Gas Light Co. of Columbus v. Town of Bibb City

• Court: Georgia Supreme Court
• Writing for the Court: HILL
• Citation: Gas Light Co. of Columbus v. Town of Bibb City, 322 S.E.2d 250, 253 Ga. 498 (Ga. 1984)
• Decision Date: 06 November 1984
• Docket Number: No. 41191,41191
• Parties: GAS LIGHT COMPANY OF COLUMBUS v. TOWN OF BIBB CITY et al.

Page 250

322 S.E.2d 250

253 Ga. 498

GAS LIGHT COMPANY OF COLUMBUS v. TOWN OF BIBB CITY et al.

No. 41191.

Supreme Court of Georgia.

Nov. 6, 1984.

J. Madden Hatcher, Jr., Hatcher, Stubbs, Land, Hollis & Rothschild, Columbus, for Gas Light Co. of Columbus.

Samuel W. Oates, Jr., Oates & Byars, Columbus, for Town of Bibb City et al.

HILL, Chief Justice.

Following a bench trial, the trial court ruled that a 1980 ordinance of the Town of Bibb City assessing a 3% franchise tax on gross sales of natural gas within its corporate limits was not an impairment of the gas company's franchise with the city and that a 1981 city ordinance assessing a 3% occupational tax on gross sales of natural gas within its corporate limits was not beyond the powers of the mayor and council. The Gas Light Company of Columbus appeals.

In 1940, the following ordinance was adopted: "Be it ordained by the Town Council of the Town of Bibb City, Georgia, and it is hereby ordained by authority of same--1--That there be, and is hereby granted unto Georgia Power Company, a corporation, its successors and assigns, the right, privilege and franchise to sell and distribute to and in the Town of Bibb City, and to the inhabitants, residents and transients therein, natural and artificial gas for commercial and residential purposes, .... 2--The consideration for this grant is one dollar which amount has this day been paid to the Town of Bibb City by Georgia Power Company." The ordinance contained no durational limit. Georgia Power commenced the service of gas in the town soon thereafter, but later assigned its rights to the Gas Light Company of Columbus.

In September, 1980, the town council adopted an ordinance, Section 3 of which was entitled "Compensation for Grant of Franchise." It provided: "Be it ordained that [the gas company] shall pay to the Town of Bibb City a sum equal to 3% of its gross sales of natural and artificial gas to residential, commercial, and industrial consumers within the limits of the Town of Bibb City, Georgia.... The payment of the percentage of gross receipts above provided for shall be in lieu of all specific, occupation, license, excise, sales, special and franchise taxes; but not in lieu of ad valorem taxes on property or license taxes on the sale of appliances or on sales other than of gas...." In addition, the franchise was purportedly extended for 40 more years. The gas company has refused to pay this charge.

In May, 1981, the town council amended its Business, Special or License Tax Ordinance to provide: "Gas works or company--shall pay an occupational tax in the amount of 3% of its gross sales of natural and artificial gas to residential, commercial and industrial consumers within the limits of the Town of Bibb City, Georgia. However, all payments made by the Gas Light Company of Columbus, Georgia, pursuant to the franchise tax ordinance passed September 4, 1980, shall be credited toward the payment of the within occupational license tax and shall operate to reduce, to the extent of such payment, the amount due from the percentage of gross sales above provided for." The gas company has also refused to pay this tax.

The gas company filed this suit to have the 1980 ordinance declared unconstitutional as an impairment of its contract and to have it and the 1981 ordinance declared invalid as having been passed without statutory authority, as well as to enjoin the collection of these taxes. The trial court found the ordinances valid and the gas company appeals.

1. We first address the question whether the 1980 ordinance impairs the 1940 franchise agreement entered into between the town council and the assignor of the gas company. There is no durational limit expressed in the 1940 franchise agreement, and the consideration was $1.00. The 1980 ordinance purports to grant a franchise for 40 years and to fix the compensation at 3% of the gross sales of gas.

The Town of Bibb City has the authority to grant a gas franchise under the provisions of the 1895 act under which it was incorporated in 1909. 1895 Code, Vol. 1, §§ 683-710. Among the powers of the town council enumerated at § 696 are the authority "to erect or authorize or prohibit the erection of gas-works or water-works in the town .... To carry into effect these enumerated powers ... the council shall have power to make and pass all needful orders, by-laws, ordinances, resolutions, rules, and regulations not contrary to the Constitution and laws of this State...."

It is clear that the 1940 ordinance quoted above is a franchise giving the gas company as assignee of the Georgia Power Company the right to provide gas services and is not an easement conveying rights in land. In another part of our code, a "special franchise"...