Case ID: ohio-st_103/html/0023-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Incorporated Village of New Bremen et al. v. The Public Utilities Commission et al.
    
      Public utilities commission — Jurisdiction — Application to abandon • gas service — Sections 504-2 and 504-3, General Code — Subject-matter pending in court — Franchise-contract involved in injunction proceedings.
    
    1. The public utilities commission is an administrative board and has only such authority as the statute creating it has conferred.
    2. When it is properly shown to the public utilities commission that an order prayed for in an application filed with it will affect rights which are involved in an action pending in a court of general jurisdiction at the time of the filing of the application, it is the duty of the commission to dismiss the application.
    (No. 16747
    June 21, 1921.)
    Error to the Public Utilities Commission.
    The New Bremen-Minster Gas Company and J. F. Arnold filed with the commission their joint application for leave to withdraw natural gas service and facilities therefor from the municipalities of New Bremen and Minster, both in Auglaize county, invoking the authority vested in the commission by Sections 504-2 and 504-3, General Code.
    The reason set forth in the application was that the available supply of natural gas, which the applicant company had prior to September 1, 1918, from which it had furnished gas to the villages of New Bremen and Minster, and the inhabitants thereof, had become completely exhausted, and that every reasonable effort to procure natural gas for said villages, including the contracting for a supply from the New Knoxville Gas Company, which con-tinned from September, 1918, to February 1, 1919, when the supply of the latter company also became exhausted, has been ineffective, with the result that the attempt to furnish gas to said municipalities was abandoned on February 1, 1919.
    It is further alleged in the application that the applicant company has made every effort by drilling and otherwise to find a gas supply for said municipalities, but has failed to do so, for the reason that there is no gas to be procured in that vicinity.
    The prayer in the application is “that permission may be given these applicants to withdraw its service and service facilities from the municipalities of New Bremen and Minster and all natural gas consumers therein that have been supplied by this applicant.”
    In the answer, after admitting the formalities, there is a general denial of the statements contained in the application. The answer further sets up the pendency in the court of common pleas of Auglaize county of an action brought by the village against the gas company, W. Holl, William D. Arnett and Charles 'F. Arnold, and avers that in that suit the identical questions presented in the application be-fore the commission are involved and presented for determination; that personal service in that suit was made on the defendants therein before the application with. the commission was filed; and that by reason thereof the common pleas court of Auglaize county first obtained jurisdiction of the subject-matter set forth in the application.
    The answer further avers that in June, 1898, a franchise was granted to the Interstate Gas Company, under which that company entered upon the streets of the village and erected a gas plant therein, and assumed the obligations thereof, and that the applicant company is the assignee of that franchise and has assumed the liabilities thereunder; that the franchise is still in full force and effect and the gas company applicant "is subject to its obligations; that on the first of August, 1913, the gas company applicant entered into a contract with the villages under which the gas company agreed to furnish gas to the villages and their inhabitants, and it was provided in the contract that the execution thereof should in no manner enlarge or diminish the rights or obligations of the villages or the company that each owed to the other; that by the contract the gas company transferred to the village without cost, all that part of its distributing pipe lines in the village that were located under paved streets, and further agreed to sell and assign to said village all the pipe lines contained under the streets not paved, in the event that the gas company was relieved from performing the terms of said contract for furnishing of gas, either by consent of the village or by decree of a court of competent jurisdiction; that no other party purchased the lines and equipment until the village had first been given an opportunity to exercise its option and the company has never been relieved of the obligations of said contract; and that the village, in accordance with the contract, passed an ordinance fixing the price, that the company could charge for furnishing gas, and the company filed its written acceptance of the terms of the ordinance with the village. A copy of this ordinance and the written acceptance is attached to the answer.
    The answer also alleges that the rights of the village under the franchise and contract are protected by the constitution, and specific articles of the state and federal constitutions are named in that behalf. It further avers that the franchise and the contract between the village and the company were in full force and effect before the passage of the statute, 108 Ohio Laws, 372, known as the Miller bill, adopted May 16, 1919, under which the applicants seek the order prayed for, and alleges that the commission has no jurisdiction in the premises.
    It further alleges that the failure to furnish gas was not due to the exhausted condition of the fields, but to the neglect of the company in the respects set forth in the answer.
    The reply of the applicant was in the nature of a general denial.
    On the final hearing before the commission, after introduction of evidence and the arguments of counsel, the commission entered its'order, in which it found that the evidence did not disclose that the applicants have or by reasonable diligence can obtain a reasonable supply of gas to warrant a resumption of service, and that the retention of said facilities in place, without a sufficient supply of gas to enable applicants to furnish service, is of no benefit to the public, and, having due regard for the welfare of the public and the cost of operating the facilities, and considering the lack of available gas, the commission is satisfied that the permanent abandonment of said facilities is reasonable, and that its consent and authority should be granted. And the 'commission entered its order accordingly.
    This proceeding is brought to reverse that order.
    
      Mr. Lewis Stout; Mr. Otto J. Boesel; Mr. J. H. Goeke and Mr. Smith W. Bennett, for plaintiffs in error.
    
      Mr. John G. Price, attorney general; Mr. E. E. Corn; Messrs. Steuve & Tangeman; Mr. Freeman T. Eagleson and Mr. J. Warren Madden, for defendants in error.
   Johnson, J.

It is shown by the record that the applicant gas company has been furnishing gas to the villages with its pipe lines and equipments under a franchise-contract made with its predecessor in title; that when the company proposed to discontinue the service the municipal corporation in May, 1918, commenced an action in the common pleas court of Auglaize county seeking an injunction to prevent the discontinuance of the service from West Gas Field to the village and inhabitants, and to prevent the company from taking up its lines in the village and the supply lines leading thereto, and* from otherwise abandoning the gas field.

It is further shown that subsequently the parties entered into an agreement for the settlement of - the legal proceeding and in accordance with its terms the suit was dismissed without prejudice to another action, and that also in accordance with its terms a rate-ordinance fixing the price to be charged for natural gas in the village was passed by the village and accepted by the company. The contract provided that immediately upon the acceptance of the gas ordinance the company should have authority to take up the pipe lines in the West Gas Field “that will not materially lessen the present volume of gas furnished from said gas field to the village.”

The contract further provided that as long as practicable the gas company will furnish and supply natural gas to the village and its inhabitants through its lines and through a new feed line at the rates fixed by the ordinance “unless released therefrom by the acts of the parties hereto or by judgment or decree of a court of competent jurisdiction.”

It further provided that in the event the gas com-pany in the future should be released from its obligations in regard to the furnishing of. natural gas to the village, by acts of the parties or by judicial decree, the gas company agreed to transfer and set over to the village without cost all that part of its gas distributing pipe lines in the village that are buried and located under paved streets and further that it would sell, assign and transfer to the village all gas pipe lines then buried or contained under streets not paved, and also a four-inch line between Minster and New Bremen, if the corporation desired to acquire the same and agreed to accept in payment therefor a price to be fixed by three arbitrators chosen, in the manner provided in the contract.

It will be noted that there is an express contract between the gas company and the villages by which the company agrees that it will, “as soon as practicable,” furnish natural gas to the village and its inhabitants with its pipe lines and equipments at the rates fixed by the ordinance “unless released therefrom by the acts of the parties hereto or by the judgment or decree of a court of competent jurisdiction.”

Subsequent to the. making of this contract, to-wit, on the 14th of November, 1919, the village brought suit in the court of common pleas of Auglaize county to enjoin the gas company and J. F. Arnold, who then claimed to have purchased the pipe lines, from discontinuing the service and dismantling the equipment. Subsequently, to-wit, December 2, 1919, the application involved in this proceeding was filed with the public utilities commission. It will also be noted that pursuant to the agreement of August 1, 1918, settling the prior suit, the village passed a rate-ordinance fixing the price to be charged for natural gas, which was accepted by the company. The term fixed by the ordinance was three years, and its acceptance by the company constituted a contract between the parties for three years from and after August 3, 1918.

It is contended by the defendants in error that the action of the commission was authorized by the provisions of Sections 504-2 and 504-3, General Code (108 O. L., 372), passed April 15, 1919, known as the Miller act. Section 504-2 provides that no public utility furnishing service within the state shall abandon any gas line, etc., except as provided in Section 504-3. By Section 504-3 it is provided that any public utility desiring to abandon or close, or have abandoned, withdrawn or closed for service, all or any part of any such line or'lines, shall first make application, to the public utilities commission in writing; that upon the hearing of the application the commission shall ascertain the facts and make its finding thereon, and if such facts satisfy the commission that the proposed abandonment, withdrawal or closing of service is reasonable, having due regard for the welfare of the public and the cost of operating the service, they may allow the same; and the section further contains provisions with reference to notice and other matters not pertinent here.

The commission by its order authorized the permanent abandonment of the respective facilities in and about the village.

It is contended that this action by the commission amounted to a judicial decree releasing the gas company from the further furnishing of gas. The public utilities commission is an administrative board and only has such authority as the statute creating it has given it. This court has repeatedly declared that the powers of the commission are conferred by statute and that it has no other authority than that thus vested in it. City of Cincinnati v. Public Utilities Commission, 96 Ohio St., 270; Interurban Ry. & Terminal Co. v. Public Utilities Commission, 98 Ohio St., 287; Sylvania Home Telephone Co. v. Public Utilities Commission, 97 Ohio St., 202, and Village of Oak Harbor v. Public Utilities Commission, 99 Ohio St., 275.

The judicial power of the state is vested in courts, the creation of which and their jurisdiction is provided for in the judicial article of the constitution, Article IV. The public utilities commission is in no sense a court. It has no power to judicially ascertain and determine, legal rights and liabilities, or adjudicate controversies between parties as to contract rights or property rights. The Miller act does not purport to confer such power upon the public utilities commission, and if it did so in any of .its terms it would be to that extent invalid.

The creation of the commission, with supervisory and regulatory powers, is authorized by Section 2, Article XIII of the Constitution as amended in 1912. And by the amendment of the judicial article of the constitution adopted at the same time it was provided that this court should have “such revisory jurisdiction of the proceedings of administrative officers as may be conferred by law.”

As pointed out in Hocking Valley Ry. Co. v. Public Utilities Commission, 100 Ohio St., 321, 323, “if by legislative act or administrative order property or rights are taken or affected parties must be given full opportunity to show by judicial review that the taking or interference with rights or property was so arbitrary, unjust or unreasonable as to amount to a deprivation in violation of the constitution.” This principle is nowhere denied. It is invoked and declared in C., M. & St. P. Ry. Co. v. Minnesota, 134 U. S., 418, and Hocking Valley Ry. Co. v. The Public Utilities Commission et al., 92 Ohio St., 9, 14; Wadley Southern Ry. Co. v. Georgia, 235 U. S., 651, at page 661; State, ex rel. Oregon Rd. & Navigation Co., v. Fairchild, 224 U. S., 510, 528, and Kansas City Southern Ry. Co. v. C. H. Albers Commission Co., 223 U. S., 573.

Now, in this case there is a valid subsisting contract between the parties under the terms of which the gas company is under obligation to furnish gas at the rate stipulated in the contract for a period of three years, and it is under obligation to sell to the village the portion of its pipe lines as above stated in the event that it should be released from furnishing gas by the acts of the parties or by judgment or decree of a court of competent jurisdiction. That is the express provision of the contract. The rights created under it are protected by the federal and state constitutions as shown above. Moreover, as shown by the record, there is pending in a court of competent jurisdiction, the court of common pleas of Auglaize county, a proceeding invoking the jurisdiction of the court for the judicial determination of the very question presented on the application to the commission and the rights of the parties in connection with the facilities described in that application. That proceeding in the court of com- ■ mon pleas was brought before the filing of the application in this case. The court of common pleas had acquired full jurisdiction of the subject-matter and of the parties and when this situation was shown by the answer of the villages, and the testimony in the proceeding before the public utilities commission, it was its duty under this state of facts to dismiss the petition.

Manifestly, the permission given by the commission to withdraw or abandon a particular service must be given to parties owning or controlling the facilities, and if these parties have by contract bound themselves to a different use and a different disposition of the facilities, and the rights and duties under that contract are involved in litigation in a court of competent jurisdiction, the parties are not entitled to the order by the commission.

The order will be reversed.

Order reversed.

Hough, Wanamaker and Robinson, JJ., concur.

Matthias, J., concurs in the judgment.