Harlan F. Stone

“ The sound discretion which controls the exercise of the extraordinary powers of a federal court of equity should not permit them to be exerted to relieve suitors on such a ground from the very action of state authorities which they have invoked. ”

“ Assuming as we do for present purposes the authority of the commission under state law to refuse its permission to appellants to withdraw, we perceive no objection under the Federal Constitution, or otherwise, to withholding it. Appellants do not seriously deny that the Warfield Company is but an agency organized by the United Company for the purpose of carrying on its public service business in Kentucky or that through that agency the latter is doing business in the cities named and elsewhere in the state. ”

“ Appellants do not accept either cost or market value as the basis of value of their gas rights. Instead they urge that their assembled holdings of gas rights are unique, in that they cannot be reproduced and that their value depends largely upon their peculiar nature and situation. They rest their claim to a largely enhanced value over book value upon alternative theories supported by two classes of expert testimony. ”

“ Appellant United Fuel Gas Company, a West Virginia corporation, also appellant in No. 4, is engaged in the business of producing natural gas from gas fields located principally in West Virginia, which it sells to consumers in West Virginia, Kentucky, and Ohio. A part of its business is the sale of gas wholesale to distributors in West Virginia, and has not been subjected to regulation by any public body. ”

“ Suitors may not resort to a court of equity to restrain a threatened act merely because it is illegal or transcends constititional powers. They must show that the act complained of will inflict upon them some irreparable injury. As the court below held, appellants, as public service companies, are bound by the common law, if not by statute, to render their service at reasonable rates. ”

“ Appellants' second class of expert testimony is that of men experienced and interested in the production and marketing of natural gas, who purported to assign to appellants' gas field what was described on the argument as its present exchange value or the price which the property would bring if sold by a willing seller to a willing buyer. ”

“ By taking the value of that property used exclusively in this regulated business and allocating the gas fields and other property used jointly in the two classes of business, the former on the basis of the volume of gas supplied to each type of business, appellants conclude that, if their valuation of their gas rights be accepted a compositive percentage of 11 per cent. of the total value is to be allocated to the regulated business. ”

“ Section 163 of the Kentucky Constitution provides that gas companies may not procure franchises permitting them to lay pipes in and under public streets without the consent of the appropriate municipal governing bodies, and section 164 limits all franchises to periods not exceeding 20 years. ”

“ Public Service Commission of West Virginia, 95 W. Va. 91, 120 S. E. 398, in which the United Company was a party, held that 50 per cent. was a fair share of the net return of the subsidiary's business attributable to appellant United Company, and this was the conclusion adopted by the court below.
We need not labor the point that a public service corporation may not make a rate confiscatory by reducing its net earnings through the device of a contract unduly favoring a subsidiary or a corporation owned by its own stockholders. ”

“ A point considered below and argued here is that gas in the earth is not capable of ownership, but we assume that appellants' leases and contracts give them complete legal power of control over the gas available beneath the surface of the area embraced in the gas field, so far as it may be brought under physical control. ”

“ No witness testified that there was a composite percentage which could be taken generally to represent the part of appellants' entire property used in the regulated business, regardless of the varying values assigned to different items of property. Appellants have used this last figure, 11 per cent., in their calculations, and do not contest its validity. This percentage appears to include some property located in Kentucky but not actually used in the local regulated business. In our own computation, we have, for convenience, taken 12 per cent. ”

“ The leases vary in their terms, but a typical lease gives the lessee the right to drill for gas for ten years, with the privilege of renewal at a fixed small annual delay rental, varying from 25 cents to $2 per acre, materially increased in the form either of a fixed rental or a royalty if and when production is established. ”