City of Winfield v. Wichita Natural Gas Co.

• Decision Date: 17 August 1920
• Docket Number: 5461.
• Citation: 267 F. 47
• Parties: CITY OF WINFIELD v. WICHITA NATURAL GAS CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

267 F. 47

CITY OF WINFIELD v. WICHITA NATURAL GAS CO. et al.

No. 5461.

United States Court of Appeals, Eighth Circuit.

August 17, 1920

S. C Bloss and A. M. Jackson, both of Winfield, Kan. (J. E Torrance, of Winfield, Kan., on the brief), for appellant.

Joseph G. Carey, of Wichita, Kan., and Robert A. Brown, of St Joseph, Mo. (John H. Brennan, of Bartlesville, Okl., and R R. Vermilion, Earle W. Evans, and W. F. Lilleston, all of Wichita, Kan., and H. O. Caster, of Bartlesville, Okl., on the brief), for appellees.

The city of Winfield has appealed from an order of the court below, which dissolved an interlocutory injunction that forbade the defendants below, the Wichita Natural Gas Company, a corporation of Delaware, engaged in producing, buying, and selling natural gas, and the Winfield Natural Gas Company, a corporation of Kansas, engaged in the business of distributing and selling natural gas to consumers in the city of Winfield, from raising the price of natural gas to consumers for domestic purposes in that city above 30 cents per 1,000 cubic feet, from discontinuing the supply of gas to the plaintiff and the inhabitants of the city, and forbade the Wichita Company from raising the price of gas to the Winfield Natural Gas Company above two-thirds of the 30-cent rate per 1,000 cubic feet fixed therefor by the contract between them.

When the suit was commenced, when the injunction was issued, and when it was dissolved, the Winfield Natural Gas Company was distributing and selling natural gas to the city and its inhabitants under Ordinance No. 776 of the city of Winfield, which had been accepted by the grantee, Pattison, on November 13, 1906. This ordinance provided that the grantee should supply

natural gas for domestic purposes to the inhabitants of the city of Winfield for a price not exceeding 30 cents per 1,000 cubic feet. By several assignments the rights and privileges of Pattison under this ordinance had been conveyed, before this suit was brought, together with the distributing mains and pipes in the streets and alleys of Winfield, to the Winfield Natural Gas Company, which had accepted them and had assumed the obligations to the city, which conditioned the grant therein of the right to use the streets for its mains and pipes. The Winfield Natural Gas Company was, and had been since 1909, obtaining its supply of gas from the Wichita Company under a contract, dated November 2k, 1906, between that company and the Winfield Gas Company, taken in the name of W. P. Hackney. This Winfield Gas Company was a corporation which in 1906 had a plant in Winfield for the distribution of artificial gas, which it subsequently changed and used to distribute the natural gas of the Wichita Company. It became insolvent. A receiver was appointed for its property, which was sold under a decree of court and vested in the Winfield Natural Gas Company in June, 1909, and the old Winfield Company then ceased to function.

On June 2, 1912, the Wichita Company and the Winfield Natural Gas Company made a supplemental agreement, by which they modified the terms of the Hackney contract of June 25, 1906. In the early part of the year 1919 the Wichita Company gave notice to the Winfield Natural Gas Company that the natural gas in the field from which it had agreed to furnish it in the supply contract was exhausted; that the expense of providing it from more distant fields was so great that it could not and would not longer supply it for two-thirds of 30 cents per 1,000 cubic feet, the price fixed therefor in the Hackney contract, nor for less than 45 cents per 1,000 cubic feet; that the supply contract was illegal, and did not by its terms require it so to do; and that it would cease to supply natural gas to the Winfield Natural Gas Company at an early date unless the 45-cent rate was adopted and used.

Thereupon the city of Winfield brought this suit in the district court of Cowley county, Kan., prayed that the defendants be enjoined from changing the rate at which they were furnishing the gas to the city and its inhabitants, and from ceasing to furnish gas on account of any failure to pay any sums in excess of the 30-cent rate, and applied for and obtained the interlocutory injunction. The Wichita Company removed the case to the court below on the ground that there was a separable controversy between it and the plaintiff. A motion to remand was made and denied, the Wichita Company moved for a dissolution of the injunction, and that motion was heard on the complaint, affidavits, and testimony and was granted.

The terms and provisions of the ordinance contract between the city and the Winfield Natural Gas Company, of the supply contract, of the supplemental agreement between the Winfield Natural Gas Company and the Wichita Company, and of the notice of the Wichita Company to the Winfield Natural Gas Company are the same in material respects, mutatis mutandis, as the terms and provisions of those instruments in the case of Hutchinson Gas & Fuel Co. v. Wichita Natural Gas Co., 267 F. 35, in which the opinion is handed down herewith. Reference to the statement and opinion in that case is here made for a more extended recital of those terms, which it is thought it is useless to repeat in this case.

Before SANBORN and CARLAND, Circuit Judges, and TRIEBER, District judge.

SANBORN Circuit Judge (after stating the facts as above).

Counsel first argue that the order dissolving the injunction should be reversed for want of jurisdiction of the District Court, because there was no separable controversy between the city and the Wichita Company, a corporation of Delaware, while the other defendant was a corporation of Kansas, a corporation of the same state as was the plaintiff.

'Separate and distinct causes of action disclosed by the record in a single suit, upon either of which a separate suit could have been maintained, and the determination of neither of which is essential to the disposition of the other, constitute separable controversies, within the meaning of the acts of Congress.'

'In a determination of the jurisdiction of the national courts, and the right to remove causes of action to them, indispensable parties only should be considered, because all other parties may be dismissed and disregarded, if their presence would oust or restrict the jurisdiction or the right.'

These rules were stated and the authorities sustaining them were cited many years ago by this court. Boatmen's Bank v. Fritzlen, 135 F. 650, 658, 663, 68 C.C.A. 288, 296, 301. The opinion and decision in that case was twice challenged and affirmed in the Supreme Court. Fritzlen v. Boatmen's Bank, 198 U.S. 586, 25 Sup.Ct. 803, 49 L.Ed. 1174; Fritzlen v. Boatmen's Bank, 212 U.S. 364, 371, 29 Sup.Ct. 366, 53 L.Ed. 551. The later decisions of the national courts have not disturbed these rules. Texas Co. v. Central Fuel Co., 194 F. 1, 10, 114 C.C.A. 21, 31.

Neither of the defendants is bound in morals or in law to supply natural gas to the city of Winfield for 30 cents per 1000 cubic feet, or for any other price, unless it has agreed with that city so to do. The only cause of action the complaint in this case presents against the Winfield Company is that by its purchase, receipt, and acceptance in June, 1909, of the conveyance to it of the property of the old Winfield Gas Company, and of its rights and privileges under the ordinance contract, and by its subsequent use thereof, it assumed the obligations of that company under the ordinance contract to supply natural gas to the city and its inhabitants at the 30-cent rate. If the complaint discloses any controversy between the Winfield Natural Gas Company and the city, it relates to and involves this contract of assumption, and to the trial and determination of that issue the Wichita Company is neither an indispensable, necessary, nor proper party.

There is no averment in the complaint that the Wichita Company ever made any direct agreement with the city, or with any of its inhabitants, to sell, deliver, furnish, or supply to it, or any of them, natural gas at 30 cents per 1000 cubic feet, or at any other price, or that the city or its inhabitants ever gave to that company any franchise, consideration, or grant for any such agreement. The complaint contains averments, however, that the Wichita Company assumed the obligation of Pattison and his successors in interest in the ordinance contract so to do: First, by supplying gas to the receiver of the old Winfield Company, and through him to the city and its inhabitants, under and pursuant to the terms of the Hackney supply contract, dated November 25, 1906; second, by paying, as the principal bondholder and creditor of the old Winfield Company, the purchase price at the sheriff's sale of that company's property to John D. Neely, its president, in June, 1909, causing its officers and agents to incorporate the Winfield Natural Gas Company, causing the title to the property, rights, and privileges of the old Winfield Company to be vested in this new corporation immediately after the sheriff's sale, and taking, holding, and owning the capital stock of that company; third, by using the Winfield Natural Gas Company as its agent to send its gas through the mains and pipes of that company in the city of Winfield, to the city and its inhabitants, in accordance with the terms of the supply contract of November 25, 1906, which was assumed and ratified by the Winfield Natural Gas Company and is in full force and effect; fourth, by the facts that the city and its inhabitants have known of the ordinance contract, of the supply contract, and of the furnishing of gas thereunder, and have made expensive improvements in reliance thereon.

If the Wichita Company has not assumed and agreed by...