OWENSBORO V. CUMBERLAND TEL. & TEL. CO., 230 U. S. 58 (1913)

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U.S. Supreme Court

Owensboro v. Cumberland Tel. & Tel. Co., 230 U.S. 58 (1913)

Owensboro v. Cumberland Telephone & Telegraph Company

No. 244

Argued April 22, 1913

Decided June 16, 1913

230 U.S. 58


Rights conferred by a municipal ordinance on a corporation qualified to conduct a public business come from the state through delegated power to the city.

A municipal ordinance granting to a corporation qualified to carry on a public business, such as a telephone system, the right to use the streets for that purpose is more than a mere revocable license; it is the granting of a property right, assignable, taxable and alienable, an asset of value and a basis of credit.

Such a grant is one of property rights in perpetuity unless limited in duration by the grant itself or by a limitation imposed by the general law of the state or by the corporate powers of the municipality.

The powers of municipalities of Kentucky to grant licenses in the streets for telephones were not limited in 1889 as to time, and, under a charter provision giving power to regulate streets and alleys, a municipality had ample power to grant a franchise to a telephone company to place and maintain poles and wires thereon.

A corporation is capable of taking a grant of street rights of longer duration than its own corporate existence if the grant expressly inures to the benefit of the grantees, assigns and successors. St. Clair Turnpike Co. v. Illinois, 96 U. S. 63, distinguished.

A reservation to alter or amend in a municipal ordinance, granting rights in the streets to a corporation to carry on a public utility as the necessities of the city demand, is simply a reservation of police

Page 230 U. S. 59

control incidental to the unabridgeable police power, and does not reserve a right to revoke or repeal the ordinance itself.

While the power to destroy contract rights may be reserved by a municipality in the ordinance granting them, the reservation must be clear and explicit.

An ordinance requiring a telephone corporation to remove from the streets its poles and wires which had been placed there under a former ordinance granting permission so to do without specifying any period, or else pay a rental not prescribed in the original ordinance, held unconstitutional under the contract clause of the federal Constitution. Greenwood v. Freight Co., 105 U. S. 13, distinguished.

Where, under the statutes of the state, a corporation formed by consolidation of several previously existing corporations becomes by express terms vested with all the assets of such constituent corporations, rights in the streets under municipal ordinances pass to the new corporation and such rights are protected against impairment by the contract clause of the federal Constitution.

Where the judgment itself makes the opinion a part of the record, the bar of the judgment is confined to those questions to which the opinion expressly declares the litigation was limited.

This case involves the nature and duration of the right of the telephone company to maintain its poles and wires upon the streets of the City of Owensboro. The ordinance under which it, or its predecessors in right, title, and property, have maintained a telephone system in the City of Owensboro was passed on December 4, 1889. Inasmuch as it contains several provisions which require consideration, it is set out in full in the margin. *

Page 230 U. S. 60

The grantee under that ordinance at once proceeded to erect its plant and to place its poles and wires upon the streets, and it and its successors and assigns have ever since maintained and operated a telephone system. The city

Page 230 U. S. 61

has used the company's poles for the maintenance of its fire alarm service, and has had the benefit of a free public telephone service for municipal purposes.

In January, 1909, the city council passed an ordinance requiring the telephone company to remove from its streets and alleys all of the poles and wires "within a reasonable time after the passage of the ordinance," and, upon failure to so remove, the mayor was directed to have them removed. This was, however, subject to a provision

"that said company shall have the right to purchase from the said city a franchise authorizing it to maintain said poles and wires and use same as provided under the laws of the state, upon proper conditions, to be prescribed by an ordinance, to be passed upon request of said company to the common council of said city."

This bill was filed for the purpose of enjoining the enforcement of this ordinance, the contention being that it was an impairment of the company's contractual property rights in the streets, and, as such, in contravention of the contract and due process clauses of the Constitution of the United States. Upon a final hearing, the court below sustained the bill and permanently enjoined the enforcement of the repealing ordinance.

Page 230 U. S. 64

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