Charles Simons Sons Co. v. Maryland Telephone & Telegraph Co.

Jones, J., delivered the opinion of the Court. This suit was instituted in the Court below by the appellants against the appellee corporation for an injunction, upon the allegations and for the purposes set out in their bill of complaint. The appellee demurred to the bill, thu.s admitting the truth of the facts therein alleged as far as the same are well pleaded. The Court below sustained the demurrer and dismissed the bill.

This action of that Court is before us for review upon this appeal. The facts with which we will be concerned in the inquiry we are to make, as they are made to appear from the record of proceedings before us, are as follows : The appellee is a corporatiph formed and organized- under the general incorporation laws of the State. The original Act of incorporation was obtained in January, 1890. This provided that the name of the corporation should be, “The Writing Telegraph Company of Baltimore City” and stated the object thereof to be the constructing, owning, and operating telegraph lines in the State *■ * * the transaction of a general telegraph business * * * and “the transaction of any business in 'which electricity, over or through wires may be applied to any useful purpose.” By an amendment to the charter in July,, 1895, the name of the corporation was changed to “Home Telephone and Telegraph Company of Baltimore City;” and by a further amendment in May, 1899, the name was changed to that by which the corporation is sued in the present proceeding “Maryland Telephone and Telegraph Company of Baltimore City;” and the object of the corporation as respects the operation of a telephone system was more specifically stated. ¹⁶³ Prior to the last amendment and under the name “Home Telephone and Telegraph Company of Baltimore City,” the corporation applied to the city of Baltimore for permission to construct and maintain its “lines of wire and , electrical conductors under, upon or over . the public streets, alleys, conduits and other public places” of the city in order to transact and carry on its telephone business therein.

On the ist of July, 1896, the city of Baltimore by Ordinance No. no granted this permission. The ordinance is styled, “An ordinance granting permission to the Home Telephone and Tele- ' graph Company of Baltimore City to use for its telephone wires the ducts in the conduits of the police and fire alarm telegraph system, not needed for the city’s use, and authorizing said company to extend its system in the territory not covered by the said police and fire alarm telegraph conduits, subject to certain conditions and restrictions, and authorizing the Mayor to rent all space in said conduits not promptly occupied by said the Telephone Company to such other persons or corporations as may desire to use the same.” Following this is a preamble which recites that “the telephone has become almost a necessity of modern life in cities ; ” that “there is very great need of a cheaper telephone service in Baltimore City, the number of telephones being very small in proportion to the population on account of the very high prices demanded by the company which now has a monopoly of the telephone business here ; ” that such company had given official notice to the public through the report of the Telephone Commission to the General Assembly on January 6th, 1896, that “it will not and cannot reduce its rates for telephone service; ” that “at the present rates the telephone, although greatly needed in business, is beyond the reach of persons of ■ordinary means, and the use of it is confined to a favored few, who have the means of paying the high prices charged ; ” that “it would be a great boon to the persons of moderate means, and a very great advantage to the business community, at large, to have a cheaper telephone service ; ” that ¹⁶⁴ “the Home Telephone and Telegraph Company of Baltimore City has declared itself ready and willing to supply such a service at rates very much lower than those now prevailing; ” that the subways heretofore constructed by the city of Baltimore for the wires of the police and fire alarm telegraph system of the city are “capable of containing numbers of wires over and above the number of ducts required for the city’s use ; ” and that these ducts produce no revenue to the city but- can be made, a source of revenue if leased to the Home Telephone Company. The ordinance then grants permission to said Telephone • Company to-use the ducts, &c., mentioned in its title and preamble for the purposes of its business; and prescribes the regulations and conditions under and subject to which such permission is granted. Among these is the following, bejng sec. 4 of the ordinance, “that the rights and privileges hereby granted are granted subject to the following conditions, namely : ’■’ “That the prices to be charged by the said Home Telephone and Telegraph Company of Baltimore City shall not be more than four dollars per month for telephones furnished to business offices, and not more than three dollars per month for telephones furnished at dwelling houses within the corporate limit of Baltimore City, and to the further express condition that all the rights and privileges hereby and herein granted shall cease and be forever forfeited, in case the said Home Telephone and Telegraph Company of Baltimore City shall be consolidated with any other telephone company in Baltimore City, unless the terms of the consolidation provide that the consolidated company shall not charge more than the above mentioned rates for the use of its telephones.” It is further provided in the ordinance that the powers therein granted to the telephone company may be forfeited at the option of the city unless the company-shall have, within two years from the date of the same, not less than two thousand telephones in actual u “ in the city; and that the Telephone Company “shall indicate its acceptance of the terms and conditions” of the ordinance “by filing a written acceptance of ¹⁶⁵ the same with the Mayor, and filing at the same time a bond conditioned for a faithful observance of the provisions of” the “ordinance in the penalty of ten thousand dollars,” &c.

After the passage of the ordinance, the Telephone Company therein mentioned filed its bond as required thereby and its acceptance of the same, addressed to the Mayor, in the office of the Comptroller of the city. The grant of the use of the subways and ducts of the city for the purposes of the telephone company was made for “the period of ten years and until such time as the city’s general subway system is ready for use in the localities now covered by the subways of the police and fire alarm telegraph system ; ” and subject to a rental to be paid to the city as provided in the ordinance. The appellants are four in number — all citizens of Baltimore;' all having business establishments, and conducting business therein, and all having need for the purposes of business, of the use of some telephone system. They sue for themselves and all others in like situation with themselves, as respects the use of the telephone and their relations to the appellee.

It' appears, rather inferentially than by direct averment, that all of the appellants had, with the appellee, prior to 1903, contracts for telephone service at the rate named in sec. 4 of the Ordinance no under which apparatus and’equipments, with what is known as the metallic circuit, had been installed in their several business establishments. The appellee now refuses to furnish the appellants or any of them the telephone service mentioned, at the rates specified in the ordinance; and,it is alleged, is threatening some of them with a discontinuance of service to them and a removal of the telephone instruments and equipments from their places of business unless they agree to pay for said service at the rate of seventy-two dollars per annum; and as to others, has, by such threats, extorted from them contracts, made under protest, to pay for such service at the said rate. The prayer of the bill, in substance, is that the appellee be restrained from the aforesaid threatened action; and from demanding and receiving from the appellants he excess of charge for telephone service, such as is men ¹⁶⁶ tioned in the bill, over the rate provided in Ordinance No. no; and that the appellants and others in like situation with them, as respects the matters in controversy between them and the appellee, be decreed entitled to demand and receive from the appellee the kind of telephone service mentioned in the bill of complaint at the rate of charges provided in said ordinance. Among the grounds of demurrer to the bill the third in order is “that no contract is stated in said bill whereby the defendant is obliged to furnish the plaintiffs or any of them telephones and telephone service of the kind described in said bill ; ” and the fourth ground is “that by a proper construction of Ordinanne no, stated in said bill, the defendant is not pbliged to furnish telephones and telephone service of the kind described in said bill to plaintiffs (appellants), or any of them, at the rates claimed in said bill.” The matters embraced in these grounds of demurrer are such as the appellee ought to bring before the Court by way of answer.

They -cannot be properly treated and disposed of on demurrer. The contention upon this phase of the demurrer is that the 'meaning of the word telephone and what the term will embrace when used 'in contracts for telephone service has been defined and fixed by statute in this State; and that the description of service to which the- appellants allege themselves entitled is not within the terms of Ordinance No. no under which the rights of the appellants arose, when reference is had to-the statute in construing the ordinance. The legislation to which is attributed this effect upon the rights of the parties here is that enacted by the Acts of 1892, ch. 387, which added to Art. 23 of the Code of Public General Laws, sub-title Telegraph and Telephone Companies, secs. 232A, 232B, 232C, 232D, and 232E; and Act of 1894, ch. 207, which added to said Article and sub-title of the Code, secs. 232F and 232G. Of these sections thus added to the Code, secs. 232A and 232B prescribed maximum rates of charges for rental or use of telephones by any “individual company or corporation, now or hereafter owning, controlling, managing or operating any ¹⁶⁷ telephone line, or lines within the limits of any city, town or village in the State.” Sec. 232C defined what the word telephone “shall be construed to include” wherever used in the Act of 1892, ch. 387.

Sec. 232D required that every Telephone Company should supply all applicants with telephone connections and facilities “without discrimination or partiality” and made further provisions for protecting the rights of such applicants in securing such connections and facilities. Sec. 23 2E made it a criminal offense for “any owner, operator, agent or other person” to collect or receive for the rental or use of any such telephone “any sum in excess of the ratio fixed” by the Act and provided a penalty therefor. The subsequent legislation modified the foregoing by providing in sec. 232F that any person, firm or corporation might contract in the manner therein prescribed with any individual’, company or corporation owning, &c., any telephone lines within the State “for such special form, description and amount of telephone equipment and service expressed in such contract, as such person, firm or corporation may need, at such rates, and upon such terms and conditions as may be agreed upon;” but provided that nothing in this section should be construed to impair the obligation of any person or corporation owning or operating any telephone line in this State to furnish, in accordance with the aforementioned sections of the Code enacted by the Act of 1892, ch. 387, and at the rates of charge mentioned in secs. 232A and 232B, telephone equipment and service of the kmd and description which was, at the time, being furnished by the Chesapeake and Potomac Telephone Company of Baltimore City at the said rates; and required as a condition precedent to the exercise by the said company of any of the powers conferred by the Act of 1894, ch. 207 (secs. 232F and 232G of Art. 23 of the Code), that it should file in the office of the Clerk of the Court of Appeals to be annexed to the original of the Act a full ánd adequate description in detail, and to be certified so to be by the Governor, of the equipment then used by said company in furnishing the service mentioned in the proviso. This descrip ¹⁶⁸ tion was to be taken as a true description of the “said equipment in 'all proceedings whether civil or criminal” which might be taken to enforce the requirements of the proviso or of the sections of Art. 23 of the Code therein mentioned.

Sec. 232G provides for the appointment of a commission by the Governor upon which is imposed the duty, under the powers conferred upon it, to make such investigations as should enable it to report what is the cost of furnishing to the city of Baltimore and other places telephone service “both that known as the ordinary or • grounded service, and also that , known as the metallic circuit service;” and to procure all such information as may “be. necessary and proper to determine what ought to be fair and sufficient rates for furnishing such telephone service;” and to make report to the next General Assembly. ’ .Exhibit No-. 1 filed with the bill of complaint makes it appear that it is claimed by the appellee corporation that, at the time of .the passage of Ordinance no, under the statute, to which reference has been made, regulating maximum charges for telephone service- and defining what the word telephone should be held to include, the ordinary telephone-equipment to which the statute applied had been described as what is known as the grounded circuit service and that said ordinance must be taken as having reference to that equipment for, or description of, telephone service, and does not authorize the appellants to- call for contracts for the metallic circuit service as claimed in their bill. It is not perceived from a reading of the legislation in question, and which has been reviewed, how it can have a necessary effect in construing the Ordinance no. If it be assumed that the:statute, in prescribing maximum rates of charges for telephone equipment and service, meant and was dealing with the ordinary grounded circuit service nothing is discovered in its terms or provisions which would prevent parties or corporations wishing to make contracts for furnishing telephone service from going to parties desiring to have such service furnished, and offering and contracting to furnish any kind or description of service that might be agreed upon provided ¹⁶⁹ only that for the particular kind or description of service which was within the contemplation and provisions of the statute charges should not be in excess of the rates therein prescribed. And so there is nothing to prevent a corporation organized for the purpose of furnishing telephone service from going to the Mayor and City Council of Baltimore (assuming for the present the power of the city to enter into such a contract), and in consideration of the right and privilege of using the subways and ducts of the city, obligating itself to make contracts with the citizens thereof to furnish any kind or description of service that it may choose to contract for within the like limitations.

The general intent and policy of the law in question was to prevent extortion in charges for telephone service and to secure fair and reasonable rates of charges for such service. It would be contrary to this intent and policy to so construe the law as to restrict or hinder parties in making contracts for the service that will secure for them, at cheaper rates . than those fixed as the maximum in the statute, improved equipments and more effective appliances. In other words to hold that parties are not free to secure contracts for a different and better.telephone service than that with which the statute deals, at cheaper rates than the statute prescribes as a maximum for an inferior service. A telephone company could not be required to enter into a contract for service at rates under those which the statute permits it to charge for the description of service to which the statute applies, but its voluntary action in entering into contracts is under no restraint either as to description of service or rates of charge provided the maximum statute rates are not exceeded in any case falling within its provisions.

The law expressly provides that contracts for special forms and description of service may be made under regulations prescribed. We may suppose that this provision was made with a view to allow of contracts for higher rates, than those fixed as a maximum by the statute, in cases where parties desired to contract for special, or different and better equipments than those the statute contemplated when fixing the maximum ¹⁷⁰ charges therein specified; but parties would have the same right, to make contracts of the same class at rates lower than ■the maximum rates of the statute, without going counter to either its letter or its spirit. The statute does not fix a meaning to or give a definition of the word telephone; nor prescribe an amount or description of telephone equipment to be imported into all contracts for telephone service irrespective of the intention of the parties to the contracts. The definition of the word telephone occurring in the Act of 1892 and the fixed description of telephone equipment provided for in the Act of 1894 have relation to the purposes of the legislation enacted by these two Acts.

Sec. 232C enacted by the former Act expressly provides what the wore! telephone “shall be construed to include wherever used” in that Act; and sec. 232F enacted, by the later Act expressly provides that the fixed description, of telephone equipment which it requires to have filed with the original Act' in the office of the Clerk of the Court of Appeals shall be taken as a true description of said equipment in all proceedings civil and criminal which might be taken thereafter for the enforcement of'the requirements of that section or of the sections of the Code enacted by the Act of 1892. The legislation embraced in the two Acts referred to gave to parties seeking to make, or making contracts for. telephone service certain rights, and wherever the provisions of the statute have to be availed of in the enforcement of those rights the definitions therein given of the word telephone and of telephone equipment apply; but there can be no reason for.applying them, and they have no application, to cases in which parties by their own voluntary action enter into contracts, in no way violative of the provisions of the law, in which they fix for ■themselves the terms of their contracts, and define for themselves what they are contracting for. : When, therefore, the appellee applied to the Mayor and City Council of Baltimore for the right to use the subways and. ducts of the city' for its corporate purposes there was nothing in the legislation we have been considering to prevent it from' making the contract, which the appellants insist that it did' ¹⁷¹ make, to furnish the citizens of Baltimore with telephone service at the rates specified in the Ordinance No. no; and the kind and description of equipment and service that was to be supplied at the said rates we must look for, not in the law, but in the contract that was made. To determine this question the Court is entitled to be advised of all the circumstances under which and the conditions with reference to which the contract was entered into. In the case of First National Bank v. Gcj'ke, 68 Md. 449 , it was said at p. 456, Chief Justice Aevey delivering the opinion, “it is a principle of universal application that in order to arrive at the intention of the parties, the contract itself must be read in the light of the circumstances under which it was entered into.

General or indefinite terms employed in the contract may be thus explained or restricted in their meaning and application and the contract must be so construed as to give it such effect and none other as the parties intended at the time it was made. These principles are elementary.” The instrument being construed in the case was a bond and it was further said “regard must be had to the intention of the parties when the bond was executed; and whatever facts will shed light upon the question of intention may be considered in construing the bond.” Now the ordinance here which constitutes the contract between the city of Baltimore and the appellee, in its fourth section where provision is made for furnishing to the citizens telephone service at the rate of forty-eight dollars for business places and thirty-six dollars per annum for dwellings, uses the word telephone generally and does not specify any particular description of service to be furnished. The most natural and