City of Emporia v. Emporia Telephone Co.

The opinion of the court was delivered by Benson, J.:

Two principal questions are presented: (1) Is the new ordinance in effect; (2) Are the provisions of the old ordinance with reference to rates in force ?

The allegations of construction, reconstruction, expenditure and improved service in compliance with provisions in the new ordinance can not be considered as true in deciding the motion for judgment for they are denied in the reply.

The language of section 14 is clear and unambiguous that the ordinance is to take effect from and after its passage, publication, filing of the acceptance by the company, and the passage of a resolution by the council declaring that the company has complied with the provisions of section 12. Each of these precedent conditions was deemed material by the city government, which, having the power to pass the ordinance, had the power to fix the time at which it should become effective. The company could accept or refuse such conditions, but having accepted without qualification is bound by the terms thus agreed to. The company contends that by exacting the acceptance and waiver of the privileges under the old ordinance the new ordinance took immediate effect. It is said that this result necessarily follows from the waiver in the present tense and the requirement that the waiver should be filed before the privileges granted should become available, which left an implication that they would become available at that time. It is further insisted that as the company was required to waive its rights under *471 the old ordinance it must have acquired at. the same time the rights and privileges of the new one. The suggested results do not necessarily follow. The city had no reason, if it had the power, to prevent the improvements which it is alleged that the company has made. It must be presumed that if such improvements were in fact made (which is denied) they were made upon the belief that the governing body of the city would make the certificate at the proper time, and thereby the new ordinance would become effective. The company incurred no risk of being placed beyond the protection of either ordinance, for the first must be deemed in force until the second takes effect, whenever that event bccurs. It is not alleged that the company has been embarrassed or interfered with' in any improvements it desired to make, and it seems that it acted under the provisions of the old ordinance and maintained the rates provided therein long after the time when by its acceptance and waiver it now claims that it was repealed.

The precise contention of the company, as stated in its brief, is not only that the old ordinance was repealed by implication, but that the requirement by the city of the waiver and its filing by the company operated to cancel that ordinance as a contract; that it is not necessary to the defense that it should be held that the new ordinance is in force in all respects, but only that the old ordinance is not in force, either because of its repeal, or by express agreement by the acceptance and waiver required and given. It is also argued that a ' statute or an ordinance does not take effect by piecemeal, although when it does become effective as a whole, benefits to be derived under it may not accrue until a future date. Applying this last-named principle, it is claimed that the new ordinance went into effect when the waiver was filed, leaving the resolution as an incidental matter to be adopted afterward. One patent obstacle to this con *472 struction is .that it violates the express terms of the clause prescribing the event upon which the ordinance shall take effect. If, however, the view should be accepted that the old ordinance was repealed although the new one had not taken effect, the company would be left without the protection of any franchise, a situation probably neither contemplated nor desired.

It may be conceded, as argued, that ordinances may be repealed by necessary implication, and that the provisions of a new act fully covering the subject matter of a former one may be a substitute, and a repeal of a former act without express words of repeal. Still this principle does not meet the situation here presented for the new act can not become a substitute or work a repeal or accomplish any other legislative purpose until it takes effect. It is concluded that upon the facts as they must be held to be, on a motion for judgment on the pleadings, the new ordinance is not in effect and that the old one remains in force.

At the time the old ordinance was adopted the company had the right, theretofore directly granted by the state, to build its line in and over streets and highways, and the city could not prevent such use. (Telephone Co. v. Concordia, 81 Kan. 514 , 106 Pac. 35 .) Because it had this right the argument is made that the provisions of the first ordinance prescribing rates are void. It does not follow, however, that the city had no power over the company because it had no power to prohibit it from using its streets. In the case just cited it was said:

“The city may prescribe terms and conditions upon which the right granted by the state shall be exercised, but it has no power to annul the right granted by the higher authority,” (p. 518.)

In Wichita v. Telephone Co., 70 Kan. 441 , 78 Pac. 886 , it was also held that the state law gave the right to telephone companies to erect their lines in city streets, but that the general police powers of cities *473 might . nevertheless be exercised over such companies within the corporate limits. Acting under this police power and the power to prescribe terms and conditions,the city granted the privileges and the former company entered upon the undertakings and duties specified in the ordinance. Its terms, prescribed by the council and accepted by that company, were satisfactory to both. Later the appellee succeeded to the rights and became subject to the liabilities of its predecessor,, and for a period,of over ten years these terms were observed, the rates so fixed were maintained, and the obligations performed. It seems probable that the increase of rates was declared pursuant to the claim that the new ordinance had taken effect, rather than upon any supposed want of power in the city to fix. rates in the first instance.

The acceptance of a franchise or privilege to use a. city street is.upon the implied condition that it shall be held subject to the reasonable exercise of the police powers of the state operating either through legislative or municipal action. (3 Dillon on Munic. Corp., 5th ed., § 1269.) It was accordingly held by this court, that a franchise granted by a city of the second class for a street railway, prescribing, among other conditions, a schedule of fares, did not relieve the grantee from reasonable regulations and the burden of a license tax after-wards imposed. (City of Wyandotte v. Corrigan, 35 Kan. 21 , 10 Pac. 99 .) Much less would the-holder of such privileges be exempt from a like condition contained in the franchise and accepted by the grantee. Hence it would at least seem true that provisions for the payment of two per cent of the gross-receipts and to furnish free service for certain offices and departments are valid. Whether this is also true of a reasonable provision fixing rates or not, they should be upheld as against the grantee when assented to by acceptance of the ordinance imposing them— whereby they become a matter of contract, and the. *474 grantee has long enjoyed the benefits and privileges of the same contract. It is true that it is alleged that the rates under the old ordinance are not now reasonable, but that is denied, and can not be taken as true on the motion for judgment on the pleadings. Besides, it is not alleged that the rates were unreasonable when established or when accepted by the company. Doubtless the increased rates prescribed by the new ordinance were fixed in view of the improved facilities and service provided for by its terms. These provisions do not indicate that the parties believed that the old rates were inadequate under the conditions existing when it was passed and that might continue until the improvements should be completed and the resolution adopted.

The contention that the provisions of the old ordinances relating to rates are invalid can not be upheld. The motion for judgment on the pleadings was erroneously sustained. The judgment is reversed, and the cause remanded with directions to overrule the motion and proceed in accordance with these views.