The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-07-24


pany showed earnings in the amount
of practically a million dollars.
Deception Was Charged.
Morrison further charged that the gas
company and it's receivers had per-
sistently endeavored to deceive the
public as to the real available gas sup
pIy in an effort to obtain an increase
in rates to consumers. The report
stated that new fields opened in Kansas
and Oklahoma insured ample gas sup
ply for consumers in all OF the towns
supplied by the corporation All that
was needed, according to Morrison,
was an order directing the gas COM
pany to extend its mains to these new
fields. That order was issued, but was
today set aside by the federal court
and the receivers-both state and fed
eral-are ordered not O observe its pro-
visions.
City hearing was to the effect that the
owners of Oklahoma gas fields were
willing to pay the cost of extending the
pipe lines, practically taking the DUR
den off the shoulders of the gas COM
pany. Yet this offer adds nothing 10
the present situation, Judge Marsnaii
saws. He recites that the rates Whlch
the producers demand for their gas -
an increase over the old rates and tnat
the condition of the corporation at TINS
time does not warrant an order colh
pelIing the company to buy the sas
at the preferred rates and to sell 1t "
the consumers at the old price.
In his review of thc case and MS
opinion. Judge Marshall declares that
the order of the commission calling for
an expenditure of $285,O00 for exten-
sions is unjust when protested py tne
bond holders of the company. The Mar
shall opinion is lengthy, but is a clean
cut review of the financial troubles OF
NJot 20
Reviewing the case, the federal judge
says in part:
Court Reviews Case.
1.-THE Kansas Natural Gas company
is a foreign corporation. 1t was duly
admitted to do business in Kansas. The
business it was authorized to do and
was in fact engaged in, was the obtain
ing of supplies of natural gas by pur-
chase or by lease of wells and the
transportation of this gas by pipe lines
to various cities in Kansas and ad-
joining states, where it was sold TO To-
cal public service corporations or to
manufacturing plants. 1t was not a
common carrier, but was granted the
right of eminent domain, and its busi-
ness was such as to give the public
an interest in it. By reason of its en-
try into Kansas and the grant to it
of the right of eminent domain, il en-
tered into obligation to the state
to the extent of and with respect to its
property devoted to this quasi-public
of that service. The bond holders took
their mortgage with notice of this
fundamental obligation and subject
to it.
State Can Make Rates.
"On foreclosure, the purchaser must
buy the property subject to the same
duty. The state because of the public
interest, has the power to prescribe
reasonable rates for gas sold and to Sc
cure the efficiency of the service by
regulations, and it is not to
be doubted that a receiver of the prop
erty of the corporation must operate
it in accordance with valid state laws
in respect thereto. But what are the
limits of the duty to the state or pub
l1c- There was no specific contract or
charter provision exclusive right
granted so as to imply a contract to
supply the full needs of those depend
Ing on the monopoly and for whose in
terest the grant was made. The action
of the state was only permissive The
company was not obligated to build
any pipe line or to furnish any gas So
far as 1t availed itself of this perrnis-
sion its property used for the quasi
public service was affected by the Dub
lie interest, and it's use of the property
in this business was subject to valid
state regulation, but it did not become
a mere agency of the state, and was
under no obligation, contractual or
other, to increase it's investment or
build new lines. 1t did not manufacture
gas. 1t purchased wells and transport
ed gas by pipe line. These wells were
gradually exhausted
The lines were extended and more
distant wells obtained until the sys-
tenn extended into several states The
security of the bondhoIders is con-
hxr ha
OF the property, and this method has
led to the insolvency of the corpora
ton. If by its entry into Kansas the
company entered into an obligation to
constantly buy new wells and extend
Its lines to new gas fields so as to
constantly furnish to the cities of
Kansas an adequate supply of gas, the
security of the bondholders was, in
deed. illusory. The undertaking was
one necessarily ending in bankruptcy.
1t is well settled that a railroad
company chartered to build a particu-
lar line under a permissive charter is
not liable to the state for failure to
build it, and that only so far as it
does build is its property affected by
the public interest
York etc. Ry. VS.. Regina, 1 Ell &
Bl. SIS. S64.
Edinburgh etc. Ry Co. VS.. Philip,
? Macq. APP. Cas-. 526.
state VS.. Southern Mimi. R. R. CO.
Is Mimi. 40
Weymouth VS.. Penobscot Log Driv-
ing Co, II Maine 20
And fortiori, that such a COM
pany cannot be required to construct
new or branch line. I know of no rea-
son why this we'll settled principle is
not applicable in this case.
No Interstate Jurisdiction.
considered apart from a contract
right the want of power is still clearer.
Ihe extensions directed are in Ok
lahoma; the receivers are ordered by
the commission to go into Oklahoma
and there build pipe lines, procure gas
and transport it into Kansas for sale.
Ihls IS interstate commerce. The pow
er TO order it is an undoubted regula-