City of Austin v. North Austin State Bank, 13406

• Decision Date: 24 March 1982
• Docket Number: No. 13406,13406
• Citation: 631 S.W.2d 564
• Parties: The CITY OF AUSTIN, Appellant, v. NORTH AUSTIN STATE BANK, Appellee.
• Court: Texas Court of Appeals

Page 564

631 S.W.2d 564

The CITY OF AUSTIN, Appellant, v. NORTH AUSTIN STATE BANK, Appellee.

No. 13406.

Court of Appeals of Texas, Austin.

March 24, 1982.

Rehearing Denied April 14, 1982.

Jerry L. Harris, City Atty., Richard C. Balough, Asst. City Atty., Austin, for appellant.

David W. Hilgers, Hilgers, Watkins & Kazen, Austin, for appellee.

POWERS, Justice.

North Austin State Bank sued the City of Austin to recover excess sums which the Bank paid for electricity furnished by the City during the period December, 1972 to February, 1979. The overcharges resulted from the City's admitted error in computing the Bank's monthly utility statements based upon an official rate applicable to customers using both electricity and gas for energy. The Bank uses only electricity and was entitled to a lower rate. ¹ Based upon stipulated facts, the trial court awarded the Bank judgment for the net amount of the overcharges,.$20,448.07, prejudgment interest in the amount of $2,265.32, and $10,875.00 in attorney's fees, the last sum to be reduced by $1,000.00 and $2,000.00 if the judgment is not appealed to the Supreme Court of Texas and the Court of Appeals, respectively. The trial court filed findings of fact, consistent with the stipulated facts, and conclusions of law.

The City assigns as error the failure of the trial court to hold the Bank's action barred by limitations and payment, and the court's award of attorney's fees against the City, a municipal corporation allegedly immune from judgment for such costs.

LIMITATIONS

The trial court's conclusions of law are to the effect that a period of limitations had not run at the time the Bank filed its suit. ² A suit for money had and received is governed by the two year statute, Tex.Rev.Civ.Stat.Ann. art. 5526 (1958). Causeway Investment Co. v. Nass, 131 Tex. 12, 111 S.W.2d 703 (1938). We will assume this shorter period to be the applicable period of limitations. The parties join issue on the question whether the Bank, more than two years before suit was filed, had constructive notice of the City's mistaken and improper categorization.

The City contends ordinance 700129-D was in effect on the day the Bank requested electric service in 1972 and the Bank was therefore by law charged with notice of the correct classification and rate described therein. Moreover, the City alleges, had the Bank compared the applicable City utility regulations, of which the Bank had constructive notice, to the erroneous billing code shown on the Bank's monthly statements, the mistake would have been obvious. The Bank was, therefore, put on inquiry, the City argues, and if the matter had been pursued with diligence, the Bank would have discovered the City's mistake in assigning to the Bank an erroneous classification and rate. City of Fort Worth v. Johnson, 388 S.W.2d 400 (Tex.1964); Johnson v. City of Dallas, 78 S.W.2d 265 (Tex.Civ.App.-Dallas 1934, writ ref'd); Hohertz v. Durham, 224 S.W. 549 (Tex.Civ.App.-Austin 1920, no writ); Isaacks v. Wright, 50 Tex.Civ.App. 312, 110 S.W. 970 (1908, writ ref'd). The Bank replies by citing El Paso Electric Co. v. Raynolds Holding Co., 128 Tex. 495, 100 S.W.2d 97 (1937), a decision to the effect that the law presumes a supplier of electricity will charge the proper legal rate, a presumption upon which the Bank was entitled to rely until it came into actual possession of facts sufficient to put an ordinary prudent person on inquiry. Moreover, the Bank contends, there is sufficient evidence in the record to support the trial court's conclusion that no such facts are shown in the record of this case.

The ultimate burden of proving the bar of limitations was upon the City. We assume, however, that the nature of the case pleaded by the Bank and the filing date on the petition evidence a prima facie showing that the claim would be barred by limitations. We turn then to the exculpatory showing of due diligence required of the Bank. It is in this respect that the holding in El Paso Electric Co. v. Raynolds Holding Co., 100 S.W.2d at 101-102, has the most significance for this case. The court there wrote:

Under the statutes of this state, as well as by principles of common law, defendant was prohibited from discriminating between its customers, situated under like circumstances, either as to the service rendered or the charges made therefor. Plaintiffs had a right to rely on the presumption that defendant would obey the law and would give them the benefit of the rate they were entitled to receive under the published schedule. Being in a position both as to an understanding of the true meaning of the schedule and as to the appliances or methods for ascertaining the measured demand applicable to plaintiff, defendant's obligation was to deal fairly and give plaintiffs the benefit of the most favorable rate which they were entitled to receive. (citations omitted) We do not intend to hold that public utility companies in every instance are under a legal obligation, prior to installation of service, to see that customers receive the most economical service and rates, but we do hold that under the circumstances of this case plaintiffs had a right to rest upon the assumption that the bills rendered were not discriminatory, but were based upon a correct estimate of the measured demand. Whatever may be the rule with reference to the use of diligence to discover fraud, we hold in this instance that owing to the relation of the parties, as above set forth, plaintiffs were under no duty to exercise diligence to discover the over-charges (even if they could have reasonably done so) until they came into possession of facts sufficient to cause them to distrust defendant, and also to put an ordinarily prudent person on inquiry. In our opinion, defendant has failed to show any fact or circumstance which justifies us in holding, as a matter of law, that plaintiffs were put upon inquiry, and the finding of the jury on the question of notice is in harmony with and supported by the facts and circumstances. (emphasis supplied). (The jury found that plaintiffs failed to actually discover, and could not by the exercise of reasonable diligence have discovered the excessive charges.)

Under this holding, a presumption (that the supplier will charge the correct rate for electric service) arose to rebut the City's prima facie showing of the bar of limitations, and the burden shifted back to the City to show that the Bank actually possessed facts sufficient to cause it to believe an incorrect rate had been charged, and also to put an ordinarily prudent person on inquiry.

As was the case in El Paso Electric Co., we believe the City has failed to show any fact or circumstances which justifies our holding, as a matter of law, that the Bank was put upon inquiry, and the findings and conclusions of the trial court, to the opposite effect, are in harmony with and supported by the stipulated evidence.

The monthly statements do not compel a finding that the Bank was put on notice of an improper categorization and rate because they contain no information upon which a categorization may be based. These statements simply reflect the rate charged and the title of the category, usually abbreviated, to which that rate is applicable. The applicable departmental regulations do not compel the necessary finding because only one page of the regulations is attached to the parties' stipulation and it sets forth no information upon which a categorization may be made. That page only states, in pertinent part, that a prospective customer may state the class of service desired, upon which statement the City may rely.

The ordinance in effect at the time service was applied for by the Bank does not compel, as a matter of law, the finding that the Bank had the requisite notice because the ordinance is highly technical with respect to the character of service which qualifies a customer for the relevant category, General Service Commercial Space Electric, making it questionable whether an ordinary prudent person would understand it. More importantly, a classification under that ordinance depends upon a contingency-the City must make a decision that "not less than 50% of the total annual energy consumption is utilized by the customer during the billing months of November through April, inclusive." It may not be said, as a matter of law, that the Bank is charged with notice of the applicability of these ordinance provisions to itself when the City never made the decision prerequisite to such applicability, as shown conclusively by the action of the City in placing the Bank in an altogether different category from the very beginning of service.

The foregoing evidentiary matters are in harmony with the trial court's findings and conclusions that the Bank had not received constructive or actual notice sufficient to invoke inquiry and commence any applicable period of limitations. We overrule the City's point of error.

PAYMENT

The City of Austin, as a home-rule city operating its own electrical utility, has the statutory authority "to fix such rules and regulations governing the city's liability as may be deemed advisable." Tex.Rev.Civ.Stat.Ann. art. 1175, § 6 (1963); see ...