LOS ANGELES COUNTY v. SOUTHERN CALIFORNIA TELEPHONE CO (1946)

This is an action in equity by which the county seeks an adjudication that the Telephone Company must procure a franchise from the county in order to make use of the highways for the operation of its system in unincorporated areas of the county. The action seeks, for the past, an accounting for the usable value of the defendant's alleged unauthorized occupancy of such highways, and for the future, an injunction to restrain the Telephone Company from occupying the highways unless it procures a county franchise. The complaint denominates the defendant's occupancy of county highways as ‘obstructing the free passage and use in the customary manner by the plaintiff’, etc. and as constituting ‘a public and common nuisance injuriously affecting the property of the plaintiff’, etc.

The answer denies obstruction and nuisance, and alleges that the defendant and its predecessors have continuously maintained telephone and telegraph lines throughout the eight southernmost counties since 1889, making use of the highways in connection therewith by virtue of the express provisions of Section 536 of the Civil Code. Estoppel and laches are also pleaded by alleging facts showing recognition by the appellant county of the telephone company's rights, over a long period of years. At the trial appellant's attorney renounced any ‘intention of proving or attempting to prove that * * * the structures are so located that they constitute a nuisance in fact’, basing the county's claim upon the theory that the respondent's use of the highways for its poles, wires, etc. was unauthorized.

The primary question, according to appellant's brief, relates to the constitutionality of Section 536 of the Civil Code. In addition of maintaining that this section is valid and constitutes a state franchise authorizing use of the highways, respondent contends that with the appellant's renunciation of the nuisance theory adopted in its complaint, no judicial controversy remained. Respondent further asserts that this suit in equity cannot be converted into a quo warranto proceeding and that appellant is not authorized to maintain such a proceeding. It is the respondent's position that by Section 536 ‘the State has left nothing to be granted by a county in respect to franchises to corporations for telegraph and telephone purposes'.

Section 536 of the Civil Code, as amended in 1905, reads as follows: ‘Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this state, and may erect poles, posts, piers, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters.’

The section was originally placed in the Civil Code in 1872, applied only to telegraph corporations. It is conceded by the appellant that if Section 536 grants a valid franchise, the respondent company has done those things necessary to the procurement of such franchise. During the trial the court rendered an opinion upholding the constitutionality of this section; thereafter evidence was introduced, and the present appeal is from a judgment in favor of the telephone company.

The appellant county maintains that Section 536 is invalid in that it amounted to a legislative ‘grant’ of a valuable franchise ‘without any consideration whatsoever except the operation of a private enterprise for private profit * * * in violation of sections 22 and 31 of Article IV of the State Constitution. It follows that the purported ‘grant’ was a nullity, that the Telephone Company has had no ‘franchise’ and that it needs a franchise from the County under the Broughton Act.'

Section 22 of Article IV of the Constitution of 1879 provided that ‘no money shall ever be appropriated or drawn from the state treasury for the use or benefit of any corporation, association, asylum, hospital, or any other institution not under the exclusive management and control of the State as a State institution, nor shall any grant or donation of property ever be made thereto by the state; * * *’. (Italics added.)

Section 31 of Article IV of the Constitution makes the further limitation that the legislature shall have no ‘power to make any gift, or authorize the making of any gift, of any public money or thing of value, to any individual, municipal or other corporation whatever; * * *.’ (Italics added.)

The respondent asserts that the above constitutional provisions were not intended to ‘forbid the lending of the use of the public highways for and in consideration of the establishment of a public service’, and that the decisions of this state over a period of more than forty years, have clearly recognized the validity of Section 536 of the Civil Code granting telephone and telegraph corporations the use of all public highways. In reference to these California decisions it is the appellant's contention that ‘nowhere in the opinion of any one of those cases did the Court before which the case was pending pass upon the constitutionality of section 536 in the light of sections 22 and 31 of Article VI of our State Constitution. * * * The validity of section 536 * * * was apparently conceded by every party and assumed by the Court.’

Among other cases cited by respondent is Western Union Telegraph Company v. Hopkins, 160 Cal. 106, 118, 116 P. 557, 562, where the court said: ‘In the light of what we have said, it appears that the case of Western Union Tel. Co. v. Visalia, 149 Cal. 744, 87 P. 1023, does necessarily decide that section 536, Civil Code, was affectual to grant this right as to all highways lying outside of municipalities, * * * section 536 * * * has, however, never been confined in terms to highways outside of municipalities, but always purported to apply to all public highways in the state.’ And on page 119 of 160 Cal., on page 563 of 116 P., it is said: ‘It is earnestly urged * * * that section 536, Civil Code, is either unconstitutional or cannot be construed as it was in the Visalia case, * * *. Assuming that section 536, Civil Code, was a grant of the right to such use of the streets, we are of the opinion that it must be held, to use the language of the United States circuit court of appeals in Sunset Tel. & Tel. Co. v. Pomona, 9 Cir., 172 F. [829], 837, 97 C.C.A. 251, that the maintenance and operation of such system ‘was an acceptance by it of the provisions of that statute, which thereby became a contract between the company and the state, secured by the Constitution of the United States against impairment by any subsequent state legislation.’'

Although this and other cases hold that the right conferred by Section 536 is a ‘vested’ one, it should be noted that this is not an unqualified right; the County still has control over the manner of its exercise. Said the court in the Western Union Telegraph Company v. Hopkins case, 160 Cal. at page 121, 116 P. at page 563: ‘Of course, the liability of plaintiff to all such reasonable regulations as is warranted in the proper exercise of the police power cannot be disputed. In fact, this is expressly stipulated by the provisions in section 536, Civil Code, that the system of the telegraph company must be conducted ‘in such manner and at such points as not to incommode the public use of the road or highway.’'

The franchise to use the public highways, granted by Section 536, has been held taxable for state and county purposes in the County of Los Angeles. Western Union Tel. Co. v. Hopkins, 160 Cal. 106, 116 P. 557; Western Union Tel. Co. v. Los Angeles County, 160 Cal. 124, 116 P. 564; Postal Tel. Cable Co. v. Los Angeles County, 160 Cal. 129, 116 P. 566; See also Postal Telegraph-Cable Co. v. City of Los Angeles, 164 Cal. 156, 128 P. 19.

The case of City of Beverly Hills v. City of Los Angeles, 175 Cal. 311, 165 P. 924, has been particularly commented upon by both parties. Prior to the incorporation of Beverly Hills, the City of Los Angeles had acquired the right to construct a water pipe-line along public roads subsequently included in the city limits of Beverly Hills, by accepting the grant made by the Act of April 10, 1911 (Stats.1911, page 852) of the right to so use roads situated in unincorporated territory. At page 315 of 175 Cal., at page 926 of 165 P. in the Beverly Hills case, the court says: ‘No doubt exists as to the power of the state to make the grant, which, when accepted as we have seen, constituted an inviolable contract the extent of which is measured by the purpose for which it was intended, and in the exercise of which right defendant was limited alone by the language used in the grant.’ (Italics added.) See also State v. Marin Municipal Water District, 17 Cal.2d 699, 111 P.2d 651.

Appellant's contention that the telephone company is obliged to obtain a county charter under the provisions of the Broughton Act, warrants consideration of the case of County of Inyo v. Hess, 53 Cal.App. 415, 424, 200 P. 373, 377, where the court says: ‘Our conclusions are * * * third, that under and by virtue of the provisions of section 536, Civil Code, telephone corporations are granted the right and privilege to use the public highways over which to construct and operate lines of telephone wires, free from any grant made by subordinate legislative bodies, and unrestricted by the provisions of the Broughton Act, * * *.’ (Italics added.) A petition for hearing in the Supreme Court, was denied.

Section 536 also received consideration in Postal Telegraph-Cable Co. v. Railroad Commission, 200 Cal. 463, 472, 254 P. 258, 261, where the court held that ‘This section constitutes a grant of a franchise which the state offered, and petitioner accepted by the construction of its lines. The rights acquired * * * are vested rights which the Constitutions, both state and federal, protect. They cannot be taken away by the state, even though the Legislature should repeal the section, or by the people through a constitutional provision.’ The Railroad Commission could not, therefore, demand a certificate of public convenience and necessity from petitioner before it could carry on its intrastate business.

In a recent case not cited by either party hereto,—City of Salinas v. Pacific Tel. & Tel. Co., January, 1946, 72 Cal.App.2d 494, ——, 164 P.2d 905, 907, the court again adhered to the views expressed in earlier California cases and said: ‘The purpose of the 1905 change was to add telephone lines and telephone corporations to the section (Civil Code, Sec. 536). * * * The section has been construed as a continuing offer by the state to all telegraph and telephone companies to use without compensation such public highways as may be convenient or necessary for the operation of their lines. Postal Telegraph-Cable Co. v. Los Angeles, 164 Cal. 156, 128 P. 19.’

A survey of the cases previously mentioned and others cited by appellant and respondent clearly indicates that, as stated by the trial judge in the instant case, ‘the Supreme Court of California, consistently whenever opportunity has presented itself, has dealt with section 536 of the Civil Code as a valid, constitutional enactment.’ And, in the language of respondent's brief,—‘Appellant not only asks the court to turn its back upon these settled doctrines, but to reverse a series of its own decisions covering more than forty years. * * * Therein statutes have been recognized and acted upon as valid and Constitutional and thereunder untold millions have been expended in the establishment and maintenance of indispensable public services.’

In Miller & Lux v. Enterprise Canal & Land Co., 142 Cal. 208, 215, 75 P. 770, 773, 100 Am.St.Rep. 115, answering an assault upon the constitutionality of a code provision, the court said: ‘And although the point of the unconstitutionality of the section may not heretofore have been expressly raised and decided, still we think the principle of the rule of stare decisis should apply, * * *’. The court held that the power there in question ‘has been continuously recognized and declared by this court for too long a period of time to be now questioned.’ There is similar expression by Justice Brewer in voicing a concurring opinion in Western Union Tel. Co. v. Pennsylvania, R. Co. 195 U.S. 540, 593, 25 S.Ct. 133, 150, 49 L.Ed. 312, 1 Ann.Cas. 517: ‘When this court has construed a statute * * * and that construction has remained for more than a quarter of a century, neither changed by any judicial decisions nor set aside by any Congressional legislation, it ought not to be disturbed except for the most cogent reasons.’

Since acceptance by the telephone company of the provisions of Section 536 of the Civil Code has been held to effect a contractual relation between company and state (Western Union Tel. Co. v. Hopkins, 160 Cal. 106, 116 P. 557, and other cases previously cited), the familiar principle, often announced, and stated again recently in Hill v. Fowble, 65 Cal.App.2d 25, 30, 149 P.2d 862, 865, may be noticed; namely that ‘The practical construction placed on a contract by the parties, by their conduct and actions in executing it, is often considered strong evidence of what was intended by its provisions.’ The trial court in the instant case correctly held that ‘This principle applies with extraordinary force and appropriateness to Section 536, Civil Code, in respect to which, since the adoption of the Constitution, and until the preliminaries of filing of the instant suit, the practical construction adopted by the state in all departments called upon to construe the section and its relationship to the Constitution has been uniform, and consistent with the validity of the section.’ Not only this, but the appellant county has apparently acquiesced in this view by way of its answers filed in the Western Union cases hereinbefore mentioned, and otherwise. Respondent further calls attention to the fact, not denied in appellant's brief, that ‘As late as 1935 efforts of appellant to have it (Section 536) repealed were turned down by the legislature’. These matters, it should be noted, are not referred to as bearing upon estoppel or laches alleged by appellant to bar consideration of the constitutional question, the decision of which question is not deemed necessary herein. They are merely mentioned in reference to the practical construction of Section 536 over a period of many years, as shown by the acts of the parties in connection therewith. While not controlling in reference to the present controversy, such construction is not without value.

Although it is doubtless true, as urged in appellant's brief, that a decision upholding the validity of a statute does not preclude the same court from later declaring the statute unconstitutional upon grounds other than these urged in the first case, such doctrine standing alone cannot support appellant's present contention. Indeed, no pertinent case has been cited which would justify this court in declaring Section 536 invalid. On the contrary, what authority there is, fully supports the finding of the trial court. As said in Lacy v. Gunn, 144 Cal. 511, 514, 78 P. 30, 32, ‘the question would seem to be foreclosed by the previous decisions of this court recognizing the validity * * *. While its constitutionality has not been discussed, section 1 of the act has been treated as valid, and its provisions enforced by the court * * *. These decisions have been generally considered and acted on as judicial recognitions of the validity of the section, * * *.’ (Italics added.)

In view of the opinion expressed herein, and of the appellant's frank concession that ‘it has no case at all if section 536 is constitutional’, there is no need to consider the other issues in the case.

The judgment is affirmed.

DORAN, Judge.

YORK, P. J., and WHITE, J., concur.