Case Name: The State, ex rel. the Attorney-General, v. The Columbus Gas Light and Coke Company
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1878-12
Citations: 34 Ohio St. 572
Docket Number: 
Parties: The State, ex rel. the Attorney-General, v. The Columbus Gas Light and Coke Company.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 34
Pages: 572–582

Head Matter:
The State, ex rel. the Attorney-General, v. The Columbus Gas Light and Coke Company.
1. "Where a corporation, acting under a special charter, is invested with franchises to be exercised to subserve the public interest, the terms upon which the corporation may be required to discharge its duties to the public are subject to legislative supervision and control, unless it clearly appears from the terms of its charter that it was the intention to exempt it from such interference.
2. Under a special charter, granted prior to the adoption of the present constitution, the defendant was empowered to “ manufacture and sell gas ” for the purpose of lighting the city of Columbus. The grant was exclusive for the term of twenty years. The charter contained no provision as to the price to be charged for gas, nor on thesubject of meters: Held, That the defendant was subject to the provisions of the act of March 9, 1867 (S. & S. 160), restricting the price to be charged for the use of meters.
Ineormation in quo warranto.
The information charges the defendants, among other things, with usurping the privilege and franchise of charging each consumer of gas, who consumes five hundred cubic feet or more of gas per month, and compelling him to pay, in addition to the price of said gas, thirty cents, more or less, per month as rent for the meter that measures the gas to the consumer.
The defendant, in its third plea, justifies the alleged usurpation under its charter. The charter consists of a special act of the general assembly, passed February 21, 1846, entitled “ an act to incorporate the Columbus Gas Light and Coke Company” (44 Ohio L. 144).
The act contains five sections.
Section 1 enacts that ten persons therein named, and their associates, be created a body corporate and politic, with perpetual succession, by the name of the Columbus Gas Light and Coke Company, and by that name they and their successors shall he capable, in law, of contracting and being contracted with, suing and being sued, defending and being defended, with power to acquire, hold, and occupy such real and personal estate as may be necessary and proper for the construction, extension, and usefulness of the works of the company, and for the management and good government of the same, and that they may have a common seal.
Section 2 provides that the corporation shall have power to manufacture and sell gas, to be used for the purpose of lighting the city of Columbus, or the streets thereof, and any buildings, manufactories, public places, or houses therein, and to erect necessary works and apparatus for conducting gas in the streets and avenues of the city.
Section 3 provides that the capital stock of the company may be forty thousand dollars, to be divided into shares of ten dollars each, to be subscribed for and paid at such time and in such proportions as shall be prescribed by the- bylaws and rules of the company.
Section 5 empowers the directors to make such by-laws and rules for their own government, and for regulating the concerns of the company, as they shall think necessary and proper, respecting the management and disposition of the stock, property, and estate of the company, the duties of the agents and artificers to be employed, and all other matters pertaining to the concerns of the company; provided the same shall not be inconsistent with the constitution and laws of the United States or of this state. It contains also this provision: “ Said company shall have the exclusive privilege of supplying the city of Columbus and its inhabitants with gas, for the purpose of affording light, for the term of twenty years.”
The plea also contains the following averments:
This defendant says that, by virtue of said special act or charter, it was vested, on its organization (as it is advised and avers), with full power as a corporation to so contract and be contracted with, concerning the matters and things pertaining to the manufacture and sale of gas in the city of Columbus, and acquire and enjoy any personal property that was necessary to the usefulness, management, or good government of its business; that it was (as it is advised) by said act authorized to purchase and rent meters to its customers ; that there is no limitation or qualification to said right in said special act or charter; and that the defendant has never assented to nor accepted any limitations to its rights, liberties, and franchises in this behalf; nor did the general assembly reserve any right to alter, amend, or repeal said charter, in said act, nor in any amendment thereto.
And this defendant avers that the State of Ohio, without such reserved right, or without the consent of this defendant, has no power to impair the said rights and privileges, liberties, or franchises so granted to this defendant by said special act or charter, and that the general law of the state does not apply to it. This defendant says that it is by said grant that this defendant exercises the liberties, privileges, and franchises herein aforesaid, and that the same is a full warrant and authority therefor, and which it is ready to verify.
To this plea several replications were filed by the state. The only ones that need be noticed are the third, fourth, fifth, and sixth. These replications are, in substance, that on four several occasions since the adoption of the present constitution, the defendant has increased its capital stock until in the aggregate it amounts to two hundred and fifty thousand dollars; and that its stock was thus increased, under the general laws passed on the subject under the present constitution.
To these replications the defendant demurred. On the question of law raised by the demurrer, the cause is submitted.
Harrison <¡¡¡ Olds, for the relator :
The original charter of the Columbus Gl-as Light and Coke Company did not confer upon the company the power to sell gas at whatever price it might choose to exact, and to impose and collect the price of gas sold by it in any manner it might please, free from the right of regulation by the general assembly.
The charter, it is true, conferred upon the company the right to manufacture and sell gas, but it also provided that the company should have “ the exclusive privilege of supplying the city of Columbus and its inhabitants with gas for the purpose of affording light for the term of twenty years.”
The corporation has no rights of property, except those derived from the provisions of the charter creating and the statutes regulating it, nor can it exercise any powers over the property it holds, except those -with which the charter and the statutes have clothed it. It holds the property only for the purposes for which it was permitted to acquire it; that is, to effectuate the objects for which the legislature created it. And whether it may lawfully demand payment of whatever price it chooses to exact for gas sold by it, and levy whatever contributions it may please to defray the expenses of purchasing and maintaining meters as a part of its works, must depend upon the language of the charter, and not upon the rules of the common law. Perrine v. Chesapeake and Delaware Canal Co., 9 How. 172, 184.
The principles of construction by which such a charter . is to be expounded are well settled. Although a special act of incorporation may be called a contract, the rules of construction applied to it are admitted to be the reverse of those applied to other contracts. The charter of this company is not only the grant of certain franchises by the public to a private corporation, and in a matter where the public interest is concerned, but it is the grant of franchises restrictive upon the city and the inhabitants named in the charter, to the extent of prohibiting both the city and its inhabitants, for the term of twenty years, from obtaining, from any other person than this company, a supply of an article of consumption necessary for their convenience, comfort, and safety. This company’s charter, therefore, presents the clearest and strongest possible instance for the firm and rigid application of the rule of strict construction against the company and in favor of the public.
In determining whether or not the corporation, under such a charter, actually has a franchise which it claims to have, any ambiguity in the charter must operate against the corporation and in favor of the public ; the. grant claimed in such a case must be clearly expressed in the very letter of the statute, and not to be discovered by astute construction and inference ; and the words of the statute are to be taken most strongly against the corporation. Charles River Bridge v. Warren Bridge, 7 Pick. 344; Ib., 11 Peters, 420, and cases cited; Proprietors of the Strowbridge Canal v. Wheeler, 2 Barn. & Adol. 793; Perrine v. Chesapeake and Delaware. Canal Co., 9 How. 172, 184; Commissioners v. Gas Co., 12 Penn. St. 318; Scales v. Pickering, 4 Bing. 448; The Ohio Ins. and Trust Co. v. Debolt, 16 How. 416; The Jefferson Branch Bank v. Skelly, 1 Black, 436 ; Richmond R. R. Co. v. Louisa R. R. Co., 13 How. 71.
This company, under its original charter, had, as one of its franchises, the right to demand and receive some compensation for gas manufactured and sold by it; but the state did not, by granting such charter, make an agreement with the company that the state would never assume to regulate the use of such franchise, and limit the price which the company might charge for gas sold, and prescribe how the same might be collected. Blake et al. v. The W. & St. P. R. R. Co., 19 Minnesota, 418.
When the nature and object of this corporation are considered, it can not be maintained that this is a mere private corporation for the manufacture and sale of a commercial commodity. It is practically, a quasi public corporation.. Shepard v. Gas Co., 6 Wis. 539; Gas Co. v. The State, 18 Ohio St. 237; 7 Pick. 344; Powell v. Sammons, 31 Ala. (U. S.), 552.
Henry G. Noble, for defendant:
“ The general assembly shall have no power to pass laws impairing the obligation of contracts.” Sec. 28, art. 2 of Ohio Constitution.
A charter of a corporation is a contract. Knoup v. Piqua Bank, 1 Ohio St. 603 ; Debolt v. The Life Ins. and Trust Co., 1 Ohio St. 563 ; Toledo Bank v. Bond, 1 Ohio St. 622 ; Sandusky City Bank v. Wilbur, 7 Ohio St. 481; Skelly v. Jefferson Br. Bank, 9 Ohio St. 606 ; Ohio Life Ins. and Trust Co. v. Debolt, 16 How. 432; Mechanics’ and Traders’ Bank v. Debolt, 18 How. 380; Dodge v. Woolsey, 18 How. 331; Jefferson Br. Bank v. Shelly, 1 Black, 436 ; 19 Ohio St. 369; 21 Ohio St. 451.
It will be seen that sections 1 and 2, of article 12, of the-constitution, do not take from the general assembly either the power to form new corporations or to confer corporate-powers on those already formed. Those corporations existing at the time the constitution was adopted are within the letter and spirit of the first section. The history of the constitution, as above referred to, establishes the fact that, 'the existing corporations of the state were neither to be destroyed nor paralyzed. They were to be let alone in whatever franchises they had. Whatever corporate powers were-thereafter to be conferred were not to be conferred by “ special acts,” but by general laws, and thus the dealing with them was left, as before, to the legislative wisdom and policy alone, subject to this single change.
We admit that the charter of a corporation conferring-corporate franchises is to be strictly construed. But this- ■does not mean that the clear rights of a corporation are to ■be construed away, and the court, by construction, do that which the legislature can not do by legislative act, viz., impair the .obligation of a contract. The Planters’ Bank v. Sharp, 6 How. 301, 327.
The rule as explained in 9 Howard, 192, is just, and. we ■■are perfectly willing to have the charter of this company measured by it, for we are sure that this court will not find :any ambiguity in this charter, when fairly interpreted, having in view the object for which the corporation was created. The court will see, by a reference to the charter, that this company has the right to manufacture and sell gas. The very primary meaning of “ sell ” is “ to transfer property or the exclusive right of possession to another for an ■equivalent in money.” — "Webster. What would this light amount to if the right to sell here should mean to transfer the gas to the consumer at a price to be fixed by a third party (the general assembly), and that third party not governed by any rules or limitations in fixing the price, except its own will ? But this is not the only franchise that relates to this subject. This company is also granted the franchise •“ to contract and be contracted with.” If, therefore, gas is ■a commodity concerning which parties consuming the same ■are free to contract or not as to the price, then this company has the right to contract with such consumers; not only to ■supply them with gas, but for the price or equivalent at which it is to be supplied; for it is the very object of the •creation of this corporation to manufacture and sell gas.
That the gas so manufactured is such a commodity the following cases declare: McCune v. Norwich Gas Co., 30 Conn. 521; 3 Dutcher (N. J.), 245.
In addition to the franchises just discussed, particularly the franchise “to contract and be contracted with,” the •charter further confers power on this corporation “ to acquire, hold, and occupy such real and personal estate as may :bc necessary and proper for the construction, extension, and tisefulness of the works of the company, and for the management and good government of the same.”
Assuming, therefore, that meter rent is a recognized right ■of all gas companies, in addition to the price of gas to be charged, and knowing that this company has exercised the right to charge and receive from each consumer, in addition to said price for gas, a sum agreed upon as rent for the meter that measures the gas to the consumer for more than ■twenty-one years before the issuing of the writ of quo warranto herein, it remains to inquire whether this right can he taken away under this law, as an exercise of police powers.
"We admit the right in the legislature to provide for the •control and regulation not only of corporations, but of every individual in the state under the police power, but as this is a vague and dangerous power, it is the more necessary that courts should carefully scrutinize all acts which profess to be an exercise of police power, to see that, under this name, they do not improperly interfere with the liberty or property of the citizen; for the very object of this power, .as well as of all government, is, or should be, the protection of life, liberty, and property. , It, therefore, should ever he the pleasure, as it is the duty, of the courts to see that no man, or set of men, be they incorporated or unincorpor.ated, be deprived of his or their “property without due process of law.” Cooley on Const. Lim. 577; Shaver v. Starrett, 4 Ohio St. 498; Reeves v. Treas. Wood Co., 8 Ohio St. 333; 18 Ohio St. 237.

Opinion:
White, J.
The question now before us for determination, in this case, is, whether the defendant, in regard to its right to charge rent for gas meters, is subject to the act entitled " an act for the inspection of gas meters, the protection of gas consumers, and the protection and regulation •of gas companies," as amended March 9; 1867. S. & S. 160.
Section 15 of the act provides, " This act shall apply to .•all companies who manufacture gas for sale." And the .amendatory act contains this provision: " No gas company :shall have the right to charge rent for meters, when five hundred cubic feet per month have been consumed."
The defendant claims that it is not subject to the operation of this statute, and asserts the right, under its charter* to exact rent for meters irrespective of the statute.
This right is denied by the state on two grounds. These-grounds, stated in the inverse order in which they are argued, are, in substance:
1st. That the right of defendant to charge for the use of meters, as well as for gas furnished, is subject to legislative-control.
2d. That if such right of control did not exist under the-original charter, yet the defendant, by increasing its capital stock, under the authority of the present constitution, became subject to such control.
If the first of these positions is well taken, the determination of the correctness of the second is not necessary to the decision of the case before us.
. As to the first ground: Whether this ground is well taken or not, depends upon the terms of the charter. The-charter provides that the corporation " shall have power to-manufacture and sell gas, to be used for the purpose of lighting the city of Columbus, or the streets thereof, and. any buildings, manufactories, public places, or houses therein, and to.erect necessary works and apparatus for-conducting gas in the streets and avenues of the city." The directors of the corporation are authorized to make-such by-laws and rules for their own government, and for-regulating all matters pertaining to the concerns of the-company, as they shall deem necessary and proper; provided such rules and regulations are not inconsistent with the constitution and laws of the United States or of this state. The charter likewise provides that the " company shall have the exclusive privilege of supplying the city of Columbus and its inhabitants with gas, for the purpose of affording light, for the term of twenty years."
The. corporators and their associates are authorized to employ their means, to the extent and in the manner provided by the charter, to accomplish the public purpose of supplying the city of Columbus and its inhabitants with ;gas. In the accomplishment of this purpose the public have an interest. The main object of the charter was not the. private emolument of the corporators and stockholders, but the promotion of the public convenience and welfare. 'This object, it is true, is to be accomplished upon the terms prescribed by the charter, subject to the right of such supervision and control as may have been withheld in the grant, in favor of the public.
In the present ease, it is claimed on the part of the defendant, that no right is reserved, on behalf of the public, to control the price of gas, or the amount to be charged for the use of meters; but that this power, under the charter, •rests exclusively in the discretion of the defendant.
Before this right of exemption from legislative control •can be asserted, the right must appear to have been clearly granted by the charter. " The rights of the public are never presumed to be surrendered to a corporation, unless the intention to surrender clearly appears in the law." Perrine v. Chesapeake & Delaware Canal Co., 9 How. 172, 184, 192.
The charter, in the present instance, grants to the defendant the exclusive right of supplying the city and its inhabitants with gas, for the term of twenty years. It operates, therefore, not only to confer a public franchise on the defendant, but also to restrict the public from supplying its necessities from any other source. This creates a monopoly in the defendant for the time the right is made exclusive. It is unreasonable, therefore, to infer that it was the intention -of the legislature to exempt the defendant from all public -control, in respect to the terms upon which it should be required to discharge its duties to the public, unless such intention is found clearly expressed in the charter. The •charter expresses no such intention. On the contrary, the plain implications are against the existence of any such ex-emption. The directors are authorized, by the charter, to make by-laws and rules for regulating all matters pertaining to the company, but such regulations are required to be consistent with the laws of the state. This provision is not limited to laws then in force; but extends also to such laws as may be passed in the future. The charter does not prescribe the terms upon which gas is to be furnished to the public. The whole matter is left to be determined by such rules and regulations, not inconsistent with the laws of the state, as the directors may prescribe.
The business in which the defendant is engaged largely concerns the public. As already remarked, the main purpose of its creation was to subserve the public interest.
In Munn v. Illinois, 94 U. S. 118, it was laid down, in respect to natural persons, that " where the owner of property devotes it to a use in which the public have an interest, he in effect grants to the public an interest in such use,, and must, to the extent of that interest, submit to be controlled by the public, for the common good, as long as he-maintains the use."
In that case the principle was applied to warehousemen,, who were engaged in receiving and storing grain, and it was held that their rates of charges were subject to legislative regulation.
The principle applies with greater force to corporations-when they are invested with franchises to be exercised to» subserve the public interest. Deriving their powers by grant directly from the public, they are clearly subject to-public control, in respect to the terms upon which their franchises are to be exercised, unless they are protected by their charters from such interference. Blake v. Winona and St. Peter Railroad Co., 19 Minn. 419; s. c., 94 U. S. 180 ; Chicago, Burlington and Quincy Railroad Co. v. Iowa, Id. 155 ; Peik v. Chicago and Northwestern Railway Co., Id. 165.
' As we find nothing in the terms of the charter of the defendant which protects it from legislative control in respect to the matter in question, the right which it sets up to-charge for the use of meters, in contravention of the statute, is without warrant in law; and the plea setting up such, right is adjudged insufficient.
Judgment accordingly.