City of Erie v. Erie Gas & Mineral Co.

Citations

• 78 Kan. 348
• 97 P. 468
• 1908 Kan. LEXIS 62

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>Net Profits — Computation and Division — Agreement between City and Gas Company — Sale of ■ Gas for “Domestic Purposes.” In consideration of the franchise and the transfer of certain leases, wells and city bonds the defendant company agreed to pay to the city, annually, one-fifth of the actual net profits derived from the sale of gas to the inhabitants of Erie for domestic purposes. In a suit for an accounting and recovery of such profits it is held: (1) That the company, with the aid contributed by the city, was to create and own the necessary instrumentalities for producing and distributing gas, in which the city has no proprietary interest and in the cost of which it has no voice or concern. (2) In computing, the profits to be divided the expenditures of the company for these instrumentalities can not be charged as expenses against, its receipts from the sale of gas. Such expenditures constituted the company’s contribution to the plant with which it was to. produce and distribute the product. (3) The cost of operating, the plant in furnishing gas within the city upon which profits, are to be divided, including necessary repairs, should be charged as expenses, to be deducted from the amount received for such gas, in order to determine the profits thereon. Such expenses will not include expenditures for new wells, mains or other permanent improvements or betterments; nor the cost of supplying gas and making other sales in the profits of which the city does not share. (4) “Domestic purposes,” as the term is here used, includes gas furnished, for homes,, churches, stores, offices, and the opera-house, where its principal use is for heating and lighting, and not for power.</p>