Farnsworth v. Boro Oil & Gas Co.

• Decision Date: 28 September 1915
• Citation: 109 N.E. 860,216 N.Y. 40
• Parties: FARNSWORTH v. BORO OIL & GAS CO.
• Court: New York Court of Appeals Court of Appeals

216 N.Y. 40

109 N.E. 860

FARNSWORTH

v.BORO OIL & GAS CO.

Court of Appeals of New York.

Sept. 28, 1915.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Newton E. Farnsworth against the Boro Oil & Gas Company. From a judgment of the Appellate Division, Fourth Department (155 App. Div. 79,139 N. Y. Supp. 736), affirming a judgment in favor of plaintiff, defendant appeals. Affirmed.

Chase and Hogan, JJ., dissenting.

Ward J. Wilber, of Gowanda, for appellant.

Fred J. Blackmon, of Gowanda, for respondent.

CARDOZO, J.

[1][2] The plaintiff is a resident of the town of Collins, Erie county. He has sued the defendant to restrain it from charging more than 25 cents per thousand cubic feet for the gas which it supplies. The defendant is a domestic corporation. It was organized under the Business Corporations Law in 1899. It drills wells for natural gas, and sells and distributes the gas to inhabitants of the town of Collins. By a law passed in 1889 (Laws 1889, c. 422, § 2) such a corporation is authorized to lay its pipes in the highways of the state--

‘provided however, that no pipe line for the purposes aforesaid shall be constructed across, along, or upon any public highway, without the consent of the commissioners of highway, without the town in which such highway is located, upon such terms as may be agreed upon with such commissioners.’

That is the statute applicable to corporations organized under the Business Corporations Law to deal in natural gas. Wilson v. Tennent, 61 App. Div. 100,70 N. Y. Supp. 2;Id., 179 N. Y. 546, 71 N. E. 1142. Corporations dealing in manufactured gas are governed by another statute, the Transportation Corporations Law (Laws 1890, c. 566, as amended by Laws 1900, c. 575, and Laws 1902, c. 596; now embodied in Laws 1909, c. 219). Such corporations are required to obtain the consent of ‘the municipal authorities' of the city, village, or town in which their pipes are to be laid. Transportation Corporations Law, § 61. The plaintiff argues, and the defendant seems to concede, that the ‘municipal authorities' of a town are the members of the town board. The statutes and the decisions sustain the concession. Ghee v. Northern U. Gas Co., 158 N. Y. 510, 53 N. E. 692;West S. E. Co. v. Cons. Tel. & El. S. Co., 110 App. Div. 171,96 N. Y. Supp. 609;Id., 187 N. Y. 58, 79 N. E. 892;Palmer v. Larchmont El. Co., 158 N. Y. 231, 238,52 N. E. 1092,43 L. R. A. 672;People ex rel. W. G. L. Co. v. Deehan, 153 N. Y. 528, 530,47 N. E. 787; Town Law (Consol. Laws, c. 62) Laws 1909, C. 63, §§ 2, 130, 210, 230, 260, 285, 310. See, also, Highway Law, Laws 1909, c. 30 (Consol. Laws, c. 25) §§ 48, 60, 61. A corporation organized under the Transportation Corporations Law to manufacture and supply gas is not restricted, however, to the sale of maunfactured gas. It may deal in natural gas also. Laws 1902, c. 596; Laws 1909, c. 219, § 61. We have thus a singular situation. Corporations dealing in natural gas, but organized under the Transportation Corporations Law, are told to seek the consent of the municipal authorities, i. e., the town board. Corporations dealing in natural gas, but organized under the Business Corporations Law, are told to seek the consent of the commissioner of highways, now the town superintendent. Highway Law (Laws 1909, c. 30), § 43.

[3][4] In this tangle of statutes the defendant made its application to the town board. Fourteen years ago, in July, 1901, the members of the board gave their consent, which they coupled, however, with conditions. Such conditions are not unlawful. Dusenberry v. N. Y., W. & C. T. Co., 46 App. Div. 267,61 N. Y. Supp. 420;Simons Sons Co. v. Md. Tel. & T. Co., 99 Md. 141, 57 Atl. 193,63 L. R. A. 727; Merc. T. & D. Co. v. Collins R. R. Co. (C. C.) 101 Fed. 347. The defendant was not to lay its conductors under the traveled parts of the highway, except to cross them, and was not to interfere with public travel; it was to replace all earth removed, and leave the highways in as good condition as before the conductors were laid; it was to keep the conductors in repair, and save the town harmless from all damage by reason of their location in the highways; and finally, it was not to charge the inhabitants of the town using gas for fuel or lights, or both, a sum exceeding 25 cents per thousand cubic feet. The defendant assented to these conditions, laid its pipes, and delivered gas to consumers. Nearly 7 years later, in January, 1908, it again applied to the town board for permission to lay additional pipes in other streets, the consent was granted upon the same conditions as before, and the defendant accepted in writing the terms imposed upon it. It lived up to those conditions until November, 1911. In the summer of that year it applied to the town board to modify the permit so as to allow a charge of 30 cents per thousand cubic feet. The request was refused. The defendant then gave notice to the board and also to its consumers that, notwithstanding the conditions of the permit, it proposed to charge the increased rate. It has carried out its threat, and it now repudiates the conditions. It says that it did not need the permission of the town board. It says that what it should have obtained was the consent of the commissioner of highways. Because it requested and received the approval of the wrong officers, it says that its acceptance of the conditions must be held to count for nothing. It proposes to stay in the highways and charge whatever it pleases.

I think the defendant is estopped to deny the binding force of its agreement. It applied to the town board for permission to lay its pipes in the highways of the town, and it received the premission for which it prayed. The privilege may be one that the board was not competent to grant, but at least it believed itself competent, and the defendant shared that belief. There was a claim of right which the defendant extinguished for a price. The board asserted the power to regulate the use of the highway and to prevent the defendant's entry. The defendant yielded to the claim and purchased the coveted consent. It received the very benefit which it sought, the opportunity to lay its mains without molestation of its possessionor question of its right. It did not intend to occupy the streets as a trespasser. It intended to occupy them under color of the right which the consent of the board conferred. Under color of that right it went into possession, and it has retained that possession, undisturbed and unchallenged, for nearly 14 years. If the highway commissioner had assailed the power of the board, and evicted, or even attempted to evict, the defendant, a different situation would be presented. Towne v. Butterfield, 97 Mass. 105; Marlow v. Wiggins, 4 Ad. & El. (N. S.) 367. But nothing of the kind has happened. In the language of this court in Tilyou v. Reynolds, 108 N. Y. 558, 566,15 N. E. 534, 537:

‘There has been no eviction, no disclaimer, no acquiescence in another title, no claim by any other person that a superior title was to be enforced or insisted upon or even that one existed.’

The argument is made that the town board had nothing to do with the subject-matter of the attempted license, that it had not even a colorable right to exclude the defendant from the highway, and hence that its consent was not the effective force that put the defendant in possession. But that view of the situation loses sight of important elements. The town board, as well as the town superintendent, is charged by law with responsibilities in respect of the general subject-matter involved in the defendant's application for leave to lay its pipes. If the defendant had been organized under the Transportation Corporations Law, the consent of the ‘municipal authorities' would have been necessary. Two corporations, engaged in the same business, the sale of natural gas, and seeking a license to do the selfsame thing, must go to the superintendent or to the board according as they chance to be organized under one law or under another. The defendant went to the board, and thereby held itself out as a corporation within the board's jurisdiction. The subject-matter of the consent was one with which the board was not incomptent to deal, and the consent, when granted, conferred upon the defendant at least the color of right. Without that color of right, we may safely assume that it would never have been permitted without molestation to lay its conductors in the highways. No one knew this better than the defendant itself, or it would not have assented to the terms. The impulse that landed it in peaceable possession was the consent of the town board.

[5] In such circumstances, the defendant will not be heard to say, while retaining possession of the highway, that the consent under which it entered was valueless and void. Its position is the same as that of a lessee who has gone into possession in submission to the title of the lessor. It is the same as that of a licensee who has acquired the right to manufacture under an outstanding, though defective, patent. The lessee will not be heard to say that the lessor had no title to convey (Tilyou v. Reynolds, supra; Stott v. Rutherford, 92 U. S. 107, 109, 23 L. Ed. 486), and this though the lease was not merely voidable, but void upon its face. The licensee will not be heard to say that the patent is a nullity. Marston v. Swett, 66 N. Y. 206, 23 Am. Rep. 43;Id., 82 N. Y. 526;Hyatt v. Dale Tile Mfg. Co., 106 N. Y. 651, 12 N. E. 705;Hyatt v. Ingalls, 124 N. Y. 93, 26 N. E. 285; Laws v. Purser, 6 Ell. & Bl. 932. It is not necessary to show that the strict relation of landlord and tenant exists between the parties. The rule of estoppel applies with equal force to a licensee in possession of land as against his licensor (Doe v. Baytup, 3 Ad. & El. 188), and to other relations (Henderson v. Miller, 53 Mich. 590, 19 N. W. 197;Seymour v. Slide & Spur Gold Mines, 153 U. S. 523, 14...