City of Okmulgee v. Okmulgee Gas Co.

Decision Date05 November 1929
Docket NumberCase Number: 18465
PartiesCITY OF OKMULGEE v. OKMULGEE GAS CO. (Oklahoma Natural Gas Corp. Substituted).
CourtOklahoma Supreme Court
Syllabus

¶0 1. Franchises--Monopolies--Statute Authorizing Surrender of Municipal Franchises by Public Utilities in Exchange for Revocable Permits Held Violative of Constitutional Provision Against Monopolies and Perpetuities.

Chapter 102, Session Acts of the 10th Legislature of Oklahoma, 1925, commonly known as House Bill No. 4, being an act relating to the business of furnishing power, light, heat, gas, electricity or water in cities and towns; authorizing the surrender of municipal franchises in exchange for revocable permits, requiring certificates of convenience and necessity and providing for the determination and issuance thereof and repealing acts in conflict therewith, by its terms authorizes any person, firm, association or corporation now or hereafter engaged in the business of furnishing power, light, heat, gas, electricity or water as a public utility in any city or town in this state under a municipal franchise now in existence or hereafter granted, at any time before the expiration of such franchise, but not thereafter, to file with the clerk of the municipal corporation which granted such franchise and with the Corporation Commission of the state of Oklahoma a written declaration and agreement issued in the manner required for the execution of conveyances of real estate, that it surrender such municipal franchise for the purposes mentioned in said act; and in consideration, the utility surrendering the same shall, by operation of law, receive, in lieu of such surrendered franchise, a permit from the state revocable only by the Legislature of Oklahoma whenever in its opinion such permit may be injurious to the citizens of this state; in such manner, however, that no injustice shall be done to the holder of such permit,--in effect authorizes the converting of a limited franchise into a perpetual franchise, and therefore violates section 32 of art. 2 of the Constitution, which declares that perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed.

2. Same--Statute Unconstitutional as Depriving Electors of Municipality of Authority in Matter of Franchises.

Said chapter 102 of the Session Laws of 1925 is invalid in that it deprives the qualified electors of a municipality from granting, renewing, or extending a franchise for not exceeding 25 years, such power being reserved in our Constitution by the people to themselves under section 5a of art. 18 of the Constitution.

3. Same.

Chapter 102, Session Laws of 1925, commonly known as House Bill No. 4, burdens and violates section 5b of art. 18 of the Constitution in that it deprives 25 per centum of the total number of electors voting at the next preceding general municipal election from presenting a signed petition to the chief executive officer of a municipality demanding that a franchise be granted, extended, or renewed and filing the same with the chief executive officer of said corporation and deprives said chief executive officer from calling an election thereon within 10 days after the same is filed for the purpose of submitting the question of whether or not such franchise shall be granted, extended or renewed, and if, at said election a majority of the said electors voting thereon shall vote for the grant, extension or renewal of such franchise, said act deprives and prevents the proper authorities at the next succeeding regular meeting of the legislative body of the city from granting such franchise, such power being reserved in our Constitution by the people to themselves under section 5b of art. 18 of the Constitution.

Error from District Court, Okmulgee County; James M. Hays, Judge.

Action by the City of Okmulgee against the Okmulgee Gas Company. Judgment for defendant, and plaintiff appeals. The Oklahoma Natural Gas Corporation substituted defendant in error. Reversed and remanded.

L. L. Cowley, City Atty., and A. E. Underwood, for plaintiff in error.

Ames, Cochran & Ames and Allen, Underwood & Smith, for defendant in error.

SWINDALL, J.

¶1 In this action the plaintiff questions the validity of an act of the Legislature of 1925 which authorizes the surrender of a municipal franchise in exchange for a revocable permit and requiring certificates of convenience and necessity and providing for the determination and issuance thereof. The act has been approved by the Governor and is now part of the law of this state unless it violates some provision of the Constitution.

¶2 The act is as follows:

"House Bill No. 4. Revocable Permit Act.
"An act relating to the business of furnishing power, light, heat, gas, electricity, or water in cities and towns; authorizing the surrender of municipal franchises in exchange for revocable permits; requiring certificates of convenience and necessity and providing for the determination and issuance thereof; and repealing acts in conflict herewith.
"Be It Enacted by the People of the State of Oklahoma:
"Corporations--Franchises--Surrender.
"Section 1. Any person, firm, association, or corporation, now or hereafter engaged in the business of furnishing power, light, heat, gas, electricity, or water as a public utility in any city or town in this state under a municipal franchise now in existence or hereafter granted, may at any time before the expiration of such franchise, but not thereafter, file with the clerk of the municipal corporation which granted such franchise and with the Corporation Commission of the state of Oklahoma a written declaration and agreement, executed in the manner required for the execution of conveyances of real estate, that it surrenders such municipal franchise for the purposes herein provided; and, in consideration, the utility surrendering the same shall, by operation of law, receive in lieu of such surrendered franchise, a permit from the state revocable only in the manner hereinafter provided, granting to such utility the right, until such permit shall be so revoked, to conduct the same business in such municipality and enjoy the use of the streets, alleys, and public grounds, or ways, in the municipality for that purpose and upon the terms and conditions of said surrendered franchise except as to its period of duration, subject to the lawful police regulation and control of such municipality.
"Municipal Corporations-Receipts.
"Section 2. Nothing in this act shall be so construed as to limit the right of any municipal corporation to include in any franchise hereafter granted by it such requirement as it shall see fit that the grantee of such franchise pay to the municipal corporation a portion of the receipts of such grantee from business conducted under such franchise, or pay to such municipal corporation any other sum or sums of money; or such reservation of right in the municipality to purchase the property of the grantee used in the conduct of business under such franchise. Every such right to share receipts or to receive payments of moneys or to purchase created by any franchise or other contract present or future, shall continue to exist to the full extent defined by such franchise or contract; and no existing right of any municipal corporation under the laws of the state of Oklahoma shall be effected (sic) hereby except as herein expressly provided.
"Corporation Commission--Permit--Certificate.
"Section 3. Upon the surrender of any municipal franchise, as provided in the first section hereof, it shall be the duty of the Corporation Commission to issue to such utility a certificate to the effect that from the date of the filing of such written declaration and agreement, it is the holder of such permit, and such certificate shall be conclusive of that fact.
"Permit--Amendments--Revocation.
"Section 4. Any permit granted under the provisions of this act may be altered, amended, annulled, revoked, or repealed by enactment of the Legislature of Oklahoma whenever in its opinion such permit may be injurious to the citizens of this state; in such manner, however, that no injustice shall be done to the holder of such permit.
"Corporations--Franchises--Permits.
"Section 5. No person, firm, association, or corporation except the municipality shall commence the business of furnishing power, heat, light, gas, electricity or water as a public utility, or commence the construction of a plant, works, or system therefor, or apply for or be granted a municipal franchise therefor, in any city or town of this state so long as there is in existence a valid franchise or permit authorizing any other person, firm, association, or corporation, to conduct in such city or town a business similar to that proposed, until the Corporation Commission of Oklahoma shall issue a certificate of public convenience and necessity therefor, as hereinafter provided. But no such certificate shall be required in cases where no such valid franchise or permit exists.
"Corporation Commission--Jurisdiction--Certificates.
"Section 6. The Corporation Commission is hereby given jurisdiction to determine whether public convenience will be served by such proposed new public utility business and whether public necessity exists therefor and to issue such certificate of public convenience and necessity upon hearing after a written petition therefor shall be filed. The Corporation Commission shall have power to promulgate such rules and regulations not in conflict herewith, as it shall see fit, for the purpose of making this act effectual, and before hearing any such petition shall fix a date therefor and shall require that notice of such hearing be given by delivering a copy to the chief executive officer and the clerk of all cities and towns effected (sic) by the proposal and to the managing officer of any person, firm, association or corporation conducting or holding a valid franchise or permit to conduct a
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