LOCKWOOD CHAMBER OF COMMERCE v. FARMERS TELEPHONE EXCHANGE AND LOCKWOOD TELEPHONE EXCHANGE.

Case No. 3841.

Decided February 4, 1924.

Commission Unable to Grant Relief on Complaint as to Service Where Companies Were Operating Without a Franchise — Complaint

as to Unsatisfactory Service Dismissed.

REPORT AND ORDER.

Complaint of the Lockwood Chamber of Commerce against the telephone exchange named herein as to unsatisfactory service and a desire for a reasonable service of twenty-four hours duration, filed with this Commission was heard by a Commissioner on January 18, 1924, and at that hearing the following appears to be the state of facts existing :

That Lockwood is a city of the fourth class, having a mayor and four aldermen; that some twenty years ago D. C. Clark, owner and operating the Lockwood Telephone Exchange, applied for a franchise in that city, and a franchise was refused, but some order, not by an ordinance, was made permitting him to locate poles in the streets of the city, upon which he acted and started the operation of his exchange.

That some eight years or more thereafter the Farmers Telephone Exchange was organized by the farmers in that community, and thereafter they entered Lockwood under the same terms and conditions as Mr. Clark, and since that time the dual exchanges have continued.

The Chamber of Commerce of that city desiring to be effective in the improvement and progress of that city, found among other things, a general bad condition existing as to the service rendered by each of the exchanges, a general bad condition of the poles, lines and other equipment, and the further fact that subscribers of one exchange were necessarily cut off from interchange of conversation with others of the competing company, and were impressed

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with the idea that a universal service for the whole community would blend them together much more harmoniously and thus benefit the social and business life of the community served by the two exchanges, and in seeking to bring this about have sought the aid of this Commission.

Mr. Johnson, of the telephone department of the Commission, has sought by every means possible to persuade the two exchanges to sell one to the other or to some other disinterested person competent to operate, and this has been the desire of the city officials and the Chamber, of Commerce, but this desired end fails of consummation by reason of the obstinacy of Mr. Herman Ott, now the owner by presentation of the equipment of the Farmers Telephone Exchange. Mr. Ott refuses to buy or sell or to accept the good offices of the Chamber of Commerce or of the city looking towards a fair and reasonable disposition of the vexing issue, desired to be solved, and presented for consideration of the Commission a petition signed by a great number of his subscribers that they

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are satisfied with his service, and that the service to all other persons would be satisfactory if they would keep their lines in proper condition and repair."

Mr. Clark testified that he was now rendering an adequate twenty-four hour service and has in his exchange the long distance connections, which service he also permits the Ott exchange to use. This service, however, under present conditions, is not available to the Ott subscribers during the night and late evenings.

The purpose and desire of the Lockwood Chamber of Commerce is very commendable and a "consummation to be wished," as it would do away with the necessary duplication of telephones required of the business men and give universal service much desired, and a general satisfactory service could be given and required.

From the evidence introduced it appeared that the second telephone system installed in Lockwood, was not conceived by a desire for a betterment of service, but by some

professional rivalry existing between a drug store and two physicians residing there, and was installed just prior to the enactment of the Public Service Commission Law, so that at that time its existence for a malevolent purpose could not be avoided.

However, a condition now exists that needs some remedy, and the problem presented is, can the Public Service Commission do anything at this time for the betterment of these conditions?

Telephone companies are granted the right to erect, construct and maintain their systems, but when placing them in the streets, avenues or alleys of the cities of this State are required to receive a franchise from the city showing this consent, and it is our view that neither of the companies at Lockwood, Missouri, have complied with this provision of the law, as the city should have an ordinance, passed in form required by law, making this grant, and when this has been done the Commission may then, on application for the certificate of convenience and necessity required by law made to this Commission, exercise, if it may, some jurisdiction over the service to be given to the city of Lockwood. Until the city of Lockwood acts or chooses whether it desires one or the two companies to thus continue in Lockwood, the Commission should reserve its action herein.

The petition should be dismissed without prejudice to further action or complaint by any party in interest after affirmative action by the city of Lockwood.

It is, therefore, ordered, 1. That the complaint of the Lockwood Chamber of Commerce be, and the same is hereby, dismissed without prejudice.

Ordered, 2. That this order shall be in full force and effect on and after February 4, 1924.

February 4, 1924.

NEBRASKA.

State Railway Commission.

In re APPLICATION OF THE BLAIR TELEPHONE COMPANY FOR AUTHORITY TO INCREASE ITS CAPITAL STOCK.

Application No. 5375.

Decided January 16, 1924.

Increase in Capital Stock Authorized.

FINDINGS.

In effect this is an application for modification of an order issued by this Commission in Application No. 4113,* but it has been docketed separately and will be so considered. In Application No. 4113,* the Commission authorized the Blair Telephone Company to issue stock in the amount of $36,700, of which $23,414 was for cash paid in at various times, and the remainder for dividends earned but not paid. The new issue, added to the then outstanding issue of $10,800, made a total capital issue of $47,500. This order was entered on March 5, 1920. Compliance with the order required an amendment to the articles of incorporation of the company. For that reason and others, the company has never issued the new stock.

To have issued the stock to the existing stockholders numbering 241, with 26 shares additional in the treasury, would have required the issuance of fractional shares. This the company does not desire. It desires also to change the par value of the stock from $40.00 to $50.00 per share. In this application, therefore, it asks permission to issue a total of 964 shares of its common stock at a par value of $50.00 per share. The articles of incorporation have been properly amended and notice of the same filed with the Commission. The plan as proposed by the company will increase the total outstanding issue by $700. It

*See Commission Leaflet No. 102, p. 221.

is proposed to issue 4 new shares at $50.00 for every share of $40.00 par, requiring a pro rata cash payment aggregating $700.

On November 30, 1923, the balance sheet of the company showed total assets of $87,310.88. Of this amount, $77,422.46 was in fixed property. It is manifest, therefore, that the issue as proposed will still leave a wide margin between the outstanding stock and the undepreciated assets of the company. The Commission found in the previous order that the present value of the physical property, plus the working assets, was approximately $47,401. Since that time, additions and betterments have been made to the property so that its present or depreciated value on an original cost basis exceeds $50,000. There appears to be no reason, therefore, why the application of the company should not be approved.

ORDER.

It is, therefore, ordered, That the order issued by this Commission in Application No. 4113* be modified so as to authorize the Blair Telephone Company to issue its common stock in the amount of $37,400 instead of $36,700 as previously authorized, provided that the total outstanding issue shall not exceed $48,200.

It is further ordered, That the par value of this stock be changed from $40.00 to $50.00 per share, and that the increase as herein provided for shall be paid for in cash by existing stockholders on a pro rata basis.

It is further ordered, That report of the distribution of the additional stock be submitted to the Commission when such distribution is completed.

Made and entered at Lincoln, Nebraska, this sixteenth day of January, 1924.†

* See Commission Leaflet No. 102, p. 221.

+ On February 13, 1924, the Commission issued an order modifying the above order so as to authorize the issue of common stock in the amoun of $37,520 instead of $36,700, provided that the total outstanding issue shall not exceed $48,200.

[Neb.