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Moenning v. Illinois Bell Telephone Co.

OPINION FILED DECEMBER 18, 1985.

RICHARD C. MOENNING, APPELLANT,

v.

ILLINOIS BELL TELEPHONE COMPANY, APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.

JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

Plaintiff Richard C. Moenning filed a formal complaint with the Illinois Commerce Commission against defendant Illinois Bell Telephone Company, a privately owned company regulated by the Commission. The gravamen of the complaint relates to Illinois Bell's practice of requiring a security deposit from customers who have had their telephone service discontinued because of nonpayment of telephone bills. After conducting hearings, the Commission entered an order finding that Illinois Bell could properly request a security deposit from plaintiff. Plaintiff appealed to the circuit court of Cook County, and the court upheld the Commission's order. Plaintiff appeals.

Plaintiff resides in Evanston, where he receives residential telephone service from Illinois Bell. Illinois Bell's records show that during 1980, plaintiff paid April through October bills late. Illinois Bell terminated plaintiff's residential service for nonpayment of the May 1980 charges, and restored service after late payment was made. Illinois Bell mailed plaintiff disconnect warnings for all seven of the late payments.

Plaintiff owed Illinois Bell $38.43 for the October 1980 charges. Illinois Bell records show that it sent plaintiff a final disconnect notice for nonpayment of the October charges, in accordance with the Commission's General Order 197. The disconnect notice is a red card entitled "FINAL NOTICE PRIOR TO DISCONNECTION" and includes information as to how the consumer can complain to Illinois Bell or to the Commission. Plaintiff could not recall whether he received such a notice as to the October bill, and had "no idea" how many similar notices he had received during 1980 or for which months.

On December 3, 1980, plaintiff gave Illinois Bell a check for $38.43 to cover the October 1980 bill. It was returned to Illinois Bell on Friday, December 12, 1980, for non-sufficient funds in plaintiff's account. Illinois Bell's records indicate that it made an attempt to telephone plaintiff on December 15. Plaintiff's residential service was disconnected that day. Plaintiff promptly spoke to an Illinois Bell service representative who, according to plaintiff's testimony, stated that she had attempted to reach plaintiff by telephone.

Plaintiff had a conference call that day with representatives of Illinois Bell and the Commission to discuss a solution. Plaintiff's residential telephone service was restored later that evening after he agreed to deliver cash for the October payment.

Illinois Bell then sent plaintiff a request for a $125 security deposit, and threatened to discontinue his service if the security deposit was not paid. Plaintiff filed a complaint with the Commission requesting a hearing before denial of services and the demand of a deposit, and also asking for "costs and damages" in the form of credits.

After conducting hearings, the Commission entered its order finding that Illinois Bell's notice of termination to plaintiff was insufficient under General Order 197 because its attempt to contact plaintiff was unsuccessful; that it was proper to require a security deposit from plaintiff because he was late with his payments more than six times in 12 months; that the security deposit requirement and termination of service did not give rise to a civil rights action under 42 U.S.C. § 1983 (1982) or constitute a due process violation; and that public utility transactions were statutorily exempt from the Consumer Protection Act and the Truth in Lending regulations. The Commission also denied plaintiff's request for cost and damages as being outside its jurisdictional scope.

Illinois Bell and plaintiff both sought rehearing. The Commission denied plaintiff's request for rehearing. The Commission did grant Illinois Bell's petition for rehearing, in which Illinois Bell argued that General Order 197 only required an attempt to contact a customer on termination date, and that Illinois Bell made that attempt. Plaintiff filed the present action, and the trial court affirmed the Commission's orders.

On appeal, plaintiff contends that the Commission acted without statutory authority in promulgating General Order 197, which allows Illinois Bell to terminate telephone services and require security deposits; that the Commission's rulings regarding the sufficiency of the termination notice sent to plaintiff and the reasonableness of the security deposit required of plaintiff are against the manifest weight of the evidence; that the termination procedure and security deposit requirement violated 42 U.S.C. § 1983 (1982) and due process requirements; that the security deposit requirement violated Federal protection statutes; that the trial court improperly injected its personal feelings, thereby distorting its judgment; that the trial judge made factual errors, indicating he was not familiar with the record; and that the Commission improperly delegated its rule making power.

• 1 Plaintiff initially contends that the Commission does not have the authority to promulgate orders authorizing cash deposits for customers who have made late payments. The legislature does not expressly grant the Commission power to restrict Illinois Bell's security deposit practices. (See generally Ill. Rev. Stat. 1979, ch. 111 2/3, par. 1 et seq.) The Commission, however, has broad discretion to regulate the rate policies of public utilities. (Alton Water Co. v. Illinois Commerce Com. (1978), 60 Ill. App.3d 553, 377 N.E.2d 385.) Section 41 of the Public Utilities Act authorizes the Commission to determine just and reasonable rates or other charges, and practices affecting rates or other charges, and to fix the same by order. (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 41.) The trial court was correct in stating that the authority to fix rates necessarily includes credit regulation. A security deposit requirement is a credit practice that falls under the area of rate regulation. See Ill. Rev. Stat. 1979, ch. 111 2/3, par. 10.16; see also Wood v. Public Utilities Com. (1971), 4 Cal.3d 288, 481 P.2d 823, 93 Cal.Rptr. 455, appeal dismissed (1971), 404 U.S. 931, 30 L.Ed.2d 245, 92 S.Ct. 293, and 64 Am.Jur.2d Public Utilities sec. 46 (1972).

The soundness of the policy at issue was established when the United States Supreme Court recognized that a utility, like any business, often needs to require security deposits to secure prompt payment. (Southwestern Telegraph & Telephone Co. v. Danaher (1915), 238 U.S. 482, 59 L.Ed.2d 1419, 355 S.Ct. 655; see also Lucas v. Wisconsin Electric Power Co. (7th Cir. 1972), 466 F.2d 638, cert. denied (1973), 409 U.S. 1114, 34 L.Ed.2d 696, 93 S.Ct. 928.) In Illinois Telephone Association v. Illinois Commerce Com. (1978), 57 Ill. App.3d 968, 373 N.E.2d 676, while discussing General Order 197, this court stated at page 972: "Quite obviously, in the promulgation of this order the Commission was functioning under its statutory mandate to have general supervision of all public utilities and to inquire into the management and business of them and to keep itself informed as to the manner and method in which the utilities conduct their business." For these reasons, we find that plaintiff has failed to show that the Commission lacked authority to promulgate General Order 197, or that the policy requiring security deposits is unreasonable.

• 2 Plaintiff next contends that the Commission's findings were against the manifest weight of the evidence. The Commission's findings and conclusions are to be held prima facie true and will not be set aside unless it clearly appears that the findings are against the manifest weight of the evidence. (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 72.) The relevant section of General Order 197 requires Illinois Bell to mail a written notice of its intention to discontinue a customer's service due to nonpayment of the past due bill. The notice must be sent separately from other notices or bills, and service cannot be discontinued for at least eight days after mailing. In addition the company "shall attempt" to advise the customer of the termination at the time it occurs. General Order 197, sec. 303(1).

Illinois Bell sent a written notice of termination of service to plaintiff in early December; it attempted to telephone him on December 15; and actually terminated service on December 15. Plaintiff stated that he could not remember whether he had received a final notice, but he may have. Plaintiff also stated that ...


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