*1 Peoples’ Herme, v. C. Company, appellant, D. and Electric

appellee. No. 47729. 551) 2d (Reported in 46 N.W. March 1951. Rehearing Denied June *2 Beck, City, appellant. Smith of Mason for & Mason, City, appellee. M. L. of Mason for sought in C. J. Plaintiff the trial court to Wennerstrum, enjoin continuing the defendant from connections with the com- pany’s gas in heating purposes. line Mason for The trial injunction plaintiff appealed. court denied the has appellant public utility The a company serves which the city City, Mason Agas. granted franchise was company May by the on 9,1938, council, the approved at special 6, a on by election held 1938, accepted June the company July 12, 1938. company, on Under this franchise the at trial, general the time of the furnished use, natural for space heating, for commercial purposes. appel- industrial The lant has water manufacturing plant a City, in Mason but it operated during year 1948, was not the up to the time the trial appear 1949. It December would from the record that natural appellant was obtained for local distribution commencing August 1, appellee operates

The garage City, Mason Iowa, and on application March 1948 made to the for service building Eighteenth at 251 his Street Southeast. At the time application appellee of this is claimed to have made the state- ment that service was wanted for a water heater. Some- prior time appellee, December without knowl- edge or appellant, consent made a connection to the service building pipeline in his and attached it to facilities for space heating. When this fact was discovered by representatives of the appellant appellee company, the was informed that since Decem- 30,1946, heating purposes ber had restricted, been that permitted new installations had not been except under lim- conditions, appellant ited that the taking any was not on com- heating mercial or heating installations for of new homes and appel- being use of heating made space

that which made and the connections be discontinued lee would have to had application ever been purpose that disconnected. No appellee garage. The heating of appellant space to the heating ahd purposes, installation for to disconnect the refused com- appeal, was then litigation,'which has resulted appel- Upon the trial of the cause appellant. menced necessity for pertaining to the evidence lant offered voluminous patrons and its the use the restriction of heating inability gas for furnish natural justification of its testimony. appellee. appellee offered no purposes utility, appellant, public as a that the The record discloses Kensett, Manly, City, Lake, gas Mason supplies natural Clear and also Northwood, of those communities and the residents communities; obtains patrons living near those *3 Company, which gas Northern Natural Gas its natural from the Texas gas from public utility engaged transporting in natural a Natural patrons; that Northern Gas and Kansas to its various the subject the engaged and is Company is in interstate commerce gas Commission; .transports company its Federal Power that pipelines Minnesota, in south- through points southern a of north- portion Nebraska and Dakota, eastern South eastern appellant and Northern Natural Gas Kansas; that the the western 10, 1942, which, July on Company entered into a contract that Northern Natural Gas subsequent amendments, provided the supply appellant requirements of Company would the the entire agree- required by gas firm it. It is also shown that several the Company appel- between the Northern Natural the ments Gas subject pertaining to general lant and conditions are terms gas filed with the Federal Power Commission. schedules supply gas in deficiency

In December 1946 a the developed Natural as a result the that the Northern Gas fact pipeline capacity the de- Company did not have to take care company ad- gas. gas At that time the natural mand for natural gas it the installa- vised all utilities which served to discontinue space heating equipment, meetings held tion of various were Company, representatives Northern Natural Gas at which the Power Commission and the various utilities served the Federal gas company natural in attendance. As a result of the tbe were continuing deficiency pipeline capacity in were various orders pertaining made the Power Commission to the alloca- Federal gas tion of natural to the several utilities served the Northern Company. Natural in the Gas It is further shown that the event appellant company gas took more than its contract the orders previously subject penalty provided, it would to a of ten be per dollars thousand cubic for all of con- feet of the excess sumed, appellant company if that used more natural than, the contract and a provided, the orders this would result in supply limitation of the furnished to the communities north of including City, city Minneapolis; further, Mason that if appellant company connected its lines more custom- supplied by than could ers the Northern Natural Gas Com- pany, necessary would be for the company .to limit appellant. furnished This restriction the use through continued 1947 and May remained effect until During period 1948. when there was a limitation in the amount of natural appellant could be furnished the com- pany, representatives mayor conferred with the Mason building commissioner relative to restrictions permits issuance of gas space for the installation of heating equip- ment. When the increased facilities were available for the fur- nishing gas by the Northern Natural Company May appellant 1948 to the company, it endeavored work out plan for allocation of gas, increased available and rules adopted by for the allocation of additional during year These rules and were different adopted by the rules in 1948. It is shown that *4 heating there were no new installations made in 1947 and no that additional space was available for sale for heating until dur- ing the autumn of 1948. court, findings

The trial fact, of found that appel- the company lant April on or about plan formulated a regulation pertaining to the allocation of supplies space heating purposes; plan that such regulation for the allocation gas supply of the was not submitted to officially approved city the council of City, Iowa; pursuant Mason that regu- to the accepted applica- company, it appellant the adopted

lations own according to their classified them heating and space tions appel- gas allocated to the such additional regulations; and that all available the extent that use of to company was lant m.ade any fur- to allocate company refused appellant was used and the space heating. any connections for permit further gas or to ther of law that the Northern in its-conclusions The trial court held engaged com- in interstate Company was at all times Gas Natural ; merce it was of Natural Gas Act provisions the that under the Commission; the that subject of the Federal to the control com- appellant city Mason to the by the of granted franchise city a contract between the pany distribution of was for the ap- required furnish company and it to appellant and the plan regulations or discrimination; the plicants without .that upon the use company was á limitation appellant the pro- of the heating was violation space new customers not en- franchise; appellant the that visions of the provi- subject to the and was not gaged in interstate commerce Federal Act as administered the Natural Gas sions franchise ordi- provisions One of Power Commission. * “* * said company provides that appellant given to the nance necessary regulations make all rules grantee authorized to provided for not furnishing the service herein respect to Iowa, provisions of this ordi- with the laws of inconsistent authority. regulations All rules nance, or other constituted authority approved by hereof shall first made under the being placed in force.” City; of Mason before council grounds reversal, (1) maintains: appellant, as Power Commission was made under the order of Federal Natural Act and that the allocation authority of the inhabitants of cities and towns gas by appellant comply with the orders and had which served right appellant and that the Federal Power Commission by it derived from the Federal received to allocate regulate states; (2) commerce between the Power Commission require appellant ordinance does not that the franchise requirements the full the communities served under furnish shown; given authority that the the conditions

899 regulations necessary rules and all to make under the franchise inhabitants, City and its gas to Mason respect supplying to must first provides such rules ordinance the fact that the and power or not limit restrict by city council does approved they fair void if are it make them nor does to make such rules under which and reasonable; rules (4) that the and not such by appellant were rules allocations of requiring contemplated by the-ordinance regulations were as council; approved to be first them appel- law'to make and enforce power under the common lant had the of its necessary operation in the regulations as áre such rules they reasonable, fair without discrim- business, provided are injunctive relief ination; was entitled (6) that by it communities served inhabitants of the protect it and the injury. irreparable re- 717-717w, chapter 15B, U.S.C.A., 15, I. Title section transportation gas. In regulation and section lates to “* ** transporting that the business 717(a) is stated: it public af- selling gas for ultimate distribution the- interest, mat- public regulation and that Federal fected with transportation relating to the the sale ters foreign necessary commerce is in the in interstate thereof interest.” public questions presented is whether interstate

One transportation of natural and the orders of Federal Power carry the local over so as affect distribution of that Commission commenting upon particular utility. a local product it in Illinois Natural Gas Co. v. question was Central stated Illi (1941), Serv. Co. and Illinois Commerce Comm. 314 Pub. nois 371, 86 L. Ed. 504, 62 Ct. 375: 498, U. S. S. held that the retail sale at the ‘burner

“This court has into the pipes state, who or one tips one who acquiring gas from who a local distributor another has simi state, conimerce, brought into is a sale in intrastate larly upon interstate commerce was said end introduc since pipes gas into the service tion of the distributor. Public Landon, v. 249 U. L. Commission S. Ed. Utilities S. 465, Co. v. Tax 268; Commission, East Ohio U. Ct. S. 499.” Ct. Ed. 51 S. 75 L. *6 that the question no but

In ease there the instant the interstate distributor natural of receives many City. are authorities There city Mason outside deal with the inter appellant which have cited been which reading gas, natural but transportation of state character a, they pertain do not that us authorities of these convinces case. do not be instant We presented as is situation such supra/and the orders of the Fed Act, Natural Gas that the lieve any jurisdiction over the local dis have Power Commission eral utility. cited local The initial case gas by a natural' tribution of Pipeline holding. In Panhandle Eastern definitely supports this 507, U. 68 S. Ct. Indiana, 332 S. Public Serv. Comm. v.Co. Nátural held that neither the Federal 128, it was 92 L. Ed. 190, constitution of its own clause of the nor the commerce Act Gas natural sold of rates for regulation prevents state force In case an interstate to local customers. this pipeline interstate Indiana,- direct to industrial consumers carrier sold pipeline Public' Service Commission of held that the was therein and it charged regulate the rates to local industrial con could state by an interstate carrier. See Public sumers served Pipeline Co., 662, Eastern 224 Ind. v. Serv. Comm. Panhandle been called to the Our attention has case N.E.2d 117. 71 (1950), Comm. v. East Ohio Gas Co. U. S. Federal 266, 94 L. 271, 268, Ed. 277. We have read 472, Ct. 70 S. 464, many of therein as the authorities cited. "In it as well case transportation interstate into the state there turn, high pressure connected which, lines of the of Ohio- Company, Ohio Company. turn, Gas trans Gas Ohio systems to local distribution the Ohio ported the gas through that the flow of natural It was held company.- within Ohio and before it reached high-pressure lines the local subject was interstate system commerce and distribution Natural Act. This is not the provisions of situation we case. in the instant have Supreme case in the cited

However, last Court of the stated: States United * * * of cases this court had declared

“In a series that states gas only interstate after it pressure was reduced in regulate could Comm. Public Utilities system. distribution a local and entered 577; Ed. State 268, 63 L. 243, 39 Ct. Landon, 236, S. 249 U. S. v. 298, 310, 44 S. Co., 265 U. S. Natural Gas v. Kansas Missouri v. Attleboro Comm. 1027; Public Utilities 68 L. Ed.

Ct. 296, L. 294, 89, 47 83, S. Ct. Co., 273 U. S. & Electric Steam Comm., 465, 283 U. S. v. Tax Co. see Ohio Gas 549; Ed. East L. Ed. 1171.” 500-501, 75 499, 470-472, 51 S. Ct. Pipeline Eastern v. Panhandle Power Comm. Federal L. Ed. 1251, 1255, 93 503, 69 Ct. S.

Co., 337 U. S. of Panhandle Eastern prior case quoted from court supreme Indiana, 332 U. S. Comm. Pipeline v. Serv. Co. Public *7 92 L. Ed. as follows: 190, 195, Ct. 516, 68 S. coverage and does so in Act’s determines the

“This section things and Three existing at the time. light of the situation regulatory power, dele- own only Congress drew within its three Federal Power Commission. agent, the gated by the Act to its in interstate natural (1) transportation The of were: These resale; interstate commerce commerce; (2) its sale in transportation or engaged in gas companies such (3) natural sale.” Pipelin v. Panhandle Eastern

In Federal Power Comm. supra 504), it further stated: Co., (page was

e coverage moreover, expressly exempts Act, from its

“The (2) transportation gas; (1) or sale of natural the local any other gas; (3) the used for local dis- of natural facilities distribution production gathering gas.” ; and tribution previously It that under the authorities set is our conclusion question can be no but that the local distribution of forth there provisions did not within the of Mason come by any not affected or controlled Natural Gas Act Federal Power regulations made Commission. rules or hold that the trial court was correct in its con- Consequently, we appellant company engaged was not in interstate that the clusion subject provisions of the Natural not commerce by the Federal Power Commission. Act as administered 902 question provision

II. of whether the a franchise such claimed ordinance shall be followed under conditions as are 'by has received consideration of other courts. Co., the case of State ex rel. Wood v. Gas Trust Consumers 674, 678, 245, 249, Ind. N.E. L.R.A. it was shown deficiency utility. that there was a obtainable It was therein held*: principal argument appellee’s is,

“The not counsel having supply present having sufficient its customers, and every increasing exhausted available supply, means for it is its impossible to'perform public duty, therefore its man- compel attempt damus will not lie to an im- perform duty possible performance. We concede the fullest terms that require lie attempt mandamus will not to do a thing shown impossible. question But this is not the we have before us. asking, The relatrix is not nor the court commanding, that the company attempt gas. increase its The'relatrix only seeking permitted to be to share in quantity command, at has may be, whatever that on the same permitted terms that others are to use it. There request nothing relatrix unreasonable nothing impossible performance.” last cited holding

This case and is followed in Indiana Nat *8 ural Gas & Oil v.Co. State ex rel. Armstrong, 162 Ind. N.E. 133. Newman v. East Ohio Gas Co. (1948), 149 Ohio St. 78 N.E.2d 900, the Ohio court states: presents

“This proper case a occasion for the intervention of equity protect a court of the city inhabitants of the from arbi- trary part action on company. the of the The franchise contract completed 1946; December 16, February on 6, 1947, by com- pany rule deliveries were forbidden new industries, to new homes, converting to owners from other fuels to heating and gas'heating installing consumers new equipment which * * * gas. used additional

“It permitted cannot be to thus provisions alter such by filing rule, mere of a although formally approved by the commis- sion.” appellant to the case of Akron v. has referred (1948), 347, 78

Public Utilities Comm. 149 Ohio St. N.E.2d question where the the court was whether one considered authority public adopt emer- state utilities commission had suspend gency regulations rules and which in for a limited effect period operation a terms of contract entered into certain by municipality public utility a a to be furnished to city. residents It was there held that the com- utilities mission could make such an order. do not that this We believe parties controlling city case that in the cited a case were public utility and' a parties while the instant are a case utility. appeal customer and a In the cited case was public utilities commission. bearing upon question division,

As considered opinions reference is made to Public Wisconsin Service Commission, Murphy v. wit: Northern States Power Co.

(1942), 46 Reports 148; Public In re Northern Utilities States (1944), Reports Co. 53 Public Utilities

III. holdings The statements and heretofore out set seem determinative made contentions rela right promulgation tive to establishment of reason fair However, able and rules. in addition to holdings, these we provision are satisfied that provides of the franchise which regulations “All rules authority under the hereof approved by city shall be first council of Mason City, placed being before in force” is the final appellant’s answer to compliance There claims. was no with the franchise ordinance.

It council to first determine whether the rules fair and reasonable. It our conclusion that the trial court should be affirmed. —Affirmed. and Thompson, JJ., concur..

Bliss, Oliver, Hays, Mulronby, Smith, JJ., dissent. Garfield J., sitting. not

Mantz, (dissenting) J. respectfully dissent. Garfield, —I *9 either not mentioned or not made Some facts clear in the applied to When defendant majority opinion should be stated. without appears it March plaintiff gas for service on wanting gas for the water dispute statement about “he some * * * building. he wanted gas run into the get heater if he could for for a shower heater to be used purchase from a water to us all garage at is not denied that defendant’s employees.” It his and coal an oil burner equipped with times material here was space heating. for furnace 1948', defendant, plaintiff discovered

In December when garage (pur- piped his consent, using gas had been into without heater, but for a application) only not water to the above suant not then space heating, informed defendant was plaintiff for “* * * agreed Mr. would purpose. it Herme available for such was also January, testimony, undis- by off 15th of 1949.” This agreed discontinue use taken to mean defendant puted, is space heating. gas for (cid:127) plaintiff April applied to when defendant Southeast, building him at 18th Street for another used put he garage, “He made the statement would near his application not and then if his did receive 18th Street Southeast anyway; him he it didn’t make damn to approval number [garage].” his pipe building it from other There just over would no denial of this. states, Company the Northern Natural majority the As plaintiff gas required to furnish all which had contracted twenty years subject to the of the Federal Power orders contract canceled the Federal Commission. “This new and a one substituted.” The Federal commis- Commission recognized emergency that an sion existed because extraordinary heating. space demands for Company plaintiff

After Northern allocated plaintiff every customers, other seems to have made reasonable procure effort to more Northern even to the extent bringing (with others) against suit it in Plaintiff federal court. purchased it. all allocated to This allocation pursuant plaintiff Northern order of the Federal Power plaintiff place left with no other than Commission recourse *10 gas by plaintiff’s of upon some restrictions rise customers prospective customers. supply plain- March Northern increased its to plaintiff

tiff insufficient for meet all although increase was upon promptly pub- demands it. Plaintiff then formulated and April newspapers under lished rules which added this supply would be available to residents of the communities plaintiff served it. After obtained another additional alloca- from Northern plaintiff’s tion still insufficient for needs, adopted published April new rules were of that year ap- and the 1948 rules were discarded. Defendant no made space heating plication garage for for under 1948 or 1949 rules.

It neither the 1948 nor is true the 1949 rules were submitted approval city for council the franchise ordinance states authority that all rules “made under the hereof ap- shall be first * * * city proved being council placed before in force.” I disagree majority holding with that under the circumstances approve failure of the council to plain- here the rules is fatal to right to relief. tiff’s ordinance, immediately franchise preceding provi- just quoted, clearly

sion grants plaintiff authority “to make necessary all respect furnishing rules provided for service herein not inconsistent with the laws of provisions ordinance, authority.” or other constituted necessary That rules were for allocation after plaintiff’s source of had been reduced seems obvious. Be- beyond cause of circumstances plaintiff its control was unable to procure gas to supply sufficient the demands of all its customers prospective adopted customers. It not contended the rules plaintiff provisions inconsistent with Iowa laws, the “or authority.” ordinance other constituted pleading proof

There neither nor that such un- rules were fair, unduly discriminatory. unreasonable or There is -indica- no council would approved tion not have they the rules if been it. Nor appear had submitted to does it any there was basis the council refuse approve the rules. merely provided

Plaintiff’s 1948 rules applications must they heating purposes would plaintiff be of new homes (1) or builders Owners granted in this order: be ready for heat November to be planned under construction or recently completed of homes (2) Owners or builders building plans. Owners provided gas heat in their who replace existing equipment which is wishing to install heat to repaired at reasonable cost. incapable operation and cannot *11 heating. space desiring* Others rules knowledge similar were I it common think is communities dur- Iowa gas in numerous adopted furnishers of question. ing period in here designated in plain class It was the fourth is defendant there were from the record fairly inferred above rules. It is to be of some population a (with several hundred in Mason alone plaintiff, served 27,000), not the other to mention communities than To greater heating need of defendant. who were procure permit in his hands and defendant take matters own plain disregard of reasonable rules consent heat without though they not submitted to adopted plaintiff, even inequitable approval, to reward conduct council for seems advantage many give applicants an unfair over defendant stronger claim heat with than defendant. plaintiff obligated not dur-

Under the circumstances here heating everyone ing question to furnish the time regardless who of need. The franchise itself desired ordinance times, provides plaintiff “shall at all unavoidable circumstances * * * * * * only required by all excepted, furnish .the inhabi- ** in plaintiff’s supply gas, The reduction tants pursuant to directions Federal Commission which admittedly subject, the Northern is unavoidable circumstance. Bros.,

Birmingham 410, 416, 417, Rice 238 Iowa N.W. v. 39, 42, 43, quoting A.L.R.2d after from different au- 2d utilities, obligations public as makes this thorities state- any (called common law nor ment, statute to our “Neither any utility required attention) public serve all. conduct unjtist prohibited always discrimination, prac- or rates unfair rules.” tices, unreasonable or

By foregoing plaintiff obligation tbe test was under no dur- ing the time here involved to defendant with to heat garage. plaintiff prayed his I think relief was entitled to the therefore I would reverse. joins J., in this dissent.

Smith, al., appellant, v. Carroll H. et Weaver, Jessie Perkins appellees.

No. 47818.

(Reported 240) in 47 N.W.2d

April 4, 1951.

Rehearing Denied June