Jamieson v. Indiana Natural Gas & Oil Co.

• Decision Date: 20 June 1891
• Citation: 28 N.E. 76,128 Ind. 555
• Court: Indiana Supreme Court
• Parties: Jamieson v. Indiana Natural Gas & Oil Co. et al.

128 Ind. 555

28 N.E. 76

Jamieson

v.Indiana Natural Gas & Oil Co. et al.

Supreme Court of Indiana.

June 20, 1891.

Appeal from circuit court, Porter county; William Johnston, Judge.

Complaint by Egbert Jamieson, a stockholder in the Indiana Natural Gas & Oil Company, for an injunction to prevent the company from carrying out a contract alleged to have been in violation of law. There was a demurrer to the answer, which the trial court carried back to the complaint, and sustained as a demurrer thereto. Plaintiff appeals.

Olds, J., dissenting.

Walter D. Holt, for appellant. W. E. Niblack, Addison C. Harris, and Linton Cox, for intervenors. Bell & Morris, Morris & Barrett, and Winter & Elam, for appellees.

ELLIOTT, J.

The complaint of the appellant states these material facts: The Indiana Natural Gas & Oil Company is a corporation organized under the laws of Indiana for the purpose of drilling wells, procuring natural gas, and supplying it to consumers. The appellant is a stockholder in that corporation. The Columbus Construction Company is also a corporation, and is the owner of natural gas wells in many counties of this state. In June, 1890, the gas company entered into a contract with the construction company, wherein it was provided that the latter company should acquire the right of way through Indiana and through Illinois to the city of Chicago; that it should construct for the gas company, on the right of way secured, a line of pipe for the transportation of natural gas, and should furnish all necessary machinery and appliances required to obtain and convey natural gas to consumers. In consideration of the purchase of the right of way and the furnishing and construction of pipe lines, machinery, and appliances, the gas company agreed to issue and deliver to the construction company capital stock to the value of $1,500,000, and also to issue to the construction company $4,000,000 of its corporate bonds, and to secure their payment by a mortgage upon its property and franchises. The construction company, proceeding under the contract, acquired a right of way as agreed, and did purchase and lay down a line of pipe for a distance of 20 miles, and distributed pipe along the right of way for a distance of 40 miles. That company has purchased, and has in readiness, machinery and appliances to be connected with the line of pipes; and it is able, ready, and willing to perform its part of the contract. Natural gas can only be transported to Chicago by pumping and under pressure. It will be impossible to transport it to that point at a pressure which does not exceed 300 pounds to the square inch. The gas company will have no other assets or property than “its plant and system, and no means whatever of paying either the principal or interest” of the corporate bonds which are to be issued to the construction company; but its only means of paying such bonds, or of redeeming its capital stock, will be such as are derived from “the plant and system, and the revenues, tolls, in come, and profits to be earned thereby in the transportation and sale of natural gas in the city of Chicago; and the sole value of its stock will depend upon the right and ability of said company to engage in and carry on, by means of its natural gas plant and system, the business of transportingnatural gas to Chicago and there selling the same.” The plant and system cannot be put to any other commercially profitable use than that of transporting natural gas to Chicago, and can only be used to advantage and profit by the use, as aforesaid, of the pumping machines and other artificial devices. The complaint sets forth at full length the act of March 4, 1891, and, in addition to the averment of the facts already outlined, contains these allegations: “The Indiana Natural Gas and Oil Company, by reason of the statute aforesaid, is prohibited from transporting said gas through said pipe line at more than the natural flow and pressure, or at a pressure in excess of three hundred pounds to the square inch, or from using any artificial device to increase or maintain the natural flow of the gas. The natural gas property and plant contracted to be furnished and delivered to the defendant, as aforesaid, will be of no value for the purpose of such plant, and of little or no value for any purpose to said defendant, and the stock and bonds of the defendant will be wasted, and said company deprived of all the means of effecting the objects and purpose of its incorporation, and be rendered entirely insolvent. Plaintiff further avers and charges that the statute aforesaid has made it unlawful for said defendant, or any person in said state of Indiana, to transport natural gas through said pipe line at a pressure exceeding three hundred pounds per square inch, or the natural flow and pressure of such gas, or to use in such transportation any artificial device for the purpose, or which shall have the effect, of increasing or maintaining the natural flow and pressure of such gas. Wherefore plaintiff avers that it has become and is illegal for either of said defendant companies to further proceed with the execution of said contract, and that the defendant the Indiana Natural Gas and Oil Company especially ought not to be permitted to further proceed in the execution of said contract, the performance of which will result, as aforesaid, in a waste and destruction of almost its entire corporate assets, and make it entirely impracticable for it to carry out the objects and purposes of its incorporation, and will also involve it in liability for the payment of heavy penalties for the violation of said statute. Plaintiff avers that, immediately upon the taking effect of said statute, he demanded of the board of directors of said the Indiana Natural Gas and Oil Company that they and the said company should at once desist from any further proceedings towards executing and carrying out said contract, and that they should abandon the said enterprise of transporting natural gas by the use of artificial pressure, or pressure in excess of three hundred pounds to the square inch, or other than the natural flow and pressure of said natural gas, and that they should at once rescind and abandon the said contract; but that said board of directors refused to do so, and declared that notwithstanding said statute, and regardless of the right of this plaintiff, they would proceed to perform fully said contract as to all the obligations of the said the Indiana Natural Gas and Oil Company thereunder, and would not abandon the said enterprise of transporting natural gas by artificial pressure in excess of the natural flow and pressure, and in excess of three hundred pounds to the square inch; and that, upon performance by said Columbus Construction Company of its part of said contract, the said the Indiana Natural Gas and Oil Company would issue and deliver to said Columbus Construction Company its stock and bonds in all respects according to the terms of said contract. Plaintiff further avers that, in execution of said contract, the companies have already, and since the taking effect of said statute, connected their said pipe line with certain gas-wells in the county of Howard, in the state of Indiana, being wells which, under said contract, are to be acquired and used by the said the Indiana Natural Gas and Oil Company, and by means of a certain artificial device for pumping, known as a ‘pump,’ being a part of the machinery to be acquired and used by said the Indiana Natural Gas and Oil Company, did unlawfully transport the natural gas from said wells, through the said line of pipe in said county, at an artificial pressure in excess of three hundred pounds to the square inch, and in excess of the natural pressure and flow of said gas, to-wit, at a pressure of four hundred and twenty pounds to the square inch, whereas the natural pressure of such gas was but, to-wit, three hundred and twenty-five pounds to the square inch, and ever since have continued to and still are so engaged in violating the provisions of said statute; whereby the said the Indiana Natural Gas and Oil Company has already incurred liability for the penalty prescribed by said statute, and will be subjected to further liability for such penalties unless the said defendant companies be enjoined as hereinafter prayed, which will result in further waste of the corporate assets and irreparable loss to this plaintiff. And plaintiff further avers that said defendant the Indiana Natural Gas and Oil Company, unless enjoined from so doing, will issue to said Columbus Construction Company its bonds and stock as provided by said contract.”

The trial court carried back the demurrer addressed to an answer filed by the appellees to the complaint, and gave judgment because of the insufficiency of that pleading. The ruling of the trial court in carrying back and sustaining the demurrer to the appellant's complaint is properly challenged by a specification in the assignment of errors. We decide the case upon the ruling adjudging the complaint bad, and we neither give nor intimate an opinion upon any other ruling, nor upon any other questions than such as that ruling legitimately presents. We do not feel at liberty to consider any other questions than those designated, and upon none others do we give judgment; nor, indeed, can we decide any other questions without a departure from settled principles of procedure.

To determine what questions are legitimately presented to us, it is necessary to give a construction to the complaint which the trial court condemned; but it is only necessary to state in a very general way what we adjudge to be the nature of the complaint. We adjudge that the complaint is to be construed as charging that the contract of the corporation, of which the appellant is a member, with the construction company is incapable of performance, because it requires a violation of the act of March 4, 1891, in...