St. Mary's v. Hope Gas Co.

76 S.E. 841, 71 W. Va. 76, 1912 W. Va. LEXIS 115

• Court: West Virginia Supreme Court
• Decided: October 8, 1912
• Status: Published

Opinion

BRANNON, PRESIDENT:

In the year 1893 the town of St. Mary’s (now by statute a city) granted by two ordinances, one to the B'arnsdall, the other to Mallery, franchises to operate plants to furnish natural gas for consumption in that town. Bamsdall and Mallery accepted these grants and established plants or works under them, and furnished gas to the town. These grants are identical in character. By change of ownership The River Gas Company became owner of both plants and operated them until 1910, when ownership was changed to The Hope Natural Gas Company. These franchise grants fixed for different kinds of fires specific rates per fire called “flat rates.” Such rates prevailed until 1898, then the River Gas Company changed to charge by meter, mailing the rate twenty cents per 1,000 cubic feet. The town, brought in 1897 an injunction suit against the gas company to enjoin it from collecting by such meter rate, which resulted in a dcree that the town was not entitled to any relief and dismissing its bill. For about thirteen years the River Gas Company and the Hope Gas Company furnished gas by the 20 cent meter rate; but in July, 1911, it increased the meter rate from 20 to 22 cents per 1,000 cubic feet. Supposably to resist this change, on 31st August, 1911, the city council passed an ordinance providing that any person or corporation supplying gas to the city should charge 20 cents per 1,000 feet by meter, and prohibiting any greater charge. In September, 1912, the city brought suit to enjoin the Hope Gas Company from collecting gas charges at a greater rate than 20 cents per 1,000 feet. The casé was heard on bill, demurrer to it, answer and affidavits, and the court made a decree overruling a motion made by the gas company to dissolve the injunction, from which decree or order the gas company appeals.

It was assigned in the demurrer that the city cannot maintain this bill for itself and its residents, and argument is made by the city on this point. ¥e cannot say that each resident must sue for himself, making multiplicity of suits. Clearly the city as a corporate entity may sue for itself alone, or in its name in behalf of its residents, to vindicate the public right and prevent the imposition of illegal rates. St. Mary’s v. Woods, 67 W. Va. 110; Gas Co. v. Muncie, 10 Munic. Cases 137, 160 Ind. 97; Trustees v. Comar, 27 Am. Dec. 80; Pom. Eq., sec. 243.

For the Hope Gas Company it is contended that the provision in the franchise ordinances fixing fiat rates per fire is void, on the ground that without legislative grant of power to do so a municipality cannot prescribe rates for corporations performing public service. Grant this. But these franchises are not municipal statutes fixing rates generally, applicable to all, like a general law passed by the legislature; but they are special grants of franchise made by the town to Barnsdali and Mallery, at their instance; grants offered them and accepted by them. They are contracts.binding both the town and these grantees. We see no reason why a town may not make a contract to accomplish a function with which it is charged or empowered, binding it and the other party. He accepting is plainly bound, and cannot say the town’s act is void. Opinion of Judge Poffenbarger in Bluefield Water Co. v. Bluefield, p. 8 of 69 W. Va., citing Railroad Co. v. Triadelphia, 58 W. Va. 487, and Clarksburg Electric Co. v. Clarksburg, 47 W. Va. 739. Having accepted the grant the grantee accepted all its terms, and cannot deny the town’s power to fix rates by contract.

Code ch. 147 gives a town the power “to erect or authorize or prohibit the erection of gas works, electric light or water works.” It would seem to require no argument to sustain the proposition that in exercising its function under this statute the council may impose conditions and rates in the franchise. Zanesville v. Gaslight Co., 47 Ohio St. 1; Muncie v. Gas Co., 160 Ind. 97; Beerth v. Detroit, 152 Mich. 654. So we hold that the provision in the franchise limiting rates of charge per fire is valid.

Do the specific or flat rates of so much per fire yet prevail? They do not. The gas company does not so claim, does not propose to go by them, is not doing so. Nor does the city seek to enforce these rates. The company has been charging by meter rates at twenty cents per 1,000 cubic feet of gas consumed. It proposes to increase to twenty-two cents per 1,000 feet, and the city opposes such increase and seeks to compel the gas company to adhere to the meter system at twenty cents. So, I do not see that the clause of the franchise fixing specific or flat rates per fire is material.

After the grantees of said franchise and their alienees or assignees had for years been operating by the fiat rates fixed the franchise ordinances, The River Company proposed to abandon that flat rate, and charge by meter at twenty cents per 1,000 feet consumed, and in December, 1897, the town brought a suit against The River Gas Company to'enjoin it from collecting by meter rate and compel it to collect by the flat rates per fire fixed by the franchise. This suit ended in a decree declaring that the town was not entitled to the relief which it sought, and dismissing its bill. Thus it was decreed and established that the gas company had not without right abandoned the flat rate fixed by the ordinances; that it was not binding, and that the gas company could lawfully charge by the meter system. Por some thirteen years after this decree the River Gas Company, the Mountain State Gas Co., its assignee, and its assignee, the Hope Natural Gas Company furnished gas by the meter at twenty cents, when the Hope Gas Company increased its meter rate to twenty-two cents per 1,000 feet; and to prevent the increase the council of St. Mary’s, August 31, 1911, passed an ordinance fixing a rate of twenty cents per 1,000 feet chargeable by any person or corporation furnishing gas, prohibiting any greater charge under penalty of fine or imprisonment. After the passage of this ordinance the city of St. Mary’s filed this bill to enforce, against the Hope Natural Gas Company the twenty cent rate, and enjoin it from charging the meter charge of twenty-two cents, and it was so decréed by overruling a motion to dissolve the injunction.

Here we have the question, Is the ordinance valid? It is useless to give authority for the proposition that a municipal corporation can do no act not granted power expressly or by necessary implication. Judy v. Lashley, 50 W. Va. 628. It is a branch of government exercising such power as the Legislature lias conferred upon it; it can make laws by municipal statute to effectuate its functions, only if the legislature has given it that power. Fixing rates of charge by public service corporations is essentially legislative action and as held in Bluefield Water Co. v. City of Bluefield, 69 W. Va. 1: “In the absence of a delegation thereof by the législaturc, express or necessarily implied, a municipal corporation has no power to regulate or control.rates for public service, such as furnishing water, gas, electricity, or the terms and conditions of contracts thereof, otherwise than by contract with the corporation or person rendering such service.” Counsel in this case argues that that point is obiter. . The question was whether an ordinance fixing rates was valid in law, and this involved whether a town could lawfully pass it; that question was squarely involved. Why is it obiter ? The point is moreover said not to be sound law, and we are asked to disregard it at the behest of a necessity, in these latter days especially, of giving municipalities power to regulate such rates. The legislature alone can do this. This Court cannot disregard a former holding conformable to legal principle and upheld by-plentiful authority. City of St. Louis v. Bell Tel Co., 9 Am. St. R. 370; Griffin v. Goldsbere, 41 L. R. A., p. 242. A statute giving cities power to provide for lighting streets, “subject to such regulations as airy such city or village may b3r orddnaance impose,” does not delegate to cities or villages power to regulate prices which a gas company may charge-Mills v. Chicago, 127 Fed. 731. The price at which natural gas shall be furnished cannot be regulated by ordinance under a general power to provide reasonable regulations for the, safe supply,, distribution and consumption of gas. Louisville v. State, 21 L. R. A., p. 734. So holds Noble v. Nobleville Gas Co., 157 Ind. 162, 60 N. E. 1032, and Richmond v. Richmond, 168 Ind. 82. See In re Fryer, 29 L. R. A. 398; Knoxville v. Water Co., 212 U. S., p. 8; Tacoma Co. v. Tacoma, 44 Pacific 55; Wisconson Co. v. Sheboygan, N. W. 86; South Mo Alster Tel. Co. v. State, 106 Pac. 962. The power to provide for general welfare does not give power to fix rates. Shrieder v. Scranton Co., 29 Pa. Sup. Ct. 255. There is no statute giving the power. The statute authorizing a town to erect or authorizes gas works does not by mere implication, give this great law making power. See Knoxville v. Water Co., 212 U. S., p. 8.. “Grant of such power is never to be implied.” Interstate Com. v. Railway Co., 167 U. S., pages 494, 495. So, we conclude that the ordinance of the city of 31st of August, 1911, does not per se forbid the increase of the meter rate.

The original grants of franchise do not give the city power to regulate rates, since they only provide a maximum limitation on the grantees. They cannot warrant the ordinance of 31st August, 1911.

But while that ordinance of 1911 cannot, of its own mere-force, fix rates, it does not stand alone; that consideration does-not decide the ease. We must look at other things. I was inclined to think that the decree in the first suit was res judicata fixing right in favor of the company to change from fixed to meter rates, and did not fix the twenty cent rate, and that the company could charge more, if so doing would not increase in burden the charge of the flat rate. But a majority of the Court hold that as the company, of its will, changed from fiat rate to meter, and fixed a rate of twenty cents per 1,000 feet, the right to change and that rate were involved, and the decree is to be held as fixing that rate as a substitute for the fiat rate, especially as in its answer tire company said it was practically equivalent in extent of charge to the flat rate fixed by the original ordinance. That it was claimed! by the company to be the equivalent substitute for the former charge. Furthermore, a majority of the Court hold that as the gas company itself substituted the twenty cent meter rate for the flat rate, and charged that rate for thirteen years, and it was silently acquiesced in by the city for that time, and finally accepted and' insisted upon by the council ordinance of 1911, all this operated to modify the original franchise, and fix the twenty cent rate as a new contract. A strong view, I must confess. Our conclusion is, the gas company cannot increase the meter rate over twenty cents per 1,000 cubic, feet.

We affirm the decree overruling the motion to dissolve the injunction and we remand the cause to the circuit court.

Affirmed.