Baltimore Steam Co. v. Baltimore Gas & Electric Co.

THIEME, Judge. Appellant Baltimore Steam Company, doing business as Trigen-Baltimore Energy Corporation (hereinafter referred to as “Trigen”), appeals from an order of the Circuit Court for Baltimore City dismissing Trigen’s declaratory judgment action for lack of standing. Trigen’s complaint requested injunctive relief and a declaration (1) that the franchise granted by Baltimore City (the City) to the Baltimore Gas & Electric Company (BGE) was invalid or in the alternative (2) that this franchise could not be exercised until its use was authorized by the Maryland Public Service Commission (PSC). The action was primarily directed against BGE and its affiliate, the District Chilled Water Limited Partnership (hereinafter referred to by its commercial name, “Comfort Link”), but because the complaint necessarily called into question the validi ⁷ ty of the city ordinance that purported to grant BGE a franchise, the City was also made a party as required by Md.Code Ann., Cts. & Jud.

Proc. § 3-405(b) (1995 RepLVol.). BGE, the City, and Comfort Link, appellees, all moved to dismiss the action, arguing inter alia that Trigen lacked standing. After a hearing, the court dismissed the complaint on standing grounds and denied Trigen leave to amend. Within ten days, Trigen moved for clarification and reconsideration, which motion was denied.

Trigen timely filed its notice of appeal within thirty days after the docketing of that denial. We have recast the question presented as follows: Does appellant, as holder of a non-exclusive franchise, have standing to challenge the validity of a competitor’s nonexclusive franchise or to force such a competitor to comply with the preauthorization requirements of the Maryland Public Service Commission Law? I. Trigen operates a steam heating business in Baltimore City, and this enterprise involves transmitting steam through pipelines under the city streets. Trigen has obtained from the City a franchise granting Trigen the City’s permission “to construct, lay, operate and maintain” an underground pipeline system within a designated portion of the downtown area “for the purpose of transmitting heat or refrigeration, or both.” Trigen’s franchise additionally authorizes use of public streets for connecting any building within the designated area to this pipeline system.

This franchise was granted via City Ordinance No. 171, approved on 29 June 1984. As a matter of purely historical interest, this grant roughly coincides with Trigen’s purchase of an existing underground steam pipeline system from BGE, Trigen’s present rival. There is no dispute that Trigen’s franchise is non-exclusive, ie., it does not purport to prevent the City from granting similar franchises to other entities. In fact, the ordinance states: [NJothing in this ordinance shall be construed to give to the said Grantee, its successors and assigns, an exclusive right to occupy any of the streets, lanes or alleys embraced in and ⁸ covered by the terms of this ordinance, nor to prevent the Mayor and City Council of Baltimore from granting similar privileges to any other person or company, nor to prevent the Mayor and City Council of Baltimore from granting to such other person or company the privilege of laying subways, pipe lines, ducts or conduits in juxtaposition to those embraced in this ordinance.

In 1984, BGE ceased operations of its steam heating business and consequently forfeited the franchise under which it had previously enjoyed the right to transmit steam beneath the city streets. In 1995, BGE decided to reenter this heating market and incorporated Comfort Link for that purpose. 1 BGE applied for a new franchise, and the proposed franchise was introduced before the City Council as Council Bill 1295. Trigen addressed the City Council at a hearing on the bill and requested certain amendments and deletions. Bill 1295 was eventually passed and became Ordinance No. 624, signed by the Mayor on 29 November 1995.

The franchise that was granted to BGE is similar to the one previously granted to Trigen. It authorizes BGE “to construct, lay, operate and maintain subways and pipe lines ... for the purpose of transmitting heat or refrigeration, or both.” BGE’s franchise, like Trigen’s, is also indisputably non-exclusive. The geographical boundaries of the two franchises differ somewhat, but they basically cover the same areas of downtown Baltimore. BGE formally accepted its franchise in a letter of 12 April 1996.

The catalyst for the instant suit was a steam heating bid request issued by the University of Maryland Medical System. The Medical System published a “Request for Proposal to Provide Steam and Chilled Water” in 1996, and Comfort Link submitted a proposal for such services in late March 1997. Trigen responded swiftly by filing this four-count declaratory judgment action on 24 March 1997. ⁹ In Count One, Trigen sought a declaration that Ordinance No. 624 was invalid for failure to comply with two different procedural requirements of Article VIII (governing franchise grants) of the Baltimore City Charter. Specifically, Trigen alleged that the City Council had failed to advertise the proposed franchise grant for three days in a daily newspaper, Baltimore City, Md. Charter, art VIII, § 6, and that the proposed franchise had not been valued by the Board of Estimates for purposes of obtaining maximum compensation from the franchisee.

Id. at § 2. Count Two sought a declaration that the franchise granted by Ordinance No. 624 cannot be exercised or otherwise acted upon without first obtaining authorization from the PSC, as required both by § 13 of the Ordinance and by the Maryland Public Service Commission Law (MPSCL). Section 13 of the Ordinance authorized BGE to charge such sums for its services “as may be established by, and subject to the jurisdiction of, the Public Service Commission, if any.” The MPSCL requires all “public service companies” to obtain prior authorization from the PSC before exercising, assigning, or transferring any franchise. Md. Ann. Code art. 78, § 24 (1998 Repl.Vol.).

(Trigen alleged that since Comfort Link was purporting to exercise a franchise that was granted solely to BGE, an assignment or transfer must have occurred.) Count Three sought a declaration of the invalidity of Ordinance No. 624 on the alternate rationale that, assuming that PSC authorization is not required, then the ordinance is invalid for failure to set forth the rates at which customers will be charged, a mandatory term according to the Charter, art. VIII, § 2. Count Four requested an injunction against any competition from BGE/Comfort Link and other relief based on all of the foregoing counts. Appellees moved the circuit court to dismiss the case on several grounds, one of which was that Trigen lacked standing to bring the action.

At the conclusion of the hearing on the issue of standing on 18 June 1997, the court ruled that Trigen lacked standing and ordered the entire case dismissed. ¹⁰ II. Some preliminary matters must be resolved before addressing the central issues. To begin with, appellees BGE and Comfort Link have moved to dismiss this appeal on the grounds that Trigen has previously taken a position that is inconsistent with its right to appeal. The motion is premised on the principle that “[t]he right to appeal may be lost by acquiescence in, or recognition of, the validity of the decision below from which the appeal is taken or by otherwise taking a position which is inconsistent with the right of appeal.” Banegura v. Taylor, 312 Md. 609, 615 , 541 A.2d 969, 972 (1988) (quoting Rocks v. Brosius, 241 Md. 612, 630 , 217 A.2d 531, 541 (1966)).

Stated another way, “[A] voluntary act of a party which is inconsistent with the assignment of errors on appeal normally precludes that party from obtaining appellate review.” Id. (quoting Franzen v. Dubinok, 290 Md. 65, 69 , 427 A.2d 1002, 1004 (1981)). At the hearing before the circuit court, the arguments focused mostly on standing to challenge the validity of the franchise ordinance and much less so on standing to enjoin a violation of the MPSCL. The court orally ruled that Trigen had no standing to challenge the validity of the ordinance.

As previously noted, the court then dismissed the complaint and denied leave to amend, and Trigen responded with a Motion for Clarification and Reconsideration. The desired clarification pertained to whether the court had also ruled on standing to enforce the MPSCL. The request for reconsideration concerned the court’s denial of leave to amend, as Trigen argued that it could assert other bases for standing which would not call into question the validity of Ordinance No. 624. In reply to the City’s response to this motion, counsel for Trigen filed a letter pleading dated 8 July 1997.

The letter stated: The City’s Opposition asserts and is premised upon the mischaracterization that “[Trigen] challenges the validity of a franchise ordinance enacted by the City.” This is patently wrong. For purposes of amending its complaint, Trigen ¹¹ would assume that the enactment of Ordinance No. 624 is valid. Trigen still has legal claims that can be asserted based on BGE’s failure to comply with the ordinance. (Emphasis in original.) (Citation omitted.) BGE and Comfort Link now allege that these statements constitute “a clear acquiescence in the decision by [the court] that Trigen lacks standing to challenge the subject ordinance,” and that Trigen has thereby lost its right to appeal any issue pertaining to the validity of Ordinance No. 624.

We do not agree. By its context and its very words, the import of the above passage is limited to “purposes of amending [Trigen’s] complaint.” The type of argument signified by this language is a common one, whereby a party concedes a preliminary point for purposes of argument only, in order to demonstrate how that party would still win an ultimate victory on a secondary point. In so specifying the purposes for which the preliminary point is conceded, the party is reserving the right to contest the issue in another context and is not acquiescing in or conceding the point generally. The technique is so common that we wonder at BGE’s and Comfort Link’s misreading of the significance of the quoted passage.

Having fought and lost on the issue of standing to challenge the validity of Ordinance No. 624, Trigen had already preserved its appeal with regard to that issue and was merely attempting to ensure that its other arguments were addressed as well. Nothing about Trigen’s post-judgment motion is inconsistent with its right to appeal the ruling against it. We also note that it usually takes far more than a post-judgment argument for a party to lose the right to appellate review. The motion of BGE and Comfort Link to dismiss the appeal is denied.

Since the appeal itself arises from a motion to dismiss, “we assume the truth of all relevant and material wellpled facts, as well as all the inferences that could reasonably be drawn from those facts, in the light most favorable to appellant.” Ferguson v. Cramer, 116 Md.App. 99, 103 , 695 A.2d 603, 605 (1997). We may only consider those allegations ¹² set forth in the complaint. Frericks v. General Motors Corp., 274 Md. 288, 303 , 336 A.2d 118, 127 (1975). As the issue in this case is a party’s standing to be heard in court, it is especially important to note that we will at no point be reviewing the merits of Trigen’s case.

See Sugarloaf Citizens’ Ass’n v. Department of Env’t, 344 Md. 271, 295 , 686 A.2d 605, 617 (1996) (“[Standing to challenge governmental action, and the merits of the challenge, are separate and distinct issues.”). Our review is confined solely to matters of law, based on the facts as alleged in Trigen’s complaint. BGE and Comfort Link would have us apply a more searching standard of review, as they argue that we may reject some allegations in the complaint which are “patently false.” We find no support for such a proposition in the law of this state. It is true that we need not consider wholly conclusory charges that have no factual support, Berman v. Karvounis, 308 Md. 259, 265 , 518 A.2d 726, 728-29 (1987), and that we may even construe ambiguities in the complaint against the pleader.

Ronald M. Sharrow, Chtd. v. State Farm Mut. Auto. Ins. Co., 306 Md. 754, 768 , 511 A.2d 492, 500 (1986).

We cannot, however, resolve a factual dispute in the first instance, regardless of how conclusive the evidence may be. Md. Rule 8-131(a); Harrell v. Sea Colony, Inc., 35 Md.App. 300, 308 , 370 A.2d 119, 124 (1977). BGE and Comfort Link argue that Trigen cannot allege particular facts contradicting a prior determination by the PSC that its authorization is not required with regard to the exercise of the franchise at issue. 2 We believe this issue properly sounds in preclusion or perhaps administrative exclusivity, neither of which has been argued here or decided below. The issue also relies on factual matters beyond the complaint and thus is ¹³ properly raised in a motion for summary judgment, not a motion to dismiss.

Lusby v. Baltimore Transit Co., 199 Md. 283, 285 , 86 A.2d 407, 408 (1952). The court was very careful to note that it took into consideration no matters beyond the pleadings, so there is no basis for recasting its ruling as a grant of summary judgment. Since the lower court never took into consideration the effect of any prior proceedings before the PSC, neither shall we. Finally, Trigen has presented us with two alternate bases for standing not pled in the complaint: taxpayer standing and standing to sue for tortious interference with economic and business relationships.

These same bases were also proffered to the lower court in Trigen’s motion for reconsideration of that court’s denial of leave to amend the complaint. In order to address these alternate bases we would first have to reverse the lower court’s denial of leave to amend, and such a ruling may only be reversed for abuse of discretion. Downs v. Roman Catholic Archbishop, 111 Md.App. 616, 626 , 683 A.2d 808, 813 (1996). Trigen has not even attempted to argue that the lower court abused its discretion in denying leave to amend, and we will not speculate as to why these alternate bases were not pled in the first instance.

Trigen’s standing must therefore be determined solely according to the complaint.

III

The matter before us is simply a dispute over whether Trigen has standing, yet the ease with which the problem can be stated belies its complexity. There are in fact two questions of standing before us, as Trigen’s complaint seeks both to challenge the validity of a competitor’s franchise and to enjoin a violation of the MPSCL. Trigen has argued its case primarily through citation of precedent, contending that the Court of Appeals and other authorities recognize a franchisee’s standing to challenge the validity of a competitor’s franchise and to seek an injunction barring a competitor from exercising its franchise without first obtaining necessary au ¹⁴ thorizations from the appropriate regulatory bodies. The City adopts a similar strategy, albeit in opposition, by proposing that we follow KAKE-TV and Radio, Inc. v. City of Wichita, 213 Kan. 537 , 516 P.2d 929 (1973), in which the Supreme Court of Kansas rejected the plaintiffs standing to challenge the validity of a competitor’s franchise.

BGE and Comfort Link, on the other hand, have taken a more doctrinal approach. While they certainly contest Trigen’s interpretation of precedent and join the City in support of the Kansas case, BGE and Comfort Link propose that the reason Trigen has no standing is because its interests in the instant suit are not within the “zone of interests” contemplated by any of the various provisions of law Trigen seeks to enforce. As we shall soon discuss, these various approaches also signify differing views on how a party attains standing. We begin our approach with the basic prerequisites of a declaratory judgment.

The Maryland Uniform Declaratory Judgments Act authorizes a court to grant such judgment if: it will serve to terminate the uncertainty or controversy giving rise to the proceeding, and if: (1) An actual controversy exists between contending parties; (2) Antagonistic claims are present between the parties involved which indicated imminent and inevitable litigation; or (3) A party asserts a legal relation, status, right, or privilege and this is challenged or denied by an adversary party, who also has or asserts a concrete interest in it. Md.Code Ann., Cts. & Jud. Proc. § 3-409(a). The statute is remedial in nature and is intended “to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.

It shall be liberally construed and administered.” Id. at § 3-402. Consistent with such a broad purpose, it takes only the most basic showing of “a justiciable controversy” in order to invoke a court’s jurisdiction under the Act. Hatt v. Anderson, 297 Md. 42, 45 , 464 A.2d 1076 , 1078 ¹⁵ (1983). A justiciable controversy is present “when there are interested parties asserting adverse claims upon a state of facts which must have accrued wherein a legal decision is sought or demanded.” Reyes v. Prince George’s County, 281 Md. 279, 288 , 380 A.2d 12, 17 (1977).

A declaratory judgment is not justiciable if a party lacks “standing” to bring a suit. Citizens Planning and Hous. Ass’n. v. County Executive, 20 Md.App. 430, 437 , 316 A.2d 263, 267 , rev’d on other grounds, 273 Md. 333 , 329 A.2d 681 (1974). The doctrine of standing is that strain of justiciability focusing on the interestedness of the parties.

See Maryland State Admin. Bd. of Election Laws v. Talbot County, 316 Md. 332, 339 , 558 A.2d 724, 727 (1988). Although it is perhaps more accurate to describe standing as a collection of context-specific doctrines, the core inquiry of standing is whether a particular party has an interest that is sufficient as a matter of judicial policy to entitle that party to be heard in court. See Louis L. Jaffe, Judicial Control of Administrative Action 501-05 (1965).

At the most basic level, a plaintiffs interest in the case must be legally cognizable, i.e., it must be a “legal interest,” which has been succinctly defined by the Supreme Court as “one of property, one arising out of a contract, one protected against tortious invasion, or one founded on a statute which confers a privilege.” Tennessee Elec. Power Co. v. Tennessee Valley Auth., 306 U.S. 118, 137-38 , 59 S.Ct. 366, 369 , 83 L.Ed. 543 (1939). This so-called “legal interest test” has been criticized in other contexts as overly conducive to blending issues of standing with the merits of the claim. Association of Data Processing Serv.

Orgs., Inc. v. Camp, 397 U.S. 150, 153 , 90 S.Ct. 827, 830 , 25 L.Ed.2d 184 (1970). We refer to the test here merely as a useful road map of the various potential routes to demonstrating standing. The only interest Trigen has alleged in the instant case is an interest in being free from competition by BGE and/or Comfort Link. In most cases, however, such an interest is not legally cognizable and is thus insufficient to confer standing.

Cook v. Normac Corp., 176 Md. 394, 397-98 , 4 A.2d ¹⁶ 747, 749 (1939) (“[M]ere competition is not an evil which business men may enjoin as a wrong to them.”). This is not to say that Trigen’s interest is negligible or not susceptible to proof. To the contrary, we have little doubt that Trigen would suffer real financial consequences from the introduction of competition into the Baltimore steam heating market. The rule, however, is the necessary corollary of a public policy favoring competition as a source of social benefit.

As the Court of Appeals has eloquently put it, in the context of explaining why tortious competition is such a narrow concept: “ ‘Iron sharpeneth iron’ is ancient wisdom, and the law is in accord in favoring free competition, since ordinarily it is essential to the general welfare of society, notwithstanding competition is not altruistic but is fundamentally the play of interest against interest, and so involves the interference of the successful competitor with the interest of his unsuccessful competitor in the matter of their common rivalry. Competition is the state in which men live and is not a tort, unless the nature of the method employed is not justified by public policy, and so supplies the condition to constitute a legal wrong.” Natural Design, Inc. v. Rouse Co., 302 Md. 47, 72-73 , 485 A.2d 663, 676 (1984) (quoting Goldman v. Harford Rd. Building Ass’n, 150 Md. 677, 684 , 133 A. 843, 846 (1926)). Courts are thus understandably reluctant to characterize something “essential to the general welfare” as an actionable wrong.

Instead, the law considers the economic consequences of competition to be damnum absque injuria, or damage without legally cognizable injury. Tennessee Elec. Power Co., 306 U.S. at 140 , 59 S.Ct. at 370 ; Macklin v. Robert Logan Assocs., 334 Md. 287, 303-04 , 639 A.2d 112, 120 (1994) (citing Walker v. Cronin, 107 Mass. 555, 564 (1871)). In Cook , the plaintiff owned a movie theater and sought an injunction against the construction of a rival movie theater across the street, alleging that the construction was in violation of the city building code.

As already quoted above, the Court’s initial response was to note that “mere competition” is not an enjoinable “evil.” The plaintiff countered that, because ¹⁷ of the building code violations, this was not a case of “mere competition” but of “illegal competition.” The Court was ultimately unswayed. It conceded that [c]ompetition without full compliance with the law has been enjoined at the suit of private individuals, but only under some conditions; a principle upon which the relief may be permitted seems generally agreed upon, although courts have differed in its applications. It is allowable only to preserve an exclusive privilege or advantage which the law gives, as, for instance, that to a class of persons admitted to a business or profession by reason of special qualifications for it, or those who exercise a franchise from the government. 176 Md. at 397-98 , 4 A.2d at 749 (citations omitted). There was no allegation that any sort of franchise was involved, so the Court queried whether the portions of the building code at issue gave the plaintiff “an exclusive privilege.” The court is clear that the requirements of the building code to which reference is made are concerned with fire and other hazards in a theater, and are not at all intended to confer privileges or advantages on owners of other theaters.

Id. at 399 , 4 A.2d at 749 . Trigen’s burden, then, is to demonstrate how its interest in avoiding competition is cognizable in spite of the Cook rule that competition generally is mere damnum absque injuria. This Trigen has attempted to do in two different ways, each of which was foreshadowed in Cook and each of which addresses a different prong of the legal interest test. First, Trigen points to the franchise in its possession and alleges that such a franchise carries with it a right in the nature of a property right to be free from any illegal and unauthorized competition from BGE and Comfort Link.

The Cook Court itself suggested that a franchise might confer standing to enjoin competition, and this will be our first area of inquiry below. Second, Trigen resurrects the argument that what it seeks to enjoin is not “mere competition” but “illegal ¹⁸ competition,” since BGE and Comfort Link are allegedly violating various provisions of law, most notably the MPSCL. As Cook demonstrates, however, the fact that competition is contrary to law does not by itself confer standing on a competitor. A ready explanation of why this is so may be found by referring to the rules of standing applicable to so-called “public rights” cases.

Ordinarily, only the public authorities have standing to seek redress for violations of the public laws, and a private individual has standing to do so only when she can show that she has “ ‘suffered some special damage [read “injury”] from such wrong differing in character and kind from that suffered by the general public.’ ” Becker v. Litty, 318 Md. 76, 92-93 , 566 A.2d 1101, 1109 (1989) (quoting Weinberg v. Kracke, 189 Md. 275, 280 , 55 A.2d 797, 799 (1947)). A competitor’s interest in avoiding competition will frequently be “special” enough to satisfy this rule, but the fact yet remains that competition results in no “injury” at all. In order for an individual to have standing to seek an injunction against a market competitor’s violations of the law, the law allegedly violated must be one that protects the individual’s interest in avoiding competition. Cook, 176 Md. at 399 , 4 A.2d at 749 (rejecting standing on the grounds that “the requirements of the building code to which reference is made ... are not at all intended to confer privileges or advantages on owners of other theaters”); see also Kreatchman v. Ramsburg, 224 Md. 209, 222 , 167 A.2d 345, 352 (1961) (a competitor cannot appeal a zoning decree allowing the construction of a rival store because “competition is not a proper element of zoning”); Baltimore Retail Liquor Package Stores Ass’n v. Board of License Comm’rs, 171 Md. 426, 429 , 189 A. 209, 210 (1936) (liquor licensees have no standing to compel the revocation of their competitors’ licenses that were allegedly improperly renewed because, inter alia, “it was not within the purpose of the [licensing] statute to restrict competition for the benefit of any licensee”).

Compare Thomas v. Howard County, 261 Md. 422, 430 , 276 A.2d 49, 53 (1971) (plumbers ¹⁹ found to have standing as taxpayers to compel the enforcement of plumbing licensing laws; no need to discuss standing based on competitive injury). But see Dart Drug v. Hechinger Co., 272 Md. 15, 24 , 320 A.2d 266, 271 (1974). 3 Only under these special circumstances can it be said both that the plaintiff asserts a legal interest “conferred by a statute” and that the plaintiff would be “specially ‘injured’ ” by the alleged statutory violation. If necessary, this will be our second topic of discussion below. ²⁰ IV. The term “franchise” has acquired several different usages through the years, and so we caution that the species of franchise with which we are here concerned should not be confused with, for example, a corporate charter, a licensing agreement, a regulatory permit or license, or the right to vote.

We address the type of franchise most commonly associated with a utility company’s right to dig up the public streets in the course of providing its particular service. Almost any utility company serving individual households will need to make some use of public streets or other public property in order to transmit its product to its customers, whether this be by hanging wires from poles, laying cables in the ground, or running pipes along a road. Such permanent encroachments on public property for private use would, in the absence of authorization, constitute a public nuisance and a trespass against the governing authority. See Board of County Comm’rs v. Bell Atl.-Md., Inc., 346 Md. 160, 170-71 , 695 A.2d 171, 176 (1997) (a public service company suing for damage to its underground cables which were laid without any governmental authorization has the status of a trespasser); Adams v. Commissioners of Trappe, 204 Md. 165, 169-71 , 102 A.2d 830, 833-34 (1954) (all unauthorized permanent encroachments on public streets for private use are public nuisances).

Although a municipality can authorize minor encroachments in any number of ways (by license, permit, or perhaps even acquiescence), Huebschmann v. Grand Co., 166 Md. 615, 624-25 , 172 A. 227, 231 (1934), a utility company will generally require the type of ongoing and widespread authorization that only a franchise can provide. 1 A.J.G. Priest, Principles of Public Utility Regulation 230-31 (1969). Of course, franchises apply to industries beyond modern day utilities. They also apply to streetcars, toll roads and bridges, ferry boats, motor buses, and any other undertaking that requires regular private use of public property. See generally 63 Am.Jur.2d Franchises §§ 1-4 (1968); 37 C.J.S. Franchises §§ 2-5 (1997). ²¹ The franchise is an unusual privilege that is not easily explained by reference to other, more common rights and privileges.

Perhaps the most precise description of a franchise, first adopted by the Court of Appeals over a hundred years ago, is “a special privilege conferred by the State on certain persons, and which does not belong to them of common right.” State v. Philadelphia, W. & B. R.R. Co., 45 Md. 361, 379 (1876). The franchise’s most salient feature is that, not being “of common right,” it does not exist in the people collectively at common law but is rather a privilege that can only be granted by the General Assembly, or by a local government pursuant to power specifically delegated by the General Assembly. Charles County Sanitary Dist., Inc. v. Charles Utils., Inc., 267 Md. 590, 598 , 298 A.2d 419, 423 (1973). The franchise is clearly a valuable property right, and it is thus subject to valuation and taxation along with other property.

Philadelphia, W. & B., 45 Md. at 379 . Strictly speaking, the franchise is neither real estate nor an interest in real estate, even though the exercise of a franchise by installing conduits and occupying space in the public streets will usually result in the acquisition of an easement. Consolidated Gas Co. v. Mayor & City Council of Baltimore, 101 Md. 541, 545-46 , 61 A. 532, 534 (1905). The franchise itself is more accurately characterized as an “incorporeal hereditament.” Van Dyck v. Bloede, 128 Md. 330, 335 , 97 A. 630, 632 (1916).

Perhaps the closest functional relative of the franchise is the license, although a license is “less extensive in its duration and incidents than a franchise.” Huebsehmann, 166 Md. at 622 , 172 A. at 230 . Furthermore, a license is imposed primarily for the purpose of regulation or for revenue, and it merely authorizes the exercise of a restricted privilege instead of creating a privilege where none existed previously. Greenfeld v. Maryland Jockey Club, 190 Md. 96, 105-06 , 57 A.2d 335, 338-39 (1948). To a lesser extent, franchises also implicate the law of contract.

Mayor of Baltimore v. Chesapeake & Potomac Tel. Co., 92 Md. 692, 696 , 48 A. 465, 466 (1901). The franchise is ²² itself referred to as a contract between the grantor and grantee, and since such a contract confers “exceptional privileges and powers,” it is to be strictly construed against the franchisee. Id.

As it makes no difference to our analysis of standing whether the franchise is a property right or a contract right, we will refer to the franchise as simply a property right for the remainder of this opinion. Since a franchise is a valuable property right, a franchisee has standing in court to protect its franchise from unwarranted interference or encroachment by others, including city authorities, id. at 694 , 48 A. at 465 , or competitors. Charles County Sanitary Dist., 267 Md. at 595 , 298 A.2d at 422 . A franchisee may also enjoin any physical interference with its right to lay conduits, whether such interference arises from the municipality, a competitor, or an adjoining landowner.

See 36 Am.Jur.2d Franchises §§ 42-43, 70. Franchises can be either exclusive or non-exclusive, and an exclusive franchise is, in effect, a contractual promise by the granting authority not to grant any similar franchises to anyone else. See 37 C.J.S. Franchises § 20b. An exclusive franchise is not necessarily the same thing as a monopoly, but a grant of any similar franchises by the granting authority will constitute interference with the exclusive franchise.

Id. Even non-exclusive franchises, however, carry a type of exclusive privilege. In Kelly v. Consolidated Gas, Elec. Light & Power Co., 153 Md. 523 , 138 A. 487 (1927), a case we will discuss in great detail below, the Court of Appeals quoted with approval the proposition that holders of non-exclusive franchises can enjoin competition by one who possesses no such franchise. “The plaintiff may maintain its suit for an injunction.

It has a franchise right to transport passengers between the points named. That right carries with it heavy obligations to the public. Although that franchise right is not exclusive against other grants authorized by the Legislature, it is exclusive against one conducting competition, as is the ²³ defendant, without a franchise or license [4] and contrary to law.” Id. at 529 , 138 A. at 489 (quoting New York, N.H. & H. R.R. Co. v. Deister, 253 Mass. 178, 181 , 148 N.E. 590, 591 (1925)). 5 Kelly’s authority on this point, however, is weakened by the fact that the quoted proposition is inapplicable to Kelly’s facts. Both the plaintiff and the defendant in that case possessed valid franchises.

A review of the law of other states reveals almost universal agreement with the Kelly proposition that a holder of a nonexclusive franchise has standing to enjoin competition by one lacking any franchise. E.g., Kinder v. Looney, 171 Ark. 16, 18-19 , 283 S.W. 9, 10 (1926); City of Groton v. Yankee Gas Services Co., 224 Conn. 675, 685-86 , 620 A.2d 771, 776 (1993); Central States Electric Co. v. Incorporated Town of Randall, 230 Iowa 376, 386 , 297 N.W. 804, 809 (1941); Reo Bus Lines Co. v. Southern Bus Line Co., 209 Ky. 40, 43-44 , 272 S.W. 18, 19 (1925); Gulf States Utils. Co. v. Dixie Elec. Membership Corp., 185 So.2d 313, 315 (La.Ct.App.1966); Deister, supra; Village of Blaine v. Independent Sch.

Dist. No. 12, 265 Minn. 9, 22 , 121 N.W.2d 183, 193 (1963); Payne v. Jackson City Lines, 220 Miss. 180, 191, 70 So.2d 520, 523 (1954); Lincoln Traction Co. v. Omaha, L. & B. Ry. Co., 108 Neb. 154, 159-60 , 187 N.W. 790, 793 (1922); Millville Gas Light Co. v. Vineland Light & Power Co., 72 N.J.Eq. 305, 307-08, 65 A. 504 , 505 ²⁴ (1906); Central Crosstown R.R. Co. v. Metropolitan St. Ry. Co., 16 A.D. 229, 234-35 , 44 N.Y.S. 752, 756-57 (N.Y.App.Div. 1897); City Coach Co. v. Gastonia Transit Co., 227 N.C. 391, 395 , 42 S.E.2d 398, 400 (1947); Bartlesville Elec.

Light & Power Co. v. Bartlesville Interurban Ry. Co., 26 Okla. 453, 458 , 109 P. 228, 229 (1910); Citizens’ Elec. Illuminating Co. v. Lackawanna & Wyo. Valley Power Co., 255 Pa. 145, 155 , 99 A. 462 , 465 (1916); Memphis St. Ry.

Co. v. Rapid Transit Co., 133 Tenn. 99, 109 , 179 S.W. 635 , 638 (1915) (Memphis St. Ry. Co. I); Lindsley v. Dallas Consol. St. Ry. Co., 200 S.W. 207, 210 (Tex.Civ.App.1917); Turner v. Hicks, 164 Va. 612, 617 , 180 S.E. 543, 545 (1935); Puget Sound Traction, Light & Power Co. v. Grassmeyer, 102 Wash. 482, 490 , 173 P. 504, 507 (1918); Carson v. Woodram, 95 W.Va. 197, 202 , 120 S.E. 512 (1923).

See also Frost v. Corporation Comm’n, 278 U.S. 515, 521 , 49 S.Ct. 235, 237 , 73 L.Ed. 483 (1929). But see Coffeyville Mining & Gas Co. v. Citizens’ Natural Gas & Mining Co., 55 Kan. 173 , 40 P. 326 (1895) (discussed infra). While most states follow the rule that all franchises are exclusive against unfranchised competition, very few cases actually explain the reasoning behind the rule. A notable exception is the Bartlesville case, in which the Supreme Court of Oklahoma explained that the rule does not per se protect the franchisee’s interest in avoiding all competition but follows of necessity from the heavy obligations that any franchisee owes to the public.

When plaintiff accepted its franchise, it did so subject to the power of the municipality to grant to other persons or corporations similar franchises, and with the knowledge that it might be compelled to exercise its rights under its franchise with others exercising similar rights. If, by the competition of rival companies to whom the use of the streets and public grounds has been granted by the municipality, plaintiff is rendered unable to discharge the obligations of its contract to furnish the city and its inhabitants with light and power at stipulated prices, except at a financial loss to it, plaintiff cannot complain, for it must be held to have contemplated such condition might arise and to ²⁵ have agreed thereto, when it accepted the franchise; but such cannot be said of the defendant who unlawfully occupies the streets and public grounds of the city in competition with plaintiff. By its unlawful acts defendant can and will take from plaintiff a portion of its business. At the same time defendant is under no obligation to the city or its inhabitants, and is all the while maintaining upon the streets and public grounds of the city a public nuisance, and the loss plaintiff sustains is to defend its fruits from its violation of the law.

By these unlawful actions of defendant plaintiff may be rendered financially unable to comply with the obligations of its contract, and may be subjected to suits for damages, mandamus proceedings to enforce the performance of its contract, or an action to forfeit its franchise. Defendant does not undertake to compete with plaintiff for the business of the city and its inhabitants by furnishing to them light and power other than by the use of the streets and alleys. Its right to sell light and power is not dependent upon any franchise, but its right to use the streets and public grounds of the city for that purpose does depend upon the consent of the city; and, when it uses the streets without that consent, it is not only guilty of maintaining a public nuisance, but also inflicts upon plaintiff a special injury by its unlawful act which may be restrained. Id. at 457-58, 109 P. at 229-30 .

Thus, while a non-exclusive franchisee cannot complain of being driven to unprofitability by competition from one either possessing a franchise or not needing to make use of the streets, when the competitor has no franchise, and yet appropriates public property for private use, then a franchisee has standing to defend its franchise in court. “[A]ny attempted exercise of such rights, without legislative sanction, operates as a direct invasion of the private property rights of those upon whom the franchises have been so conferred.” Millville, 72 N.J.Eq. at 307, 65 A. at 505 . We re-affirm the overwhelming majority rule stated in Kelly , and we hold that a non-exclusive franchisee has standing to enjoin unfranchised competition. According to the ²⁶ facts as presented in Trigen’s complaint, Trigen possesses a non-exclusive franchise to use the streets of downtown Baltimore for the transmission of steam. Comfort Link has submitted a bid on a steam heating contract which apparently will bring that company into competition with Trigen and will require Comfort Link to make use of steam pipes in the public streets within the same general area covered by Trigen’s franchise.

Baltimore City has not granted a franchise to Comfort Link, but the City has granted one to BGE. On these facts alone it appears that Trigen would have standing as a franchisee to enjoin Comfort Link’s unfranchised competition, but none of the parties have relied on these facts alone. All involved have apparently proceeded on the assumption either that BGE and Comfort Link are the same entity for franchise purposes or that BGE has in some way transferred its franchise rights to Comfort Link. 6 We thus confront a situation in which a holder of a non-exclusive franchise seeks to enjoin competition by another franchisee on the grounds that the latter’s franchise is invalid. The general rule appears to be that only the granting authority may challenge the validity of a franchise.

See 36 Am. Jur.2d Franchises § 20; 37 C.J.S. Franchises § 28. Trigen argues, however, that this rule is subject to the same exceptions applicable in all public rights cases and that it must be afforded an opportunity to protect its valuable franchise property right through just such a challenge. BGE and Comfort Link claim that the Court of Appeals has already ruled in Kelly that a franchisee cannot challenge the validity of a competitor’s franchise.

We disagree with their reading of Kelly , which, in all fairness, is a complex case. The plaintiff in that case, the Northern Maryland Power Company, had provided electricity and street lighting to the city of Havre de Grace since before 1902 under franchises granted from both the General Assembly and the city. In January of ²⁷ 1927, the city informed Northern that its services to the city would cease in June and that the city would immediately enter into negotiations with Consolidated Gas, Electric Light & Power Company to take Northern’s place. (As a historical note, it appears that Consolidated is a corporate predecessor of appellee BGE. 153 Md. at 527 , 138 A. at 489 .) In March, the city contracted with Consolidated to provide electric service, and Northern then immediately sued 7 to enjoin Consolidated