City of Uvalde v. Uvalde Electric & Ice Co.

• Decision Date: 18 April 1923
• Docket Number: (No. 345-3723.)
• Citation: 250 S.W. 140
• Parties: CITY OF UVALDE et al. v. UVALDE ELECTRIC & ICE CO.
• Court: Texas Supreme Court

Page 140

250 S.W. 140

CITY OF UVALDE et al. v. UVALDE ELECTRIC & ICE CO.

(No. 345-3723.)

Commission of Appeals of Texas, Section B.

April 18, 1923.

Appeal from Court of Civil Appeals of Fourth Supreme Judicial District.

Injunction by the City of Uvalde and others against the Uvalde Electric & Ice Company to restrain the defendant from increasing electric light rates. From a judgment of the Court of Civil Appeals (235 S. W. 625) affirming a judgment sustaining a general demurrer to the petition, plaintiffs bring error. Affirmed.

Martin & Martin, Love & Smith, and L. Old, all of Uvalde, for plaintiffs in error.

G. B. Fenley, of Uvalde, and Templeton, Brooks, Napier & Brown, of San Antonio, for defendant in error.

HAMILTON, J.

The city of Uvalde, a municipal corporation, Jake Schwartz, D. W. Barnhill, and Eugene Kincaid, citizens of Uvalde, brought suit against defendant in error for injunction restraining it from raising the rates for lights, alleging that the city and the company entered into a contract in 1917, many years after the company had been doing business in the city, by the terms of which the city agreed, for a term of 10 years, to pay the company the prices per kilowatt stipulated in the contract for street lighting, and the company agreed, for the same term, to charge the inhabitants the prices per kilowatt named therein for the citizens; that the contract was in the form of an ordinance, accepted by defendant in error, providing that, unless a reduction from the prices then being charged to the prices stipulated in the ordinance should be made by the company, the contract would cease to exist; that the company reduced the rates in conformity with the contract and supplied lights according to its terms until March, 1921, when the company raised its prices to the rates sought to be enjoined. The trial court sustained a general demurrer to the petition. Upon appeal the Court of Civil Appeals affirmed the trial court's judgment. 235 S. W. 625.

The city of Uvalde was incorporated under the general laws of the state, Revised Civil Statutes 1911, tit. 22, c. 14.

The questions involved are whether or not the ordinance relied on and its acceptance by the company was sufficient to constitute a contract, and whether, in any event, the city of Uvalde was authorized and empowered to make a contract for lights.

We pretermit the first question and approach the second, for, if the city was without power to make a contract for lights, no ordinance and its acceptance, whatever its form and contents might have been, could have constituted a contract.

The ordinance and its acceptance, in this case, had no relation to the granting of a franchise for the construction and installation of an electric lighting system. The franchise for the construction of the light system had been granted and plaintiff had been supplying light many years before the alleged contract involved in this case was made. Therefore no question arising out of an agreement or contract for rates to secure the installation of a light plant and system prior to its construction and for the purpose of securing its construction is involved here.

By article 1018, Revised Civil Statutes of Texas 1911, the city councils of cities of the class of Uvalde are authorized to regulate the rates to be charged by light companies engaged in furnishing light to the public with the restriction that the city council or board of aldermen shall not prescribe any rate or compensation which will yield less than 10 per cent. per annum on the actual cost of the physical properties, equipments and betterments.

The functions of municipal corporations, though all of them are of a public nature, may be divided into two great classes according to the purpose and nature of the function or act. They are either governmental functions performed by virtue of power conferred upon the municipality as a legal agency of the state to be exercised in the administration of affairs affecting the people generally or proprietary business powers granted for the special benefit of the urban community embraced within the corporate boundaries. Pond, Public Utilities, §§ 3-7; 28 Cyc. p. 267, and authorities cited there. Those functions of a municipal corporation in its capacity as an agent of the state are strictly limited by the statutory provisions granting them. In the exercise of these functions the municipality is an arm of sovereignty, and its powers are strictly construed.

This class of functions the city must perform. The city has no option. They are not to be exercised or ignored by the municipality at discretion. Anne Arundel County v. Duckett, 20 Md. 468, 83 Am. Dec. 557; Allegany County Public Schools v. Allegany County Commissioners, 20 Md. 449. Such functions are legal duties imposed by the state upon its creature. These duties the municipality may not omit with impunity, but must perform at its peril. Hill v. Boston, 122 Mass. 344, 23 Am. Rep. 332; Chattanooga v. State, 5 Sneed (Tenn.) 578; Com. v. Hopkinsville, 7 B. Mon. (Ky.) 38; People v. Albany Corp., 11 Wend. (N. Y.) 539, 27 Am. Dec. 95; Com. v. Bredin, 165 Pa. 224, 30 Atl. 921.

The other class of functions is imperative in part and discretionary in part. The making of rate contracts with public utilities where the city has the power to make contracts for such purposes is within the discretion of the municipality, unless expressly directed by statute or charter to do so. The statutes of Texas under which the city of Uvalde was incorporated not only do not direct any such contracts to be made, but do not even authorize a municipality to make a contract stipulating the rate for electric lights for the use either of the municipality or of the inhabitants. The power of the city to regulate rates is governmental. City of Bessemer v. Bessemer City Waterworks, 152 Ala. 391, 44 So. 663; Home Telephone Co. v. Los Angeles, 211 U. S. 267, 29 Sup. Ct. 50, 53 L. Ed. 176.

Then did the city of Uvalde have the power by contract to bind itself and its inhabitants to pay a stipulated rate for electricity for lighting purposes for 10 years, as it here insists it has done, thereby suspending the operation of the statute which declares it shall have power to regulate, by ordinance, the rates and compensation to be charged by all water, gas, light, and sewer companies engaged in furnishing water, gas, light, or sewerage service to the public? In other words, could the city of Uvalde surrender or barter away its power to regulate light rates by a contract suspending the exercise of that power? Since the statutes give the city no express power to contract with respect to rates for lights, whatever power, if any, it has so to contract must arise from implication. Then the question is whether or not the city has the implied power, by contract, to surrender or suspend the power by ordinance expressly conferred by statute to regulate the rates. It is insisted by plaintiff in error that the city had the implied power to make the contract, and that this power is sufficient. We do not agree that there was in the city such implied power. We think the city did not have implied power to make a contract for light rates. The grant of power by the Legislature to the city to regulate those rates was an exclusion of the power to make a contract for light rates that would suppress or suspend the expressly granted power to regulate.

The power to regulate rates and the power to stipulate by contract for a term of 10 years for rates cannot coexist. If the city has the power thus to contract, then it...