Case ID: monaghan_1/html/0091-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Allegheny Heating Company’s Appeal.
    A preliminary injunction will not be decreed against a natural gas company incorporated under tbe Act of May 29,1885, at the suit of numerous customers of the company, to restrain it from increasing its charges from 50 to 100 per cent, over the rates established when it began business.
    Nov. 6, 1888.
    Appeal, No. 233, Oct. T. 1888, from C. P. No. 2, Allegheny Co., to review a decree awarding a preliminary injunction on a bill in equity, at Oct. T. 1888, No. 388. Steeeett, J., absent.
    Bill in equity by Benjamin Waddinton and forty-seven others against the Allegheny Heating Company to restrain the defendant from enforcing an increased charge for gas.
    The bill, in substance, averred:
    1. The defendant was incorporated Feb. 22, 1882, under the Act of 18Y4, and on June 23, 1885, accepted the Natural Gas Act of May 29, 1885, P. L. 29.
    2. The defendant’s business is the supply of natural gas in the city of Allegheny. It has entered into the streets and laid pipes. N atural gas has come into use as a fuel and is produced and supplied to consumers in Allegheny at a great profit, owing to tbe great quantities found in the immediate vicinity of the city. The transportation and supply of natural gas is a public use. It is the duty of defendant to furnish natural gas at reasonable prices, which will allow a fair and reasonable profit to the stockholders and at uniform rates.
    3. Defendant obtains its gas from the Philadelphia Co., and pays that company one-half of its gross receipts therefor, and that company owns and controls a majority of defendant’s stock.
    4. Defendant laid its pipes as fast as practicable and solicited contracts, representing generally, that gas would cost no more than coal; other companies were also soliciting contracts to furnish gas, among which was the People’s Natural Gas and Pipeage Co., chartered Nov. 23, 1885, and the Ohartiers Co., which had begun to lay down pipes, so that Oct. 15, 1887, and before and after, there was competition between these companies in Allegheny. They had adopted prices which were about these :
    Kitchen range..........$16 per year.
    Six-hole cook stove........14 “
    Four-hole cook stove........14 “
    Open grates $6 per year for first, and $5 per year for others.
    Furnaces, hall and room stoves, corresponding rates; and these rates were about the same as it would cost for coal.
    5. Plaintiffs are consumers of gas'under contracts with defendant entered into about Oct. 1,1887. At that date, defendant solicited them to take gas, and about that date they entered into contracts agreeing to pay the rates stated in the preceding paragraph. These rates were a little more than, or about the same as, coal would cost them, but owing to the convenience from use of gas, they entered into contracts.
    These prices were reasonable and are now reasonable and sufficient, and would and did enable the stockholders to realize large profits. Plaintiffs were also informed that natural gas would not exceed the cost of coal. Believing this, they expended large sums in gas fittings and pipes to connect with the gas mains. The fittings and pipes are of no other use.
    6. The People’s Natural Gas and Pipeage Go. and the Chartiers Co., about May 15, 1888, made a consolidation contract or arrangement with defendant by which all competition ceased. The two former companies are not making any new contracts, and payments under old contracts are required to be made at defendant’s office. The patrons of all those companies, whose contracts are about to expire, have received notice that the price of gas will be increased from 50 to 100 per cent.
    7. The defendant has grown from a capital of $100,000, only partially paid, to have about $600,000, invested in pipes and other construction. It has paid no dividends, but the profits have been expended in new construction.
    8. Notices have been sent to plaintiffs, and all consumers whose contracts are about to expire, that they must make contracts for a year from Oct. 1, 1888, at an advance of from 50 to 100 per cent., or purchase meters and pay 10 cents per thousand feet net, or, in default, the gas will be turned off.
    9. Plaintiffs’ contracts are about to expire, and they have been notified of the advance, and fear that defendant will turn off the gas.
    
      10. Turning off the gas will work great and irreparable injury to plaintiffs and other consumers.
    11. The new rates are unreasonable, unjust and excessive.
    12. Defendant unjustly discriminates in its charges. It charges Holdship & Rankin, oil refiners, only 6 cents per thousand feet, and so with many other persons whose names are unknown.
    13. There are many others who have similar complaints, but are not named as plaintiffs because too numerous, and many of them are unknown, but this bill is filed for their benefit as well as that of plaintiffs.
    14. Plaintiffs agree to pay for gas by fire or thousand feet such amount as the court shall deem to be reasonable and proper.
    The prayers were: 1. A preliminary injunction to restrain turning off gas, upon the payment of old rates, pending the trial. 2. That the court may fix what is reasonable to be paid and restrain defendant from charging more, or from shutting off the gas, so long as the prices fixed by the court are paid. 3. That the court may fix what shall be paid by all consumers, and defendant to be restrained as in 2d prayer. 4. General relief.
    Numerous affidavits were filed by both parties, in support and denial of the allegations of the bill. In defendant’s affidavits it was averred that, on account of expense in laying new lines to new fields, etc., the Philadelphia Co. charged them about 30 per cent, more for gas;' and in no case had the increase charged by the defendants been more than was fair under the circumstances.
    Defendant’s affidavits further alleged : The company furnishes gas by two plans, viz.: by measurement, at 10 cents per 1,000 feet; or a fixed sum per year, according to the number of fires and the area to be heated. A thousand feet of gas is equivalent, in heating capacity, to a bushel of coal. Before the introduction of gas, coal was about 8 cents per bushel. At that price, gas at 10 cents is cheaper than coal. By the plan of a fixed sum per year, gas can he burned in the fire-places without limit, except their capacity. In fixing these rates, it is necessary to examine each fire-place, the size of the room or area to be heated, and to take into consideration that there may be a waste of gas. The company has increased the price of gas by this plan from 25 to 50 per cent., but in no case has the increase been larger than a fair consideration of all the circumstances required. The company has urged upon all its consumers the mutual benefit of economizing in the use of gas, which is accomplished by the use of meters, and about 50 per cent, of the consumers are taking by that plan. The plaintiffs are all persons who use gas by the contract plan and refuse to adopt the measurement plan.
    The defendant further denied discrimination. The company has a different rate for manufacturing establishments and dwellings. Holdship & Rankin are classed with manufacturing establishments, at regular rates.
    The court below granted the injunction, in an opinion reported in 6 Pa. C. C. R. 96, by White, J.
    
      The following decree was entered:
    “And now, Oct. 17, 1888, this cause came on to be heard, on motion for preliminary injunction, on bill and affidavits filed at this term, and was argued by counsel and, therefore, upon consideration thereof, it is ordered, adjudged and decreed that, upon plaintiffs’ filing bond as hereinafter directed and paying up all arrears as hereinafter directed,
    “ That the defendant, the Allegheny Heating Oo., its officers, agents and employees, and each of them, are hereby enjoined and restrained from shutting off the gas supply through and by defendant’s pipes and mains from plaintiffs’ houses and fires in the city of Allegheny, or from interfering with or disturbing in any way, the said supply of natural gas to plaintiffs so long as plaintiffs shall pay or tender payment to the said defendant of the same rates and charges, and in the same installments as heretofore paid for said supply of gas, until further order of court, provided that payment be made for arrears now due under old rates, within five days from this date.
    “ That the plaintiffs shall give bond to the said defendant company with sureties satisfactory to defendant company or approved by court, in a sum three times as great as their annual gas bill heretofore, conditioned to pay whatever increased price, if any, may be finally determined, and the arrears of increase, with the right in defendant company, if an increase is finally allowed and the arrears of increase be not paid within thirty days, to shut off the gas and proceed on the bonds for the arrears.”
    
      The assignment of error specified the action of the court in entering the decree, as above, quoting it.
    
      W. B. Rodgers, with him D. T. Watson, for appellant.
    Emerson v. Com., 108 Pa. 126, struck down all investment incorporations organized under the Act of 1874 and was the cause of the passage of the Act of May 29, 1885.
    Under § 1, of the Act of 1885, gas may be employed “ upon such terms and under such reasonable regulations as the gas company shall establish.” The word “ reasonable ” is affixed to the “ regulations ; ” it does not limit the power to fix the terms. It was the gas company to which these powers were given and not to the courts. Under § 10, of that Act, they are to furnish “ gas for heat or light or other purposes as the corporation may determine.” This evidently refers to the terms and reasonable regulations which the company was authorized to make under §1. By subdivision 4, §1, the powers enumerated are “to deal in, transport, store and supply natural gas, and have all the rights and privileges necessary or convenient therefor.” Subdivision 7 of the same section authorized the company to make by-laws for “ the management of its property, and, the regulation of its affairs.” These are the portions of the Act which' give the express power to the company to fix terms and the reasonable regulations upon which it will furnish gas.
    
      The Act of 1874, P. L. 95, expressly gave the courts power to regulate charges; but it is significant that this provision is not reenacted by the Act of 1885. Besides, the Act of 1885 expressly declared that it did not confer any exclusive privileges upon any corporation. Any persons might organize under it, and form a company and have equal privileges with all other companies, but no one should have an exclusive privilege. How long the supply of natural gas would last was entirely problematical. Whether long enough to repay the investments made for its use, no one could tell; and therefore, what rates gas companies should charge was a question for the company itself to determine. If it charged too much, so that it could not 'successfully compete with coal, it could not sell its gas. If it turned out a prosperous and paying business, competition would surely also step in as a factor to control the price, and therefore, the Legislature felt safe in giving to the company the power to fix the terms.
    The right to fix charges as established bv the Act of 1885 is a part of the contract between the state and the corporation and is inviolate. Cumberland Valley R. R. Co.’s Ap., 62 Pa. 226; Hersh v. R. R. Co., 74 Pa. 181; Stone v. R. R. Co., 62 Miss. 607; Stone v. Trust Co., 116 U. S. 330; Chicago, B. & Q. R. R. Co. v. Iowa, 9 U. S. 162.
    The case as presented in the bill shows an alleged violation of a public franchise, and therefore the evil, if any, is for the public to redress through the attorney general, and not for individuals. Cumberland Valley R. R. Co.’s Ap., 62 Pa. 226; Buck Mountain Coal Co. v. Lehigh Coal & Nav. Co., 50 Pa. 99.
    The decree should not have been made because the bill was multifarious. The circumstances of no two of the complainants were alike as to the number or size of the stoves or grates used or as to the number of rooms to be heated. The court in the end will have to fix the rate in each case under all the circumstances in each case. Clark’s Ap., 107 Pa. 439; Wray v. Hazlett, 6 Phila. 155; Lungen v. Pennell, 10 W. N. C. 302.
    A preliminary injunction will only be issued when the right is clear and the danger imminent. Sparhawk v. Union Pass. R. R. Co., 54 Pa. 401; Farmers’ R. R. Co. v. P. R. R. Co., 53 Pa. 225; Audenried v. P. R. R. Co., 68 Pa. 377. No evidence was offered to show that the increased rates were unreasonable.
    
      Geo. Elphinstone, with him Wm. A. Stone, for appellees.
    Notwithstanding the Act of 1885, the defendant is bound by the provisions of the Act of 1874, under which it was incorporated, giving the courts power to interfere to regulate rates. See on this point §§ 14, 15 and 16 of the Act of 1885.
    The Act of May 29,1885, itself requires that the prices charged for gas shall be reasonable. Any ambiguity in a grant must be construed in favor of the public. Comrs. v. Gas Co., 62 Pa. 321.
    The defendant has wrongfully obtained a monopoly in supplying natural gas for heat in Allegheny City, and is therefore entitled to no equitable consideration. Emerson v. Com., 108 Pa. 126; Scranton Electric Light and Heat Co.’s Ap., 22 W. N. C. 247.
    The existence of a monopoly in a public use raises an obligation on the part of the monopolist to supply the public at reasonable rates. Shepard v. Milwaukee Gas Light Co., 6 Wis. 526.
    This corporation is a creature of the state; is subject to state control, and such control can be exercised only through the courts. The regulations and restrictions must be reasonable and not dis criminate. Com. v. Bank of Pennsylvania, 3 W. & S. 184; Comrs. v. Gas Co., 12 Pa 318; City of Pittsburgh’s Ap., 115 Pa. 4; Crouch v. Great Northern R. W. Co., 11 Ex. R., H. & G 752; Wells v. Oregon R. R. and Nav. Co., 15 Fed. R. 561; Shepard v. Milwaukee Gas Light Co., 15 Wis. 349; Schwartz and six thousand others v. Consolidated Gas Co., 1 Ry. & Corp. L.J. 339; Munn v. Illinois, 94 U. S. 113; Sickles v. Manhattan Gas Light Co., 63 How. Pr., N. Y., 33; Winona & St. Peter R. R. Co. v. Blake, 4 Otto, 180; Hartford v. Adams, 2 Duer, 471; New England Ex. Co. v. Maine Central R. R. Co., 57 Me. 194; Harres v. Packwood, 3 Taunt. 282; Messenger v. Pa. R. R. Co., 36 N. J. 407.
    The complainants have a right to maintain this bill and it is not necessary to invoke the aid of the attorney general. It does not appear on the face of the bill that there is a private injury to the parties complaining and therefore Cumberland Valley R. R. Co.’s Ap., 62 Pa. 226; Birch Mountain Coal Co. v. Lehigh Valley Coal & Iron Co., 50 Pa. 99, sustain our case.
    The bill is not multifarious. It is true that some of the complainants had more grates than others, and those who had more paid more, but all at the same rates.
    Jan. 7, 1889.
   Per Curiam,

As this is an appeal from a decree awarding a preliminary injunction no opinion is filed under our rule.

The decree is reversed and the injunction dissolved at the cost of the appellees. A. B. W.