The relator is a Wisconsin corporation organized for the purpose of establishing, maintaining, and ■operating a system of telephones in this state. It has such powers, and is subject to such restrictions and regulations, .-as are granted and prescribed by law. Its authority to use and occupy the streets and highways of the state is granted by sec. 1778, Stats. 1898, which came into existence in 1848. So far as is material to this litigation, such section reads as -follows:
“ Any corporation formed under this chapter to build and • operate telegraph lines, or conduct the business of telegraphing, may construct and maintain any such lines with all necessary appurtenances, from point to point upon or along •or across any public road, highway or bridge or any stream or body of water, or upon the land of any owner consenting -thereto, and from time to time extend the same at pleasure; *32. . . but no such telegraph line or any appurtenance thereto shall at any time obstruct or incommode the public use of any road, highway, bridge, stream or body of water.”
The right of a telephone company to organize, to erect lines, and to .do business under our laws, and especially under sec. 1778, was first challenged in the case of Wisconsin Tel. Co. v. Oshkosh, 62 Wis. 32. That right was vindicated in an opinion by the present chief justice, which has been cited with approval in many jurisdictions. Duke v. Central N. J. T. Co. 53 N. J. Law, 341; Cumberland T. & T. Co. v. United E. R. Co. 12 L. R. A. 544; Hudson River T. Co. v. Watervliet T. & R. Co. 135 N. Y. 393; Southern Bell T. & T. Co. v. Richmond, 78 Fed. Rep. 858. This court has sancr tioned the doctrine stated in Roberts v. Wis. Tel. Co. 77 Wis. 589; Marshfield v. Wis. Tel. Co. 102 Wis. 604; Krueger v. Wis. Tel. Co. 106 Wis. 96. The exact nature and scope of the power thus conferred has at no time been definitely treated. In the Oshkosh Case this court held that a telephone company might lawfully organize under ch. 86, and construct and operate its lines under sec. 1778, and it was there said that the company was occupying the street “ not onl/y by express gramt of the legislature, but by express permission of the city authorities.” In the Roberts Case the contest was whether poles set by the company were unlawful structures in a highway. In disposing of this question Cole, C. J., remarks:
“ Was it lawful to place these poles in the highway'? The statute authorizes any corporation formed to build and operate telegraph lines or conduct the business of telegraphing to construct and maintain its lines, with all necessary appurtenances, along a public highway. Sec. 1778, S. & B. Ann. Stats. And in Wisconsin Tel. Co. v. Oshkosh, 62 Wis. 32, it was held that the statute included telephone companies, although such companies were not specifically mentioned therein. The poles, then, were not unlawful structures in the 'highway, but were authorized by law to be set therein.”
*33In the Marshfield Case we said the section in question authorized the use of the highways of the state by poles and wires, provided they were set so as not to obstruct or incommode the public use thereof. In the Krueger Case we held the statute granted no power to use the street except as against the public. Under it the public were foreclosed of the right to object to the poles being in the street, but the lot-owner might pursue his legal remedies.
Several of these cases related to the right to place poles in city streets, and it was assumed that the word “highway” was broad enough to and did cover the streets of a city. That proposition is now disputed by the defendants. We will not pursue their argument. Sec. 4971 is to the effect that in the construction of statutes the word “highway” may be construed to include any road laid out by the authority of any town, city, or village. In. view of the course of decisions and the importance of the rights involved, we see no good reason for turning from the position tacitly assumed in the cases noted. We therefore hold that the word “ highway,” as used in sec. 1778, covers the streets and ways of a city, as well as rural highways. We find support in this conclusion in a recent case in the federal court, construing a somewhat similar statute of Minnesota. Abbott v. Duluth, 104 Fed. Rep. 833. A still more recent and extended discussion of the same statute by the supreme court of that state may be found in Northwestern Tel. Exch. Co. v. Minneapolis, 86 N. W. Rep. 69, where the same conclusion is reached. The right to construct and maintain poles in city streets is as ample and positive as to build in the country highways, except that it may be subject to stricter-police regulations, as will be more fully discussed in a subsequent portion of this opinion.
Not one of the cases referred to can be justified except upon the theory that the statute in question grants to corporations of this kind a franchise,— a special privilege, which *34could not be legally exercised without legislative authority. Under it, great corporations have been organized, vast sums of money have been expended, thousands of miles of poles and wires have been erected, and the systems are being extended until the remotest hamlet in the state may communicate with the business centers with the utmost ease. So far as we are aware:, this is the only statute from which the authority and power mentioned arises. It came from the ultimate source of power, the legislature, and passed directly to such organizations as come within its terms.
The trial court reached a somewhat different conclusion. His reasoning runs thus: The right to use the streets is a franchise. No franchise can be enjoyed or held which is not derived from the state. The legislature may delegate to municipal corporations power to make by-laws and ordinances wThich shall have the force of legislative acts. The charter of the city of Sheboygan gives the common council authority to control its streets, to - make ¡ordinances for the government and good order of the city and for the benefit of trade and commerce. In the Marshfield Case, 102 Wis. 604, this court held that sec. 1778 did not deprive cities of their power of police control over the manner in which the work of such corporations shall be done, or of the power to regulate the location and use of poles and wires in the streets. The city, therefore, having the power to regulate, control, and to prevent the incumbering of certain of its streets in the exercise of a reasonable discretion, when called upon to exercise these powers, or take action as requested by relator’s petition, was granting a franchise. Sec. 9405, Stats. 1898, provides that no franchise shall be granted by any village board or common council until the application therefor, containing the substance of the privileges asked for, shall be filed with the village or city clerk and be published in the official paper. The relator failed to comply with these requirements, and hence the return states a good' defense.
*35In reaching this conclusion the court failed to keep in mind the distinction between the rights or franchises granted by the state and the power of police control possessed by the city. As we have already seen, the power to exist as a ■corporation, and to exercise the franchise of the use of highways and streets, as against the public, was already possessed by the relator. The city had no power to add to or detract from it except in the exercise of its police power. The franchise existed by express legislative grant. Its exercise might be controlled only in recognition of its existence, and in conformity with a just and reasonable administration of the police power in the interest of the city and its inhabitants. In a sense, the city was called upon to grant a privilege. It had the power to regulate the use of its streets. It might deem it improper to allow poles to be set along some of the streets included in the proposed extensions. It might designate other streets, and thus exercise a reasonable discretion in the interests of its people. But such privilege was controllable only in harmony with the rights both possessed. In no proper sense was the privilege sought a franchise, within the meaning of sec. 9405. The consent of the city was only 'required or asked in view of its right to regulate. Having that power, it was its plain legal duty, when a plan had been submitted as its ordinance required, to take such action thereon as reason and a proper regard for the interests and legal rights of all concerned would seem to suggest. It was no answer for the city to say, as it did in general terms in its return, that the streets -of the city were already incumbered by poles and wires, and that a due regard for the safety and convenience of its people rendered it prudent that a change be made “ as soon as possible ” in the manner of running wires used for electric purposes from poles to an underground system. If the time had arrived, and the exigencies were such, that such a change *36was necessary, it was its duty to act, and to adopt such plan as reason and enlightened judgment might suggest.
In the first case in which this court was ever called upon to consider the reciprocal rights of the company and the city, a line was blazed with accuracy, and has since been followed in all the cases. The charter of Oshkosh contained a provision broader in terms than any contained in defendant’s. It gave the common council authority “ to regulate, control and prohibit the location, laying, use and management of telegraph, telephone and electric light and power wires and poles.” In disposing of the question raised, this court said:
“But we do not think this was designed as giving to the municipality absolute authority to exclude such companies altogether from carrying on or' operating their business within the corporate limits of the city, but simply to regulate the same, and to prohibit such location in improper places; otherwise the municipalities of the state would have the power to nullify what the legislature had expressly authorized. Undoubtedly, the common council, under the charter, had a right to regulate, in order to guard and secure the public safety and convenience; but their regulations, to be valid, should have been reasonable and fair, and not have gone to the extent of confiscation, nor of wholly excluding the plaintiff from the city.” Wisconsin Tel. Co. v. Oshkosh, 62 Wis. 32, 40.
The police power possessed by the city, as said in Chicago, M. & St. P. R. Co. v. Milwaukee, 97 Wis. 418, extends to the protection of the lives, health, and property of citizens, and to the promotion of good order and good morals. It is not easy of exact definition, or possible to fix upon it exact limitations or restrictions. “It is easier to perceive and realize the existence of this power than to mark its boundaries or to prescribe limits to its exercise.” Comm. v. Alger, 7 Cush. 53. It arises under what has been termed “ the law of overruling necessity.” But it has its limitations. Certainly, its exercise must be reasonable and calculated to *37promote the ends suggested. Hayes v. Appleton, 24 Wis. 544; Barling v. West, 29 Wis. 307. Neither the city nor the state can destroy or essentially modify'corporate franchises, except as the power is reserved in the original grant or by the constitution. They may regulate the mode of doing business with reference to the comfort, welfare, and safety of society, but cannot, under the pretense of regulating, take away any of the essential rights and privileges which the charter confers.
In the exercise of its police power to control and regulate its streets the city passed an ordinance providing that the location of poles should be subject to the approval of the proper authorities and that the further occupation of its streets should be upon a plan to be approved by the council. This was reasonable, and the relator cannot and does not object to it. In the petition presented to the council it signified its readiness to conform to all reasonable requirements, and, if the plan presented did not meet with approval, it was ready to change the same to meet the wishes of the authorities. But the city seeks to go much further. It, in effect, says to relator: “ Before you can make any changes, or extend your system, you must consent to an ordinance fixing rates of charges to patrons. You must consent to sell your privileges at an appraised value in case the city shall desire to purchase. You must consent to the free use by the city of the top thirty inches of all poles for its police and fire-alarm system. In case you shall fail to operate and maintain your exchange, any poles or property in any way used by the city shall become its property. And, finally, if the city shall construct and operate an exchange for the use of its officers and departments, it shall have the right to connect with your exchange, and have the rights, privileges,- and service given other subscribers, free of all rental charges.” These, in brief, are the conditions insisted upon by the city that shall be accepted by the relator, and are set up in the *38return as an excuse íor not obeying the writ. The relator insists that the city has no power to impose any such conditions. None of them can be justified unless they can be said to fairly come within the purview of police regulations. The argument in behalf of the city is based entirely upon the power of the city to regulate and remove encroachments on its streets and to regulate trade and commerce. The fixing of maximum charges for use of telephones or service in the city is said to be a lawful police regulation to prevent extortion. This is based upon the assumption that the power of police control possessed by the city is unlimited. Such is not the fact. Such power is inherent in the state, and is a necessary attribute of sovereignty. It does not pass to the minor divisions of government except by express grant or by necessary implication from other powers granted. Every citizen holds his property subject to the proper exercise of this power either by the state legislature directly or by public or municipal corporations to which the legislature may delegate it, 1 Dillon, Mun. Corp. § 141. Speaking on the general proposition, the same learned author states the rule thus:
“ It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the declared objects and purposes of the corporation,— not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.” Sec. 89.
That rule has been substantially adopted and approved in this state. Hayes v. Appleton, 24 Wis. 542; Gilman v. Milwaukee, 61 Wis. 588; Bell v. Platteville, 71 Wis. 139; Kilvington v. Superior, 83 Wis. 222; Becker v. La Crosse, 99 Wis. 414. Whatever power a municipality possesses over *39tbe wires and poles of a telephone company in its streets must be granted it by the legislature. 2 Dillon, Mun. Corp. § 698. The charter of the city of Sheboygan empowers it to enact proper ordinances and regulations for the government and good order of the city, for the benefit of trade and commerce, for the suppression of vice and the prevention of crime, to prevent the incumbering of streets, to provide for the'removal of obstructions therein, to regulate the manner of using streets, and to protect them from injury. As we have already seen, this gránt of power does not authorize the city to wholly prevent the relator from doing business within its limits. No express authority is given the city to regulate charges for telephone service, nor is there any express grant of power from which such authority can necessarily be implied. Construing the charter and the statute in the light of the rules of law stated, the city has authority to exercise its police power to protect the public from unnecessary obstructions, inconvenience, and danger, and to determine in what manner the relator may erect its poles so as to accomplish this result. Michigan T. Co. v. Benton Harbor, 121 Mich. 512. It has no authority to impose other conditions. That power rests in the legislature. The power to regulate charges was not included in or incidental to the power to regulate the manner of using streets. There is not the remotest relation between them. The attempt of the city to justify its position on that ground must fail. St. Louis v. Bell T. Co. 96 Mo. 623. The case of Allegheny v. Millville, E. & S. St. R. Co. 159 Pa. St. 411, cited by defendants, has no-application here. It was based upon the ground that under the constitution of Pennsylvania no street railway shall be constructed within the limits of a city without the consent of the local authorities. Eor that reason the imposition of a condition ■ regulating rates of fare was justified. Neither does the power come to the city under the general authority to pass ordinances for the government and good order *40of the city and for the benefit of trade and commerce. To say that under this general power the city may fix rates for telephone service would be going entirely too far. The charter otherwise points out the cases in which the city may exact licenses and fix rates, and any attempt to extend the power would be running directly in the face of the rule laid down by this court in the Oshkosh Case, 62 Wis. 32.
What has been said applies with almost equal force to the other conditions insisted on by the city. We do not see how, under the power it now possesses, the city can rightfully withhold action, or base affirmative action on the condition /'of financial benefits to itself. Such contention must rest largely upon the supposed exercise of power to grant or refuse the right to use the streets. This, of course, the city has no right to do except when the situation is brought within the rale stated in the Marshfield Case, 102 Wis. 604. We need not repeat what was there said relative to the right of the city to prohibit the erection of poles on certain .of its streets. Such right must be exercised in the light of reason; not with a view of prohibiting the company doing business in any given locality, but reasonably to protect the public against unnecessary obstructions, inconvenience, and dangers, for the general welfare and common protection of all. The right to purchase relator’s exchange, if granted, would be a contract right of great value. So, also, as to the right to use the tops of the poles for the fire-alarm system, and the agreement as to forfeiture of property to the city in case of nonuse. Such rights have no relation to the legitimate exercise of the power of police regulation. To permit the city to base its action upon considerations of financial benefit to itself would be allowing it to put its powers up for sale to the highest bidder. Nothing could be more vicious. Yery soon the interest of the public would be at the mercy of local boards. The company willing to yield the greatest number of privileges or pay the most money would get the *41greatest favors. The embarrassments growing out of a recognition of the existence of this right are so manifest and so manifold that we need spend no time in discussing them. ¥e say without hesitation that the city has no right to barter with the police power, or exact for itself financial benefits as a condition for its exercise. Such power must be exercised for the public good and public welfare, and not for public gain.
The further contention that the city may refuse action on the ground that ruinous competition in telephone rates would result, cannot be sustained: The city has no express or implied power to legislate on this subject. Its power to .regulate trade and commerce does not extend to controlling competition. Such power as it possesses must be exercised within the lines already suggested, and cannot be extended to cover municipal fears, or to control mere matters of local competition. The course followed by the relator is substantially that mapped out by this court in the Marshfield Case. It presented its petition with a plan of its proposed improvements and extensions. It signified its willingness to submit to such changes as were deemed for the best interest of the city. It then became the duty of the city to take affirmative action. What that action should be the court has no power to declare. It can only say “Acó, and let such action be in harmony with the powers granted in the charter as herein construed.”
Considering the return as a whole, we do not think it presents-any question of fact for trial, or any legal justification for failing to obey the commands of the writ.
By the Oourt.— The order appealed from is reversed, and the cause is- remanded with directions to sustain the demurrer to the return and for further proceedings according to law.