Title: Chesapeake & Potomac Tel. Co. v. City of Morgantown
Citation: 105 S.E.2d 260
Docket Number: 11000
State: west-virginia
Issuer: west-virginia Supreme Court
Date: October 21, 1958

105 S.E.2d 260 (1958) The CHESAPEAKE &amp; POTOMAC TELEPHONE COMPANY v. The CITY OF MORGANTOWN et al. No. 11000. Supreme Court of Appeals of West Virginia. Submitted September 16, 1958. Decided October 21, 1958. *264 H. Wm. Largent, George R. Farmer, Morgantown, for appellant. Charles G. Baker, Charles S. Armistead, Morgantown, John G. Fox, Charleston, for appellees. DONLEY, Judge. This is a suit by The Chesapeake and Potomac Telephone Company of West Virginia, a corporation, against the City of Morgantown, Elmer W. Prince, City Manager, James A. Ashburn, City Clerk, and John W. Lewis, Acting Chief of Police of the City of Morgantown, to enjoin the enforcement of an Ordinance, adopted by the City on April 9, 1957, as amended on July 9, 1957. A brief summary of the facts leading up to the adoption of the Ordinance is necessary in order to understand the contentions made by the parties. Central District Telephone Company, the predecessor of the plaintiff, was granted a franchise by the City of Morgantown on July 3, 1916, for a period of forty years. Following the expiration of this franchise, the parties were unable to agree upon the terms of a new one. The Ordinance in question, adopted on April 9, 1957, is entitled: The pertinent parts of this Ordinance, which are now the subject of controversy between the parties, are Sections 1, 2, and 4, and Section 3, as amended. Sections 1, 2 and 4 provide as follows: It will be observed that these sections are designed for the protection of the city streets, alleys, sidewalks, and the like, against damage or injury from disturbances thereof by any person, firm or corporation, having occasion to make openings or excavations or to erect barricades in such public ways; and that it is expressly provided in Sections 2 and 4 that the fees so received by the City shall be used in the administration of the provisions thereof. In its brief, the plaintiff states that it does not question, and has never questioned, the regulatory nature of Sections 1, 2 and 4, or the reasonableness of the fees; and that its only objection to these sections is that they constitute part of a plan to coerce the plaintiff into accepting a franchise which is unacceptable to it. More will be said of this contention hereafter in the course of this opinion. The storm center of the dispute between the parties is Section 3 of the Ordinance, which, in its original form, provided as follows: Prior to the adoption of the Ordinance, and while the parties were still negotiating, some time in March, 1957, five of the employees of the plaintiff were arrested by the City for stringing telephone wires and the plaintiff takes the position that such fact made it apparent that the City was embarking upon such a program in order to force the plaintiff into an agreement for a new franchise. Following the adoption of the Ordinance on April 9, the plaintiff filed its bill of complaint on April 15, 1957, and was awarded a temporary injunction against the enforcement of the Ordinance. In accordance with the order of the circuit court, the plaintiff filed an inventory of its facilities located in the public streets, and it thereupon appeared that the application of the fee schedule above set forth in Section 3 of the Ordinance would result in the payment of approximately $240,000.00 a year by the plaintiff. Thereupon, on July 9, 1957, the City amended Section 3 of the Ordinance. The changes made by the amendment were to substitute the words "use fee" for the words "license fee" in every instance; and the schedule of payments for such fees was changed as follows: In addition, the Ordinance recited that: The change in the schedule of fees set forth in the amendment to the Ordinance reduced the charge to the plaintiff from approximately $240,000.00 to $40,000.00 annually, and it will be observed that while the original Section 3 denominated the charge an "annual license fee", the amended Ordinance denominated it an "annual use fee". In neither the original nor the amended Section 3 are there any provisions containing any regulatory words, providing for any duties to be performed *269 by the municipality, except the collection of the fees, nor is there any language indicating whether the proceeds are to be paid into the general treasury, or are to be used to pay the expense of carrying out the provisions of the Ordinance. Compare Wisconsin Telephone Co. v. City of Milwaukee, 126 Wis. 1, 104 N.W. 1009, 1 L.R.A.,N.S., 581. In fact, it is conceded by the City that the "use fee" is purely for revenue purposes, but it is contended that the City is authorized to charge a "rental" to the plaintiff for the portion of the streets occupied by it. The determination of this issue is the crux of the case. In order to decide it, we shall briefly review the law upon the subject of municipal powers as enunciated by the decisions of this and other courts. It is axiomatic and fundamental that a municipality has no inherent power to levy taxes, and that it can do so only by virtue of the authority delegated to it by the Legislature. City of Fairmont v. Bishop, 68 W.Va. 308, 69 S.E. 802; Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780. In Walker, Jr. v. City of Morgantown, 137 W.Va. 289, 71 S.E.2d 60, 63, in a suit to enjoin the collection of a tax on the distribution and dispensing of gasoline sought to be imposed by the municipality, it was held that a municipal ordinance containing no essential regulatory words, providing for no duties to be performed by the municipality, except the collection of license fees, and containing no language indicating whether the proceeds are to be paid into the general treasury of the municipality or are to be used to pay the expense of carrying out the provisions of the Ordinance, imposes a revenue tax under the taxing power delegated to such municipality, and is not the exercise of a delegated police power, notwithstanding the Ordinance is designated as a "license fee ordinance". In the course of that opinion, the Court said: To the same effect is City of Morgantown v. Fidelity Mutual Life Insurance Co., 141 W.Va. 405, 90 S.E.2d 434. We consider that it is settled under the foregoing authorities that Section 3 of the Ordinance is invalid, for the reason that it is quite apparent that the so-called "use fees" are imposed purely for the purpose of obtaining general revenue, and involve no regulatory features, which would *270 bring them within the category of license fees. See 9 McQuillin, Municipal Corporations, 3rd Ed., Section 26.15. We have been cited to no authority, and we know of none in this jurisdiction, which holds to the contrary. Nor have we found or have there been cited to us, any provisions of the Constitution or of the statutes of this State which delegate to any municipality the power to impose a "use fee" upon any person, firm or corporation for the privilege of occupying any portion of the public ways within a municipality. In Article X, Section 1 of the West Virginia Constitution, it is provided that: "The legislature shall have authority to tax privileges, franchises, and incomes of persons and corporations * * *" In Article X, Section 9, it is provided that: "The Legislature may, by law, authorize the corporate authorities of cities, towns and villages, for corporate purposes, to assess and collect taxes; but such taxes shall be uniform, with respect to persons and property within the jurisdiction of the authority imposing the same." It has been held that the limitation that taxes shall be uniform does not purport to cover license and privilege taxes which are in the nature of excises, but only applies to taxes on persons and property. Mullens v. City of Huntington, 117 W.Va. 740, 188 S.E. 120. In Article XI, Section 5 of the Constitution, it is provided that: "No law shall be passed by the Legislature, granting the right to construct and operate a street railroad within any city, town or incorporated village, without requiring the consent of the local authorities having the control of the street or highway, proposed to be occupied by such street railroad." In construing an identical provision of the Constitution of Oklahoma, the Circuit Court of Appeals for the Tenth Circuit in the case of City of Tulsa v. Southwestern Bell Telephone Co., 75 F.2d 343, at page 352, held that, applying the doctrine of expressio unius est exclusio alterius, it follows that the Legislature may grant the right to telephone companies to occupy the public streets and highways without the consent of local municipal authorities. However, in West Virginia the Legislature has not seen fit to do so, and the question is now raised as to whether or not municipalities in West Virginia have any authority whatsoever under the general law to exact from a public utility a revenue tax for the use of its streets. No express grant of such authority has been found in any provision of the statutes. There is none in the Charter of the City of Morgantown, Acts of the Legislature, 1933, Chapter 126. We have no occasion on this appeal to consider or to decide whether or not the defendant city, or any other municipality, has the power by general law to require the plaintiff, or any other public utility, to obtain a franchise in order to maintain its facilities in the public ways. Such power may be expressly granted in the special charter of a municipality, as was done in the City of Fairmont, Watson v. Fairmont and Suburban Railway Co., 49 W.Va. 528, 39 S.E. 193, and in the City of Charleston, City of Charleston v. Public Service Commission, 86 W.Va. 536, 103 S.E. 673. Nor do we have any occasion to consider or to decide what may be the respective rights, duties, powers, privileges, immunities, or liabilities existing between a municipality and a public utility which may arise upon the expiration of a franchise. We express no opinion thereon; but it is interesting to observe that the privileges which are conferred upon the plaintiff by the City under Section 3 of the Ordinance, in return for the payment of the "use fee", are virtually the same as those which would be conferred by a franchise. The City relies heavily upon the case of City of St. Louis v. Western Union Telegraph Co., 148 U.S. 92, 13 S. Ct. 485, 487, 37 L. Ed. 380, in which the defendant contested the validity of an ordinance requiring it to pay for the privilege of using the streets the sum of five dollars per annum for each telegraph or telephone pole erected in the streets. In holding that the ordinance was not invalid, the Court said *271 that the charge so imposed was not a privilege tax or license tax. On rehearing, 149 U.S. 465, 13 S. Ct. 990, 991, 37 L. Ed. 810, the Court held that the city had this power by virtue of its charter provisions growing out of the power "to license, tax, and regulate * * * telegraph companies or corporations, street-railroad cars", etc., and "to regulate the use" of the streets. In discussing the City of St. Louis case, the Supreme Court of Mississippi in Hodges v. Western Union Telegraph Co., 72 Miss. 910, 18 So. 84, 29 L.R.A. 770, pointed out that the ground upon which the City of St. Louis case was decided is that the City is the absolute owner in fee of its streets, the charter powers of the City are self-appointed, and it is expressly declared that St. Louis occupies a unique position, in that it does not, like most cities, derive its power by grant from the Legislature, but it framed its own charter under authority given to the people by the Constitution. The Hodges case further held that the Legislature not having authorized the City of Meridian to exact a rental charge, its effort so to do was beyond its power. See Southern Bell Telephone &amp; Telegraph Co. v. City of Meridian, D.C., 154 F. Supp. 736, 740. In the case of School District of McCook, in the County of Red Willow v. City of McCook, 163 Neb. 817, 81 N.W.2d 224, 225, the court held that while a municipality under the powers delegated to it may by ordinance install parking meters, if such ordinance is, in fact, a revenue measure, it is unconstitutional for the reason that it lacks the element of uniformity necessary to the validity of revenue enactments, and that "a revenue tax may not be imposed under the guise of a police regulation." The Court went on to say: "The city has no right to charge for the use of public streets. It may not lease nor rent the area within a public street nor charge a toll for the use thereof." In the case of City of Pella v. Fowler, 215 Iowa 90, 244 N.W. 734, 736, after the expiration of a franchise to operate a telephone system, the operator continued to occupy the streets of the city. The city sought to recover upon an alleged implied contract to pay the fair and reasonable value of the use of the streets. The Court held that the city was without power or authority to lease the streets and public places thereof for use in maintaining and conducting a telephone exchange. The city insisted that it had the right to recover rental for the streets and public places. The Court said: In the case of City of Portland v. Pacific Telephone &amp; Telegraph Co., D.C., 5 F. Supp. 79, it was held that the State could validly delegate to a Home Rule city the authority to levy a privilege tax for the use of the public streets of a municipality upon any public utility operating within such city, without a franchise for *272 a period of one year. The implication to be drawn from this case is that without such express grant of authority by the Legislature, the municipality would not have it. Where a statute confers certain specific powers on municipalities, those not enumerated are withheld. Van Eaton v. Town of Sidney, 211 Iowa 986, 231 N.W. 475, 71 A.L.R. 820; State ex rel. Bibb v. Chambers, 138 W.Va. 701, 77 S.E.2d 297. A case which is strikingly similar to the instant case is that of Village of Lombard v. Illinois Bell Telephone Co., 1950, 405 Ill. 209, 90 N.E.2d 105, 107. There, the telephone company had been operating under a franchise which terminated in December, 1946. No charge or license was ever exacted by ordinance. On February 2, 1948, the city enacted an ordinance which provided that it should be unlawful to maintain the wires, poles and other equipment of the company, without complying with the terms of the ordinance. The ordinance further provided: The ordinance further imposed a penalty of not less than $10.00 nor more than $200.00 for each violation of the ordinance, and provided that a separate offense should be deemed committed on each day during or on which a violation occurred or continued. The city brought suit to recover the penalty of $200.00 a day, amounting to a total of $24,000.00. The Court said: The Court also pointed out that taxes are generally defined as coming within two classes, property taxes and excise taxes; and that excise taxes are such as occupational, license, privilege, franchise, and other types which are a charge for a privilege arising from the use of property. It was reiterated that a municipal corporation has no inherent powers of its own; and it is not endowed with inherent power to license or exact payment for a privilege. The Court further said: At this point it may be observed that under our statutes a municipal corporation may not impose a privilege tax upon a telephone company. Code, Chapter 8, Article 4, Section 13b, construed in connection *273 with Chapter 11, Article 13, Section 2b. Cf. City of Morgantown v. Fidelity Mutual Life Insurance Co., 141 W.Va. 405, 90 S.E.2d 434. The Illinois Court went on to say that: There is no magic in labels, although the City apparently thought so when it amended the Ordinance by substituting "use fee" in place of "license fee". Under the foregoing principles, we hold that the City of Morgantown does not have the power, express or implied, to exact a "use fee" from the plaintiff. Other authorities cited by the defendant lend no support to its contention. Postal Telegraph Cable Co. v. City of Baltimore, 156 U.S. 210, 15 S. Ct. 356, 39 L. Ed. 399, was affirmed upon the authority of the St. Louis case. Mayor &amp; City Council of Baltimore v. Chesapeake &amp; Potomac Telephone Co., 142 Md. 79, 120 A. 229, was, in turn, affirmed upon the authority of the Postal Telegraph Cable Co. case. Western Union Telegraph Co. v. Borough of New Hope, 187 U.S. 419, 23 S. Ct. 204, 47 L. Ed. 240, held that, under the particular facts of that case, the imposition of a municipal license fee on telephone poles and wires was not obnoxious to the Commerce Clause of the Constitution of the United States. The same question was involved in Atlantic &amp; Pacific Telegraph Co. v. City of Philadelphia, 190 U.S. 160, 23 S. Ct. 817, 47 L. Ed. 995. In Western Union Telegraph Co. v. City of Richmond, 224 U.S. 160, 32 S. Ct. 449, 56 L. Ed. 710, relief was sought wholly on the ground that the telegraph company had such rights that no state legislation could touch it. Cases which recognize the licensing or regulatory power of a municipality with reference to motor vehicles are inapplicable. Ex parte Dickey, 76 W.Va. 576, 85 S.E. 781, L.R.A.1915F, 840; Henderson v. City of Bluefield, 98 W.Va. 640, 127 S.E. 492, 42 A.L.R. 279; County Court of Webster County v. Roman, 121 W.Va. 381, 3 S.E.2d 631. Likewise, cases such as Tsutras Automatic Phonograph Co. v. City of Williamson, 132 W.Va. 22, 51 S.E.2d 427, recognizing the power of a municipality to require license fees for the operation of automatic phonographs and pin ball machines, have no pertinency, although it may be noted that in this case the Court significantly warned that a municipality *274 does not have unlimited power in respect to the imposition of a license tax, and that it must bear some fair relation to the value to the licensee of the license so issued. We now pass to a consideration of the contention of the plaintiff that the license fees imposed by Sections 1, 2 and 4 of the Ordinance are discriminatory, and deprive the plaintiff of the equal protection of the laws in violation of the Fourteenth Amendment to the Constitution of the United States. In support of this contention the plaintiff relies upon Pembina Consol. Silver Mining &amp; Milling Co. v. Commonwealth of Pennsylvania, 125 U.S. 181, 8 S. Ct. 737, 31 L. Ed. 650. We are unable to see the pertinency of this case to the issue under consideration. General statements in the opinion to the effect that the Fourteenth Amendment was designed to prevent any person, or class of persons, from being singled out as a special subject for discriminatory and hostile legislation, are undoubtedly true. However, there is nothing upon the face of the Ordinance here under consideration nor in the evidence produced at the hearing, which establishes that the plaintiff was so singled out. It was shown that there are other corporations in the City of Morgantown which have no franchise and which are subject to the terms and provisions of the Ordinance. The plaintiff also relies upon Ligare v. City of Chicago, 139 Ill. 46, 28 N.E. 934, in which the Court held that a municipality has no power to condemn land for a street for the express purpose of giving a railroad company the use of it in such manner as to exclude all other travel therefrom, and that the city had no power to condemn private property for private purposes. It was said that the purpose for which a thing is done is very different from the motives that may have actuated those by whom it is done. Conceding that this is a valid distinction, we cannot go back of the declared objects and purposes of the Ordinance, where, as here, it is apparent that the City is legitimately exercising its delegated powers. 5 McQuillin, Municipal Corporations, 3rd Ed., Section 16.90. In the nature of the case, license taxes cannot be strictly equal and uniform. Classification is not discrimination, and it is sufficient that those in the same class are treated with equality. Chesapeake &amp; Potomac Telephone Company of Virginia v. City of Newport News, 196 Va. 627, 85 S.E.2d 345. The fact that one person, firm or corporation falls within a class upon which a license tax is imposed does not of itself make the tax discriminatory. Standard Oil Co. v. City of Fredericksburg, 105 Va. 82, 95, 52 S.E. 817, 821. "The equal protection provisions of the Federal and State Constitutions do not preclude resorting to classification for purposes of legislation if such classification is reasonable, is founded upon pertinent and real differences, and has as its object a purpose germane to the legislation." Syl. 4, Tweel v. West Virginia Racing Commission, 138 W.Va. 531, 76 S.E.2d 874, 876. See 16A C.J.S. Constitutional Law § 529, p. 424. Nor is there a deprivation of the property of the licensee without due process of law. Manhattan Company of Virginia v. County Board of Arlington County, 197 Va. 765, 91 S.E.2d 408. We hold that the classification made in the Ordinance between franchised and nonfranchised persons, firms and corporations is a reasonable one and is not violative of any provision of either the State or the Federal Constitutions. No support for the plaintiff's position is found in the case of Town of Fulton v. Norteman, 60 W.Va. 562, 55 S.E. 658, 9 L.R.A.,N.S., 1196, which holds that a municipal ordinance may not validly discriminate against the sale or use of articles of lawful trade merely upon the ground of the place of their production. The provisions of Sections 1, 2 and 4 of the Ordinance are not void for uncertainty. Nothing to the contrary was held in Pence v. Bryant, 54 W.Va. 263, 46 S.E. 275, nor in State v. Lantz, 90 W. Va. 738, 111 S.E. 766, 26 A.L.R. 894. *275 For the reasons hereinabove stated, we are, therefore, of the opinion, and so hold, that Sections 1, 2 and 4 of the Ordinance are valid, and Section 3 is invalid. We are further of the opinion that the invalidity of Section 3 does not render Sections 1, 2 and 4 invalid. Section 9 of the Ordinance provides that: While such a declaration is not conclusive, it should be given great, if not controlling, weight in the application of the general rule that where a part of an Act is invalid, that fact does not authorize the courts to declare the other provisions of the Act to be void, unless they are so connected in subject matter, dependent on each other, or otherwise so connected in meaning, that it cannot be presumed that the legislative body would have enacted the one without the other. State v. Edwards, 95 W.Va. 599, 122 S.E. 272. We are of the opinion that Section 3 is not such a substantial part of the legislative scheme as to render materially ineffective the entire Ordinance. Legitimate objects and purposes are accomplished by the imposition of the license fees exacted under Sections 1, 2 and 4, even though the revenue measure sought to be enacted by Section 3 is eliminated. Cf. Hodges v. Public Service Commission, 110 W.Va. 649, 159 S.E. 834. There remain to be mentioned certain procedural points raised by the City, which will be considered briefly. The City contends that the trial Chancellor erred in rendering a final decree after the filing of the plaintiff's second amended bill of complaint without giving the City an opportunity to demur thereto or to answer the same. It may be conceded that this is true. 1 Miller's Hogg's Equity Procedure, Sec. 370. However, we can discover no prejudice to the City resulting therefrom. The allegations of the original and supplemental bills of complaint were sufficient to enable the Chancellor to pass upon the validity of the Ordinance, as a matter of law. The second amended bill added nothing to the case except to set forth that by reason of a franchise granted to the plaintiff by the Town of Sabraton (which was thereafter incorporated into the City and now constitutes the Sixth Ward thereof), the Ordinance has no applicability to the plaintiff within any part of the City. This was a mere legal conclusion upon the part of the pleader and, in reality, added nothing to the allegations of the original and supplemental bills. The error was, therefore, harmless and constitutes no ground for reversal of the decree. However, the plaintiff contends that the existence of the franchise from the Town of Sabraton has the legal effect claimed, as aforesaid, and it argues that, in terms, the Ordinance applies only to persons, firms or corporations which are operating without a franchise from the City. We cannot agree to such a narrow and unreasonable interpretation of the Ordinance. The City concedes that the Ordinance does not apply to any operations conducted by the plaintiff within the Sixth Ward. To attach to the Ordinance the interpretation sought by the plaintiff would render it practically meaningless, and it is not to be presumed that the City intended to do a useless thing, and in one breath to exercise its powers and in the next breath to eliminate from the object of such exercise one of the chief public utilities to which the provisions were applicable. To the extent that the Ordinance *276 is valid, we therefore hold that it operates upon the plaintiff within all areas of the City except that embraced within the limits of the former Town of Sabraton. The City further contends that the trial Chancellor erred in granting the injunction for the reason that the bill was not properly verified. There is no merit in this point. The trial Chancellor may grant an injunction if he is satisfied that ground for such relief appears by affidavit, or otherwise. "Such objection [lack of verification] after the injunction is granted can amount to nothing but a mere legal quibble." McGregor v. Camden, 47 W. Va. 193, 195, 34 S.E. 936, 937. Code, Chapter 53, Article 5, Section 8. The decision in Shonk v. Knight, 12 W.Va. 667, is not in conflict with this principle. It is next contended by the City that a court of equity will not enjoin the enforcement of a municipal ordinance upon the sole ground that it is illegal. In support of this position we are referred to Williams v. County Court of Grant County, 26 W.Va. 488, which involved a taxpayers' suit to stop the collection of a dogtax; and to Mann v. Mercer County Court, 58 W.Va. 651, 52 S.E. 776, in which a writ of mandamus was sought to compel a county court to call a special election to determine whether a county seat should be removed. We do not think that these authorities are controlling, in view of an established line of cases in which this Court has permitted the remedy of injunction to test the validity of municipal ordinances. The distinction was made almost seventy-five years ago in Christie v. Malden, 23 W.Va. 667, and it was there held that if a municipal corporation erroneously or illegally taxes property which it has the power to tax in a proper manner, the remedy for such error must be sought generally in a court of law; but if it acts ultra vires by taxing property not subject to taxation, or taxes property which it may tax, beyond the limit fixed by the organic law conferring the power to tax, a court of equity will enjoin its collection. In recent years the remedy of injunction against municipalities in such cases has been recognized, by implication, if not expressly, in Shulick-Taylor Co. v. City of Wheeling, 130 W.Va. 224, 43 S.E.2d 54; Alderson v. City of Huntington, 132 W.Va. 421, 52 S.E.2d 243; Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780; and Walker, Jr. v. City of Morgantown, 137 W.Va. 289, 71 S.E.2d 60. We have carefully considered other arguments made and other authorities cited by both the plaintiff and the defendants concerning other phases of the litigation, but we think that what we have said sufficiently disposes of the case. The decree of the Circuit Court of Monongalia County, entered on January 9, 1958, is reversed, insofar as it enjoins the defendants and their officers, attorneys, agents, servants and employees from in any manner enforcing or attempting to enforce, against the plaintiff or its agents or employees, the provisions of the Ordinance, with the exception of Section 3, as amended. The decree is affirmed insofar as it enjoins the enforcement of Section 3 of the Ordinance, as amended. The plaintiff, as the party substantially prevailing, is awarded recovery of all costs both in the circuit court and in this Court, including as a part thereof the cost of printing the record. Code, Chapter 59, Article 2, Section 11. Reversed in part; affirmed in part.