Case Name: City of Superior, Appellant, vs. Douglas County Telephone Company and others, Respondents
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1910-02-01
Citations: 141 Wis. 363
Docket Number: 
Parties: City of Superior, Appellant, vs. Douglas County Telephone Company and others, Respondents.
Judges: Winslow, C. J., took no part.
Reporter: Wisconsin Reports
Volume: 141
Pages: 363–377

Head Matter:
City of Superior, Appellant, vs. Douglas County Telephone Company and others, Respondents.
September 17, 1909
February 1, 1910.
Contract with city for telephone service: Validity: Proposal and acceptance: Consideration: Discrimination in rates: Public policy:Subsequent legislation affecting obligation of contracts: Railroad Commission: Action attacking order: Joinder of causes and' of parties: Demurrer.
1. Where, "before the enactment of ch. 499, Laws of 1907, a telephone, company, in order to afford its patrons connection with the departments of. the city government, offered to install and maintain telephones free of charge in such departments, and the-common council accepted such offer, granting leave to the company to install its telephones in specified offices upon condition that the service should be first-class at all times and be con- ■ tinned so long as the company- should operate a telephone system in the city, and the company accepted such conditions by installing the telephones as specified, a valid contract based upon sufficient consideration resulted.
2. No written acceptance by the company of the privilege so granted was necessary to create a contract.
3. Such a contract, if valid when made, is not affected by subsequent legislation prohibiting discriminatory rates, but is protected by the constitutional provision against impairing the obligation of contracts.
4. At common law a public-service corporation may for special reasons make a different rate to one person than to another, or accept payment from one in money and from another in services or some reasonable equivalent, — only unjust discriminations being condemned.
5. In a contract between a public-service corporation and a city, advantage given to the city over other patrons inures to the benefit of the public and does not, at common law, render the contract unenforceable.
•6. A contract by which a telephone company, in return for the privilege of placing telephones in the city departments, agreed to maintain such telephones free of charge so long as it continued to operate a telephone system in the city, was not so uncertain or indefinite as to its duration, or so unreasonable in that respect, as not to be enforceable according to its terms. Marshall, J., doubts.
7. The special statutory action provided for in sec. 1797m. — 64, Stats. (Laws of 1907, ch. 499), to vacate an order of the Railroad Com- ■ mission alleged to be invalid, cannot be joined with another action of primary import against another party to prevent the latter from complying with such order. Maeshall, J., dissenting, is of the opinion that the two causes of action may be joined; that both the Railroad Commission and the public-service^ corporation to which the order in question is directed are necessary parties to the litigation. Baknbs, J., is of the opinion that the Commission is a proper party to the action against such corporation.
Appeal from an order of the circuit court for Dane county: E. Rat SteveNS, Circuit Judge.
Reversed in part; affirmed m part.
Action to enjoin defendant telephone company from dis-•eontinuing maintenance of telephones in plaintiff’s city and . public library buildings under the agreement to do so free of ■charge to it pursuant to which they were placed therein, and nullify action of the State Railroad Commission requiring *uch discontinuance.
The complaint is to this effect: About May, 1904, plaintiff and defendant telephone company made an agreement, whereby the former extended to the latter the privilege of placing one telephone in each of eleven of the former’s departments in its city building and one in its public library building, and promised to maintain the same so as to afford telephone communication between the company’s patrons and such public officers, making all changes in such buildings necessary to the proper installation, and continue the facilities for telephone communication thus created during the life of the agreement, and, in consideration of such privilege and the-advantage to such company thus created of making its service more desirable to existing patrons and so of retaining their patronage and gaining new customers upon the faith of such increased scope of service, it agreed to accept the privilege as. granted with the condition affixed thereto that telephone service should be first class at all times and be continued so tong-as the company should maintain and operate a telephone system in the city. The company duly performed by installing and maintaining the telephones, and full performance on both, sides was continued down to the commencement of this action, when such performance, on the part of the company, was about to be interrupted, and could only be prevented by judicial intervention, because, October 14, 1908, defendant Railroad Commission, basing its action on the law of 1907 creating-such Commission, ordered the company, in disregard of its agreement, which was in full force at the time such legislation took effect, to discontinue performance. The company, pursuant to such order, notified plaintiff that it would cease performance of its agreement after November 10, 1908. The agreement contemplated substantial benefits to the telephone company as consideration for performance of its obligation, which benefits have in fact been enjoyed, while some injury has been caused to plaintiff’s property by reason of changes in its buildings necessarily made in the course of installing the telephones, and some benefit has accrued to the public. The discontinuance of the telephone service and removal of the telephones will inflict a substantial injury to' plaintiff by reason of consequent necessary repairs. Appropriate relief was prayed for. A motion on behalf of the plaintiff for a temporary injunction was denied. The Railroad Commission demurred to the complaint for insufficiency and the same was sustained. Both determinations were closed by a single order from which this appeal was taken.
Eor the appellant there was a brief by Thos. E. Lyons and T. L. McIntosh, and oral argument by Mr. Lyons.
Eor the respondent Douglas County Telephone Company there was a brief by Miller, Made & Fairchild, and oral argument by E. 8. Mach.
Eor the respondents constituting the Railroad Commission there was a brief by the Attorney General and A. C. Titus, assistant attorney general, and oral argument by Mr. Titus.

Opinion:
The following opinion was filed October 5, 1909:
MARSHALL, J.
The arguments of counsel cover a very wide range as to whether the transactions detailed in the statement show that a contract was made between appellant and respondent telephone company. On that branch, waiving the matter of public policy, such purely elementary principles are involved that it is not thought best to follow the intricacies of the arguments with which the court has been favored. What constitutes a contract, in the general sense, is too familiar to require discussion. If there was an offer on one side to render a service to the other within the competency of that other to receive for the use of its officers in the conduct of the public business or the convenience of the public, in exchange for a privilege of value within the competency of such other to grant and which was granted in such exchange, subject to legitimate conditions which were accepted, there is hardly room for argumeut but that a valid contract was made.
No pecuniary liability on the part of the city was contemplated in the transaction. Therefore, it is useless to consider appellant's charter provisions respecting the maimer of making contracts in that field.
It is obvious that it was important for the telephone company to be able to afford its general customers facilities for communicating by telephone with the public offices. That opportunity could not operate otherwise than to render the service it offered in general more valuable than it would otherwise be and so attract customers and greatly extend its sphere •of operations. - That which it sought to obtain was then a legitimate basis for a contract. It is just as obvious1 that the ¡service which it offered in return for the privilege sought could not he otherwise than valuable to appellant as a means of expediting the public business. Such privilege may well have been considered so specially valuable to the company as to he •a fair equivalent for the free service, so called, that is free as regards appellant rendering any direct pecuniary consideration therefor.
' No question is raised, or could well he, hut that it was competent for appellant to contract for telephone service. So there is no question of competency in general to be considered. It is argued that no contract was made because the offer of the •company was only conditionally accepted by appellant. That, of course, does not cut any figure, since the modified acceptance was submitted to by the company by installing the telephones. As in the case of any municipal privilege granted, no written acceptance was necessary. The actual enjoyment of the privilege granted was as effective to close the contract as a formal written acceptance, in the absence of any written law requiring a different acceptance.
Even in case of a legislative franchise granted upon specified conditions but without providing any manner of acceptance, use of the franchise constitutes an acceptance and creates .contractual obligations. Heath v. Silverthorn L. M. & S. Co. 39 Wis. 146; Madison, W. & M. P. Co. v. Reynolds, 3 Wis. 287.
In a case of this sort parties are competent to contract the-same as private persons. An offer on one side may be accepted by unqualified performance on tbe other, as well as in any other way, in case tbe offer does not otherwise require. This is so in harmony with the most familiar of elementary principles that nothing further need be said in respect to the matter. The facts show unmistakably that a binding contract was made as appellant claims, unless it is void upon grounds hereafter discussed.
It is suggested that the transaction contemplated treating-appellant as a favored customer, contrary to public policy. It is conceded that there was no written law at the time the contract was made prohibiting the company from granting appellant a different rate for service than general customers, but it is insisted the circumstances fall within the common-law rule that a quasi-public corporation should afford the service it offers, to every person upon the same basis that 'it does to any one under the same or similar circumstances; that any substantial departure therefrom is an unjust discrimination and contrary to sound public policy, rendering any contract for such discriminatory service unenforceable by judicial-remedies.
The contract in this case having been made before the legislation occurred prohibiting discriminatory rates, such legislation does not cut any figure in the case. If the contract were-valid when made it is within the constitutional protection precluding the legislature from impairing the obligations of contracts. Moreover, it is by no means certain but that the special circumstances in this case would, in any event, take the same out of tbe common-law rule mentioned. We need not go further on this branch of the case than to suggest that it is not every discrimination in the treatment by public-service corporations of their customers which is condemned by the- common law. Only unjust discriminations axe so condemned. For special reasons, in the absence of any written law on the subject, such a corporation may make a different rate to one person than to another, or accept pay from one upon a money rate and from another in service of a legitimate character or some other reasonable equivalent, so long as the compensation demanded is within reason under the circumstances. This subject covers a broad field. - We leave it without stating much more than the rule in general, nothing further being at all necessary to the case in hand..
It should be noted that the legislature in enacting the law of 1907 (Laws of 1907, ch. 499), appreciating there might be contr acts existing between public-service corporations and customers», valid in the absence of prohibition by written law, and that it was not within its competency to nullify or impair them, expressly provided at sec. 1797m — 91, that:
"The furnishing by any public utility, of any product or service at the rates and upon the terms and conditions provided for in any existing contract executed prior to April 1st, 1907, shall not constitute a discrimination within the meaning specified. ."
Sufficient has been said to indicate that the question of whether the contract in question is unenforceable on 'grounds of public policy must be solved with reference to» the condition of things at the time it was made. If public policy sanctioned it then, a change thereof by act of the legislature or otherwise does not affect its validity. Greenhood, Pub. Pol. 5.
Public policy as bearing on the validity, or in other words the judicial enforceability, of contracts, is that principle which maintains that a person cannot rightfully do or bind himself to do that which is inimical to the public good. So where a contractual situation is not found to be clearly within the principle condemning it, it cannot properly be said to be illegitimate merely because there is discrimination. Discriminatory contracts between public utility corporations and their patrons wbicb are beld to be void as inimical to tbe public good are so beld because unreasonable advantage is thereby given to one customer or a class over others, whereas all have a moral and legal right to equality of treatment. In case of the contract being between a private corporation and the state or other public corporation, whatever advantage the particular customer has over general customers, obviously, inures to the benefit of the latter in the aggregate. In other words, in the ultimate there is no discrimination which is inimical to the public good, and hence no violation of public policy. Such is the situation here. If we concede that the appellant under the contract was a favored customer, in that if the same advantages had been granted by contract to a private corporation the agreement would have been unenforceable, still in the circumstances here the contract is enforceable because the advantage is to the public instead of to any particular member thereof.
But it is argued that, conceding there is a contract as claimed by appellant, valid as regards any written or unwritten law, it is unenforceable, so far as executory, because no time is specified, with reasonable definiteness for its duration. We assume that point is made relying on the familiar principle governing such cases as Irish v. Dean, 39 Wis. 562, and Coffin v. Landis, 46 Pa. St. 426, 430. The rule on the subject was stated in Robson v. Mississippi River L. Co. 43 Fed. 364, thus:
"When a contract is silent as to the matter oí its duration, then it is ordinarily terminable at the pleasure of either party, reasonable notice being given to the other party. When there is nothing in a contract, when applied to its subject matter, which either directly or in fair implication can be considered to fix a limit to its duration, the law infers that the parties intended that such contract' is terminable at the option of either party, reasonable notice of the exercise of such option being required, when such notice is needed for the protection of the other party to the contract." 43 Fed. 368.
Tbafc doos not mean that a contract for continuous service is fatally indefinite so as to' be subject to the option mentioned merely because it does not specify a time, presently definite, for its termination.. As said in the case quoted from:
"The duration of a contract may be made dependent upon the expiration of a period of time, or upon the completion of a given undertaking, or the happening of some event, all of which in turn may be certain or.uncertain as to 'the date when the undertaking may be completed, or the event may happen. This uncertainty, however, does not render the-contract terminable at will." 43 Fed. 370.
It is conceded' that the contract in question, in its letter, fixes a time for its termination, to wit, when the telephone company ceases to "maintain and operate a telephone exchange in said city." But it is argued that the language is ambiguous, because it would be so unreasonable for a telephone company to agree for such a mere privilege as that granted to give service through twelve telephones during the entire period of its existence as an operating company in the grantee city, that it cannot be there was any such mutual intention in this case. For my own part, the proposition thus presented is one of serious difficulty. However, it is the opinion of the court that it may well be the telephone company, under the circumstances,-supposed the contract, taking it at its letter, provided for a fair exchange of equivalents. At any rate, in the opinion of the court, there is nothing in the situation presented to indicate that the agreement, taken literally, is so unreasonable as regards its continuance, as to warrant treating the language of the parties in that regard as ambiguous. Therefore, in the opinion of the court, the contract is binding according to its terms.
No question is raised as to whether, in any event, this case, from the showing made in the complaint, falls within some recognized head of equity jurisprudence. Therefore, we take it that the parties considerately waived that question. Hence this court will not consider it. It follows that the ground upon which the general demurrer to the complaint was susr tained and the temporary injunction denied is untenable, and that others, if any there be, are deemed waived.
It is the opinion of the court that the order sustaining the demurrer as regards the improper joinder of actions should be affirmed; that the statutory action created to enable a party aggrieved by an order of the Railroad Commission, by action against such Commission to challenge the validity of such order, is not joinable with another action of primary import against some other party, to prevent the latter from complying with such order; that the statute does not contemplate affording opportunity to compel the Railroad Commission to appear in court as a party defendant and vindicate the validity of its action upon such validity being challenged at the suit of another against a third person, and that to permit such to be done would unduly prejudice administration of the law by such Commission. Sec. 2647, Stats. (1898), on the subject of joinder of actions, it is thought, does not permit the special statutory action against the Commission to be joined with any other.
The point is made that the complaint is. demurrable because it is aimed at an order of October 14, 1908, which is based on one of June 12, 1908, in favor of which the limitation of time to question the validity under sec. 1797m — 65, expired before the action was commenced. It is a sufficient answer thereto that the complaint is silent about any order of June 12, 1908. So far as the pleading shows, the order of October 14, 1908, is wholly an original matter.
From the foregoing it follows that the order appealed from, as regards the temporary injunction and the general demurrer, is reversed, and that as regards improper joinder of causes of action, it is affirmed.
By the Court. — So ordered, with costs in favor of appellant against the telephone company and costs in favor of the Railroad Commission against appellant.