Southern Union Gas Co. v. City of Artesia

• Decision Date: 08 June 1970
• Docket Number: No. 8906,8906
• Citation: 472 P.2d 368,81 N.M. 654,1970 NMSC 86
• Parties: SOUTHERN UNION GAS COMPANY, a corporation, Plaintiff-Appellant, v. CITY OF ARTESIA, a municipal corporation, and Urban Renewal Agency of Artesia, New Mexico, a public body corporate and politic, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 368

472 P.2d 368

81 N.M. 654

SOUTHERN UNION GAS COMPANY, a corporation, Plaintiff-Appellant, v. CITY OF ARTESIA, a municipal corporation, and Urban Renewal

Agency of Artesia, New Mexico, a public body

corporate and politic,

Defendants-Appellees.

No. 8906

Supreme Court of New Mexico.

June 8, 1970.

Rehearing Denied July 30, 1970.

McCormick, Paine, Feezer & Forbes, Carlsbad, A. S. Grenier, Boyd L. Henderson, Dallas, Tex., for appellant

Watson & Watson, Artesia, for City of Artesia.

William M. Siegenthaler, Artesia, for Urban Renewal Agency.

OPINION

SISK, Justice.

Plaintiff appeals from the determination of the trial court in a declaratory judgment action that it is not entitled to be compensated by defendants for its costs incurred in removing and partially relocation certain of its utility lines from streets and alleys within the area covered by an urban renewal project in Artesia, New Mexico. We affirm.

Plaintiff is a private utility which operates its gas distribution system within the City of Artesia pursuant to a franchise agreement from defendant city. Defendant city owns and operates a water distribution system and a sanitary sewer system within the City of Artesia. Defendant Urban Renewal Agency of Artesia is a public body corporate and politic, created pursuant to the provisions of our State Urban Renewal Law. Seventy-five percent of the cost of the subject urban renewal project is funded by the United States Department of Housing and Urban Development (HUD), and 25% by defendant city. HUD regulations have established a policy that expenditures may be made to compensate public utilities for removal and relocation expenses but that such compensation to private utilities is prohibited unless required by state statute, judicial decisions, pre-existing local ordinances, or the applicable franchise agreement. Defendant city was compensated by defendant agency for the costs of removing its utility lines within the urban renewal area, but plaintiff was not similarly compensated.

Plaintiff first contends that it is entitled to compensation because the requirements made by defendants that it remove almost all of its gas lines from the urban renewal area constitute a complete ouster and therefore a taking of its property without due process of law.

At common law, the right of a utility to use the streets is subject to the right of the municipality to require the utility to relocate its lines and facilities when necessary, because of changes in street locations or improvements, or as otherwise required in the interest of the public health and welfare. In the absence of a valid ordinance or statute to the contrary, such removal of facilities, must be accomplished at the expense of the utility. State ex rel. City of Albuquerque v. Lavender, 69 N.M. 220, 365 P.2d 652 (1961); State ex rel. State Highway Comm'n v. Town of Grants, 66 N.M. 355, 348 P.2d 274 (1960); Mountain States Tel. & Tel. Co. v. Town of Belen, 56 N.M. 415, 244 P.2d 1112 (1952); Bristol Tennessee Housing Authority v. Bristol Gas Corp., 219 Tenn. 194, 407 S.W.2d 681 (1966); New Orleans Gaslight Co. v. Drainage Comm., 197 U.S. 453, 25 S.Ct. 471, 49 L.Ed. 831 (1905); 64 C.J.S. Municipal Corporations § 1738 (Supp.1969).

In the present case there is no provision in the applicable franchise ordinance pertaining to relocation costs, and, at the times material to this case, no statute permitted or required that plaintiff be reimbursed for such relocation costs. The requirement that plaintiff remove its failities from the urban renewal area is clearly within the police powers of defendants, and defendants acted properly under this power. State ex rel. City of Albuquerque v. Lavender, supra; Bristol Tennessee Housing Authority v. Bristol Gas Corp., supra; New Orleans Gaslight Co. v. Drainage Comm'n, supra.

The Lavender case, supra, in upholding as constitutional an act which specifically authorized reimbursement of utility relocation costs, without distinction between public and private utilities, noted the principal of law that a complete ouster of a utility from a public highway could constitute an unlawful taking of property rights, and cited Mountain States Tel & Tel. Co. v. Town of Belen, supra; City of Roswell, N.M. v. Mountain States Tel. & Tel. Co., 78 F.2d 379 (10th Cir. 1935); and Russell v. Sebastian, 233 U.S. 195, 34 S.Ct. 517, 58 L.Ed. 912 (1914), each of which is clearly distinguishable from the present case. In Mountain States v. Town of Belen, supra, the town attempted by ordinance to force the substitution of a new franchise for a valid franchise previously granted by the county. This court held that the ordinance was not a police power regulation but was primarily a revenue measure, and that cancellation of the valid and existing franchise was unconstitutional, both as an impairment of contract and as a taking of property without due process. Similarly, in Russell v. Sebastian, supra, the United States Supreme Court held that a municipality could not constitutionally require a gas company to purchase a new franchise, where a valid and still existing street franchise had been granted by the California State Constitution, despite a subsequent constitutional amendment and resulting ordinances. In City of Roswell v. Mountain States Tel. & Tel. Co., supra, the court held that a 1909 statute did not grant a perpetual right to use of the city streets and that the city after reasonable notice could eject a private utility whose franchise had been expired for more than 12 years.

In the present case, there is no impairment, abrogation or cancellation of plaintiff's franchise, nor is there a complete ouster of plaintiff from the area covered by its franchise. Plaintiff argues forcefully that because the total urban renewal area covered 328.03 acres, which constitutes a substantial portion of the city, we should find such complete ouster. We cannot agree. It would be unsound to make a legal distinction between a duty to remove utility lines from a large area comprising one improvement project to be accomplished over an...