Gas Prods. Co. v. Rankin

• Citation: 63 Mont. 372
• Decision Date: 03 July 1922
• Docket Number: No. 5031.,5031.
• Parties: GAS PRODUCTS CO. v. RANKIN, ATTY. GEN., ET AL.
• Court: United States State Supreme Court of Montana

63 Mont. 372

GAS PRODUCTS CO.

v.RANKIN, ATTY. GEN., ET AL.

No. 5031.

Supreme Court of Montana.

May 18, 1922.

On Motion for Rehearing, July 3, 1922.

Appeal from District Court, Lewis and Clark County; A. J. Horsky, Judge.

Suit by the Gas Products Company against Wellington D. Rankin, Attorney General, and another. From judgment for defendants, plaintiff appeals. Reversed and remanded, with directions.

Cooper and Holloway, JJ., dissenting.

Gunn, Rasch & Hall, of Helena, for appellant.

W. D. Rankin, Atty. Gen., and D. R. Young, of Baker, for respondents.

GALEN, J.

This is an action in injunction, involving solely the question of the constitutionality of chapter 125 of the Laws of 1921. On defendants' motion, judgment on the pleadings was granted and entered. The appeal is from the judgment.

The purpose of the suit is to enjoin the defendants from enforcing or attempting to enforce the statute, which provides in part as follows:

“Section 1. The use, consumption or burning of natural gas taken or drawn from any natural gas well or wells, or borings from which natural gas is produced for the products where such natural gas is burned, consumed or otherwise wasted without the heat therein contained being fully and actually applied and utilized for other manufacturing purposes or domestic purposes is hereby declared to be a wasteful and extravagant use of natural gas and is hereby declared to be unlawful.

“Sec. 2. No person, firm or corporation having the possession or control of any natural gas well or wells, except as herein provided, or borings from which natural gas is produced, whether as a contractor, owner, lessee, agent or manager, shall use, sell, or otherwise disposeof natural gas, the product of any such well or wells, or borings for the purpose of manufacturing or producing carbon or other resultant products from the burning or consumption of such natural gas, without the heat therein contained being fully and actually applied and utilized for other manufacturing purposes or domestic purposes.

“Sec. 3. Any person, firm or corporation violating any of the provisions of this act shall be guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100.00) or more than one thousand dollars ($1,000.00) for each offense and each and every day in which any person, firm or corporation shall violate any of the provisions hereof shall constitute a separate offense hereunder and subject the offender to the penalty hereby provided.” Sections 3550 to 3552, inc., R. C. M. 1921.

It appears that the plaintiff is a South Dakota corporation, legally and regularly doing business in Montana; that it owns in fee 250 acres of land in Fallon county, upon which there are gas wells producing gas by natural flow in merchantable quantities; that prior to the enactment of this statute the plaintiff erected, owned, and operated, and now owns and operates, a factory for the manufacture of carbon black from natural gas derived from its wells, which are located 1 1/4 miles from the town of Baker; that the factory consists of 32 fireproof buildings, together with packing houses, warehouses, conveying and packing machinery, machine shops, tanks, and other buildings, machinery and equipment, covering several acres of ground, in the construction and erection of which the plaintiff has expended over $200,000. The constitutionality of the act is attacked as violative of the Fourteenth Amendment to the Constitution of the United States, in that it deprives the plaintiff and others of liberty and property without due process of law, and denies to the plaintiff and others the equal protection of the laws; that it violates the provisions of section 10 of article 1 of the Constitution of the United States, in that it impairs the obligation of contracts; and further, that it is contrary to equity and good conscience and to the letter and spirit of the Constitution of the state of Montana.

Were we content to accept the views expressed by the Supreme Court of the United States as the rule of property rights in this state, our task in determining the questions presented would be comparatively easy. However, the danger of establishing such a principle in this state is apparent, and although we entertain the very highest regard and respect for the decisions of the Supreme Court of the United States, we do not feel constrained to follow blindly its determinations affecting the rights of our citizens, especially in view of our own constitutional guaranties. The act in question is the same as the statute of Wyoming, considered in the case of Walls v. Midland Carbon Co., decided by the Supreme Court of the United States December 13, 1920 (254 U. S. 300, 41 Sup. Ct. 118, 65 L. Ed. 276), except that the Wyoming statute (Laws 1919, c. 125) applies only to gas wells or sources of supply of natural gas “located within ten miles of any incorporated town or industrial plant.” In that case the validity of the Wyoming statute was sustained, Chief Justice White, Mr. Justice Vandevanter, and Mr. Justice McReynolds dissenting. The court in the opinion said:

“The question in the case is, as we have said, whether the legislation of Wyoming is a valid exercise of the police power of the state, and brings into comparison the limits of the power as against the asserted rights of property––whether the legislation is a legal conservation of the natural resources of the state, or an arbitrary interference with private rights. Contentions of this kind have been before this court in other cases, and their discussions and decisions have materiality here. We mean, not discussions or decisions on the police power in the abstract or generality, but discussions and decisions involving conditions and principles pertinent to the present case.

It will be observed that the act under review does not prohibit the use of natural gas absolutely. It prohibits, or, to use its words, declares it to be a ‘wasteful and extravagant use of natural gas,’ when it is burned or consumed ‘without the heat therein contained being fully and actually applied and utilized for other manufacturing purposes or domestic purposes.’ But not even that unlimitedly, but only when the ‘gas well or source of supply is located within ten miles of any incorporated town or industrial plant.’ Such is the prohibition upon the user or consumer. There is a prohibition upon the owner or lessee of wells within the designated distance from a town or industrial plant to sell or dispose of the gas except under the specified conditions ‘for the purpose of manufacturing or producing carbon or other resultant products.’ There are two elements, therefore, to be considered: (1) The distance of the wells from an incorporated town or industrial plant; (2) the element of heat utilization for manufacturing or domestic purposes. These elements are the determining ones in the accusations against the law. The first is the basis of the discrimination charged against it; the second is the basis of the charge that the law deprives the companies of their property by the ruin of their business and capital investments, and impairs the obligations of pre–existing contracts.”

After reviewing, discussing, and applying the cases of Bacon v. Walker, 204 U. S. 311, 27 Sup. Ct. 289, 51 L. Ed. 499,Ohio Oil Co. v. Indiana, 177 U. S. 190, 20 Sup. Ct. 576, 44 L. Ed. 729, and Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 31 Sup. Ct. 337, 55 L. Ed. 369, Ann. Cas. 1912C, 160, it was held that the Wyoming statute is a legitimate exercise of the police power, and not constitutionally objectionable under the Constitution of the United States as taking property without due process of law or as an unreasonable or arbitrary discrimination. The Wyoming case is cited, and relied upon, by counsel for the defendant.

The Supreme Court of the state of Indiana sustained the constitutionality of an act making it unlawful for any person, firm, or corporation operating a natural oil or gas well to permit the flow of gas or oil therefrom to escape into the open air, and directed the issuance of an injunction against the operators for the maintenance of a public nuisance and the commission of waste. State v. Ohio Oil Co., 150 Ind. 21, 49 N. E. 809, 47 L. R. A. 627. This case was reviewed by the Supreme Court of the United States on writ of error (Ohio Oil Co. v. Indiana, 177 U. S. 190, 20 Sup. Ct. 576, 44 L. Ed. 729), and it was there held that the act is not in violation of the Constitution of the United States, and that its enforcement as to persons whose obedience to its commands were coerced by injunction is not a taking of private property without adequate compensation, and does not amount to a denial of due process of law, contrary to the provisions of the Fourteenth Amendment of the Constitution of the United States, but is rather a regulation by the state of Indiana of a subject which especially comes within its lawful authority. Upon examination of the cases cited and relied upon by the Supreme Court of the United States in the Wyoming case, it will be found that its decision is based on the holding announced in the Indiana case; the latter being on writ of error from the Supreme Court of the state of Indiana, and the former on appeal from the federal District Court of Wyoming. In the Wyoming case, the Supreme Court accepted the Indiana rule of property as stated by the Supreme Court of Indiana (State v. Ohio Oil Co., supra), followed by the United States Supreme Court on review (Ohio Oil Co. v. Indiana, supra), but this does not necessarily require that we shall declare the rule for Montana the same, especially if not in accord with our constitutional and statutory provisions, and views respecting the established rules of property in Montana.

In the Indiana case the Supreme Court of the United States, noting the lack of harmony existing in the decisions of Indiana on the subject, commented as follows:

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