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March 14, 1950



Ralph E. Evans, Harry H. Frank, McNees, Wallace & Nurick, Harrisburg, for appellants.

Arthur J. Diskin, Assistant Counsel, William J. Grove, Assistant Counsel, Charles E. Thomas, Counsel, Harrisburg, William H. Lamb, John B. King, E. Everett Mather, Jr., Philadelphia, for intervening appellee.

Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross, Arnold and Fine, JJ.

Author: Reno

[ 166 Pa. Super. Page 395]

RENO, Judge.

The Public Utility Commission dismissed the joint complaint of Pennsylvania Hotels Association (hereafter called the Association) and Penn-Harris Hotel Company (called Penn-Harris against The Bell Telephone Company of Pennsylvania (called Bell), and the complainants appealed separately. They charged in effect that Bell violated the Public Utility Law of May 28, 1937, P.L. 1053, as amended, 66 P.S. § 1101 et seq., by omitting from its filed tariffs the scale of commissions paid by Bell to the hotels for services rendered by the hotels in connection with the semi-public branch exchanged service to which they subscribed.

The Association comprises 205 Pennsylvania hotels; 125 of them subscribe to the branch exchange service; and 56 of these are represented by the Association and mentioned in the complaint. The Association itself is not

[ 166 Pa. Super. Page 396]

    a subscriber to the type of service here involved. The Law, supra, § 1001, 66 P.S. § 1931, provides: 'The commission, or any person, corporation, or municipal corporation having an interest in the subject matter, * * * may complain in writing * * *.' (Emphasis added.) Obviously, the Association does not have a direct, immediate, pecuniary and substantial interest in the subject of the controversy, and the commission correctly held that it was not a proper party. Lansdowne Borough Board of Adjustment's Appeal, 313 Pa. 523, 170 A. 867; Pennsylvania Commercial Drivers Conference v. Pennsylvania Milk Control Comm., 360 Pa. 477, 62 A.2d 9; Seitz Liquor License Case (In re Seitz), 157 Pa. Super. 553, 43 A.2d 547.

Penn-Harris is qualified to litigate the questions herein raised. It utilizes Bell's semi-public branch exchange service. By it Penn-Harris' guests, and those of other hotels which use the service, secure incoming and outcoming telephone service by means of extension stations connected with a central switchboard located on the hotel premises and operated by hotel employes. The equipment is owned by Bell and leased to the hotel at a monthly rental prescribed in the tariffs filed with the Commission or its predecessor. The reasonableness of that rent is not here questioned. The tariffs provide for a contract under which the hotel is designated as Bell's agent for the collection of the toll charges incurred by the guests. For the service rendered as collecting agent Bell pays a stipulated commission which, although changed from time to time, is uniform, and is paid by deducting the amount earned from the rent and the total of toll charges shown on the bill submitted monthly to the hotel. Since 1924, without objection by any one before the present complaint was filed in 1946, Bell's tariffs did not state the scale of the commissions and the contracts for them were not filed with the Commission.

[ 166 Pa. Super. Page 397]

The contracts also provided that the hotel should 'collect for the Company its regularly established tolls.' Violation of this provision precipitated this controversy. Penn-Harris and other hotels began to impose surcharges upon its guests, i. e., they charged and collected from their guests a sum of money over and above the legal rate established by Bell, and retained the surcharged for themselves. Hence the guest paid more than the rate established by Bell's tariffs, and the hotels, which obviously are not public utilities, collected compensation for the use of telephone facilities. In 1942 the Commission informed Bell that this constituted a violation of its tariffs and directed it to institute necessary measurers to have its tariffs strictly followed. Copies of this letter were sent to Penn-Harris and other hotels. No further action was taken pending completion of certain proceedings before the Federal Communications Commission. In 1944 that Commission ordered all telephone companies to file new tariffs which expressly stated that surcharges by hotels in excess of the duly published interstate tariff rates were prohibited, and its order was affirmed by the United States Supreme Court. Ambassador, Inc., v. United States, 325 U.S. 317, 65 S.Ct. 1151, 89 A.L.R. 1637. Subsequently Bell notified Penn-Harris and other hotels that unless they ceased making surcharges on intrastate toll messages their contracts would be cancelled. Penn-Harris and other hotels continued the surcharges, and their contracts were cancelled. Consequently, no contract for commissions has been in force between Bell and Penn-Harris since the cancellation, and yet Penn-Harris has withheld $7,148 as alleged commissions. After Bell Telephone Co. of Pennsylvania v. Philadelphia Warwick Co., 355 Pa. 637, 50 A.2d 684, was instituted to collect the commissions withheld by that hotel, the instant complaint was filed.

Coincident with the cancellations, Bell offered a new contract under which the hotel was required, inter alia,

[ 166 Pa. Super. Page 398]

    to agree that it would not charge its patrons any sums for telephone service in addition to those set forth in Bell's tariffs. On its part, Bell agreed to pay to the hotel for its services for collecting the toll charges a scale of commissions which differed from that previously paid, and which was not set forth in Bell's tariff filed with the Commission.*fn1 Appellants now contend that Bell's failure to file as a part of its tariffs the contract containing the rate of the commissions is a violation of the Law, supra, § 302, 66 P.S. § 1142, which requires utilities to file tariffs showing the rates established by them, and of § 308(a), 66 P.S. § 1148, which requires utilities to notify the Commission of any change of rates.

The sole issue, as stated by appellants, is 'whether or not the rules and regulations including the commissions allowed hotels as subscribers of semi-public branch service are 'rates' within the meaning of that term as defined in the Public Utility Law, § 2(19), 66 P.S. § 1102, and as a 'rate' should be plainly specified in respondent's tariff.'

Section 2(19), supra, provides: 'Rate' means every individual, or joint fare, toll, charge, rental, or other compensation whatsoever of any public utility, or contract carrier by motor vehicle, made, demanded, or

[ 166 Pa. Super. Page 399]

    for and the reasonableness of the compensation paid by the utility. This is a purely managerial function and, under all our cases, is not a power statutorily committed to the Commission. Northern Pennsylvania Power Co. v. Pennsylvania Public Utility Comm., 333 Pa. 265, 5 A.2d 133. 'It [the Commission] does not manage, but regulates. The company spends its money as it sees fit. It can adopt any plan it wishes, and the Commission cannot directly stop it'. Swarthmore Borough v. Public Service Comm., supra, 277 Pa. page 483, 121 A. page 491. (Emphasis added.) Of course, 'The commission may consider its subject-matter [e. g., the commissions paid to hotels] as a rate factor in a rate base' case. Id., 277 Pa. page 483, 121 A. page 492.

The decisions of utility commissions of other states and the opinions of their appellate courts, relied upon by appellants, have been studiously examined, but they relate to facts not here present, and they are not persuasive.

Order affirmed.

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