
    242 La. 24
    SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY v. LOUISIANA PUBLIC SERVICE COMMISSION et al.
    No. 45493.
    Supreme Court of Louisiana.
    May 29, 1961.
    On Rehearing Nov. 6, 1961.
    
      Jack P. F. Gremillion, Atty. Gen., Joseph H. Kavanaugh, Special Counsel, Melvin G. Dakin, Baton Rouge, for defendant-appellant.
    C. C. Bird, Jr., Breazeale, Sachse & Wilson, Baton Rouge,- James W. Hammett, New Orleans, for plaintiff-appellee.
   SUMMERS, Justice.

This case is ancillary to a proceeding instituted by the Louisiana Public Service Commission on December 1, 1954, directing Southern Bell Telephone and Telegraph Company to show cause why its “rates and charges for Louisiana intrastate telephone service should not be reduced and for such further order or orders as the Commission may deem necessary in the premises.” This resulted in Commission Order Number 6993 of June 30, 1956, which reads in pertinent part:

“It isj therefore, ordered:
“1. That Southern Bell Telephone and Telegraph Company shall reduce its annual gross intrastate operating revenues in the amount of $3,940,000.-00.
“2. This reduction shall be accomplished in the following manner:
“Effective September 1, 1956, all public telephone pay station rates shall be reduced' from ten cents (10^) to five cents (5‡) per local call.
“Effective August 1, 1956, all intrastate toll rates and charges shall be subject to a discount of 20 per cent per call.”

Subsequently, by its Order Number 6999 the Commission extended each of the two effective dates one month.

Order Number 6993 of the Commission was affirmed by this Court on appeal. In affirming the Order of the Commission this Court stated:

“If at any time in the future, the company’s investors are prejudiced in their enjoyment of a fair and equitable return, this Commission will be available for appropriate rate adjustments.”

Furthermore it was there said:

“As appears from its Order, the Commission has retained jurisdiction to act upon any revision of the amount of the reduction which can be based upon competent evidence. Thus, the door is not closed to the Telephone Company in the proceedings in which the order herein involved was rendered.”

Thereafter, in a purported compliance with Order Number 6993, Southern Bell proceeded to make refunds of 20 per cent on intrastate toll calls for the period commencing September 1, 1956, which was the period covered by the Order as subsequently amended, and to reduce intrastate toll charges thereafter in accordance with said order except there were no refunds and no reductions on Southern Bell’s portion of toll calls jointly handled with the independent companies, when such calls originated at stations of the independent companies.

It having come to the attention of the Commission that refunds were not being made with respect to the Southern Bell portion of certain intrastate toll rates and charges imposed for the joint use of exchange and toll facilities owned either by Southern Bell or independent connecting companies, the Commission issued its order on August 5, 1957, to Southern Bell to show cause why refunds of the Southern Bell portion of such rates and charges should not be made. Before a hearing on this rule and on August 14, 1957, pursuant to the rights accorded them by this Court and the Commission itself, Southern Bell sought relief from the Commission for an increase in rates. On October 10, 1958, the Commission granted the Company an annual increase of $1,918,707 in gross earnings, though it did not make this effective because it was dissatisfied with Southern Bell’s expansion program. On appeal the District Court affirmed the increase ordered by the Commission. On further appeal to this Court we granted an additional increase in rates. See Southern Bell Telephone & Telegraph Co. v. Louisiana Public Service Commission, 239 La. 175, 118 So.2d 372.

In the meantime Southern Bell filed an answer to the Commission’s show cause order of August 5, 1957, respecting the refunds referred to above alleging in such answer that (1) the said toll rates and charges as to which refunds have not been made were rates and charges not collected from subscribers or customers of Southern Bell and that Southern Bell has no way of reducing such rates and charges since they are rates and charges collected by independent connecting companies. Southern Bell further alleged that (2) since the Commission has not previously fixed joint rates and charges for Southern Bell and independent connecting companies, for the Commission to now order reduction of even Southern Bell’s portion of such rates and charges is tantamount to fixing joint rates and charges without having afforded affected parties a hearing on the issues. Southern Bell further alleged that (3) the division of such toll rates and charges pursuant to contract between Southern Bell and independent connecting companies did not constitute joint rates and charges, hut was the result of private contractual arrangements protected against impairment by the Constitutions of the United States and State of Louisiana.

A hearing was held on October 11, 1957, in response to the rule to show cause. No decision was forthcoming on this matter until August 8, 1960. The Commission then found that Southern Bell maintains toll message connections with a number of independent telephone companies throughout the State of Louisiana, such toll message connections utilizing various combinations of Southern Bell and independent company exchange and toll line facilities. Southern Bell and the independents charge for such interchanged message toll traffic on the basis of tariffs on file with the Commission. The share of each participant in such traffic rates is based on settlement provisions contained in “Connecting Company Traffic Agreements” in effect between Southern Bell and each of the independent companies with which such toll message interchanges are maintained. The basis of settlement provides that each company, through the application of formulas and procedures provided in the agreement, will determine the appropriate portion of its “sent paid” and “received collect” toll message revenue from use of joint facilities and will remit to the other company such determined portion of the joint revenue. Southern Bell, in making refunds for the period September 1, 1956, to April 1, 1957, has made refunds on intrastate toll messages utilizing joint facilities with independent companies where such messages originate in a Southern Bell exchange as “sent paid” message or terminate as “received collect” message, but has not made refunds on intrastate toll messages originating in an exchange of an independent connecting company on a “sent paid” basis or terminating there on a “received collect” basis. The Commission submits that as a result of the position taken by Southern Bell an anomalous and a discriminatory result has followed in that on a message originating on a Southern Bell exchange on a “sent paid” basis utilizing an independent connecting toll line a lower rate has been paid than on the identical message originating as a “sent paid” message in an independent exchange although utilizing the identical toll and exchange equipment.

The Commission found that the provisions of its Order Number 6993, as amended, directed that “all intrastate toll rates and charges shall be subject to a discount of 20 per cent per call” included the Southern Bell portion of intrastate toll rates and charges shared with independent connecting companies whether such toll rates are collected by Southern Bell on “sent paid” or “received collect” messages or whether such toll rates are collected by independent connecting companies as “sent paid” or “received collect” messages; since the reduction of 20 per cent was ordered in the intrastate rates and charges of Southern Bell as of September 1, 1956, all rates and charges subsequent thereto for use of Southern Bell facilities were thereby ordered reduced whether or not the rates and charges were directly collected by Southern Bell or were collected for Southern Bell by independent connecting companies pursuant to the terms of “connecting company traffic agreements” then in effect.

On the basis of the foregoing findings, the Commission issued its Order Number 8190, directing Southern Bell to make the applicable refunds, calculated on the basis of the settlements between Southern Bell and the independent companies involved and further directing that the refunds to those who have paid such joint toll rates and charges shall be distributed for Southern Bell by such independent connecting companies, Southern Bell, however, to pay all expenses in connection with such distribution of refunds. In its Order Number 8190, the Commission further took official notice of the fact that, contrary to the position taken by Southern Bell as outlined above and in the stipulation offered in evidence, Southern Bell has, following the increase of its toll charges allowed by Commission Order Number 8117 of May 5,1960, issued in compliance with the order of this Court, increased its joint toll rates with the independent telephone companies to the extent permitted by that order both as to calls originating in a Southern Bell exchange as a “sent paid” message or terminating as a “received collect” message and as to calls originating in an exchange of an independent connecting company on a “sent paid” basis or terminating there on a “received collect” basis.

Subsequently Southern Bell appealed the ruling of the Commission and sought an injunction in the Nineteenth Judicial District Court, where the Commission has its domicile, to prevent the enforcement of Order Number 8190, alleging that the Order was unlawful and invalid in that, (1) it seeks to impose joint rates retroactively without following the procedure prescribed by law for the establishment of such rates, (2) it seeks to impair the obligations of valid contracts between the company and the independent connecting companies in violation of the Constitution of the State of Louisiana, (3) it seeks to subject petitioner to unlimited and uncontrolled expense by efforts on the part of such companies to distribute refunds to their customers, or if they cannot do so, would permit such companies to obtain a windfall at the expense of petitioner, (4) it is confiscatory in that it would require a deduction in revenue in excess of that ordered by Order Number 6993, (5) it violates Article VI, Sec. 4 of the Constitution of Louisiana, LSA relative to fixing rates, and Article I, Sec. 2 of said Constitution by depriving petitioner of its property without due process of law.

A temporary restraining order was signed and the matter first came before the Court on a rule for a preliminary injunction. The rule was made absolute and there was judgment rendered ordering the issuance of a preliminary writ of injunction. The matter was then tried on its merits and a permanent injunction issued setting aside Order Number 8190 of the Commission.

From this judgment of the District Court the Commission is appealing.

What is in fact at issue here is a ruling construing an order of the Commission which is, in effect, an order interpreting an order previously issued by that body.

The question of construing and reviewing an order of the Commission is one properly before this Court, and this Court is not bound by the construction placed thereon by the Commission. Parker Gravel Co. v. Louisiana Public Service Commission, 182 La. 524, 162 So. 64; Northwestern Wisconsin Electric Co. v. Public Service Commission, 248 Wis. 479, 22 N.W.2d 472, 23 N.W.2d 459; State ex rel. Gehrs v. Public Service Commission of Missouri, 232 Mo.App. 1018, 114 S.W.2d 161; Deaton Track Line, Inc. v. Birmingham-Tuscaloosa-Mobile Motor Freight Line, 264 Ala. 345, 87 So.2d 421.

With regard to the first contention of Southern Bell that the order complained of seeks to impose joint rates retroactively without following the procedure prescribed by law for the establishment of such rates, it is to be observed that the procedure established by law for the fixing of joint rates is found in LSA-R.S. 45 :1093 through 45:1096 which contain the Commission’s powers with respect to the establishment of joint through rates and charges for the transmission of messages and communications by telephone between points in Louisiana. However, these statutory provisions are not applicable here for the order of the Commission did not seek to establish joint rates but sought only to reduce the rates of Southern Bell. The joint rates contemplated by the quoted provisions of the Revised Statutes have not been established pursuant to that authority. It is inappropriate for Southern Bell to contend that the Commission’s authority to regulate its rates can be foreclosed by an agreement entered into by Southern Bell with the independent companies whereby settlements for use of interchange facilities are agreed upon. It is fundamental that Southern Bell must confect its agreements concerning rates subject to the previously ordained power of the Commission to regulate those rates. Within that power to regulate, it must be conceded, reposes the power to reduce rates prospectively as was done in the case at bar. The determinations of the foregoing propositions relative to the powers of the Commission are preliminary to a decision of whether the questioned order did, in effect, reduce the rates with respect to the Southern Bell portion of certain intrastate toll rates and charges imposed for the joint use of exchange and toll facilities owned either by Southern Bell or independent connecting companies.

Southern Bell concedes that the reduction did affect the toll rates collected by them on “sent paid” or “received collect” messages but denies that the Order affected the toll rates collected by independent connecting companies for Southern Bell as “sent paid” or “received collect” messages where interchange facilities were involved. It seems quite evident from the plain language of the Order that the Commission did order and did contemplate that “all intrastate toll rates and charges” of Southern Bell were subject to the discount of 20 per cent, and that the Order was intended to effect a reduction in toll rates collected by independent connecting companies for the account of Southern Bell. The fact that Southern Bell was ordered to reduce its annual gross intrastate revenues in the amount of $3,940,000 and that it has, in fact, made reductions totalling a sum exceeding $3,940,000 does not alter this conclusion for the amount of $3,940,000 as contained in Order Number 6993, as amended, was applicable only to the test period and not to the effective period of Order Number 6993, as amended. It will appear from an examination of the Commission’s Order Number 6993 that the specific finding which was the genesis of the $3,940,000 reduction was as follows: “Southern Bell’s present intrastate telephone rates and charges are excessive, unjust and unreasonable, and should be reduced in the annualized amount of $3,940,-000 based on operations during the test period.” (Italics ours.) While the reduction in local pay telephone revenue, which is not in contest here, took into account the increase in volume resulting from a lower rate, the reduction in intrastate toll revenue did not.

We are of the opinion that the aforementioned result must follow under the facts in this case for, as pointed out heretofore, Southern Bell has, following the increase in its toll charges allowed by Commission Order Number 8117 of May 5, 1960, issued as a result of this Court’s mandate, increased its joint toll rates with the independent companies to the extent permitted by that Order both as to calls originating in a Southern Bell exchange as a “sent paid” message or terminating as a “received collect” message and as to calls originating in an exchange of an independent connecting company on a “sent paid” basis or terminating there on a “received collect” basis. If it can increase its charges with customers with whom it has no “customer relations” it can also reduce its charges with those customers. There is no circumstance which has been brought to our attention surrounding the issuance of Order Number 8117 whereby the charges for calls originated off the Bell system may be increased which distinguishes that Order from Order Number 6993, as amended, under which the Commission contends that charges should have been reduced, for all of the intrastate toll operating revenues of the company were contemplated in each order.

To hold otherwise would permit a discriminatory rate situation to prevail which is incompatible with sound practice and reason. This discrimination takes the form of the Company’s withholding a share of the refunds required by the Commission’s Order from some telephone users simply because they had paid tolls and charges for Southern Bell services through independent telephone companies rather than directly to Southern Bell.

The Public Service Commission of Wisconsin has noted that “It has been the Commission’s policy, unless there are extenuating circumstances involved, to establish the same toll rate in both directions between any two toll points.” Prospect, Guthrie and Big Bend Telephone Company, 2-U-361S (1951). See, also Re Annaton-Preston Telephone Company, 2-U-4160, 4 PUR 3rd 56, 58 (1954). The New York Commission has also noted the desirability of having “uniform toll rates for like distances throughout the state.” Rochester Telephone Company, Case 13489 (1949). In a recent case the Tennessee Commission stated: “It has been the policy of this commission for a period of many years to maintain uniformity of intrastate toll rates within the state between all points and between all telephone companies.” Re Inter Mountain Telephone Company, Docket No. 3996, 19 PUR 3rd 109, 110 (1957). The Commission contends that it has adopted a similar policy in this state and we consider such a policy to be just and reasonable and within the authority of the Commission.

The Company furthermore contends that the result reached here will subject Southern Bell to unlimited and uncontrolled expense by efforts on the part of the independent companies to distribute refunds to their customers, or if they cannot do so, would permit such companies to obtain a windfall at the expense of Southern Bell. The obvious answer to this contention is that the refunds in question shall be made under proper supervision of the Commission, based upon adequate and proper records having been retained by or which are available to the independent companies, and the expense incurred will be within limits of sound and reasonable business practices, in keeping with those employed by Southern Bell itself in effecting the refunds made by it. The refunds contemplated here are to the customers and are not intended to provide a “windfall” for independent companies who are not in a position to make those refunds in a proper manner. The Commission will not permit such a result.

Nor can we subscribe to the contention made by Southern Bell that this result violates Article VI, Sec. 4 of the Constitution of Louisiana relative to fixing rates, and Article I, Sec. 2 of that Constitution by depriving Southern Bell of its property without due process of law. A review of those constitutional provisions reveals nothing in this result which is incompatible therewith, nor have counsel for Southern Bell supplied arguments which would suffice to support their contention.

For the reasons assigned, it is ordered that the permanent injunction issued herein by the District Court be and the same is declared to have been improvidently and improperly issued and same is hereby vacated, recalled, rescinded and set aside; and Order Number 8190 of the Louisiana Public Service Commission is hereby declared to be valid and enforceable, and this cause is hereby remanded to the Louisiana Public Service Commission for such further proceedings as are appropriate according to law and the views herein expressed.

FOURNET, C. J., and HAMLIN and SANDERS, JJ., dissent with written reasons.

HAMLIN, Justice

(dissenting).

I am compelled to dissent from the majority opinion.

Order No. 6993 of the Louisiana Public Service Commission, issued June 30, 1956, was involved in the case of Southern Bell Telephone and Telegraph Company v. Louisiana Public Service Commission, Decided February 25, 1957, Rehearing Denied April 1, 1957, reported in 232 La. 446, 94 So.2d 431.

In that matter, this Court, in an opinion of which I was the author, reversed the judgment of the trial court setting aside Order No. 6993 of the Louisiana Public Service Commission issued June 30, 1956, and decreed Order No. 6993 to be in full force and effect.

Order No. 6993 reads in pertinent part:

“It Is, Therefore, Ordered:
“1. That Southern Bell Telephone and Telegraph Company shall reduce its annual gross intrastate operating revenues in the amount of $3,940,000.00.”

The Commission further ordered that this reduction should be accomplished in the following manner:

“Effective September 1, 1956 all public telephone pay station rates shall be reduced from ten cents (10^) to five cents (5‡) per local call.
“Effective August 1, 1956 all intrastate toll rates and charges shall be subject to a discount of 20 per cent per call.”

This directive was addressed only to Southern Bell and did not affect any independent connecting company, and it did not make any change in the rates of the independent companies, as it was the only telephone company made a party to the proceedings.

There is nothing in the order to indicate any intention on the part of the Commission to interfere with the reciprocal settlement agreements between the independent companies and Southern Bell.

In my opinion, the Commission’s order primarily concerned the amount of the reduction, $3,940,000, and the method was subordinate to the result to be accomplished.

On August 14, 1957, Southern Bell sought relief from the Commission. Meanwhile, on August 5, 1957, the Commission issued an order to Southern Bell to show cause why toll rates and charges on calls by customers of independent telephone companies, which are completed over Southern Bell facilities, should not also be reduced by twenty per cent and refunds made accordingly.

In answer to this order to show cause, Southern Bell, on October 11, 1957, showed the Commission that it makes no charges to the customers of independent telephone companies and collects no money from the customers of these companies. The independent companies interconnect their facilities with those of Southern Bell and with other companies in order to furnish a long distance service for their customers all over the United States and to enable their customers to receive calls from all over the United States. The settlement arrangements agreed upon by contract between the companies are related to the total traffic interchanged, without regard to the interstate or intrastate character of the traffic. Southern Bell does not receive payment on a per-call basis. This statement is explained by Southern Bell in Footnote 3 of its brief, reading as follows :

“The toll charges of all messages made each month by an independent company on calls where Southern Bell’s facilities are involved are totaled, and this total is divided by the aggregate number of all such calls to determine the average charge per call. This average is applied to a schedule attached to the contract to determine the part which the independent is to keep and the part which the independent is to pay to Southern Bell. No distinction is made between intrastate and interstate calls.”

Because of the complexes of the nationwide as well as state-wide flow of toll traffic, the payments to Southern Bell are computed under an agreed upon formula as a portion of the total revenue, interstate and intrastate, collected by the independent companies for toll service to their own subscribers.

Southern Bell further showed that in compliance with the Commission’s order, refunds and reductions of 20% per call were made on the .entire charge for intrastate toll calls of Southern Bell customers without regard to the fact that interconnection with the facilities of independent companies had been used in completing many of those calls. Also, Southern Bell showed that it had already made refunds which amount to substantially more on an annual basis than the $3,940,000.00, all of which appears to have been explained to the Commission on October 11, 1957.

Southern Bell further showed that if the Commission had intended that toll rates charged by the independent companies for calls over interconnected lines should be deemed joint rates and should have been affected by the reduction order, the Commission should have undertaken to establish joint rates in the manner prescribed by LSA-R.S. 45:1093-1096, which the Commission had not done.

It is my view that when the Commission directed Southern Bell to accomplish the $3,940,000 reduction by providing that “all intrastate toll rates and charges shall be subject to a discount of 20 per cent per call,” the Commission was directing Southern Bell — the only party to the proceeding — to discount its toll tariff rates and charges to its own customers by that per cent for each call.

The foregoing was my interpretation of the order at the time I authored the opinion involving Order No. 6993, and it is my interpretation today. I felt then and still feel that that is the clear and unmistakable meaning of that order and that it is not subject to any other reasonable interpretation. The independent companies were not parties to the reduction proceeding; the interconnection contracts were not mentioned in the reduction order; the subject of joint rates was not mentioned in the reduction order; and Southern Bell made refunds in accordance with its interpretation of the order.

All of this appears to have been explained on October 11, 1957, in answer to the rule to show cause, and no statement or assertion in evidence by Southern Bell was disputed in any way.

Thereafter, a second Southern Bell case, in which this Court, in effect, decreed that Southern Bell is entitled to a return of not less than 6% on the property rate base as revised by us, was decided January 11, 1960, Rehearing Denied March 21, 1960, 239 La. 175, 118 So.2d 372, 394. In a concurring opinion I set forth, with my reasons therefor, that the rate, as fixed in the decree, should be “not less than 6.25%.” I stated therein:

. “Inasmuch as the ascertainment of a fair return in a given case is a matter incapable of exact mathematical demonstration and is one of reasonable approximation, having its basis in a proper consideration of all relevant facts, I believe that a return of not less than 6.25% will strike the happy medium and will not be unreasonable, whether considered from the viewpoint of the subscriber, the investor, or the Company.”

In my concurring opinion, I also observed :

“ * * * it would appear to me that in the instant case a rate of return of not less than 6.25% on property rate base would be fair and reasonable at this time, to allow for the great necessity for an immediate expansion program in Louisiana, the reasons for which being set forth in the original opinion.” (Emphasis added.)

Another reason for my having been of the opinion that the rate should not be less than 6.25% in the last Southern Bell case, is that experts on both sides of a case of this nature seldom agree; therefore, when I stated in my concurring opinion that .25% should have been added to the 6% fixed by this Court in the majority opinion, I did so in order to allow what I thought was margin for error and to give to business, industry, and the people of Louisiana proper and adequate telephone service.

Reverting back to October 11, 1957, before the foregoing case was decided by us.

Southern Bell urges that, apparently, the Commission was satisfied with the explanation offered, as nothing further occurred in the present matter until August 8, 1960, several months after the rehearing was denied in the last Southern Bell case on March 21, 1960. Southern Bell further urges:

“The sequel rate case was before the Commission on the same day, October 11, 1957, and the Commission proceeded in that case to hear again that refunds and reductions had substantially exceeded the $3,940,000.00 annual reduction ordered whether calculated on the business done during the test period on which the order had been based or calculated on actual subsequent operations. After reconsidering the needs of Southern Bell the Commission decided on October 10, 1958, that the Company was entitled to an annual Increase on its intrastate operations of $1,918,707.00 though it did not make this effective because it was dissatisfied with Southern Bell’s expansion program.
“The District Court decided that Southern Bell was entitled to that increase and your Honors found that Southern Bell was entitled to more.4 [4 Southern Bell Telephone and Telegraph Company vs. Louisiana Public Service Commission, 239 La. 175, 118 So.2d 372 (I960).] Your decision was rendered January 11, 1960, which was Two Years And Three Months After Southern Bell had explained why refunds were not made to customers of the independent carriers. The Commission then fixed new rates for Southern Bell — All Of This Was Done With Full Knowledge Of The Facts We Have Recited Here. If Southern Bell had been required to suffer a further reduction through refunds to independent connecting carriers, an additional compensating increase would have been required under the law. The new rate order did not direct such reduction nor make any compensating increase in rates.
“Then, out of a blue sky, without any other notice to Southern Bell, without any demand on Southern Bell by any independent connecting carrier, or subscriber, a divided5 [5 Commissioner Knight dissented.] Commission on August 8, 1960, Two Years And Ten Months after the hearing, directed a refund to independent companies for distribution to their customers.
“This order of August 8, 1960, did not command a refund of twenty per cent per call as contemplated when the annual reduction of $3,940,000.00 was ordered. Instead, the Commission ordered the refund of ‘20 per cent of all intrastate toll rates and charges collected by independent connecting companies for 'the use of Southern Bell exchange and toll line equipment in handling messages originating in connecting company exchanges, all as determined pursuant to the terms of applicable “Connecting Company Traffic Agreements”, such refunds to be made for the period during which Commission order number 6993 as amended by Commission order number 6999 remained in effect, namely, from September 1, 1956, to May 5, 1960, and all in accordance with said Commission orders.’ (Emphasis ours.)”

Southern Bell has, in fact, made annual reductions totalling a sum exceeding $3,940,000. This is conceded in the majority opinion herein.

It is my further view that the terms of the directive of August 8, 1960 (Order No. 8190) are clearly different from those of the rate reduction order of June 30, 1956 (Order No. 6993). My interpretation of the August 8, 1960 order is that it is not an implementation of the original rate reduction order of 1956, but that the Commission is now seeking to impose a new and an additional reduction, even though no attempt has been made by the Commission to justify a greater reduction than that already imposed upon Southern Bell and with which it has complied.

Depriving Southern Bell of the funds involved herein might well result in being a factor toward retarding the expansion of telephone service to business, industry, and homes. I have, as heretofore shown, placed myself of record as being in favor of such expansion, as has the majority opinion in the last Southern Bell case.

In conclusion, I would like to quote from the opinion of the trial judge; he said that one of Southern Bell’s contentions “is that it was ordered to reduce its annual gross intrastate revenues in the amount of $3,940,-000; that the evidence shows the annual reduction exceeded that amount; and that the commission is without authority to order any further reduction. The commission has not made any satisfactory answer to this contention. In my opinion it has merit.” (Emphasis mine.)

I agree with the conclusion of the trial judge, and for this and other reasons heretofore set forth, I respectfully dissent.

SANDERS, Justice

(dissenting).

Louisiana Public Service Commission Order Number 6993, issued June 30, 1956, as amended, provides in part:

“It Is, Therefore, Ordered:
“1. That Southern Bell Telephone and Telegraph Company shall reduce its annual gross interstate operating revenues in the amount of $3,940,000-00.
“2. This reduction shall be accomplished in the following manner:
“Effective September 1, 1956, all public telephone pay station rates shall be reduced from ten cents (10^) to five cents (5‡) per local call.
“Effective August 1, 1956, all intrastate toll rates and charges shall be subject to a discount of 20 per cent per call.”

The district court found that the plaintiff, Southern Bell Telephone and Telegraph Company, had actually made an annual reduction of earnings in excess of $3,-940,000. This is conceded in the majority opinion.

In my opinion, the plaintiff has fully complied with the order. It is true that the amount of $3,940,000 was computed on a test year basis, but when it was incorporated in the order without qualification, it was thereby given a prospective application for the effective term of the order. It is clear that the primary emphasis of the order was on the amount of the reduction. The method was subordinate to the result. The annual reduction is controlling.

Moreover, I do not construe the order as applicable to inter-connection contracts with independent companies. No express reference to these contracts is contained in the order. Southern Bell does not receive payments under them on a per-call basis. Joint rates were not properly before the Commission at the time of the order, nor were the independent companies parties to the proceeding.

The order of August 8, 1960, does not command a reduction of 20 per cent per call as did the original order. Instead, it orders the refund of “20 per cent of all intrastate toll rates and charges collected by independent connecting companies for the use of Southern Bell exchange and toll line equipment * * Thus, a new and additional reduction has been ordered under the guise of the original order.

For the reasons assigned, I respectfully dissent.

FOURNET, Chief Justice

(dissenting).

The Supreme Court of Louisiana, by its decree in Southern Bell Telephone and Telegraph Company v. Louisiana Public Service Commission, 232 La. 446, 94 So.2d 431, rendered February 25, 1957, affirmed Order No. 6993 of the Louisiana Public Service Commission issued on June 30, 1956, the pertinent part of which provides ■“That Southern Bell Telephone and Telegraph Company shall reduce its annual gross intrastate operating revenues in the amount of $3,940,000,” such reduction to be accomplished by lowering all public telephone pay station rates from 10‡ to 5<f per call, and by subjecting all intrastate toll rates to a discount of 20% per call.

The Commission, claiming that in complying with this order Southern Bell failed to make the 20% discount applicable to its portion of intrastate toll calls handled jointly with certain independent companies where such calls originated on a pre-paid basis, or terminated on a collect basis at stations of these independent companies, issued its order No. 8190 on August 8, 1960, directing the company to forthwith make the 20% refund representing the reduction on all such calls handled with the independent companies.

In my opinion, the trial judge properly decreed the nullity of this order and enjoined its enforcement, for Order No. 6993, upheld in our decision of February 25, 1957, is clear and explicit in requiring, as it does, only that the Southern Bell Telephone and Telegraph Company reduce “its annual gross intrastate operating revenues in the amount of $3,940,000,” and it is admitted by the Commission that the company did, in fact, reduce its annual gross intrastate operating revenues in excess of this amount. The remaining part of the order is only directive of the manner in which, or the method by which, this reduction was to be made, and the Commission, by its Order No. 8190, imposing new and additional reductions and refunds upon the company in further excess of this stipulated amount — that not only affects Southern Bell but the several independent companies involved that were neither mentioned in the Commission’s order No. 6993 nor made parties to the suit upholding that order, and, further, without following the rule prescribed by law (R.S. 45:1093-1096) for the establishment of joint rates— has clearly exceeded its authority.

I must, therefore, respectfully dissent.

On Rehearing

HAMITER, Justice.

The facts and circumstances leading up to the instant litigation are fully set forth in the original opinion of this court, and no useful purpose would be served by restating them on this rehearing. Suffice it to say that the primary question for our determination in this cause is whether Order No. 6993 of the Louisiana Public Service Commission, heretofore approved by this court (Southern Bell Telephone and Telegraph Company v. Louisiana Public Service Commission, 232 La. 446, 94 So.2d 431), required the plaintiff to refund 20% of its revenues received from independent connecting companies for intrastate toll messages originating in the latter on a “sent paid” basis or terminating there as “received collect” calls. (The concluding portion of the order was quoted in full initially.) On the first hearing we held that such refunds had to be made.

A careful consideration of the pronouncements supporting the holding has not revealed any errors which would warrant a change in the former decree, and an elaboration of our assigned reasons for the judgment seems unnecessary. Nevertheless, there will be discussed hereinafter certain of our findings and conclusions which plaintiff, on this rehearing, asserts are erroneous.

Firstly, it is said that the “most obvious error of findings of fact contained in the majority opinion is the finding that the reduction in intrastate toll revenue made by the Company did not take into account the increase in volume subsequent to the test period, upon which Order No. 6993 of June 30, 1956 was based.” Evidently, the finding to which reference is thus made has been misinterpreted by plaintiff. What we found was that the company, for the purpose of making the ordered refunds respecting intrastate toll revenues, did not give consideration to “the increase in volume resulting from a lower rate”. And such finding is supported by the record, particularly by the testimony of plaintiff’s general accounting manager — Mr. Eugene M. Robinson. During the hearing in the district court this witness, while comparing data respecting the test and refund periods, was asked the specific question: “In any event, as far as this comparison is concerned, it does not reflect the effect of any acceleration due to the lower rates, does it?” His answer was: “Well, no. In other words— no.”

Next it is urged that the “majority has erred in placing a construction on the Commission’s Order No. 6993 which increased the dollar amount of the reduction clearly beyond the amount found to be justified in the Order itself ($3,940,000 annually on the basis of the test period operations).” Just as was concluded originally, it appears that the intention of the assailed order was not to prescribe any specific amount for the annual reduction; and that all of the parties so interpreted it, including this plaintiff. In the body of such order under a heading entitled “Summation of Principal Findings”, the commission plainly stated that the reduction should be for the annualized amount of $3,940,000 “based on operations during the test period”. If it had been intended that the mentioned sum was controlling and conclusive certainly the quoted qualifying phrase would not have been used. Moreover, the plaintiff itself concedes (in fact, it introduced documentary evidence showing) that it voluntarily refunded considerably in excess of the an-nual sum specified. And in oral argument here its counsel admitted that the recited amount was merely an estimate based wholly on the test period of four months (annualized) .

Incidentally and interestingly, the record (in a stipulation) and the briefs of plaintiff’s counsel disclose that not only did Southern Bell make refunds to its customers on charges for use of its facilities in connected calls, but it also refunded to them 20% of that part which it was obliged under its contracts to remit to the independent connecting companies for the use of the latter’s lines. According to our interpretation of Order No. 6993, as indicated in the original opinion, the last mentioned refund was not required.

Thirdly, plaintiff complains that the “majority opinion is in error in holding that independent connecting companies collect toll rates for the account of Southern Bell, and [hence] is in error in considering that there is any contradiction in Southern Bell’s refunding to its customers while refusing to refund to customers of connecting companies. * * * ” And in support of this complaint it argues: “ * * * These errors necessarily flow from the erroneous assumption that the toll settlement contracts establish subscriber rates and that the rates charged and collected by the independent companies are rates for Southern Bell service. This assumption by the majority is without support anywhere in the language of the connecting company agreements =i= *

“The error apparently stems from a failure to distinguish between the rate a company charges the public (which must be established by the Commission and which is applicable to all of the company’s customers whether or not interconnection of facilities is involved) and the settlements made between two companies for the use of each others facilities in rendering service to their customers. The toll settlement contracts are concerned only with such settlement payments.

“The toll settlement agreements do not fix rates. * * ■ * ”

Here plaintiff appears to he contending that the portion of the charges collected by the independent companies and remitted to it are not “rates” within the contemplation of the order in question. Conceding that this limited application of the term “rates” is proper, it seems immaterial inasmuch as such order requires a 20% refund on “all intrastate toll rates and charges.” Furthermore, even though plaintiff refers to the payments to it by the independent companies as “settlements” they are in truth nothing more than settlements of charges for the use of plaintiff’s lines in making intrastate connecting calls. In this regard it is especially pertinent to note the language of the agreements. Therein it is provided: “Each company will be responsible for collection of all charges payable by its customers for telephone communications originating or terminating on its system, and will account and be responsible to the other for the latter’s portion thereof. * * * ” Thus, the method employed by the respective companies for settling the amount due each on connecting calls is unimportant; for, as aforeshown, the agreements themselves plainly consider the portions remitted as charges. (Italics ours.)

Next plaintiff asserts that the “Commission was in error in stating, and the Court is in error in accepting the statement of the Commission, that Southern Bell raised the rates of the independent companies following the decision of this Court in 1960 in favor of Southern Bell. * * *” Neither the commission nor this court found that Southern Bel! had raised the rates of the independent companies. The finding was that plaintiff had (to quote the language of the commission) “ * * * increased its joint toll rates with the independent telephone companies to the extent permitted * * *.” (Italics ours.)

If this finding by the commission (as approved by this court) was incorrect plaintiff could and should have demonstrated the error on the trial of the case. This it did not do. Nor did it suggest in its original brief to this court that such finding was erroneous. Under these circumstances the assumption is that it was a correct statement of the facts of which the commission took official notice.

Finally, plaintiff contends that the “majority is in error in holding that the disparity in the rates of the various companies constitutes discrimination and that such disparity was caused by Southern Bell.” In support of this contention certain examples are given with the view of showing that even if refunds were made under the order as interpreted by the commission this would not completely prevent a disparity of rates. It was not concluded originally, and cannot now be correctly asserted, that exactly equal rates would prevail in all cases, particularly when (as here) more than one company is involved in making and completing calls. But it may well and properly be observed that, in the absence of extenuating circumstances, sound practice and reason dictate that the toll charges between any two points can and should be the same in both directions.

Insisting that the mentioned desired result was not produced by the commission’s disputed order, plaintiff argues that it refunded 20% of the entire charge on a call for which it was the collecting agent (a portion of the charge, under the agreement, had to be sent to the independent connecting company) whereas by virtue of the order only 20% of Southern Bell’s charge would be refunded on a call where the independent company performed the collecting. However, as previously pointed out, this disparity was brought about solely by plaintiffs improper application of the order. It was not obliged to refund 20% of the entire charge; the refunding of only 20% of its portion was required. True, this action on the part of plaintiff may have resulted in a windfall for or overpayment to its customers. but such was not the fault of the commission.

For the reasons assigned the judgment rendered herein on the original hearing is now reinstated and made the final decree of this court.

FOURNET, C. J., dissents and will assign written reasons.

HAMLIN, J., dissents with written reasons.

SANDERS, J., dissents.

HAMLIN, Justice

(dissenting).

The majority opinion on this rehearing answers the allegations of error assigned by Southern Bell Telephone and Telegraph Company - to the original opinion of this Court and concludes that they are without merit. It discusses certain findings which plaintiff asserts are erroneous.

When the original opinion of this Court was handed down, I respectfully dissented, setting forth in detail my grounds therefor. A reading of the majority opinion on this rehearing has not changed my initial views. I, therefore, respectfully dissent from the majority opinion on rehearing for the same reasons expressed in my original dissent.

FOURNET, Chief Justice

(dissenting).

In my dissenting opinion when this case was originally before us for consideration I called attention to the fact that this court, by its decree rendered February 27, 1957, affirmed Order No. 6993 of the Louisiana Public Service Commission issued June 30, 1956, which directed the Southern Bell Telephone and Telegraph Company to “reduce its annual gross intrastate operating revenues in the amount of $3,940,000,” by cutting the cost of all its intrastate toll rates by 20% and reducing its pay station calls to 5‡, and that in carrying out this order, the company had, indeed, reduced its annual gross intrastate operating revenues in excess of the $3,940,000 so ordered.

I accordingly expressed the opinion that the trial judge had properly decreed the nullity of Order No. 8190 of the Commission whereby it sought to extend the effect of its Order No. 6993 to include all intrastate calls handled with the several independent telephone companies within Louisiana operating under contracts with Southern Bell Telephone and Telegraph Company, and to thereby compel the company to reduce its annual gross intrastate operating revenues still further in excess of the $3,-940,000 reduction originally ordered, despite the fact these independent companies had not been made parties to the proceedings either before the Commission when it was considering the issuance of Order No. 6993, in the previous court case, or in the instant litigation, clearly evidencing the fact that the Commission never intended to have the intrastate calls handled by such independent companies brought within the purview of Order No. 6993, and, indeed, that such order could not affect or be binding on these independent companies.

This was readily admitted by counsel for the Commission in oral argument, as he conceded these companies, if and when reimbursed by Southern Bell Telephone Company 20% of the amount of all intrastate calls handled by them under their contract, as is being ordered in the instant litigation, could-not be compelled by the Commission, or by any other department of the state or the company, to pass this reduction on to the subscribers who made these calls and paid the full amount therefor. In other words, the Commission is powerless to keep these independent companies from retaining this 20% reduction themselves after reimbursement by Southern Bell for the very simple reason that they were not parties to the proceedings and, therefore, not subject to the order of the commission rendered on June 30, 1956, i. e., Order No. 6993.

On this rehearing my views have not been changed. In fact, they have been strengthened, particularly when we consider the purpose of Order No. 6993 was to have the income of the Southern Bell Telephone and Telegraph Company reduced by $3,940,000 annually to insure it a limited annual rate of return on its investment of 4.8%, which the commission, after hearings, felt was adequate and anything above that rate excessive. To allow, as is being done in the majority, the Commission to force the further reduction of the income of the company by extending Order No. 6993 to all intrastate calls handled by it with independent telephone companies under special contract is to compel Southern Bell to realize a return on its investment of even less than the 4.8% the Commission concluded in the previous hearings under Order No. 6993 was adequate.

The absurdity of such a conclusion is clearly evidenced by our findings in the subsequent case between the telephone company and the commission, decided on January 11, I960, and which are to the effect that with the reduction ordered by the commission under Order No. 6993 and the annual reduction of $3,940,000, the return of the company had actually been reduced to 4.21% — not the 4.8%' asserted by the commission — an amount we found to be so inadequate as to be confiscatory inasmuch as the company must be given a fair rate of return on the property used and useful in the public service, and we, accordingly, there actually ordered the rates raised to guarantee an annual return in excess of the 4.8% the commission felt was adequate.

The decision of the majority being handed down here, as just pointed out, does not even permit Southern Bell to have a return of 4.8% during the intervening period between the two decisions, despite the fact that in the last decision we found such a return was confiscatory.

I must, therefore, respectfully dissent. 
      
      . Southern Bell Telephone & Telegraph Co. v. Louisiana Public Service Commission, 1957, 232 La. 446, 94 So.2d 431, 437.
     
      
      . Order No. 6999 amended Order No. 6993 to provide that the effective date of the reduction of intrastate toll rates and charges contained in said Order “shall he September 1, 1956, instead of August 1, 1956.” By subsequent orders of the Commission the 20 per cent reduction ordered effective September 1, 1956, was amended to 10 per cent effective June 17, 1959, through May 5, 1960, inclusive, the period during which Commission Order Number 6993 as amended by Commission Order Number 6999 remained in effect.
     
      
      . The effective date for the reduction in the rates charged for public pay telephone calls was September 1, 1956, and August 1, 1956, was the effective date for the 20% discount on intrastate calls. By Order No. 0999, the commission extended these effective dates for one month in each case.
     
      
      . 232 La. 446, 94 So.2d 43L
     
      
      . 239 La. 175, 118 So.2d 372, 392. It is interesting to note that the Commission, at no time, sought to have its Order No. 6993 apply to the intrastate calls here involved until after the finality of the decision of this court in a subsequent case (March 21, 1960), wherein we found that the rate of return allowed Southern Bell was discriminatory and inadequate and ordered the Commission, upon remand, to “so adjust the rates that the end result will bo a return of not less than 6% on the property rate base * * *.» (¶]16 citation of this subsequent case is given above in this note.)
     