Case Name: The City of Columbus v. The Columbus Gas Company
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1907-05-07
Citations: 76 Ohio St. 309
Docket Number: No. 9758
Parties: The City of Columbus v. The Columbus Gas Company.
Judges: Shauck, C. J., Crew and Summers, JJ., concur..
Reporter: Ohio State Reports, New Service
Volume: 76
Pages: 309–340

Head Matter:
The City of Columbus v. The Columbus Gas Company.
Municipal ordinance — Granting right to gas company to operate in city — Company to pay annual stipend to city for benefit of gas fund, etc. — Valid—Upon acceptance becomes contract — Grant not exclusive — City authorizes second company to operate— Contract with first company not vitiated — Municipal corporations — C ontracts.
1. Where a municipal corporation by an ordinance passed by its council grants to a gas company the right to lay its pipes and other appliances in the streets and other public places within the corporation, for the purpose of selling and distributing its gas for public and private use, such council may require the gas company to pay annually to such municipal corporation a reasonable sum to compensate for the city’s necessary supervision of the work as well after as during its installation; and when the gas company accepts the terms of said ordinance according to law, and takes possession of and occupies the streets, et cetera, under-said grant, such accepted ordinance becomes a valid contract between the parties for the annual payment of said sum. The clause in the ordinance here involved that said payments are “for the benefit of the gas and light fund of said city” does not render the ordinance invalid as a means to raise general' revenue, said clause being subordinate to the principal obligation.
2. That the municipal authorities, subsequent to the grant to the defendant company, gave permission to one or more other gas • companies to lay pipes in the streets and other public places within the corporation for the purpose of selling and distributing gas for public and private use, constitutes no defense to an action to recover payments due under the provisions of the former ordinance, because:
(а) The said former ordinance under which the defendant holds does not purport to give to defendant an exclusive right to the streets for the purposes of its business.
(б) The latter part of section six of that ordinance provides “that nothing herein contained shall be construed as granting exclusive rights or privileges, or preventing any other company from furnishing gas to the citizens of said city of Columbus.”
(No. 9758
Decided May 7, 1907.)
Error to the Circuit Court of Franklin County.
On the 5th day of October, 1903, the City of Columbus filed its petition against the defendant in error, in the court of common pleas of Franklin county, to collect the sum of $8,000, alleged to be due the city from defendant in error, on account of the provisions of a certain ordinance passed by the council of said city, on the 27th day of June, 1892, whereby the Columbus Gas Light & Coke Company obtained a franchise to enter upon the streets, and other public ways and places of said city for the purpose of excavating in the same and laying gas pipes and putting in other necessary lines and appliances to convey and supply illuminating gas to the inhabitants of said city and others desiring to consume such gas.
The petition alleges that said Columbus Gas Light & Coke Company, in'writing, accepted the provisions of said ordinance, in the manner prescribed by statute, and afterwards, in October, 1892, transferred and assigned all its rights and interest in the said privilege to the defendant in error, The Columbus Gas Company, by and with the consent of the city, and that said latter company is now operating under said privilege, and has enjoyed ever sipce such transfer was made, all the privileges and benefits given to the said Columbus Gas Light & Coke Company by said ordinance.
A copy of the ordinance is attached to the petition. -The city further alleges that section five of said ordinance provides that the privileges conferred in section one were granted upon the condition that the said Columbus Gas Light' & Coke Company, its successors and assigns, shall annually pay to the City of Columbus for the benefit of the gas and light fund of said city, the sum of four thousand dollars, the first payment to be made when this ordinance took effect, and the others annually thereafter; and as a further consideration for the rights and privileges therein granted, the grantee company shall sell gas for and during the ten years next following the passage of the ordinance, at a price not exceeding one dollar and ten cents per thousand cubic feet, and that from the above-named price a discount at the rate of ten cents per thousand feet shall be made on all bills paid on or before the fifteenth day of each month for gas consumed during the preceding month, making the net price not to exceed one dollar per thousand feet; the gas to be so furnished shall be of at least sixteen candle power.
Ten annual payments were made in advance, as required by said ordinance, by The Columbus Gas Light & Coke Company, and its successor, The Columbus Gas Company, the last payment having been made by the latter company on July 8, 1901, which was to pay, and did pay, for the year beginning July 1, 1901, and ending June 30, 1902. No further payments have been made, although there was due, when suit was brought, the sum of $4,000 páyable July 1, 1902 and $4,000 payable July 1, 1903. ' _
_ It is further alleged that defendant is still exercising all the privileges conferred by said ordinance and is furnishing gas to the citizens of Columbus at the price originally fixed, the city council having made no change in the rate to be charged. The city wants judgment for the amount so alleged to be due, with interest.
The defendant answered at great length, the material points of which are, that The Columbus Gas Light .& Coke Company, assignor of defendant, The Columbus Gas Company, was incorporated about the 21st of February, 1846, under the laws of Ohio, for the purpose of manufacturing, selling and distributing artificial gas to the city and its inhabitants, and that thereafter, about the 14th day of-May, 1850, the said city passed an ordinance to provide for the lighting of the city with gas, and thereb}r vested in the -said Columbus Gas Light & Coke Company, its sucessors and assigns, the full and exclusive privilege of using the streets, lanes, commons and other public grounds for the purpose of conveying gas to the city and its citizens, with exclusive authority to open and use the said public ways and grounds for the introduction of pipes and other apparatus for gas, from the date thereof to and including the 21st pf February, 1866,. and thereafter fixed the price of gas from time to time, which defendant’s predecessor should charge its customers for gas furnished down to and including said ordinance, of 1892, and in each of said ordi-nances renewed, or again gave consent to the use and occupancy of said streets, etc.
The defendant further avers that said consent when once given by the city exhausted its power to further grant or give consent, and it became co-extensive with the occupancy and use of the streets, etc.., by The Gas Light & Coke Company, and that the giving of said consent, or the granting of said privileges by said ordinance of 1892 was superfluous and unnecessary, and defendant charges that said streets have been occupied by defendant and its predecessor for said purposes since the year 1850; and that in October, 1892, The Columbus Gas Light & Coke Company sold, conveyed and assigned all its rights, interests and privileges in,, by and under said ordinances to defendant, which was done with the consent of said city,' and that said Gas Light & Coke Company at the same time sold and conveyed to defendant all its property-entire plant, including the pipes laid in said streets, etc. And further, that defendant acquired the right to exercise said privileges by virtue óf said ordinance of May 14, 1850, and denies that it acquired the right to exercise said privileges under said ordinance of 1892, or that it has for more than ten years exercised said privileges under said ordinance of 1892. Said ordinance of 1892 is of no force and effect, except as to the fixing the price of gas to be charged and collected by it, until such time as the city shall fix another or different price.
It is further said in the answer that the said sum of $4,000 to be paid annually by the defendant as successor of The Columbus Gas Light & Coke Company to the city, as required by the ordinance of 1892, is and was a sum of money exacted for the purpose of general revenue for said city and for no other, and was, and will be, if collected, used by the city as such revenue, and applied to the purposes to which revenues of said city obtained through the ordinary system of taxation are, and have been, applied, and was a tax upon defendant, and its business, for the purpose of securing such revenue for the city; that said gas and light fund is provided by said city for the payment of light' furnished the city, and the same is maintained through a system of taxation'and is. part of the city’s general fund.
The defendant next says the city has never appointed a measurer or inspector of gas, or gas' meters, at any time, and that at the time of the passage of said ordinance of 1892 there was no such officer or gas inspector in said city, and that the city has been at no expense on account of inspection or supervision of defendant’s gas and meters, and said sum of $4,000 was not exacted for any purpose of regulation.
The defendant also says that on August 10» 1896, the city, without defendant’s knowledge or consent, passed an ordinance transferring said annual payment of $4,000 to the general expense account or fund of the city, and that thereafter all annual payments were placed in said fund, which is maintained through revenue derived from taxation, and therefore the exacting of said payments from defendant is without legal authority, and defendant is not under obligation to pay the same — that said agreement to pay said annual sums is without consideration, contrary to law and against public policy, and therefore void.
A second defense is interposed to the effect, that the city well knew, when it passed- the ordinance of 1892, the only means the defendant had for the payment of said $4,000 annually was its receipts and income derived from the consumption of gas by the plaintiff and private consumers of gas, and that defendant would have to rely upon said receipts to enable it to pay the same, and knowing all this the city permitted The Federal Gas & Fuel Company to occupy and use the streets, and other public grounds, for the purpose of laying pipes therein and conveying and distributing natural gas to said city and its inhabitants, to be used for illu initiating purposes, without requiring it to pay anything therefor to said city, which permission was given by ordinances passed May 22; 1889, July 31, 1889, and April 3, 1900, respectively.
It is then alleged that natural gas can be furnished to consumers at a much lower price and at' much larger profit than the artificial gas of defendant; and that said ordinances for natural gas provided that said Federal Gas & Fuel Company should pay annually to the city for general expense fund, ten per cent, of all moneys received from sale of natural gas sold at a price exceeding fifteen cents per one thousand cubic feet, and that said company sold its natural gas at fifteen cents per thousand cubic feet, and so was not required to pay anything to the city.
Also, that in February, 1889, The Central Ohio Natural Gas & Fuel Company secured the right to occupy said streets and other public grounds and lay pipes to distribute its natural gas for public and private use, and that on or about July —, 1901, said company laid its pipes and was furnishing gas to the city and its inhabitants, and its price was fixed at thirty-five cents per thousand cubic feet, with a discount for prompt payment.
The defendant says that when said ordinance of 1892 was passed, natural gas had not then been used, believed or known to be suitable for illuminating purposes, and it did not come into general use for that purpose until about the year 1896 or 1897; that on account of the rights and privileges conferred by the city on said two natural gas companies, the defendant was unable to retain its trade and consumers, and was thereby deprived of the means to pay said annual payments.
The reply admits that the payments made by defendant the past four years were placed to the credit of the general expense fund of the city, and that this fund is maintained by revenue derived from a system of-taxation and proceeds of bonds sold; and admits the privileges obtained by the two natural gas companies, and that part of their gas is used for illuminating purposes, and that the city, in 1901, fixed by ordinance the price of natural gas delivered to the city and its inhabitants, and that natural gas had not come into general use for illuminating purposes when the ordinance of 1892 was passed. • .
The parties waived a jury and the cause was heard by the court, who found and rendered judgment for the defendant. This judgment was affirmed by. the circuit court.
Mr. George S. Marshall; Mr. Edgar L. Weinland and Mr. Fred R. Hoover, for plaintiff, in error.
We recognize the fundamental principle underlying municipal powers, viz.: that municipalities have only such powers as are expressly conferred by the state, together with such as are necessarily implied therefrom and such as are essential to the existence of the corporation.
The express power to grant the franchise in question will scarcely be disputed by the defendant in error. The same statute which conferred it also in express terms gave the municipality the right to prescribe reasonable regulations under which the company might use the streets. Section 3550, Revised Statutes; City of Zanesville v. Telegraph & Telephone Co., 64 Ohio St., 67.
The court will note .that Section 3461 does net so clearly in its express terms give the city the right to prescribe regulations under which a telegraph or telephone company may use the streets, as d'oes Section 3550 with respect to gas companies. It is further significant, we think, that Section 3550 contains no such stringent limitation as is found in the concluding sentence of 3461, the only limitation in the statute here under consideration being the single word “reasonable.”
It follows, therefore, that the city has in Section 3550 thé right to prescribe as a condition to its grant any regulation whatsoever so long as it is reasonable.
It is almost impossible to give a concise and comprehensive definition of the term “regulation.” For that reason we desire to call the court’s attention to a few of.the various subjects recognized by the courts and text writers as belonging under that head. Regulations of the character under consideration are under the police power which is inherent in the state and which it may delegate, in large part, to municipalities. Smith on Modern Law of Municipal Corporations, Section 1319; Booth on Street Railways, Section 220.
This latter author in other sections of his work on street railways holds that' even after a franchise has been granted to a street railway company it is subject to reasonable regulations, such as a requirement to pay a license fee upon its cars, etc.
To the same effect we desire to cite Railway Co. v. City of Philadelphia, 58 Pa. St., 119. This case was approved in Johnson et al. v. City of Philadelphia et al., 60 Pa. St., 445.
To the same effect i§ the case of Railzvay Co. v. City of Philadelphia, 83 Pa. St., 429. This case was also affirmed in the 101 U. S., 528. To the same effect is Allerton v. City of Chicago, 6 Fed. Rep., 555; Gas Light & Coke Co. v. State, 18 Ohio St., 238; City of Zanesville v. Gas-Light Co., 47 Ohio St., 1.
The broad scope of this police power of the state is too well recognized to call for any extended discussion of its application in Ohio. As bearing on the subject we note: State, ex rel., v. Gas Light & Coke Co., 34 Ohio St., 572; State, ex rel., v. Gas Light & Coke Co., 18 Ohio St., 262; Marmet v. State, 45 Ohio St., 63; City of Cincinnati v. Bryson, 15 Ohio, 625; Baker v. City of Cincinnati, 11 Ohio St., 534.
The Pennsylvania courts uniformly, uphold the right of a city to require reasonable exactions from public service corporations, without express statutory authority therefor, but under the general police powers of municipalities. Telegraph Co. v. City of Philadelphia, 22 Weekly Notes of Cases, 39; Chester City v. Telegraph Co., 154 Pa. St., 465.
The right of a municipal corporation to protect itself against the cost and expense incident to the granting of a franchise’ for the use of its streets is thus recognized by the United States Circuit Court of Appeals: City of Philadelphia v. Telegraph Co., 89 Fed. Rep., 454; Gas Co. v. City of Muncie, 160 Ind., 101; Dillon on Municipal Corporations, Section 706; Milhau et al. v. Sharp et al., 15 Barb., 193.
Generally speaking, municipal corporations, as well as other public bodies, when acting through their proper agencies and in the line of their corporate powers and duties, are presumed to act in a lawful and regular manner. The principle is stated by McQuillan on Ordinances, Section 186.
This court has held that as to assessments levied by municipalities on property, the presumption is in favor of their validity. Bolton v. City of Cleveland et al., 35 Ohio St., 319; Muhlenbrinck v. Commissioners, 42 N. J. L., 364, 368.
It should be borne in mind constantly, that we are not dealing with the right and the extent of the power of the city to impose conditions upon a company having the right, either- under the statutes or under an existing franchise, to use the streets, but merely with the right of the city to agree with a company desiring to obtain the city’s consent to such use. City of Columbus v. Railway Co. et al., 2 C. C., N. S., 305.
The amount charged is reasonable. The burden being upon the company resisting the payments to prove that they are unreasonable, it sought to do so by showing, and rested its case largely upon the fact that no officer had been specifically employed or designated as a “Gas Inspector” and that the city’s accounts did not show specific expenditures for such inspection.
The record, however, does show that the necessary cost of such inspection and supervision, if carried on through a separate department established for that purpose, would be at least equal to the amount agreed upon. It was also shown that inspection would be needed to discover leakages and prevent dangers from explosions. The more we go into this feautre of the case, the more reasons we see why the city, not knowing what the future might bring forth, should ask the sum of $4,000.00 a year from the company. The presumption is that such sum is reasonable and the conditions existing in a growing city beat out that assumption. Telegraph-Cable Co. v. Borough of Taylor, 192 U. S., 64; Borough of North Braddock v. Telegraph Co., 11 Pa. Sup. Ct. Rep., 24; City of Allentown v. Telegraph Co., 148 Pa. St., 119; City of Philadelphia v. Telegraph Co., 102 Fed. Rep., 254.
We submit that there was no testimony offered on behalf of the gas company showing the sum in question to be of that unreasonably excessive character which would warrant a court in prohibiting its collection. Telegraph Co. v. Borough of New Hope, 187 U. S., 419.
As the company seems- to lay the greatest stress on its claim that the city has failed so to apply the payments in question, we will assume for the purpose of the argument such to be the fact. We ask wherein this is cause, of complaint for the company? If the city 'has diverted the money received, the remedy is apparent and always open. Injunction will lie to prevent further diversion of the funds and the city authorities' may be compelled by proper proceedings to apply the moneys to proper inspection and regulation uses. At all events, can the company be heard to say that because the city in the. past has failed in its duty to its citizens, therefore the company may refuse to perform its obligation under the contract? Two wrongs do not make one tight. Telegraph Co. v. Borough of New Hope, 187 U. S., 419; Borough of New Hope v. Telegraph-Cable Co., 202 Pa. St., 532; Borough of North Braddock v. Telegraph Co., 11 Pa. Sup. Ct., 24.
It must be borne in mind that the annual charge in the case at bar was not imposed subsequently to, but was and is part and parcel of the franchise contract.
If such requirement be of the kind which the legislature might empower the city to exact, then the company is estopped to set up want of power on the part of the city at the time of the franchise grant or to deny the reasonableness of the consideration to which it agreed. This is the well recognized doctrine of estoppel, and applies with especial force in this case where the company accepted the condition, and for ten years, without objection, made the annual payments required by the ordinance. Telegraph-Cable Co. v. City of Newport, 76 S. W. Rep., 159.
The company is estopped by continuing to enjoy the franchise. The company sought to obtain from the city what it evidently believed was a valuable and highly 'profitable franchise. It acquired the right to use, and as the record shows, used and is using more than one hundred miles of the streets of the city. It made its own contract with the city as to the amount of compensation or reimbursement which-it should pay. It secured these valuable franchises only upon condition of such payment. It continues to this day to hold and enjoy the privileges secured to it under the franchise. Aside from the question, whether the city has the right under the enactments of the legislature to charge and collect such compensation, there can be no dispute as-to the power of the legislature to authorize the city so to do. There is nothing in the nature of such a charge that could be construed as contrary to public policy, and it is certainly not expressly df impliedly prohibited by statute. City of Columbus v. Gas Co., 2 N. P., N. S., 37; Gas Co. v. City of Muncie, 160 Ind., 97; Board of Agriculture v. Railway Co., 47 Ind., 407; Sturgeon et al. v. Commissioners, 65 Ind., 302; Poock et al. v. Building Association, 71 Ind., 357; Bicknell, Admx. v. Township, 73 Ind., 501; Railway Co. v. Flanagan, 113 Ind., 488; Wright et al. v. Hughes, Assignee, et al., 119 Ind., 324; City of St. Louis v. Davidson et al., 102 Mo., 149; Page on Contracts, Section 1054; Middleton et al. v. State ex rel., 120 Ind., 166; Deering & Co. v. Peterson et al., 75 Minn., 118; Mayor, etc., v. Harrison et al., 30 N. J. L., 73; City of Buffalo v. Balcom et al., 134 N. Y., 532; Mayor, etc., v. Sonneborn, 113 N. Y., 423; Hendersonville v. Price, et al., 96 N. C., 423; City of Fergus Falls v. Hotel Co., 80 Minn., 165
Messrs. De Witt & Hubbard, for defendant in error.
1: The exaction of $4,000 annually was for the purpose of securing revenue only for said plaintiff. The terms of the ordinance provide, that it shall be paid to the benefit of the gas and light fund; The evidence is that the gas and light fund is a fund to pay for lighting the streets. There is no provision that it is for regulation or supervision.
“An ordinance having no element of regulation, and showing on its face that the sole purpose of the city authorities in adopting it was to raise revenue is a tax ordinance.” State ex rel., v. Boyd, 63 Neb., 829.
The use made by the city of the money it received fixes its character as revenue. Telegraph-Cable Co, v. Borough of Taylor, 192 U. S., 64.
The regulations contemplatéd by Section 3550, Revised Statutes, were limited to the mode and manner of laying conductors of gas in the streets, etc. The exaction could not be for inspection because other sections of the Chapter 2, Revised Statutes, make other ample provision for inspection.
2. The plaintiff in error had no power or authority to exact from the defendant in error the payment of any sum whatever as a police measure, or for regulation, inspection or revenue, as a consideration or condition for its consent to a gas company occupying its streets, etc. “A municipal authority has no power or authority except such as has been expressly.granted to it by the legislature or is clearly implied.” Village of Ravenna v. Pennsylvania Co., 45 Ohio St., 118; Bloom v. City of Xenia, 32 Ohio St., 461; State ex rel. v. Gas Light & Coke Co., 18 Ohio St., 293; Cooley’s Const. Lim., 231; Beekman et al. v. Railroad Co., 153 N. Y., 144; 1 Dillon on Municipal Corporations, Section 89; Water Co. v. City of Los Angeles, 88 Fed. Rep., 720; Minturn v. Larue et al., 23 How., 435;
Especially for thé purpose of revenue. Gas Light Co. v. City of Elmira, 2 Albany L. J., 392; Smith v. Gas Light Co., 12 How. Pr. Rep., 187; State v. Mayor, etc., 33 N. J. L., 280; Kip v. Mayor, etc., 2 Dutcher, 298; Adamson v. Railroad Co., 89 Hun, 261; Mayor, etc. v. Railroad Co., 32 N. Y., 261; Macklin et al. v. Telephone Co. et al., 1 C. C., N. S., 373.
The city has no power to make this exaction for some future emergency that may or may not arise. City of Philadelphia v. Telegraph Co., 40 Fed. Rep., 615.
3. The ordinance relied upon is void for that it is against public policy. Greenwood on Public Policy, rules 1, 2, 5, 6, 284; Crawford & Murray v. Wick, 18 Ohio St., 190; Richardson v. Crandall, 48 N. Y., 348; Atchison v. Mullen, 43 N. Y., 147; People v. Supervisors, 60 Hun, 328; Beekman et al. v. Railroad Co., 153 N. Y., 157.
The tendency of contracts of this kind is bad. The main object of the legislature in granting the franchise right to use of the streets of a city is “the promotion of the public convenience and welfare.” State ex rel. v. Gas Light & Coke Co., 34 Ohio St., 580. The people are entitled to the benefit thereof, and any price or consideration for the consent of the municipal corporation by so much more do the people have to pay for gas in excess of a reasonable price.
4. A municipality holds whatever interest it has in its streets in trust for the people for public use, and hence has no authority to use the trust property for its own benefit. Elster v. City of Springfield, 49 Ohio St., 96; 2 Dillon on Municipal Corporations, Section 671 \-City of Alton v. Transportation Co., 12 Ill., 38; 27 Am. & Eng. Ency. Law, 194; Perry on Trusts, Sections 129, 196, 209, 427, 432.
5. A municipal corporation has no proprietary rights in its streets which it can sell or part with for a compensation, especially when the use contemplated is for the public benefit. City of Zanesville v. Telegraph & Telephone Co., 64 Ohio St., 67; Lewis on Eminent Domain, Section 119; Gas Light Co. v. Gas Co., 25 Conn., 19; Mayor, etc. v. Railroad Co., 32 N. Y., 261; State v. Mayor, etc., 33 N. J. L., 280; Barhite v. Telephone Co. et al., 63 N. Y. Supp., 659; Ghee v. Gas Co. et al., 158 N. Y., 510; Adamson v. Railroad Co., 89 Hun, 261.
6. There was then no consideration to support the requirement to pay or promise to pay said $4,000. 1 Parsons on Contract, 427; Tiedeman on Commercial Paper, 1st Ed., Section 151; Daniels on Negotiable Instruments, Section 160; Chitty on Contracts, 5, 25, 26; Lord Loughborough in Myddleton v. Lord Kenyon, 2 Ves. Jr., 392; 30 Eng. Rep., 689; Swan’s Treatise, 12th Ed., 514, 517; 2 Kent’s Commentaries, 12th Ed., 463, star paging; Withers v. Ewing, 40 Ohio St., 400.
The alleged consideration is an executory one, that is, it is not only a promise to give something immediately, but to give something at a future day. And equity estops the same rule as the' common law. Fry on Specific Performance, 45; Platt v. Maples, 19 La. Ann., 459; Paton v. Stewart, 78 Ill., 481; Butman et al. v. Porter, Exr., et al., 100 Mass., 337; Pomeroy on Specific Performance, 57; Miturn v. Seymour, 4 John’s Ch., 498; McIntire v. Hughes., 4 Bibb., 186; Dawson et al. v. Dawson et al., v Devereux Eq., 92, 99; Banks v. May’s Heirs., 3 A. K. Marshall, 435; Bibb v. Smith, 1 Dana, 580; Holland v. Hensley, 4 Ia., 222; Webb et al. v. Insurance Co., 10 Ill., 223; Wyatt v. Mayfield, 99 Ill, 577.

Opinion:
Price, J.
We have yielded to the apparent necessity of setting forth in the statement of this case the issues made by the pleadings, believing that such statement will materially assist to an understanding of what may be said in this opinion. But as the rights, of the -parties are based on. the ordinance of June 27, 1892, .and the subsequent con duct and acts of the city and the defendant, wé will not dwell upon several averments of the answer, which do not aid in determining the paramount controversy. It will promote a clear' understanding of this controversy to examine two or more sections of said ordinance.
"Section 1. Be it ordained by the city council of the city of Columbus, Ohio, that the Columbus Gas Light and Coke Company, a corporation organized under the laws of Ohio, and its successors and assigns are hereby granted the privilege and invested with the right to use the streets, alleys, avenues, lanes, commons, bridges and public grounds of-the city of Columbus for the purpose of laying and maintaining pipes to be used for carrying gas for public and private use in buildings and manufacturing establishments, and otherwise of said city, together with the right to dig and excavate in all of said streets, alleys, avenues, lanes, commons and public grounds, for the purpose of laying and maintaining pipes and other appliances required to convey said gas to consumers thereof; provided, however, that the right to purchase the works of said company and all the appurtenances belonging thereto at any time during the existence of the rights and privileges conferred by this ordinance, is hereby reserved by said city of Columbus and is hereby secured to said city by said company, its successors or assigns."
The second section provides for the manner of conducting the work of excavating in the. streets and other public grounds, and places restrictions against interfering with water pipes, drains, sewers, or other public or private works of the city, or the gas pipes of other companies. The third section required the relaying and replacing of all pavements, curbs, gutters, streets and alleys disturbed by the gas company, so as to. restore them to former condition. The fourth section binds the company to preserve and keep the city harmless from any damages or costs that may be incurred or happen to persons or property by reason or on account of anything done by the company under the provisions of the ordinance, and to defend at its own costs any suits brought against the city by persons or corporations, claiming damages on account of the erection or maintenance of the plant of' said company, etc.
The fifth sections provides:
"Section 5. The privilege conferred in section one (1) of this ordinance is granted upon the condition that the said Columbus Gas Light and Coke Company, its successors, or assigns, shall annually pay to the city of Columbus for the benefit of the gas and' light fund of said city the sum of four thousand dollars, the first payment to be made when this ordinance takes • effect and the others annually. thereafter; and as a further consideration for the rights and privileges- therein granted the Columbus Gas Light and Coke Company shall sell gas for and during the ten years next following the passage of this ordinance at a price not exceeding one dollar and ten cents ($1.10) per 1000 cubic feet, and that from the above named price a discount at the rate of ten cents per 1000 feet shall be made on all bills paid on or before the fifteenth day of each month for ga's consumed during the preceding month, making the net price not to exceed one dollar per 1000 feet. ' The gas to be furnished for the above price shall be of at least sixteen candle power, and the council of said city hereby reserves the right to enforce compliance with this specification.
"Section 6. When the said Columbus Gas Light and Coke Company shall file with the city clerk its assent in writing to the terms of this ordinance, the said ordinance and acceptance shall be treated and deemed, as a compliance with law, and the council shall not, for the term (10 years) aforesaid, by ordinance or otherwise, require said company, its successors or assigns, to furnish gas of sixteen (16) candle power at a lower price than that herein named; provided, that nothing herein contained shall be construed as granting exclusive rights or privileges, or preventing any other company from furnishing gas to the citizens of said city of Columbus.
"Section 7. The privileges granted by the provisions of this ordinance shall not be forfeited by a temporary failure to furnish gas, unless such failure is through the neglect or misconduct of said company, its successors or assigns.
"Section 8. This ordinance shall take effect from and after its passage and publication according to law.
"Passed Júne 27, 1892."
The ordinance was signed by the president of the city council and attested by the cit)r clerk. On the 1st day of July, 1802, the company, by resolution of its board of directors, accepted the provisions of said ordinance in due form, and authorized and directed its president to file said acceptance in writing with the city clerk, all of which was done July 2, 1892.
The defendant company has enjoyed the rights and privileges conferred upon it by the above ordinance every since its acceptance by the company * and has paid ten annual payments as required by its terms. It refused to pay the amounts due July 1, 1902, and July 1, 1903, respectively, although still in the énjoyment of all the privileges and benefits of the contract as before. It hqs released or abandoned nothing which it gained by such contract. When brought into court to answer the demand for the payment of said sums, it urges several reasons why it should not respond to the terms of the obligation which it so long supposed was binding upon it. We have endeavored to extract from the answer and the arguments of counsel in its support the principal points of defense.
(1) It is said that because the predecessor of defendant, the Columbus Gas Light and Coke Company, obtained a right to occupy the streets and other public grounds of the city for the purpose of laying pipes and to sell and distribute gas to the city and its inhabitants in the year 1848 and again in 1850, there was no further grant necessary, and the authority of the city over the subject was exhausted and the grant under the ordinance of 1892 was neither necessary nor warranted, • except as to fix the price at which gas should be furnished. The argument in support of this point is vague and unsatisfactory. It can have no foundation in either fact or law, unless the right to so use the streets and public grounds is derived from a higher source than, and independent of municipal control. It was even claimed on oral argument that the gas company had its authority to occupy the public grounds of the 'city from the statute, and that the municipal authorities could only regulate the mode of use and the price to be charged for the gas. This erroneous view "may account for the entire foregoing proposition. We find nothing'in the statute to uphold the claim made. Section 3550, Revised Statutes, provides: "A company organized for the purpose of supplying gas for lighting the streets and public and private buildings of a city, village, town, or township, may manufacture, sell and furnish the gas required therein for such, or other purposes, and a company organized for the purpose of supplying the inhabitants of a city, village, town, or township with water may sell and furnish any quantity of water required therein for such or other purposes; and such companies may lay conductors for conducting gas or water through the streets, lands, alleys and .squares in such city, village, town, or township, with the consent of the municipal authorities of the -city, village or town, or with the consent of the trustees of the township, and under such reasonable regulations as they may prescribe."
This section was enacted as an amendment to the former statute, April 17, 1867, 64 Ohio Laws, 255, and it is now Section 3550, Revised Statutes. The former provision so amended, required the consent of the municipal authorities to the laying of conductors of gas or water in the streets and public grounds of the municipality. This legislation authorized the municipal authorities to refuse the privilege of placing such pipes and appliances in the streets, etc., and without their consent no gas company can lawfully enter upon and occupy the streets for the purposes of its business. This was understood to be the law during times past, and must have been so understood by the defendant, as witness the several ordinances under which its predecessor operated, as also the ordinance in favor of defendant, which is now before us. The ordinance of 1850, and those passed before and. afterwards, so far as found in the record, were passed under favor of statutory authority similar to Section 3550, supra. In all of the them the grant of the use of the streets, etc., was found in the ordinances themselves. We are unable to adopt the theory advanced,- and still believe that the city council must be consulted and its consent obtained before -any gas company can occupy public highways and places, for the transaction -of its business. This view is perfectly consistent with the duties imposed by former Section 2640, Revised Statutes, now Section 28 of the Municipal Code, which provides that the council shall have the care, supervision and control of all public highways, streets, avenues, alleys, sidewalks, public-grounds and bridges within the corporation and shall cause the same to be kept open and in repair and free ' from nuisance. Former ordinances re-. ferred to in the answer had run their course and had expired, and the gas company wanted and needed the ordinance of 1892, and without it the company had no right as against the. will of the council to longer continue its business in- the- streets and other public grounds. We deem this sufficient to answer the first point made in the defense.
(2) The answer makes the further claim that the said sum of $4,000 to be paid annually by the defendant as successor of the Columbus Gas Light and Coke Company to the city as required by said ordinance of 1892 was exacted by the city for the purpose of general revenue for said city and for no other purpose, and when collected was, and the sums now sued for, will be used, as such revenue, which should be raised by taxation, and therefore the sums so exacted are an additional tax upon defendant and its business, which is not authorized by law. To sustain this charge of inequality it is said that the ordinance provides that the annual payments shall be "for the benefit of the gas and light fund of said city," which fund is created and maintained by taxation of property in the city; and that the city never appointed an inspector of gas, or gas-meters, and that when said ordinance of 1892 was passed the city had no such officer, and that the city has not at any time been at any expense on account of inspection or supervision of defendant's gas, or gas-meters, and said annual payment was not exacted for any purpose of regulation.
As if to increase the enormity of the demands of the city, it is alleged (and it seems to be true) the city, in August, 1896, without defendant's consent, by ordinance transferred said annual payments to the general expense fund of the city, which latter fund is maintained by a system of taxation. The defendant complains of having to make these annual payments which go into the general expense fund, because it is an exaction' in addition to the payment of its share of the general taxation to maintain said fund, and is an unlawful tax upon the company and its business.
This phase of the defense needs some analysis, inasmuch as it is argued that such facts show the obligation 'to make the annual payments is without consideration and contrary to law.
We have- observed that the gas company can establish its plant and system of pipes, etc., only with the consent of the city council, and we now say that a reasonable condition may be fixed for such consent. This is not prohibited by statute, and it is evident that the privilege and its fruits were of great value • to the company. Such system, or plant, consisted of a network of underground pipes, their connections and other fixtures, as well as surface attachments, absolutely necessary for the successful operation of the business of the company. Frequent excavations and repairs were inevitable, and new extensions of the system were required from time to time. The city being charged with the care and control of its streets and public places, became responsible to third parties for their safe condition, and hence an additional burden was cast upon the city to supervise and see that such safe condition prevailed, which increased responsibility was attended with additional expense, in order that the gas company might be compelled to keep its agreement of regulation, and in case of its neglect, to make the public places occupied by the company safe and free from nuisance.
In the contemplation of the parties to the ordinance contract, the sum of $4,000 per year was considered reasonable and it was so stipulated, and the presumption that it was reasonable must be indulged until it is overthrown. When the present ordinance was passed — 1892—the city had a brilliant future, which has been fully realized,for since that time it has moved forward. with rapid strides in both territory, manufacturing and commercial business, so that eighty miles or more of defendant's gas pipe conductors with their fixtures are in the streets and other public places, and.it is folly to say that the supervision of all this system, costs the city nothing. It may not have an officer known as an inspector of gas and gas-meters, but it. appears that the duties of such a position fall upon other officers of the city, and it has'a right to be reimbursed. We think the facts in the record warrant this statement.
The city and the gas company, in closing the negotiations for the grant, agreed upon the amount which should be paid the city annually, either as a condition of the grant or as an indemnity to the city for the cost and expense of its supervision and care of the streets, and this sum was inserted in the ordinance and became one of its substantial parts and as such it has since continued, for we are not advised that any change or modification has been made by the only parties authorized to make it.
It might or might not cost the city four thousand dollars a year to supervise and exercise the proper control over the plant and conduct of the gas company. If it should cost more the company could not be compelled to pay more than the agreed amount. If less, the gas company has no right to change its stipulated liability to a scale of actual cost to the city. Nor has the company a right to' ask the court to whittle down its liability to the precise expense the city annually incurs by reason of the privileges the company enjoys in the use and occupancy of the streets and other public grounds. There is no prayer for the reformation of the contract on any ground.
The parties who were competent to make this contract in question, are competent to change it; but it is not for the court to .sanction repudiation by one party or make a new contract instead of the former.
It is true the ordinance says the annual payments are "for the benefit of the gas and light fund," but the city is the contracting party, and if any one, by contract or otherwise, diverts the money so paid into a wrong fund the act can be corrected by proper proceedings. Such payments do not become general revenue of the city if it be illegal to so transfer them. Hence the clause "for the benefit of the gas and light fund" is not destructive of the company's obligation.
The city auditor testified that the name "Gas Light Fund" was a mere ledger name in the method of keeping the city books and has no special significance. There is also considerable evidence in the record tending to prove the cost to the city of the supervision of the streets occupied by the company. Therefore it is not necessary to discuss the right of the city to raise general révenue by requiring these payments, a point so fully and ably argued in brief for defendant in error. It sufficiently appears in the record that much, if not all, of these annual payments have directly or indirectly been used by the city for the legitimate purposes contemplated by the parties, and it is not compecent for the gas company to escape because the city authorities have not been judicious in the manner they expended the money. It may have been improperly mingled with the general revenues of the city; and if the contract or ordinance, accepted and yet relied on by the company,, gives countenance to a wrongful diversion of the payments, it can not repudiate its obligations on that account. It is charged with the duty of making the payments, but it is not charged with any responsibility for the proper disbursement of the same.
The answer avers that in 1896, the city council passed an ordinance transferring payments made by the gas company "to the general expense account fund of said city," and that this was done without the knowledge or consent of the company, and that this particular fund is one raised by general taxation. Here again we have a supposed avenue of escape on the ground that the city committed a wrong in mixing the payments with a general expense fund. The knowledge or consent of the gas company, or their absence, in no sense affects the situation. If the ordinance complained of is illegal there is a way to restore the money to its proper function, but the liability of the coriipany- can not be thus extinguished. We think this branch of the defense not good.
We do not deem it necessary to consider here the many authorities cited in the briefs of learned counsel. . They are collected in their proper place preceding this, opinion.
(3) The remaining defense is that when the ordinance of 1892 was passed, the city knew that the only means the defendant had for the payment of said annual payments was its receipts and income derived from the consumption and sale of gas to the city and private consuméis, and to meet these annual amounts, it would need to retain its then business; yet the city, having such knowledge, subsequently permitted the Federal Gas & Fuel Company to enter upon and occupy the streets and other places and lay pipes therein for the distribution and sale of natural gas as an illuminant to- the city and its inhabitants, which permission was given first in 1899. It is pleaded that natural gas could be and was thereby furnished at a much lower price and at a greater profit than artificial gas, which was being furnished by the defendant; and further, that the above natural gas company was not required to pay anything for the benefit of the general expense fund except the excess received for the gas above fifteen cents per cubic foot, and that no natural gas was sold by that company above that price, and therefore the city received nothing.
It is also complained that in February, 1899, the Central Ohio Natural Gas Company secured from the city' the right and privilege of piping said streets and other places for the purpose of conveying natural gas for public and private use, and that' in 1901 the latter company did lay its pipes and furnished natural gas to the city and its inhabitants, and that the city then fixed the price of natural gas at thirty-five cents per thousand cubic feet, with a discount for prompt payment.
It is alleged that when defendant obtained its contract of 1892, natural gas had not then been used, or believed to be suitable for illumin*ating purposes, and that it did not come into general use for such purposes until* about the year 1896 or 1897; and that by reason of the city giving the right to these companies to furnish the cheaper-gas the defendant was wholly unable to compete with them — was not able to retain its consumers and was thereby deprived of the means to make said annual payments, and that it would be "unconscionable and inequitable to require or compel the defendant" to pay said- annual sums, or to make any further payments thereof. The reply denied the alleged results of the acts of the city.
The court of common pleas heard evidence as to the loss or decline in defendant's business after the natural gas companies were admitted to the field, but its finding for the company is general, and we are not advised by the record what weight such defense had with that court. And the judgment of the circuit court is a general affirmance.
If all that is said in this branch of the defense should be conceded, what, then, aré the rights of the parties?
The city did not violate the provisions of the ordinance of 1892 under which defendant holds, for it did not grant it the exclusive right to occupy the streets and furnish gas to. the city and fits inhabitants; and the statute (Section 3550, Revised Statutes) does not purport to grant, either directly or by permission of thé municipal authorities, an exclusive right to any one company to lay its conductors for conducting gas through the streets of a city, town, or village. This is held in The State, ex rel., v. The City of Hamilton, 47 Ohio St., 52, 70, 71. On page 71, it is said: "A gas company may open the streets and lay down its pipes with the consent of the city, under such reasonable regulations as the city may make; but the right to give such consent and prescribe such regulations does not carry with it a power to exclude every other gas company or to bar the municipality from ever using unoccupied portions of the streets for the same purposes. In State, ex rel., v. Cincinnati Gas Light & Coke Company, 18 Ohio St., 262, 289, the principle is stated, that to enable the city council to grant, by ordinance in the nature of a contract, an exclusive right to use the streets and alleys of the city for the. purpose of laying therein pipes for carrying gas to be used in lighting the city for a term of twenty-five years, the power must be shown' to have been expressly granted, or to be so far necessary to the proper execution of the powers which are expressly granted as to make its existence free from doubt. Grants by the public are to be strictly construed, and an intention to grant an exclusive privilege, or monopoly, is not to be implied. Where exclusive privileges are not expressly given by the charter they should not be held to be conferred."
But if any one should doubt the soundness of the doctrine so advanced the ordinance itself should silence all cavil, for the last clause of section six thereof provides, "that nothing herein contained shall be so construed as granting exclusive rights or privileges, or preventing any other company from furnishing gas to the citizens of said city of Columbus."
The defendant and its assignor, the Columbus Gas Light and Coke Company, under prior ordinances and the one under consideration have occupied and used many of the city streets and grounds for the .transaction of its business for over half a century, and when the last ordinance was passed a.nd accepted, both the city and the company were facing the future, not knowing what it might unfold as to new means of furnishing light. The company was content with past profits, and would venture upon the unknown future. If its profits are now behind it, the city should not be tied to the destiny of the company and be obliged to exclude other gas and electric companies, to the great detriment of its inhabitants. What time has' developed, the company must be held to have contemplated.
In respect to the gas company, the contract may now be a hard one to comply with, but there are innumerable instances in business life where contracts of parties have become hard and unprofitable, 'yet the courts can not discharge from liability on that ground, for such risks were assumed when the contracts were made.
We find that the lower courts erred in their judgments, and perceiving no good reason to remand the case for another trial, we render final judgment for the sums mentioned in the petition.
Judgment reversed and judgment for plaintiff in error.
Shauck, C. J., Crew and Summers, JJ., concur..