City of Wink v. Wink Gas Co., 3646.

Decision Date24 March 1938
Docket NumberNo. 3646.,3646.
Citation115 S.W.2d 973
PartiesCITY OF WINK et al. v. WINK GAS CO.
CourtTexas Court of Appeals

Appeal from District Court, Winkler County; J. A. Drane, Judge.

Suit by the Wink Gas Company against the City of Wink and others to enjoin the city and its officers from enforcing an ordinance prescribing the rates to be charged for natural gas in the city and containing other regulatory provisions. From a judgment enjoining an enforcement of the ordinance, the defendants appeal.

Judgment reversed, and judgment rendered dissolving the injunction and denying the prayer for injunction.

Hill D. Hudson, of Pecos, and A. T. Folsom, of Wink, for appellants.

L. A. Dale, of Pecos, and Willis L. Lea, Jr., and Scott Hughes, both of Dallas, for appellee.

NEALON, Chief Justice.

October 7, 1936, the Board of Commissioners of the City of Wink, a city incorporated under the general laws of the state, passed an ordinance, which was approved on the same day, prescribing the rates to be charged for natural gas in said city. A schedule was adopted by which the rate per thousand cubic feet diminished with increased consumption. The ordinance contained other regulatory provisions. November 11, 1936, said ordinance was amended in certain particulars which it is not necessary to mention. November 5, 1936, an ordinance was passed, with an emergency clause attached, and approved by the mayor, which contained the following provisions:

"Section 1. That from and after the passage, approval and publication of this ordinance it shall be unlawful for any person, firm, corporation, or association engaged in the business of the distribution and sale of natural gas in the City of Wink, Texas, to demand, insist upon, or require by contract, stipulation, rule, or otherwise, the setting of more than one meter to measure the gas furnished to one consumer on property owned or leased by him at one location, (i. e. on the same or adjacent lots) unless more than one meter is requested by such property owner or lessee; and if for any reason more than one meter shall be required in violation of the terms of this section, the combined readings of all such meters shall be construed as the reading of a single meter.

"Section 2. Every person, firm, corporation, or association, who shall wilfully violate any of the terms of this ordinance shall be deemed guilty of a misdemeanor, and upon conviction shall be punished by fine in any sum not exceeding ($100) One Hundred Dollars, and each day of such violation shall constitute a separate offense."

December 24, 1936, Wink Gas Company, plaintiff in the trial court and appellee in this court, filed suit against the City of Wink, its mayor and its city commissioners, seeking to enjoin said city and its officers from enforcing the ordinance passed and approved November 5, 1936. Plaintiff alleged that the ordinance was void, unlawful, and arbitrary as to plaintiff, for the following reasons: (a) That it would force plaintiff to unlawfully discriminate between its customers contrary to the provisions of articles 1438, 1505 and 6057 of the Revised Civil Statutes, and of the provisions of article 1630 of the Penal Code; (b) that it would deprive plaintiff of large sums of revenue by requiring plaintiff to sell and distribute gas to all who have and maintain more than one house on one meter for a lesser price and at a lesser revenue than would be received if sale and distribution were made through a single meter for each separate use and establishment, thereby depriving it of property without due process of law in violation of article 14, § 1, of the Amendments to the Constitution of the United States, and of sections 3, 17, and 19, article 1 of the Constitution of Texas; (c) that it would apparently destroy the obligations of various contracts between plaintiff and customers, which, it alleged, were made prior to the incorporation of Wink as a city; (d) that it would force plaintiff to violate article 1630 of the Penal Code and articles 1438, 1505, and 6057 of the Revised Civil Statutes. Then followed the usual allegations of irreparable injury and inadequacy of legal remedies.

Upon a hearing at a special called session, held on the 6th day of May, 1937, the court entered judgment reciting that the ordinance was unreasonable and not within the power of the City of Wink; that it would require discrimination between the customers of the plaintiff contrary to the statutes of the state; and that its enforcement with its penal provisions "infringes upon and materially affects the property rights of plaintiff to its injury and diminution of its revenue," and perpetually enjoining the city and its representatives from enforcing or attempting to enforce said ordinance, and from requiring or attempting to require its observation in whole or in part. From this judgment defendants appealed.

Opinion.

The City of Wink, by virtue of article 1119, R.C.S., has power to regulate by ordinance the rates to be charged by gas companies and other public utilities using the city's streets and public grounds, "and also to prescribe rules and regulations under which such commodities shall be furnished, and service rendered, and to fix penalties to enforce such charges, rules and regulations." The power of the city to regulate rates to be charged by public utilities and to prescribe rules and regulations under which such commodities shall be furnished is governmental. It may not be bartered away. The city may not by contract impair or limit this right. The power was delegated by the state. The city, as the agent of the state, is under the duty of exercising the power when its exercise is necessary. City of San Antonio v. San Antonio Irr. Co., 118 Tex. 154, 12 S.W.2d 546; City of Brenham v. Brenham Water Co., 67 Tex. 542, 4 S.W. 143; Texas Gas Utilities Co. v. City of Uvalde, Tex.Civ.App., 77 S.W.2d 750. From the foregoing it necessarily follows that no contract between appellee and its customers, whether made prior to the incorporation of the city or thereafter, can destroy or limit the city's right to regulate rates, and to prescribe the rules and regulations referred to in article 1119. That right in the state existed prior to the making of the contracts relied upon by plaintiff. Knowledge of this power of the state and of the right of the state to delegate this power to any municipal corporation that might thereafter be formed with jurisdiction over the area involved is imputed to the contracting parties. Therefore, the objection that the necessary effect of the ordinance is to impair the obligation of contract between appellee and its customers is not sound, and does not afford ground for the relief sought. As said by the Commission of Appeals, with the approval of the Supreme Court, in Bowers v. City of Taylor, 16 S.W.2d 520, 522: "In New York & N. E. R. R. Co. v. Bristol, 151 U.S. 556, 14 S.Ct. 437, 38 L.Ed. 269, a similar rule was announced by the court in the use of this language: `The governmental power of self-protection cannot be contracted away, nor can the exercise of rights granted, nor the use of property, be withdrawn from the implied liability to governmental regulations in particulars essential to the preservation of the community from injury.' * * * The general rule deducible from the authorities is that the legislative power vested in municipal bodies is something which cannot be bartered away in such manner as to disable them from the performance of their public functions. 2 Beach on Pub. Corp. §§ 1068 and 1208; Indianapolis v. Consumers' Gas Co., 140 Ind. 107, 39 N.E. 433, 27 L.R.A. 514, 49 Am.St.Rep. 183; Davis v. Mayor, etc., of City of New York, 14 N.Y. 506, 67 Am.Dec. 186; Detroit v. Ft. Wayne & Elmwood Ry. Co., 90 Mich. 646, 51 N.W. 688; Chicago, Burlington & Quincy Ry. Co. v. Quincy, 139 Ill. 355, 28 N.E. 1069; Roanoke Gas Co. v. Roanoke, 88 Va. 810, 14 S.E. 665; Louisville City Ry. Co. v. Louisville, 8 Bush (Ky.) 415; Hood v. Lynn, 1 Allen (Mass.) 103; Backus v. Lebanon, 11 N.H. 19, 35 Am.Dec. 466; Brimmer v. Boston, 102 Mass. 19; O'Connor v. Pittsburgh, 18 Pa. 187."

The principle, as applied to federal legislation, was stated by the Supreme Court in the famous Gold Clause Cases, Norman v. Baltimore & O. R. R. Co., 294 U.S. 240, 55 S.Ct. 407, at page 416, 79 L.Ed. 885, at page 902, 95 A.L.R. 1352, and other cases, Nortz v. U. S., 294 U.S. 317, 55 S.Ct. 428, 79 L.Ed. 907, 95 A.L.R. 1346; Perry v. U. S., 294 U.S. 330, 55 S.Ct. 432, 79 L.Ed. 912, 95 A.L.R. 1335: "Contracts, however express, cannot fetter the constitutional authority of the Congress. Contracts may create rights of property, but, when contracts deal with a subject-matter which lies within the control of the Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them. See Hudson Water Co. v. McCarter, 209 U.S. 349, 357, 28 S.Ct. 529, 52 L.Ed. 828, 832, 14 Ann.Cas. 560."

If, as a result of diminished revenues under the scale of charges ordained by the City Commission, injustice is done to appellee, its right of appeal to the Railroad Commission and thereafter to any district court of Travis county exists under articles 6058 and 6059, Revised Civil Statutes. State v. Public Service Corporation of Texas,...

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