Court Opinion

ID: 9518624
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:57:38.522609+00
Date Added: 2024-06-11T12:29:38.949519
License: Public Domain

JUSTICE McMORROW, dissenting: I respectfully dissent. The majority erroneously determines that the municipalities do not possess the lawful authority to prohibit AT&T’s use of public streets pending negotiation of a franchise agreement. The majority’s decision is in direct conflict with Illinois Supreme Court case law precedent and applicable Illinois statutory law. The majority’s ruling is particularly disturbing, because it virtually nullifies both the municipal power to regulate a public utility’s use of public streets and the municipal authority to charge a franchise fee for such use. I The instant appeal presents the question of whether the municipalities possess the lawful authority to condition their consent to AT&T’s use of public streets upon the negotiation of a franchise agreement for such use. In my view, Illinois statutes and case law precedent grant to the municipalities the power to prohibit AT&T’s use of public streets pending negotiation of a franchise agreement. According to the record, AT&T is a public utility that has been issued a certificate of public necessity and convenience, from the Illinois Commerce Commission, to operate AT&T’s telecommunications system in this State. However, the Public Utilities Act explicitly provides that a certificate of public necessity and convenience does not confer a franchise, license, or other power upon the public utility. (Ill. Rev. Stat. 1987, ch. 1112/3, par. 8 — 406.) Consequently, AT&T’s receipt of a certificate of public necessity and convenience does not grant it the automatic right to use public streets for its stated business purpose. Other statutory provisions set forth limitations upon AT&T’s use of public streets. (Ill. Rev. Stat. 1987, ch. 134, pars. 4, 20 (hereinafter the Telegraph Act and the Telephone Company Act, respectively).) Section 4 of the Telegraph Act provides that AT&T cannot use public streets “without the consent of the corporate authorities” of the municipalities. (Ill. Rev. Stat. 1987, ch. 134, par. 4.) In addition, section 4 of the Telephone Company Act states that AT&T’s use of public streets “shall [not] interfere with the control now vested in” the municipalities. Ill. Rev. Stat. 1987, ch. 134, par. 20. The “control now vested” in municipalities with respect to use of public streets is set forth in the Illinois Constitution (Ill. Const. 1970, art. VII, §6) and the Illinois Municipal Code (Ill. Rev. Stat. 1987, ch. 24, par. 11 — 80—1 et seq.). One of the municipalities in the case at bar, Arlington Heights, is a home rule unit that is granted the “power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax.” (Ill. Const. 1970, art. VII, §6(a).) These “[p]owers *** of home rule units shall be construed liberally.” (Ill. Const. 1970, art. VII, §6(m); see generally City of Carbondale v. Yehling (1983), 96 Ill. 2d 495, 451 N.E.2d 837; County of Cook v. John Sexton Contractors Co. (1979), 75 Ill. 2d 494, 389 N.E.2d 553.) The remaining defendant-municipalities, which are non-home-rule units, are accorded the power to “regulate the use of the streets and other municipal property.” (Ill. Rev. Stat. 1987, ch. 24, par. 11 — 80—2; see also City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 39 N.E.2d 26 (power to regulate includes power to prohibit).) They are also expressly granted the authority to “prevent and remove encroachments or obstructions upon the streets.” (Ill. Rev. Stat. 1987, ch. 24, par. 11 — 80—3.) Based upon these principles, the municipalities in the case at bar are granted the power to regulate, and prohibit, use of public streets by a public utility. Under Illinois statutory law, all municipalities are specifically granted the power to charge a tax upon the gross receipts of public utility telecommunication companies when those receipts derive from service originating within the municipality. (Ill. Rev. Stat. 1987, ch. 24, par. 8 — 11—2.) The municipal power to charge such a tax is explicitly stated to have no limiting effect upon the municipal authority to charge a franchise fee for a public utility’s use of the municipalities’ public streets: “The corporate authorities of any municipality may tax any or all of the following occupations or privileges: 1. Persons engaged in the business of transmitting messages by means of electricity, at a rate not to exceed 5% of the gross receipts from such business originating within the corporate limits of the municipality. * * * Any of the taxes enumerated in this section may be in addition to the payment of money, or value of products or services furnished to the municipality by the {public utility] as compensation for the use of its streets, alleys, or other public places, or installation and maintenance therein, thereon or thereunder of poles, wires, pipes or other equipment used in the operation of the [public utility’s] business.” (Emphasis added.) Ill. Rev. Stat. 1987, ch. 24, par. 8 — 11—2. These constitutional and statutory enactments demonstrate that the municipalities possess the power to regulate, and to prohibit, AT&T’s use of public streets. They also establish the municipalities’ authority to charge a reasonable franchise fee for AT&T’s use of public streets. The municipal power to prohibit a public utility’s use of public streets pending imposition of a franchise fee derives from Illinois Supreme Court precedent. Originally, in Chicago Motor Coach Co. v. City of Chicago (1929), 337 Ill. 200, 169 N.E. 22, the supreme court held invalid a municipal ordinance that required a franchise agreement with the municipality before busses of a public utility would be permitted upon the municipality’s public streets. The supreme court in Chicago Motor Coach concluded that the municipality could not prohibit a public utility’s access to public streets pending the execution of a franchise agreement. The supreme court’s decision in Chicago Motor Coach was overruled in City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 39 N.E.2d 26. In Geneseo, the court explicitly held that the municipal authority “to regulate and control the use of their streets *** inelude[s] the right to grant to or to withhold that use from [public] utilities.” (Geneseo, 378 Ill. at 520.) The court noted that “[t]his power has been sustained since the passage of the Public Utilities act[] [citations]” (Geneseo, 378 Ill. at 520), which does not “tak[e] from the city the ‘right to permit * * * or prohibit the use of any street, alley or public place within a city.’ ” (Geneseo, 378 Ill. at 521.) The court has also held that a municipality possesses the power to charge a reasonable franchise fee for a public utility’s use of public streets within the municipality’s control. (Geneseo, 378 Ill. at 522-23; see also City of Springfield v. Inter-State Independent Telephone & Telegraph Co. (1917), 279 Ill. 324, 116 N.E. 631; People ex rel. Shallberg v. Central Union Telephone Co. (1908), 232 Ill. 260, 83 N.E. 829; see also Coles-Moultrie Electric Cooperative v. Illinois Commerce Comm’n (1985), 131 Ill. App. 3d 946, 476 N.E.2d 1303; Diginet v. Western Union ATS, Inc. (N.D. Ill. 1991),_E Supp._; see generally 12 E. McQuillen, The Law of Municipal Corporations §34.37, at 128 (3d ed. 1986).) The court determined that “the power vested in cities to permit or refuse a license or franchise to a public utility has not been repealed by the provisions of the Public Utilities act, and anything said to the contrary in *** Chicago Motor Coach *** is not adhered to.” Geneseo, 378 Ill. at 530. Based upon Geneseo, the Illinois Supreme Court has observed that: “[Chicago Motor Coach] involved the power of the city to prohibit the operation of the company’s busses. It has been regarded as holding *** that the Public Utilities Act had so occupied the field as to repeal the right of a municipality to grant or deny permission to utilities to use its streets ***. (See: City of Geneseo v. Illinois Northern Utilities Co., 378 Ill. 506, 518[, 39 N.E.2d 26].) [This] *** proposition[ ] was expressly overruled in the City of Geneseo case." (City of Peoria v. Peoria Transit Lines (1957), 11 Ill. 2d 520, 522-23,144 N.E.2d 607.) Thus, under binding Illinois Supreme Court precedent, the municipalities retain the right to grant or deny permission to a public utility, such as AT&T, to use the public streets within the municipalities’ control pending the execution of a franchise agreement. The majority undertakes a misguided analysis with regard to the municipalities’ right to charge a franchise fee for AT&T’s use of public streets. The majority initially determines that “a municipality does not have an absolute right to require a franchise agreement as a precondition for the use of public streets by a telecommunications utility.” (Emphasis added.) (216 Ill. App. 3d at 481.) Thereafter, the majority finds that a public utility’s receipt of an Illinois Commerce Commission certificate of public convenience and necessity (Ill. Rev. Stat. 1987, ch. 1112/3, par. 8 — 406) completely overrides the municipal power to prohibit a public utility’s use of public streets. (216 Ill. App. 3d at 480.) On this basis, the majority concludes that “a municipality’s ‘consent is [only] for the purpose of notifying the municipality in advance of intended construction so that it can exercise its regulatory power of time, manner, and location of the construction.’ [Citation.]” 216 Ill. App. 3d at 482-83, quoting Arlington Heights, 174 Ill. App. 3d at 386. To reach its erroneous conclusion, the majority misconstrues the Telegraph Act and the Telephone Company Act. According to the majority, these Acts “ ‘clearly show[ ] that defendants’ consent is not mandatory before access to the streets *** can be obtained. [Citation.] Section 4 of the Telegraph Act expressly authorizes the telephone company to install its facilities when it is necessary.’ ” (216 Ill. App. 3d at 480, quoting Arlington Heights, 174 Ill. App. 3d at 385.) However, contrary to the majority’s interpretation, the Acts do require the municipalities’ prior consent to AT&T’s use of public streets. Moreover, section 4 of the Telegraph Act does not authorize the telephone company to install its facilities “when it is necessary,” without regard to municipal consent to such use. (Ill. Rev. Stat. 1987, ch. 134, par. 4.) In addition, section 4 of the Telephone Company Act, which grants public utilities the authority to exercise eminent domain powers over private property, does not vest in public utilities the unilateral right to use public streets without the prior consent of the municipality. Ill. Rev. Stat. 1987, ch. 134, par. 20. The majority’s disposition in the instant cause is also founded upon a misinterpretation of the scope of municipal powers. For example, the majority posits that the municipal authority to “permit the use of public streets *** must be strictly construed” and is simply “regulatory in character.” (216 Ill. App. 3d at 480, citing Arlington Heights, 174 Ill. App. 3d at 387.) The majority neglects to recognize that the powers of Arlington Heights, which is a home rule unit, should be broadly construed. (Ill. Const. 1970, art. VII, §6(m); see generally City of Carbondale v. Yehling (1983), 96 Ill. 2d 495, 451 N.E.2d 837; County of Cook v. John Sexton Contractors Co. (1979), 75 Ill. 2d 494, 389 N.E.2d 553.) The majority also ignores that the non-home-rule units’ power to regulate use of their public streets includes the power to prohibit such use. See City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 39 N.E.2d 26. The majority also errs in its application of Illinois Supreme Court precedent. The majority improperly relies upon supreme court decisions pertaining to the power of a municipality to impose a tax upon a public utility’s gross receipts or a municipality’s power to license for revenue. (See 216 Ill. App. 3d at 481, discussing City of Chicago Heights v. Public Service Co. (1951), 408 Ill. 604; City of Chicago Heights v. Public Service Co. (1951), 408 Ill. 310; City of Chicago Heights v. Western Union Telegraph Co. (1950), 406 Ill. 428; see also Village of Lombard v. Illinois Bell Telephone Co. (1950), 405 Ill. 209, 90 N.E .2d 105; see generally Ill. Const. 1970, art. VII, §6(e)(2) (municipality has “only the power that the General Assembly may provide by law *** to license for revenue”).) However, the municipalities in the case at bar argue that the franchise fees were premised upon the municipal power to regulate use of public streets, not on the municipal authority to tax, or to license for revenue. Consequently, the decisions relied upon by the majority are inapplicable to the case at bar, and do not lend support to the majority’s position. The majority misreads the Illinois Supreme Court’s decision in City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 39 N.E .2d 26. According to the majority, the Geneseo court “held that the powers granted to the Illinois Commerce Commission by the Public Utilities Act [citation] do not deprive municipalities of regulatory authority over the use of streets by public utilities. [Citation.]” (Emphasis added.) (216 Ill. App. 3d at 486.) However, the court in Geneseo also held that the Public Utilities Act did not deprive municipalities of prohibitory powers over a public utility’s use of public streets. (Geneseo, 378 Ill. at 520-21.) In addition, the Geneseo court overruled its previous decision in Chicago Motor Coach Co. v. City of Chicago (1929), 337 Ill. 200, 169 N.E. 22, in which the court had held that municipalities do not possess the authority to prohibit a public utility’s use of public streets pending execution of a franchise agreement. (See City of Peoria v. Peoria Transit Lines, Inc. (1957), 11 Ill. 2d 520, 144 N.E.2d 607.) The majority’s analysis fails to take into account the Geneseo holding in light of the Illinois Supreme Court’s decisions in Chicago Motor Coach and City of Peoria. In addition, Geneseo and City of Peoria are directly contrary to the conclusion the majority adopts in this appeal. The majority’s determination is also unsupported by its earlier decision in American Telephone & Telegraph Co. v. Village of Arlington Heights (1988), 174 Ill. App. 3d 381, 528 N.E.2d 1000 (hereinafter Arlington Heights I), which pertained to the trial court’s allowance of AT&T’s motion for a preliminary injunction. In a patent non sequitur, the majority states that “insofar as this court went beyond determining whether the trial court abused its discretion, its findings are valid because they are relevant with respect to the question of whether plaintiffs are ultimately likely to prevail on the merits.” (216 Ill. App. 3d at 479.) However, it is well established that disposition of an appeal from preliminary injunctive relief is not, and cannot be, a ruling on the underlying merits of the parties’ dispute. (See, e.g., Buzz Barton & Associates, Inc. v. Giannone (1985), 108 Ill. 2d 373, 483 N.E.2d 1271.) I cannot accept the majority’s determination that Arlington Heights I is controlling in the instant appeal. I also find it significant that AT&T has recognized the municipal power to charge a reasonable franchise fee, and has entered into numerous franchise arrangements with other municipalities pertaining to the passage of AT&T’s fiber optic cable under public streets. The municipalities in the instant cause relied upon the existence of AT&T’s franchise agreements with other municipalities as justification for the municipalities’ position that they would not consent to AT&T’s use of their public streets until negotiation of a franchise agreement between AT&T and the municipalities involved in the instant appeal. Although AT&T initially insisted that it had no legal obligation to pay a franchise fee to the municipalities in the case at bar, AT&T later suggested that it would pay the municipalities $1 per linear foot for its use of their public streets. The franchise agreements that AT&T has executed with municipalities, other than those involved in the instant cause, require the payment of at least $1.00 per linear foot. The record shows that, in aggregate, these fees amount to millions of dollars per year. It cannot be seriously argued that AT&T would have agreed to pay these franchise fees to other municipalities if the fees were not legally valid. AT&T’s payment of such franchise fees to other municipalities is not gratuitous or in the nature of charitable contributions to those municipalities. AT&T has observed that still other municipalities have not demanded a franchise fee or franchise agreement for the passage of fiber optic cable under the municipalities’ public streets. However, the circumstance that one municipality chose not to charge a franchise fee for a public utility’s use of public streets does not infringe upon the legal right of another municipality to require a reasonable franchise fee if it so chooses. In light of these considerations, I conclude that the municipalities possess the lawful authority to prohibit AT&T’s use of public streets pending negotiation of a franchise agreement for such use. II The majority also erroneously determines that the entry of a permanent injunction was appropriate, because the municipalities “attempted to charge plaintiffs millions of dollars in franchise fees [that bear] no reasonable relationship to the minimal burdens which plaintiffs have imposed upon defendants by running their cable underneath short segments of defendants’ streets.” 216 Ill. App. 3d at 484. However, the majority addresses the wrong question. The proper inquiry is not whether the proposed franchise fees were excessive, but whether the municipalities were arbitrary and capricious when they refused to consent to AT&T’s use of public streets until negotiation of a franchise agreement. It is well established that a municipality may not exercise its authority in an arbitrary and capricious fashion. See, e.g., Chicago National Bank v. City of Chicago Heights (1958), 14 Ill. 2d 135,150 N.E.2d 827. In my opinion, the municipalities here were not arbitrary or capricious. The record indicates that the failure to reach an early accord with respect to a franchise fee was precipitated in large part by AT&T’s refusal to pay any franchise fee whatsoever to the municipalities. There is no legal requirement that a municipality consent to a public utility’s use of public streets according to the time frame unilaterally dictated by the public utility’s intended date of operation. Under these circumstances, the municipalities’ failure to consent to AT&T’s use of public streets cannot be fairly characterized as arbitrary and capricious. Ill I find the majority’s resolution of the instant appeal ill-advised, because it nullifies both the municipal authority to regulate a public utility’s use of public streets and the municipal power to charge a franchise fee for such use. The majority now permits a public utility to unilaterally extend its power of eminent domain over private property (see Ill. Rev. Stat. 1987, ch. 134, par. 20) to include public property within a municipality’s control. The majority also allows a public utility’s exercise of this expanded eminent domain power without any consent by or payment of any franchise fee whatsoever to the municipality having control of the public property. This disposition is contrary to Illinois statutory law and Illinois Supreme Court precedent, and is not justified by the majority’s previous ruling in Arlington Heights I. I am unable to accept the majority’s sweeping rules in the instant cause. In addition, the majority’s disposition needlessly entangles the court in inherently municipal affairs. The majority tacitly condones AT&T’s refusal to negotiate any franchise agreement at all. In place of such negotiation, the majority allows AT&T to obtain a judicial determination of whether the various proposed and nonbinding franchise fees suggested by the municipalities were reasonable. As this court recognized in Arlington Heights I, the imposition of a franchise fee for use of public streets is an inherently legislative function of the municipalities, and whether a particular franchise fee arrangement should be imposed is, in the first instance, a matter within the province of the municipalities and their residents. (Arlington Heights, 174 Ill. App. 3d at 388.) This court is certainly not the proper forum to debate the relative merits of the various franchise arrangements offered by the municipalities. I cannot condone the majority’s unjustified intrusion into a dispute that should be resolved by the residents of the municipalities through their elected officials. In view of the foregoing considerations, I respectfully dissent.