City of Houston v. Memorial Bend Utility Co., 13555
| Decision Date | 21 January 1960 |
| Docket Number | No. 13555,13555 |
| Citation | 32 P.U.R.3d 522,331 S.W.2d 418 |
| Parties | CITY OF HOUSTON, Appellant, v. MEMORIAL BEND UTILITY COMPANY, Appellee. |
| Court | Texas Court of Appeals |
R. H. Burks, City Atty., John Gano, Senior Asst. City Atty., Charles F. Weaver, Asst. City Atty., Houston, for appellant.
Dow & Dow, Melvin A. Dow, Houston (Howard W. Edmunds, Houston, of counsel), for appellee.
The appellee is a private utility furnishing water and sanitary sewer service to residents of a defined area in the City of Houston. Prior to December 31, 1956, the territory served was outside the limits of the City. As a result of annexation, a part of the area served by appellee bcame a part of the City of Houston. At the time of annexation appellee was charging rates for services rendered by it according to a rate schedule promulgated by it. These rates it continued to charge until it raised its rates effective July 1, 1959.
On January 2, 1957, the City Council of the City of Houston passed general ordinances Nos. 57-1 and 57-3, by which it, without notice to appellee, fixed the rates that might be charged by a utility situated as was appellee for water and sanitary sewer service. The rates so fixed were less than the rates prescribed by appellee's schedule of rates. The record here reflects that on February 18, 1957, appellee furnished the City information as to the value of its properties, the appraisal being made by Freese, Nichols and Turner, the report being dated February 15, 1957. Also it furnished a statement of its income and expenses for the fiscal year ending November 30, 1956. The furnishing of these statements was in an effort to comply with the above ordinances. At the same time appellee for various reasons protested the passage of the ordinances and questioned their validity and the rates fixed thereby. The petition to the City Council contains this prayer:
'Wherefore, premises considered, petitioner prays that the City Council of the City of Houston pass an ordinance approving the rates and charges made by the petitioner in the operation of its utilities and in the furnishing of other public services (emphasis ours) or in the alternative that said City Council conduct a public hearing concerning rates and charges made by the petitioner and at such hearing that said petitioner be given an opportunity to introduce evidence with reference thereto and further, that the rates and charges made by petitioner be not changed until the City of Houston has taken final action after such hearing.' (Emphasis ours.)
On May 1, 1957, the City Council passed ordinance No. 57-531 by which it provided that a private utility operating without a franchise could charge no greater rate for its service than was being charged by it on December 31, 1956. The effect of the ordinance was to fix the maximum rate that could be charged, such maximum rate being that being charged by the utility on December 31, 1956. Appellee had no notice of the passage of the ordinance before its passage. On the same day ordinances Nos. 57-1 and 57-3 were repealed.
The facts here show that the rates being charged by appellee on May 1, 1957 were the same as those being charged by them on December 31, 1956.
Nothing was done by appellee until June 3, 1959. It continued to charge the rates it had voluntarily adopted and which it, by its petition of February 18, 1957, expressly asked the City Council to adopt and which the City Council did effectively adopt by ordinance No. 57-531. On June 3, appellee wrote the City Council contending it had on February 18, 1957 asked for a rate hearing and stating the rates in force were not compensatory and stating it did not intend to continue to operate under the existing rates. They requested a rate hearing. Mr. Puig, the Company president, stated appellee had several times from early 1957 orally requested a rate hearing. Just what kind of a rate hearing he does not state, nor are the times of the requests stated. On June 9, 1959, the City Council set a rate hearing for July 23, 1959.
Appellee, without approval of the City Council, promulgated an increase in rates to be charged by it effective July 1, 1959, and is now charging such rates.
Appellant filed this suit to enjoin appellee from charging rates in excess of those fixed by ordinance No. 57-531. The trial court refused to grant the injunction.
Appellee contends the ordinance is as to it invalid because it was given no notice or hearing in connection with the ordinance fixing its rates and it was thus denied procedural due process. Too, it contends the rates established are not compensatory, but operate to confiscate its property. Further, it says the ordinance recites facts which are contrary to the established fact, that is, that since Decembr 31, 1956, there has been no increase in prices and expenses, whereas certainly there has been a very substantial increase in taxes. Appellee says that in any event under all circumstances the trial court did not abuse its discretion in refusing to grant the injunction.
We have reached the conclusion that ordinance No. 57-531 was as to appellee valid and effective to fix the maximum rates which appellee could charge for its services. We take it to be established law that until such time as a regulatory body assumes to exercise its authority to fix rates which a utility may charge, that the utility may fix its own rates, provided they are reasonable. 73 C.J.S. Public Utilities Secs. 14 and 15, p. 1009. Such rates would be binding until such time as the regulatory body assumes to exercise its authority. United Gas Corp. v. Shepherd Laundries, 144 Tex. 164, 189 S.W.2d 485. As we held on January 14, 1960, in the case of the City of Houston v. Willow Bend Utilities, Inc., Tex.Civ.App., 331 S.W.2d 333, in case the regulatory body proposes to fix the rates to be charged by the utility due process of law requires that the utility be given notice and be given a hearing, unless the...
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...holdings therein, which could suggest the result argued for by appellee. For example, in City of Houston v. Memorial Bend Utility Company, 331 S.W.2d 418, 421 (Tex.Civ.App.1960, writ ref'd n.r.e.), Justice Bell wrote, 'We take it to be established law that until such time as a regulatory bo......
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