Court Opinion

ID: 9557739
Source: CourtListenerOpinion
Date Created: 2023-08-21 16:56:34.756742+00
Date Added: 2024-06-11T09:06:30.755559
License: Public Domain

SCHAUER, J., Dissenting.
If we follow established law, or even the fundamental principles of our governmental plan, we should hold'that the Public Utilities Commission is without jurisdiction in this matter because it clearly appears that the private mobile radiotelephone operations of the Pacific Telephone Company are not public utility operations. Pacific, by its purported dedication of its private mobile radiotelephone equipment and maintenance service and its filing of a tariff schedule, cannot impart the character of a true public utility into that which is essentially a highly competitive private enterprise. The action of the commission, in the premises, gives official approval to the unwarranted invasion of a free market by the entering wedge of what appears to be a design for eventual monopolistic sequestration of the field. This public utility company should not be allowed to convert the furnishing of equipment and maintenance service for private communications into an operation, under control of the Public Utilities Commission.
The conditions of the furnishing of equipment and facilities by Pacific are described as follows in Schedule 108-T, filed by Pacific with the Public Utilities Commission. The lessee-licensee is “responsible for securing from the Federal Communications Commission the necessary authorizations for the communications system and the operating personnel as may *529be required in accordance with the Rules and Regulations of the Federal Communications Commission.”
“The station licensee shall have exclusive control of the communication facilities furnished to such licensee and full responsibility for their use and operation in accordance with the station authorization and the Rules and Regulations of the Federal Communications Commission.
“The station licensee shall have unlimited right of ingress to and egress from any premises of the Telephone Company on which is located land radio station equipment furnished to each licensee under this schedule, and the licensee shall have unrestricted access to such equipment. ’ ’
The lessee must provide and maintain an adequate power supply for each mobile station and, unless the land station is located on premises of Pacific, must provide and maintain an adequate power supply for the land station.
Pacific undertakes only to furnish, install, and maintain the facilities for communication.
The foregoing description by Pacific of the private mobile communication operation shows that the operation is essentially a private business, not a public utility service. The lessee, not Pacific, must secure the requisite authorization for radio operation from the Federal Communications Commission. The lessee has full responsibility for the operation and exclusive control over the communication facilities. The lessee provides the power for operation of the station (except in the few and entirely distinct situations of land stations on telephone company property). Thus it is the lessee who operates and controls the communication service; Pacific merely invades the field of private enterprise to furnish and maintain equipment necessary or convenient to the carrying on of the private communications.
There is nothing in the nature of the private mobile communications business which contemplates that the supplier of the communications equipment retain an interest in it, as Pacific does; most private manufacturers of such equipment sell the equipment to those who operate it. The many thousands of such privately owned items of equipment installed and maintained in aircraft are subject to regulations of both the Federal Communications Commission and the Civil Aeronautics Administration. To what extent the Public Utilities Commission of California expects to overlap the jurisdiction of the federal regulatory bodies is not precisely defined.
According to the majority’s construction of the applicable *530provisions of the state Constitution1 and the Public Utilities Code,2 the Constitution has authorized the Legislature to provide, and the Legislature has provided, that any service in connection with any telephonic communication, public or private, is a public utility service subject to the jurisdiction of the Public Utilities Commission if it is offered to the public or any portion thereof. But the Constitution should not lightly be understood as authorizing the Legislature to convert private business into a public utility and the legislation enacted pursuant to the Constitution should not be understood as intended so to do.
Private mobile radiotelephone communication systems are analogous to private interoffice or intrabuilding communication systems. Concerning the latter type of communication system the following language and holding of Chesapeake & Potomac Tel. Co. v. Manning (1902), 186 U.S. 238, 246-247 [22 S.Ct. 881, 46 L.Ed. 1144], are pertinent: “it cannot be presumed that a legislature intends any interference with purely private business. It cannot ordinarily prescribe what *531an individual or corporation, engaged in a purely private business, shall charge for services, and, therefore, although the language of a statute may be broad enough to include such private business, it will generally be excepted therefrom in order to remove all doubts of the validity of the legislation. It appears that some portion of the defendant’s business is of a purely private nature, the receipts whereof are spoken of in its reports as private rentals, and as to such business Congress could not, if it would, prescribe what shall be charged therefor. In many buildings, both those belonging to the government or the District [of Columbia], and those belonging to private individuals, is what may be called a local telephone plant; that is, an arrangement of telephones by which parties in different rooms can communicate with each other; a system which is not connected with the general telephone exchange, and is no more public in its nature than the speaking tubes or call bells in a building. It is only for the personal use of parties in the building. By it those in the building cannot communicate with the general public, nor can such public reach parties in the building. It is simply a local convenience for the use solely of those who are in the building. Such combinations of telephone instruments in a single building, with no outside connections, are furnished by the defendant, and the rentals therefrom, as well as the expenses thereof, are entered in its books of account, and constitute a part of its business.” The described system, it is held, was not subject to rate regulation by Congress. (See also City of St. Paul v. Tri-State Tel. & Tel. Co. (1935), 193 Minn. 484 [284 N.W. 822] [telephone systems, separate from the general public telephone system, for city’s fire and police departments are “a private use”].)
Contrary to the majority opinion (p. 524) it has been held that the fact that a private telephone system may be used by a governmental unit for governmental purposes does not make the system a public utility subject to regulation as such. (Chesapeake & Potomac Tel. Co. v. Manning (1902), supra, 186 U.S. 238, 247; City of St. Paul v. Tri-State Tel. & Tel. Co. (1935), supra, 193 Minn. 484, 486 [258 N.W. 822, 824].)
The fact that equipment for private mobile communications systems is furnished and maintained by a public utility corporation which also furnishes public utility facilities and service, does not mean that the corporation, as to the private service, can be compelled to file a tariff with the Public *532Utilities Commission or is entitled to have a tariff accepted by the commission. “The mere fact that such telephones are furnished by the company, which also does a public business, does not make them a part of such public business, or subject them to the regulation by Congress of its charges. A railroad company may, if authorized by its charter, carry on not simply its strictly railroad business, but also an establishment for the manufacture of cars and locomotives. The fact that it is engaged in these two' different works would not in itself subject the manufacture of cars and locomotives to the supervision of the legislature, although such body would have the right to regulate the charges for railroad transportation.” (Chesapeake & Potomac Tel. Co. v. Manning (1902), supra, 186 U.S. 238, 247; see Allen v. Railroad Com. (1918), 179 Cal. 68, 82 [175 P. 466, 8 A.L.R. 249].)
The fact that Pacific has offered, by filing Schedule 108-T, to submit to the jurisdiction of the commission and to furnish communication equipment on a lease and maintenance basis without discrimination to persons authorized by the Federal Communications Commission to operate private mobile communications systems, cannot convert an essentially private business operation into a public utility offering. (See Allen v. Railroad Com. (1918), supra, 179 Cal. 68, 82.)
The opinion of the commission states, “We are not convinced that Pacific’s presence in the field will constitute any threat to the continued vigor of its competitors. It should not, does not propose to, and will not be allowed to favor its own private mobile customers by way of connections with its ‘land lines’ not allowed to the customers of its competitors. It will be required to maintain charges which are fully compensatory. It will be under the disadvantage of being unable to enter into price competition with its competitors to secure the business of particularly desirable customers; and it will be required to serve customers its competitors may not elect to serve. . . .
“The Commission finds that competition of regulated companies with the nonregulated, if it is unfair at all, is more likely to be unfair to the regulated rather than to the non-regulated competitors. ... [I]n the Commission’s opinion, the public has less to fear from the activities of a ‘monopoly’ when such ‘monopoly’ is fully regulated by public authorities and we fail to find that Pacific will be in a position to compete unfairly with its smaller rivals.”
These determinations of the commission ignore the realities of the situation. Pacific, a public utility corporation, obviously *533is looking toward expanding the area of its operations into a field now serviced by private enterprise. Surely the commission is not presuming that Pacific is altruistic in filing schedules for its activities in this field. And certainly Pacific has the right to seek expansion, diversification, and increased profits—but not by the process of bringing disparate segments of private enterprise into its monopolistic domain. Of course it is true that Pacific currently, under free enterprise conditions, is far from having a monopoly in this field. But manifestly it is working toward elimination of the competition of private persons and firms in the newly invaded field of private mobile communication service. The result of the majority decision upholding the order of the commission will be a tendency to promote monopoly in a field of business operation which is and should remain in the realm of free enterprise. The decision of the majority places the stamp of approval upon bureaucratic recognition, as well as control, of Pacific in a type of business which has not been shown to require regulation as a monopoly. The private mobile communication business has heretofore operated satisfactorily under the freely competitive conditions which have characterized it. Understandably the petitioners engaged in this business in the open market of free enterprise object to commission action which amounts to bureaucratic sponsorship of a public utility corporation operating as a public utility in this field.
The following discussion in General Alarm, Inc. v. Underdown (1953), 76 Ariz. 235 [262 P.2d 671, 672-673 [1-3]], concerning a telephonic and telegraphic burglary, fire, and emergency alarm system is apropos: “To be a public service corporation, its business and activities must be such as to make its rates, charges, and methods of operation a matter of public concern. It must be, as the courts express it, clothed with a public interest to the extent clearly contemplated by the law which subjects it to governmental control. Free enterprise and competition is the general rule. Governmental control and legalized monopolies are the exception and are authorized under our constitution only for that class of business that might be characterized as a public service enterprise. The theory is that the right to public regulation and protection outweighs the customary right of competition. If the public contact with a business is such that its necessities and convenience can be better served through governmental supervision and controlled monopoly, thereby eliminating cus*534ternary competition, the state may exercise its police power to that end. Such invasion of private right cannot be allowed by implication or strained construction. It was never contemplated that the definition of public service corporations as defined by our constitution be so elastic as to fan out and include businesses in which the public might be incidentally interested or businesses that might incidentally transmit messages in furtherance of the main object of the enterprise that otherwise could not be so characterized. The public has some interest in all business establishments but that interest must be of such a nature that competition might lead to abuses detrimental to the public interest. The public interest contemplated depends on the nature of the business, the means by which it touches the public, and the abuses which may reasonably be anticipated if not controlled. Charles Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522 [43 S.Ct. 630, 67 L.Ed. 1103, 27 A.L.R. 1280]. Our constitution must and easily can be interpreted in harmony with these principles. So construed, it is only in the interest of the convenience and necessity of the public, of the nature and to the degree herein stated, that a business may be supervised and controlled, rates fixed or monopolies granted. ’ ’
With reference to the provision of the 1956 consent decree of the United States District Court for the District of New Jersey in United States v. Western Electric Co., quoted in the majority opinion, ante, p. 527,3 I would comment as follows: This provision is not a clear declaration that the charges for leasing and maintaining private communications systems are not subject to public regulation; neither is it a clear declaration that American Telephone and Telegraph Company and its subsidiaries are not enjoined from engaging in the business of leasing and maintaining facilities for private communications systems where the charges for those private communications services are subject to public regulation. In the circumstances it does not appear that the provision of the consent decree should influence the decision herein.
*535For the reasons above stated I would annul the order of the Public Utilities Commission.
Carter, J., and McComb, J., concurred.
Petitioners’ application for a rehearing was denied July 23, 1958. Carter, J., Schauer, J., and McComb, J., were of the opinion that the petition should be granted.

Cal. Const., art. XII, § 23: “ Every private corporation . . . owning . . . equipment . . . for the transmission of telephone . . . messages . . . , either directly or indirectly, to or for the public ... is hereby declared to be a public utility subject to such control and regulation by the . . . Commission as may be provided by the Legislature . . . The . . . Commission shall have and exercise such power and jurisdiction to supervise and regulate public utilities, in the State of California, and to fix the rates to be charged for commodities furnished, or services rendered by public utilities as shall be conferred upon it by the Legislature, and every class of private corporations, individuals, or associations of individuals hereafter declared by the Legislature to be public utilities shall likewise be subject to such control and regulation. ...”

Pub. Util. Code, § 216: “ (a) ‘Public utility’ includes every . . . telephone corporation . . . where the service is performed for or the commodity delivered to the public or any portion thereof.
‘‘(b) Whenever any . . . telephone corporation . . . performs a service or delivers a commodity to the public or any portion thereof for which any compensation or payment whatsoever is received, such . . . telephone corporation ... is a public utility subject to the jurisdiction, control and regulation of the commission. ...”
Pub. Util. Code, § 207: “ 'Public or any portion thereof’ means the public generally, or any limited portion of the public, including a person, [or] private corporation . . . for which the service is performed or to which the commodity is delivered.”
Pub. Util. Code, § 233: “ ‘Telephone line’ includes all conduits, duets, poles, wires, cables, instruments, and appliances, and all other real estate, fixtures, and personal property owned, controlled, operated, or managed in connection with or to facilitate communication by telephone, whether such communication is had with or without the use of transmission wires. ’ ’
Pub. Util. Code, § 234: “ ‘Telephone corporation’ includes every corporation or person owning, controlling, operating, or managing any telephone line for compensation within this State. ’ ’

‘‘The defendant AT&T is enjoined and restrained from engaging, either directly, or indirectly through its subsidiaries ... in any business other than the furnishing of common carrier communications services; provided, however, that this Section V shall not apply ... (d) for a period of five (5) years from the date of this Pinal Judgment, leasing and maintaining facilities for private communications systems, the charges for which are not subject to public regulation, to persons who are lessees from defendants or their subsidiaries of such systems forty-five (45) days after the date of this Pinal Judgment. ...”