Glen Oaks Utilities, Inc. v. City of Houston, A-7875

• Decision Date: 23 November 1960
• Docket Number: No. A-7875,A-7875
• Parties: GLEN OAKS UTILITIES, INC., et al., Petitioners, v. CITY OF HOUSTON, Respondent.
• Court: Texas Supreme Court

Page 783

340 S.W.2d 783

161 Tex. 417

GLEN OAKS UTILITIES, INC., et al., Petitioners, v. CITY OF HOUSTON, Respondent.

No. A-7875.

Supreme Court of Texas.

Nov. 23, 1960.

Rehearing Denied Dec. 31, 1960.

Dow & Dow, Houston, for petitioner.

R. H. Burks, City Atty., John Gano & Charles F. Weaver, Asst. City Attys., Houston, for respondent.

HICKMAN, Chief Justice.

This action was instituted by Glen Oaks Utilities, Inc., and Greenfield Utilities Corporation, petitioners, against the City of Houston, respondent, for an injunction to prevent the enforcement of an ordinance fixing rates to be charged by them for water and sewer service in the city. The City filed a plea to the jurisdiction of the district court to entertain the suit, which was sustained and the case dismissed. The Court of Civil Appeals affirmed the trial court's judgment of dismissal. 334 S.W.2d 469.

The plea to the jurisdiction was based upon two grounds:

1. Since the ordinance is regular and valid on its face the court had no jurisdiction to inquire into the facts upon which it was based.

2. The petitioners had not exhausted their administrative remedies. The trial court filed no conclusions of law, and it cannot be determined upon which of these grounds it based its ruling. The Court of Civil Appeals affirmed on the ground that, since Section 3 of the ordinance provided that a party dissatisfied with the rate set could apply for a new rate hearing before the City Council, the plaintiffs had not exhausted their administrative remedies.

We cannot sustain the City's position that the court has no jurisdiction over the question of procedural due process because the ordinance on its face is regular and valid, and the court is not authorized to go behind the ordinance to investigate the facts of its passage. It is settled law that procedural due process requires that a rate-fixing body give due notice to the utility involved and grant a hearing before enacting an ordinance. Interstate Commerce Commission v. Louisvill & Nashville Railroad, 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431; Ohio Bell Telephone Co. v. Public Utilities Commission of Ohio, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093; Highway Transportation Co. v. Southwestern Greyhound Lines, Inc., Tex.Civ.App., 124 S.W.2d 433, er. ref. Justice requires that a court must have authority to go behind an ordinance which is valid on its face and inquire into the facts surrounding its enactment; otherwise the utility would have a right without a remedy.

It is the further position of the City that the ordinance is presumed valid as a matter of law and that the court has no jurisdiction to consider the question of its validity at a hearing on temporary injunction. We cannot sustain that contention. The law has been settled in this State against it. General Telephone Company of the Southwest v. City of Wellington, 156 Tex. 238, 294 S.W.2d 385; City of Houston v. Southwestern Bell Telephone Co., Tex.Civ.App., 263 S.W.2d 169, er. ref. A court may exercise its equity powers to enjoin the enforcement of a rate-fixing ordinance which is attacked because the rates set are confiscatory, and may issue a temporary injunction pending final determination of the validity of the ordinance. The court does not actually decide the validity of the ordinance at the hearing on temporary injunction, but decides only whether it is probable that the plaintiff may succeed in his attack on the ordinance at the final disposition of the case. If it so appears, the temporary injunction may properly be issued.

The second ground of the plea to the jurisdiction was that petitioners had not exhausted their administrative remedies. That ground is based on the fact that Section 3 of the ordinance provides, in substance, that if either company is dissatisfied with the rates as established, the City Council upon application will, as soon as practicable, set a new rate hearing for the purpose of adjusting the rates therein set or, in the alternative, for the purpose of establishing new rates. It is the position of the City that since it has provided a means for obtaining a new hearing on the rates, petitioners must exhaust that remedy before being entitled to apply to the courts for relief. That ground was sustained by the Court of Civil Appeals, and upon it the trial court's judgment of dismissal was affirmed. It is not questioned that administrative remedies must be exhausted before the courts will intervene to give relief. Generally the plaintiff has not actually suffered any injury until the administrative processes have been completed and the ruling complained of has been put into effect. In the present case the ordinance is to go into effect immediately. No provision is made for a stay of the ordinance pending the outcome of the new hearing which the utilities are authorized to request. It follows that if the facts developed on the hearing show that the ordinance is void, and the utility companies are sustaining an immediate injury by its enforcement, the courts will not require them to continue to suffer the injury until the City has completed its second hearing on the subject. An administrative body cannot, by reserving for itself...