Story Case

The Consumers Gas Trust Company was organized to construct and maintain a natural gas line in Gains-ville, Indiana, to supply the citizens of the town with natural gas. The company had been in existence for several years, when the natural gas weakened in force, and the company refused to supply new applicants with gas. Jane Woods owned property in the town, and she applied for the right to use the natural gas; when this was refused, she asked the state attorney to bring an action in mandamus to compel the company to supply her with its commodity. The company defended, on the ground that it was unable to supply its customers with all the gas they required, and, therefore, could not assume new obligations. Is this a good defense ?

Ruling Court Case. Village Of Bowling Green Vs. Cincinnati, Hamilton & Dayton Railroad Company, Volume 57 Ohio State Reports, Page 336

The village of Bowling Green passed an ordinance requiring the C, H. & D. Railroad to light certain crossings within the village. The railroad company failed to provide the lights, and the village authorities, pursuant to the ordinance, supplied the lights and brought this suit against the railroad company to recover from it the expense incurred. The railroad company made two defenses, first, that the village did not have authority to require the installation of the lights, and, therefore, did not have the right to do the work at the expense of the company; and, second, that because the ordinance required electric lights of a certain type, it put the railroad company at the mercy of the local electric light company, compelling it to pay whatever extortionate price the light company should require.

The first defense was held insufficient, because the case came within the statute giving villages power to pass regulations of this nature. The requirement was of the sort that the village could make, and would be valid if not unreasonable.

Of the second defense, the court said, in an opinion by Mr. Justice Bradbury: "It is true that the railroad was required to adopt electricity as the means of illumination, and was confined to the kind of lamps and their attachment then in use in said village. If the exclusive right to use these lamps and attachments, within the village, had been granted by the patentee to the Bowling Green Electric Light & Power Company, and if this company had an absolute power to fix the price that it could exact for the use of its light and lamps, then the contention of the railroad company would find strong support in reason and justice. It may be conceded, that the lamps and their attachments, as well as the system of lighting in use in the village, were all protected by patents and yet the power of extortion would not follow, necessarily. Although the light and power company has acquired a monopoly in the village, the use to which it has devoted its property is one in which the public has an interest. Both reason and authority deny to a corporation in such a relation to the public, the power to fix arbitrarily the price at which it will furnish light. The Bowling Green Electric Light & Power Company was bound to serve all of its patrons alike; it could impose on the railroad company no greater charge than it exacted of others whom it served. The village had authority to fix the rates of the light company. If it should fail to do so, and the railroad company should believe that an extortionate price was demanded, it could, by appealing to the courts of the state, compel the light company to establish a reasonable price. It follows that the ordinance was not unreasonable in its requirements. Even though the railroad company was compelled to patronize the light company, this is not objectionable, since that company is bound to supply its patrons on terms that must be both reasonable and impartial."

It was, therefore, decided that the ordinance was valid, because it was not oppressive to require the railroad to deal with a company that was legally bound to serve it fairly. The village, having authority to require the lights, could install them at the expense of the company. Judgment was given for the plaintiff, the village.

Ruling Law. Story Case Answer

The fundamental rule governing all public service companies is that they must serve all persons desiring their service on equal terms, without discrimination, and for a reasonable charge. This is true whether the public employment is a corporation, a partnership, or an individual. If this law did not exist, the elementary purpose of creating public utility companies would be defeated. Thus, a contract entered into by an irrigation company whereby it agreed to sell water to one electric power plant, but to no other company desiring to use its power to generate electricity, was declared a void contract, on the ground that the irrigation company was engaged in a public calling, and must serve all alike.

Two gas companies, operating in the same town in Indiana, mutually agreed not to supply gas to each other's customers. This contract was declared illegal, on the ground that the companies must serve all who apply. In South Carolina, a groceryman agreed with one telephone company not to use the telephone of a rival line, and if he did so, the first could sever its services. The court held that the company could not sever its service, although the grocer also used the rival telephone, on the ground that the telephone company could not thus discriminate. The same law applied to the case where a lighting company charged a customer, who had applied for electricity, an additional price for a transformer, in pursuance of its policy to supply transformers free to those who had the wiring of their houses done by the company's own wiring department, but to charge applicants, like the present one, who had their wiring done by other parties, the full price of the transformers. The Supreme Court held that this discrimination was not justifiable.

The Story Case is based upon the Court Case of Wood, In the Name of the State, vs. Consumers Gas Trust Company, Volume 157, Indiana Reports, Page 345, where the court held that, since the company's lines were contiguous to the plaintiff's property, which was thus subservient to its business, and since it was a public service company, the plaintiff had the right, with the public in general, to whatever service the company could grant. The court said that the right to the gas was held in common by all those abutting on the streets where the company's pipes were laid; that the legislature could not grant the right to the use of the streets for any part of the public, less than the whole public.