Case Name: Newton E. Farnsworth, Respondent, v. Boro Oil and Gas Company, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1915-09-28
Citations: 216 N.Y. 40
Docket Number: 
Parties: Newton E. Farnsworth, Respondent, v. Boro Oil and Gas Company, Appellant.
Judges: 
Reporter: New York Reports
Volume: 216
Pages: 40–57

Head Matter:
Newton E. Farnsworth, Respondent, v. Boro Oil and Gas Company, Appellant.
Estoppel — gas company which has obtained consent of town board, on certain conditions, to lay pipes in streets estopped from denying validity of contract on ground of lack of power in town board to grant permission — parties — resident of town may enforce conditions.
Defendant, a corporation organized under the Business Corporations Law to deal in natural gas, applied to and obtained consent of a town board to lay its conductors in the highways and streets, which was granted on certain conditions — among others, that the price charged for gas should not exceed a certain sum. After supplying gas to the inhabitants for several years it applied to the town board for permission to increase its charges, which was denied. It then made the increase, claiming that the board had no power to grant the permission in the first instance; that the application should have been made to the commissioners of highways (now the town superintendent of highways), and that the town board had power in such matters only when the company was incorporated under the Transportation Corporations Law for supplying manufactured gas. Upon- examination of the statutes it appears that two corporations engaged in the same business — the sale of natural gas-»- and seeking a license to do the self-same thing, must go to the town superintendent of highways or to the town board according as they chance to be organized under the Business Corporations Law or the Transportation Corporations Law.' In such circumstances the defendant will not be heard to say, while retaining possession of the highway, that the consent under which it entered was valueless and void, but is estopped from denying the binding force of its agreement, and the estoppel can be taken advantage of by a resident of the town in an action to restrain the company from increasing its charges.
Farnsworth v. Boro Oil & Gas Co., 155 App. Div. 79, affirmed.
(Argued May 4, 1915;
decided September 28, 1915.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered January 29, 1913, affirming a judgment in favor of plaintiff entered upon a decision, of the court on trial at Special Term.
The nature of the action and the facts, so far as material, are stated in the opinion.
Ward J. Wilber for appellant.
The town board had no authority to grant the defendant any rights in the highway whatever. (L. 1889, ch. 422; Wilson v. Tennant, 61 App. Div. 100.) The clause in the resolutions of the town board restricting the price of gas to twenty-five cents per thousand cubic feet is wholly without consideration. (Rochester Tel. Co. v. Ross, 195 N. Y. 429.) The condition as to the price of gas being imposed without consideration there is no cause of action to inure to the benefit of the plaintiff. (Lawrence v. Fox, 30 N. Y. 268; Pond v. New Rochelle Water Co., 183 N. Y. 330; Smyth v. City of New York, 203 N. Y. 106.) The defendant is not estopped from questioning the validity of the clause of the resolutions restricting the price of gas nor the right of the plaintiff to enforce it. (Ackerman v. True, 175 N. Y. 353; Brown v. Bowen, 30 N. Y. 519; Brewster v. Striker, 2 N. Y. 19; Chatfield v. Simonson, 92 N. Y. 209; Sturm v. Boker, 150 U. S. 312; Matter of Sharp, 56 N. Y. 257; Bussing v. City of Mt. Vernon, 198 N. Y. 202; Veeder v. Mudgett, 95 N. Y. 295; M. L. Ins. Co. v. Corey, 135 N. Y. 334; People ex rel. U. C. Co. v. Voorhies, 114 App. Div. 351.)
Fred J. Blackmon for respondent.
The town hoard had authority to grant such consent. (L. 1909, ch. 219, §§ 60, 61; Matter of Woolsey, 95 N. Y. 135.) Even if the town hoard had no power to grant the franchise, the defendant is estopped from denying it. (1 Parsons on Cont. 359; Vil. of Bolivar v. Bolivar Water Works Co., 62 App. Div. 484; Beloit v. Heineman, 128 Wis. 398; M. T. & D. Co. v. Collins P. & R. R. Co., 101 Fed. Rep. 347; People v. Suburban R. R. Co., 178 Ill. 594; Rochester Tel. Co. v. Ross, 125 App. Div. 76.)

Opinion:
Cardozo, J.
The plaintiff is a resident of the town of Collins, Erie county. He has sued the defendant to restrain it from charging more than twenty-five cents per thousand cubic feet for the gas which it supplies. The defendant is a domestic corporation. It was organized under the Business Corporations Law in 1899. It drills wells for natural gas, and sells and distributes the gas to inhabitants of the town of Collins. By a law passed in 1889 (L. 1889, ch. 422, section 2) such a corporation is authorized to lay its pipes in the highways of the state, "provided, however, that no pipe line for the purposes aforesaid shall be constructed across, along, or upon any public highway, without the consent of the commissioners of highways of the town in which such highway is located, upon such terms as may be agreed upon with such commissioners. " That is the statute applicable to corporations organized under the Business Corporations Law to deal in natural gas (Wilson v. Tennent, 61 App. Div. 100; 179 N. Y. 546). Corporations dealing in manufactured gas are governed by another statute, the Transportation Corporations Law (L. 1890, ch. 566, as amended by L. 1900, ch. 575 and L. 1902, ch. 596; now embodied in L. 1909, ch. 219). Such corporations are required to obtain the consent of " the municipal authorities " of the city, village or town in which their pipes are to be laid (Transportation Corporations Law, sec. 61). The plaintiff argues, and the defendant seems to concede, that the "municipal authorities " of a town are the members of the town board. The statutes and the decisions sustain the concession (Ghee v. Northern U. Gas Co., 158 N. Y. 510; West S. E. Co., v. Cons. Tel. & El. S. Co., 110 App. Div. 171; 187 N. Y. 58; Palmer v. Larchmont El. Co., 158 N. Y. 231, 238; People ex rel. W. G. L. Co. v. Deehan, 153 N. Y. 528, 530; Town Law [L. 1909, ch. 63], secs. 2,130, 210, 230, 260, 285, 310; see also: Highway Law [L. 1909, ch. 30]; Cons. Laws, ch. 25, secs. 48, 60, 61). A corporation organized under the Transportation Corporations Law to manufacture and supply gas is not restricted, however, to the sale of manufactured gas. It may deal in natural gas also (L. 1902, ch. 596; L. 1909, ch. 219, sec. 61). We have thus a singular situation. Corporations dealing in natural gas, but organized under the Transportation Corporations Law, are told to seek the consent of the municipal authorities, i. e., the town board. Corporations dealing in natural gas, but organized under the Business Corporations Law, are told to seek the consent of the commissioner of highways, now the town superintendent (Highway Law [L. 1909, ch. 30], sec. 43).
In this tangle of statutes the defendant made its application to the town board. Fourteen years ago, in July, 1901, the members of the board gave their consent, which they coupled, however, with conditions. Such conditions are not unlawful (Dusenberry v. N. Y., W. & C. T. Co., 46 App. Div. 267; Simons Sons Co. v. Md. Tel. & T. Co., 99 Md. 141; Merc. T. & D. Co. v. Collins Park & B. R. Co., 101 Fed. Rep. 347). The defendant was not to lay its conductors under the traveled parts of the highway, except to cross them, and was not to interfere with public travel; it was to replace all earth removed, and leave the highways in as good condition as before the conductors were laid; it was to keep the conductors in repair, and save the town harmless from all damage by reason of their location in the highways; and finally, it was not to charge the inhabitants of the town using gas for fuel or lights or both a'sum exceeding twenty-five cents per thousand cubic feet. The defendant assented to these conditions, laid its pipes, and delivered gas to consumers. Nearly seven years later, in January, 1908, it again applied to the town board for permission to lay additional pipes in other streets; the consent was granted upon the same conditions as before, and the defendant accepted in writing- the terms imposed upon it. It lived up to those conditions until November, 1911. In the summer of that year it applied to the town board to modify the permit so as to allow a charge of thirty cents per thousand cubic feet. The request was refused. The defendant then gave notice to the board and also to its consumers that notwithstanding- the conditions of the permit, it proposed to charge the increased rate. It has carried out its threat; and it now repudiates the conditions. It says that it did not need the pel-mission of the town board. It says that what it should have obtained was the consent of the commissioner of highways. Because it requested and received the approval of the wrong officers, it says that its acceptance of the conditions must be held to count for nothing. It proposes to stay in the highways and charge whatever it pleases.
I think the defendant is estopped to deny the binding-force of its agreement. It applied to the town board for permission to lay its jiipes in the highways of the town, and it received the permission for which it prayed. The privilege may be one that the board was not competent to grant, but at least it believed itself competent, and the' defendant shared that belief. There was a claim of right which the defendant extinguished for a price. The board asserted the power to regulate the use of the highway and to prevent the defendant's entry. The defendant yielded to the claim and purchased the coveted consent. It received the very benefit which it sought, the opportunity to lay its mains without molestation of its posses sion or question of its right. It did not intend to occupy the streets as a trespasser. It intended to occupy them under color of the right which the consent of the board conferred. Under color of that right it went into possession, and it has retained that possession; undisturbed and unchallenged, for nearly fourteen years. If the highway commissioner had assailed the power of the board, and evicted or even attempted to evict the defendant, a different situation would be presented (Towne v. Butterfield, 97 Mass. 105; Marlow v. Wiggins, 4 Ad. & El. [N. S.] 367). But nothing of the kind has happened. In the language of this court in Tilyou, v. Reynolds (108 N. Y. 558, 566): "There has been no eviction, no disclaimer, no acquiescence in another title, no claim by any other person that a superior title was to be enforced or insisted upon or even that one existed."
The argument is made that the town board had nothing to do with the subject-matter of the attempted license, that it had not even a colorable right to exclude the defendant from the highway, and, hence, that its consent was not the effective force that put the defendant in pas-' session. But that view of the situation loses sight of important elements. The town board, as well as the town superintendent, is charged by law with responsibilities in respect of the general sub j ect-matter involved in the defendant's application for leave to lay its pipes. If the defendant had been organized under the Transportation Corporations Law, the consent of the "municipal authorities" would have been necessary. Two corporations engaged in the same business, the sale of natural gas, and seeking a license to do the self-same thing, must go to the superintendent or to the board according as they chance to be organized under one law or under another. The defendant went to the board, and thereby held itself out as a corporation within the board's jurisdiction. The subject-matter of the consent was one with which the board was not incompetent to deal, and the consent, when granted, conferred upon the defendant at least the color of right. Without that color of right, we may safely assume that it would never have been permitted without molestation to lay its conductors in the highways. No one knew this better than the defendant itself, or it would not have assented to the terms. The' impulse that landed it in peaceable possession was the consent of the town board.
In such circumstances, the defendant will not be heard to say, while retaining possession of the highway, that the consent under which it entered was valueless and void. Its position is the same as that of a lessee who has gone into possession in submission to the title .of the lessor. It is the same as that of a licensee who has acquired the right to manufacture under an outstanding, though defective, patent. The lessee will not be heard to say that the lessor had no title to convey (Tilyou v. Reynolds, supra; Stott v. Rutherford, 92 U. S. 107,109), and this though the lease was not merely voidable, but void upon its face. The licensee will not be heard to say that the patent is a nullity (Marston v. Swett, 66 N. Y. 206; 82 N. Y. 526; Hyatt v. Dale Tile Mfg. Co., 106 N. Y. 651; Hyatt v. Ingalls, 121 N. Y. 93; Lawes v. Purser, 6 Ell. & Bl. 932). It is not necessary to show that the strict relation of landlord and tenant exists between the parties. The rule of estoppel applies with equal force to a licensee in possession of land as against his licensor (Doe v. Baytup, 3 Ad. & El. 188), and to other relations (Henderson v. Miller, 53 Mich. 590; Seymour v. Slide & Spur Gold Mines, 153 U. S. 523; Village of Bolivar v. Bolivar Water Co., 62 App. Div. 481). The franchise to occupy the highway comes by grant from the state, but the consent of the locality is necessary to make the franchise operative, and when the right is exercised, it is through and under the consent. The elements of an estoppel are thus present, whatever the source may be from which the franchise itself proceeds. " The foundation of the estoppel is' the fact, of the one obtaining possession and enjoying possession by the permission of the other. And so long as one has this enjoyment he is prevented by this rule of law from turning round and saying that his landlord has no right or title to keep him in possession " (Tilyou v. Reynolds, supra, at p. 563). Some decisions have even extended the estoppel, in the absence of fraud or mistake, to cases where the tenant was already in possession at the making of the lease (Prevot v. Lawrence, 51 N. Y. 219; Jones v. Reilly, 174 N. Y. 97, 107; Wallace v. Ocean Grove Camp Meeting Assn., 148 Fed. Repr. 672; Willis v. Harrell, 118 Ga. 906, 911; Michigan C. R. R. Co. v. Bullard, 120 Mich. 416). The precise limits of the estoppel under such conditions, we need not now consider. This defendant never had possession till it received the permission of the town, and never claimed the right to take possession except by force of that permission. If one enters upon land in subordination to the right of another who asserts the power to exclude him, it is never an answer to say, while enjoying unchallenged occupancy, that the power of exclusion was unreal. An analogous situation may help us to a conclusion. The executors of a will believing, though erroneously, that they have power over the real estate, lease it to a tenant, who enters and holds possession with the acquiescence of heirs and devisees. It does not seem probable that he would be suffered to question the executors' assumption of authority (Hawes v. Shaw, 100 Mass. 187; Bailey v. Kilhurn, 10 Metc. 176). The distinction is a narrow one between the case supposed and the case before us. It is not needful, in order to make the estoppel effective, that the lessor should have enjoyed a pedis possessio, which he has yielded to the tenant, the licensor a like possession, which he has yielded to the licensee. It is enough that he has asserted in good faith a present power and purpose of exclusion, which, in return for the covenants of the lease or license, he has been induced to abandon. A case in point is Eastham v. Anderson (119 Mass. 526). A town sold a fishery for a term of years. The defendant enjoyed the fishery, and when sued for the price, defended on the ground that the fishery belonged, not to the town, but to some one else. The court held that " the defendant, having enjoyed the fishery by the permission of the plaintiffs, cannot be permitted, on this ground, to excuse himself from the payment of the stipulated rent." The plaintiffs there weré not in possession of the fishery in any other sense than this town was in possession of the highway. In each case there vms a claim of right; in each the claim was one that the defendant wished to extinguish; in each it gained through its promise the immunity that was its aim; and in each the entry, which was peaceable and unchallenged, would have been resisted and perhaps prevented if the consent had not been given. I think these facts are sufficient to establish an estoppel. When the defendant takes up its mains and vacates the highway, a court will listen with some tolerance to its plea that it has been there without right.
Some point is made that the protection of the estoppel must he restricted to the town itself, and does not extend to the plaintiff as a resident of the town. I think the settled rule in this state compels a contrary conclusion. There is no doubt that the inhabitants of a town may enforce a valid contract of this kind (Pond v. New Rochelle Water Co., 183 N. Y. 330). It can make no difference in principle whether the contract is held valid by force of estoppel or for any other reason.
The judgment should be affirmed, with costs.