Quality Laundry, Inc. v. Southern Union Gas Co., 11892

Decision Date01 March 1972
Docket NumberNo. 11892,11892
CourtTexas Court of Appeals

Coleman Gay, Austin, for appellant.

Clark, Thomas, Harris, Denius & Winters, Barr McClellan, Austin, for appellee.

PHILLIPS, Chief Justice.

Appellee Southern Union Gas Company brought suit against the Appellant Quality Laundry, Inc. for $3,223.16 for natural gas furnished to Appellant in the City of Austin. Judgment was rendered for Appellee for the amount claimed plus attorney's fees of $1,074.38. Appellant was denied recovery on its cross-action for certain hereinafter described overcharges, and for the statutory penalty and attorney's fees provided for in Vernon's Tex.Rev.Civ.Stat.Ann. art. 6062, for violation of the rate ordinance .

We reverse the judgment of the trial court in part and affirm in part and render judgment as hereinafter described.

The essential facts in this case are not in dispute. Appellee Southern Union Gas Company furnishes natural gas to users within the City of Austin under a franchise from the City. In Section 13 of the franchise it is provided that:

'The City of Austin retains full and complete powers, within the limits of the Constitution and laws of this State, to fix and determine by ordinance from time to time throughout the life of this franchise a reasonable price for gas sold and distributed by Grantee (appellee) hereunder, and to prescribe a scale of charges therefor; . . .

As a condition precedent to its right to use the streets . . . of the City of Austin under this franchise, Grantee agrees that in no event will it charge more for natural gas and service of natural gas . . . than the rates and charges fixed and set forth in whatever ordinance or ordinances the City of Austin shall . . . hereinafter enact to supersede or amend the aforementioned ordinance, (2) and such agreement shall be a continuing one throughout the life of this franchise, and is the principal consideration upon which the granting of this franchise is based . . .'

Proceeding under the franchise, the City Council passed a new rate ordinance which became effective in October, 1964, and which prescribed the rate for the period involved in this suit. Under this ordinance, the 'Large Volume Rate' was 37cents per MCF for the first 300 MCF during a day period, with successively lower prices to 28cents per MCF for each MCF in excess of 2,000, and with a minimum charge of $111.00 per monthly billing period.

The amounts charged to Appellant for the period beginning March 20, 1969, and ending June 23, 1970 disclose that the least charge for those months is $143.42 for the period ending July 23, 1969, and that the greatest charge is $206.99 for the period ending October 21, 1969. Each charge is in excess of the $111.00 that would have been due under the 'Large Volume Rate.'

Under stipulation Appellant had paid, not only the amount that it owed if charged at the 'Large Volume Rate,' but it alleges that it had overpaid the amount legally chargeable by $594.88.

Appellee seeks to justify the charges made Appellant by virtue of its rule entitled 'Initiation of Service,' containing the following provision:

'(f) All Contracts for service under rate schedules for other than general service are a matter of negotiation between the Company and consumers and shall cover all matters which may be necessary or appropriate under the individual circumstances involved . . .'

Appellee takes the further position that before it gave Appellant or any other consumer the benefit of the 'Large Volume Rate' it had the right to require the consumer to execute a contract; that only those consumers who signed such a contract had the right to buy gas at the 'Large Volume Rate,' regardless of the amount of gas used and regardless of the positiveness of the ordinance.

Thus the question in this case becomes whether or not a public utility can add requirements to a rate ordinance not provided for in the ordinance. We hold that it cannot.

The ordinance in question provides that:

'The following rates are hereby fixed and determined as the rates authorized to be charged and placed in effect by Southern Union Gas Company for natural gas service rendered through one meter at one location during a monthly billing period in the City of Austin, Texas . . .' (Emphasis added)

The rate ordinance in question will be searched in vain for any indication that a consumer would not be entitled to the lower 'Large Volume Rate' unless he signed a contract with Appellee to that effect. Appellee makes no claim that the ordinance contains any such provision. Its sole reliance is on one of its own rules which it had filed with the secretary of the City of Austin and with the Railroad Commission. The rule in question actually goes much further and provides that:

'All contracts for service under rate schedules for other than general service are a matter of negotiation between the Company and consumers and shall...

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