Gulf States Utilities Co. v. State
Decision Date | 13 January 1932 |
Docket Number | No. 7666.,7666. |
Parties | GULF STATES UTILITIES CO. v. STATE. |
Court | Texas Court of Appeals |
Appeal from District Court, Travis County; J. D. Moore, Judge.
Suit by the State against the Gulf States Utilities Company. From the judgment for plaintiff, defendant appeals.
Affirmed.
Baker, Botts, Andrews & Wharton and Palmer Hutcheson, all of Houston, for appellant.
James V. Allred, Atty. Gen., and Sidney Benbow and Everett L. Looney, Asst. Attys. Gen., for the State.
Templeton, Brooks, Napier & Brown and W. L. Matthews, all of San Antonio, amicus curiæ.
Appellee, the state of Texas, sued appellant, Gulf Utilities Company, for its franchise tax due for the year 1930; and recovered judgment for $23,112; hence this appeal.
The primary question in the appeal is whether, in absence of a legislative enactment, the manufacture and sale of ice to the public in Texas by appellant constituted it a public utility corporation or business. A decision of the question is necessary for the purpose of determining the particular subdivision of the Franchise Tax Act under which the amount of appellant's franchise tax for the year in question should be computed.
The state demanded that appellant pay the franchise tax imposed by subdivision (a) of article 7084, Acts 5th Called Session, 41st Legislature (1930), p. 220, c. 68, § 2, the material portion of which reads as follows: "Except as herein provided, every domestic * * * corporation shall * * * pay * * * a franchise tax * * * based upon that proportion of the outstanding capital stock, surplus and undivided profits, plus the amount of outstanding bonds, notes and debentures, other than those maturing in less than a year from date of issue, as the gross receipts from its business done in Texas bears to the total gross receipts of the corporation from its entire business."
Appellant contended that ice had grown to be a commodity needed and used by the public so generally that it had become a public necessity, and that its business of manufacturing and selling ice to the public in Texas was therefore a public utility business, and entitled to classification under the Franchise Tax Act as a "public utility corporation," and to pay the lower franchise tax imposed by subdivision (d) of said article 7084, the material portion of which reads as follows: "Except as provided in preceding clauses `B' and `C', all public utility corporations, which shall include every such corporation engaged solely in the business of a public utility whose rates or service is regulated, or subject to regulation, in whole or in part, by law, shall pay a franchise tax as provided in this Act, except the same shall be based on that proportion of the issued and outstanding capital stock, surplus, and undivided profits, which the gross receipts of the business of said corporation done in this State bears to its total gross receipts, instead of the gross assets; and in lieu of the rate hereinbefore prescribed said tax shall be computed as follows."
Appellant was incorporated under what is now subdivision 88 of article 1302, R. S. 1925, to conduct the following businesses:
Appellant has never engaged in the gas business in Texas, but has engaged in each of the other businesses authorized by its charter, and was still so engaged on the date of the judgment.
By legislative enactment two of appellant's businesses, those conducted under subdivisions (1) and (3) of its charter, have been declared to be public utility businesses. Chapter 10, title 32, R. S. 1925 (article 1416 et seq.). There has never been enacted in Texas a statute declaring the manufacture and sale of ice to be a public utility business, and the Forty-First and Forty-Second Legislatures refused to enact such a statute and to confer authority upon the Railroad Commission to regulate the ice business.
It is conceded that the business of manufacturing and vending of ice to the public in Texas was not in its incipiency a public utility. The trial court found from the evidence adduced that "ice is a commodity needed and used by the public; but ice is not a public necessity, and is not indispensable."
It is appellant's contention that the court erred in refusing to find as a matter of law that ice has risen to be a commodity so generally needed and used by the public that it has become a public necessity in Texas, like in effect to gas, electric power, and water, and that therefore appellant's business of manufacturing and selling ice to the public in Texas is entitled to classification as a "public utility whose rates or service is regulated, or subject to regulation, in whole or in part, by law," under subdivision (d) of the Franchise Tax Act; and particularly because of the growth, expense of maintaining permanent manufacturing plants, standardization of the commodity, magnitude, and number of people affected by the ice business, both as to quality of the commodity and as to regular and daily service to the domestic consumers of ice, the business is subject to regulation by law.
We have reached the conclusion that appellant's contentions cannot be sustained. The climatic conditions in Texas are such that there are no natural ice businesses, but all ice sold to the public is artificial ice manufactured of frozen water. Appellant has artificial ice manufacturing plants in several towns and cities where it manufactures and sells ice to the public, and also ships and sells ice to the public in several towns within a radius of 15 to 50 miles from its plants. The artificial ice business of appellant is subject to competition at all places where it does business, and there is actual competition in some of these places. In recent years an electrical invention was put upon the market for refrigeration purposes and for manufacturing of ice in the household and in business enterprises, which is in competition with the artificial ice business, and which is shown by the testimony to now be in fairly general use by the public. What is known as dry ice is also in competition with artificial ice to some extent. Appellant and all others similarly engaged in Texas fix their own prices for their artificial ice and control their own service to the public. It is agreed that ice is being sold for as reasonable prices as the public would have to pay under public regulation, or at least the public is now paying, and the manufacturers and vendors are receiving fair prices for ice. There is no evidence in the record which shows that the public, or the portion of it which uses ice, is suffering any inconvenience of health or comfort by reason of the fact that the ice business has not been subjected to some sort of public regulation.
In the case of Ladd v. Southern Cotton Press & Mfg. Co., 53 Tex. 172, our Supreme Court held the policy of this state to be that, in absence of a legislative enactment, a business theretofore strictly juris privati will not become juris publici as a matter of law by reason of its growth, magnitude, or the number of persons affected by it, since the right to control its property, or regulate its use or service, pertains to the legislative and not to the judicial department of the government. See, also, American Livestock Commission Co. v. Chicago Livestock Exchange, 143 Ill. 210, 32 N. E. 274, 282, 18 L. R. A. 190, 36 Am. St. Rep. 385; Richardson v. R. R. Commission, 191 Cal. 716, 218 P. 418. It may be conceded that there are cases in which courts have the right to declare an existing business affected with a public interest and subject to regulation and control without a regulatory statute, under some branch of the doctrine of the state police power; but in cases like the instant case, where no material inconvenience or injury is resulting to the public health or comfort because of lack of public regulation or control of the ice business, the last-cited cases are authority for the rule that, "it is thought the better procedure for this declaration to come, in the first instance, from the legislature and not from the courts." Thompson on Corporations (3d Ed.) 706, § 508. In practice and policy, the reasons for this rule were well stated in the case of American Livestock Co. v. Chicago Livestock Exchange, supra, as being that, This policy of procedure has been adopted by courts generally and by the Supreme Court of Texas in Ladd v. Southern Cotton Press & Mfg. Co., supra. We therefore conclude that, in absence of a legislative enactment, the manufacture and sale of ice to the public in Texas is not a public utility business as a matter of law.
In deciding the above question, we are not holding that a legislative enactment declaring ice to be a public utility, or that the ice business is affected with the public interest and subject to some character of public regulation, would not be upheld by the courts. No such legislation has been enacted in Texas, and that question need not be determined in this case.
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