15 Ohio App. 117 | Ohio Ct. App. | 1921
This cause came into this court on appeal from a decision of the common pleas court. It was first heard a few weeks ago in this court on 'an application or motion to fix a temporary rate, pending further and final litigation of the cause, which motion was disposed of soon after hearing. At that time there was another motion pending, a motion for judgment upon the pleadings. After the first motion was disposed of and a temporary rate
The history of the litigation is so familiar that it is hardly necessary to repeat much of what is already known. Suffice it to. say that The East Ohio Gas Company had had the natural gas franchises for about twenty years, and that it became assignee of the franchises that had been granted to The Cleveland Gas, Light & Coke Co. and The Peoples Gas, Light & Coke Co., and I believe there was a consolidation of these companies. The East Ohio Gas Company succeeded to all the rights held by the other companies.
The franchise under which The East Ohio Gas Company occupies the streets was passed in 1901 or •1902, and was accepted by the company. In that franchise the law requires a rate fixing period, which shall not exceed a period of ten years. In 1911 a rate-fixing ordinance was passed, which provided for 30-ct. gas for the first eight years, and 35-ct. gas for the two remaining years. This rate-fixing period expired on the 8th day of February, 1921. Prior to that time the city council passed a new rate-fixing ordinance, in which they fixed the price of natural gas to be furnished for the period of ten years next ensuing at 35 cents, the same as it had been the last two years of the former rate-fixing ordinance. The Gas Company notified the city of Cleveland that it would not accept the terms of this last rate-fixing ordinance, and notified the city that it elected to terminate its franchise with the city of Cleveland and desired to withdraw from this field in serving the public with natural gas; and that it proposed
The case was heard in the court below before Judge Duncan, of the common pleas bench of Hancock county, -sitting by designation in this county. After a hearing he granted the prayer of the defendant company, overruled the contention of the city, and authorized the Gas Company to discontinue service, and set a time, to-wit, November 1st, when that should be done, and ordered the Gas Company to have its pipes and paraphernalia pulled out of the ground by the 1st day of April, 1922, and fixed a temporary rate pending the destruction of the Gas Company’s property. That decision was appealed from and carried into this court, and, as I have already said, the case was heard here upon the motion to fix a temporary rate, which motion has already been disposed of, and is now heard upon the motion before the court.
It is claimed that the motion raises issues which would show whether the city had or had not a right to maintain this suit; that the motion brings two
The two questions involved are:
First, was the franchise that was granted to The East Ohio Gas Company in 1901 a continuous franchise, or was it a franchise, terminable at will, at the expiration of any of .the rate-fixing periods? A reading of the franchise will show that there is no time fixed when it shall expire, and it is therefore claimed, on the part of the city, that this franchise was a perpetual franchise, and gave-1 the city and the gas company the right to enter into an agreement to fix the rate at various intervals,- and that when that rate was fixed, and the Gas Company accepted the same, it was a contract at that rate during the period for which the rate was fixed. On the other hand, the Gas Company claims that it was a franchise terminable at the will of either party, at the expiration -of any of these periods, where the rate bad been fixed by agreement between the city and the Gas Company. This is the first question to which our attention has been directed.
It must be conceded that in view of the decisions of our courts in Ohio there is a grave question involved as to whether this franchise is a perpetual franchise, or not. The court below held, and it is argued here with much Torce, that the case of East Ohio Gas Co. v. City of Akron, 81 Ohio St., 33, is conclusive of the proposition that this franchise is not a perpetual franchise, but is simply indeterminate, existing only so long as the parties mutually
“Judgment for relator on authority of The East Ohio Gas Co. v. The City of Akron, 81 Ohio St., 33. Judgment for relator.”
Now it will be noticed that the supreme court of Ohio in the Northern Ohio Traction & Light Co. case based its ruling upon the decision in the City of Akron case, and held the same way, namely that the franchise granted by the county commissioners to The Northern Ohio Traction & Light Company was not a perpetual franchise, but one terminable at will; for that was the principle involved in the Akron case.
Our attention has been called to the dissenting opinion of Judge Jones in this case, because it has been argued that the statutes giving authority to county commissioners to grant railroad franchises are somewhat different from those in which municipalities are given authority to grant franchises to gas companies. It is true the dissenting opinion of
“Beyond serious doubt, under constitution and statutes of Ohio in 1892 county commissioners had power to grant franchises over public roads valid for twenty-five years, if not perpetually. Nothing said by the state courts prior to East Ohio Gas Co. v. Akron (1909), is cited which intimates that grants, without specified limit of time, were revocable at will. Evidently this was not the settled.view in 1903 when the Circuit Court distinctly adjudged that accepted ordinances by a city between 1861 and 1873, authorizing construction and operation of street
‘ ‘ The circumstances surrounding the grant of 1892 show no intention either to give or accept a mere revocable right. It would be against common experience to conclude that rational men wittingly invested large sums of money in building a railroad subject to destruction at any moment by mere resolution of county commissioners. Detroit v. Detroit Citizens’ Street Ry. Co., 184 U. S., 368, 384.”
Taking the last sentence to heart, let us see. The Bast Ohio Gas Company, by its franchise of 1901, and subsequent transactions between that company and the Peoples Gas, Light & Coke Company and The Cleveland Gas, Light & Coke Company, acquired all the rights to distribute both artificial and natural gas in the city of Cleveland, and it succeeded to all the rights and powers that its predecessors had. Can it be conceived that the city council of Cleveland ever thought it possible that the old Cleveland Gas, Light & Coke Co., or the old Peoples Gas, Light & Coke Co., could, at any point of time, when a rate-fixing period had expired, terminate its franchise, and leave the city of Cleveland in utter darkness! Is it conceivable that such could have been in the minds of the council of Cleveland, when these fran
“Such vested rights are binding on both parties, and cannot be reduced to a mere revocable license or
The same doctrine is announced in the case of City of Louisville v. Cumberland Telephone & Telegraph Co., 224 U. S., 649.
Referring again to the Jamestown case the court, at page 441, has this to say with respect to East Ohio Gas Co. v. City of Akron, supra:
“The Supreme Court (of the United States) disagreed with that decision, and held that where there are no controlling provisions in the state Constitution or statutes, and no prior decisions by its courts to the contrary, a franchise granted by the state authorities, without limit as to duration and without apparent intention to accept a mere revocable right, is such a contract as cannot be annulled at the will of the granting authority.”
In the syllabus of State, ex rel. Taylor, v. Columbus Ry. Co., 1 C. C., N. S., 145, opinion by Judge Summers, it is said:
“1. The right to construct and operate a street railway in streets of a city, prior to the act of May 34, 1878 (75 O. L., 359), was a franchise or privilege granted by the state upon condition that the city consent to its exercise.
“3. A franchise or privilege to construct and operate a street railway granted and consented to prior to said act without limitation of time is perpetual, but subject to be determined by the General Assembly under Section 2 of Article I, or under Sections 1 and 3 of Article XIII of the Constitution. ’ ’
It will be seen, therefore, that there was some reason why the supreme court of Ohio was very cautious in the use of words in the Akron case, because there is grave doubt, taken in the light of the present-day belief, concerning necessity for and advantages to be derived from having one utility ready at all times to serve the public, and where a franchise has been granted without limit as to time, there is some question as to whether it would not be regarded as a perpetual franchise. So in reading the decision in the Northern Ohio Traction & Light Company case, decided by the supreme court of the United States, reported in 245 U. S., 574, one cannot help wondering whether the supreme court of Ohio would not have been overruled in the Akron case if that case had been taken % to the supreme court of the United States. It seems to us that if the question there involved had been fairly before the United States supreme court, that court surely must have reversed the Ohio supreme court. Accordingly it will not do to say that there is not a question, or the possibility of a question, as to whether or not this franchise is revocable at will, or whether or not it is a perpetual franchise subject to rate-fixing at definite periods of time. But we do not deem it
His Honor, Judge Duncan, in the court below, held that the Miller law was unconstitutional, and it ha3 been argued before us with much force that the Miller law, as amended, which was passed by the legislature April 15, 1919, and is to be found in 108 Ohio Laws, pt. 1, 372 (Sections 504-2 and 504-3, General Code), is unconstitutional. Before the amendment of April 15,1919, a similar provision in our law applied to street railroads and railroads, that no street railroad or railroad could terminate its right to ¡serve the public and withdraw the service from the public without the consent of the utilities commission. Somewhere before 1917 The East' Ohio Gas Company sought to withdraw service from the city of Alliance. In the case of the City of Alliance v. East Ohio Gas Co., unreported, decided by the court of appeals, it was held that the company might terminate its relations with the city of Alliance and withdraw therefrom, the court of appeals following the Alerón case in that respect, and the supreme court refused motion for order to the court of appeals to certify its record. Now, that case, if it were important, could be readily distinguished from the Alerón case; but the point I want to make is that Mr. Miller, who represented the Alliance district in
“Corporations may be formed under general laws; but all such laws may, from time to time, be altered or repealed. Corporations may be classified and there may be conferred upon proper boards, commissions, or officers, such supervisory and regulatory powers over their organization, business and issue and sale of stocks and securities, and over the business and sale of the stocks and securities of foreign corporations and joint stock companies in this state, as may be prescribed by law. Laws may be passed regulating the sale and conveyance of other personal property, whether owned by a corporation, joint stock company or individual.”
It is admitted that if this latter provision had been contained in the Constitution of 1851, or when The East Ohio Gas Company got its charter, it would be subject to that amendment. But it is claimed that it is much broader than the provision in the Constitution of 1851. We think that the provision of 1851 was really adopted, as Justice Story suggested in the Dartmouth College case, for the purpose of having lawis passed to take care of corporations that had received their charter from the state, so that any law that the legislature might pass would not be inhibited by the Constitution of the United States, in that clause which prohibits any state from passing any law impairing the obligation of contracts; and all that the Constitution of 1912 did was to put in print what was plainly and necessarily implied from the provision of the Constitution of 1851. So, then,
An examination of the so-called Slaughter Mouse cases and the Chinese Laundry eases, and a great many other cases of similar import, will amaze one as to the extent to which the state legislature may go' in passing laws affecting the health, comfort and convenience of the public, even though’ such laws may interfere with existing contracts and impair the obligation of contracts, and even though they may be retroactive in their nature. Applying that doctrine to the case at bar, with respect to the Miller law, let us see. Here it is claimed that a utilities corporation that is serving natural gas, say to 300,-000 families in and about Cleveland, can, upon notice —and nobody has said how long that notice must be —cut off the service at will. The suffering, the inconvenience and destruction of property that would result if this were permitted to be done, would be so marked and so grave that it would be next to
Agáin, when The East Ohio Gas Company laid its mains, and made the connections to the thousands of homes in the city of Cleveland, the home owner was put to great expense, in some instances as high' as hundreds or maybe thousands of dollars, in establishing natural gas furnaces and connections in the various homes. All of this property would be destroyed, just because the Ga3 Company served notice upon the city that it was going to withdraw. Should there not be a supervisory power over the manner in which it may withdraw? Should it not submit that right to withdraw to the public utilities commission, which would have the power to say under what circumstances and how it should discontinue service and withdraw from the community it had served so long? The health, comfort and convenience of the people would be served in a marked degree, if this were done; and the injury would be manifest and manifold if this were not done.
It is argued, however, that this confers judicial power upon the utilities commission. I do not think that follows, at all. The right could be determined, and must be determined, by the courts, but after that right has been determined I do not see how there could be any objection to having the manner in which the service is discontinued overseen by the utilities commission. It would lessen suffering, and tend to
We think for these reasons, and many others that might be urged, that the Miller law is a valid exercise of legislative power. It is argued that the preamble of the law does not place it within the police power; that that was not the purpose of it; that it was simply an amendatory act to the Gilmore law, which related only to railroads and street railroads. We do not understand that to bring an act within the police power of the state the police power must be mentioned. If it legislate, and the purpose be to legislate, upon a subject that is within the police power, even though it is not mentioned, it would still be an exercise of the police power, and the law would be valid notwithstanding the preamble did not mention the police power, and notwithstanding the preamble and the act itself did not mention the purpose for which it was passed. We think, however, if the legislation and litigation with respect to this law be kept in mind, it will not be hard to discover that the Miller law was passed for meeting a situation exactly such as was brought about by the Newcomerstown case, 100 Ohio St., 494, the Alliance case, and the Akron case itself.
We are, therefore, of the opinion that the Miller law is a valid exercise of legislative authority, and is therefore valid. That being so, The East Ohio Gas Company would have no right to withdraw its service from this community without the consent of the public utilities commission, and the consent not having been obtained it necessarily follows that this motion must, therefore, be overruled; and this is true whether the franchise be á perpetual franchise
Motion overruled.