Mefford v. City of Dupontonia

• Decision Date: 28 July 1961
• Citation: Mefford v. City of Dupontonia, 49 Tenn.App. 349, 354 S.W.2d 823 (Tenn. App. 1961)
• Parties: Lewis R. MEFFORD, D/B/A, etc., Dupontonia Water Company, v. The CITY OF DUPONTONIA et al.
• Court: Tennessee Court of Appeals

Page 823

354 S.W.2d 823

49 Tenn.App. 349

Lewis R. MEFFORD, D/B/A, etc., Dupontonia Water Company, v. The CITY OF DUPONTONIA et al.

Court of Appeals of Tennessee, Middle Section.

July 28, 1961 Certiorari Denied by Supreme Court Feb. 8, 1962.

Denney, Leftwich & Osborn, Z. T. Osborn, Jr., Nashville, for complainant.

H. Phillip Sadler, Donelson, John L. Uhlian, Nashville, Hugh C. Howser, Phillips, Gullett & Steele, Charles Hampton White, Nashville, for defendants.

HUMPHREYS, Judge.

Complainant has appealed to this Court from the part of the decree of the Chancery Court dismissing so much of his bill as sought unliquidated damages of defendants for procuring a breach of his contract with others.

Complainant sued defendants alleging they had procured the breach of his contracts with sewer service customers, residents of defendant city, by enacting a city ordinance assuming to take over the operation of the sewer system in the city area, and by advising users of the sewer system not to pay complainant for sewer service furnished. The bill sought an injunction prohibiting further interference of this kind, damages for the contracts breached, and a declaratory decree as to the validity of the ordinance by which defendant city sought to assume the duty of servicing the sewer system. Defendants answered denying the allegations of the bill and averring justification for the city's action. The Chancellor decreed a permanent injunction, but denied the prayer for damages 'for the reason that complainant admitted he had no express contracts with his customers and there is no proof of damages in the record'. He declined to make a declaratory decree on the ordinance. Complainant has appealed only from the disallowance of damages, and has assigned error based on this.

Complainant does business as Dupontonia Water Company, purchasing his water from Old Hickory Utility District and selling it to some 500 customers living in Dupontonia. His contract for the purchase of water provides for the use of the Old Hickory Utility District's sewage treatment facilities by the sewer system serving the residents of the City of Dupontonia. The connection of this sewer system with the sewerage disposal facilities of the Utility District has existed at least since complainant acquired the system in 1944, when the Dupont Company owned both the sewage disposal facility and the source of water supply for the City of Dupontonia, both of which it later gave to the Old Hickory Utility District, which now operates the same. Under complainant's contract with the Old Hickory Utility District he pays an annual surcharge on the water he buys from the District of $1,250.00, to cover the cost of the Utility District's handling of the sewage from the Dupontonia Sewer System. At the time of the entry of the final decree, the Public Service Commission of Tennessee had disclaimed jurisdiction of sewer systems as public utilities and had declined to make a rate to be charged by complainant for the service he was rendering. Nevertheless, complainant was making a charge of an amount equal to fifty per cent of the water bill of each water customer connected to the sewer system. The sewer services rendered by complainant consist of unstopping the sewer lines when they become plugged up and, on occasion, the digging out and replacing a part of the line which has proved to be particularly troublesome. The average maintenance expenses is approximately $500.00 annually. Since 1952, complainant has collected a charge for sewer service. We gather from the record that during all of this time there has been something of a controversy between complainant and the residents of the area served by the sewer system over complainant's right to collect a charge for sewer service, since the sewer system is actually the property of the owners of the property in the area. It was originally built by the United States Government during World War I days as a gravitations system, taking advantage of the rise and fall of the land, so as to require no pumping stations, and in the main traverses the city lots, although a portion of it was built in the thoroughfares which now constitute the streets of the city. Since none of the system belongs to complainant, residents of the area have objected to paying the charge he has sought to collect for sewer service. Complainant has had no formal contracts with his water customers using the sewer lines. However, he did state that in his opinion he had implied contracts with these parties.

In August, 1959, defendant, City of Dupontonia, enacted an ordinance authorizing the city to expend funds on maintenance and repair of the sewer system. The ordinance declared this action was taken to protect the health and welfare of the residents of the City. Thereafter, notice of this legislative action was given to residents of the city by means of a circular, which among other things, advised that since the sewer system was dedicated to the public use and since the city had in effect assumed its maintenance, there was no longer any need or authority for Dupontonia Water Company to collect a sewer charge from its users and that they need not continue to pay. As a result of the enactment of this ordinance and the circulation of the notice thereof, as of January 31, 1960, complainant's water customers had declined to pay accounts rendered by complainant for sewer service in the amount of $1,329.98. In August, 1959, complainant brought this suit.

As stated, the only part of the decree appealed from is that declining to award treble damages under § 47-1706, T.C.A. So, the questions before us are whether, admitting as complainant does, there are no formal contracts between complainant and his water customers who use the sewer system, there are such implied contracts as are within the protection of the Code section sued on, and, if so, whether the legislative action taken by the City and the subsequent notice given was justified, or constituted a tort for which complainant can recover.

Section 47-1706, T.C.A., reads as follows:

'Procurement of breach of contracts unlawful--Treble damages.--It shall be unlawful for any person, by inducement, persuasion, misrepresentation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto; and, in every case where a breach or violation of such contract is so procured, the person so procuring or inducing the same shall be liable in treble the amount of damages resulting from or indident to the breach of said contract; and the party injured by such breach may bring his suit for said breach and for such damages.'

It is plain, of course, before there can be a recovery under this Code section, complainant must prove by the preponderance of the evidence the existence of contracts. We do not think, however, that this section contemplates only formal contracts. It is our opinion it protects contracts implied in fact, as well as formal, expressed contracts.

Complainant defines his contract in his brief as follows: 'While the contract was not written nor expressed in formal terms, it was a valid subsisting contract, standing squarely upon the law respecting implied contracts that where one person furnishes a service to another and the person receiving the service knows that a charge is to be made for that service and accepts the same, he becomes obligated to...