MacKay Telegraph & Cable Co. v. City of Little Rock

Background

On March 11, 1912, the Little Rock city council passed an ordinance granting a telegraph company the right to build and maintain poles, wires, ducts, and manholes along certain streets and along a railroad right of way. The ordinance required the company to pay fifty cents per pole each year and a conduit fee equal to four poles per block. The company accepted the ordinance and built the line, placing 66 poles in city streets, 104 poles on the railroad right of way inside city limits at acceptance, and 35 poles on right of way that became part of the city shortly after acceptance. In 1917 the city sued, claiming unpaid fees for 205 poles covering four and a half years.

Reasoning

The core question was whether applying the fifty-cent fee to poles on the railroad right of way and to poles later brought within the city violated federal law. The Court treated the charge as a license tax for local supervision and regulation rather than a contractual franchise payment. Citing earlier Supreme Court decisions, the Court said cities may impose reasonable taxes to supervise and regulate poles and wires. It found no proof the fee was unreasonable in amount or that the company suffered unlawful discrimination, and rejected arguments that the fee unconstitutionally burdened interstate commerce or infringed rights under an 1866 federal statute. The Court also noted the line crossed public streets and turnpikes, supporting local oversight.

Real world impact

The decision affirms that a city acting under state authority may impose reasonable per-pole fees, including on poles along railroad rights of way when local supervision is needed. Telegraph companies operating in the city may be required to pay such taxes. The Court did not reconsider the state-court construction of the ordinance as a contract clause matter, and the state judgment was upheld.