Opinion
No. 340.
August 26, 1936.
James C. Henriques, of New Orleans, La., and E.D. Smith and John T. Goree, both of Atlanta, Ga., for plaintiff.
Gaston L. Porterie, Atty. Gen., State of Louisiana, Peyton R. Sandoz and James P. O'Connor, Sp. Assts. to Atty. Gen., and William C. Dufour and Henry O'Connor, both of New Orleans, La., for defendants.
Before FOSTER and HUTCHESON, Circuit Judges, and BORAH, District Judge.
Plaintiff, a New York corporation, conducting a general telephone business in the state of Louisiana, brings this its bill of complaint against the Louisiana Public Service Commission and the individual members thereof to enjoin the defendants from enforcing or attempting to enforce the provisions of Act No. 20 of the Second Extraordinary Session of the Legislature of Louisiana for the year 1934 and to enjoin the enforcement of two certain orders entered in the cause entitled "Louisiana Public Service Commission v. Southern Bell Telephone and Telegraph Company, Inc., No. 2428 of the docket of the Louisiana Public Service Commission," which orders direct plaintiff to pay to the commission the sums of $9,128.63 and $4,097.66, and which orders it is alleged were issued under color of authority claimed to be granted by the provisions of the aforesaid act authorizing the imposition of the cost of investigation upon the utility being investigated.
Upon the filing of the bill a temporary restraining order was issued without notice restraining the enforcement of the statute and orders against the plaintiff because of the danger of irreparable injury being done to plaintiff before the matter could be heard on notice. The cause is now pending before a District Court of three judges which was organized and convened to hear plaintiff's application for an interlocutory injunction.
The verified pleadings and affidavits filed herein show that plaintiff owns and operates a telephone system in the state of Louisiana furnishing intrastate and interstate telephone service, both toll and exchange, to the general public; that in order to properly conduct its business it has acquired and does own and use real estate and personal property in the state valued at more than $20,000,000, which property consists of buildings, poles, wires, cables, conduits, manholes, switchboards, and other telephone equipment, the vast majority of which could not be moved out of the state, and if required to be moved would be practically worthless except for its junk value.
In addition, plaintiff has connecting company contracts with forty-two individuals, copartnerships, and/or corporations operating telephone plants and furnishing telephone service, both toll and exchange, in the state of Louisiana. Of these forty-two contracts, twenty-seven are with individuals and/or copartnerships; the remaining fifteen cover telephone companies operated by corporations. Of the twenty-seven individuals or copartnerships, eleven own toll lines of their own and the balance connect directly with plaintiff's toll lines; and the character and kind of telephone service, exchange and toll, furnished by the individuals and copartnerships, is the same character and kind of telephone service, both toll and exchange, as is furnished by plaintiff in the state of Louisiana.
A history of the facts which gave rise to this controversy reveals that during the latter part of the year 1934 the Louisiana Public Service Commission issued an order requiring plaintiff to show cause why the telephone exchange rates in various towns and cities in the state of Louisiana should not be reduced; hearings were had in this proceeding which is known as case No. 2331 of the docket of the commission; and on March 2, 1935, an order was entered reducing the telephone exchange rates. Plaintiff promptly filed a suit in the state court contesting the order, and the cause was set down for hearing on May 25, 1935, and thereafter continued to August 8, 1935, at the request of the commission in order that it might be afforded an opportunity to offer certain evidence to rebut the evidence of plaintiff. In due course judgment was rendered annulling and setting aside the order, whereupon an appeal was taken by defendants to the Supreme Court of Louisiana where the matter is now pending.
Prior to the date of the filing of its suit in the state court contesting the order of March 2, 1935, plaintiff without admitting the constitutionality of Act No. 20 of the Second Extraordinary Session of 1934 or the legality of the orders rendered under said act paid to the commission the sum of $30,000 for the alleged purpose of being used in payment of expert fees and other matters. These payments were made before the decision of the case as a matter of policy on account of the insistent demands made upon plaintiff by the commission and its then attorney, and not because plaintiff believed they were due or collectible or that the act or the orders were constitutional, and upon making the last payment the defendants were duly informed that its orders directing plaintiff to pay money to it were null and void and that in the future plaintiff would make no more payments to the commission.
After its suit was filed in the state court and after the first hearing was had and the plaintiff had been put to its proof to show that the order reducing the rates was null, void, and confiscatory, the commission issued a citation directed to plaintiff ordering it to appear before the commission at such time and place as may hereafter be designated, and then and there show cause why its rates, charges, and practices for telephone service within the state should not be further investigated to determine the latest operating results within the state of Louisiana, etc. This order was issued on May 31, 1935, in proceeding No. 2428 of the docket of the commission, and the unchallenged proof shows that it was issued for the purpose of obtaining information which defendant thought would be helpful to