Coleman Gas & Oil Co. v. Santa Anna Gas Co.

• Decision Date: 25 January 1933
• Docket Number: No. 7851; and Motion No. 7477.,7851; and Motion No. 7477.
• Citation: 58 S.W.2d 540
• Parties: COLEMAN GAS & OIL CO. v. SANTA ANNA GAS CO.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

58 S.W.2d 540

COLEMAN GAS & OIL CO. v. SANTA ANNA GAS CO.^*

No. 7851; and Motion No. 7477.

Court of Civil Appeals of Texas. Austin.

January 25, 1933.

Rehearing Denied March 22, 1933.

Appeal from District Court, Coleman County; E. J. Miller, Judge.

Suit by the Santa Anna Gas Company against the Coleman Gas & Oil Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Critz & Woodward, of Coleman, for appellant.

Woodruff & Holloway, of Brownwood, for appellee.

McCLENDON, Chief Justice.

Appeal from a judgment in favor of Santa Anna Company, appellee, enjoining Coleman Company, appellant, from violating an ordinance of the Santa Anna city commission fixing specific rates for sale of natural gas to domestic and commercial consumers.

The grounds for reversal urged by Coleman Company are:

1. That the city was a necessary party to a suit to enjoin violation of the ordinance.

2. That the ordinance violated the due process of law and obligations of contract provisions of the Federal and State Constitutions (Const. U. S. Amend. 14; and art. 1, § 10; Const. Tex. art. 1, §§ 16, 19), in that the Coleman Company was the owner of a franchise, granted by the city in 1912, which fixed the rates (lower than those in the ordinance) it was charging.

3. That it had the right to disregard the ordinance and to test its validity in this proceeding because it had no right of appeal from the ordinance.

4. That since the field was limited, and the patronage sufficient to support only one of the two competing utilities, it had the inalienable right to engage in "cut-throat competition," and thereby to drive its competitor from the field.

We will refer to these grounds by number.

First Ground. Santa Anna Company as a competitor of Coleman Company had the legal right to enjoin disobedience of the rate ordinance. Tugwell v. Ferry Co., 74 Tex. 480, 9 S. W. 120, 13 S. W. 654; Lindsley v. Ry. Co. (Tex. Civ. App.) 200 S. W. 207; Springfield Gas & Electric Co. v. City of Springfield, 292 Ill. 236, 126 N. E. 739, 18 A. L. R. 929; McQuillan Mun. Corp. (2d Ed.) § 1915.

Since the suit did not bring in question the validity of the ordinance, but merely sought to enforce it as enacted, the city was not a necessary party. The authorities cited by appellant (32 C. J. p. 299, § 480, note 55; 47 C. J. pp. 73, 81, notes 61, 83; In re Engelhard & Sons Co., 231 U. S. 646, 34 S. Ct. 258, 58 L. Ed. 416) do not sustain its contention. In the Engelhard Case it was held that the city was the representative of the public in an action against it by a utility to enjoin enforcement of municipally imposed rates, and that the trial court did not abuse its discretion in refusing permission of a consumer, as representing a class, to intervene upon the theory that the city might not diligently prosecute the suit. We can see no reason for making the city a party to a suit brought by an individual to enforce his rights under a city ordinance. In a direct attack upon the ordinance the city would be a necessary party. Engelhard Case, above. Unless absolutely void, the ordinance could not be attacked collaterally, as the Coleman Company is attempting to do in this case. It seems to us that the only theory upon which the city would be a necessary party would be that the defenses urged by the Coleman Company constituted a direct attack upon the ordinance, in which event it would be incumbent upon it to make the city a party. The city has the right to enforce the ordinance, in its capacity as representative of the public interest. But we cannot see that it was a necessary party to a suit by a competing utility to prevent infringement of its rights through disobedience of the ordinance. No authority to that effect has been cited. Necessary parties are those whose interest in the subject-matter is of such a nature that final decree cannot be entered without affecting their interests. Wilson v. Imp. Dist. (Tex. Civ. App.) 256 S. W. 346.

Second Ground. The making of rates to operate prospectively is a legislative function, Missouri-Kansas & T. R. Co. v. Railroad Comm. (Tex. Civ. App.) 3 S.W.(2d) 489; Producers' Refining Co. v. Missouri, K. & T. R. Co. (Tex. Com. App.) 13 S.W.(2d) 679; and when delegated to a municipality cannot be bartered away, City of Uvalde v. Uvalde Electric & Ice Co. (Tex. Com. App.) 250 S. W. 140.

Appellant contends that the rates named in its franchise constituted a valid contract with the city because the latter did not have the rate making power at the time (1912) the franchise was granted. It cannot be questioned that the rate-making power inhered in the Legislature; and certainly it cannot successfully be maintained that the city could barter away a right which inhered in the Legislature, when it could not have bartered away such right if it had then been delegated to it by the Legislature. The power of the Legislature was unimpaired by any action of the city, and when that power was later delegated to the city, it was in like manner unimpaired.

We have considered this subject upon the assumption that the franchise rate was an attempted contractual obligation. It is unnecessary to determine the correctness of this assumption.

Third Ground. The city passed the rate ordinance originally on August 6, 1931. The Coleman Company applied to the city on August 26, 1931, for permission to reduce its rates to those specified in its franchise. October 23, 1931, the city denied this application and re-enacted the August 6th rates. No appeal was taken from this action.

Appellant contends that R. S. art. 6058, gives the right of appeal to utilities only where the city "has ordered any existing rate reduced." This contention is predicated upon the wording of the first sentence of the article. Further along the article provides: "Whenever any local distributing company or concern, whose rates have been fixed by any municipal government, desires a change of any of its rates, rentals or charges, it shall make its application to the municipal government where such utility is located and such municipal government shall determine said application within sixty days after presentation unless the determination thereof may be longer deferred by agreement. If the municipal government should reject such application, or fail or refuse to act on it within said sixty days, then the utility may appeal to the Commission as herein provided." This language is too plain to call for construction.

The Coleman Company laid a predicate, under the express authority of this provision, to appeal from the city's action. This, however, it did not do; but proceeded to disregard the ordinance, and the Santa Anna Company sought relief by the instant proceeding.

Article 6059 gives the right of review of the commission's orders by suit "in a court of competent jurisdiction in Travis County."

In Community Natural Gas Co. v. Natural Gas & Fuel Co., 34 S.W.(2d) 900, we held in effect that this remedy was exclusive, and that the only power of the courts was to give temporary relief, pending resort to the prescribed procedure. No considerations have been advanced which, in our opinion, impair the soundness of that holding. The equity powers of the courts are not properly invoked so long as adequate statutory remedies have not been exhausted.

Fourth Ground. This ground is predicated upon the majority holding in Great Northern U. Co. v. Pub. Serv. Comm. (D. C.) 52 F.(2d) 802, 805, which is thus tersely stated in the majority opinion: "When the state launches two upon the sea of competition, and the plank of patronage will support but one, it cannot in reason deny them the right of necessity to fight to a finish for financial life, even as may two castaways at sea battle to the death for the spar which will support but one, without any wrong to the survivor attaching." This holding was by a three-judge Federal District Court in Montana, sitting in an application for a temporary injunction restraining the Montana Public Service Commission from putting in effect a rate order. The majority opinion is concurred in by two District Judges. At the time it was handed down the Circuit Judge (the third judge sitting) "decided to dissent on the ground that I regarded the order as well as the statute valid." He later concurred in the order, but upon an entirely different ground from that announced in the majority opinion, namely:

"A public service commission has the power, under the Federal Constitution, to fix a precise rate that will mark both the maximum and the minimum range of a public utility's rates. But, when a commission undertakes to do this, it must see to it that the rate thus fixed will give to the utility company `a fair return upon a fair value' of the company's property.

"Since the commission in the instant case avowedly did not do this, I concur in the decree granting an injunction to prevent the commission from putting the order complained of into effect."

The principles applied in the concurring opinion are of unquestioned soundness; and it is interesting to note that the opinion makes no allusion whatever to the holding of the majority.

In a per curiam opinion the Supreme Court of the United States affirmed the order in the following language: "The order granting interlocutory injunction is affirmed, without prejudice to the consideration and determination at final hearing of all questions of law and fact, including the question of the reasonableness, in the circumstances disclosed of the order which is the subject of the suit. Alabama v. United States, 279 U. S. 229, 230, 231, 73 L. Ed. 675-677, 49 S. Ct. 266." Public Service Commission v. Great Northern Utilities Co., 285 U. S. 524, 52 S. Ct. 313, 76 L. Ed. page 921.

The holding in the cited case follows: "It is well established doctrine that an application for an interlocutory injunction is addressed to the sound discretion of the trial court; and that...