Gillam v. City of Fort Worth

• Decision Date: 27 January 1956
• Docket Number: No. 15674,15674
• Citation: 287 S.W.2d 494
• Parties: E. O. GILLAM et al., Appellants, v. CITY OF FORT WORTH et al., Appellees.
• Court: Texas Court of Appeals

Page 494

287 S.W.2d 494

E. O. GILLAM et al., Appellants, v. CITY OF FORT WORTH et al., Appellees.

No. 15674.

Court of Civil Appeals of Texas, Fort Worth.

Jan. 27, 1956.

Rehearing Denied March 2, 1956.

Ernest May, Fort Worth, for appellants.

R. E. Rouer, S. G. Johndrose, Jr., Robert R. Goodrich, G. Gordon Whitman, Earl C. Morgan, and John Gano, Fort Worth, for appellee, City of Fort Worth.

Cantey, Hanger, Johnson, Scarborough & Gooch, Frank E. Crumley and George R. Bridgman, Fort Worth, for appellee, Town of Westover Hills.

BOYD, Justice.

Appellants, E. O. Gillam and wife, Merl Gillam, James Athans, William P. Engelfried, W. J. Brown, A. P. Ticknor and wife, Jane Ticknor, Roy Gilley, E. D. Bullard and O. J. Price, filed suit for a judgment declaring that the rates established by the water rate ordinance of appellee, City of Fort Worth, hereinafter called the City, are neither equal nor uniform; that the ordinance contravenes the rrquirement that equal and uniform rates be sufficient to pay the cost of supplying water to any customer; that a contract entered into by the City and appellee, the Town of Westover Hills, hereinafter called the Town, by which the City agreed to furnish water to the Town, is ultra vires; that the execution and performance of such contract constitute an abuse of corporate power; and that the contract is illegal in that it allows discrimination against other water customers of the City.

It was alleged that all the appellants except E. D. Bullard and O. J. Price are resident taxpayers of the City, that all appellants are consumers of water supplied by the City, and that none has any other available water supply. It was alleged that all of the appellants who are resident taxpayers of the City, except Roy Gilley, presented to the City's Attorney a written request that he proceed under Section 5, Chapter 6, of the City Charter, to seek injunctive relief with reference to the subject matter of this suit; that the City Attorney refused to comply with that request, and that all the appellants signatory to the request filed the suit on behalf of the City as well as for themselves.

In refusing the declaratory decree, the court found and held that (1) the water rates are equal and uniform; (2) they do not contravene the lawful requirement that equal and uniform rates be sufficient to pay the cost of supplying water to any customer; (3) the contract to supply water to the Town is not ultra vires; (4) its execution and performance do not constitute an abuse of corporate power; and (5) the contract is not illegal as allowing discrimination against other customers. By appropriate points, appellants challenge such findings and holdings of the court.

Section VI of the questioned ordinance is as follows:

"The following rates per month, or fraction thereof, shall be the rates charged ror water furnished to water consumers within the corporate limits of the City of Fort Worth:

                              "'Cubic Feet                           Rate
                "' First               266-2/3  cubic feet  $1.00    Minimum
                "' Next             49,733-1/3  cubic feet    .21    per 100 cubic feet
                "'         "        40,000      cubic feet    .1875  per 100 cubic feet
                "'         "        43,333-1/3  cubic feet    .15    per 100 cubic feet
                "'         "       133,333-1/3  cubic feet    .1125  per 100 cubic feet
                "'         "       400,000      cubic feet    .075   per 100 cubic feet
                "'For all in excess of 666,666 2/3            .0675  per 100 cubic feet' "
                  cubic feet of water used per month
                

By the terms of the ordinance, the rates charged for water furnished for use on premises outside the corporate limits of Fort Worth shall be double the rates charged for water furnished for use on premises within the corporate limits of Fort Worth.

Section VIII of the ordinance is in part as follows: "Nothing in this section or any other section of this ordinance or any other ordinance shall be construed to compel the City Water Works to furnish consumers beyond the corporate limits or to continue such supply once begun; and the City Water Works reserves the right to furnish such customers it deems advisable and to, at any time, wholly or partially discontinue the supply upon violation of any of the terms of this ordinance the same as though such consumer resided in the City."

Article 1109a, § 2, R.C.S., Vernon's AnnCiv.St., provides in part that, 'The rates charged for services furnished by said system shall be equal and uniform, and no free service shall ever be allowed, except in the discretion of the governing body, for city public schools, or buildings and institutions operated by such city, and there shall be charged and collected for such services a sufficient rate to pay for all operating, maintenance, depreciation, replacement, betterment and interest charges, and for an interest and sinking fund sufficient to pay any bonds or notes issued to purchase, construct or improve such system or any outstanding indebtedness against same.'

'It is well established that a municipal corporation operating its water works or other public utility has the right to classify consumers under reasonable classification based upon such factors as the cost of service, the purpose for which the service or product is received, the quantity or amount received, the different character of the service furnished, the time of its use or any other matter which presents a substantial difference as a ground of distinciton. 73 C.J.S., Public Utilities, § 27, p. 1049; 43 Am.Jur., 689; American Aniline Products, Inc., v. City of Lock Haven, 288 Pa. 420, 135 A. 726, 50 A.L.R. 121.' Caldwell v. City of Abilene, Tex.Civ.App., 260 S.W.2d 712, 714, writ refused. See, also, Texas Power & Light Co. v. Doering Hotel Co., Tex.Civ.App., 147 S.W.2d 897; Id., 139 Tex. 351, 162 S.W.2d 938; Western Union Telegraph Co. v. Call Publishing Co., 181 U.S. 92, 21 S.Ct. 561, 45 L.Ed. 765; Botkin v. City of Abilene, Tex.Civ.App., 262 S.W.2d 732, and Silkman v. Board of Water Commissioners of City of Yonkers, 152 N.Y. 327, 46 N.E. 612, 37 L.R.A. 827.

Whether differences in rates between classes of customers are to be made, and, if so, the amount of the differences, are legislative rather than judicial questions, and are for the determination of the governing bodies of the municipalities. The presumption is in favor of the legality of the rates established by the rate-making authority, and courts may interfere only in clear cases of illegality. Knotts v. Nollen, 206 Iowa 261, 218 N.W. 563. The burden of proof is upon the party alleging that the discrimination is illegal to show that the difference in rates is disproportionate to the difference in conditions. Ford v. Rio Grande Valley Gas Co., 141 Tex. 525, 174 S.W.2d 479; Western Union Telegraph Co. v. Call Publishing Co., supra.

We are of the opinion that the trial court was justified in declining to hold that the rates established by the ordingance lakced the requirements of equality and uniformity.

We think it was not shown by a preponderance of the evidence that the discrimination in rates charged to different classes of customers is arbitrary, capricious, or unreasonable. It is only unreasonable discrimination that is condemned by the law. City of Fort Worth v. Westchester House, Inc., Tex.Civ.App., 274 S.W.2d 732. The City Council had the power to establish a rate structure. It was appellants' burden to show that where there is a difference in rates charged to different classes of customers, the distinction is not justivied by the difference in the factors...