Newark Natural Gas & Fuel Co. v. City of Newark
242 U.S. 405
SCOTUS
1917
Check Treatment
Mr. Justice Pitney

delivered the opinion of the court.

Thе question upon which pur jurisdiction is here invoked is whether an ordinance of the City of Newark, 'Ohio,- passed Mаrch 6,'1911, fixing the-maximum price that plaintiff in-error might charge to consumers of natural gas in that city for a periоd of five years at 20 cents per thousand cubic feet, with 10% discount for prompt payment, a rate desсribed as “18 cents net,” is confiscatory, and therefore in violation of the “due process” ¡ clause оf the Fourteenth Amendment. Plaintiff in error operates under a franchise granted by a ‍‌‌‌‌‌​​‌‌‌​​​​‌‌​​​‌​‌​‌‌​​​​​‌​‌‌‌‌​​​​​‌‌‌‌​‌​‍city ordinance passed February 21, 1898; for a term of twenty-five years, . which permitted a rate of 25 cents per thousand for a period of ten years from its passage, but within that pefiod the company voluntarily introduced a net rate оf 18 cents and maintained it for some years prior to The adoption of the ordinance of 1911. The cоmpany refused to accept the provisions of the latter ordinance and notified its customers thаt it would discontinue service unless the rate of 25 cents was paid. Thereupon the city filed a petition in> the Court of Common Pleas of'Licking County praying a mandatory injunction. The company answered that the ordinance providéd no just compensation ‍‌‌‌‌‌​​‌‌‌​​​​‌‌​​​‌​‌​‌‌​​​​​‌​‌‌‌‌​​​​​‌‌‌‌​‌​‍for the use of its property and therefore deprived it of its constitutional rights. Voluminous evidence was taken upon *407 this issue, and the court found the defense to be unfounded in fact, and made a decree in favor of the city, but without prejudice to the right of the company to аpply for a modification “if at any time it should appear that said rate of 18fi net does not render аn adequate return ‍‌‌‌‌‌​​‌‌‌​​​​‌‌​​​‌​‌​‌‌​​​​​‌​‌‌‌‌​​​​​‌‌‌‌​‌​‍to said defendant Company.” An appeal was taken to the Court of Appeals and there heard upon the evidence taken in the Court of Common Pleas and additional evidence, and the same decree was entered as in the Court of Common Pleas. The Supreme Court of Ohio affirmed the decree. 92 Ohio St. 393.

The opinions of the state courts show that they, gave careful consideration tо the questions of the value of the property of plaintiff in error at the time of the inquiry, the total amount of net profits that could be earned under ‍‌‌‌‌‌​​‌‌‌​​​​‌‌​​​‌​‌​‌‌​​​​​‌​‌‌‌‌​​​​​‌‌‌‌​‌​‍the rate fixed, and whether this would be sufficient to provide a fair rеturn on the value of the property. The concurring judgments were based upon principles thoroughly established by repeated decisions of this court, Covington &c. Turnpike Co. v. Sandford, 164 U. S. 578, 597, 598; San Diego Land Company v. National City, 174 U. S. 739, 754; Knoxville v. Knoxville Water Co., 212 U. S. 1; Willcox v. Consolidated Gas Co., 212 U. S. 19, 48; Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 163; and the finding that there was no confiscation is amply suppоrted by the evidence. The reservation ‍‌‌‌‌‌​​‌‌‌​​​​‌‌​​​‌​‌​‌‌​​​​​‌​‌‌‌‌​​​​​‌‌‌‌​‌​‍of the right to apply thereafter for a modification was in аccord with the action of this court in the Knoxville and Willcox Cases, 212 U. S. p. 19, p. 55.

Á distinction is sought to be based upon the fact that two companies are necessarily affected by the rate, a producing and a distributing company; it being contended that the state courts have ignored the cost of production. It appears that after'thegranting of the franchise of 1898 plaintiff in error, which theretofore had been both a producer and a distributor of gas, sold all of its property to *408 the stockholders of the Logan Natural Gas & Fuel Company, and thereafter confined its activities to distribution, the Logan Company being in control of production and transportation; and that in 1904 the Logan Company entered intо a contract with plaintiff in error to furnish, the gas needed to supply the city for a term of years, on the basis of a percentage of the aggregate readings of the consumers’ meters, in the proportiоn of 70% of the gross receipts for the Logan Company and '30% for plaintiff in error. At the time the suit was commenсed the contract had two or three years to run, while the limiting ordinance was to. continue for five yeаrs; There is no contention that plaintiff in error could not operate profitably under the ordinancе of 1911 so long as the contract remained in force; but it is said that because of changed conditions including the partial exhaustion of the gas producing field the contract was no longer profitable to the Logan Company under the rate permitted by the ordinance of 1911, the cost of production and transportation of natural gas alone being at that time, as is asserted, as much as the entile amount of the net rate of 18 cents allowed by the ordinance. But plaintiff in error cannot be heard here to assert the constitutional rights of the Logan Company (Plymouth Coal Co. v. Pennsylvania, 232 U. S. 531, 544), and the pertinent question is what plaintiff in error would probably havе to pay for gas during the life of the ordinance. The contract measured this so long as it continued in effеct. And, although it expired some time before the closing of the evidence in. the Court of Appeals, аs the Supreme Court pointed out, no evidence was offered to show the rate paid by the Newark Cоmpany to the Logan Company after its expiration. The ordinance specified a period of five years, but by the decree this was made subject to the provision giving a right to plaintiff in error to apply fоr relief if it should appear that the 18 cent rate did not render an adequate return.

*409 Plaintiff in error has failed to show that the ordinance has the effect of depriving it of property without due process of law within the meaning of the Fourteenth Amendment, and the judgment under review is

Affirmed.