City of Farmersville v. Texas-Louisiana Power Co.

• Decision Date: 29 October 1932
• Docket Number: No. 11342.,11342.
• Citation: 55 S.W.2d 195
• Parties: CITY OF FARMERSVILLE v. TEXAS-LOUISIANA POWER CO. et al.
• Court: Texas Court of Appeals

55 S.W.2d 195

CITY OF FARMERSVILLE v. TEXAS-LOUISIANA POWER CO. et al.

No. 11342.

Court of Civil Appeals of Texas. Dallas.

October 29, 1932.

Rehearing Denied December 10, 1932.

Appeal from District Court, Collin County; F. E. Wilcox, Judge.

Suit by the City of Farmersville against the Texas-Louisiana Power Company and others. From an adverse judgment, plaintiff appeals.

Reversed and rendered.

Touchstone, Wight, Gormley & Price and J. W. Gormley, all of Dallas, for appellant.

W. R. Abernathy and W. P. Abernathy, both of McKinney, and Bennett L. Smith, of Ft. Worth, for appellees.

LOONEY, J.

This controversy reached us first on appeal from an order of the trial court dissolving a temporary injunction [see City of Farmersville v. Texas-Louisiana Power Co. (Tex. Civ. App.) 33 S.W.(2d) page 272]; we refer to and adopt the statement of the case there given. As there shown, on May 5, 1930, appellant adopted two ordinances (Nos. 122 and 123); the purpose being to regulate utilities and fix rates to be charged consumers. These ordinances were enacted under authority of article 1119, Revised Statutes, as it then existed; later, however, the Forty-Second Legislature amended the article by an Act approved May 26, 1931, effective ninety days after adjournment (see Session Acts, c. 226 p. 380 [Vernon's Ann. Civ. St. art. 1119]) in these respects: Authorizing cities and towns of over 500 population, instead of over 2,000 as formerly provided, to regulate and prescribe rates to be charged by public utilities; providing that no rates should be fixed that would yield more than 10 per cent. per annum, in lieu of the former provision, of not less than 10 per cent. per annum, on the actual cost of the physical properties, equipment, and betterments.

After the amending statute became effective, appellant, on September 1, 1931, adopted Ordinances Nos. 126 and 127 in all material respects the same as Ordinances Nos. 122 and 123, in which rates for its own observance were prescribed, as well as for the observance of appellee, being the same, in effect, formerly voluntarily charged by appellee. Appellee, refusing to abide by the schedule prescribed by the ordinance, promulgated, and insists upon maintaining, a schedule of rates much lower, all of which is revealed by the findings of the court hereinafter set out.

The case was tried without a jury on appellant's fifth amended petition, which differs from its original petition as set out in the report on former appeal, in several material respects. We notice the following: In the amendment, appellant specially pleaded the ordinances enacted under amended article 1119; and, as a last recourse, if denied the legal remedy sought, that it be accorded injunctive relief in the premises under general principles of equity.

As the case is, in some respects, a pioneer, we are giving a lengthy and somewhat tedious statement.

Appellee urged, and the court sustained, a special exception to the allegations of the amended petition setting up and relying upon the rate and regulatory ordinances adopted in September, 1931, by authority of amended article 1119, on the theory that said amendment was unconstitutional because of a captional defect; other issues framed by the pleadings are revealed by the conclusions of the trial judge, the material portions of which we adopt as our own, except however, the conclusions that are obviously speculative.

The court found that on August 9, 1899, the city of Farmersville, by ordinance, granted a franchise authorizing the Farmersville Milling Company and its successors, etc., to maintain and operate within said city an electric light plant for a period of fifty years, granting, in this connection, the use of the streets, alleys, and other public highways of the city for such purposes; that thereafter the Farmersville Mill & Light Company acquired all rights of the Farmersville Milling Company, under said grant, and in the year 1926 the Kentucky-Central Company acquired from the Farmersville Mill & Light Company its rights under said franchise and properties, except its power plant, and thereunder the Kentucky-Central Company furnished electricity to said city and its citizens until defendant (appellee) in 1927, acquired said assets, including the distributing system, franchise rights, and privileges of the Kentucky-Central Company, and has since furnished to the city of Farmersville and its inhabitants electricity, as provided under the franchise; that from some date in 1927 to some date in 1928, appellee furnished electric power under a schedule of rates that allowed no discount for prompt payment, and provided a minimum rate of $1.50 per month; that a slight change was made in 1928 merely affecting commercial customers; the rates then charged by the power company were as follows: Monthly residence rates: 15 cents per kw. for the first 20 kw.; 10 cents per kw. for all energy consumed in excess of 20 kw. Monthly business rates: 15 cents per kw. for first 20 kw.; 12½ cents per kw. for second 20 kw.; 10 cents per kw. for third 20 kw.; 7½ cents per kw. for next 200 kw.; 4 cents per kw. for all energy consumed in excess of 260 kw.—with a minimum rate of $1.50 per month. These rates remained in force until March 1, 1930, about three weeks after the city plant began operation, at which time appellee promulgated an entirely new schedule materially lowering rates to consumers, and is still maintaining said lowered rates. During the year 1929, the city of Farmersville, through its governing body, availed itself of the rights accorded cities and towns in this state to purchase and install its own electric light plant; electric machinery was purchased on time payments under the provisions of the statute authorizing such purchase and, in respect to the purchase, installation, and operation of its electric light plant, the city conformed to the provisions of the statutes. (The court here sets out the contract entered into for the purchase and installation of the city's plant, which we do not deem material in this connection.) The plant established by the city began operation in February, 1930, at which time the city adopted the schedule of rates then being charged by the power company, appellee, except the city gave 10 per cent. discount for prompt payments, and reduced the minimum rate from $1.50 to $1.25 per month. (The court in paragraph 7 made findings with reference to special contracts with certain business houses, providing for the installation of lights under awnings in front of business places, not deemed material in this connection.) The findings include these further facts that, at and prior to the time of the completion and operation of the city's plant, the city had secured promises from 225 patrons of the power company to quit it and become customers of the city when its plant began operation. The power company had 450 customers at the time the municipal plant began operation in the early part of February, 1930; about three weeks later 280 of its customers discontinued and became customers of the municipal plant. At this point the court makes a specific finding to the effect that, if the power company had not reduced its rates, the municipal authorities would have secured all of the 450 customers in another three weeks' time except about 10 per cent. When the customers of the power company were reduced to 170, appellee, on March 1, 1930, adopted and promulgated its new schedule of rates; that is, they charged only 5 cents for the first 20 kw. and 3 cents for all over that amount, and it has maintained this schedule of rates since said time, with the result that loss of customers ceased.

In paragraph 9, the following deductions are stated: "I find that the power company reduced its rates as above on March 1, 1930, in good faith solely for the purpose of preventing a loss and confiscation of the property and investments in the city and did not make and maintain such reduced rates for the purpose of putting the city plant out of business nor for the purpose of securing a monopoly in the lighting business." We cannot assent to the above as being a reasonable deduction from the facts; on the contrary, think that in this, as well as in all such instances, the presumption should be indulged that appellee intended the natural and immediate results of the voluntary action taken, and, as applied to the instant case, we deduce the fact that it was the intent and purpose of appellee in reducing its rates to put the city plant out of business, with the view of ultimately securing a monopoly of the lighting business at Farmersville.

The court further found that, after the power company reduced its rates to the 5 cents and 3 cents, the governing body of the city, on April 24, 1930, enacted a general regulatory utilities ordinance, and on May 5, 1930, enacted an ordinance prescribing certain rates to be charged consumers, being the same then being charged by the municipal plant. The court also found that, on and for some time prior to the passage of said ordinances, the city of Farmersville had a population of only 1,878, and since has not had a population of 2,000 or over; that at the time of the consideration and passage of these ordinances (Nos. 122, 123), the mayor and city council were in possession of information which, if pursued, would have apprised them of the fact that Farmersville did not have a population of 2,000; that said officials made no investigation, no evidence was introduced, and no finding was made, except as shown on the face of the ordinance. We think the evidence justified the conclusion that, at the time of the passage of Ordinance No. 123 (May 5, 1930), fixing the rates to be charged by electric utilities in the city of Farmersville, members of the governing body knew that the actual count (1930 United States census) showed that the city of Farmersville had a population of only 1,878. The findings in paragraph 11 we do not regard...