Citizens Gas and Coke Utility v. Wells

• Citation: 150 Ind.App. 78,275 N.E.2d 323
• Decision Date: 24 November 1971
• Docket Number: No. 1,No. 1270A199,1270A199,1
• Parties: CITIZENS GAS & COKE UTILITY, Defendant-Appellant, v. Seth WELLS and Sarah Wells, Plaintiffs-Appellees
• Court: Court of Appeals of Indiana

Page 323

275 N.E.2d 323

150 Ind.App. 78

CITIZENS GAS & COKE UTILITY, Defendant-Appellant, v. Seth WELLS and Sarah Wells, Plaintiffs-Appellees.

No. 1270A199.

Appellate Court of Indiana, Division No. 1.

Nov. 24, 1971.

Patrick J. Smith, James R. McClarnon, Smith, Morgan & Ryan, Indianapolis, of counsel, for appellant.

Joseph F. Quill, John G. McNutt, Indianapolis, for appellees.

SULLIVAN, Presiding Justice.

According to the complaint of the appellees-plaintiffs, Seth and Sarah Wells, the appellant-defendant, Citizens Gas & Coke Utility, negligently shut off gas service to their vacant Indianapolis rental building during September of 1968, causing extensive damage during the winter due to frozen and bursting pipes. The damage was first discovered in January of 1969 by Mr. Wells. The trial court, in awarding $8,000 damages to the appellees-plaintiffs (hereinafter called the Wells'), found that the utility had not given adequate notice to the Wells' of the necessity for entrance to the premises in keeping with its mandatory obligation to either test the gas meter or discontinue service.

Rule 11 of the rules and regulations promulgated by the Public Service Commission requires that:

'No public utility shall allow a gas meter to remain in service for a period of longer than ten years without checking it for accuracy and readjusting it if found to be incorrect. * * *'

In compliance with Rule 11, Citizens Gas developed a rigid procedure for informing customers of the need for testing ¹ and for gaining access to all gas outlets. ²

Early in 1968 the Wells' property was scheduled by computer for the 10-year meter test. The property itself consisted of a restaurant, which had not been rented since 1965, and two second-floor apartments, at least one of which had been rented during part of 1968 but which was vacant on the date the gas was shut off. The gas meter for the building was located in the basement and was accessible only through the restaurant. For purposes of reading the meter a key to the restaurant was in possession of the utility; keys were not, however, available to the apartments.

According to the testimony of Citizens Gas employees, the normal procedure for notification of a customer was followed and the gas service to the Wells' property was turned off only after all attempts at notification failed. In support of its action, Citizens Gas relies upon its internal rules numbered 8 and 9, as follows:

8. LIABILITY

'The Utility shall have the right at all reasonable hours to enter the premises of the Customer for the purpose of making such inspection of the Customer's installation as is necessary for the proper rendering of service and application of the Utility's rates, rules and regulations; the right of installing, removing, testing, replacing or otherwise disposing of its property; the right of reading meters; and the right of entire removal of the Utility's property within a reasonable period of time, but not less than forty-eight (48) hours, in the event of termination of gas service for any cause.'

9. DISCONTINUANCE OF SERVICE

'The Utility may discontinue its sercice to the Customer for any one of the following reasons:

'After three (3) days' notice in writing

(a) A Violation of its Rules and Regulations.'

Such rules are binding upon customers of the utility. See Portland Natural Gas and Oil Company v. State ex rel. Keen (1893) 135 Ind. 54, 34 N.E. 818.

The primary issues presented are whether notice before disruption of service need be express; whether the notice given by Citizens Gas to the Wells' was sufficient; and whether the trial court's findings correctly reflect the law of Indiana regarding notice. Minor issues involve contributory negligence on the part of the customer and the doctrine of avoidable consequences.

RIGHT OF UTILITY TO DISCONTINUE SERVICE UPON PROPER NOTICE TO CUSTOMER

It is unquestioned that a utility can adopt reasonable rules and regulations governing its relationship with the customer and the service provided. Richmond Nat. Gas Co. v. Clawson (1900) 155 Ind. 659, 58 N.E. 1049. Failure by the customer to comply with such rules and regulations constitutes proper grounds for discontinuance of service. Greenfield Gas Co. v. Trees (1905) 165 Ind. 209, 75 N.E. 2; Irvin v. Rushville, etc., Tel. Co. (1903) 161 Ind. 524, 69 N.E. 258.

In accordance with due process principles the Public Service Commission of Indiana, in Rule 20 of its Rules and Standards of Service for the Gas Public Utilities of Indiana, has required that notice of pending discontinuance of service must be actual:

'(a) Action by Public Utility. No public utility shall discontinue the service of any customer for violation of any rule or regulation of such utility or nonpayment of bills, except on written notice of at least three (3) days, mailed to such customer at his address, as shown upon the public utility's records, or personally delivered to him or a member of his household, advising the customer in what particular such rule has been violated for which service will be discontinued if the violation is permitted to continue. * * *'

Contrary to the appellees' contention, there is no requirement that actual notice be express. It may be either express or implied. As stated in Mishawaka St. Joseph L. & T. Co. v. Neu (1935) 209 Ind. 433, 442, 196 N.E. 85, 89:

'* * * (A)ctual notice has been divided into two classes, (1) express and (2) implied, which is inferred from the fact that the person charged had means of knowledge which he did not use.'

Whatever its form, notice given by utilities to customers regarding property rights will meet due process requirements only where it is 'sufficient.' In Mishawaka St. Joseph L. & T. Co. v. Neu, supra, our Supreme Court defined sufficient notice as follows:

"Whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained." 209 Ind. 433, 442, 196 N.E. 85, 89.

The principle last above quoted is perhaps placed in perspective by the following excerpts from 2 Pomeroy's Equity Jurisprudence (5th ed.), Sec. 596, et seq.:

'That the party has knowledge or information of facts sufficient to put him upon an inquiry has often been treated as peculiarly the characteristic of constructive notice. In truth, however, this test is equally applicable to every instance of actual notice inferred by process of rational deduction from circumstantial evidence.

'The court or jury infers from the facts proved, by a process of rational deduction, but without the aid of any legal presumption, that such information was actually received.' Sec. 596 at pages 613 and 615.

'This inference is not, in case of actual notice, a presumption, much less a conclusive presumption, of law; it may be defeated by proper evidence. If the party shows that he made the inquiry, and prosecuted it with reasonable diligence, but still failed to (make discovery), he thereby overcomes and destroys the inference. If, however, it appears that the party obtains knowledge or information of such facts, which are sufficient to put a prudent man upon inquiry, and which are of such a nature that the inquiry, if prosecuted with reasonable diligence, would certainly lead to a discovery * * *, then the inference that he acquired the information constituting actual notice is necessary and absolute; for this is only another mode of stating that the party was put upon inquiry; that he made the inquiry and arrived at the truth. Finally, if it appears that the party has knowledge or information of facts sufficient to put a prudent man upon inquiry, and that he wholly neglects to make any inquiry, or having begun it fails to prosecute it in a reasonable manner, then, also, the inference of actual notice is necessary and absolute.' (Citations and footnotes omitted.) Sec. 597 at pages 619--620.

As a matter of law, the procedure adopted here by Citizens Gas for giving sufficient legal notice to customers appears sound. Yet it is as a matter of fact that we are asked to appraise its merits in this case. This was done, and we think properly so, by the trial court.

A review of the evidence shows that Citizens Gas, in following its notice procedure, made repeated efforts to gain entrance to the Wells' rental property, but that the Wells' at no time during the testing year lived there. The Wells' correct mailing address was on file with Citizens Gas throughout that year but was not checked until the penultimate step in the procedure--when the certified letter was returned by the post office. Although witnesses testified that a certified letter was probably sent to the correct address in Carmel and that contract was probably made with the Wells' by telephone, no documentary evidence to either effect was presented due to an ill-advised policy of the utility which resulted in destruction of all records pertaining to a customer at the end of the test year. The Wells' staunchly deny receiving any manner of notice regarding the 10-year test.

We may look only to the evidence most favorable to the appellee, and the reasonable inference to be drawn therefrom, in adjudging its sufficiency. We are of the opinion that the trial court was within its prerogative in finding that Citizens Gas failed in fact to give adequate notice to the Wells' under the circumstances even though following a procedure designed to...