Daily capital journal. (Salem, Oregon) 1903-1919, 1916-05-16
FRANCHISE TERMS
UPHELD IN CASE Of
CITY OF WOODBURY.
Judge Galloway Rules Against
Power Of Public Service
Commission
INCREASED SCHEDULE
OF RATES INVALID
Judge Holds That Franchise
Terms Must Prevail
Despite Commission

A decision that promises to be state
wide in its influence was handed down
in department number Q of the cir.
cult court by Judge William Galloway
this morning when it was held that the
Public Service commission could not
set aside provisions of a franchise in
the WOodburn Telephone case. The
city of Woodburn granted a franchise
to the United Telephone company in
October, 1910, and one of the provis-
ions under which the charter was grant
ed to the telephone company was
schedule Of maximum rates to be
charged to subscribers of the telephone
lines. The United Telephone com
pany afterward sold out its franchise
to the Western Telephone company and
the city Of Woodburn brought the suit
against the Western Telephone COM
pany and the Public Service commits
sion of Oregon.
In June, 1915, the Western Telephone
company was granted a new schedule
of rates by the Public Service com
mission after a hearing of both sides
to the controversy and the new sched-
ule Of rates was from rs cents to 81
per month higher than the rates estab-
lished by the provisions of the fran
chise. Under the terms of the fran
chise granted TO the telephone COM
pany in 1910 the maximum rates were
established as follows: One party line
$3.50 per month; two party line $125|
per month and for party lines of more
than two parties 81 per month
The order Of the public service com
mission dated June 16, 1915, raised
the rates according to the following
schedule:
Business phones: One party line
$3.50 per month; two party lines 1925
per month; four party line SO per
month.
Residence phones: One party line
50 per month; two party line $1.75 per
month; four party line $l.50 per month;
extension phones so cents per month
extra.
Business suburban party line $l5O
per month.
Residence suburban party line 81 per
month. Portable or desk phones 25c
per month extra.
Farmer party lines upon which the
subscriber owns and maintains eauip.
ment to the city limits $500 per year.
The city of WoOdburn filed A com
plant asking that the court set aside
the order Of the commission and that
the company be enjoined from collect
ing the increased rents. Judge Gallo
ways decree sets aside the order and
issues the temporary injunction.
In handing down his decree Judge
Galloway said that a franchise was
held to be n contract and that n con
tract or its terms could not be changed
or held for naught except upon the
mutual agreement of both parties to
the contract and that the city Of Wood.
burn which WAS one Of the original
parties to the contract objected and
that the public service commission
was a third party who had no right to
set aside the terms Of the original con.
tract. He also said that the legis'a.
ture had no power to take away the
rights Of cities to govern their own
affairs subject, Of course, to the Grim
inal laws Of the state.
The life of tne franchise granted in
1910 was 25 years and it is estimated
by Attorney Blaine McCord, who rep
resented the city Of Woodburn, that
Judge Galloway's decision would save
the residents of Woodburn about $40.
900 in that time provided the number
of telephones in Woodburn did not in.
crease within the life Of the franchise.
The public service commission was
represented by assistant attorney gen
eral J. 0. Bailey and McNary & Me-
Nary represented the telephone com.
pany with Carey & Kerr and Griffith,
Letter and Allen Of Portland and Clyde
B. Aitchison, Of the public service
commission. Attorney George G.. Bing-
nam appeared also for the city Of
Woodburn. The ease will be appealed
to the supreme court for final settle.
ment as the public service commission
has regulated the rates Of water com
panies telephone companies and other
public service corporations all over
the state and has both raised and
lowered existing rates.