Hanford Gas & Power Co. v. City of Hanford

124 P. 727, 163 Cal. 108, 1912 Cal. LEXIS 381
CourtCalifornia Supreme Court
DecidedJune 14, 1912
DocketSac. No. 1917.
StatusPublished
Cited by10 cases

This text of 124 P. 727 (Hanford Gas & Power Co. v. City of Hanford) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanford Gas & Power Co. v. City of Hanford, 124 P. 727, 163 Cal. 108, 1912 Cal. LEXIS 381 (Cal. 1912).

Opinion

ANGELLOTTI, J.

This is an action to recover from the city of Hanford, $740.20, paid by plaintiff to said city under such circumstances as, it is claimed, entitles plaintiff to recover it with interest, and also to obtain a decree enjoining the city from doing certain things. A demurrer to the complaint for want of facts to state a cause of action was overruled, and defendant failing to answer, judgment was given for the recovery of such money with interest, and restraining the city from the commission of any of the acts alleged to be threatened. Defendant appeals from such judgment.

The complaint is substantially as follows: Defendant is a municipal corporation of the sixth class. The plaintiff is a corporation organized for the purpose of constructing and maintaining gas plants in cities and towns and manufacturing and supplying gas to the inhabitants of said cities and towns to be used for heat, light, and power. On July 14, 1902, E. E. Bush and C. S. Young applied in writing to the board of trustees of defendant for a franchise and privilege for themselves, their successors, and assigns for a period of fifty years, to lay and maintain gas pipes for the purpose of conducting gas for heat, power, and light, over, upon, along, and under the public streets, alleys, etc., in the city of Hanford, and for selling and supplying the same to the inhabitants of said city. Notice of such application was given to the board of trustees by publication stating that it was intended to grant said privilege, and that sealed bids would be received therefor up to October 23, 1902, at eight o’clock p. m. The notice stated that the principal bidder and his assigns must, during the life of said franchise, pay to the city two per cent of the gross annual receipts arising from the use, operation, or possession of the franchise, except for the first five years. It stated that “in the event said payment is not made, said franchise shall be forfeited.” It further required a bond *110 from the grantee in the sum of two thousand five hundred dollars, conditioned for the observance by him of the stipulations on his part. On October 23, 1902, C. S. Young submitted a bid for such privilege in accordance with the conditions specified in the notice, offering to pay therefor two hundred and fifty dollars. This bid was accepted. On October 28, 1902, Young gave the required bond, which was approved and accepted. On November 10, 1902, the board of trustees adopted an ordinance granting to Young and his assigns the privilege and franchise for the term of fifty years “to lay gas pipes for the purpose of carrying gas for heat, light and power through the public highways, streets, and alleys in said city of Hanford” on the conditions specified in the notice for bids, one of which conditions was specified in the ordinance as follows:—

“First. The said C. S. Young, and his assigns, must, during the life of said franchise, pay to the said municipality two (2) per cent of the gross annual receipts arising from its use, operation or possession; provided, that no percentage shall be paid for the first five (5) years succeeding the date of the franchise, but thereafter such percentage shall be payable annually, and in the event said payment is not made, said franchise shall be forfeited.”

Thereafter Young assigned to plaintiff all his interest in and to said privilege, and plaintiff thereupon constructed a gas plant in said city, and laid gas pipes through the streets, highways, and alleys thereof, and ever since the completion of said work has operated said plant and has been engaged in the business of manufacturing gas and supplying the same to the inhabitants of the city. On March 25, 1909, plaintiff paid to the city $359.09, said sum being two per cent of its gross earnings for the first year after the expiration of the first five years. On April 14,1910, it paid to the city $385.11, the same being two per cent of its gross earnings for the second year after the expiration of the first five years. Each of these payments was accompanied by a written notice to the effect that the same was paid “under protest,” and under the claim that the ordinance in so far as it required the payment of said money was unconstitutional and void, and that the city has no power to exact such payment, and that the company does not waive any of its rights to object thereto.

*111 It was alleged that “plaintiff was unlawfully required to pay” these sums, that the city “did, . . . unlawfully and without right, demand of said plaintiff” such payments, that “by reason of said demand” plaintiff made the payments; that “the collection and taking of said money . . . was unauthorized, unlawful and without right, and without consideration of any kind whatever, and the payment thereof was made by plaintiff herein under menace, compulsion and coercion and under a threat that if the same were not paid, proceedings would be instituted for the forfeiture of said privilege granted by said ordinance No. 115.”

It was further alleged as a basis for the injunction sought that the defendant threatens to continue to collect said two per cent of said gross annual receipts, and threatens that if the same is not paid it will take immediate steps for the forfeiture of said privilege, “and threatens to interfere with and obstruct the use and operation of said plant by the said plaintiff,” all of which plaintiff verily believes it will do unless restrained, and that “great injury and damage will result therefrom to this plaintiff, not susceptible of computation or compensation in a suit at law, and plaintiff’s right to the use of said plant and its works will be permanently interfered with and destroyed, and great damage and waste will be wrongfully inflicted on said plaintiff, and endless litigation will result therefrom.”

Plaintiffs claim that the ordinance purporting to grant the assignor the privilege of using the streets of the city for its gas pipes, which was sought and accepted by plaintiff’s assignor, is void in so far as it attempts to impose upon the grantee the duty of paying to the city a certain percentage of its gross receipts, is based upon section 19 of article XI of the constitution as it existed prior to the amendment of 1911. That section has several times been held to constitute a grant of the right to use the streets of a city for pipes, conduits, etc., “so far as may be necessary for introducing into and supplying such city and its inhabitants either with gas light or other illuminating light, or with fresh water for domestic and all other purposes,” in any city where there are no public works owned and constructed by the municipality for such purposes, to any individual, or any company duly incorporated for such purpose under the laws of this state, *112 leaving nothing for the city to grant so far as the use of such streets for such purposes is concerned. The charge of two per cent of the annual gross receipts is styled an “annual tax” by plaintiff, but, of course, it is in no proper sense a “tax” at all, but is simply an amount that plaintiff’s assignor agreed should be paid annually as a consideration for such privilege as was granted by the city.

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Bluebook (online)
124 P. 727, 163 Cal. 108, 1912 Cal. LEXIS 381, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanford-gas-power-co-v-city-of-hanford-cal-1912.