Punxsutawney Borough v. T. W. Phillips Gas & Oil Co.

238 Pa. 23 | Pa. | 1913

Opinion by

Mr. Justice Moschzisker,

This was a proceeding in equity to restrain the defendant company from increasing the price of natural gas to consumers in the plaintiff borough. The bill averred, inter alia, as follows: That the plaintiffs are residents of the Borough of Punxsutawney and patrons of the defendant company; that the defendant is a corporation organized under the provisions of the Act of May 29, 1885, P. L. 29, for the purpose of supplying natural gas to the public in the Borough of Punxsutawney and places adjacent thereto; that the defendant corporation is the only company authorized to furnish natural gas in the said borough; that the defendant acquired its franchises to occupy the streets of the borough and to furnish natural gas to the inhabitants thereof through and by virtue of its merger or consolidation with the Citizens’ Fuel Co., the assignee of one A. L. Cole; that in the consolidation or merger of the Citizens’ Fuel Company into the defendant company, the latter acquired all the rights and assumed all the obligations of the former, one of which was the obligation not to charge more than twenty cents per thousand cubic feet of natural gas; that the franchises acquired through the Citizens’ Fuel Company are the only franchises owned or possessed by the defendant company authorizing it to occupy the streets of the territory formerly constituting the Boroughs of Punxsutawney and Clayville and now included in the Borough of Punxsutawney; that notwithstanding the provision in its franchise restricting the price of natural gas to twenty cents per thousand cubic feet, the defendant company has raised the price to twenty-five cents, and threatens to cut off the supply of anyone refusing to pay the increased rate; that the twenty-five cent rate is “unreasonable, unjust, exorbitant, excessive, vexatious and oppressive,” and that under the twenty cent rate the defendant would reap an ample profit on its investment.

The defendant company filed an answer admitting many of the allegations of the bill, but averring that its predecessors in title were in possession of the streets, etc., of the Boroughs of Punxsutawney and Clayville (now the Borough of Punxsutawney) for the purpose of laying and maintaining pipes and conduits for the transportation of natural gas to the citizens of these boroughs for heat, light and manufacturing purposes, and were so furnishing natural gas, prior to the alleged grants of permission by these boroughs to A. L. Cole; that the Citizens’ Fuel Company was not the sole predecessor in title of the defendant; that the Mahoning Gas and Heat Company was incorporated on March 5, 1883, under the Act of April 29, 1874, P. L. 73, for the purpose of manufacturing gas and supplying light and heat to the public of the Borough of Punxsutawney and of territory adjacent thereto; that under its charter the Mahoning Gas and Heat Company entered upon the streets and public ways of Punxsutawney and Clayville and supplied natural gas to the people thereof, with the consent of both municipalities, unaffected by any agreement or stipulation as to the price to be charged for gas; that on May 14, 1886, the Mahoning Gas and Heat Company accepted the provisions of the Act of May 29, 1885 (the natural gas company act), — the place or places where gas was to be supplied being the Boroughs of Punxsutawney and Clayville and Young Township,— and that letters patent for that purpose were granted to it on May 14, 1886; that on June 24, 1904, a charter was granted to the Citizens’ Fuel Company; that the latter company laid a short line of pipe to the streets of Punxsutawney, but never supplied gas to either the citizens of that borough or of the Borough of Clayville; that on or about December 15, 1905, the T. W. Phillips Gas and Oil Co., a corporation organized under the provisions of the Act of May 29, 1885, was consolidated with the Mahoning Gas and Heat Company and the Citizens’ Fuel Company, as the T. W. Phillips Gas and Oil Company, under the provisions of the Act of May 29, 1901; that the last-named company supplied gas to the public of the Boroughs of Punxsutawney and Clay-ville until the consolidation of those boroughs in March, 1907, since which time it has supplied gas to the inhabitants of the new Borough of Punxsutawney; that the privileges or franchises granted to Cole and assigned by him to the Citizens’ Fuel Company are not the only ones “owned, possessed, enjoyed or exercised” by the defendant to enter upon the streets or highways of Punxsutawney; that no gas was ever furnished to the Boroughs of Punxsutawney or Clayville by the Citizens’ Fuel Company, but that it was first furnished by the Mahoning Gas and Heat Company, and, since the latter’s merger with the T. W. Phillips Gas and Oil Company, by the consolidated company; and finally, that the charges for gas intended to be made by the defendant company are not “unreasonable, unjust, unfair, exorbitant, excessive, vexatious, burdensome and oppressive,” as alleged by the plaintiffs, but that they are “reasonable, fair and just,” concluding with a prayer to dismiss the plaintiffs’ bill with costs. After hearing, the court below found the disputed facts substantially as set forth in the answer, and entered a decree that the bill be dismissed at the cost of the plaintiffs; the latter have appealed.

The principal question is: — Did the defendant company acquire the right to occupy the streets of the Borough of Punxsutawney and to furnish natural gas to the inhabitants thereof from the Citizens’ Fuel Company or from the Mahoning Gas and Heat Company? For upon this depends the further question of whether or not the defendant company’s franchise carries with it the obligation not to charge more than twenty cents per thousand cubic feet of natural gas to the consumers in that borough.

A review of the evidence satisfies us that the court below was right in findinf that the defendant company was furnishing gas in the plaintiff borough by virtue of the franchise theretofore exercised by the Mahoning Company and not under the franchise of the Citizens’ Company, and in concluding that the defendant was not fixed with the restriction or limitation contained in the latter. The Mahoning Company was actually engaged in furnishing and marketing gas in the territory of the plaintiff borough prior to the passage of the Act of 1885, supra, and within that territory it was possessed of and continued to exercise all the rights conferred upon it by that act down to the time of its merger into the defendant company in 1905. (Phila. Co. v. Freeport Boro., 167 Pa. 279; Allegheny City’s Appeal, 11 Atl. Repr. 658.) The fact that the stock of the Mahoning Company was acquired by owners of the stock of the Citizens’ Company and that the net proceeds from the sale of its product, after payment of all its proper corporate expenses were turned into the treasury of the latter corporation, would not serve to extinguish its individual franchise or rights. The business of the Mahoning Company continued to be conducted in its own name and by its own duly elected officers; and the Citizens’ Company never marketed its gas in the territory in question, except by a sale in bulk to the Mahoning Company; in other words, it did not exercise the right to supply gas to the citizens, etc., granted to it by the municipal authorities.

The corporation merger and consolidation Act of May 29, 1901, P. L. 349, provides in Section 3 that the new corporation shall be possessed of “all the rights, privileges and franchises” theretofore vested “in each of” its constituent corporations, and that “all debts, duties and liabilities of each of said constituent corporations shall thenceforth attach to the new corporation.” As stated by the learned court below, “The weight of the authorities seems to be that when the act of consolidation gives to the consolidated company the rights and privileges of the constituent companies or makes the consolidated company subject to the obligations of the constituent companies, the rights and obligations are not extended by the act to all of the property of the consolidated company, but only apply severally to the property of each constituent company taken over by the consolidated company”; and the following authorities seem to sustain this rule: 2 Morawetz on Private Corporations, Secs. 947 and 950; 10 Cyc. 305, par. 2; 89 American State Reports, 632 Note; Phila. & Wilmington R. R. Co. v. Maryland, 51 U. S. 376; Tomlinson v. Branch, 82 U. S. 460; Minot v. R. R. Co., 85 U. S. 206; Chesapeake & Ohio R. R. Co. v. Virginia, 94 U. S. 718; Pullman’s Palace Car Co. v. Missouri Pac. Ry. Co., 115 U. S. 587; People’s Gas Light & Coke Co. v. Chicago, 194 U. S. 1. On this subject also see our own cases: Gould v. Langdon, 43 Pa. 365, and Brown v. Susquehanna Boom Co., 109 Pa. 57. But it is only necessary to decide the present case on its own facts. Since the Citizens’ Company had not exercised its right to supply gas to the inhabitants of the plaintiff borough and the defendant was operating in that territory under the franchise of the Mahoning Company, we conclude that the court below committed no error in deciding that under our act the consolidated company had all the rights of the Ma-honing Company in the territory in question free from the limtiation contained in the franchise of the Citizens’ Company.

The only other point of importance raised by the assignments of error concerns the reasonableness of the charge for gas made by the defendant company. As to this it is sufficient to state that we agree with the court below “that the rate of twenty-five cents per thousand cubic feet proposed to be charged by the defendant for natural gas supplied by it to consumers in Punxsutawney borough is fair and reasonable considering the facts as shown by the testimony in this case.”

The assignments of error are all overruled and the decree is affirmed at the cost of the appellant borough.