1. The District Court properly enjoined the appellant
proprietors of hotels from collecting, in violation of a regulation
filed by the telephone companies with the Federal Communications
Commission pursuant to the Communications Act, surcharges from
guests who make interstate or foreign long distance telephone calls
or receive such calls "collect." Pp.
325 U. S. 324,
325 U. S.
326.
2. Questions of the justness or reasonableness of the regulation
must be addressed, in the first instance, to the Commission. P.
325 U. S.
325.
3. In the circumstances of this case, it was within the
discretion of the District Court to enjoin the hotels, though it
did not enjoin the telephone companies. P.
325 U. S.
325.
4. It is unnecessary here to determine whether the hotels were
"agents" of the telephone company or "subscribers." Whatever the
relationship, it was one which the statute contemplates shall be
governed by reasonable regulations initiated by the telephone
company but subject to the approval and review of the Commission.
P.
325 U. S.
326.
Affirmed.
Direct appeal under the Expediting Act from a decree sustaining
the validity of a tariff filed with the Federal Communications
Commission and enjoining its violation by the defendant hotels.
Page 325 U. S. 318
MR. JUSTICE JACKSON delivered the opinion of the Court.
This action was instituted at request of the Federal
Communications Commission in the District Court of the United
States for the District of Columbia. The Chesapeake & Potomac
Telephone Co., which is engaged in rendering telephone service in
the District of Columbia, and the American Telephone and Telegraph
Co., were made defendants, as also were the appellants, comprising
the proprietors of twenty-seven hotels in the District of Columbia.
The complaint asks, and the court below has granted, an injunction
which forbids the hotels to make charges against their guests in
connection with any interstate or foreign message toll service to
or from their premises other than the toll charges of the telephone
companies and applicable federal taxes. The prohibition is based on
a provision to that effect in the tariff filed by the telephone
companies. Upon the trial, evidence was limited by stipulation to
the facts about the Shoreham Hotel, accepted as typical of all
defendants.
Telephone service is available to patrons of the hotel without a
charge by the hotel. In or near the lobbies, telephone booths have
direct connection with telephone company central offices. Calls can
there be made without involving the services of the hotel personnel
and at the usual tariff rates of the telephone company paid through
its coin boxes.
However, modern hotel standards require that telephone service
also be made available in the rooms. Equipment for this purpose is
specified by the hotel, but is installed and owned by the telephone
company. The hotel pays a monthly charge for its use, and its
operation is at the hotel's expense. The operating cost is
substantial, rentals of the Shoreham in 1943 being $8,680.10, and
payrolls for operation amounting to $21,895.62.
Page 325 U. S. 319
Typical equipment consists of a private branch exchange, known
as a PBX board, connected with a number of outside or trunk lines
and also with extension lines to each serviced room, and other
items. This equipment permits calls for various kinds of room
service, communication between guests, and calls from station to
station within the hotels for which no use of other lines of the
telephone company is necessary. The same switchboard and its hotel
employed operators also handle both incoming and outgoing calls for
guests, including many long distance messages.
So far as the telephone company is concerned, the toll message
coming to its central office from the hotel switchboard is handled
much as a similar message from a residence or business station.
Within the hotel, however, room telephone service necessitates
additional labor, as well as use of the equipment. When a call is
made from the station in a room, it is placed with the switchboard
operator employed by the hotel, and she, in turn, places the call
with the telephone company's long distance operator. It is
customary also to render services described as secretarial.
Incoming messages may be received during the guest's absence, and
memoranda of them are made for and delivered to him. Outgoing
messages may be transmitted for the guest. Information as to his
whereabouts may be left with the operator for communication to
callers; he may arrange to be reached at other locations than his
room; he may arrange to have telephone service suspended for a
period; incoming calls may be limited to those from designated
persons, and various other services helpful to comfortable living
are supplied by those in charge of the interior telephone
system.
Each long distance call placed through the hotel's switchboard
is charged by the telephone company to the hotel, not to the guest.
The hotel pays the charge, and is reimbursed, less credit losses,
by collections from the guest.
Page 325 U. S. 320
The reimbursement item is separately stated on the guest's bill,
and is not itself involved in this controversy.
The hotel also seeks to recoup the cost of its service,
including equipment rentals, and perhaps some margin of profit, by
a service charge to the quests who make long distance calls from
their rooms. This charge varies in different hotels, but this
typical case shows charges of ten cents for toll calls where the
telephone tariff is one dollar or less, ten percent of the
telephone tariff where the charge is more than one dollar, with a
maximum of three dollars per call. This service charge appears on
the guest's bill as a separate item, but is stated, like the
reimbursement charge, as "Long distance," abbreviated to
"LDIST."
In January, 1942, a proceeding was instituted by the Federal
Communications Commission for the purpose of determining whether
the charges collected by hotels, apartment houses, and clubs in the
District of Columbia, in connection with interstate and foreign
telephone communication, were subject to the jurisdiction of the
Commission under the Communications Act, and what tariffs, if any,
should be filed with the Commission showing such charges. No such
tariffs were on file with the Commission at the time the proceeding
was instituted.
The Commission, December 10, 1943, found that it does have
jurisdiction under the Communications Act over the charges
collected by hotels and others, and ruled that, if such charges are
to be collected at all, they must be shown on tariffs on file with
the Commission. It thought that the hotel should be regarded as the
agent of the telephone companies. It issued an order directing the
two telephone companies either to file appropriate tariffs showing
charges collected by the hotels in connection with interstate and
foreign telephone communications or to file an appropriate tariff
regulation containing a specific provision with respect to
conditions under which such interstate and foreign service would be
furnished to hotels, apartment houses and clubs.
Page 325 U. S. 321
Confronted with these alternatives, The Chesapeake & Potomac
Telephone Company filed a tariff provision in which the American
Telephone & Telegraph Company concurred, which reads as
follows:
"Message toll telephone service is furnished to hotels,
apartment houses, and clubs upon the condition that use of the
service by guests, tenants, members, or others shall not be made
subject to any charge by any hotel, apartment house, or club in
addition to the message toll charges of the Telephone Company as
set forth in this tariff."
This tariff provision became effective, by its terms, February
15, 1944. Four days later, this suit was instituted to enjoin the
hotels from collecting charges made in violation of the tariff
provision, and to enjoin the telephone companies from furnishing
such service to these hotels or others which continued to make
charges.
The District Court sustained the validity of the tariff.
[
Footnote 1] It regarded the
hotels as subscribers, rather than as agents of the telephone
companies. It held that the tariff was violated by collection of
surcharges from guests who make interstate or foreign long distance
telephone calls or receive such calls "collect." The court did not
pass upon the justness or reasonableness of the tariff, being of
opinion that such questions were, in the first instance, to be
submitted to and determined by the Commission in appropriate
proceedings. An injunction issued against the hotels, but not
against the telephone companies, the court, however, retaining
jurisdiction over the proceedings as to all defendants for the
purpose of issuing such further orders as might be necessary to
effectuate its decision. Direct appeal was taken by the hotel
defendants to this Court. [
Footnote
2]
Page 325 U. S. 322
It has long been recognized that, if communications charges are
to correspond even roughly to the cost of rendering the service,
the use to which telephone installations may be put by subscribers
must be subject to some kind of classification and regulation which
will conform the actual service to that contracted for. Familiar
examples are the classification of residence as against business
service, with a requirement that the subscriber confine his use of
the instruments accordingly. Of course, the subscriber who installs
a private branch exchange with multiple trunk lines and many
extensions has obviously contracted for a class of service
different from one whose installation consists of a single station.
One of the problems incident to the service of a subscriber who
takes facilities greatly in excess of his own needs in order to
accommodate others is to fix upon what terms he may extend the use
of telephone facilities to others. This is an aspect of the problem
of resale of utility service, which is not confined to the
telephone business. [
Footnote
3]
Page 325 U. S. 323
The Communications Act of 1934 recognizes that tariffs filed by
communications companies may contain regulations binding on
subscribers as to the permissible use of the rented communications
facilities. The supervisory power of the Commission is not limited
to rates and to services, but the formula oft repeated in the Act
to describe the Commission's range of power over the regulated
companies is "charges, practices, classifications, and regulations
for and in connection with such communication service." 48 Stat.
1070, 47 U.S.C. § 201(b). It is in all of these matters that the
Act requires the filed tariffs to be "just and reasonable," and
declares that, otherwise, they are unlawful. [
Footnote 4] By none of these devices may the
companies perpetrate an unjust or unreasonable discrimination or
preference. [
Footnote 5] All of
these must be filed with the Commission in the form it prescribes,
may not be changed except after due notice, and must be observed in
the conduct of its business by the company. [
Footnote 6] These provisions clearly authorize the
companies to promulgate rules binding on PBX subscribers as to the
terms upon which the use of the facilities may be extended to
others not themselves subscribers.
Of course, such authority is not unlimited. The telephone
companies may not, in the guise of regulating the communications
service, also regulate the hotel or apartment house or any other
business. But, where a part of
Page 325 U. S. 324
the subscriber's business consists of retailing to patrons a
service dependent on its own contract for utility service, the
regulation will necessarily affect, to that extent, its third party
relationships. Such a regulation is not invalid
per se
merely because, as to the communications service and its incidents,
it places limitation upon the subscriber as to the terms upon which
he may invite others to communicate through such facilities.
It is urged, however, that the regulation in question is
unlawful because it is unreasonable. It is said that it invades the
relationship between hotel and guest excessively, and denies to the
hotel the right reasonably to recoup its cost and to profit by the
services it renders. But we agree with the District Court that,
where the claim of unlawfulness of a regulation is grounded in lack
of reasonableness, the objection must be addressed to the
Commission, and not, as an original matter, brought to the court.
We think that the Act confers jurisdiction upon the Commission to
hear appellants' grievances against the substance of this
regulation. Indeed, appellants inform us that the American Hotel
Association, on behalf of its members, including the appealing
hotels, has filed a formal complaint with the Commission alleging
that the new provision of the tariff schedule was unreasonable,
discriminatory, and unlawful, and asking for investigation and, at
the same time, asserting that the tariff was illegal. Action on
that complaint has been held in abeyance by the Commission pending
the final decision on the jurisdictional question in this suit.
It is clear that the charges being made in this case violate the
regulation. The charges made are not based on the service rendered
by the hotel, but vary in accordance with the toll charge made by
the telephone company for communications services. So far as
appears, the service rendered by the hotel in handling a guest's
toll call from Washington to Baltimore is substantially the same as
for
Page 325 U. S. 325
a call to San Francisco. But, for like service, the charge
varies with the amount of the telephone tariff for the
communication. The guest's charges are so identified with the
communications service that they are brought within the
prohibitions of this regulation.
Since the regulation, apart from questions of reasonableness
which must be presented to the Commission, is a valid regulation of
the subscriber's use of the telephone facilities involved, a
departure from the regulation is forbidden by the Act, and the
prosecution of an action to restrain a violation is authorized.
[
Footnote 7] When an action for
enforcement is instituted in any District Court, the Act expressly
provides that it shall be lawful "to include as parties, in
addition to the carrier, all persons interested in or affected by
the charge, regulation, or practice under consideration," and
decrees may be made against such parties in the same manner and to
the same extent as authorized with respect to carriers. [
Footnote 8] One can hardly gainsay the
Government's assertion that the appellants here are persons
interested in and affected by the regulation in question, and
therefore are proper parties defendant in the action, and
injunction could properly issue against them.
It is urged, however, that, inasmuch as the Court did not enjoin
the telephone companies, the hotels should not be enjoined. Four
days after the effective date of this regulation, the hotels had
indicated no intention to comply with it, although they had had due
notice. It was well within the discretion of the trial court to
conclude that this justified an injunction. Four days of default by
the subscriber, however, might not be regarded as requiring an
injunction, which would compel the telephone companies to cut off
service on which many persons rely. We are unable to see that the
hotels have been prejudiced by
Page 325 U. S. 326
the failure to enjoin the telephone companies or are in a
position to complain of the omission of what would have been an
additional hardship to themselves.
Much has been said in argument about the theory of the
relationship between the hotel and the telephone company and the
discrepancy between the view of the Commission that the contract
created an agency and that of the District Judge, who said that the
evidence fails to show that the hotels are agents of the telephone
company, and held that "the hotels are subscribers." We do not
think it is necessary in determining the application of a
regulatory statute to attempt to fit the regulated relationship
into some common law category. It is sufficient to say that the
relation is one which the statute contemplates shall be governed by
reasonable regulations initiated by the telephone company, but
subject to the approval and review of the Federal Communications
Commission.
Without prejudice to determination by the Commission of any of
the questions raised in this case, we hold that the injunction was
properly issued, and the judgment below is
Affirmed.
MR. JUSTICE BLACK and MR. JUSTICE DOUGLAS took no part in the
consideration or decision of this case.
[
Footnote 1]
The opinion was rendered orally, and is not reported.
[
Footnote 2]
Pursuant to Section 2 of Expediting Act, 32 Stat. 823, 36 Stat.
1167, 15 U.S.C. § 29; 49 U.S.C. § 45, and Communications Act of
1934, 48 Stat. 1093, 47 U.S.C. § 401(d). Also § 238(1) of Judicial
Code, as amended, 43 Stat. 938, 28 U.S.C. § 345(1).
[
Footnote 3]
Cf. Re New York Telephone Co., 26 P.U.R.(N.S.) 311; 20
P.U.R.(N.S.) 350;
People ex rel. Public Service Commission v.
New York Telephone Co., 262 App.Div. 440, 29 N.Y.S.2d 513,
aff'd without opinion, 287 N.Y. 803, 40 N.E.2d 1020;
Hotel Pfister v. Wisconsin Telephone Co., 203 Wis. 20, 233
N.W. 617;
Jefferson Hotel Co. v. Southwestern Bell Telephone
Co., 15 P.U.R.(N.S.) 265;
Re Hotel Marion Co.,
P.U.R.1920D 466;
Connolly v. Burleson, P.U.R.1920C, 243;
Re Hotel Telephone Service and Rates, P.U.R.1919A, 190;
Hotel Sherman Co. v. Chicago Telephone Co., P.U.R.1915F
776;
1015 Chestnut Street Corp. v. Bell Telephone Co. of
Pennsylvania, P.U.R.1931A 19, 7 P.U.R.(N.S.) 184;
Budd v.
Southwestern Bell Telephone Co., 28 P.U.R.(N.S.) 235.
Remetering of electric energy creates similar problems of
regulation, often dealt with by tariff prohibition of remetering.
See Lewis v. Potomac Electric Power Co., 62 App.D.C. 63,
64 F.2d 701;
Karrick v. Potomac Electric Power Co.,
P.U.R.1932C, 40;
Florida Power & Light Co. v. State ex rel.
Malcolm, 107 Fla. 317, 144 So. 657;
Sixty-seven South Munn
v. Board of Public Utility Commissioners, 106 N.J.L. 45, 147
A. 735,
aff'd, 107 N.J.L. 386, 152 A. 920,
cert.
denied, 283 U.S. 828;
Public Service Commission, Second
Dist. v. J. & J. Rogers Co., 184 App.Div. 705, 172 N.Y.S.
498;
People ex rel. N.Y. Edison Co. v. Public Service
Commission, 191 App.Div. 237, 181 N.Y.S. 259,
aff'd,
230 N.Y. 574, 130 N.E. 899.
[
Footnote 4]
47 U.S.C. § 201.
[
Footnote 5]
47 U.S.C. § 202.
[
Footnote 6]
47 U.S.C. § 203(a), (b), (c).
[
Footnote 7]
47 U.S.C. § 401.
[
Footnote 8]
47 U.S.C. § 411.