Vill. of Constantine v. Mich. Gas & Elec. Co.

• Decision Date: 11 March 1941
• Docket Number: No. 50.,50.
• Citation: 296 N.W. 847,296 Mich. 719
• Court: Michigan Supreme Court
• Parties: VILLAGE OF CONSTANTINE v. MICHIGAN GAS & ELECTRIC CO.

296 Mich. 719

296 N.W. 847

VILLAGE OF CONSTANTINE

v.MICHIGAN GAS & ELECTRIC CO.

No. 50.

Supreme Court of Michigan.

March 11, 1941.

Suit by the Village of Constantine to restrain the Michigan Gas & Electric Company from conducting a local business within the village. From a decree for defendant, plaintiff appeals.

Affirmed.Appeal from Circuit Court, St. Joseph County, in Chancery; Theo T. Jacobs, Judge.

Argued before the Entire Bench.

C. L. Stickler and Robert P. Polleys, both of Constantine, for appellant.

Burns & Hadsell, of Niles (Louis H. Fead, of Detroit, of counsel), for appellee.

SHARPE, Chief Justice.

The village of Constantine brings this suit to restrain defendant, Michigan Gas & Electric Company, from conducting a local business within the village of Constantine of an electric company.

The Michigan Gas & Electric Company was organized as of September 21, 1904, under the provisions of Act No. 232, Pub.Acts 1903, for a period of 30 years, under the name of Portage Lake Gas & Coke Company. This name was changed to Houghton County Gas & Coke Company on February 23, 1906, and that name was changed to Michigan Gas & Electric Company on March 29, 1917. About this time, the Michigan Gas & Electric Company purchased the property and franchises of the Constantine Hydraulic Company and began to do business within the village of Constantine. In September, 1934, it renewed its corporate life for 30 years.

The Constantine Hydraulic Company was organized as a corporation in 1868 for a period of 30 years under Act No. 411, Pub. Acts 1867, entitled: ‘An Act to provide for the incorporation of slack water navigation companies, for the improvement of rivers in the counties of St. Joseph, Cass, Berrien and Cheboygan, and defining their powers and duties.’

In 1897, its corporate existence was renewed for a period of 30 years, i. e., until 1928, under Act No. 49, Pub.Acts 1897, which amended Act No. 411, Pub.Acts 1867, as amended.

In 1903, the legislature provided (Act No. 307, Local Acts 1903, amending Act No. 411, Pub.Acts 1867) that companies incorporated under this act: ‘* * * shall also have power and authority to use the water power so owned by it for the manufacture and generation of electrical current and may then vend such electrical current to all persons and corporations for light, heat and power purposes.’ Sec. 12.

And provided: ‘* * * such company may, with the consent of the corporate authorities of any county, city, village or township, erect poles and string thereon wires, or may lay conduits, and maintain the same, in, over and upon any streets, alleys, roads, public grounds, bridges and public places for the purpose of conveying and distributing electrical current, but such permission shall be given for a term not exceeding thirty years.’ Sec. 18.

On March 24, 1903, the village of Constantine by ordinance granted the Constantine Hydraulic Company, its successors and assigns, a franchise to erect, maintain and operate for a period of 30 years an electric light, heat and power system in the village of Constantine.

In 1905, the legislature passed Act No. 264, Pub.Acts 1905, which provided: ‘Any person, firm or corporation authorized by the laws of this State to conduct the business of producing and supplying electricity for purposes of lighting, heating and power, and which shall be engaged or which shall hereafter desire to engage in the business of the transmission of such electricity, shall have the right to construct and maintain lines of poles and wires for use in the transmission and distribution of electricity on, along or across any public streets, alleys and highways and over, under or across any of the waters of this State, and to construct and maintain in any such public streets, alleys or highways all such erections and appliances as shall be necessary to transform, convert and apply such electricity to the purposes of lighting, heating and power, and to distribute and deliver the same to the persons, firms and public or private corporations using the same: Provided, That the same shall not injuriously interfere with other public uses of such streets, alleys or highways, or with the navigation of said waters, and that the designation and location of all lines of poles and wires shall be subject to the regulation, direction and approval of the common council of cities, the village council of villages, and the township board of townships, as the case may be: * * * Provided further, That nothing herein shall deprive cities, villages or townships of the power and control over their streets and highways, which they have by the general laws of this State.’

About 1903, the Constantine Hydraulic Company installed a complete system for electrical service in the village of Constantine and from 1905 to 1909 made expensive improvements and purchased water rights and lands outside of the village for use in its system. It continued to operate its business until March, 1917, when it sold its property and franchises to the defendant, Michigan Gas & Electric Company, which has continued to operate the electrical service business to the present time.

The village ordinance franchise expired in 1933; and on January 5, 1934, the village notified the defendant that it was a mere licensee upon the streets of the village and again in February, 1937, the village notified the defendant that it was upon the village streets by suffrance. In February, 1938, plaintiff placed in operation its own light and distribution system.

On August 9, 1939, plaintiff filed its bill of complaint against defendant alleging that defendant is doing business within the village of Constantine without any right or authority to maintain such local business and asked a perpetual injunction against defendant restraining it from the conduct of a local electrical service business.

The lower court dismissed plaintiff's bill of complaint. Plaintiff appeals.

Defendant contends that the Constantine Hydraulic Company (its assignor) acquired a State franchise of the use of the public streets, alleys and highways of the village of Constantine under Act No. 264, Pub.Acts 1905, wholly distinct from and superior to the franchise granted it by the village in 1903; that the State franchise was assigned to ths defendant in 1917 and is still owned by it; and that such State franchise is still in full force and will continue, if used, until at least 1958.

It is conceded that defendant company has no right to operate in Constantine in its own right, but defendant claims such right by reason of assignment from the Constantine Hydraulic Company.

Defendant relies upon the language of Act No. 264, Pub.Acts 1905, and the holding of this court in City of Lansing v. Michigan Power Co., 183 Mich. 400, 150 N.W. 250, 251, as authority for its claim that the Constantine Hydraulic Company acquired a State franchise.

That act reads: ‘Any person, firm or corporation authorized by the laws of this State to conduct the business of producing and supplying electricity for purposes of lighting, heating and power, and which shall be engaged * * * in the business of the transmission of such electricity, shall have the right to construct and maintain lines of poles * * *’.

In City of Lansing v. Michigan Power Co., supra, a franchise granted to the power company's predecessor and assignor by the city had expired. The defendant company was organized under Act 232, Pub.Acts 1903. The city filed a bill of complaint to compel the power company to remove from the public streets the poles, wires and equipment installed by defendant for the purpose of transmitting electricity for power and lighting purposes on the theory that the right granted the power company's assignor by the city had expired by terms of limitation; and that it was using the streets without right. The power company claimed that it was using the streets under the grant of the legislature contained in Act No. 264, Pub.Acts 1905.

It was established in that case that prior to January 1, 1909, when the Constitution of 1908 became effective, the legislature had sovereign power over streets, highways and public places; that municipalities had only such power as was delegated to them by the legislature; and that delegation to municipalities of the right to grant franchises did not affect the legislative power to grant use to others, even though they already held municipal franchises. The court said:

“It is claimed by the city that the use of the streets by defendant under that franchise [city] and before the passage of the act of 1905 made all use of the streets, while such franchise was in force, even though after the passage of the act of 1905, a use wholly under the franchise, and that it is not now open to defendant, in the absence of an express negation of use under the franchise at the time to make the claim of right under the law of 1905. This claim of the city implies that the franchise constituted the sole authority for the use of the streets by defendant, and that, while the franchise was in existence, no other authority could be accepted, though open to all persons and corporations not having a franchise from the city. This position is untenable, for the city had no authority to grant the use of the streets for the setting of poles and the stringing of wires, except as it derived authority by grant of power from the Legislature, and a grant of such authority by the Legislature in no way lessened the sovereign power of the Legislature to also grant the right to individuals and corporations within the city, and to do so regardless of any action by the city.

“The city of Lansing had authority from the Legislature to grant the franchise in question, but this grant of authority in no way prevented the Legislature from granting the right to all persons, and the franchise did not estop defendant from having the benefit of a general law of the state. * * *

“The Legislature, under the Constitution of 1850,...