Brauer v. Iroquois Gas Corp.
| Decision Date | 22 December 1975 |
| Citation | 381 N.Y.S.2d 166,85 Misc.2d 936 |
| Parties | Everett A. BRAUER, as Treasurer of the City of North Tonawanda, a municipal corporation for and on behalf of said municipality, Plaintiff, v. IROQUOIS GAS CORPORATION, Defendant. |
| Court | New York Supreme Court |
This matter having come on for trial before me at a regular term of the Supreme Court, Niagara County, and counsel for the parties hereto having submitted agreed facts to this court and upon the pleadings, briefs and having heard Niemel & Niemel (Casimer J. Niemel, of counsel) on behalf of the plaintiff and Phillips, Lytle, Hitchcock, Blaine & Huber (Paul B. Zuydhoek, of counsel) it is the findings and decision of this court as follows:
On November 12, 1884, the Village of North Tonawanda, New York granted a franchise to the Tonawanda Gas Light Co. for the furnishing of gas and gas services to its residents. Subsequently this franchise grant was expanded in 1895 to include an area that is now the City of North Tonawanda. In 1888 a franchise was granted to Standard Gas Co. of Tonawanda for similar services by the Village. The City of North Tonawanda succeeded in 1897 to the liabilities of the Village of North Tonawanda and Iroquois Gas Corp. became a successor to the original fanchises. Charter Provision Title XXIX as enacted in 1907 by City Council of North Tonawanda governs the terms and conditions of franchise grants. Neither defendant nor its predecessors has ever applied for or been granted a franchise under that provision.
The issue of the instant case is whether the relationship which the defendant and its predecessors entered into voluntarily pursuant to the franchise of 1884 governs defendant's relationship with plaintiff, or whether the City Charter provision Title XXIX as enacted in 1907 governs the terms and conditions of their relationship. That provision governs the granting of franchises, requires a 25 year limit to franchise and a payment by the utility of 2 1/2% Of its gross income annually.
The plaintiff in his amended complaint alleges that the franchise of 1884 has no legal validity today. Five arguments are asserted in plaintiff's demand for relief concerning the earlier franchise grants which the defendant claims control and govern the legal relationship between the parties.
We shall now consider each one separately, reviewing the proof submitted by stipulation and all the pleadings.
Addressing ourselves to plaintiff's demands for relief requesting a declaration of:
1. Lack of definiteness as to beginning and terminating date of the franchise of 1884:
Plaintiff has not alleged any material fact under a theory of law which sets forth a legal basis for this demand in his amended complaint. No facts are alleged which by operation of law annul, cancel or terminate the franchise grant of 1884 because of lack of definiteness as to beginning and terminating dates.
Plaintiff and defendant admit in paragraph '2' of the stipulation that defendant's predecessors accepted the franchise and expended funds in reliance upon the grant. Paragraph '8' of the stipulation admits this grant was amended and extended in geographic area in 1897. The parties were obviously free to bargain regarding a termination date but none was added to the franchise at that time. Further, in paragraph '17' of the stipulation, plaintiff and defendant agree that defendant and its predecessors have spent over $2,850,000 in the Village and City of North Tonawanda to purchase, install and service equipment for facilities to supply gas and provide service in that locality.
It is evident that factually the defendant and its predecessors never had any notice of or expectation that the franchise of 1884, by implication or by law, was vague and uncertain--they have acted and continued to act exercising their franchise rights.
In People v. O'Brien, 111 N.Y. 1, 18 N.E. 692, the Court of Appeals held that the laying of street railway tracks by a railway corporation, pursuant to grant of a municipal franchise, resulted in the taking of an estate in perpetuity.
The court was careful to point out that in the absence of any conditions as to length of the duration of the rights granted, the conclusion is inescapable that the rights granted should be exercised in perpetuity and by successors to the original franchise, at 39, 40. See also N.Y. Cent. & H.R.R. Co. v. N.Y., 202 N.Y. 212, 95 N.E. 638.
This rule is fully applicable to gas franchises, Ghee v. Northern Union Gas Co., 158 N.Y. 510, 53 N.E. 692 (1899).
The court notes that a franchise is bilateral in nature and that acceptance is necessary to prove that the grantee has undertaken the obligations of the grant. See Greenburg v. City of N.Y., 152 Misc. 488, 500, 274 N.Y.S. 4, 18. Surely the admissions of paragraph '2' of the stipulation resolve any question as to acceptance in this case.
In view of the rule as enunciated in People v. O'Brien, supra, it is the decision of the court that demand of plaintiff to void the franchise of 1884 for lack of commencement and a termination date must be denied.
2. If the same (franchise) was ever effective, it was effective for a reasonable time, and that has expired.
The plaintiff has failed to allege the existence of any facts in the actual franchise grant of 1884 or legal principles upon which this request for relief can be granted. No express time limit as to duration was set in the original franchise grant of 1884 and none can be found by implication therein.
People v. O'Brien, supra, stands for the proposition that in the granting of a franchise, if it is silent as to duration, its existence is perpetual. Further confirmation of the perpetual nature of a franchise was made in the case of Greenburg v. City of N.Y., 152 Misc. 488, 501, 274 N.Y.S. 4, 19 (Sup.Ct.1934). There the court noted that once a utility spent money and time to carry out a franchise and the directions contained therein, a city would be estopped to revoke the franchise.
The plaintiff's request on this issue is denied.
3. The expressed conditions upon which the purported franchise was given are no longer maintained by the defendant.
The plaintiff in his amended complaint fails to allege a single factual violation of any express or implied condition of the grant of 1884. On the contrary, his own amended complaint alleges in paragraph '4' that defendant maintains pipes and apparatus for delivery of defendant's product to customers in the City of North Tonawanda.
Reviewing the stipulation, we find that the plaintiff and defendant, in paragraphs '1', '2', '3', '8', '12', '16' and '17' have agreed that since the inception of the franchise of 1884, there has been an unbroken chain of performance and proper legal succession to the original franchise.
Plaintiff has stipulated at paragraph '16' that defendant has not charged more than $2 per thousand feet of gas, a rate set forth in the original franchise grant. The plaintiff has suggested that because the Public Service Commission controls rates for utilities in this state that the franchise grant of 1884 has somehow been stripped of any legal vitality. This regulati of rates does not invalidate the underlying franchise grant. See Public Service Commission v. Pavillion Nat. Gas Co., 232 N.Y. 146, 133 N.E. 427 (1921); In Matter of City of Rochester v. Public Service Commission, 275 App.Div. 172, 89 N.Y.S.2d 545, affd. 301 N.Y. 801, 96 N.E.2d 192 (1950); Peo. ex rel. Village of S. Glens Falls v. Public Service Comm., 255 N.Y. 216, 121 N.E. 777 (1919).
The admissions of plaintiff herein compel the court to deny this request for relief.
4. Charter provides a 25 year limit to any franchise.
Charter provision Title XXIX is set forth in paragraph '7' of plaintiff's amended complaint. In paragraph '9' of the amended complaint, plaintiff alleges that since 1907 no predecessor or defendant presented a petition to obtain a franchise.
The charter provision subdivision is clearly prospective in nature. There is nothing in the wording of the charter amendment that implies a retrospective application. In fact, elementary rules of statutory construction warrant the inescapable conclusion that it was only intended to apply prospectively.
No reference in the charter provision is made to any franchises previously granted by the City of North Tonawanda from the time between its incorporation as a city and the charter amendment of 1907, not to mention any reference to franchises granted theretofore by the Village of North Tonawanda, for which the City is now liable.
The provision of the charter providing for the 25 year limitation and the 2 1/2% Of gross receipts requirements uses the language:
'(no) such grant, consent or franchise Shall be granted or made. . . .' (Emphasis added)
The use of the words 'shall be' indicates a legislative intent for prospective application only. In Weiler v. Dry Dock Sav. Inst., 258 App.Div. 581, 582, 17 N.Y.S.2d 192, 194 (1st Dept. 1940), the court said:
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