Laclede Gas Co. v. Solon Gershman, Inc.

• Decision Date: 25 May 1976
• Docket Number: No. 36817,36817
• Citation: 539 S.W.2d 574
• Parties: LACLEDE GAS COMPANY, a corporation, Plaintiff-Respondent, v. SOLON GERSHMAN, INC., a corporation, Defendant-Appellant. . Louis District, Division One
• Court: Missouri Court of Appeals

Page 574

539 S.W.2d 574

LACLEDE GAS COMPANY, a corporation, Plaintiff-Respondent, v. SOLON GERSHMAN, INC., a corporation, Defendant-Appellant.

No. 36817.

Missouri Court of Appeals, St. Louis District, Division One.

May 25, 1976.

Motion for Rehearing or Transfer Denied July 8, 1976.

Application to Transfer Denied Sept. 13, 1976.

Gross & Goodman, Michael A. Gross, St. Louis, for defendant-appellant.

Paul B. Hunder, Jr., St. Louis, for plaintiff-respondent.

WEIER, Presiding Judge.

Plaintiff, Laclede Gas Company, a gas utility, sued defendant, Solon Gershman, Inc., a real estate management corporation, for $5,709.59, a balance due for natural gas consumed by defendant between September 15, 1967 and October 18, 1971. To plaintiff's petition, defendant filed answer setting out a defense of estoppel and a counterclaim seeking damages because of plaintiff's negligence. Plaintiff's motion to dismiss the counterclaim on the basis that the counterclaim sought a special rebate contrary to the law was sustained by the court. The cause was then submitted to the court upon a stipulation of facts. Judgment was rendered against the defendant in the amount prayed for in the petition.

The facts disclose the between the dates mentioned in plaintiff's petition, plaintiff had sold to defendant gas used by defendant upon certain commercial premises in Clayton, Missouri, which comprised twenty-nine apartments and four commercial stores. The metering equipment installed by plaintiff at these premises was equipped with a 20 cubic foot internal drive. Instead of having a 20 cubic foot index on the face of the meter, plaintiff had installed a 10 cubic foot index which recorded only one-half of the total amount of gas actually consumed. Defendant had been billed for $6,513.78 during the time that this meter was in operation, leaving a balance actually due plaintiff of $5,709.59 after adjustments, according to the rate tariffs which were on file with the Missouri Public Service Commission. The agreed statement of facts contains this statement: 'The erroneous billing * * * occurred solely as a result of plaintiff's error and defendant committed no act or made no omission contributing to the error. If defendant had received the correct billings, the rental rates charged to its tenants would have reflected the additional billing in its entirety and at this time defendant cannot go back and collect these sums.'

Defendant contends that the circuit court erred in entering judgment for plaintiff since the plaintiff should have been estopped from asserting its claim because of its negligence in installing a defective meter. Plaintiff, on the other hand, counters by stating that it was entitled to recover the difference between the amount erroneously billed and the correct amount which was owing it for gas used by the defendant because, as a public utility, it could not charge less than the rates established by law. To determine whether the court committed error in its judgment, we consider the special relationship of the parties under Missouri statutory and case law.

The Missouri Public Service Commission has jurisdiction over natural gas distribution companies. § 386.250(5), RSMo 1969. The Commission alone authorizes the rates cnarged by such utilities. May Department Stores Co. v. Union Electric Light & Power Co., 341 Mo. 299, 107 S.W.2d 41, 57(18) (1937). The rates so authorized are 'prima facie lawful and reasonable until found otherwise' in a special statutory action brought to determine invalidity. § 386.270, RSMo 1969; State ex rel. Dyer v. Public Service Commission, 341 S.W.2d 795, 799(3) (Mo.1961), cert. den., 366 U.S. 924, 81 S.Ct. 1351, 6 L.Ed.2d 384. § 393.130, RSMo 1969 provides in subsection (2) that: 'No gas corporation * * * shall directly or indirectly by any special rate, rebate, drawback or other device or methods, charge, demand, collect or receive from any person or corporation a greater or less compensation for gas, * * * or for any service rendered or to be rendered in connection therewith, except as authorized in this chapter, than it charges, demands, collects or receives from any other person or corporation for doing a like and contemporaneous service with respect thereto under the same or substantially similar circumstances or conditions.' Undue or unreasonable preference or advantage to any person or corporation or locality is forbidden in the next subsection.

No gas utility rate collection case in Missouri has been found by counsel or this court, but in Mellon v. Stockton & Lampkin, 326 Mo. 129, 30 S.W.2d 974 (1930) the court had before it the very issue which is here presented to us except that it involved an undercharge claim by a railroad against one of its shippers. There the court considered the application of § 10444, RSMo 1919 (now § 387.100, RSMo 1969) which contained a prohibition against unjust rate discrimination by carriers in substantially the same words as those contained in § 393.130 applicable to gas utilities. As stated in Mellon at p. 975(2): 'This statute has been construed by our courts on numerous occasions, and it appears to be the settled law of this state, 'that a carrier cannot, by contract or otherwise, by estoppel or waiver, directly or indirectly, increase or decrease the duly established freight rates, and that the shipper must make good any deficiency not collected regardless of the cause. " (Emphasis added.) Because of lack of jurisdiction, the Supreme Court in Mellon transferred the case to the Kansas City Court of Appeals where the court directly held that the duty of a carrier to collect the total amount due under its tariff rates could not be defeated by estoppel. Mellon v. Stockton & Lampkin, 225 Mo.App. 122, 35 S.W.2d 612, 613(2) (1931). See also May Department Stores Co. v. Union Electric Light & Power Co., supra, 107 S.W.2d 41, where at p. 59 the court cited Mellon (Mo.) in support of the statement that estoppel could not be invoked to prevent recovery of unlawful overcharges. As pointed out in Mellon (Mo.App.), one of the chief evils which was sought to be remedied by the Public Service Act was the abolition and prevention of favoritism and discrimination. To permit the defense of estoppel would be merely another way of evading the provisions of the law prohibiting rate discrimination. In the case before us, the circuit court correctly ruled that estoppel was not a defense to plaintiff's action for a balance due on the gas consumed by defendant which was caused by...