Iowa City, Iowa v. Iowa City Light & Power Co.

• Decision Date: 28 June 1937
• Docket Number: No. 10852.,10852.
• Citation: Iowa City, Iowa v. Iowa City Light & Power Co., 112 A.L.R. 618, 90 F.2d 679 (8th Cir. 1937)
• Parties: IOWA CITY, IOWA, et al. v. IOWA CITY LIGHT & POWER CO.
• Court: U.S. Court of Appeals — Eighth Circuit

90 F.2d 679 (1937)

IOWA CITY, IOWA, et al. v. IOWA CITY LIGHT & POWER CO.^*

No. 10852.

Circuit Court of Appeals, Eighth Circuit.

June 28, 1937.

D. C. Nolan, of Iowa City, Iowa, for appellants.

C. D. Waterman and Wayne G. Cook, both of Davenport, Iowa (Dan C. Dutcher and Dutcher, Ries & Dutcher, all of Iowa City, Iowa, and Lane & Waterman, of Davenport, Iowa, on the brief), for appellee.

Before GARDNER, WOODROUGH, and BOOTH, Circuit Judges.

WOODROUGH, Circuit Judge.

This suit in equity was brought by the Iowa City Light & Power Company against the city of Iowa City, its mayor and solicitor and members of the city council, to enjoin the defendants from enforcing a gas rate ordinance passed by the city council April 19, 1935, and from interfering with or obstructing the plaintiff in the distribution of natural gas to the city and its inhabitants.

The plaintiff is the successor in interest to the Iowa City Gas Light Company which was granted a 25 year gas franchise by the city in 1909. The franchise expired in 1934, but there are no other means to supply gas to the city and its inhabitants, and the light and power company continues to operate as the only gas utility in the city and performs such gas utility service according to the terms of the franchise without objection from anyone. It alleged in its bill of complaint (among other things) that the gas rate ordinance of April 19, 1935, was confiscatory, void, and unenforceable, and the master to whom the case was referred so found and reported upon consideration of the evidence, and the court affirmed the report and enjoined the rates. From that part of the decree no appeal has been taken.

But it was also alleged in the bill of complaint that the light and power company had the right and had been directed by resolution of the city council, passed November 16, 1934, to serve natural gas instead of manufactured gas to its customers. That the franchise of 1909 did not, by its terms, prescribe or limit or define the character of the gas to be furnished to the city and the plaintiff has furnished different kinds of gas under its franchise, including water gas, coal gas and carbureted water gas. That it had elected to comply with the direction of the city council to serve natural gas and had incurred the expense necessary to bring the natural gas from the pipe line where it was available into the city, but that the defendants, in passing the gas rate ordinance of April 19, 1935, which fixed rates for manufactured gas only, expressed their intention to interfere with the right of the plaintiff to serve natural gas to the city and its inhabitants and have refused to permit the introduction of the natural gas and have forbidden the plaintiff the privilege of installing it.

The trial court found that the company had the right to serve natural gas and enjoined the defendants from in any way interfering with the plaintiff in serving natural gas in place of manufactured gas to the inhabitants of Iowa City. At the time the suit was brought and the injunction was entered the defendants were refusing to grant permits to the plaintiff to make necessary street excavations to connect up the natural gas line with the existing distribution system at the gas works. The decree, therefore, included mandatory provisions to permit the necessary excavations to be made. Such mandatory provisions of the decree were not stayed pending this appeal and it is stated at the bar that all necessary excavations have been made by the company and the connection has been completed so that now only the adjustment of customers' equipment and substitution of gas in the mains remains to be done in order to effect the change in the service from manufactured to natural gas.

The appellants, seeking to reverse that part of the decree which enjoins defendants from preventing the service of natural gas, have contended, (1) that the suit was not cognizable in equity, (2) that the gas franchise of 1909 did not grant the right to use the city streets to supply natural gas either expressly or by implication, (3) that there was no power in the city to compel natural gas to be supplied and so there was no mutuality of obligation and the company must fail, (4) that even if the franchise authorized serving natural gas the company should not be permitted to extend its facilities in order to supply natural gas since the term of the franchise had expired, (5) the discretionary power of the city to withhold street excavation permits should not be controlled by the court, and, (6) to install natural gas would impose a burden and damage to gas consumers.

(1). Equity: We find no merit in the contention that the trial court was without jurisdiction in equity. The federal jurisdiction was established by the diversity of citizenship and more than $3,000 involved, as well as by the allegations that determination of the controversy involved construction of the Fifth and Fourteenth Amendments to the Federal Constitution and section 10 of article 1 thereof. In part the object of the suit was to enjoin the enforcement of rates to be charged by the utility for gas and the power of the federal equity courts to entertain bills in equity for that purpose and to grant such relief in proper cases has been too long established to require citations. 1 Hughes, Fed.Practice, 433, § 567. As the suit was properly brought in equity to enjoin the enforcement of the confiscatory rates it was the duty of the equity court to retain and exercise is jurisdiction to adjudicate all the issues presented. Alexander v. Hillman, 296 U.S. 222, 242, 56 S.Ct. 204, 80 L.Ed. 192; Hartford Accident & Indem. Co. v. Southern Pacific Co., 273 U.S. 207, 217, 47 S.Ct. 357, 71 L.Ed. 612; United States v. Union Pac. Ry. and Western Union Tel. Co., 160 U.S. 1, 51, 16 S.Ct. 190, 40 L.Ed. 319; Gabrielson v. Hogan (C.C.A.8) 298 F. 722, 726.

(2). The franchise: There is no limitation or definition contained in the charter of 1909 concerning the character of gas which the city authorized the Iowa City Gas Light Company to supply. The language of the grant was:

"An Ordinance Granting the Iowa City Gas Light Company, Its Successors or Assigns Permission To Use the Streets, Alleys and Public Grounds of Iowa City For the Purpose of Laying Down Pipes For Conveying Gas For the Supplying of Said City and the Inhabitants Thereof With Gas.

"Be It Ordained by the City Council of Iowa City, Iowa:

"Section 870. That the Iowa City Gas Light Company, its successors or assigns be and are hereby authorized and the privilege is hereby...