Northern Texas Utilities Co. v. Community Natural Gas Co.

• Decision Date: 29 June 1927
• Docket Number: (No. 2776.)
• Parties: NORTHERN TEXAS UTILITIES CO. v. COMMUNITY NATURAL GAS CO.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

Page 904

297 S.W. 904

NORTHERN TEXAS UTILITIES CO. v. COMMUNITY NATURAL GAS CO.^*

(No. 2776.)

Court of Civil Appeals of Texas. Amarillo.

June 29, 1927.

Rehearing Denied September 7, 1927.

Appeal from District Court, Wilbarger County; Robt. Cole, Judge.

Suit for injunction by the Northern Texas Utilities Company against the Community Natural Gas Company. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

W. H. Penix, of Mineral Wells, Berry, Stokes & Killough and Leon H. Brown, all of Vernon, and Penix, Miller & Perkins and W. P. Smith, all of Mineral Wells, for appellant.

Karl F. Griffith, Roy C. Coffee, and Percy Hall, all of Dallas, and Storey & Leak, of Vernon, for appellee.

HALL, C. J.

This is a contest between two Delaware corporations, both seeking the right to supply the city of Vernon and its inhabitants with natural gas. The appellant, hereinafter referred to as the Utilities Company, instituted the suit in the district court of Wilbarger county, against the appellee, hereinafter referred to as the Community Company, praying for an injunction against the Community Company, restraining it from digging ditches, trenches, and doing any excavating along, upon, and across the streets of the city of Vernon for the purpose of laying its gas pipes. A temporary injunction was granted, and upon final hearing the temporary injunction was dissolved. The Utilities Company's allegations are that the city of Vernon was organized and operating under that article of the Constitution known as the "Home Rule Amendment" (article 11, § 5 [see Acts 1911, p. 284]) and the laws of the state of Texas relative thereto; that said city has adopted the commission form of government under a charter adopted by its citizens. Certain provisions of the charter are set out which will be hereinafter referred to.

It is further alleged that on or about the 22d day of September, 1925, the Upham Gas Company applied to the city of Vernon for a franchise permitting it to use the streets and alleys of the city for the transmission and distribution of gas to the inhabitants of the city; that the franchise provided for the rate to be charged, and that by ordinance said franchise was duly granted and adopted by the commission of the city and published as required by the city charter, and became effective under the provisions of the charter; that the said Upham Gas Company was thereby vested with all rights and privileges granted in said franchise; that thereafter on the 30th day of June, 1926, the city of Vernon, acting through its commission, ratified and confirmed said franchise by Ordinance No. 414, and again on the 1st day of July, 1926, ratified and confirmed the franchise which had theretofore been granted to the Upham Gas Company on September 22, 1925; that thereafter on July 13, 1926, said Ordinance No. 414, granting the franchise to the Upham Gas Company, was again ratified and confirmed, and that said ordinance has been in full force and effect since the 9th day of October, 1925; that about the 10th day of July, 1926, said franchise was duly assigned to and became the property of and is now owned by the plaintiff, the Utilities Company; that by virtue of its ownership of said franchise the Utilities Company has acquired vested rights in the streets and alleys of the city, and has the right to excavate along and across and to lay its pipes in said streets and alleys.

It is further alleged that the plaintiff is a taxpayer in the city by virtue of its ownership of the franchise, and by reason of the further fact that it has laid 26 miles of gas pipes in the streets and alleys of said city, and will lay 4 more miles, all at the cost of approximately $187,500; that, in order to lay its pipes, mains, and laterals in an efficient and capable manner, it becomes necessary to cross the streets and alleys and to extend service pipes to the various houses in said city desiring to use gas; that on the 19th day of July, 1926, the defendant, the Community Company, applied to the city commission for a franchise authorizing it to supply natural gas to said city and its inhabitants; that such franchise was granted on said date by Ordinance No. 425; that thereafter, on the 26th day of July, 1926, the defendant applied to the city commission for permission to at once use the streets and alleys for the purpose of laying its gas lines, which application was granted the same day; that thereafter on the 29th day of July, 1926, the city commission repealed and rescinded the resolution giving and granting the defendant the privilege of at once laying its pipe lines and mains in said city.

It is further alleged that under the provisions of the city charter the defendant had no right to lay its pipe lines until after the expiration of 30 days from the date of the last publication of said original franchise, which was made on August 3, 1926, and that said franchise could not under the charter provisions become effective until September 3, 1926; that the purported franchise granted to the defendant had to be published in a newspaper once a week for three consecutive weeks, and that defendant obtained no rights thereunder until the expiration of 30 days from the date of the last publication thereof; that during said 30 days 10 per cent. of the legally qualified voters of the city might determine by petition and the city commission would be compelled to submit said franchise to a vote of the people, which could not be submitted less than 30 days nor more than 90 days from the time of the filing of the petition asking such election, and if a majority of the votes cast at said election should be against granting such franchise or privilege, the ordinance should become inoperative and void, and in case said franchise had been submitted to a vote it was ineffective during said time. That in spite of the provisions of the city charter, and regardless of the fact that defendant had no franchise entitling it to make excavations in the streets and alleys, the defendant was at the date of filing said petition, to wit, the 9th day of August, 1926, digging trenches in the streets and laying its gas pipes and laterals and obstructing the streets in so doing; that it will continue to do so in an increasing degree unless restrained by the court.

Plaintiff further alleges that in complying with the terms of its franchise it would be necessary to lay its gas pipes along the streets and alleys which were being occupied and used by the defendant; that plaintiff will be put to much greater expense in making its excavations and laying its pipe lines along and across the streets and alleys burdened by the use made by the defendant thereof; that it will be greatly inconvenienced and damaged, the amount of its damages being impossible of determination at this time; that defendant is soliciting customers in the city and entering into contracts with them, most, if not all, of whom would be plaintiff's customers, and in this way is interfering with plaintiff's rights to its damage; that defendant commenced excavating and laying its lines on the 5th day of August, 1926, when it could not lawfully begin the construction of its lines prior to the 3d day of September, 1926; that by said time plaintiff would have its lines completed in the city of Vernon, would have all of its excavations made, its laterals and connections made, and would by that time be enjoying the greater bulk of the gas business in said city, which amounts to many thousands of dollars; that unless defendant is restrained it would probably have gas into the city prior to the time plaintiff would have its gas into said city, and would thereby deprive plaintiff of many customers, to its great damage, amounting to many thousands of dollars; that plaintiff had the right to believe and did believe that defendant would not be allowed to violate the charter of the city, and had the right to rely upon and believe that the city would enforce its laws, and so believing it has expended large sums of money, to wit, more than $100,000, in laying its gas mains and lines in the streets and alleys of said city, and but for such belief would not have expended such large sums of money; that the acts and conduct of the defendant are an illegal and unlawful infringement of plaintiff's rights under its franchise to its damage in the sum of many thousands of dollars; that although plaintiff has applied to the city commission for protection of its rights, and also to the county authorities of Wilbarger county for such protection, both the city and county have failed to give it any protection, and it has no adequate remedy at law and will suffer irreparable injury unless said writ of injunction is granted.

The petition was duly verified and presented to the judge of the Twentieth judicial district, who granted a temporary injunction on August 9, 1926. Bond was made on the 10th day of August, and the writ issued and served on the same day.

The defendant answered on the 17th day of August, 1926, by general demurrer, fourteen special exceptions, a general denial, and specially alleged, among other things, that on June 9, 10, and 11, 1924, the city commission of the city of Vernon granted to G. M. Church and his assigns a franchise by Ordinance No. 403, for the construction and operation of a gas distributing plant in said city, and that the said Church duly accepted under said franchise and ordinance; that on the 10th day of July, 1926, the defendant for value purchased said franchise from the said G. M. Church, and was then the owner thereof, and now has valid subsisting and vested rights thereunder.

The defendant further alleged that on July 19, July 22, and July 27, 1926, respectively, the city commission of the city of Vernon introduced and passed upon the first, second, third, and final readings of a certain instrument, which in effect constitutes an ordinance, bearing the number 425, by its terms giving and...