Hanford v. Hanford Gas Etc. Co. , 169 Cal. 749 ( 1915 )

The city of Hanford, a city of the sixth class, sued defendant, the Hanford Gas Power Company, to recover judgment for a specific sum with interest, this sum being two per cent of the gross annual receipts of the defendant, earned by operating its plant in the city of Hanford, under the provisions of ordinance No. 115 of that city. Defendant demurred to the complaint. The demurrer was overruled. Defendant declining to answer, judgment was given against it and it appeals. It appears that the defendant, a public service corporation, was and had been for many years occupying the streets of the city of Hanford with mains and laterals for the supplying of gas to the inhabitants of the city. It was exercising this franchise under the constitutional grant and permission of section 19, of article XI of the constitution as it read prior to the amendment of October 10, 1911. The legislature in 1901 enumerated certain franchises which a municipality might dispose of by sale, and provided for the manner of disposition. (Stats. 1901, p. 265.) Amongst these franchises was the franchise "to lay gas pipes for the purpose of carrying gas for heat and power." In 1902 an application was filed with the board of trustees of the city of Hanford for a franchise for the privilege of using the public streets and thoroughfares of the city for the purposes of laying pipes and conduits therein to supply the city and its inhabitants with gas "for heat, light, and power." Pursuing the course prescribed by the act of 1901, above cited, the city of Hanford advertised for bids and sold this franchise to the applicant Young, who, in turn, conveyed and assigned all his franchise rights to defendant corporation. The act of 1901 required that the successful bidder and his assigns must, during the life of the franchise, pay to the municipality two per cent of the gross annual receipts arising from the use and operation or possession of the franchise. Such provision was contained in the grant to Young. It is this two per cent which defendant has refused to pay, and for which judgment was sought and obtained. Upon appeal appellant places reliance upon such cases as In re Johnson,137 Cal. 115, [69 P. 973]; Denniger v. Recorder's Court, 145 Cal. 629, [79 P. 360]; People v. Los Angeles Gas Co., 150 Cal. 557, [89 P. 103], and Town of St. Helena v. Ewer, 26 Cal.App. 191, [146 P. 191]. To sum up its argument under these cases, appellant declares that by virtue of the constitutional grant in section 19 of article XI, it had the free right to use the streets for gas mains and laterals without being subject to any charge for such use by the municipality. This may at once be conceded to be true. It argues that while the constitution limits the right of public service corporations to the use of the streets for the purpose of supplying "gaslight or other illuminating light," the fact that by the same mains and laterals the gas so carried and purveyed may be used for heat or power, imposes no additional burden upon the municipality or its streets, and does not therefore become the legitimate subject-matter of a new franchise, with onerous payments and exactions thereunder; that therefore it acquired nothing by virtue of the franchise which it secured for the furnishing of gas for heat and power, and as it acquired nothing, can be made to pay nothing for nothing. The cases upon which appellant relies, however, are not decisions in accordance with its contention, which contention was in no one of them involved. Inre Johnson, 137 Cal. 115, [69 P. 973], merely decided that certain onerous provisions of an ordinance of the city of Pasadena unconstitutionally hampered the right of public service corporations to lay their pipes for illuminating gas or water in the streets of that city, and so far as the matter before us is concerned it decided nothing more. To the suggestion on the part of the city of Pasadena that it was the purpose of the corporation to supply gas for other than illuminating purposes, this court answered that even if the suggestion were founded upon fact, it did not deprive the corporation of the right conferred upon it by the constitution (to lay pipes for the furnishing of gas for light) "or authorize the municipality to prevent it from enjoying that right." In Denniger v. Recorder's Court, 145 Cal. 629, [79 P. 361], an ordinance regulating and fixing gas rates was under consideration. The petitioner was convicted of having collected a rate in excess of the municipal rate. The conviction was upheld. In the course of the discussion this court said: "Section 19 of article XI does not directly confer upon any individual or company the right to lay pipes and conduits in the streets of a city in order to supply gas for cooking and heating purposes, but only so far as may be necessary for supplying the city and its inhabitants with gaslight. The same gas, however, which furnishes light also serves for cooking and heating, and the pipes and connections necessary for the one purpose make the gas available for the other purposes without subjecting the streets to any additional burden." In People ex rel. City of Los Angeles v. Los AngelesIndependent Gas Co., 150 Cal. 557, [89 P. 108], the state, byquo warranto, sought to forfeit the unquestioned constitutional franchise of the defendant Gas Company to use the streets for the supplying of gas for illuminating purposes because the company was also through the same mains, laterals, and connections supplying the same gas for purposes of heat, power, and cooking. It is to be borne in mind that the effort was not to prevent the defendant company from using a franchise which it did not possess, — namely, the franchise to supply the gas for purposes other than illumination, but it was to forfeit its franchise for the supplying of gas for illumination because it was permitting the gas to be used for other purposes. The trial court refused to forfeit the franchise, and this court affirmed the judgment. In so doing it nowhere declared that a gas company, purveying gas under the constitution for illuminating purposes, had under that constitutional franchise the right to supply it for other purposes. It held merely that it would not forfeit the franchise because it was so doing. It is not even intimated as to what the decision of this court would have been had the action been addressed to an effort to restrain the defendant corporation from exercising a franchise not given to it by the constitution, — namely, the franchise of supplying gas for heat, power, and cooking. It is said in this case, but only arguendo, that, "The burden upon the street is in no way increased by the fact that the use of the gas carried through the pipe is not confined to illumination." In St. Helena v. Ewer, 26 Cal.App. 191, [146 P. 191], the court of appeal had under review an ordinance of the town of St. Helena granting a franchise for supplying the town and its inhabitants with water. The defendant acquired this franchise under a bid agreeing to pay seven and seven-eighths per cent of the gross annual receipts from the sale of water under the franchise. This franchise was one granted under the Franchise Act of 1897 (Stats. 1897, p. 135), held to be unconstitutional in Pereria v. Wallace,129 Cal. 397, [62 P. 61], as an attempt to impose illegal conditions upon the franchises freely granted by the constitution under section 11, subdivision 19.

Manifestly no one of these cases is in point upon the question here under consideration. The franchise granted by the city of Hanford did not attempt to touch upon nor deal with defendant's rights to supply gas for illuminating purposes. Unquestionably while the same gas may be used through the same mains and laterals, the use of gas for heat and power is a distinct and different use from its use for illumination, and it is only the right to the latter use which is protected and, so to speak, given free under the constitution. To say, as our decisions have said, that the franchise to supply illuminating gas will not be forfeited because the purveyor permits its gas to be used for purposes not covered by the franchise, is very different from saying that with the franchise to furnish gas for lighting purposes goes the franchise right to furnish it for the other purposes. The latter this court has never said, and from nothing that it has said can any such inference be derived. If the use is different, the right to the use is different. Conceivably a corporation might be formed for the purpose of supplying a gas unfit for illumination, but eminently well suited for purposes of heat and power. Could such a company without a franchise occupy the streets for this purpose under the constitutional grant of a right to occupy the streets for the supplying of illuminating gas? If it could not, then per contra a company supplying illuminating gas has acquired no right to supply a gas for the other separate enumerated uses. The vital question then is, Did the defendant in accepting this franchise from the city of Hanford acquire anything of value? If it did, then, no element of fraud entering into the case, it is bound by its contract. We think clearly that it did. Up to the time that it acquired the right to supply gas for purposes of heat and power it had the franchise right to supply gas solely for purposes of illumination, with the added guaranty under the decisions of this court that its franchise to supply illuminating gas would not be forfeited merely because it permitted its gas to be used for these other purposes. It was not told that it had the right, and it did not have the legal right, to permit its gas so to be used. If effort had been directed to that end, this use could undoubtedly have been restrained. The city of Hanford admittedly, under its charter (Municipal Corporations Act, sec. 862, subd. 13), [Stats. 1883, p. 270], had the power to grant the franchise for the use of its streets for the purveying of gas for heat and power, if the constitutional grant before referred to did not stand in the way. Clearly it did not stand in the way, and, moreover, the legislature itself had recognized that the different uses were subject to different franchise rights, and had made provision for the award by municipalities of separate franchises permitting these new uses.

The judgment appealed from is therefore affirmed.

Lorigan, J., Melvin, J., Shaw, J., Sloss, J., and Angellotti, C.J., concurred.