The Richardson Gas & Oil Company v. The City of Altoona

• Decision Date: 06 February 1909
• Docket Number: 15,814
• Citation: 79 Kan. 466,100 P. 50
• Court: Kansas Supreme Court
• Parties: THE RICHARDSON GAS & OIL COMPANY v. THE CITY OF ALTOONA

100 P. 50

79 Kan. 466

THE RICHARDSON GAS & OIL COMPANY v. THE CITY OF ALTOONA

No. 15,814

Supreme Court of Kansas

February 6, 1909

Decided January, 1909.

Error from Wilson district court; LEANDER STILLWELL, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

MUNICIPAL CORPORATIONS -- Franchise -- Monopoly. Where a franchise is granted by a city to a gas company authorizing it to furnish to the city and its inhabitants natural gas for light, heat and power, in consideration of which the company agrees to pay to the city annually the sum of $ 300, a further provision that such payments are to continue only so long as the gas company enjoys its franchise without competition is not contrary to public policy as tending to destroy competition and create a monopoly.

P. C Young, for plaintiff in error.

E. D. Mikesell, for defendant in error.

OPINION

PORTER, J.:

In September, 1903, Altoona, a city of the third class, passed an ordinance granting a franchise to the Hemme Gas Company to furnish natural gas to the city and its inhabitants. Under the franchise the city had the option to purchase the gas plant at a fair valuation in case the company during the life of the contract desired to sell the same.

The company accepted the franchise, erected a plant and supplied the city and its inhabitants with gas for several months, when it sold its interests to B. E. Ladow. A few months thereafter the Richardson Gas & Oil Company purchased the plant from Ladow and procured the passage of an ordinance granting it a franchise, by the terms of which the company was to pay to the city twenty per cent. of its "gross proceeds," and the city was given the option to purchase the plant on terms similar to those in the former franchise. The sale of the gas plant to Ladow and the sale from Ladow to the Richardson Gas & Oil Company were both made without notice to, or the consent of, the city.

In October, 1904, the Richardson Gas & Oil Company came before the city council with an offer to pay the city the sum of $ 300 annually, provided the city would enact an ordinance ratifying the two sales of the gas plant, waiving the right of the city to purchase under either of the former franchises and releasing the company from its obligation to pay to the city twenty per cent. of its "gross proceeds." The city accepted the offer and enacted the ordinance. Immediately thereafter a written contract was entered into between the city and the company providing for the payment to the city of $ 300 per annum, as follows: $ 100 January 1, 1905; $ 100 April 1, 1905; $ 50 July 1, 1905; $ 50 October 1, 1905; and like payments on the same days in each year thereafter during the life of the contract. The consideration for the contract is stated therein to be the passage of the ordinance with the provisions as above set forth. The contract also contained the following conditions:

"The above-named payments are to continue as long as the second party enjoys without competition the supplying the inhabitants, manufacturers, corporations and industries in the city of Altoona, and additions, with natural gas for fuel and light. Whenever from any source there shall be competition against second party, thus curtailing its justified income, then these payments to discontinue and stop and not to be...