City of Texarkana v. Arkansas Louisiana Gas Co.

• Decision Date: 19 March 1941
• Docket Number: No. 9350.,9350.
• Citation: 118 F.2d 289
• Parties: CITY OF TEXARKANA, TEX., v. ARKANSAS LOUISIANA GAS CO.
• Court: U.S. Court of Appeals — Fifth Circuit

118 F.2d 289 (1941)

CITY OF TEXARKANA, TEX., v. ARKANSAS LOUISIANA GAS CO.

No. 9350.

Circuit Court of Appeals, Fifth Circuit.

December 7, 1940.

On Motion for Rehearing January 14, 1941.

On Rehearing March 19, 1941.

Ed B. Levee, Jr., of Texarkana, Tex., and Benjamin E. Carter, of Texarkana, Ark., for appellant.

William C. Fitzhugh and H. C. Walker, Jr., both of Shreveport, La., and William H. Arnold, Jr., of Texarkana, Ark., for appellee.

Before SIBLEY, HUTCHESON, and McCORD, Circuit Judges.

SIBLEY, Circuit Judge.

This litigation was begun in 1933, to compel the Arkansas Louisiana Gas Company to maintain in Texarkana, Texas, the same scale of gas rates afforded in Texarkana, Arkansas, because of a clause in the franchise granted by the Texas city so providing. The period at first involved was June 17, 1930, to December 1, 1933. By supplemental pleading a period from December 1, 1933, to February 16, 1934, became involved, and one from February 16, 1934, to December 30, 1936. In the District Court a decree was rendered in 1937, which upheld the accepted franchise as a binding contract and adjudged refunds under it as to the second period but not the first; and as to the third period it was held the suit was premature because the rates in Arkansas for that period were still in litigation and not finally set up. On appeal this court held the provision of the franchise invalid. Arkansas Louisiana Gas Co. v. Texarkana, Texas, 5 Cir., 97 F.2d 5. The Supreme Court reversed, held the franchise provision applicable to all periods, and since it had on October 10, 1938, ended the litigation in Arkansas by a refusal of certiorari,^* leave was granted to include by a supplemental petition the period from February 16, 1934, to October 10, 1938, and the cause was remanded to the District Court for further proceedings. City of Texarkana, Texas, v. Arkansas Louisiana Gas Co., 306 U.S. 188, 59 S.Ct. 448, 83 L.Ed. 598. The decision of the Supreme Court was rendered February 6, 1939. The Gas Company at once put the Arkansas rates into effect in Texas. The permitted supplementary pleading was filed by Texarkana, Texas, in which for the first time was asserted a right to collect interest on the refunds. It reiterated a contention made since 1936, that the City was entitled to collect attorney's fees of twenty-five per cent. from each item of refund, and a pro rata of other expense of litigation amounting to over $24,000, and that to this end it had procured from a large number of the customers entitled to refund assignments of one-half of their several refunds, and was securing other assignments. It was prayed that the Gas Company be not allowed to make refund to any customer until the court should settle the matter of attorney's fees and assignments. The Gas Company showed that there were about seven hundred refunds to each of which there were more than one claimant, and that in numerous cases there were cross demands and offsets by the Gas Company. An auditor was appointed to straighten out these disputes. Reserving jurisdiction over his report, a final decree was made on July 18, 1939, which adjudged refunds for all three periods of the difference between the amounts collected from each customer and that due according to the Arkansas rates at the time, retroactive to the date in each instance on which the Arkansas rates were effective; reasonable attorney's fees were fixed for the City of twenty-five per cent. and charged on each refund, and $6,167 of expenses were similarly charged pro rata upon all refunds, and an additional sum of $18,085 expenses was charged pro rata against the half of each refund which was assigned to the City, and the Gas Company was directed to settle with the City and each customer accordingly, except as to the refunds which the auditor was investigating. No interest was allowed for any period.

The sole exception presented on this appeal is the disallowance of interest, which, it is asserted, would amount to about $100,000. The District Court gave as reasons for disallowing it in substance what follows:

1. No statute awards interest. Article 5070, Texas Revised Civil Statutes, is put forward, providing: "When no specified rate of interest is agreed upon by the parties, interest at the rate of six per cent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable * * *." It refers to debts liquidated by a writing, and applies only where the amount due can be ascertained from the writing alone. McNeill v. Casey, Tex.Civ.App., 135 S.W. 1130. The franchise here liquidates nothing. It is the basis of the demand sought to be enforced, but it ascertains no amount as due. Much extraneous evidence is necessary. The statute does not apply.

2. No interest is promised. So far from promising interest the franchise contract does not contain any promise to pay anything. The promise is to put Arkansas rates into effect in Texarkana, Texas, when lower than the rates fixed in the franchise. The money adjudged to be paid is damages for a breach of that promise. While interest is awarded as of right for the detention or use of money when promised, it is added to sums awarded as damages only when in the discretion of the court or jury it should be. Redfield v. Ystalyfera Iron Co., 110 U.S. 174, 3 S.Ct. 570, 28 L.Ed. 109; Close v. Fields, 13 Tex. 623; Fowler v. Davenport, 21 Tex. 626, 627; Atkinson v. Jackson Bros., Tex.Civ.App., 259 S.W. 280, Id., Tex.Com.App., 270 S.W. 848. See also McNeill v. Casey, Tex.Civ.App., 135 S.W. 1130. Interest may no doubt ordinarily be allowed on refunds and reparations in respect of overcharges by public utility companies operating on fixed rates, but there is no inflexible rule that it shall be.

3. As to the first and second periods there had been before the first decree an ascertainment of the refunds due, without any claim for interest, and to reopen that matter, fix the date of collection of each bill and ascertain the interest due on it would be to retry that part of the case in a most complicated manner.

4. The rates collected were collected under a bona fide claim of right and were not extortions. This court sustained that claim of right, albeit erroneously. The Gas Company in this litigation sought to contend that the Arkansas rates would be confiscatory if applied in Texarkana, Texas. On motion this contention was stricken out as no defense, and the Supreme Court said of it, (306 U.S. page 204, 59 S.Ct. page 456, 83 L.Ed. 598): "The issue of confiscation tendered by the answer of the utility to the petition to enforce the obligations of Section IX need not be considered in this proceeding. If the utility has entered into a binding contract as to rates, their confiscatory character is not a defense to the claim of the city to service at the contract rates." By the motion to strike the City confessed the confiscatory character of the rates as applied in Texarkana, Texas, for the purposes of this litigation. In a somewhat similar situation where a railroad had collected overcharges it was thought inequitable to require refund even of the principal amounts. Atlantic Coast Line Railroad Co. v. Florida, 295 U.S. 301, 55 S.Ct. 713, 79 L.Ed. 1451. A fortiori may a court of equity refuse discretionary interest on refunds.

5. In the period ending Oct. 10, 1938, as held by the Supreme Court, there was no right to ask a refund until the termination of the litigation in Arkansas on that date. These refunds did not become owing till then. On a general principle they would draw no interest till due. The same principle would similarly postpone interest in the other periods.

6. But further, as to all periods, the refunds were unliquidated demands until fixed by the court. Not only were they by nature such, but even the persons to whom owing were put in doubt; as to some by dispute among claimants, as to all by the assertion by the City of partial assignments, and of the right to charge attorney's fees and expenses against the refunds. The Gas Company could not safely pay anyone, and the City stood asking the court to prevent it. Not only action by the court but the investigations of an auditor were necessary to ascertain what and to whom payment is due. The law does not penalize by unpromised interest a nonpayment under such circumstances. Compare St. Louis & O'Fallon Ry. Co. v. United States, 279 U.S. 461, 49 S.Ct. 384, 73 L.Ed. 798.

On the whole case we think a refusal of interest was proper and

The judgment is affirmed.

McCORD, Circuit Judge (dissenting).

I do not concur in the majority opinion.

On June 13, 1930, the City of Texarkana, Texas, passed an ordinance granting a franchise to the appellee gas company. The franchise agreement became effective upon the filing of the gas company's acceptance on June 18, 1930. Section IX of the agreement provides: "If Grantee shall be finally compelled to, or should voluntarily place in any rates in the City of Texarkana, Arkansas, less than the rates granted by this ordinance then and thereupon the lessened rate shall apply in the City of Texarkana, Texas, and Grantee shall not be authorized or permitted to charge and collect any higher rate."

After long, drawn-out litigation the District Court of the United States for the Western District of Arkansas entered its decree restoring lower 1923 rates in the City of Texarkana, Arkansas, and ordering a refund of the excess collections from May, 1930, to December 1, 1933. City of Texarkana, Arkansas, v. Southern Cities Distributing Co., 8 Cir., 64 F.2d 944, certiorari denied 290 U.S. 650, 54 S.Ct. 67, 78 L.Ed. 563. After entry of the decree the overcharges collected by the gas company from May, 1930, to December, 1933, were immediately refunded to the Arkansas consumers, and the lower 1923 rates were put into effect in Texarkana, Arkansas. The gas company made no refunds to Texas consumers and declined to put the...