City of Houston v. Lakewood Estates, Inc.

• Decision Date: 09 July 1964
• Docket Number: No. 14296,14296
• Citation: 381 S.W.2d 697
• Parties: CITY OF HOUSTON, Appellant, v. LAKEWOOD ESTATES, INC., Appellee.
• Court: Texas Court of Appeals

Page 697

381 S.W.2d 697

CITY OF HOUSTON, Appellant, v. LAKEWOOD ESTATES, INC., Appellee.

No. 14296.

Court of Civil Appeals of Texas, Houston.

July 9, 1964.

Rehearing Denied Sept. 10, 1964.

John Wildenthal, Jr., City Atty., John Gano, Senior Asst. City Atty., Houston, for appellant.

Billy B. Goldberg, Houston, for appellee.

BELL, Chief Justice.

Appellee filed suit to recover from appellant the value of water and sewer lines it alleged had been taken by appellant. The trial court, on trial before the court without a jury, rendered judgment for appellee for $29,293.60 together with interest at the rate of 6% from July 1, 1961.

The facts are largely undisputed. Appellee, a private corporation, was chartered June of 1950 under Subdivision 47 of Article 1302, R.C.S.1925. Its purpose was to erect or repair any building and to accumulate and lend money for such purposes and to purchase, sell and subdivide property in Houston and within a distance of not exceeding two miles beyond the city limits of Houston. In 1948 Louis Saks, the principal stockholder in the corporation, owned a tract of land amounting to some 65 acres that he subdivided into what he called Lakewood Estates. It was subdivided into lots and blocks upon which homes might be built. The plat was approved by the City Planning Commission of the City of Houston and the Commissioners Court of Harris County. The streets, alleys and easements shown on the plat were dedicated to the public. The land constituting the subdivision was conveyed by Mr. Saks to the corporation after its formation on June 13, 1950.

Mr. Saks testified that though a few lots were sold before the addition had been approved for loans by the F. H. A. he soon found out the sale of lots in the addition would not move unless it was approved for loans by the F. H. A. In order for the addition to be approved by F. H. A. it was necessary, among other things, to have water and sewer service available. In November of 1950, appellee entered into a contract with a utility company known as Pinewood Utilities that was serving an addition to the north of, though not adjoining, Lakewood Estates. Langley Road Place was an addition between them. Under the terms of the contract appellee was to lay and pay for the water and sewer lines in Lakewood Estates and the mains that had to pass through Langley Road Place. The line through Langley Road Place was necessary in order to connect with the Pinewood Utilities lines. Pursuant to said agreement appellee laid its water lines in the dedicated streets and the sewer lines in the dedicated easements. It should be noted that the part of Lakewood Estates north of Hall's Bayou lay outside of the City limits of Houston until annexation in 1956. The lines installed by appellee were in the area beyond the City limits.

We need not notice all the provisions of the contract. It contained an agreement by Pinewood Utilities to furnish water and sewer service at prescribed rates to owners of houses in Lakewood Estates. For each house connected a tap charge of $50.00 for the water connection and meter was made and a $100.00 charge was made for the sewer connection. This charge was paid to the utilities company for its use. While the testimony shows the amount of the charge was paid by checks of appellee, the charge was actually collected from the property owner by appellee. Persons in Langley Road Place were entitled to connect with the line running through that addition upon the payment of a charge to be determined by appellee but not to exceed the amount charged owners in Lakewood Estates. Payment was made to the utilities company, and it paid the amount collected over to appellee. The users of the service, be they owners in Lakewood Estates or Langley Road Place, would make application to the utilities company on forms provided by them. The contract also provided that after one year the water and sewer lines in Lakewood Estates and Langley Road Place would be serviced and maintained by the utilities company at its own cost and expense. The contract recites the contractor laying the lines had the obligation to maintain for the first year.

It was provided that the water and sewer lines constructed should become and remain the property of the party to the contract who paid for the particular facility. It further provided: 'The rights and benefits accuring and the obligations incurred hereunder shall extend to the successors and/or assigns of the parties to this contract.'

The testimony in the record comes from Mr. Yancey of Pinewood Utilities, Mr. Saks, the president and principal stockholder of appellee, who testified by deposition, and Mr. Goldberg, secretary-treasurer of appellee, who is also its attorney. Mr. Yancey testified largely about the contract and the operation of the Pinewood Utilities. He testified the $150.00 connection charges were paid to his company by checks from appellee. This $150.00 was to help defray the cost of a water production plant and the sewerage treatment plant. Also he testified at the time of the contract the parties discussed the possibility of annexation of the territory by the City of Houston. In what context such discussion was had is not stated but the evidence shows affirmatively that the lines were constructed in conformity to the City of Houston's requirements.

Mr. Goldberg testified that the lots in the addition sold at an average price of $800.00 in addition to the $150.00 collected for the utility connection. He testified the operation of the subdivision had not been at a profit. 'The water and sewer lines installed * * * have been taxed for all years subsequent to their installation by the State of Texas and the County of Harris.' There was introduced, as an example of the assessment for taxes by the State and County, a tax statement for 1961. The testimony does not show rendition in this fashion by the appellee or its representative. Mr. Goldberg does not testify, and we find no testimony elsewhere, that the taxes thus assessed were paid. We do note, however, that when appellant objected to the introduction of the statement, Mr. Goldberg, the attorney, who was then also a witness, stated it was not contended the City was bound by it, 'but the contention is the intention of the retention of these lines. That is material and we think the payment of taxes through the years is evidence of intent on the part of plaintiffs as to ownership.' The statement does not reflect whether the taxes were paid or not. He further testified the cost of the lines and their installation was not carried on the books as an expense item but was capitalized and depreciated. There were about 12 lots in the addition north of the Bayou remaining unsold and in the whole addition there were 20 or 25 remaining unsold.

Mr. Saks testified when he went to the F. H. A. to discuss approval of the addition for loans he was told the addition must have water and sewerage. All indebtedness owed by appellee has been paid off. Here it is noted Mr. Goldberg testified that at some time Mr. Saks put additional money in the corporation. How much this was is not shown. The price the lots were to sell for was supposed to take into consideration the cost of the land and the expense of operating the corporation and borrowing money. The cost of the water and sewer lines was one of the expenses the corporation had had. When they undertook to sell the lots they obligated themselves to the customer to furnish them lots that were served by water and sewer. If he had not the purchaser would not have gone through with the deal. Lakewood Estates has done no maintenance work on the lines. He had an idea the City would some day annex the addition. The engineer (apparently the private engineer in charge of installing the lines) checked at the City Hall and had the plans and specifications approved. The lines were installed for the purpose of providing water and sewer service to the members of the public who bought lots. Everybody out there is using them. The City is now doing just what Pinewood Utilities did, that is, supplying water and sewer service through the lines, the service being contracted for by the individual consumer who pays for the service to the appellant.

In addition to the testimony of witnesses, appellant introduced the various admissions made by appellee in response to request for admissions. The clear effect of the admissions is to establish that Mr. Saks, appellee's predecessor, purchased raw land for the purpose and with the intent of platting, dedicating, developing and improving the land to such an extent that the subdivision would become eligible for F. H. A. insured home financing on houses that would be built on lots in the subdivision. Lots were sold with reference to the approved plat. All water and sewer lines were built to comply with requirements of the City of Houston. Since June, 1961 the City of Houston has furnished service to the customers in Lakewood Estates under individual contracts with the customers. In March, 1951, after correction of a drainage problem the subdivision became eligible for F. H. A. insured home loans. The water and sewer mains were laid in 1950 after the contract with Pinewood Utilities. Appellee was engaged in selling lots in the subdivision. Most of the lots sold have houses on them and are owned and occupied as residences by members of the public. After laying of the lines appellee represented to the buyers that water and sewer services were available.

The trial court found appellee executed no written instrument dedicating to the public the utility lines and appurtenances. It also found that appellee by its actions showed a clear intention of retaining ownership of the utility lines and appurtenances. There were other findings not here necessary to notice.

The basic position of appellee is there was never any dedication of the lines to the public and that appellant had...