Municipal Gas Co. v. Lone Star Gas Co.

• Decision Date: 02 February 1924
• Docket Number: (No. 9168.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 259 S.W. 684
• Parties: MUNICIPAL GAS CO. v. LONE STAR GAS CO.
• Court: Texas Court of Appeals

259 S.W. 684

MUNICIPAL GAS CO. v. LONE STAR GAS CO.

(No. 9168.)^*

Court of Civil Appeals of Texas. Dallas.

February 2, 1924.

Rehearing Denied March 8, 1924.

Appeal from District Court, Dallas County; Louis Wilson, Judge.

Action for injunction by the Municipal Gas Company against the Lone Star Gas Company, in which Levi Brashear and others intervened. From a judgment for defendant, plaintiff and interveners appeal. Reversed and remanded in part, and affirmed in part.

Chas. L. Harty, J. W. Hassell, and Merritt & Leddy, all of Dallas, and Hamp P. Abney, of Sherman, for appellants.

Lawther, Pope & Leachman and Karl F. Griffith, all of Dallas, for appellee.

JONES, C. J.

This suit was instituted by appellant, Municipal Gas Company, against appellee, Lone Star Gas Company, to restrain it from declaring a forfeiture of four contracts, under which appellant purchased and received from appellee its supply of natural gas for distribution to the consumers in the territory in which it operated; to enforce the specific performance of each of the said contracts; and for temporary injunction restraining appellee from discontinuing or diminishing the supply of gas under said contracts until a final trial of the case. The suit was filed in the district court of Dallas county on June 29, 1921, and on said date the judge of the said court issued the temporary injunction as prayed for. At the time of the execution of the said contracts and at the time of the institution of this suit, appellant's charter name was "The North Texas Gas Company," but during the pendency of said suit this name was changed to "Municipal Gas Company," and, on suggestion of this fact to the court, the case proceeded in the name of the Municipal Gas Company as plaintiff.

Some time after the filing of this suit, but before its final trial, Levi Brashear, of Sherman, Grayson county Tex., was permitted by the court to file his plea of intervention, and he is also a party appellant in this cause. By appropriate allegations this appellant set up very fully his interest in the subject-matter of this suit as a user, for domestic purposes, of the natural gas supplied him by appellant, and also set up very fully the effect a judgment in the case favorable to appellee would have upon him as such interested party. His plea of intervention was not only in his own behalf, but for all others similarly situated.

Likewise, H. B. Hennan, a resident citizen of the city of Denton, Frank J. McCoy, a resident citizen of Decatur, Tex., E. M. Thomas, a resident citizen of Ennis, Tex., and C. L. Simpson, a resident citizen of Whitesboro, Tex., by leave of the court, jointly filed a similar plea of intervention and are each a party appellant in this cause.

The city of McKinney, by leave of the court, also filed its plea of intervention, both in its own behalf as an individual user of the natural gas distributed by appellant, and in behalf of all others in like situation with like interests as itself, and especially in behalf of those citizens living within the said city of McKinney whose interests would be affected by the result of the suit. This plea of intervention alleges the interests of the said city of McKinney and the others for whom said plea of intervention was filed in the subject-matter of this suit, and the effect the final disposition of the suit, if favorable to appellee, would have on this interest.

Except for some orders increasing the injunction bond and in reference to the payment to appellee by appellant of money for gas delivered after the injunction was granted, the case remained on the docket of the trial court until September 10, 1923, when a hearing was had by the court on demurrers urged in the answer of appellee. This answer, in addition to the demurrers, was very full and complete in alleging its defensive matters to appellant's suit and to the several pleas of intervention. In said answer was also set up a cross-action against appellant for an indebtedness it claimed had arisen under the said contract.

As a result of the hearing, the trial court sustained a general demurrer to appellant gas company's petition and three special exceptions, each of which had the effect of a general demurrer. The trial court also sustained a general demurrer and various special exceptions to the various pleas of intervention. Each of the parties declined to amend, and the petition and respective pleas of intervention were dismissed by an order entered by the trial court. Appellee also dismissed without prejudice its cross-action, and the case is before this court on a duly perfected appeal by the plaintiff in the suit below and by each of said interveners.

As the final decree was rendered by the trial court upon demurrers to the sufficiency of the petition of appellant gas company and the sufficiency of the pleas of intervention of appellant interveners, it is deemed advisable to make a fuller statement of the pleadings of appellants and of the contracts forming the basis of the suit than would otherwise be considered necessary. For convenience and brevity, the Municipal Gas Company will be referred to as appellant, and the other appellants as interveners.

Each of the four contracts was attached to appellant's petition as an exhibit, and adopted by reference as a part of said petition. These contracts covered the entire territory in which appellant gas company operated. The first contract was of date December 18, 1909, and covered a period of 21 years from said date. This contract was entered into between appellee and the Clayco Oil & Pipe Line Company. Appellant claimed under this contract as assignee of the above-named company. The second and third contracts were between appellee and appellant under the name of North Texas Gas Company. The first was dated August 8, 1912, and extended over a period of 15 years from said date. The third was dated April 11, 1916, and covered a period from said date until December 1, 1927. The provisions of these three contracts are identical except as to the period of time they were to run and the territory in which each was to operate. The fourth contract was dated June 7, 1919, was between appellee and appellant under the name of North Texas Gas Company, and covered a period of time from said date until January 1, 1930. It differed in some of its material provisions from the other three contracts, and will require a separate statement as to its provisions.

The first of these contracts embraced a territory consisting of cities and towns of Byers. Petrolia, Wichita Falls, Bellvue, Bowie, Alvord, Sunset, Decatur, Rhome, and other towns along appellee's pipe line system leading into the towns named. The second of said contracts embraced a territory consisting of the cities of Sherman, Denison, Denton, and towns along appellee's pipe line system leading into these cities. The third contract embraced the city of McKinney. The fourth contract embraced a territory consisting of the cities and towns of Corsicana, Hillsboro, Cleburne, Ennis, Waxahachie, Granbury, Itasca, Italy, Milford, West, and other cities and towns located on or adjacent to the pipe line system of appellee that was to serve the above-named localities.

The preamble to each of the first three contracts recites that appellee is the owner of a large quantity of leases, gas wells, and gas-producing property situated in Clay county, Tex., and is constructing a large pipe line from its field to the territory embraced in each contract, and is desirous of securing a market for its gas. It further recites that appellant is the owner of franchises authorizing it to lay mains and pipes in and through the various towns and cities named in each contract for the supply of natural gas to said cities and to all consumers within said territory, and desires to purchase and secure a supply of gas for such use in the said towns and cities; and that appellee is willing to sell and deliver to appellant all the gas it shall require for said purpose.

This is followed by a statement of the mutual contractual obligations assumed by each. That portion of same necessary for the consideration of this case is that appellee obligates itself (1) to deliver to appellant all the gas appellant requires to supply the needs of the consumers in the towns and cities to be served at a price equal to two-thirds of the gross receipts received by appellant from such consumers; that delivery will be made by means of a lateral pipe line constructed from appellee's main pipe line to a connection with appellant's pipe line just outside the limits of each town or city to be served; (2) that, if the price thus received shall be less than 20 cents per 1,000 cubic feet of gas delivered at said connecting point, then appellee shall have the right to annul that portion of the contract in reference to the price, and that payment for the gas will be made monthly on a date stipulated in each of the contracts; (3) that appellee shall not be responsible to appellant for any deficiency in the supply of gas resulting from the failure of the gas field, but appellee is bound to furnish natural gas to appellant to the full extent that it may be able to do so through the exercise of reasonable care and diligence in the acquisition of gas territory, the drilling of wells, and the transportation of natural gas through its pipe lines to said points of delivery; (4) that appellee shall have the right to delare a forfeiture of each contract, if appellant should violate any of the covenants assumed by it in favor of appellee, or should fail to perform any of the duties imposed upon appellant under the terms of the contract, provided appellee shall first give appellant at least 30 days' written notice specifying the particulars wherein it is claimed there has been a delinquency, and, if at the end of such time appellant has not remedied the delinquency so pointed out by said notice, the termination of each contract shall be...