Myron Green Cafeterias Co. v. Kansas City. , 293 Mo. 519 ( 1922 )

Appellants are users of gas in Kansas City, and commenced this suit to enjoin the enforcement of a city ordinance which prohibited the use of gas pumps and other devices designed to increase the flow of gas beyond that normally due to the pressure in the pipe through which the Kansas City Gas Company furnished gas to them. The Kansas City Gas Company receives the gas from the Kansas Natural Gas Company, which procures natural gas at points of production in Oklahoma and Kansas and conducts it through pipes to various towns in Kansas and Missouri, including Kansas City, Missouri. About eighty-five per cent of the gas comes from Oklahoma and fifteen per cent from Kansas. That used in Kansas City is delivered to the Kansas City Gas Company through pipes metered at the city limits, and is by that company sold to about 60,000 consumers. Of these about 1200 employ devices prohibited by the ordinance in question. The Kansas Natural Gas Company is in the hands of a receiver, appointed by the Federal court in Kansas. The court fixed the price of the gas, and the Kansas City Gas Company pays to the Kansas Natural Gas Company forty per cent of its receipts from the sale of gas in Kansas City. The Kansas City Gas Company operates under a franchise granted by Kansas City in 1906. The agreed statement of facts shows the ordinance involved was duly passed and approved; that respondents contend that appellants by employing the devices in question increased the natural flow of gas to the detriment of the great body of gas users in Kansas City, and that the result of the use of such devices was to endanger the health and safety of the people of the city; that respondents were about to begin prosecution, against appellants and others, under the ordinance and would do so unless restrained; that the Federal Court has increased the franchise rates. There was testimony of experts to the effect that the use of the gas pumps and devices condemned by the ordinance tended to produce a vacuum in the pipes; that air was thereby drawn into them and that the mixture thus produced became dangerously explosive and had frequently resulted in explosions in numerous places in Oklahoma, Kansas and Kansas City, and that great injury to life, limb and property is done and threatened thereby. There is no description of any of the devices and no detailed evidence of the manner of their use. The petition raised several constitutional questions, and alleged that the ordinance invaded the field occupied by the Public Service Commission. The trial court found against appellants and dismissed the petition, and this appeal followed.

Appellants contend the ordinance is void (1) "because it is in direct conflict with the Public Service Commission Statute of Missouri, and seeks to invade and usurp the powers and functions of the Public Service Commission;" and (2) "because it is in violation (a) of the Federal statute creating the Interstate Commerce Commission and defining its powers, and (b) of Section 8, Article I, of the Federal Constitution;" and (3) that the ordinance cannot be justified as a police regulation for these reasons.

I. With respect to the question whether the ordinance is void for conflict with the Commerce Clause of the Federal Constitution, decisions in point are at hand. Appellant relies upon Landon v. Public Utilities Commission, 242 F. 658, 245 F. 950. In that case the question whether the Kansas City Gas Company's activities in selling and distributingInterstate to Missouri consumers gas delivered to it by theGas: U.S. Kansas Natural Gas Company constitutedConstitution. interstate commerce was one of the turning points of the decision. The Kansas Public Utilities Commission had attempted to fix rates for gas in cities in Kansas in which the situation with respect to the purchase, reception of gas and the sale and distribution of gas to consumers was essentially the same as that in Kansas City, Missouri. It was contended by the receiver of the Kansas Natural Gas Company that the rate fixed was a regulation of and a burden upon interstate commerce. The Missouri Public Service Commission was permitted to become a party, because its powers with respect to rate regulation under like conditions in Kansas City and St. Joseph were likely to be affected by the decision. It took an active part in the case. The district court held, in the decision cited, that "the transportation of gas carried on by the receiver is interstate commerce, and that the character of the business inheres from the beginning of the journey in Oklahoma to the termination thereof at the burner tips in Kansas or Missouri," and that the effort to fix local rates was a direct and undue burden upon interstate commerce. This case was appealed to the Supreme Court, and that court (Public Utilities Comm. v. Landon, 249 U.S. l.c. 244 et seq.) took a different view, as follows:

"We think the trial court properly overruled the objections offered to its jurisdiction, and nothing need be added to the reason which it gave. [234 F. 152, 155.] But we cannot agree with its conclusions that local companies in distributing and selling gas to their customers acted as mere agents, immediate representatives or instrumentalities of the receivers, and as such carried on without interruption interstate commerce set in motion by them.

"That the transportation of gas through pipe lines from one state to another is interstate commerce may not be doubted. Also, it is clear that as part of such commerce the receivers might sell and deliver gas so transported to local distributing companies free from unreasonable interference by the State. [American Exp. Co. v. Iowa, 196 U.S. 133, 143; Oklahoma v. Kansas Natl. Gas Co.,221 U.S. 229; Haskell v. Kansas Natl. Gas Co., 224 U.S. 217.]

"But in no proper sense can it be said, under the facts here disclosed, that sale and delivery of gas to their customers at burner-tips by the local companies operating under special franchises constituted any part of interstate commerce. The companies received supplies which had moved in such commerce and then disposed thereof at retail in due course of their own local business. Payment to the receivers of sums amounting to two-thirds of the product of these sales did not make them integral parts of their interstate business. In fact, they lacked authority to engage by agent or otherwise in the retail transactions carried on by the local companies. Interstate commerce is a practical conception and what falls within it must be determined upon consideration of established facts and known commercial methods. [Rearick v. Pennsylvania, 203 U.S. 507, 512; The Pipe Line Cases, 234 U.S. 548, 560.] The thing which the receivers actually did was to deliver supplies to local companies. Exercising franchise rights, the latter distributed and sold the commodity so obtained upon their own account and paid the receivers what amounted to two-thirds of their receipts from customers. Interstate movement ended when the gas passed into local mains. The court below erroneously adopted the contrary view, and upon it rested the conclusion that the public commissions were interfering with establishment of compensatory rates by the receivers in violation of their rights under the Fourteenth Amendment."

The decree was that the decree of the trial court was reversed and the cause remanded. Appellant seeks to evade the force of this decision on the same facts by the contention that the Supreme Court subsequently modified its decree, entered upon the filing of the opinion quoted, and made a different order as to the hearing. This is based upon the vacation, April 28, 1919, of the original decree of date March 17, 1919. [249 U.S. l.c. 590, 591.] The order of vacation and new decree is as follows:

"In these cases it is ordered that the decree entered March 17, 1919, be vacated and decree now entered as follows: The decrees below are reversed and the cause is remanded to the trial court with directions to hear it anew and determine all the issues involved, including those arising on the several bills, cross-bills, and answers in the nature of cross-bills, in conformity with the views expressed in the opinion of this court; and to take such further proceedings as may be appropriate and consistent with such opinion. All temporary injunctions in force at the time of the entry of the decrees from which appeals were taken here shall be continued in force until otherwise ordered. The costs in this court will be paid one-half by John M. Landon, receiver of the Kansas Natural Gas Company, and the remainder shall be paid, one-third by each of the three groups of appellants.

"(For the opinion of the court and names of counsel, see ante 236.)"

There seems to be nothing in this intended to modify the opinion the court had rendered in March. On the contrary, the new trial ordered by the new decree is required to be "in conformity to the views expressed in the opinion of this court," and the "further proceedings" were required to be "appropriate and consistent with such opinion." The Supreme Court (Penna. Gas Co. v. Pub. Service Comm., 252 U.S. l.c. 28) discussed the opinion in the Landon Case and stated what was there held, as follows:

"This case differs from Public Utilities Commission v. Landon,249 U.S. 236, wherein we dealt with the piping of natural gas from one state to another, and its sale to independent local gas companies in the receiving state, and held that the retailing of gas by the local companies to their consumers was intrastate commerce and not a continuation of interstate commerce, although the mains of the local companies receiving and distributing the gas to local consumers were connected permanently with those of the transmitting company. Under the circumstances set forth in that case we held that the interstate movement ended when the gas passed into the local mains; that the rates to be charged by the local companies had but an indirect effect upon interstate commerce and, therefore, the matter was subject to local regulation."

It is clear the Supreme Court was not of opinion that the order of vacation and the entry of the decree of April 28, 1919, had affected the quoted holding in the Landon Case. It also appears that the court to which the cause was remanded had no such conception of the new decree as that now advanced by appellants in the instant case. On the retrial (Landon v. Court of Industrial Relations, 269 Fed. l.c. 415) the reasons for the order and decree of April 28, 1919, are stated, and it is shown they were made (not to affect the Supreme Court's holding on the question as to interstate commerce, but) to meet conditions which arose after the original decree, and to permit the litigation of the question whether the rates fixed by the Kansas Commission were confiscatory. The decision of the Supreme Court determines against appellants the interstate commerce issue in the instant case.

II. Appellants' remaining contention is, in substance, that the enactment of the Public Service Commission law withdrew from Kansas City the power to pass the ordinance involved in this case; that the field of the ordinance is occupied by the statute; and that the power to regulate is now vested solely in the Commission to the exclusion of the municipal authorities. No question is raised concerning the power of thePublic Service State to occupy the field of regulation to suchAct: Conflict an extent that the city would be precluded fromWith City enacting and enforcing an ordinance like that inOrdinance. question. Respondents' contention is that the State has not done so, and that the ordinance is not a usurpation of power belonging to the Commission. The solution of the question depends upon a construction of certain sections of the Public Service Commission Act. The powers of the Commission are to be found in that act and are such as are expressly granted and clearly defined, and such others as are necessary to the "just and reasonable execution" of the power so conferred and which, therefore, are conferred by necessary implication. [State ex rel. v. Pub. Serv. Comm., 270 Mo. l.c. 442, 443; People ex rel. Mun. Gas Co. v. P.S. Comm., 224 N.Y. l.c. 165.] Appellants contend that the ordinance in question deals with a practice the regulation of which is committed to the Commission by the act which creates that body. It is not every general statute which withdraws the police power from the city with respect to every activity connected in any way with the general subject of such statute. [Roper v. Greenspon, 272 Mo. 288.] Subsections 10 and 11 of Section 10411, Revised Statutes 1919, define "gas plants" and "gas companies." Article IV of the Public Service Commission Act deals with the regulation of gas plants and corporations, and the first section of this article (Sec. 10476) provides that "this article shall apply to the manufacture and furnishing of gas for light, heat or power." As was to be expected, the subsequent sections of the article clearly are designed for the regulation of gas plants in their character as public utilities. There is nothing in these sections or elsewhere in the act, when it is read in the light of the quoted rule, which purports to extend the powers of the Commission beyond regulations of that character. There is certainly nothing in the act which indicates that a consumer of gas comes within the scope of the Commission's power in all respects simply because he purchases gas from a utility the Commission has power to regulate as such. The use of gas pumps is not a practice of the Kansas City Gas Company, nor a service which it provides. So far as this record shows the case is that a number of the Gas Company's customers have placed in their residences or places of business a device the use of which in such places creates a condition dangerous to life, limb and property. This is the act of individual consumers and not of the company. The fact that the device is attached to a gas pipe does not extend the powers of the Public Service Commission, nor exculpate those who use the device. The ordinance assailed by appellants is not regulatory of the activities of the Gas Company, but of the acts of individuals whose conduct endangers others. That they are consumers of gas is incidental. We are unable to see that the ordinance in any way usurps powers of the Commission.

The judgment is affirmed. All concur.