Postal Telegraph-Cable Co. v. Railroad Commission

The petitioner, Postal Telegraph-Cable Company, constructed a line from Niland, through Brawley, Imperial, and El Centro, to Calexico, known as its Imperial Valley extension, and opened offices in the places mentioned for the transaction of a general telegraph business. The respondent Railroad Commission, of its own motion, and assuming to act under the provisions of section 50, subdivisions (a) and (b), of the Public Utilities Act (Stats. 1915, p. 115; amended Stats. 1917, p. 168), instituted an investigation into the construction of the line and the business being carried on over it. After due hearing, it made an order that the Telegraph Company cease and desist from the operation of the line for intrastate business unless and until it shall have secured a certificate that the present and future public convenience and necessity require, or will require, such operation. This proceeding is brought to determine the validity of that order.

The Postal Telegraph-Cable Company, at times hereinafter referred to as the Telegraph Company, a California

It is not now claimed by the respondent Commission that the line from Niland to Calexico was unlawfully constructed, and it is conceded that it was being lawfully operated for interstate business and the transmission of government messages. Respondent admits that neither it nor the state, whose agent it is, can demand a certificate of convenience and necessity as a prerequisite to the construction or operation of a telegraph line within the state for the doing of interstate business; and that any order of the Commission requiring such a certificate, or any statutory enactment purporting to require a certificate, would be violative of the commerce clause of the federal constitution. Respondent further concedes that the state cannot require a certificate of public convenience and necessity as a prerequisite to the construction of a line physically connected to an interstate line, even though potentially usable for intrastate purposes, for such line, regardless of where constructed, would also be potentially usable for interstate business. These eon-

But, with so much conceded, the respondent contends that as to intrastate telegraph business, authority inheres in the state to require compliance with a proper and reasonable exercise of the state’s police power. It therefore invokes the provisions of section 50 (b) of the Public Utilities Act, which provides that certain named types of public utilities, including telegraph corporations, shall not exercise “any right or privilege under any franchise or permit hereafter granted, or under any franchise or permit heretofore granted but not heretofore actually exercised, or the exercise of which has been suspended for more than one year, without first having obtained from the Commission a certificate that public convenience and necessity require the exercise of such right or privilege; provided, that when the Commission shall find, after hearing, that a public utility has heretofore begun actual construction work and is prosecuting such work, in good faith, uninterruptedly and with reasonable diligence in proportion to the magnitude of the undertaking, under any franchise or permit heretofore granted but not heretofore actually exercised, such public utility may proceed, under such rules and regulations as the Commission may prescribe, to the completion of such work, and may, after such completion, exercise such right or privilege; and provided, further, that this section shall not be construed to validate any right or privilege now invalid or hereafter becoming invalid under any law of this state.”

By reason of the concessions of the respondent and its present contentions, the sole issue to be considered in this proceeding may be thus stated: Can the Postal Telegraph-Cable Company, after it has lawfully constructed its line from Niland to Calexico, for the construction of which no certificate from the Railroad Commission was necessary, be forced to let the line stand idle, in so far as California intrastate business is concerned, unless and until it secures a certificate of public convenience and necessity for the trans

[3] The decisions appear to be uniform to the effect that, by the act of Congress, and its acceptance by petitioner, the latter became an instrumentality of the United States in carrying out its governmental functions. (Western Union Tel. Co. v. Visalia, 149 Cal. 744 , 746 [ 87 Pac. 1023 ].) Having accepted the benefits and burdens of the act, it thereby became an agency of the federal government for the transaction of its postal business, ¡and an agent of interstate and foreign commerce. (State v. Western Union Tel. Co., 43 Mont. 445 [ 117 Pac. 93 ].)

[4] The respondent seems to understand the petitioner as arguing that the effect of its “federal franchise” is to give it an absolute right to carry on its intrastate telegraph business, to the complete exclusion of the police power of the state. Petitioner makes no such contention, as, indeed, it cannot. It concedes the right of the state and its municipalities to impose upon a telegraph company, under the police power, reasonable regulations with reference to the manner pf the exercise by it of the rights conferred by the

When the act of Congress granting telegraph companies the right to construct, maintain, and operate their lines over the public domain (July 24, 1866, supra) first came before the supreme court of the United States, it was carefully

[5] We take it to be, therefore, conclusively settled that the authority for the “federal franchise” possessed by the petitioner is the provision of the United States constitution, supra, that “the Congress shall have power ... to establish Post Offices and Post Roads.” Under this provision, the authorities seem to as conclusively establish that the power of the national government is exclusive, subject to the right of the state, under its police power, to make cer

[7] For another reason the respondent may not now demand the certificate of public convenience and necessity from petitioner before it can carry on its intrastate business. Section 536 of the Civil Code provides: " Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this state, and may erect poles, posts, pier's, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters.” This section constitutes a grant of a franchise which the state offered, and petitioner accepted by the construction of its lines. The rights acquired by the Telegraph Company, by accepting and availing itself of the provisions of the section, are vested rights which the constitutions, both state and federal, protect. They cannot be taken away by the state, even though the legislature should repeal the section, or by the people through a constitutional provision. (Western Union Tel. Co. v. Hopkins, supra, p. 119 et seq.; Postal-Telegraph-Cable Co. v. Los Angeles, 160 Cal. 129 , 131 [ 116 Pac. 566 ]; In re Keppelmann, 166 Cal. 770 , 773 [ 138 Pac. 346 ].) [8] The finding of the respondent Commission of the physical fact that petitioner was maintaining and operating its lines of telegraph over the roads and highways of the state establishes, as a matter of law and of fact, the proposition that

[9] Respondent takes the position that, conceding that it may have been true when section 536 was enacted that the right to operate telegraph lines was implied as a necessary adjunct to the right to construct, the situation was changed by the adoption, in 1911, of amendments to the state constitution, and the enactment by the legislature of the "Public Utilities Act,” which went into effect March 23, 1912 (Stats. 1911, Extra Session, pp. 18, 43), and which expressly added (sec. 50 [b]) a new requirement, i. e., a certificate of public convenience and necessity from the Railroad Commission as a condition precedent to the exercise by the public utility of its franchise rights. This statute, it admits, did not prevent the continuation of public utility facilities already in operation, without a certificate; but it contends that the continuing right to construct telegraph lines offered by the'state, under section 536, did not give the petitioner an unexpressed, but nevertheless vested, right to operate new lines constructed after the Public Utilities Act went into effect. We cannot agree with this contention. Neither the constitutional amendments nor the passage of the Public Utilities Act worked the change contended for by the respondent. In view of the nature of the business of the Telegraph Company, and the broad and unrestricted terms of the offer contained in section 536, which has not been withdrawn or modified, we find no ground for the contention that each act of constructing a telegraph line, or an extension of service, was to constitute an acceptance pro tanto. The offer was intended to be, and was, accepted in its entirety as made. Petitioner has now exactly the same rights under its state franchise that it has had from the time it constructed and began to maintain and operate its first telegraph line within the borders of the state. The grant, resulting from the acceptance of the state offer, constituted a contract between the Telegraph Company and the state, secured by the constitution of the United States against impairment by any state legislation. (Western Union Tel. Co. v. Hopkins, supra, p. 120;

The conclusion we have reached renders it unnecessary to consider the other points made by the petitioner.

The order is annulled.

Shenk, J., Richards, J., Preston, J., Curtis, J., Langdon, J., and Seawell J., concurred.