Court Opinion

ID: 3496829
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:04:30.793012+00
Date Added: 2024-06-11T14:15:33.096382
License: Public Domain

I concur in the foregoing opinion. Plaintiff makes no claim that the lowering of the intrastate rates to the level of interstate rates will result in confiscation. Discrimination was shown in the charges to points outside the State, the toll to which was lower than to points within the State, both being equidistant from the point where the messages originated, although practically a like contemporaneous service was given and to a considerable extent, the same terminals, operators, maintenance and other facilities were used. The order to show cause issued by the commission did not preclude the company from showing that the lowering of the rates would not give it a reasonable compensatory return on its entire intrastate business. Appellant did show that the interstate company, through its larger and more efficient facilities, handled a greater volume of business at a smaller *Page 111 
cost; that its heavier wires permitted more extensive and diversified contemporaneous uses; that it enjoyed a far larger percentage of additional business through nontelephonic uses of its wires, and that it had other advantages that did not accrue to the intrastate company. However, it did not show, nor was it prevented from showing, that the total return from its entire intrastate business would not furnish a compensatory return on the investment. It seemed to intimate that it had some rights in the rate fixed in 1936. However, a rate is always subject to revision.
Great stress is placed by the plaintiff on the case ofSmith v. Illinois Bell Telephone Co., 282 U.S. 133
(51 Sup. Ct. 65, 75 L.Ed. 255). In that case the telephone company claimed confiscation and the entire rates of the company were examined. In the present case, confiscation is disclaimed by plaintiff and it was not precluded from going into the question as to whether the new rates afforded a compensatory return. The burden of proof was on plaintiff. However, it was confronted with the very exorbitant cost, in excess of a million dollars, with the length of time and the amount of effort it would take to make another exhaustive rate examination before the Michigan public utilities commission. It is impossible from this record to ascertain the various elements of costs, revenues, and other factors that should be apportioned or allotted to interstate or intrastate, including local exchange business. These elements are closely integrated. The State has no control over the interstate rates as fixed by the Federal communications commission. The plaintiff did show that the equalizing of the intrastate long distance rates figured on the basis of the 1938 business and after the adjustment of the then existing rate of income tax would cost the company *Page 112 
$465,000. Our present inquiry must be for that year, although in the case of Bell Telephone Co. v. Pennsylvania PublicUtility Commission, 135 Pa. Super. 218 (5 Atl. [2d] 410), the court took judicial notice of the fact that 1937 was a poor business year. By the same token, it might be said that conditions had just begun to improve in 1938. The record also indicates that rates were lowered during certain hours and days in order to attract business, and the attorney general argues that the lowering of intrastate rates would result in increased business which would bring in tolls during the slack periods and furnish additional revenue up to a certain point. While the record indicates that the Southern Telephone  Telegraph Company, one of the associated Bell Companies, reduced its intrastate rates in Louisiana and Georgia to the level of the interstate rates, a comparison between the States is of little value unless all elements entering into the problem in each State are shown. Smyth v. Ames, 169 U.S. 466 (18 Sup. Ct. 418,42 L.Ed. 819).* Notwithstanding a slight difference in the laws and a much more complete record in the instant case, the case does not differ in its material aspects from that of BellTelephone Co. v. Pennsylvania Public Utility Commission, supra, an appeal from which was subsequently dismissed by the United States supreme court, 309 U.S. 30 (60 Sup. Ct. 411,84 L.Ed. 563), because there was no Federal question involved, as there was no denial of due process, when on appropriate hearing the State court determined that there was evidence to sustain the finding. The court further stated that as long as the rates established were not confiscatory and did not in any way cast a burden on interstate commerce, the State court had a *Page 113 
right to decide what constitutes an unreasonable discrimination in favor of interstate as against intrastate traffic.
Plaintiff, however, claims that it was denied procedural due process; that the order of the commission was simply an"ipse dixit" judicial fiat and not based on evidence and that it lacked any basis whatsoever. We do not agree that these claims are justified. The instant case differs from West OhioGas Co. v. Public Utilities Commission, 294 U.S. 63
(55 Sup. Ct. 316, 79 L.Ed. 761), where there was no basis whatsoever for making the reduction. In the present case, the interstate rate for similar contemporaneous service together with the other facts shown was a sufficient basis for the determination. Plaintiff offered no testimony whatsoever that tended to show it would not obtain a compensatory return on its investment. It was not denied the opportunity to do so. The order to show cause required the company to cease and desist from the "collection of unreasonable and unjust charges from intrastate toll message service," et cetera. American Telephone 
Telegraph Company, the interstate company, through its ownership of 99.99 per cent. of stock, has direct control of plaintiff. People, ex rel. Attorney General, v. Michigan BellTelephone Co., 246 Mich. 198 (P. U. R. 1929 B, 455; P. U. R. 1929 E, 27). The companies are also closely interwoven through the use of joint facilities. They must be considered together for regulatory purposes, notwithstanding that the forms of separate entities are maintained. There is no claim or right of the Michigan public service commission to regulate interstate rates which must be accepted as fixed by the Federal communications commission. While the accounting for the two companies is kept separately, nevertheless, the companies use the same *Page 114 
terminals, operators, maintenance and many other facilities. There is such an integration of them so as to make them interdependent and to give each service mutual benefits as if they constituted one company.
In answer to the alleged discrimination in favor of interstate over intrastate customers, the company sought to show that substantial differences existed between the two services. While it is apparent that some minor differences exist, the finding of discrimination is amply substantiated by the record. Failing to prove a substantial dissimilarity between the services, the burden of proof was then upon the plaintiff to show that it would not receive a reasonable compensatory return on its entire investment under the order. This it failed to do. It still has such opportunity as to rates in the future, although the costs in time, money and effort may make it prohibitive, and now undesirable in view of the better business conditions that exist. I cannot accede to the proposition that plaintiff has been denied procedural due process of law.
The decree of the trial court should be and is affirmed, with costs to defendant.
BUSHNELL, CHANDLER, and McALLISTER, JJ., concurred with BUTZEL, J. The late Justice POTTER took no part in this decision.
* See 2 Comp. Laws 1929, §§ 11700-11725 (Stat. Ann. §§ 22.1441-22.1466). — REPORTER.
* Louisville  N. R. Co. v. Eubank, 184 U.S. 27
(22 Sup. Ct. 277, 46 L.Ed. 416). — REPORTER.
* Modified 171 U.S. 361 (18 Sup. Ct. 888, 43 L.Ed. 197). — REPORTER. *Page 115