Daily capital journal. (Salem, Oregon) 1903-1919, 1916-12-05
commission CAN FIX
TELEPHONE CHARGES
Supreme Court Holds It Can
Override Contract Made
by the Parties

Service commission that it has power
to fix rates of any public service cor.
poration in any municipality of the
corporation was granted before the
commission was created or not.
The case that brought the question
up before the supreme court was the
appeal of the public service commits
sion from decree of Judge Galloway
in the circuit court for Marion county
vacating an order of the commission
fixing the telephone rates in Woodburn
higher than the city franchise allowed
the company to charge The title of
the. case is the City of Woodburn,
against the rublic Service commission
of Oregon and the Western Telephone
company.
The City of Woodburn was incor-
porated in 1889, according to the de.
cision, and in June 1909, the city
adopted an amendment to its charter
permitting what is known as 'home
rule" which gives the council author
ity to grant franchises in and through
the city streets for public uses. In
1910 the council granted franchise to
the United Telephone company which
permitted the construction of telephone
wires and poles. One section of this
franchise fixed the maximum rates to
be charged for use of the telephone.
New Company Now.
Later the plant was transferred to
the Western Telephone company, which
has extended its lines beyond Wood
burn into the country. In July, 1913,
the company applied to the Public
Service commission for permission to
increase telephone rates. After due
notice to the company and city hear
ing was held and the commission or
dered that the company be permitted
to increase its rates on condition that
the applicant avoid duplication of
equipment by consolidating with the
competing plant. The consolidation
was completed, and on December l,
1918, the P. s. c. directed the Western
Telephone company to charge speel-
fled schedule of rates, which charges
were greater than specified by the
franchise. Shortly after the city COM
menced suit to vaeate the order and en-
Join the company from enforcing the
new rate. The trial was held before
Judge Galloway who held in favor OF
the city, and enjoined the company
from making any charges greater than
specified in the franchise.
Justice Harris, in rendering the de.
cision reversing Judge Galloway, stated
that the decree appealed from is pre-
dicted on the argument that the P. 5.
G. was without power to permit the
telephone company to charge city
customers more than the rates pre-
scribes in the franchise, which the city
granted before the =. S. G. was
created.
Under the law approved by the peo-
pie of the state, the commission has
power to regulate telegraph, telephone,
street railw VS., heat light and water
systems so that safe and adequate serv-
ice may be rendered to the public. The
term "public utility" embraces every
owner who operates a telephone line
for the public.
The People Changed 1t.
'Tn brief" SAYS Justice Harris, ''the
facts present situation where the
legal voters of the city amended their
the common council authority to grant
franchises in the streets for public
benefits; the council exercised this
chartered power and granted fran
chise to the telephone company, the
rates to be charged to be fixed by the
terms of the franchise; subsequently
the Public Utility act was passed by
the legislative assembly and then re-
ferred to all the voters of the state who
approved the measure at general
election; and finally upon the applica
tion of the telephone company the pub
lie service commission acting under the
authority of the Public Utility act
specified a schedule of rates to be
charged by the telephone company and
the city is now complaining because
these rates exceed the charges fixed
in the franchise.
''The ultimate question for decision
is whether the Public Service commits
sion was lawfully empowered TO speci'
fy rates different from those fixed by
the terms of the franchise. Through
out the discussion it must be born in
mind that the state acting through the
Public service coHlHlSslOH ~ P"'y
to this suit, and consequently judicial
precedents arising out of controversies
between none but the immediate par
ties TO a franchise are not controlling
here. Moreover the present juncture
does not call for decision of the rela'
tive rights of the grantor and grantee
of a franchise as between themselves.
Furthermore, the very purpose OF TINS
litigation is to determine whether the
state has in fact empowered Woodburn
TO fix schedule Of rates which the
state could not afterward change, and
hence we must also distinguish all
those judicial utterances which foi,
lowed a finding that the state had
actually conferred upon city the
power unalterably to fix the rates to
be charged by the grantee of fran
chise. ~
Lower Court Reversed.
After citing numerous authorities
relative to the governing power, JUS
tice Harris says ''The right to regulate
the rates to be charged by public
utility inheres in the power to govern.
The regulation of rates for the pur-
pose of promoting the health, comfort,
safety. and welfare of society is an ex-
20 tbara.