In re petition of Ben T. Welch
AGO 59
Opinion No. 59
Pennsylvania Attorney General Opinions
Opinions Of the Attorney General
September 12, 1932
Keystone Pipe Line Company—Exercise of Eminent Domain for Transportation of Gasoline—Quo Warranto—Function of Attorney General.
Where an owner of private lands over which a pipe line company has purported to exercise the power of eminent domain for the transportation of gasoline, on a petition for quo warranto, has shown the presence of substantial questions as to the statutory and constitutional authority for the exercise of such power, the Attorney General will allow the petition.
It is not the function of the Attorney General to determine the disputed issues involved in such a case, but to ascertain whether there are substantial questions of importance to the public. If such questions are present, it is the duty of the Attorney General to permit them to 'be passed upon by the Courts.
Neither the granting of a charter to a corporation nor the issuance of a certificate of public convenience by The Public Service Commission can estop the Commonwealth from instituting quo warranto proceedings to test the legality of an exercise of eminent domain by the corporation.
In re petition of Ben T. Welch for a writ of quo warranto against Keystone Pipe Line Company.
Ben T. Welch has filed with the Attorney General a petition asking that the Commonwealth institute a quo warranto proceeding against Keystone Pipe Line Company to oust the Company of certain corporate rights and privileges which the Company claims to exercise under its charter and the laws of the Commonwealth. For the sake of brevity the respondent company will hereafter be referred to as the Company.
The Company filed an answer and testimony was taken.
The petitioner alleged and proved that he is the owner of a tract of land in Philadelphia County across which the Company has constructed a pipe line, for the purpose of transporting gasoline, and which is now being used for that purpose.
He alleged that the pipe line was located on his premises as the result of an exercise of eminent domain by the Company, and the issue is whether the Company may exercise the power of eminent domain for such a purpose.
The Company, in addition to asserting its legal right to exercise the power of eminent domain under these circumstances, also contended that there was no exercise of such power in respect to the land of the petitioner.
The specific objections raised by the petitioner are, in substance (1) that the Company's charter and the Acts of Assembly under which the charter was granted did not confer the right of eminent domain for the purpose of transporting gasoline, and, (2) that in operating the pipe line in question the Company is not a public service corporation or a common carrier, and therefore even if the Acts of Assembly and the charter purport to confer the power of eminent domain, they are unconstitutional.
The Company is a Pennsylvania corporation incorporated on May 19, 1931, under the Act of April 29, 1874, P. L. 73, "and the several supplements thereto."
The charter states the purpose of the corporation to be "the transporting, storing, insuring and shipping petroleum and refined petroleum products, and to construct, maintain and operate such pipe lines, tanks and facilities as are necessary and proper for the conduct of certain business, said pipe line or pipe lines to run within the Commonwealth of Pennsylvania, including a pipe line or pipe lines beginning at or near the vicinity of Point Breeze, Philadelphia" and extending through certain counties and to certain points therein named.
Prior to the issuance of the charter, the Public Service Commission of the Commonwealth had issued a certificate of public convenience, approving the incorporation of the Company, as required by law.
The Company seems to rely for the basis of its charter on the Act of June 2, 1883, P. L. 61, (which was a supplement and amendment to the General Corporation Act of 1874) as amended by the Act of April 30, 1929, P. L. 896. This Act of 1883 provided for the incorporation of companies with power to transport, store, insure and ship petroleum. The second section of the act refers to companies incorporated for the transportation and storage of oil. The Act of 1929 amended the second section but did not alter the use of the words "petroleum," or "oil."'
If these supplements to the General Corporation Act of 1874 were the only ones upon which this charter could be based there might arise a question as to the right of the Company to transport gasoline at ail. However, the supplementary Act of May 11, 1909, P. L. 515, which authorized the formation of corporations "for any lawful purpose not specifically designated by law," is full warrant for the present charter. The petitioner, recognizing the scope of the Act of 1909, does not contend that this Company may not in any event transport gasoline. Eminent domain is the sole issue.
The Company's first contention is that it has not exercised eminent domain as to this petitioner.
It is to be noted in passing that Mr. R. C. Tuttle, the respondent's Vice President and General Manager, testified that in the construction of its pipe lines the Company had dealt with approximately six hundred tracts of land, and that in about one hundred thirty-five eases condemnation bonds were filed in court, and in two eases in addition to the present one, other litigation was instituted. Thus it is apparent that the Company has purported to exercise the power of eminent domain in the construction of its lines. However, it will not be necessary for us to consider whether that admission would be sufficient grounds on which to base a proceeding in quo warranto in the absence of the exercise of eminent domain as to the particular petitioner.
The circumstances concerning the construction of the line across this petitioner's premises were developed at length in the testimony. Briefly they were these.
Some time in July, 1931, the Company's right-of-way agent interviewed the petitioner with the object of purchasing a right-of-way for the pipe line across petitioner's land.
A number of conferences took p!ace, and the Company made certain offers, all of which Welch rejected. No agreement was ever reached. About July 31, 1931, the Company's agent tendered to the petitioner the following letter:
"July 31st, 1931.
"Mr. Ben. T. Welch,
"Penfield Building,
"Philadelphia, Pa.
"Dear Sir:
"Referring to your conference with Mr. C. Edwin Hunter, please be advised that this Company hereby undertakes to pay you such an amount of damages as you shall be entitled to receive after the same has been agreed upon or assessed in the manner prescribed by law by reason of this Company's entry upon your lands located at or near 70th Street and the Chester Branch of the Philadelphia and Reading Railroad Company, Philadelphia, as shown on the survey attached hereto and made a part hereof, to the extent of a right of way easement for the purpose of locating and maintaining an eight inch pipe line thereon.
"This Company further undertakes, if you so desire, to deliver to you at any time upon request its bond with the Independence Indemnity Company as surety for such damages as mentioned in the first paragraph of this letter.
"Very truly yours,
"KEYSTONE PIPE LINE COMPANY,
"By
"(Signed) R. C. TUTTLE,
'Vice-President.
"OHP:G
"The above is hereby agreed to."
Welch never signed the agreement which was prepared at the end of the letter.
Thereafter there was an offer by the Company to give a bond. The petitioner inquired whose bond it would be, and when given the name of the surety company which the respondent proposed to offer, the petitioner said that it would not be satisfactory. The Company's agent then suggested the National Surety Company, and the testimony is that Welch did not object to it. An open-end bond was prepared and was handed to him. He received it and has retained it. This was done some time in the first week of August.
The petitioner testified that he never consented to the entry of the Company on his land, and that in the course of his conversation with the agent, he was told that if they could not agree on a price, the Company would take the right-of-way by eminent domain. He said that the Company had already entered his land on August 4. The bond given to him by the Company bears that date.
In view of these facts, we are not impressed by the Company's argument that its entry on the petitioner's land was the result of a voluntary grant of a right-of-way. Nothing in the record even tends to sustain that argument except the fact that Welch received and did not affirmatively reject the bond that was given to him. But the bond itself was conditioned for the payment to the petitioner of such damages as he '' shall be entitled to receive after the same have been agreed upon or assessed in the manner prescribed by law in such case made and provided, by reason of the entry upon, use, occupation and appropriation by the Keystone Pipe Line Company of the said land to the extent of a right-of-way easement for the purpose of locating and maintaining a pipe line * * * under or across said land." The letter which we have quoted used similar phraseology.
The form of the bond is clearly that of a condemnation bond. The conversations that passed between the petitioner and the agent of the Company all clearly indicate an intention of the Company to enter the land and lay its pipe irrespective of...
