Central Power Co. v. City of Hastings

• Decision Date: 13 August 1931
• Citation: 52 F.2d 487
• Parties: CENTRAL POWER CO. v. CITY OF HASTINGS et al.
• Court: U.S. District Court — Panama Canal Zone

52 F.2d 487 (1931)

CENTRAL POWER CO. v. CITY OF HASTINGS et al.

District Court, D. Nebraska, Hastings Division.

August 13, 1931.

Cleary, Suhr & Davis, of Grand Island, Neb., and Stiner & Boslaugh, of Hastings, Neb., for Central Power Co.

Roscoe S. Hewitt, City Atty., of Hastings, Neb., and Ernest B. Perry and Lloyd J. Marti (of Perry, Van Pelt & Marti), both of Lincoln, Neb., for City of Hastings.

WOODROUGH, District Judge.

This case is tried upon the bill in equity, the answer, and the evidence and the court has considered briefs and requests for findings and conclusions timely submitted by defendants. The substance of the bill is outlined by counsel as follows:

I. The plaintiff, the Central Power Company, is a corporation organized under and by virtue of the laws of the state of Delaware.

The defendant, the city of Hastings, is a municipal corporation, created and existing under the laws of the state of Nebraska, and is a city of the first class, with a population of more than five thousand and less than twenty-five thousand people.

The individuals named as defendants are the mayor and members of the city council of the city of Hastings, Neb.

II. The amount in controversy exceeds the sum of $3,000.

The plaintiff and defendants are residents and citizens of the states of Delaware and Nebraska respectively.

The subject-matter of the controversy set out in the bill of complaint arises within the contemplation and provisions of section 1 of the Fourteenth amendment and section 10 of article 1 of the Constitution of the United States.

III. The plaintiff is a public utility and for more than fifteen years past has been and now is engaged in the distribution of gas to the city of Hastings and its inhabitants by virtue of a franchise granted plaintiff by the city of Hastings in accordance with the laws of the state of Nebraska.

The gas distributing system owned by plaintiff and operated in the city of Hastings is the only gas distributing system operating in said city and is now serving gas to more than twenty-five hundred customers.

During the course of existence of plaintiff company, it has constructed and laid gas pipes in and under the streets of the city of Hastings, and as a public utility is under duty to serve the public with gas.

IV. Since the granting of the franchise (October 11, 1915, franchise attached to bill of complaint and made a part thereof), plaintiff has distributed manufactured or artificial gas. Until recently no natural gas was available for distribution.

Plaintiff took advantage of an opportunity brought about by the construction of pipe line from the gas fields in Texas and Kansas through the state of Nebraska and near the city of Hastings to acquire, and it has made arrangements for, a supply of natural gas to be distributed to the city of Hastings and its inhabitants.

Plaintiff has now signed a contract for the furnishing to it of an adequate, continuous, and sufficient supply of natural gas to respond to the needs and requirement of its patrons and to the public.

That natural gas is more efficient than manufactured or artificial gas and can be obtained at less cost to the plaintiff, and therefore can be supplied to the city of Hastings and the inhabitants of said city at a lower price than at which artificial or manufactured gas can be supplied.

That, by the substitution of natural gas in the place of artificial gas, the plaintiff can better serve the city of Hastings, its inhabitants, and the public, and can better carry out and perform its duty and obligation under its contract to furnish light and heat to the city and its inhabitants.

V. As a result of the contract and arrangements between the plaintiff and the Nebraska Natural Gas Company, arrangements have been made and completed for the construction of adequate transmission lines for the transmission of natural gas to the plaintiff in quantities sufficient to supply the public now being served or to be served.

The transmission lines of the Nebraska Natural Gas Company has been or will immediately be completed to the city limits of Hastings, and the Nebraska Natural Gas Company is ready to receive natural gas through such transmission lines.

The plaintiff is ready and desires to complete all lines of connections necessary for receipt and distribution of natural gas, and the making of the connections constitutes ordinary or normal gas line construction wholly consistent with the safety of the public.

VI. In order to make the proper connections for the receipt of the natural gas and distribution thereof, it is necessary for the plaintiff to lay a transmission or pipe line from its plant to the transmission line of the Nebraska Natural Gas Company where it comes to the corporate limits of the city of Hastings.

When the plaintiff made the preparation to exercise its rights to lay such transmission pipes connecting with the transmission line of the Nebraska Natural Gas Company, and indicating their intention to engage in the distribution of natural gas, the defendants forbade them to do so.

Plaintiff was notified by the mayor and the city council that it would not be permitted to lay the necessary pipes and make these connections unless and until the plaintiff should submit to the defendant a new schedule of charges for natural gas, such schedule to be satisfactory to and approved by the defendants.

Defendants have asserted that the plaintiff would not be permitted to distribute natural gas to the inhabitants of the city of Hastings through its (now) distributing system unless and until the plaintiff should have secured a new franchise and submitted to the defendants a new schedule or rates or charges for the natural gas to be consumed in said city. All of this, notwithstanding the fact that natural gas contains approximately double the heating value of artificial gas.

Plaintiff charges that, under the terms of the franchise, it is entitled to maintain, extend, and enlarge its system in such manner as the public service requires, subject only to such reasonable police regulations as may be imposed by authority of the city, and that it has the right under its franchise to distribute natural gas through its system and through such extensions of the system as may subsequently be required for the purpose of adequately serving the inhabitants of the city of Hastings.

Plaintiff charges that the action of the defendants in preventing the plaintiff from utilizing its present system for the distribution of natural gas is wholly and entirely arbitrary, oppressive and illegal; and that such action on the part of the defendants was and is with the intent and purpose of carrying out an ulterior design against the plaintiff in order to force plaintiff to accept an arbitrary schedule of charges for natural gas below charges that are reasonable, lawful, just, and proper.

That a change from artificial to natural gas as is proposed and intended by plaintiff will result in a saving to the inhabitants of the city of Hastings and users of gas of not less than $30,000 per year.

VII. That the present investment by plaintiff in the city of Hastings amounts to more than $300,000, and that plaintiff has only received a small net profit in the operation of its gas plant, and even with the most economical administration will be able to make only a small net return, which is not compensatory upon the actual amount of its investment.

To continue the manufacture and distribution of artificial gas and give the service necessary and such as plaintiff is obligated under the terms of its franchise will require the immediate outlay by the plaintiff in repairs, replacements, and necessary new equipment for the manufacture of artificial gas of not less than $50,000; all of which will be rendered unnecessary if plaintiff is permitted to exercise its right to introduce and distribute natural gas.

If permitted to prepare its system as proposed for the receipt of natural gas by reasonable and safe extensions of its mains and to distribute natural gas, the volumes of consumption by the city of Hastings will be greatly increased, and it will be able to sell a larger volume of highly efficient and economical fuel, and the plaintiff, as well as the public, will be benefited and plaintiff can earn a reasonable return upon its investment.

If plaintiff is prevented from making such extension for the receipt of natural gas, and prevented from distributing natural gas, plaintiff will be deprived of its vested contract and franchise rights and forced to operate and continue for an inadequate and confiscatory return, if not an actual loss upon the fair value of its system.

VIII. Plaintiff charges that under the terms of its franchise it is vested with the right of supplying the inhabitants of Hastings, Neb., with natural gas to the extent that it was and is invested with the right to supply artificial gas, there being no tangible or substantial difference, except natural gas is more efficient than, and is superior to, artificial gas.

The denial by the defendants of the right of plaintiff to extend its system and supply natural gas to the inhabitants of the city of Hastings deprives plaintiff of its property without due process of law, and denies plaintiff the equal protection of the law.

The acts of the defendants in forbidding plaintiff to carry on its business, as authorized by law and by its charter (franchise), constitutes an undertaking on the part of the governing authorities to pass law and enforce demands impairing the obligation of the contract which is forbidden by the Constitution of the United States and by the Constitution of the state of Nebraska.

If defendants are permitted to carry out their unwarranted and unlawful plans and are permitted to prevent plaintiff from carrying on business, plaintiff will suffer irreparable financial losses in its business.

If defendants are prevented from carrying out their avowed purposes in the...