City Gas Co. v. Peoples Gas System, Inc., 33815

CourtUnited States State Supreme Court of Florida
Citation182 So.2d 429
Docket NumberNo. 33815,33815
Parties, 62 P.U.R.3d 518 CITY GAS COMPANY, a Florida Corporation, Petitioner, v. PEOPLES GAS SYSTEM, INC., a Florida Corporation, Respondent.
Decision Date14 July 1965

Ward & Ward, W. G. Ward, and Dubbin, Schiff, Berkman & Dubbin, Miami, for petitioner.

McClain, Thompson & Turbiville, J. A. McClain, Jr., Tampa, Scott, McCarthy, Preston & Steel and George W. Wright, Jr., Miami, for respondents.

Edgar H. Dunn, Jr., St. Petersburg, and Erskine W. Landis, DeLand, amici curiae.

O'CONNELL, Justice.

This cause is before this Court on petition for writ of certiorari pursuant to the certification by the District Court of Appeal, Third District, that its decision reported as Peoples Gas System, Inc. v. City Gas Company, Fla.App.1964, 167 So.2d 577, 'passes upon a question * * * of great public interest.' Article V, Sec. 4(2), Florida Constitution, F.S.A.

In September, 1960, petitioner and respondent, both distributors of natural gas in Dade and Broward Counties, entered into a territorial service agreement. The agreement delineated service areas for each of the parties and provided that neither would extend its operations to the territory of the other. It was provided that each party would purchase the equipment of the other located within its assigned territory and that enforcement of the agreement would be by specific performance. The obvious purpose was to eliminate competition between, and duplication of facilities and service by, the parties within the area covered.

In accordance with the terms of agreement, it was jointly submitted by the parties to the Florida Public Utilities Commission. That agency gave its formal approval, observing that such agreements were in the public interest and should be encouraged. Although acknowledging that it is not authorized to grant franchises or cerificates of convenience and necessity to electric and gas companies, the commission asserted that such territorial service agreements would not be valid without its approval because they necessarily limited the commission's statutory authority to require additions and extensions to plant and equipment. Although the validity of such agreements has never been judicially determined, it appears that the commission has previously approved similar ones.

On May 7, 1962, Peoples Gas Company filed a complaint in circuit court alleging that City Gas Company had violated the agreement by taking certain steps, including interim distribution of liquefied gas, toward the establishment of a gas distribution system in an area reserved by the agreement to Peoples. The complaint sought a decree for specific performance, an injunction against continued violation of the agreement, and other appropriate relief.

City Gas filed an answer which in substance (1) denied that the disputed area was covered by the agreement; (2) asserted that Peoples was estopped from bringing such a complaint by reason of its failure to take earlier action, although having adequate notice of the activity complained of; and (3) asserted that in any event the agreement was void and unenforcable under F.S. Chapter 542, F.S.A. and Title 15, U.S.C.A, the latter being the Sherman Antitrust Act. City Gas also filed a counterclaim to enjoin Peoples from interfering further with its efforts to extend its service to the area involved.

On May 23, 1962, the chancellor issued a final decree dismissing the complaint on the ground that the agreement did not cover the disputed area. The City Gas counterclaim was dismissed without prejudice. The decree did not deal with the other issues raised in the answer.

On appeal, the District Court of Appeal, Third District, reversed and remanded, holding that the disputed area did fall within the area reserved to Peoples by the agreement. See Peoples Gas System, Inc. v. City Gas Company, Fla.App.1962, 147 So.2d 334.

After further proceedings, the chancellor issued the final decree here involved, holding that in the absence of a specific, as opposed to merely implied, statutory provision therefor, the Florida Public Utilities Commission lacked authority to approve such agreements and that they were therefore invalid under the Florida antimonopoly statute, F.S. Ch. 542, F.S.A. City Gas' counterclaim, which had been reinstated, was again dsimissed without prejudice. The chancellro observed that this disposition of the case made it unnecessary to decide questios concerning estoppel and the possible invalidity of the agreement under federal law.

On appeal, Peoples Gas listed seventeen assignments of error, the combined import of which was that it was erro for the chancellor to hold that in the absence of express statutory provision, the commission lacked authority to immunize, by its approval, the agreement against invalidity under F.S. Ch. 542, F.S.A. City Gas filed a cross-assignment of error charging that the chancellor had erred in refusing to hold specifically that the agreement was also void as being in violation of Title 15, U.S.C.A. and as burdening interstate commerce, although these issues had been clearly framed by the pleadings and the testimony.

In its opinion reported at 167 So.2d 577, the District Court of Appeal, Third District, stated that crucial question to be: 'Can the Public Utilities Commission exercise any power not expressly granted?' The court reversed the decree, holding that on the basis of (1) the broad scope of the powers granted to the commission by F.S. Ch. 366, F.S.A., (2) the extent of the public interest in the effective regulation of public utilities, and (3) the express statutory direction that the powers of the commission be liberally construed, the commission did have implied authority to approve such agreements, thereby immunizing them against invalidity under Ch. 542. The district court refused to consider defendant's attempted crossassignment of error, on the ground that Rule 3.5, Florida Appellate Rules, 31 F.S.A., limits assignments and cross-assignments to judicial acts, as opposed to mere grounds given by the court below for its judicial acts.

The district court and both parties are in agreement that the principal question to be answered is whether the commission possesses authority under the statutes to approve such service area agreements. The petitioner, City Gas, takes the position that the agreement is void under both state and federal antitrust legislation, whether or not approved by the commission. The respondent, Peoples Gas, agrees that the agreement would have been invalid in the absence of commission approval, but argues that this would have resulted from Ch. 366, which authorizes the regulation of distributors of gas and electricity, rather than from the antitrust acts.

We prefer to formulate the questions that need answering as follows: (1) whether the agreement would have been invalid under Ch. 542 in the absence of commission approval; (2) whether the agreement would have been invalid under Ch. 366 in the absence of commission approval; (3) assuming an affirmative answer to either of these questions, whether commission approval would have the effect of immunizing the agreement against such invalidity; and (4) whether the District Court of Appeal, Third District, was correct in its interpretation of Rule 3.5, F.A.R.

On its face the agreement seems to be in violation of Ch. 542. That chapter forbids combinations which have the purpose of imposing 'restrictions in the full and free pursuit of any business authorized or permitted by the laws of this state' or of preventing 'competition in manufacture, making, transportation, sale or purchase of merchandise, produce or commodities * * * .' There is no doubt that in restricting the activities of each of the parties in the areas allocated to the other, the agreement seems to do what is prohibited.

But it is a commonplace that antimonopoly statutes are not intended for literal application, but, rather, are intended for only to prevent undue, or unreasonable, restrictions upon free competition. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1910); Lee v. Clearwater Growers' Ass'n, 93 Fla. 214, 111 So. 722 (1927); McQuaig v. Seaboard Oil Co. et al., 96 Fla. 275, 118 So. 424 (1928); Montana-Dakota Utilities Co. v. Williams Elec. Coop., 263 F.2d 431 (C.A. 8th 1959). Thus, such statutes are not directed against monopoly per se, but rather against the evils that led to their enactment. As Chief Justice White analyzed the history of such legislation in Standard Oil Co. of New Jersey v. United States, supra, 221 U.S. at p. 52, 31 S.Ct. at p. 512, these were: '(1) The power which the monopoly gave to the one who wnjoyed it, to fix the price and thereby injure the public; (2) The power which it engendered of enabling a limitation on production; and (3) The danger of deterioration in quality of the monopolized article which it was deemed was the inevitable resultant of the monopolistic control over its production and sale.' If, in short, the agreement under consideration has the effect of leaving an unreasonable degree of control over price, production, or quality of product or service in the hands of the parties thereto, it would evidence the kind of monopolistic advantage that Ch. 542 and other statutes of the kind were intended to prevent. If it does not leave such control in the hands of the parties we perceive no conflict between the agreement and the anti-monopoly statute.

That this is the construction to be placed on this state's anti-monopoly legislation seems to be indicated by an earlier decision of this Court. In Lee v. Clearwater Growers' Ass'n., 93 Fla. 214, 111 So. 722, 723-724 (1927), in which the issue was the validity of a co-operative marketing agreement under the federal legislation, the Court said:

'In construing statutes and contracts against monopolies or in restraint of trade both state and...

To continue reading

Request your trial
14 cases
  • Consol. Gas Co. of Fla. v. City Gas Co. of Fla., 83-1010-CIV.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • July 24, 1987
    ...through the Florida state court system, and, in 1965, the Florida Supreme Court upheld the agreement. City Gas Co. v. Peoples Gas System, 182 So.2d 429 (Fla.1965). The court concluded that the FPSC had adequate implied authority under Chapter 366, Florida Statutes, to validate such an agree......
  • Consolidated Gas Co. of Florida, Inc. v. City Gas Co. of Florida, 87-6108
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • September 19, 1990
    ...under chapter 366 to approve or forbid the territorial agreement between Peoples and City Gas. City Gas Co. v. Peoples Gas System, Inc., 182 So.2d 429, 436 (Fla.1965). B. Procedural History 1. District Court On April 23, 1983, Consolidated filed its complaint in the present action. The Page......
  • Gainesville Utilities Dept. v. Florida Power & Light Co., 76-1542
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • May 22, 1978
    ...Public Service Commission, have been upheld under Florida's antimonopoly statute. City Gas Co. v. Peoples Gas System, Inc., Fla., 1965, 182 So.2d 429. 6 FPC jurisdiction over P&L was not established until the Supreme Court's decision in FPC v. Florida Power & Light, 1972, 404 U.S. 453, 92 S......
  • Point East One Condominium Corp., Inc. v. Point East Developers, Inc., 76-469
    • United States
    • Court of Appeal of Florida (US)
    • June 28, 1977
    ...on free competition which are detrimental to the public welfare and obnoxious to public policy. City Gas Co. v. Peoples Gas System, Inc., 182 So.2d 429 (Fla.1965); Lee v. Clearwater Growers Ass'n, 93 Fla. 214, 111 So. 722 We deal here with a tying arrangement under anti-trust law wherein a ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT