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PACIFIC TELEPHONE & TELEGRAPH COMPANY v. KUYKENDALL

decided: May 26, 1924.

PACIFIC TELEPHONE & TELEGRAPH COMPANY
v.
KUYKENDALL, AS DIRECTOR OF PUBLIC WORKS OF WASHINGTON, ET AL.



APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF WASHINGTON.

Author: Taft

[ 265 U.S. Page 197]

 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

These are two appeals from the District Court in the same case involving the question of the confiscatory character

[ 265 U.S. Page 198]

     of rates for telephone service within the State of Washington and in the cities of Seattle and Tacoma, to which rates the appellant company is limited by a refusal of the Department of Public Works to permit an increase thereof. The Pacific Telephone & Telegraph Company is a corporation of California authorized to do business in Washington and owning a plant covering the State. It owns all the stock of the Home Telephone Company which owns and operates the Spokane Exchange. A similar question as to confiscatory rates has arisen in respect to that company and that exchange, but a separate bill was filed by that company and is considered on appeal in a case reported next after this.

This bill by the Pacific Company seeks an injunction against the Department of Public Works of the State to prevent it from interfering with the maintenance and collection of the increased rates the Company proposes in all parts of Washington except Spokane. A court of three judges was organized to hear the application for a temporary order. The suit depended for jurisdiction both on the diverse citizenship of the parties and upon the averment that the order of the Department of Public Works if enforced would deprive the company of its property without due process of law, in violation of the Fourteenth Amendment. The court set aside the temporary restraining order issued by the District Judge on the filing of the bill and denied the application for temporary injunction. Appeal was taken direct to this Court under ยง 266, Jud. Code, as amended by the Act of March 3, 1913, c. 160, 37 Stat. 1013. After the denial of the temporary injunction, the District Judge heard the case on a motion to dismiss the bill and granted the motion, and from this final decree a second appeal was taken.

The bill of complaint shows that on August 8, 1919, the Public Service Commission of the State, the predecessor of the Department of Public Works, made an order

[ 265 U.S. Page 199]

     prescribing maximum rates and charges to be charged by the Pacific Company on and after that date within the State of Washington which are made an exhibit to the bill; that on September 20, 1922, the company filed a schedule of rates with the Department of Public Works increasing rates to be charged for exchange telephone service in all the exchanges owned by the company in Washington; that the Department on September 24, 1922, suspended the rates for thirty days, and that after numerous hearings as to their reasonableness, the Department by a majority of two members on March 31, 1923, denied the increase. The bill further averred that the fair and reasonable value of the property of the company in Washington, not including the Spokane plant, was $35,616,896, which includes $20,852,067 for the Seattle plant, and $3,457,290 for that of Tacoma, and that this estimate includes nothing for franchises and nothing for going concern; that the fair annual return which the company was entitled to earn was eight per cent. on this value, whereas the actual return was as follows:

Fair

Cost. value.

Year 1919, State of Washington 4.97% 3.67%

Year 1919, City of Seattle 3.97% 2.66%

Year 1919, City of Tacoma .98% .81%

Year 1920, State of Washington 4.42% 3.33%

Year 1920, City of Seattle ...


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