Fort Worth Gas Co. v. Latex Oil & Gas Co.

• Decision Date: 09 July 1927
• Docket Number: (No. 11862.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 299 S.W. 705
• Parties: FORT WORTH GAS CO. v. LATEX OIL & GAS CO. et al.
• Court: Texas Court of Appeals

Page 705

299 S.W. 705

FORT WORTH GAS CO. v. LATEX OIL & GAS CO. et al.

(No. 11862.)^*

Court of Civil Appeals of Texas. Fort Worth.

July 9, 1927.

Rehearing Denied October 1, 1927.

Appeal from District Court, Tarrant County; Bruce Young, Judge.

Injunction proceeding by the Fort Worth Gas Company against the Latex Oil & Gas Company and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Slay, Simon & Smith, of Fort Worth, for appellant.

Cantey, Hanger & McMahon, of Fort Worth, and J. W. Hassell, W. H. Francis, A. S. Hardwicke, and Wallace Hawkins, all of Dallas, for appellees.

CONNER, C. J.

This proceeding was instituted by the Fort Worth Gas Company, a corporation engaged in the business of supplying and distributing natural gas to the city of Fort Worth, against the Latex Oil & Gas Company, the Magnolia Petroleum Company, and the Magnolia Gas Company, for the purpose of enjoining the defendants, and each and every one of them, from using the streets of the city of Fort Worth for the purpose of laying pipes thereunder, through which to transport and distribute natural gas. The record discloses that neither the Magnolia Gas Company nor the Latex Gas Company has entered or is using the streets of the city of Fort Worth, or has any intention of doing so, if at all, until it receives a proper permit or franchise so authorizing from the governing authorities. Therefore these two defendants and their connection with the case will not be further referred to.

The petition for the injunction shows that the Fort Worth Gas Company is duly incorporated and acting under charters and ordinances authorizing that company to operate the business of supplying, to the city of Fort Worth and industrial and domestic consumers of said municipality, natural gas; that said gas company, by virtue of its franchise and charter, has laid its mains and pipes for the purpose of conducting natural gas under the streets and alleys of the city; that it has invested large sums of money in its plant and equipment, and in its lines and rights of way, and in laying and extending and operating its system and plant; that it has laid in the city of Fort Worth alone approximately 450 miles of pipe used in the furnishing of natural gas to domestic and industrial consumers of said city, and it now has approximately 30,000 consumers, and has acquired, as a result of such efforts and service, good will of a value impossible to estimate; that by virtue of said operation, and by virtue of its exercise of the rights granted under the franchise above referred to, it has become vested with an interest in and to the rights and privileges granted under said franchise; that plaintiff is the owner of a large amount of property in the city of Fort Worth and pays taxes thereon.

Plaintiff avers that the defendant Magnolia Petroleum Company is threatening to and preparing to begin operations in the corporate limits of the city of Fort Worth, of a kind and character similar to the business carried on by the plaintiff; that it is digging ditches and trenches in which to lay its gas pipes on, over, and under the streets and alleys of said city, and will continue to do so unless restrained by an injunction or other order of the court; that defendant is doing said acts and making such preparations unlawfully and in violation of the charter of the city of Fort Worth and the laws of the state of Texas; that defendant does not have a valid franchise or right to operate a gas business in the city of Fort Worth, or to use the streets, highways, and alleys of the city for the purpose of constructing a gas pipe line therein. It is further alleged that the defendant is soliciting customers for the purchase of gas from its proposed gas lines and mains, and that said defendant has entered into a contract with one of the industrial concerns of said city, heretofore supplied with gas by the plaintiff, to furnish it with natural gas, to the great injury and detriment of the plaintiff; that, were it not for the said unlawful acts of the defendant in securing and soliciting said customers, they would purchase gas from the plaintiff; that the acts of the defendant constitute and will continue to constitute irreparable injury to the plaintiff, for which it has and will have no adequate remedy at law.

It is further alleged that all of said acts are in violation of, and an infringement upon the rights of the plaintiff, vested in it by the franchise owned and held by the plaintiff, and are unlawful attempts by the defendant to enter into wrongful and unlawful competition with the plaintiff and establish its business in the said city, without the lawful consent of the city, as provided in the charter, and contrary to law; that plaintiff has for a long time engaged in business as a public utility in the city of Fort Worth, supplying its inhabitants with natural gas, acting at all times under a valid franchise, and at all times complying with the charter and ordinances of the city and the laws of the state; that during said times, and at great cost and expense, it has established a large and profitable business, and acquired, and has in the city, valuable properties, including good will and the patronage of a large number of consumers; that, by reason of the unlawful acts of the defendant, many of the consumers of gas heretofore supplied by the plaintiff will hereafter purchase gas from the defendant, and large revenues and profits will thereby be diverted from the plaintiff to the defendant, and the plaintiff will thereby sustain great loss, and by reason of said acts of the defendant the plant and properties of the plaintiff will be greatly depreciated in value, and the plaintiff will be thereby damaged in a sum exceeding $100,000.

It was further alleged that the aforesaid acts and conduct of the defendant are increasing, and will increase from day to day, and are damaging the business of plaintiff, and infringing upon plaintiff's rights in the premises; that there is no way of legally determining the damages that will be occasioned from day to day to the plaintiff, and that on account of the situation existing at this time, and which will continue to exist, it is imperative that the plaintiff have speedy relief, and that its rights be protected under the laws of the state and under the charter of the city of Fort Worth; and that, each and every day the defendant is permitted to continue his conduct, plaintiff's damages increase and are irreparable, for which it has no adequate remedy at law. It was further alleged that the plaintiff has appealed to the city of Fort Worth for protection in its rights under its franchise, and to prevent defendants from building their said pipe line, and engaging in the gas business in the city, and that said city and its governing agencies have and will decline and refuse to take any action in the matter.

Upon notice, the Magnolia Petroleum Company appeared and pleaded, so far as necessary to notice, admitting the digging of the ditches and the laying of pipes under the streets of the city of Fort Worth as alleged, but averred that it had acquired a lawful right to do so under its franchise and ordinance of the city.

At the threshold of our consideration, we are met with the question of whether the plaintiff showed a right to maintain the action. Appellant bases its right to the injunction on the proposition that it has a lawful franchise to conduct a natural gas business upon the streets and within the limits of the city of Fort Worth, while the Magnolia Petroleum Company is without any such right or franchise to bring its suit within the principles announced in the case of Lindsley v. Dallas Consolidated Street Ry. Co. (Tex. Civ. App.) 200 S. W. 207, and Tugwell & Madison v. Eagle Pass Ferry Co., 74 Tex. 492, 9 S. W. 120, 13 S. W. 654.

In the case last cited, it appears that the county commissioners' court of Maverick county had granted to Tugwell & Madison the exclusive right to operate a ferry across the Rio Grande river at Eagle Pass. The Eagle Pass Ferry Company, after incorporating as a ferry company, sought a license, tendering the license fee, to also operate a ferry between the points named, but the application for such license was refused. It nevertheless continued to operate a ferry at Eagle Pass, when Tugwell & Madison applied for and were granted the issuance of a preliminary injunction, which, at a hearing, was dissolved. Upon appeal from the order of dissolution, it was held by the Supreme Court that Tugwell & Madison were entitled to the injunction. The ground of the ruling, as we understand, was not that the commissioners' court was empowered to grant an exclusive franchise to Tugwell & Madison, but on the ground that under the statutes they were entitled to issue a license to operate a ferry and that the Eagle Pass Company had no such license, and in the absence of a license Tugwell & Madison were entitled to restrain the competition of which they complain.

The other case is one in which the street railway company sought to restrain the operation of an ordinance of the city of Dallas regulating jitneys. On a hearing before the district court, the ordinance was declared void, and the city and its officers restrained from enforcing or observing it. On appeal to the Dallas Court of Civil Appeals, the judgment was affirmed in an opinion by Mr. Justice Rasbury. It appeared that the street railway company was a corporation lawfully authorized by the municipality to use its streets as a common carrier of passengers. It was held that the grantee of the valid franchise has a property right therein which may be protected against those not having a similar right. In sustaining this proposition the court cited numerous cases and quoted the following from McQuillin, Mun. Corp. vol. 4, § 1771:

"The grantee of a valid franchise, according to what seems to be the better rule, may enjoin interference with its property rights...