The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1922-05-27
TELEPHONE
RATE CASE
Attorney General Wolfe Files
Answer in Judge Smiths
Court

Charleston, May 23.-Answering
the original bill of complaint upon
which Judge H. A. NJ. Smith is-
sued an injunction restraining the
state authorities from enforcing
the telephone rates provided for
in the Foster act passed by the
general assembly this year, the
railroad commission, attorney gen.
eral and others. defendants in the
proceedings, deny the main ale
cations of the plaintiff. the South
ern Bell Telephone & Telegraph
company, and allege that the rates
involved are not c~onffscatory, and
they allege furthermore that in
its relations with the American
Telephone & Telegraph company
and through improper charges and
accounting methods, the plaintiff
shows thin earnings, while the real
party in interest, the American
Telephone & Telegraph company,
is in fact receiving larger earn
ings from its investments in this
state, held in the name Of its sub
salaries, and is thereby increas-
ing constantly and largely its pro-
fits and surplus, as we'll as it's div
idends and the value of its stock
and properties.
The following are some of the al
legations made by the defendants
in answering the bill Of complaint:
THAT the plaintiff is a mere in
strumentality. conduit or adjunct,
of the American Telephone & Tel
egraph company, and the purpose
and effects of said form of organ
ization is to set up a fictitious en-
tity, Which performs the bidding
of the parent company, is fed or
bled as the exigencies of condi-
tons. may require, but always with
the intent and purpose that its
statement of earnings may show
something less than a fair return
on it's property, so that at will it
may show to regulating commits
sions the need for higher rates and
support such demand by a sys-
tenn of bookkeeping and account
ing, which misleads and d%eceives.
That the relations between this
real party in interest and the
plaintiff are such as to carry out
and effectuate the foregoing pur-
pose, and to drain the subsidiary
company of its rightful revenue
and earnings in this state especial
1y."
The defendants list the alleged
methods in which the results are
brought about, through purchase
of supplies and equipment from
the Western Electric company an
other alleged subsidiary; the charge
and collection by the American
Telephone & Telegraph company of
4 II per cent. Of all the gross re-
ceipts of the plaintiff; in its Ions
distance toll contract with the
American Telegraph & Telephone
company; through depicting e arm
ings and income by charging more
than q fair share or proper or av-
erage amount for repairs deprecia-
ton, traffic and commercial ex-
penses.
It is alleged by the defendants
that it is necessary to a full and
adequate hearing and understand
ing by the court of the matters
presented by the plaintiff in It's
bill, and to understand and pass
on a proper and fair rate, THAT the
American Telephone & Telegraph
company, which is also a corpora.
ton engaged in business in this
state, be made a party to the ac-
ton, and be required to appear
before this court and to submit it
self and it's books. as well as the
books oftlc plaintiff herein, to al,
inspection and examination by the
defendants and their agents and
by this court.
The defendants conclude the an
swer by praying that the bill OF
complaint be dismissed. At a hear
lug held May 6. Judge Smith re-
fused to dismiss the bill of com.
plant on grounds as then set fortl,
by the plaintiff. and gave the de-
PENDANTS 80 days in which to an
swer to- the original bill of com
plant. The case will in due time
be heard on its merits, it is
thought.