City of San Marcos v. Lower Colorado River Authority

• Decision Date: 10 April 1974
• Docket Number: No. 12110,12110
• Citation: 508 S.W.2d 403
• Parties: CITY OF SAN MARCOS, Texas, Appellant, v. LOWER COLORADO RIVER AUTHORITY, Appellee.
• Court: Texas Court of Appeals

Page 403

508 S.W.2d 403

CITY OF SAN MARCOS, Texas, Appellant, v. LOWER COLORADO RIVER AUTHORITY, Appellee.

No. 12110.

Court of Civil Appeals of Texas,

Austin.

April 10, 1974.

Rehearing Denied April 24, 1974.

James W. Wilson, McGinnis, Lochridge & Kilgore, Austin, for appellant.

C. C. Small, Jr., Small, Craig & Werkenthin, Austin, for appellee.

O'QUINN, Justice.

The City of San Marcos brought this lawsuit against the Lower Colorado River Authority seeking a declaratory judgment asseverating its power as a home rule city to fix rates charged by any electrical utility serving its inhabitants, including rates charged by the Authority selling at retail in San Marcos.

The City also sought to enjoin the Authority from increasing its rates beyond charges prescribed in a city ordinance adopted December 19, 1972, without prior approval of the city council. The City sought alternatively to set aside action of the Authority's board of directors adopting increased rates on October 19, 1972, on the ground that the Authority had failed to comply with the Texas Open Meeting Law (Article 6252--17, Vernon's Ann.Civ.Sts.).

The Authority answered and disputed the City's claim of jurisdiction over rates charged by the Authority and asserted its own exclusive power to set rates for its electric service. The Authority denied that the increased rates adopted by its directors were invalid by reason of noncompliance with the Open Meeting Law. The Authority alternatively contended that the City's rate ordinance was void for lack of notice to the Authority prior to adoption. The Authority prayed for declaratory judgment affirming its contentions.

The trial court entered judgment declaring that the City of San Marcos was without jurisdiction to set rates for the sale of electricity by the Lower Colorado River Authority within the City's corporate limits.

We will reverse that part of the judgment of the trial court and render judgment that the City of San Marcos has exclusive jurisdiction to fix rates for the sale of electricity to the inhabitants of the City.

The trial court further rendered judgment that the rate ordinance adopted by the City was void for lack of notice to the Authority, and that the two attempts by the Authority to fix rates were invalid because of noncompliance with the Open Meeting Law. The court also denied the City injunctive relief. These actions of the court will be considered and disposed of incidental to decision on the principal issue of jurisdiction to fix rates.

The City of San Marcos, being a home rule city, operates under the provisions of section 5, Article XI, of the Constitution of Texas, Vernon's Ann.Tex.Const. (As amended November 5, 1912). The effect of the home rule amendment is to authorize the citizens of any city having more than 5,000 inhabitants to adopt a charter which becomes the basic law of the city and may contain any provisions approved by the people not inconsistent with the general laws of the state or the Constitution. The voters of San Marcos adopted a charter in February of 1967, and in Article XI of the charter delegated to the city council '. . . full power, after notice and hearing, to regulate by ordinance, the rates of every public utility operating in the City . . .' (sec. 11.09, Art. XI, San Marcos Charter).

In April of 1967, two months after adoption of the home rule charter, the city council of San Marcos granted a franchise for a term of ten years to the Lower Colorado River Authority under which the Authority was accorded the right to distribute 'electric power and energy for lights, heat and power, including distribution of electric power and energy to the City and its inhabitants . . .' The Authority acquired the electrical distribution physical properties within the City of San Marcos from the Texas Power and Light Company in September of 1939, an acquisition which also included a franchise for fifty years dating from June 11, 1925.

Following the home rule amendment to the Constitution in 1912, the Legislature in 1913 enacted laws enumerating 'for greater certainty' numerous powers that might be exercised by cities adopting charters for local self-government. (Art. 1175, Vernon's Anno.Civ.Sts.; Acts 1913, p. 307). Among the powers enumerated by the Legislature is the power of home rule cities to grant franchises and fix utility rates:

'12. To prohibit the use of any street, alley, highway or grounds of the city by any telegraph, telephone, Electric light, street railway, interurban railway, steam railway, gas company, Or any other character of public utility without first obtaining the consent of the governing authorities expressed by ordinance . . . (and) To determine, fix and regulate the charges, fares or rates of any person, firm or corporation enjoying or that may enjoy the franchise or exercising any other public privilege in said city . . .' (Emphasis supplied) (Subd. 12, Art. 1175)

In the same Act of 1913 the Legislature stated, in Article 1176, 'The enumeration of powers hereinabove made shall Never be construed to preclude, by implication or otherwise, any such city from exercising the powers incident to the enjoyment of local self-government, provided that such powers shall not be inhibited by the State Constitution.' (Emphasis supplied)

San Marcos, as a home rule city, must look to its own charter in determining whether it has power to fix electric utility rates, and will look to enactments of the Legislature only to ascertain whether by general law any limitations on the charter power have been imposed. Yellow Cab Transit Co. v. Tuck, 115 S.W.2d 455 (Tex.Civ.App. Dallas 1938, writ ref.); Forwood v. City of Taylor, 147 Tex. 161, 214 S.W.2d 282 (1948); State v. City of La Porte, 386 S.W.2d 782 (Tex.Sup.1965).

The Authority contends that Article 1175 limits the charter power because by its terms the statute does not embrace a 'municipal corporation such as' the Lower Colorado River Authority, created by Article 8280--107, V.A.C.S. (Acts 1934, 43rd Leg., 4th C.S., p. 19, ch. 7). The Authority argues that the words 'person, firm or corporation' employed in the Article 1175 must be construed to exclude a corporation created by the Legislature, as distinguished from a private corporation. Reliance in this position is on the rule stated by the Supreme Court in State v. Central Power and Light Company, 139 Tex. 51, 161 S.W.2d 766 (1942), in which the Court held that the Texas anti-trust statutes were 'not intended to include a combination between a municipality and a third party.'

We find the rule of that case inapplicable to the statute here under consideration.

When all of the language of subdivision 12 of Article 1175 is examined, it becomes apparent that the words 'person, firm or corporation' are used, not in a restrictive sense as to the peculiar character or origin of the utility that may occupy the streets of a city for the purpose of selling services to the inhabitants, but rather as descriptive of any and all entities 'that may enjoy the franchise or (may be) exercising any other public privilege in said city.' In fact, the statute, after enumerating specific types of utilities to be denied use of streets until consent is given by city ordinance, enlarges the scope of the list to include 'any other character of public utility.'

Read with Article 1176, set out above in full, the provisions of subdivision 12 of Article 1175 make clear the intention of the Legislature not 'to preclude, by implication or otherwise, any such city from exercising the powers incident to the enjoyment of local self-government . . .' It is an established rule that courts will construe the language of a statute liberally to reach the true objective of the enactment and thereby give effect to the legislative intent. Lone Star Gas Company v. Sheaner, 157 Tex. 508, 305 S.W.2d 150 (1957); Whitmarsh v. Buckley, 324 S.W.2d 298 (Tex.Civ .App. Houston 1959, no writ); 53 Tex.Jur.2d, Statutes, secs, 194 et seq. The courts must ascertain the purpose for which the statute was enacted, as the dominant consideration in construing a statute is the intention of the Legislature. Flowers v. Dempsey-Tegeler and Company, 472 S.W.2d 112, 115 (Tex.Sup.1971).

The statute under consideration in State v. Central Power and Light, Supra, as pointed out by the Supreme Court, was 'highly penalizing in its nature,' being an anti-trust law, found in both civil and criminal statutes of the state. 'It is thought,' the Court stated, 'that if the Legislature had intended to visit such severe penalties on municipalities, it would have used more apt language to describe them.' (161 S.W.2d 768, col. 2)

Ordinarily, statutes imposing penalties or forfeitures, levying a tax, or in derogation of common law will be strictly construed in determining whether the act applies to persons or entities not clearly included by the language of the law. See 53 Tex.Jur.2d, Statutes, secs. 195 et seq. and cases cited.

Attorney's fees, authorized under Article 2226, which are in the nature of a penalty or punishment for failure to pay a just debt (Huff v. Fidelity Union Life Insurance Co., 158 Tex. 433, 312 S.W.2d 493), may not be collected from a municipal corporation since municipalities are not construed to be within the words 'against a person or corporation' found in the statute. City of Houston v. L. J. Fuller, Inc., 311 S.W.2d 285 (Tex.Civ.App. Houston 1958, no writ); City of Houston v. Howe and Wise, 323 S.W.2d 134, 151 (Tex.Civ.App. Houston 1959, writ ref. n.r.e.). The anti-trust statutes, construed in State v. Central Power and Light, were given the same strict construction in State v. Fairbanks-Morse and Company, 246 S.W.2d 647, 658 (Tex.Civ.App. Dallas 1952, writ ref. n.r.e.). Article 7589a, an act making it unlawful 'for any person, firm or private corporation to divert the natural flow' of surface waters to the damage of other property owners was held by the Supreme Court not to include...