Louisville & Jefferson County Metropolitan Sewer Dist. v. Joseph E. Seagram & Sons, Inc.

• Decision Date: 06 February 1948
• Citation: 211 S.W.2d 122,307 Ky. 413
• Parties: LOUISVILLE & JEFFERSON COUNTY METROPOLITAN SEWER DIST. et al. v. JOSEPH E. SEAGRAM & SONS, Inc. et al. SAME v. INTERNATIONAL HARVESTER CO.
• Court: Kentucky Court of Appeals

211 S.W.2d 122

307 Ky. 413

LOUISVILLE & JEFFERSON COUNTY METROPOLITAN SEWER DIST. et al. v. JOSEPH E. SEAGRAM & SONS, Inc. et al.

SAME v. INTERNATIONAL HARVESTER CO.

Court of Appeals of Kentucky

February 6, 1948

Rehearing Denied June 4, 1948.

Appeal from Circuit Court Jefferson County, Chancery Branch, Second Division; Scott Miller, Judge.

Actions by Joseph E. Seagram & Sons, Inc., and the International Harvester Company against the Louisville & Jefferson County Metropolitan Sewer District and another to enjoin collection of allegedly excessive service charges. From adverse judgments, plaintiffs appeal.

Reversed for consistent proceedings.

J. Verser Conner, Gilbert Burnett and John Moremen all of Louisiville, for appellants.

Ogden Tarrant, Galphin & Street, of Louisville, for appellees.

STANLEY Commissioner.

The Louisville and Jefferson County Metropolitan Sewer District was created under an enabling act. Acts of 1946, Ch. 104, now Chapter 76, Kentucky Revised Statutes. The act was held constitutional in Veail v. Louisville & Jefferson County Metropolitan Sewer District, 303 Ky. 248 197 S.W.2d 413. By virtue of the statute and the action of the Board of Aldermen of Louisville and the Fiscal Court of Jefferson County, there was transferred to the District the 'complete jurisdiction, control, possession and supervision' of all the existing sewer and drainage system and facilities of Louisville, located within and without the city boundary. Among the broad powers of the district is that of establishing a schedule of 'rates, rentals and charges to be collected from all the real property served by the facilities,' based upon 'the consumption of water, on premises connected with such facilities, taking into consideration commercial and industrial use of water.' The district was authorized to adopt either of two other specified bases or a combination, or 'any other bases or classification' it should 'determine to be fair and reasonable, whether similar or dissimilar to those enumerated.' The statute declares, however, that the schedule should not become final within the city 'unless and until it has received the approval' of the Board of Aldermen 'by ordinance approved by the mayor.' It is further provided 'such schedule shall be uniform for all property falling within the same classification.' Provision is made for changing the rates in the same manner. KRS 76.090.

In May, 1947, the District Board (composed of three members, appointed by the Mayor, and two by the County Judge) promulgated a schedule of rates based upon and graduated according to quantities of water used in the property served by the sewer system. No distinction was made between property within and property without the city limits. The schedule was submitted to the Board of Aldermen for approval of the city rates. The president and other representatives of the Board of Aldermen advised the District Board that the rates to be charged within the city would not be approved except and until the schedule be changed to charge property outside the city fifty per cent in excess of the charge fixed against city property for similar sewer services. After meetings of the District Board and a committee of Aldermen, and further negotiations, oral and written, the District Board acceded to the city authorities. Following a preamble reciting the negotiations and the fact that the Board had been advised that the Aldermen would not approve the rate schedule established for the city unless that for outsiders were increased, the District Board, 'Resolved that on condition that the Board of Aldermen approve the rate schedule heretofore submitted to it without further delay, the Sewer District agrees, in so far as it may legally do so, that all contracts hereafter entered into with persons or corporations for sewer services to property outside the City of Louisville, will provide for a sewer rental charge of 50% more than is charged for similar service to property inside the City of Louisville, said additional charge to prevail until such time as the property served may be annexed to the City of Louisville.'

Modification was made of the proposed schedule and subsequently an ordinance was passed by the Board of Aldermen approving the rates for the city property as originally submitted.

The District Board having overruled their objections and protests, suits were filed against the district and the city by Joseph E. Seagram & Sons, and a subsidiary corporation, the International Harvester Company, the B. F. Goodrich Company, and Bond Brothers, Incorporated, which operate large industries located outside the city and use the city sewer system, to enjoin the district from charging or collecting the service charges against them respectively, as finally established on August 13, 1947. ^[1] They also sought to recover money alleged to have been illegally collected and to enjoin the city from interfering with any action of the district in the adoption and promulgation of sewer service fees outside the city limits. The appeals have been considered together, but a separate opinion is delivered in the Goodrich and Bond cases, since they involve an additional and different question.

The suit of the International Harvester Company was made a representative suit for all property holders similarly located.

The grounds upon which the schedule of charges finally adopted is attacked are: (1) The classification and greater service charges on property lying without the city limits are arbitrary and unreasonably discriminatory; and (2) the schedule is invalid because the sewer district in acceding to the demand of the Board of Aldermen abdicated its power to fix rates and delegated it to the Aldermen.

Justification for the classification and differential claimed by the district and the city is that they rest upon natural and reasonable bases, namely: (1) The location of the property furnishes a valid factual basis for classification, primarily because (a) the two classes of citizens reside in separate and distinct political subdivisions; (b) the statute vests complete jurisdiction and management in the district as an independent, unified municipal corporation; (c) the statute recognizes the existence of a distinction in the classes of property; (d) the City of Louisville over a long period of time and at great cost has developed the sewer system for the benefit of its own citizens, and is the owner of the legal title to all of it, both that which is within the city boundary and the outlet sewers and drains outside the city, which are being used by the plaintiffs; and (e) the city is obligated to liquidate outstanding bonds and pay annual interest thereon in large sums, the money being raised exclusively by taxation on city property and licenses. (2) The classification and schedule were in fact established and adopted by the District and the courts may not go behind the action to inquire into the motives or purposes of the Board.

The court ruled the classification to be improper and invalid and rendered a consistent judgment. Since this court has reached a different conclusion and believes that the classification of users of the sewer system is founded upon a reasonable basis, the alternative question must be decided.

First. The provision of the statute as to the schedule of rates applicable to property within the city being approved by ordinance does not provide for such a formal action in case of non-concurrence. It is true, as the appellees contend, that a municipal body must act in its corporate capacity and speaks only through and by its records. But the statutes do not provide for any affirmative disapproval of proposed charges. Obviously, non-action withholds approval, and the absence of a record of approval constitutes a negative. The hard fact and crux of the matter is that the Board of Aldermen did not approve the schedule submitted to it. There was a pocket veto. The character of the representation of the Aldermen and the positive assertions of the president of the board and other members, it seems to us, was sufficient notice to the District Board of the failure to approve. A reasonable time elapsed and the District Board reconsidered its former action without having sought a judicial review of the non-action of the Board of Aldermen.

We need not concern ourselves with the point that the Aldermen may have acted arbitrarily. Cf. Hatcher v. Kentucky & West Virginia Power Company, 280 Ky. 583, 133 S.W.2d 910. The District Board did recede from its position and promulgate a new schedule. The demand of the city was really that the service charges within the city should be two-thirds of the rate outside the city. Instead of reducing the city rates to bring them within the ratio demanded as a condition of approval, the Board raised the outside rates. Whether this was of its own free will or by force of pressure is not material. The former is to be presumed. It is firmly settled that the courts will not inquire into motives which impel or the expediency or wisdom of legislative or administrative action, for that does not affect its legality or validity. O'Bryan v. Highland Apartment Company, 128 Ky 282, 108 S.W. 257, 33 Ky.Law.Rep. 349, 15 L.R.A.,N.S., 419, 11 Am.Jur., Constitutional Law, Sec. 141; 37 Am.Jur., Municipal...