Richland Gas Co., Inc. v. Hale Rayville Gas Co., Inc.

• Decision Date: 04 November 1929
• Docket Number: 29810,30147
• Citation: 125 So. 130,169 La. 300
• Court: Louisiana Supreme Court
• Parties: RICHLAND GAS CO., Inc., v. HALE et al. RAYVILLE GAS CO., Inc., v. LOUISIANA PUBLIC SERVICE COMMISSION (RICHLAND GAS CO., Inc., Intervener)

125 So. 130

169 La. 300

RICHLAND GAS CO., Inc., v. HALE et al.

RAYVILLE GAS CO., Inc., v. LOUISIANA PUBLIC SERVICE COMMISSION (RICHLAND GAS CO., Inc., Intervener)

Nos. 29810, 30147

Supreme Court of Louisiana

November 4, 1929

Rehearing Denied December 2, 192

Appeal from Fifth Judicial District Court, Parish of Richland; John R. McIntosh, Judge.

In Case No. 3014:

Appeal from Nineteenth Judicial District Court, Parish of East Baton Rouge; George K. Favrot, Judge.

Suit by the Richland Gas Company, Inc., against J. A. Hale and others, and suit by the Rayville Gas Company, Inc., against the Louisiana Public Service Commission, in which the Richland Gas Company, Inc., intervened. The suits were consolidated for the purpose of trial. From the judgment in the first suit rejecting plaintiff's demand, plaintiff appeals, and, from the judgment in the second suit, defendant and intervener appeal.

Judgments affirmed.

Barksdale Bullock, Warren, Clark & Van Hook, of Shreveport, and Hodge &amp Barnett, of Rayville, for Richland Gas Co.

Francis Williams, of New Orleans, for Louisiana Public Service Commission.

George Wesley Smith, T. H. McGregor, C. J. Ellis, Jr., and Warren Hunt, allof Rayville, and W. M. Barrow, of Baton Rouge, for Rayville Gas Co.

OPINION

LAND, J.

As the issues involved in the above cases are largely similar, they have been consolidated for the purposes of trial.

On July 20, 1927, the town of Rayville, by Ordinance No. 144, granted a franchise to T. L. James for the distribution and sale of natural gas in the town, the rate to be charged for gas being fixed at 70 cents per 1,000 cubic feet to domestic consumers.

This franchise was acquired later by the Richland Gas Company, Inc., which commenced the sale and distribution of gas to the inhabitants of the town of Rayville, and is still engaged in that business.

On August 28, 1928, by Ordinance No. 158, the town of Rayville granted a similar franchise to J. A. Hale; and in this franchise the rate to be charged for gas is fixed at 35 cents per 1,000 cubic feet to domestic consumers. This franchise was sold and transferred to the Rayville Gas Company, Inc.

On December 24, 1928, while the Rayville Gas Company was engaged in constructing a plant and laying pipes along the streets and alleys of the town of Rayville, for the purpose of furnishing gas to the inhabitants at a lower rate, the Richland Gas Company filed suit in the district court of Richland parish, attacking the validity of Ordinance No. 158 on various grounds, and alleging that, if the town of Rayville can lawfully grant an additional franchise, said ordinance cannot have effect nor be executed without the approval and authority of the Louisiana Public Service Commission, and that no such approval or authority has been granted or obtained by the Rayville Gas Company.

In that suit, the Richland Gas Company obtained a temporary restraining order prohibiting the town of Rayville and the Rayville Gas Company "from laying pipe and continuing the construction of a plant for the ostensible purpose of supplying gas to, and soliciting business from, and making contracts with, the inhabitants of the Town of Rayville for the sale of gas, or otherwise engaging or offering to engage in the public service of distributing and selling natural gas in said town in competition with petitioner," the Richland Gas Company.

On January 16, 1929, after a hearing on the rule for a preliminary injunction, the temporary restraining order issued in the case was set aside, and the demands of the Richland Gas Company were rejected.

A motion for new trial was overruled, and a devolutive appeal was taken to this court; bond being filed in the lower court January 22, 1929.

On May 24, 1929, the Louisiana Public Service Commission promulgated order No. 606, reading in part as follows:

"Ordered, that the Rayville Gas Company, Inc., its officers, agents and employees, and all persons associated or connected with it, be and they are hereby directed and required to cease and desist from vending, transmitting, supplying or delivering natural gas, as a public service, or from in any manner engaging in the business of vending, transmitting, supplying or delivering natural gas, as a public service, in the Town of Rayville, Louisiana, unless and until the said Rayville Gas Company, Inc., shall have first applied to and secured from the Louisiana Public Service Commission authority to so engage in vending, transmitting, supplying and delivering natural gas in the Town of Rayville, Louisiana."

In the case of Rayville Gas Co. v. Louisiana Public Service Commission, the gas company filed a petition in the district court of East Baton Rouge appealing from order No. 606, issued by the commission, and attacking same as ultra vires, null and void, unreasonable, oppressive, and wholly unauthorized by any law of the state of Louisiana, constitutional or statutory.

The Rayville Gas Company avers that the enforcement of said order will destroy its investment and will constitute the taking of its property without due process of law.

Said company further avers that the commission is about to proceed against it for violating said order and will assess fines and penalties against it to such an extent as to prevent it from carrying on its business, and as to result in the confiscation of its property.

Said company prays for judgment annulling said order, and perpetually enjoining the commission from enforcing same.

The Louisiana Public Service Commission, in answer to the petition of the Rayville Gas Company, Inc., admits that the town of Rayville is a municipal corporation, but denies that said municipality has any right or authority in law to grant a franchise for the operation and conduct of a natural gas distributing system in the town of Rayville, as a public utility, until the grantee of such franchise shall have applied for and secured from the commission a proper certificate of convenience and necessity to engage in the business of a public utility.

On July 3, 1929, the rule nisi was made absolute, and a temporary injunction was issued by the district court of East Baton Rouge, restraining the Louisiana Public Service Commission from enforcing or attempting to enforce its order, No. 606, promulgated on May 24, 1929.

On July 8, 1929, a devolutive appeal was taken from this judgment to this court by the commission and by the Richland Gas Company, the intervener.

In the opinion of the commission, handed down on May 24, 1929, and resulting in the issuance of order No. 606, it is said in part:

"From the foregoing it will be seen that the reasonableness of the natural gas rates of neither petitioner nor respondent in the Town of Rayville is at issue. The only question to be decided is, at this time, as to whether the Rayville Gas Company, Inc., or any other person or persons, may engage in the business of a public utility unless and until authority to do so has been sought and procured from this Commission after an appropriate investigation to determine whether or not the operation of such utility is in the public interest. Manifestly, this Commission cannot prohibit the laying of pipes, mains and connections, or the construction of any of the physical elements of a natural gas plant, but the question of whether the owner of such physical properties may engage in the public distribution and sale of natural gas, in competition with an established plant, admittedly under the jurisdiction of this Commission, against whose service or rates no protest has been urged, is a most serious question, and, in the public interest, it must be definitely settled."

The town of Rayville is incorporated under Act No. 136 of 1898, as amended by Act No. 189 of 1920. Under the provisions of the original and of the amendatory act, a municipality has the right to grant the use of its streets, alleys, and public places for the laying of pipes for the purpose of serving its inhabitants with gas. It is expressly provided in these acts that "a franchise, right of way, or privilege of any character whatever, shall not be granted for a longer period than twenty-five years, and such privilege shall not be exclusive." Act No. 189 of 1920, § 15, par. 8, p. 312.

At its last regular session in the year 1928 the Legislature again authorized and empowered the governing authorities of municipal corporations, with a population not exceeding 25,000, to grant franchises to any person, firm, or corporation to use and occupy the streets, alleys, and public places therein "for pipelines, mains for gas transportation and distribution system and appurtenances." It is expressly provided in this act: "* * * But such franchises, rights and privileges shall not be exclusive, nor be for a longer period than twenty-five (25) years and shall be subject to such terms, conditions and stipulations as may or shall be prescribed by the Governing Authorities of said municipalities." Act No. 76 of 1928.

At its last regular session in the year 1928 the Legislature also passed Act No. 80 to confirm and validate all franchises theretofore granted by the governing authorities of municipal corporations (cities of more than 75,000 population excepted) to any person, firm, or corporation to use the streets, alleys, and public places of said municipalities "for the purpose of constructing, maintaining and operating * * * pipe-lines and mains for gas transportation and distribution systems and appurtenances." Act No. 80 of 1928.

As the...