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224 U.S.

Argument for Appellant.

The State of Kentucky has delegated to the city of Louisville authority to revoke any franchise which the appellee may have acquired to occupy the streets of the city of Louisville. Kentucky Constitution, 88 156, 163, 164, 199; Kentucky Statutes, &$ 2742, 2783, 2825.

The legislature had authority to delegate to the city the right to revoke any franchise which the appellee may have acquired to use the streets of the city of Louisville. City Railway Co. v. Sioux City, 138 U. S. 98; Mo. Pac. R. R. Co. v. Kansas, 216 U. S. 262.

All special privileges or grants made to corporations prior to the adoption of the present constitution and inconsistent with the provisions of that constitution and the laws made pursuant thereto are now repealed. Hager v. Kentucky Title Co., 119 Kentucky, 50; Pearce v. Mason County, 99 Kentucky, 357; McTigue v. Commonwealth, 99 Kentucky, 72.

Where a city gives its consent for a telephone company to use its streets without limit as to time the right of such telephone company to continue to use the streets expires when the charter of the city expires. Blair v. Chicago, 201 U.S. 485; People v. Chicago Tél. Co., 220 Illinois, 238; Parsons v. Breed, 126 Kentucky, 765; Louisville v. Vreeland, 140 Kentucky, 404.

A city cannot convert a license into a contract by calling it a contract. St. Louis v. West. Un. Tel. Co., 148 U. 8. 97; Wabash R. R. Co. v. Defiance, 167 U. S. 88.

A city may revoke a grant or a license without notice to the grantee and without assigning reasons therefor. Calder v. Michigan, 218 U. S. 598; United States v. Des Moines Nav. & R. Co., 142 U. S. 510.

Discrimination among its patrons gives a city ample cause for revoking the franchise of the telephone company. Wyman on Public Service Corp., chaps. 27, 28; Delaware & S. Tel. Co. v. Kelly, 160 Fed. Rep. 517; Missouri v. Bell Tel. Co., 23 Fed Rep. 541; Rudd v. New York, 143


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U. S. 517; L. & N. v. Central Stock Yard, 97 S. W. Rep. 778.

Mr. William L. Granbery and Mr. Alexander Pope Humphrey, with whom Mr. Alexander Pope Humphrey, Jr., was on the brief, for appellee.

MR. JUSTICE LAMAR, after making the foregoing statement, delivered the opinion of the court.

1. Under the present constitution of Kentucky street franchises cannot be granted for longer than twenty years and then only to the highest bidder, after public advertisement by the city authorities. But in 1886, when the Ohio Valley Telephone Company was chartered, the legislature not only had the sole right to create corporations and to grant franchises but, without municipal consent, it could have authorized the company to use any and all streets in the city of Louisville. Instead, however, of exercising this plenary power, the charter declared that the company might maintain its telephone system, erect poles and string wires over the streets and highways of the city, with and by the consent of the General Council. These provisions of the charter gave the municipality ample authority to deal with the subject, and by virtue of this statutory power it could have imposed terms, which the company might have been unable or unwilling to acceptin which event the franchise granted by the State would have been nugatory. But, when the assent was given the condition precedent had been performed, the franchise was perfected and could not thereafter be abrogated by municipal action. For, while the city was given the authority to consent, the statute did not confer upon it the power to withdraw that consent, and no attempt was made to reserve such a right in the collateral contract contained in those provisions of the ordinance relating to the com

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pany's giving a bond and carrying the police and fire wires free of charge. If those or other terms of this independent and separate contract had been broken by the Ohio Valley Company or its successors, the city would have had its cause of action. But the municipality could not by an ordinance impair that contract nor revoke the rights conferred. Those charter franchises had become fully operative when the city's consent was given, and thereafier the company occupied the streets and conducted its business, not under a license from the city of Louisville, but by virtue of a grant from the State of Kentucky. Such franchises granted by the legislature could not, of course, be repealed, nullified or forfeited by any ordinance of a General Council.

2. In 1891 a new constitution was adopted by the State of Kentucky conferring upon municipalities the right to grant street franchises, and later, under the reserve power, a statute was passed repealing all special corporate privileges. It is claimed that in consequence of these laws the street rights granted the Ohio Valley Telephone Company have been withdrawn, or at least made subject to municipal revocation. But we find in the cited sections of the constitution (156, 163, 164 and 199) and the statutes (8$ 573, 2742, 2783 and 2825) nothing which sustains this contention, which, if correct, would lead to the conclusion that all structures theretofore lawfully placed in city streets by water, light, telephone, railway and other public utility companies became nuisances, and as such were removable after September, 1898, to the damage of the community at large and the destruction of property of immense value dedicated to public purposes. The general repeal of all special privileges, referred to in the statute, related to exclusive grants, tax exemptions, monopolies and similar immunities (Ky. Stat. 573; Covington v. Kentucky, 173 U. S. 231), and not to those corporate powers and property rights needed

Opinion of the Court.

224 U.S.

and conferred in order to enable the company to perform the duties for which it had been organized. For, while this charter conferred privileges, it also created obligations in favor of the public, and no attempt was made by the general law to repeal the rights which had vested, nor to relieve the company of the burden which had been imposed.

3. The provisions of the constitution and statutes relied on as revoking licenses from municipalities or as conferring power upon cities to repeal grants are in the main prospective and do not in any event support the claim that the General Council can destroy the rights granted the Ohio Valley Telephone Company, whether they be treated as having been acquired under the charter of April 3, 1886, or under the ordinance of August 17, 1886. On the contrary, the constitution of 1891, while limiting for the future the power to sell street franchises, distinctly protected the interests of those public utility companies“whose charters have been heretofore granted, conferring such rights, and work has in good faith been begun thereunder.” Inasmuch, therefore, as the charter of the Ohio Valley Telephone Company was granted and as the exchanges were in operation before the adoption of the constitution, that company's rights are expressly preserved by the organic law of the State.

4. The Ohio Valley Company, thus owning the right to use the streets for telephone purposes, was consolidated on January 27, 1900, into the Cumberland Telephone and Telegraph Company, the defendant in error, and the latter claims that, as successor, it acquired and now holds these privileges. This is denied by the city on the ground that while the statute, then of force, provided for the transfer of the "property" of the constituent companies, it was not until the amendment of 1902 that provision was made by which their “franchises” could pass to the consolidated company.

It is not necessary to determine whether that amendment

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was intended to supply an omission, remove a doubt or to ratify the transfer and use under this and prior mergers. City Railway Co.v. Citizens' Railroad Co., 166 U.S.557,569. For while franchises to be are not transferable without express authority, there are other franchises to have, to hold and to use, which are contractual and proprietary in their nature and which confer rights and privileges, which can be sold wherever the company, as here, has power to dispose of its property. In the present case the Ohio Valley Company was by its charter given authority to mortgage and dispose of franchises. Among those thus held was the right to use the streets in the city for the purpose necessary in conducting a telephone business. Such a street franchise has been called by various names an incorporeal hereditament, an interest in land, an easement, a right of way—but, howsoever designated, it is property. Detroit v. Detroit Street Ry., 184 U. S. 368, 394; Louisville City Ry. v. Louisville, 71 Kentucky (8 Bush), 534; West River Bridge v. Dix, 6 How. 507, 534; Board of Morristown v. East Tenn. Tel. Co., 115 Fed. Rep. 304, 307. Being property, it was taxable, alienable and transferable, and, as property, passed to the Cumberland Telephone and Telegraph Company under the express provisions of the Kentucky statute, which, as of force in 1900, declared that the consolidated company should be “vested with all the property, business, assets and effects of the constituent companies, without deed or transfer, and bound for all their contracts and liabilities."

That the street rights, however designated, passed to the Cumberland Company is the natural and obvious construction of the act. The plant and property of a telephone company are useless when dissevered from the streets, and there would, in effect, have been no property out of which to pay the debts or with which to perform the public duties imposed if the street rights of the constituent companies had not been transferred by the

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