Chatham v. Jackson

• Decision Date: 06 March 1980
• Docket Number: No. 78-1114,78-1114
• Citation: 613 F.2d 73
• Parties: R. Pierce CHATHAM, Plaintiff-Appellee, v. Maynard JACKSON, Pelham C. Williams, William T. Bush, W. Curtis Hester and Wendell R. Campbell, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 73

613 F.2d 73

R. Pierce CHATHAM, Plaintiff-Appellee, v. Maynard JACKSON, Pelham C. Williams, William T. Bush, W.

Curtis Hester and Wendell R. Campbell,

Defendants-Appellants.

No. 78-1114.

United States Court of Appeals, Fifth Circuit.

March 6, 1980.

Ferrin Y. Mathews, J. M. Harris, Jr., Atlanta, Ga., for defendants-appellants.

Robert Strickland, Jr., Atlanta, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before GEE, TJOFLAT and ANDERSON, Circuit Judges.

GEE, Circuit Judge:

In Davis v. Weir, 497 F.2d 139 (5th Cir. 1974), this court held unconstitutional the City of Atlanta's practice of refusing water service to a tenant when the landlord's bill was in arrears. The case now before us requires us to decide whether the city may terminate water service to a landlord when the tenant's bills are delinquent. The trial court stated that "Davis operates to protect all parties, tenant and property owner alike, from the city's use of its power to withhold water and sewer services to coerce applicants for such services to pay water bills for which they are not liable." Because we find the case of a landlord distinguishable from that of a tenant, partly on the basis of a recent decision by the Georgia Supreme Court, we must reverse the trial court.

The facts are not in dispute. Plaintiff is the owner of a 264-unit apartment building in Atlanta, known as the Whitehouse on Peachtree. The City of Atlanta supplies water to the entire building through a single water meter. Plaintiff leased the building in October 1970 to Georgian White House Operating Company ("Georgian"). Georgian in turn assigned its leasehold interest in October 1976 to White House Towers, Inc. ("White House"). The transfer and assignment of leasehold interests were arms-length transactions. No relationship existed between plaintiff and White House other than landlord and tenant. White House took possession and opened an account with the city, in its own name, for water and sewer services. The defendants collected no security deposit from White House, and the city did not and does not regularly collect deposits on accounts of the type in question. White House timely paid its bills for water and sewer services supplied during October and November 1976. A bill for $3,043.02 was sent to White House on January 8, 1977, based on a regularly scheduled meter reading reflecting service provided from November 28 to December 28, 1976. This bill was never paid.

Meanwhile, Georgian had filed a complaint in state court seeking the appointment of a receiver to take custody and control of the apartment building. The court appointed a receiver on December 29, 1976, who took and retained possession until January 12, 1977, when, upon intervention and motion of the plaintiff in the receivership proceeding, plaintiff was restored to possession of the property.

A bill in the amount of $2,205.72 for service between December 28, 1976, and January 28, 1977, based on a meter reading on the latter day, was sent out in early February 1977. Sometime after February 1, 1977, plaintiff opened an account for water and sewer service in his own name. Following some discussion between plaintiff's representatives and representatives of the city, the plaintiff agreed to pay, and paid, a pro rata share of the January bill that represented services supplied to the apartment house from January 12, to January 28, 1977, calculated at $1,102.86. Following the payment period ending January 28, 1977, all subsequent bills for water and sewer service to the apartment house have been paid by plaintiff on a current basis.

However, this result left the city with two unpaid water and sewer bills, one for the entire month of December and one for part of the month of January. These bills totaled $4,146.78. The City of Atlanta's attorney informed plaintiff that the city expected plaintiff, as owner of the property in question, to pay this past-due amount. ¹ Plaintiff contested his liability for the bills. Following more discussion, the city threatened to terminate water service to the apartment house.

Plaintiff filed this action on May 19, 1977, seeking temporary and permanent injunctive relief. On the same day a temporary restraining order was entered enjoining the defendants from terminating services to the premises. At the hearing on the preliminary injunction the parties agreed to continue the temporary restraining order in effect in the form of preliminary injunctive relief until the issues could be resolved on the merits.

On October 25, 1977, the district court entered its final order enjoining the defendants from terminating water service to the apartment house. It declared that defendants' application of the city's ordinance to the plaintiff in this case resulted in an unconstitutional deprivation of due process and equal protection of the laws under the fourteenth amendment.

I.

This case essentially involves the question of where the City of Atlanta may constitutionally place the risk of nonpayment of its water bills. We have already held that the city may not place the risk of nonpayment of a landlord's bills on the tenant. See Davis v. Weir, supra. Because of an intervening state court decision and because we find constitutional and policy considerations different when risk of nonpayment is placed on the landlord, we must reverse the trial court.

The trial court found that the City of Atlanta lacked authority to impose personal liability on a property owner for the contractual liabilities incurred by a lessee. Additionally, the trial court evidently found no proof that the City of Atlanta intended to impose a lien on the premises in question for unpaid bills. Since the property owner here never expressly agreed to be responsible for the payment of water bills of its tenants, plaintiff's liability necessarily had to be based on either a lien or implied-consent theory. Failing to find either theory supported by state law, the trial court held the city's practice of terminating water service unconstitutional.

However, two developments occurred in 1978 that shed a different light on the case at bar. First, the Georgia Supreme Court, in Bowery Savings Bank v. DeKalb County, 240 Ga. 528, 242 S.E.2d 50 (1978), held that DeKalb County had a valid lien on rental property, enforceable against the property owner, for unpaid water bills of a tenant. The DeKalb County ordinance is almost identical to the city ordinance at issue here. Both allow refusal of service where there are delinquent accounts. ² The Georgia court examined earlier Georgia cases ³ and adhered to them, concluding:

These cases are modified by Davis v. Weir, supra, to the extent that non delinquent tenants must constitutionally be provided with . . . services as individuals upon proper application and payment for installation of meters. However, the basic ruling of our cases that the delinquent service charges are liens against the property which authorize the discontinuance of such services to the owner of the property remains unchanged.

242 S.E.2d at 52. Thus, the Georgia court found that liens arising because of delinquent accounts of a prior owner could be enforced against the present owner by refusal of service. ⁴

The other case relevant to this discussion is Union Circulation Co. v. Russell, 463 F.Supp. 884 (N.D.Ga.1978), decided by the same trial judge who heard this case, to which he referred:

(A)bsent either judicial or statutory authority expressly imposing liability on a property owner for unpaid water bills on his property, by means of a lien or otherwise, the Chatham court held that the due process and equal protection clauses of the fourteenth amendment protect "all parties, tenant and property owner alike from the (defendant's) use of its power to withhold water and sewer services to coerce applicants for such services to pay water bills For which they are not liable."

Id. at 886 (footnote omitted) (emphasis in original). The court considered Bowery Savings and held: "(I)f there are valid liens on a property for unpaid water bills, then it is not unconstitutional for DeKalb County to refuse services to the owner of any property subject to such liens." Id. However, the court distinguished the case under consideration here by stating:

Unlike Chatham, however, the defendants in the case Sub judice have cited to authority expressly creating liens on any property in DeKalb County at which there remains an unpaid water bill.⁴

4. In Chatham the defendants failed to cite to any authority expressly creating a lien on any property in the City of Atlanta at which there remains an unpaid water bill.

Id. at 886 & n. 4. The defendants here, however, Did bring to the trial court's attention the new City Charter and the ordinance allowing termination of service, discussed below.

We believe that Bowery Savings controls this case and that the county ordinance at issue in Union Circulation is simply not distinguishable from the city ordinance at issue here. The authority to impose a lien in DeKalb County arises from a statute and an ordinance. The statute states:

The Commissioner is hereby authorized to provide by regulation and rules for the assessment and collection of a reasonable tax or charge for the maintenance of said sewer line and for the disposal of sewage. Said assessment may be made on the basis of gallonage of water metered to the property served by said sewer or by fixing a flat charge for each service connection, such payments to be made either on a monthly or an annual basis as provided for in the rules and regulations to be adopted. . . . Any taxes or charges as herein provided shall become a lien on the property served by said sewer line. (emphasis added).

1949 Ga.Laws pp. 1590, 1593-94 (as quoted in Union Circulation, 463 F.Supp. at 887). The DeKalb County Code of Ordinances § 6-2002 reads in pertinent part:

Where there remains a...