Calor Oil & Gas Co. v. Franzell

• Decision Date: 26 March 1908
• Citation: 109 S.W. 328,128 Ky. 715
• Parties: CALOR OIL & GAS CO. v. FRANZELL et al. KENTUCKY HEATING CO. et al. v. CALOR OIL & GAS CO.
• Court: Kentucky Court of Appeals

109 S.W. 328

128 Ky. 715

CALOR OIL & GAS CO. v. FRANZELL et al.

KENTUCKY HEATING CO. et al. v. CALOR OIL & GAS CO.

Court of Appeals of Kentucky.

March 26, 1908

Appeals from Circuit Court, Meade County.

"To be officially reported."

Condemnation proceedings by the Calor Oil & Gas Company against Nicholas Franzell, the Kentucky Heating Company, and others. From a judgment in favor of Nicholas Franzell and wife, all the parties appeal. Affirmed on appeal of the Kentucky Heating Company and Nicholas Franzell and wife. Reversed on appeal of the Calor Oil & Gas Company.

L. A Faurest, J. S. Wortham, and Humphrey & Humphrey, for Calor Oil & Gas Co.

Matt O'Doherty, McQuown & Brown, J. W. Lewis, and J. M Richardson, for Kentucky Heating Company and others, and Nicholas Franzell and others.

BARKER J.

These two appeals grow out of the same transactions. Both the plaintiff and the defendants below appealed from the judgment of the circuit court, and filed copies of the record here. These, by order of this court, were heard together, and will be treated in this opinion as one case. Nicholas Franzell and wife own a farm in Meade county, Ky. between the natural gas fields and the city of Louisville. The Kentucky Heating Company is a corporation owning and operating natural gas wells in Meade county, and is engaged in the business of piping the gas from the wells to the city of Louisville and there selling it to its customers under a franchise which it owns and holds to lay its pipes through the public streets. The Louisville Gas Company is a corporation engaged in the business of manufacturing gas in the city of Louisville and selling it both for lighting and heating purposes under a franchise which it owns of laying its pipes through the public ways of the city of Louisville. This latter corporation is not a party to this record, but it is a rival to some extent at least, of the Kentucky Heating Company, and it is the theory of the Heating Company that the Calor Oil & Gas Company is but a branch of the Louisville Gas Company, and that the latter was incorporated, among other things, to enable the Louisville Gas Company by indirection to pipe natural gas from the gas fields of Meade county to the city of Louisville, and in this way unlawfully compete with the Kentucky Heating Company in its business. We shall not enter very deeply into this phase of the case, for reasons which will appear farther on in the opinion. The Calor Oil & Gas Company is a corporation having power and authority under its charter to buy and lease oil and gas lands, dig wells, construct pipe lines, and do any and all other things connected with such business. The questions which arise for adjudication upon the transcripts before us grow out of an attempt on the part of the gas company to condemn a strip of land across the farm of appellants Franzell and wife, for the purpose of laying therein a pipe line to convey natural gas from its wells in Meade county, Ky. to the city of Louisville. The proceeding is under section 3766a, Ky. St. 1903, and sections 835-840, Ky. St. 1903. The statement which was filed in the clerk's office of the county court of Meade county fully described the strip to be condemned, and thereupon the judge of the Meade county court appointed three commissioners who, after having duly qualified as required by law, viewed the land, and made report, assessing the damages which would accrue to the owners by reason of the condemnation thereof. Upon the trial of the case before the county court on the exceptions of the owners of the land to the report of the commissioners the court held that the corporation did not have the power of eminent domain, and dismissed the proceedings. From this judgment the corporation appealed to the circuit court of Meade county, where, upon a trial de novo, as provided by statute, the circuit court held that the corporation did possess the right of eminent domain, and submitted the question of damages to the jury, with the result that they returned a verdict of $4,000 in favor of Franzell and wife; and from this judgment all the parties, as said before, have prosecuted appeals for its reversal.

The first question which is raised by the defendants below on this appeal is that, after the judgment in the circuit court that the Calor Oil & Gas Company possessed the right of eminent domain under its charter, the case should have been sent back to the county court and there tried out before a jury on the question of the amount of damages. We cannot agree to this proposition. When the county court decided that the corporation did not possess the right of eminent domain, it was forced to appeal to the circuit court to get from under the ban of that adverse adjudication, and, having appealed to the circuit court, under the statute (section 839, Ky. St. 1903) the case came on for trial de novo, and the whole controversy was to be tried out there. This is what a trial de novo means; and there is nothing in the statute which indicates that the Legislature intended to impose upon the parties the burden of the case being sent back to the county court for a retrial after an appeal to the circuit court. On the contrary, all the language of the section (839) indicates an intention that, upon appeal to the circuit court, the whole case is to be there tried and settled, subject, of course, to a right of appeal to this court.

The Kentucky Heating Company was made a party defendant to the condemnation proceedings, because it claimed under a written contract with Franzell and wife, the owners of the land, the "exclusive right and privilege of laying pipe and pipe lines for any and all purposes whatsoever on, across, in, or upon said land"; the consideration of which was an annual rental of $262 so long as the Kentucky Heating Company "shall continue to occupy and use any part of the above-described land under this agreement." In addition to this exclusive privilege it had, under this contract certain mineral rights in the land, which need not be set forth here, as the proposed right of way sought by the Calor Oil & Gas Company in no wise infringed upon or involved them. So far, then, as the Kentucky Heating Company is concerned, the only question in this case in which it is interested is the validity of its claim to an exclusive right to construct or operate a pipe line across the Franzell farm. Obviously this contract is void as being in contravention of public policy. This position needs little elucidation or argument. Undoubtedly the public welfare requires the freest competition in all things pertaining to the common interest; and it has always been contrary to law to establish a monopoly such as is involved in the contract between the Franzells and the Kentucky Heating Company. What would be thought, for instance, of the proposition that a railroad corporation could lease from the owners a belt of land surrounding a municipality, and provide in the lease that it should have the exclusive right to operate a railroad across the land in question? And yet the supposed proposition differs in principle in no wise from the contract between the Kentucky Heating Company and the Franzells. In 1 Lewis on Eminent Domain, § 137, it is said: "An exclusive franchise or privilege in a matter of public concern can be created only by the sovereign power. It cannot be secured by contract with individuals or corporations. Thus the grant by a railroad company of the exclusive right of maintaining a telegraph line along its right of way, or the grant by an individual of the exclusive right of constructing pipe lines over his lands for the transportation of oil, is void as against public policy." And again, in volume 2, section 289a, it is said: "It is held that the grant of an exclusive right of way for a use of a public nature, such as a railroad, or pipe line, or telegraph, is against public policy and void, so far at least as the exclusive feature is concerned." To the same effect is West Virginia Transportation Co. v. Ohio River Pipe Line Co., 22 W.Va. 626, 46 Am.Rep. 527; Kettle River R. Co. v. Eastern R. Co., 41 Minn. 461, 43 N.W. 469, 6 L.R.A. 111; W. U. T. Co. v. A. U. T. Co., 65 Ga. 160, 38 Am.Rep. 781; Western Union Telegraph Co. v. B. & S.W. Ry. Co. (C. C.) 11 F. 1; W. U. T. Co. v. B. & O. Tel. Co. (C. C.) 23 F. 12. From the foregoing authorities, and upon principle, it is manifest that the lease from the Franzells to the heating company is void so far as it undertakes to grant an exclusive right to lay pipe lines in or across the land involved here. Being void, it can constitute the basis for no claim for compensation either upon the part of the Franzells or the heating company, as a void contract can give rise to no legal right. In 2 Lewis on Eminent Domain, § 484, it is said: "Nothing can be allowed on account of the loss or impairment of a gratuitous privilege, which the owner has been enjoying by the sufference of another, or contrary to law or public right." See, also, Kingsland v. New York, 110 N.Y. 569; 18 N.E. 435; Ranlet v. Railroad Co., 62 N.H. 561. It follows that the Kentucky Heating Company had no interest whatever in this condemnation proceeding, it being patent that the rights which the Calor Oil & Gas Company were seeking did not in any wise militate against or infringe upon the mineral rights of the Heating Company in the Franzell farm; and, as we have already said, it had no right whatever to the exclusive privilege of laying pipe lines across the farm. The commissioners and the jury correctly refused to award it any damages by reason of the condemnation of the right of way, and the court erred in permitting any evidence as to the damages that would accrue to the Franzells by reason of the loss of rental under their...