Court Opinion

ID: 875455
Source: CourtListenerOpinion
Date Created: 2013-06-04 20:00:19.292371+00
Date Added: 2024-06-11T12:15:45.693520
License: Public Domain

No. 12293

         IN THE SUPREME COURT OF THE STATE OF M N A A
                                               OTN

                                       1972

XHE STATE OY N N A A e x r e 1 THE MOUNTAIN STATES TELEPHONE
              OTN
AND TELEGRAPH COMPANY,

                            Relator,

THE DISIXICT COURT O THE SECOND JUDICIAL DISTRICT O THE STATE
                     F                              F
dF MONTANA, I N AND FOR THE COUNTY O SILVER BOW, THE HONORABLE
                                    F
JAMES D. FREEBOURN, JUDGE PRESIDING,

                            Respondents.

O r i g i n a l proceedings.

~ o u n s e l f Record:
            o

         Fox A p p e l l a n t :
               Hughes, B e n n e t t and Cain, Helena, Montana 59601
               Alan Cain a r g u e d , Helena, Montana 59601.

         F o r Kespondent:

               S. 0. Meyers a r g u e d , B u t t e , Montana 59701.
               Poore, McKenzie and Roth, B u t t e , Montana 59701.
               James A. Poore 1 1 a r g u e d , B u t t e , Montana 59701.
                                  1

                                                    Submitted:     June 2 1 , 1 9 7 2

                                                      Decided :   ;NOV       1972

                                                      Clerk
Mr, Justice Gene B. Daly delivered the Opinion of the Court.

     This is an original proceeding wherein relator, The
Mountain States Telephone and Telegraph Company (hereinafter
referred to as Mountain States), petitioned this Court for a
writ of supervisory control directed to and requiring the
respondent district court to grant Mountain States' motion
for summary judgment in a civil action entitled: "Mary Jane
Davidson and John G. Davidson, Plaintiffs, vs. The Mountain
States Telephone and Telegraph Company, Defendant."   Relator
asked this Court to review the record of the district court
in this action and its order denying relator summary judgment.
The civil action seeks damages for omission of plaintiffs'
listing and advertisement in defendant ' s telephone directory
and its yellow pages.
     This Court assumed jurisdiction, briefs were filed and
oral argument had,
     Plaintiffs Mary Jane Davidson and John G, Davidson assumed
ownership and management of an existing ski shop in Butte, As
a part of such ownership and management, they subscribed to a
business telephone from Mountain States.   In February 1.971,
plaintiffs were contacted by Mountain States and at that time
they requested, in writing, that certain advertising be placed
in the yellow pages, and further requested their listing in the
white pages be in bold faced print.
     In March 1971, Mountain States acknowledged the order and
indicated the listings would be in the next issue of the telephone
directory.   Neither the "white pages" listing nor the "yellow
pages1' listing and advertisement appeared in the spring, 1971,
Butte telephone directory.
     Suit was brought by plaintiffs alleging negligent omission
on the part of Mountain States, resulting in loss of profits and
other damages to plaintiffs.   Mountain States admitted the omission,
and admitted the listing should have been in both the white pages
and yellow pages of its directory.
         I n t h e i r complaint, p l a i n t i f f s demanded damages i n t h e
amount of $7,990 f o r "'actual" damage t o t h e i r business and $2,000
p u n i t i v e damages.     The p u n i t i v e damage claim was s t r i c k e n from
t h e complaint by t h e respondent c o u r t on motion of Mountain
States.
         A t t h e time of t h e p r e t r i a l conference Mountain S t a t e s
confessed judgment, however only i n an amount l i m i t e d by provi-
s i o n s which i t contends a r e c o n t r o l l i n g .       Mountain S t a t e s then
moved f o r summary judgment t o enforce those l i m i t a t i o n s ,                     The
d i s t r i c t c o u r t refused t o g r a n t summary judgment, and Mountain
S t a t e s now a p p l i e s t o t h i s Court f o r an a p p r o p r i a t e w r i t ,
         Mountain S t a t e s contends t h a t l i a b i l i t y f o r omission i n
t h e white pages of i t s d i r e c t o r y i s l i m i t e d by the l i m i t a t i o n
of l i a b i l i t y contained i n t h e General Exchange T a r i f f , published
by t h e Montana Public Service Commission, and which s t a t e s :
         "3. The Telephone Company's l i a b i l i t y a r i s i n g from
         e r r o r s i n o r omissions of d i r e c t o r y l i s t i n g s s h a l l be
         l i m i t e d t o and s a t i s f i e d by a refund n o t exceeding
         t h e amount of t h e charges f o r such of t h e s u b s c r i b e r ' s
         s e r v i c e a s i s a f f e c t e d during t h e period covered by
         t h e d i r e c t o r y i n which t h e e r r o r o r omission occurs. 11
         Mountain S t a t e s contends t h a t under s e c t i o n 70-101, e t . s e q . ,
R.C.M.      1947, i t i s r e q u i r e d t o f i l e a schedule of i t s r a t e s ,
t a r i f f s , r u l e s and r e g u l a t i o n s with t h e Montana Public Service
Commission;          t h a t t h e Commission has complete a u t h o r i t y t o
r e g u l a t e a l l a c t i v i t i e s of t h e u t i l i t y and pursuant t o t h i s
a u t h o r i t y r e q u i r e s Mountain S t a t e s t o publish a d i r e c t o r y l i s t i n g
t h e names, addresses and phone numbers of i t s s u b s c r i b e r s .
         I t f u r t h e r contends e r r o r s and omissions i n l i s t i n g a r e
i n e v i t a b l e , d e s p i t e t h e most exacting proofreading standards.
Even i f decreased business o r s a l e s can be shown by a business
whose l i s t i n g has been omitted, t h e problem of causation when t h e
offended s u b s c r i b e r i s a business e n t e r p r i s e would be a problem
for courts,         Businesses s u f f e r f l u c t u a t i o n s from year t o y e a r ,
mostly unexplained, making t h e determination of damage a complex
problem,        I n a d d i t i o n , t h e telephone company's exposure t o l i a b i l i t y
is one factor which determines the rates the company is permitted
by the Public Service Commission to charge.    If the company must
litigate every case of error in, or omission of a listing, the
telephone rates must necessarily rise to reflect this increase
in costs.   All this is in the area of its public service, properly
regulated by the Public Service Commission.
     Plaintiffs strongly question the authority of the Public
Service Commission to act in the field of limitation of liability
in this manner, as beyond its authority and an unconstitutional
delegation of legislative powers,(Art.IV,   Sec. 1, Montana Consti-
tution), if the legislature has such power, Plaintiffs maintain
the entire subject matter is governed by the Montana statutes on
damages, sections 17-301 and 17-401, R.C.M.   1947,
     Plaintiffs cite Great Northern Utilities Co. v. Public Service
Comm., 88 Mont. 180, 293 P 294, (also cited by Mountain States
                          .
as authority to regulate rates), as a demonstration of the fact
that the authority to regulate rates   in that case had to be
"inferred" from the statute.   Therefore, they contend, the
statutes never contemplated permitting the extension of authority
of the Public Service Commission to limit liability for error
or omission.
     In a sense plaintiffs are correct in that in Great Northern
Utilities the Court did rule that the statutes enacted in rela-
tion to the Public Service Commission did authorize rate making
authority, but this was not as arbitrary or confined as the term
"inferred1'might imply. Great Northern Utilities was a lengthy
in depth discussion by Judge Leiper on utilities, the monopolistic
aspect, public interest, statutory construction, legislative in-
tent and much more, The Court either spoke directly or affirmed
langauge from other jurisdictiom and the federal courts in many
areas.   In regard to public utilities generally, the Court dis-
cussed and approved the principle of private property devoted
to public use, as it differs from property used in business
generally. This concept is based on the principle that property
devoted t o public use o r a use i n which t h e public has an
i n t e r e s t , g r a n t s t o t h e public an i n t e r e s t i n the use which
can be c o n t r o l l e d by t h e public f o r t h e common good,                This i s
done through t h e Public Service Commission i n Montana and t h e
Court f u r t h e r held t h a t t h e Commission i s required not only t o
r e g u l a t e charges, b u t has a duty t o s e e t o reasonable s e r v i c e
being rendered, among o t h e r r e g u l a t o r y functions.
       This places t h e u t i l i t y i n a c l a s s of corporations s t r i c t l y
r e g u l a t e d i n i t s r i g h t s and p r i v i l e g e s and i t t h e r e f o r e should
be r e g u l a t e d , a t l e a s t t o t h e e x t e n t of i t s s t a t i c known ex-
posure t o l i a b i l i t i e s such a s i t s d i r e c t o r y omissions and e r r o r s
when t h i s function i s required by t h e Commission, and a t t h e very
l e a s t i n d i r e c t l y involved i n r a t e and s e r v i c e considerations.
       The language of Great Northern U t i l i t i e s i s broad enough
t o include t h i s function by the Commission.                      The Court t h e r e
f u r t h e r observed t h a t t h e u t i l i t y and t h e public were adequately
protected under t h e system of r e g u l a t e d monopoly c o n t r o l c o n s t i -
t u t i o n a l l y , i n a s much a s a l l permitted r e g u l a t i o n s o r r a t e s
must be reasonable.
       I n a review of t h e cases c i t e d t o t h i s Court, t h e majority
have held i n f a c t s i t u a t i o n s s i m i l a r t o those here t h a t t h e
l i m i t a t i o n contained i n t h e General Exchange T a r i f f i s reasonable
and binding on t h e s u b s c r i b e r .       Bird v . Chesapeake and Potomac
Telephone Company, (D,C.App.),                  185 A.2d 917; Warner v. Southwestern
B e l l Telephone Company, (Mo,1968), 428 S.W.2d 596; 92 ALR2d 917.
W agree.
 e
       The second i s s u e h e r e i s the e x t e n t of Mountain s t a t e s '
l i a b i l i t y f o r f a i l i n g t o l i s t p l a i n t i f f s i n t h e yellow pages.
The yellow pages a d v e r t i s i n g i s o u t s i d e Mountain s t a t e s f a r e a of
public s e r v i c e , and i s n o t under t h e a u t h o r i t y of t h e Public
Service Commission, but r a t h e r i s governed by t h e r u l e s of law
applicable t o private contracts.
       Here we a r e concerned with the provision i n t h e a d v e r t i s i n g
c o n t r a c t which l i m i t s t h e l i a b i l i t y of Mountain S t a t e s f o r t h e
omission of classified advertising.    It provides:
     11
      In case of error in the advertisement as published
     or in case of the omission of all or any part of the
     advertisement from publication, the Telephone Company's
     liability, if any, shall be limited to a pro rata
     abatement of the charge paid to the Telephone Company
     for such advertisement in the same proportion that the
     error or omission reduces, if at all, the value of the
     entire advertisement, but in no event shall such
     liability exceed the amount payable to the Telephone
     Company for said advertisement during the service life 11
     of the directory in which the error or omission occurs.
     We do not agree with the contention that this limitation
falls under section 13-804, R.C.M.    1947, "Contracts fixing
damages void", but rather provides for a maximum recovery as
will be discussed later in this opinion. Williston on Contracts,
3d Ed., V. 5 5781-A.
     The majority of the cases cited to us have upheld the
provision that we have under consideration and under similar
circumstances. A leading decision is McTighe v. New England
Telephone & Telegraph Co., 216 F.2d 26, 28.    The jurisdictions
of South Carolina, Ohio, New Mexico, Florida, California,
Missouri, Maryland, Texas and Louisiana are generally in accord
with the principle that it is within the utility's domain of
private contract and there are many alternate methods of adver-
tising; that the error or omission is generally a simple mistake
not amounting to gross negligence and the rationale in these
jurisdictions ranges all the way from the determination that
the provision is a reasonable restriction to the principle that
lacking fraud, willful, or wanton misconduct, the parties are
free to contract and reasonableness is not an issue. As Judge
Medina stated in McTighe:
     1I
      If there be some disparity in the bargaining
     power of the contracting parties it is not more
     than may be found generally to exist * * *. I'
     Plaintiffs have cited Allen v. Michigan Bell Telephone
Company, 18 Mich.App, 632, 171 N,W,2d 689, to the contrary as
their principal authority and furnished a Colorado and Oregon
citation by permission after oral argument.
     The Michigan Court criticizes other jurisdictions holding
the exculpatory paragraph in the advertising contract valid
for having not recognized the problem of unconscionability,
meaning the absence of a meaningful choice on the part of one
party (subscriber) and the contract terms unreasonably favoring
the other (telephone company),    Further, there being no competing
alternate, except at a prohibitive disproportionate cost.
     Plaintiffs' argument is based on the Michigan decision and
the monopolistic quality of the defendant utility company and,
in addition, points out a resulting general nationwide deteriora-
tion of telephone service,
     As plaintiffs point out, defendant is a public utility
monopoly.   Since the utility corporation has devoted its assets
to a public service, it is a permitted legal monopoly to be
regulated by the public through its elected officials. Great
Northern Utilities Co, v. Public Service Commission, 88 Mont. 180,
293 P. 294, In this respect, it is set apart in the family
of corporations from the profit corporation which is not regu-
lated and can and does deal in the market place.   Even though
the yellow pagesadvertising is not part of the utility's public
function, the utility is not in the "market place" advertising
business per se and if it offers rhis service at all it is
necessarily, at least in fact, a part of its directory function
and subject to some of the same disabilities in relation to
errors and omissions as is the white pagedirectory.
     In this area, once an error or omission is made in the
advertising there is no opportunity to correct this problem, any
more than in the white listing, until the next publication.    On

the other hand "market place" advertisers can correct or mitigate
in the next issue or broadcast.   The same problems attendant to
damages exist here and if they could be accurately ascertainable
they could conceivably run for a considerable period of time,
with no opportunity to mitigate or abate.
     The monopolistic character of the yellow pages which the
Michigan Court decries as resulting in no meaningful choice or
or no competing alternate, except at a prohibitive disproportionate
cost, is not exactly, as has been discussed, a one way street,
particularly when one considers further that by the Michigan
court's own definition the service is desirable and at a more
reasonable cost than "market place" advertising.   It necessarily
follows that in some cases it may appear harsh at times but not
ur~conscionable. The mere fact of claimed unequal bargaining
position does not render it so in today's world of commerce,
where situations of this nature are not uncommon, McAlear v,
Saint Paul Insurance Companies, 158 Mont. 452   , 493 P.2d 331,
29 St. Rep. 73.
     Plaintiffs claim that permitting this kind of limitation
could be extended to limitations on recovery for personal
injuries caused by the utility, The problem of an extension
of this kind and also the acceptance of limitations of liability
generally is well stated in some of the most modem enactments
contained in the Uniform Commercial Code,   In subsection (3),of
section 87A-2-719, R,C.M, 1947, the section of Montana's Uniform
Commercial Code wherein limitation of recovery by contract is
provided for, it is stated:
     "* + * Limitation of consequential damages for in.iury
     to the person in the case of consumer goods is
                                                    F
     facie unconscionable but limitation of damages w ere
     m o s s is commercial is not," (Emphasis supplied).
     Without a demonstration of bad faith, fraud, or willful
or wanton conduct by Mountain States,a limitation of liability
for errors and omissions in its advertising expressed in a
written and signed contract is reasonable and nowise against
public policy and it is within the power of the company and
subscribers to its directory to make such contracts and they
become a valid and binding limitation,
     The abstracts of the two cases submitted after argument
are interesting but not helpful on our principal point.   The
Oregon case, Macca v. General Telephone Company of the Northwest,
Inc., Oregon Superior Court # 9849, is a different situation
involving two phone companies and an invasion of privacy
or harassment complaint resulting from a number switch which
does not seem to turn on a contract limitation of yellow pages
advertising.
       The Colorado case, Irish v. The Mountain States Telephone
&   Telegraph Company, Colorado Court of Appeals /, 71-326, involves
the failure to include a dentist's listing in the yellow pages
section, although it appeared in the white pages.    That court's
discussion is confined to the proof of damages and proximate
cause and no mention is made of any contract limitation on damages.
       It does not appear that either of the two cases submitted
by plaintiffs after argument reaches our problem and it is clear
that insofar as damages are concerned those two cases are unique
situations in which damages could be much more accurately ascer-
tained than in the ordinary commercial enterprise.
       The order denying summary judgment is reversed with in-
structions to enter judgment within the limitations of the
liability expressed in the General Exchange Tariff and the yellow
pages advertising contract.

                                     Associate Justice
       .-----------I--_------------

    OfChief Justice -

/       l ~ s s o c i a t e ustice
                           J