Guadalupe-Blanco River Au. v. City of San Antonio

• Decision Date: 26 February 1947
• Docket Number: No. A-811.,A-811.
• Citation: 200 S.W.2d 989
• Parties: GUADALUPE-BLANCO RIVER AUTHORITY et al. v. CITY OF SAN ANTONIO et al.
• Court: Texas Supreme Court

200 S.W.2d 989

GUADALUPE-BLANCO RIVER AUTHORITY et al. v. CITY OF SAN ANTONIO et al.

No. A-811.

Supreme Court of Texas.

February 26, 1947.

Rehearing Denied April 2, 1947.

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Error to Court of Civil Appeals of First Supreme Judicial District.

Suit by City of San Antonio and others against Guadalupe-Blanco River Authority and others to cancel a contract by which city leased to named defendant, with an option to buy, an electric generating plant and for other relief, wherein the Board of Trustees of the San Antonio Electric and Gas System and others filed a cross-action. To review a judgment of the Court of Civil Appeals, 191 S.W.2d 118, reversing a judgment for defendants, defendants bring error.

Judgment of the Court of Civil Appeals reversed and that of the District Court reversed in part and affirmed in part.

D. W. Glasscock, of Austin, E. M. Cape, of San Marcos, A. J. Wirtz, of Austin, Vinson, Elkins, Weems & Francis, W. A. Vinson, Chas. I. Francis and Tarlton Morrow, all of Houston, Hart & Brown, of Austin, Fred L. Blundell, of Lockhart, and Tom G. Oliver, Jr., of San Marcos, for petitioner Guadalupe-Blanco River Authority.

Ben H. Powell, J. A. Rauhut and W. S. Gideon, all of Austin, for petitioner, Lower Colorado River Authority.

T. D. Cobbs, Jr., City Atty., and Martin Arnold, both of San Antonio, Weaver Moore, of Houston, and Dan Moody, of Austin, for respondent, City of San Antonio.

Brewer, Matthews, Nowlin & Macfarlane, of San Antonio, for respondent, Board of Trustees of the San Antonio Electric & Gas System.

Chapman and Cutler and Dayton Ogden, all of Chicago, Ill., and Trueheart, McMillan & Russell and C. W. Trueheart, all of San Antonio, for respondents, Harris Trust & Savings Bank and Harold Eckhart, Trustees.

ALEXANDER, Chief Justice.

The City of San Antonio (City) brought this suit against Guadalupe-Blanco River Authority (GBRA) and others to cancel a contract by which the City leased to GBRA, with an option to buy, the electric generating plant located at New Braunfels, known as the Comal plant, and various tracts of real estate, electric transmission lines, transformers, easements, and other properties used in connection therewith. The trial court instructed a verdict for the defendant and entered judgment accordingly. This judgment was reversed by the Court of Civil Appeals, and judgment rendered for the plaintiff. Tex.Civ.App., 191 S.W.2d 118.

The City's major contention is that the lease contract under consideration is void because it was an attempt by the Board of Commissioners of the City to encumber the City's electric power system without a vote of the qualified voters in violation of the provisions of Revised Statutes, Article 1112, Vernon's Ann.Civ.St. art. 1112. On the other hand, GBRA contends that the City had previously agreed to the lease contract as a condition to its right to acquire the property and that it acquired the property burdened with the lease, and as a consequence the contract is valid. We will discuss this major point first.

The record is very voluminous. We will state the facts as briefly as possible.

The San Antonio Public Service Company (SAPSCo) was a public service corporation engaged principally in generating, transmitting, and distributing electric energy for public consumption. It owned and operated a large steam-operated electric generating plant in New Braunfels, two hydro plants in the same vicinity, a large generating plant known as Station "B" in the City of San Antonio, various tracts of land used in connection therewith, 274 pole miles of high-power transmission lines, over 2,200 miles of primary wire lines, and sundry transformers and meters for serving over 86,000 customers. It operated in Bexar, Kendall, Wilson, Medina, Guadalupe, Comal, Caldwell, Karnes, Atascosa, Uvalde, and Bandera Counties and supplied San Antonio, Boerne, Floresville, Hondo, Poth, New Braunfels, Stockdale and the inhabitants thereof, and various urban and rural districts with electric energy for lights and power. Its stock was held by the American Light & Traction Company, a holding company. In 1941 the Securities and Exchange Commission ordered the American Light & Traction Company to dispose of its interest in SAPSCo. This it could do by (a) dividing the stock of SAPSCo among its stockholders, (b) selling the assets of SAPSCo, or (c) selling the stock of SAPSCo. It elected to pursue this latter course.

GBRA is a water conservation and reclamation district created under a special act of the Legislature to impound, conserve, and use the waters of the Guadalupe and Blanco Rivers in the manufacture and sale of electric energy. Its domicile is in New Braunfels, Comal County. Acts 1933, 43rd Leg., 1st C.S., p. 198, ch. 75, as amended by Acts 1935, 44th Leg., 1st C.S., p. 1615, ch. 410, Vernon's Ann.Civ.St. following article 8197f. Lower Colorado River Authority (LCRA) is a similar corporation created for the purpose of impounding and using the waters of the lower Colorado River. Acts 1934, 43rd Leg., 4th C.S., p. 19, ch. 7, as amended by Acts 1941, 47th Leg., p. 657, ch. 398, Vernon's Ann.Civ.St. following article 8197f.

Upon learning that the assets of SAPSCo were for sale, GBRA conceived the idea of acquiring same. At first it was contemplated that LCRA would join in the enterprise, but lack of authority to issue additional bonds forced it to abandon the project. GBRA's representative then approached the Mayor of the City and suggested that GBRA and the City cooperate in the acquisition of the properties of the SAPSCo, but was informed by the Mayor that the City did not care to join in the undertaking. Thereupon GBRA alone began to make plans for the acquisition of the properties of SAPSCo. By early May, 1942, GBRA had produced and projected a plan, and secured the approval thereof by the State Board of Water Engineers, for the issuance of revenue bonds of the Authority in the sum of 40 million dollars, the building of dams for the storage of the flood waters of Guadalupe and Blanco Rivers, the building of a hydro-electric generating plant to be operated with the water so impounded, and for the purchase of the properties of SAPSCo for use in connection with the hydro-electric plant; had arranged for the sale of its bonds; and had reached a tentative agreement with the President of the American Light & Traction Company under which the stock of SAPSCo was to be conveyed to GBRA at a stipulated price. (This agreement, however, was never approved by the stockholders of American Light & Traction Company.)

When the Mayor and Commissioners of the City learned of the steps being taken by GBRA to acquire the assets of SAPSCo they began to take steps to defeat the efforts of GBRA and to acquire the properties of SAPSCo for the City. Then began a race between the City and GBRA in an effort to acquire the properties.

On May 27, 1942, the City Commissioners passed a resolution authorizing the Mayor to enter into negotiations for the purchase of the properties of SAPSCo, and on June 8, 1942, the City Commissioners passed another resolution in which it was recited that "the City of San Antonio has been advised * * * that said American Light & Traction Company has practically completed negotiations for the sale of said properties to Guadalupe-Blanco River Authority and that said Company expects to hold a meeting of its Board of Directors on the morning of June 10, 1942, for the purpose of consummating said sale; * * *." Said resolution instructed the Mayor to begin negotiations for the purchase of the properties of SAPSCo and directed the City Attorney "to institute all such litigation in either State or Federal courts as in his opinion may be desirable to prevent acquisition of said properties or stock by Guadalupe-Blanco River Authority." The City gave notice of intention to acquire "an electric light and power plant and system and gas distribution system serving the City of San Antonio and its inhabitants and territory adjacent to said City"; authorized the issuance of bonds in the sum of 35 million dollars for that purpose; and employed a group of investment bankers and engineers to assist the City in the sale of its bonds and in the purchase of the properties of SAPSCo. The City filed suit in Travis County to set aside the order of the Board of Water Engineers approving the plan of GBRA, and filed a condemnation suit in Bexar County to condemn the property of SAPSCo. GBRA retaliated by filing a similar condemnation suit in the County Court of Comal County. It also filed a suit in the District Court of Hays County to condemn all of the property of SAPSCo wherever located. Lis pendens notice of this suit was filed in Bexar and other counties. The City then filed a condemnation suit in the County Court of Comal County seeking to condemn the same property. In all, 13 suits were filed. Finally, GBRA filed suit in the District Court of Comal County and secured an order enjoining the City from further proceeding with any of the suits previously filed by it, and SAPSCo filed suit in the District Court of Bexar County against GBRA to remove cloud from the title to its property and secured an order enjoining GBRA from proceeding with the prosecution of any of the suits previously filed by it. Thus a legal impassé or stalemate was reached. Neither party could proceed with the prosecution of any of the suits filed by it without violating an injunction. The City and SAPSCo finally applied to the Supreme Court for writ of mandamus to compel the District Judge of Comal County to modify the injunction previously issued by him. However, this suit was later dismissed.

In the meantime the City had induced American Light & Traction Company to break off its negotiations with GBRA and to enter into a contract with the City for the sale of the stock of SAPSCo. It had also contracted for the sale of its bonds. Large profits were to be...