City Of St. Mary&s v. Hope Natural Gas Co

• Decision Date: 08 October 1912
• Citation: 76 S.E. 841,71 W.Va. 76
• Court: West Virginia Supreme Court
• Parties: CITY OF ST. MARY'S. v. HOPE NATURAL GAS CO.

76 S.E. 841

71 W.Va. 76

CITY OF ST. MARY'S.

v.HOPE NATURAL GAS CO.

Supreme Court of Appeals of West Virginia.

Oct. 8. 1912.

Rehearing Denied Jan. 6, 1913.

(Syllabus by the Court.)

1. Gas (§ 14^*)—Charges—Actions—Parties.

A municipal corporation may in its name, suing for itself as a corporation and in behalf of its residents, maintain an injunction suit to restrain an incorporated company furnishing, under a franchise granted by the municipality, natural gas for public consumption in the town or city, from excessive unlawful rates for gas.

[Ed. Note.—For other cases, see Gas, Cent. Dig. §§ 10-11; Dec. Dig. § 14.*]

2. Gas (§ 14*)—Gas Companies—Franchises—Limitation of Rates—Validity.

A provision in a municipal ordinance granting a franchise to erect and operate works to furnish natural gas for consumption in the town or city may contain fixed rates or charges for gas, and such limitation is valid, and when accepted by the grantee is a contract binding the grantee of such franchise.

[Ed. Note.—For other cases, see Gas, Cent. Dig. §§ 10-11; Dec. Dig. § 14.*]

3. Gas (§14*)— Gas Companies — Regulation—Power of Municipality.

In the absence of a delegation thereof by the Legislature, express or necessarily implied, a city or town has no power to regulate rates for natural gas furnished by a person or corporation for public consumption in such city or town, otherwise than by contract with such person or corporation, by the terms of the grant of franchise.

[Ed. Note.—For other cases, see Gas, Cent. Dig. §§ 10-11; Dec. Dig. § 14.*]

4. Gas (§ 14*)—Gas Companies—Charges.

A franchise is granted by a town to a corporation to occupy streets with pipes to convey gas for public consumption, authorizing specific rates of charge per fire. Later the gas company changes its charge from specific rates to a charge by meter of 20 cents per 1, 000 cubic feet of gas. The town by injunction suit contested this change and charge; but it was denied relief and its bill dismissed. For 13 years the company furnished the public with gas by meter at the 20-cent rate; the town silently acquiescing. Then the gas company increased its rate to 22 cents per 1, 000 feet by meter. Later on the town passed a general ordinance allowing those furnishing gas to charge a rate by meter of 20 cents per 1, 000 feet of gas, and prohibiting higher charges. Under these facts the gas company is limited to such 20-cent charge, and cannot increase it without consent of the town.

[Ed. Note.—For other cases, see Gas, Cent. Dig. §§ 10-11; Dec. Dig. § 14.*]

Appeal from Circuit Court, Pleasants County.

Bill in equity by the City of St. Mary's against the Hope Natural Gas Company. From a decree for plaintiff, defendant appeals. Affirmed.

A. B. Fleming, of Fairmont, John F. Barron, of St. Mary's, A. D. Follettout, of Marietta, Ohio, and C. Powell and Kemble White, both of Fairmont, for appellant.

G. D. Smith, Clyde B. Johnson, and Ross Wells, all of St. Mary's, for appellee.

BRANNON, P. In the year 1893 the town of St. Mary's (now by statute a city) granted by two ordinances, one to Barnsdall, the other to Mallery, franchises to operate plants to furnish natural gas for consumption in that town. Barnsdall and Mallery accepted these grants and established plants or works under them and furnished gas to the town. These grants are identical in character. By change of ownership the River Gas Company became owner of both plants and operated them until 1910, when ownership was changed to the Hope Natural Gas Company. These franchise grants fixed for different kind of fires specific rates per fire called "flat rates." Such rates prevailed until 1898. Then the River Gas Company changed to charge by meter, making the rate 20 cents per 1, 000 cubic feet. The town brought in 1897 an injunction suit against the gas company to enjoin it from collecting by such meter rate, which resulted in a decree that the town was not entitled to any relief and dismissing its bill. For about 13 years the River Gas Company and the Hope Gas Company furnished gas by the 20-cent meter rate; but in July, 1911, it increased the meter rate from 20 to 22 cents per 1, 000 cubic feet. Supposably to resist this change, on August 31, 1911, the city council passed an ordinance providing that any person or corporation supplying gas to the city should charge 20 cents per 1, 000 feet by meter, and prohibiting any greater charge. In September, 1912, the city brought suit to enjoin the Hope Gas Company from collecting gas charges at a greater rate than 20 cents per 1, 000 feet. The case was heard on bill, demurrer to it, answer, and affidavits, and the court made a decree overruling a motion made by the gas company to dissolve the injunction, from which decree or order the gas company appeals.

It was assigned in the demurrer that the city cannot maintain this bill for itself and its residents, and argument is made by the city on this point; but it is not specifically assigned as a ground of error or argued for the gas company. Anyhow, we cannot say that each resident must sue for himself, making multiplicity of suits. Clearly the city as a corporate entity may sue for itself alone, or in its name in behalf of its residents, to vindicate the public right and prevent the imposition of illegal rates. St. Mary's v. Woods, 67 W. Va. 110, 67 S. E. 176, 21 Ann. Cas. 164; Gas Co. v. Muncie, 10 Mun. Corp. Cas. 137; Id., 160 Ind. 97, 66 N. E. 436, 60 L. R. A. 822; Trustees v. Cowen, 4 Paige (N. Y.) 510, 27 Am. Dec. 80; Pomeroy's Eq. | 243.

For the Hope Gas Company it is contended that the provision in the franchise ordinances fixing flat rates per fire is void, on the ground that without legislative grant of power to do so a municipality cannotprescribe rates for corporations performing | public service. Grant this. But these franchises are not municipal statutes fixing rates generally, applicable to all, like a general law passed by the Legislature; but they are special grants of franchise made by the town to Barnsdall and Mallery, at their instance —grants offered them and accepted by them. They are contracts binding both the town and these grantees. We see no reason why a town may not make a contract to accomplish a function with which it is charged or empowered binding it and the other party. He accepting is plainly bound, and cannot say the town's act is void. Opinion of Judge Poffenbarger in Blueficld Water Co. v. Bluefield, page 8 of 69 W. Va., page 772 of 70 S. E. (33 L. R. A. [N. S.] 759), citing Railroad Co. v. Triadelphia, 58 W. Va. 487, 52 S. E. 499, and Clarksburg Electric Co. v. Clarksburg, 47 W. Va. 739, 35 S. E. 994, 50 L. R. A. 142. Having accepted the grant, the grantee accepted all its terms, and cannot deny the town's power to fix rates by contract.

Code, c. 47, gives a town the power "to erect or authorize or prohibit the erection of gas works, electric lights or waterworks." It would seem to require no argument to sustain the proposition that in exercising its function under this statute the council may impose conditions and rates in the franchise. Zanesville v. Gaslight Co., 47 Ohio St. 1, 23 j N. E. 55; Gas Co. v. Muncie, 160 Ind. 97, 66 N. E. 436, 60 L R. A. 822; Boerth v. Detroit, 152 Mich. 654, 116 N. W. 628, 11 L. R. A. (N. S.) 1197. So we hold that the provision in the franchise limiting rates of charge per fire is valid.

Do the specific or flat rates of so much per fire yet prevail? They do not. The gas company does not so claim, does not propose to go by them, is not doing so. Nor does the city seek to enforce these rates. The company has been charging by meter rates at 20 cents per 1, 000 cubic feet of gas consumed. It proposes to increase to 22 cents per 1, 000 feet, and the city opposes such increase and seeks to compel the gas company to adhere to the meter system at twenty cents. So, I do not see that the clause of the franchise fixing specific or flat rates per fire is material.

After the grantees of said franchise and their alienees or assignees had for years been operating by the flat rates fixed by the franchise ordinances, the River Company proposed to abandon that flat rate, and charge by meter at 20 cents per 1, 000 feet consumed, and in December, 1897, the town brought a suit against the River Gas Company to enjoin it from collecting by meter rate and compel it to collect by the flat rates per fire fixed by the franchise. This suit ended in a decree declaring that the town was not entitled to the relief which it sought, and dismissing its bill. Thus it was decreed and established that the gas company had not without right abandoned the flat rate fixed by the ordinances, that it was not binding, and that...