Matter of Leitner v. New York Telephone Co.

The petitioner owns a cigar store in a business district of lower Manhattan. The New York Telephone Company has refused to install public coin box service in his store. Formerly the telephone company had furnished such service in the store and found it profitable. While the former owner was still in possession of the store he was arrested and convicted for bookmaking, which involved the use of the public telephones. Subsequently another person was arrested and charged with bookmaking over these telephones, but the complaint was dismissed. On the occasion of the second arrest the police department dismantled the telephones in the booths in the premises.

In 1936 the petitioner, while negotiating to purchase this cigar store, learned that telephone service had been discontinued therein by order of the police department. Upon application to the telephone company he was advised that service would be restored as soon as the police department informed the telephone company that it had no objection to the restoration of such service. The police department informed the petitioner that it had no objection to telephone service on the premises, but objected only to the occupant, and that, upon due proof that a legitimate, bona fide new owner was in possession, it would withdraw its objection. Subsequently the petitioner completed the purchase of the store. After going into possession he made application to the telephone company for public coin box service, and was referred by them to the police department. The police department refused approval on the ground that it had no assurance that the telephone service, if restored, would not be used in connection with racetrack gambling. These proceedings were then instituted. An alternative order of mandamus against the telephone company was granted, and, upon a verdict by the jury in favor of the petitioner, a peremptory order was entered. The Appellate Division has affirmed.

The Legislature has provided that a telegraph or a telephone company must furnish reasonable facilities and may not give any undue preference or advantage to any person, corporation or locality, or subject any particular person, corporation or locality to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. (Public Service Law, § 91.)

It is submitted that the telephone company does not possess an absolute right to refuse public coin box service. This right, which it is held to possess, may be exercised arbitrarily and without assigning a reason. To sustain this right reference is made to a rule which the telephone company has filed with the Public Service Commission. That rule provides that "the Company recognizes its responsibility for providing adequate telephone facilities to meet all reasonable public requirements, and in the discharge of this responsibility, the decision as to the extent, character and location of the public telephone facilities to be provided in any given locality rests with the Company."

Where a rule adopted or filed with the Public Service Commission is ambiguous and may be read so as to conflict with the State laws, or, in the alternative, may be read so as to conform with the governing statutes, it should be construed as complying with these statutory requirements. To read this rule as giving the telephone company an absolute and arbitrary right to deny public coin box service would render it inconsistent with the Public Service Law and, therefore, invalid. It is no answer to say that private telephone service may not be denied to the petitioner without reasonable basis. The statute is not limited in scope, and reasonable grounds must exist before any kind of service, public or private, may be denied. Naturally, the telephone company has broader scope in denying public coin box service than it has in reference to private service. Certainly such public service may be denied where it would not be profitable. When, as in the case at bar, the revenue is satisfactory, presumably there is a public demand for such service, and denial requires that a valid reason must be advanced. Only by blinking at the actualities can it be said that, since these are public telephones, the question is one solely between the public and the utility, and no attention need be paid to the desires of an individual store owner.

In large cities, especially in business sections, it is common knowledge that a substantial portion of the customers of cigar stores make their purchases incidental to the use of the telephone, and that the revenue from such customers may determine whether the business will or will not be profitable. The fact that owners of cigar stores in the neighborhood are supplied with public coin box service gives them an advantage over and results in unfair discrimination against the petitioner.

The effect of a contrary decision is to invest the telephone company with arbitrary discretion whether to grant public telephone service to one chain of cigar stores as against another competing chain. A public service corporation should not be accorded so wide a latitude of selection, and the Legislature by statute has attempted to limit the exercise of discretion of such corporations. Refusal to install public telephone service may reasonably be based upon considerations of income or risk to equipment. Reasonable basis may not be found in the unwillingness of the police department to approve. This would leave the petitioner without redress. He cannot bring action against the police to compel approval. The possibility exists that at times such refusal may be based upon ulterior considerations. On the other hand, if we permit a remedy against the telephone company, the latter is compelled to inquire of the police their ground of objection, and must render service unless this ground or some other furnishes a valid basis for refusal.

In the case at bar it is conceded that the refusal by the telephone company is based solely on the ground that the police had not given approval. This action on the part of the police department was not based upon the character or any act of the petitioner. The claim against the petitioner is limited to an attack on the character of his predecessor in ownership of the store, with which predecessor he is in no way connected. Under the circumstances the jury was justified in finding that there was no reasonable basis for the refusal to grant service to the petitioner.

The judgment appealed from should be affirmed, with costs.

CRANE, Ch. J., LEHMAN and O'BRIEN, JJ., concur with RIPPEY, J.; FINCH, J., dissents in opinion in which LOUGHRAN, J., concurs; HUBBS, J., taking no part.

Orders reversed, etc.