The Birmingham age-herald., 1912-09-17
POINTS |NVOLVEDIN PROPOSED SUIT ON
 TELEPHONE MATTER How City Commission Con- formed Strictly With Pro-
 visions of the Franchise
TWO STEPS TAKEN
 BEFORE ANY SALE
Peoples Company Surrendered It's Franchise and Then Asked Courts to Dissolve Corporation Be-
 fore Sale of Properties
Fly CLYDE w. ENNIS

Fly CLYDE w. ENNIS
 The commissioners view with the great est confidence the outcome of the pro- posed proceedings of certain citizens to compel the city to recover the property of the Peoples Home Telephone company. which ceased to be some weeks ago. The city officials are confident that they will be completely exonerated of all alleged failures or alleged oversights for to them the whole transaction is as plain as day. Moreover a few close friends of Gomms- sioner James Weatherly suggested first of all men that the tangle be tested in the courts.
 The suggestion, fl would seem. will be acted upon by those who have the affairs Of the city close at heart bus are not of- hcially connected with the administration. From what can be learned the papers are now being drawn up preparatory to the beginning of the suit.
 The point for the court to decide, ac- cordlng to rumors, Is the following pas sage of the franchise granted by the city to s. B. Claypooi, April IS, 191o and which appears as the concluding lines of section of that grant.
 Now therefore. if the sad ClaypoY or his successors. or assigns shall by an agreement. transfer, pool or sale of stock or by any device whatever dispose of said franchise OF any interest therein to any competing company whereby the tele- phone rates shall be increased or service impaired. then this franchise and al rights and privileges therein granted shall become null and void and all poles, wires, oonduits, exchanges and other appliances used by said Claypool shall be forfeited to the city. etc"
 The whole proposition hinges upon three words. it is said. those being franchise" 'service" and rates"
 Did the company sell It's franchise2 It l. claimed not. It will be recalled that Walter Percy. counsel for the Peoples company. asked the city to invaldate it's franchise and permit the company to cease business. That was granted by the city If the city annuled the franchise held by the Peoples company, who were the as- signs of Claypool then, 1t IS claimed, the company had not franchise to sell to the Bell company. The city fixed l. so that the Peoples company had nothing resemb-
 
 summated.
 The company of which A. l.. Fnlenwder was president, when it found that Il had no franchise, went into the chancery court and asked that court 10 cancel its corporate organization. He asked that the corporation be dissolved, which was the only way that matter could be handled. The court did that. The com pany then had no franchise and was not a corporation. The properties were then sold at public auction in front of the courthouse by Henry Badhau. qice pres ident, and were bought by the Southern Bell Telephone company. of which D. r. Turnbull is district manager
 Other than the above careful legal tread- ing the franchise held by the Peoples com pany provides in section that: The said party of the second part shall not have the right to transfer his their franchise and rights under this agreement without the consent of the council" That was never asked for and never granted. yet It would appear that such step codld have been taken.
 The use of the word rates in respec. 10 their being increased might have been considered. The ffancnlSe prDNiieu that 1T The franchise was sold to a competing company. resulting in an increase of rates or the impairment of service. the property would revert 10 the city Obviously the rate question could not enter into the proposed suit because the Bell company vas granted an increase of rates after a spirited fight before the commission. which is well remembered at least by tfe officials and the commissioners. Impair ment of service" might enter into tre question but would be up to experts to determine.
 Tine Bell company officials maintein that after the franchise was annulled by the commission and the Peoples company was dissolved corporation they simply purchased the physical properties. The company officials resent the use of the word merger in the discussion as they assert that no merger was effected. They never touched a Peoples phone sta ton until the properties were sold at pub lie auction.