San Antonio Public Service Co. v. State, 7816.

• Decision Date: 07 June 1933
• Docket Number: No. 7816.,7816.
• Citation: 62 S.W.2d 585
• Parties: SAN ANTONIO PUBLIC SERVICE CO. v. STATE.
• Court: Texas Court of Appeals

62 S.W.2d 585

SAN ANTONIO PUBLIC SERVICE CO. v. STATE.

No. 7816.

Court of Civil Appeals of Texas. Austin.

June 7, 1933.

Rehearing Denied June 28, 1933.

Appeal from District Court, Travis County; C. A. Wheeler, Judge.

Suit by the State of Texas, on the relation of its Attorney General, against the San Antonio Public Service Company. From Judgment rendered, defendant appeals, and the State files cross-assignment of error.

Injunctive judgment affirmed in part, and in part reversed and dissolved.

Dan Moody, of Austin, and Templeton, Brooks, Napier & Brown and W. L. Matthews, all of San Antonio, for appellant.

James V. Allred, Atty. Gen., Everett L. Looney, of Houston, and A. R. Stout, Asst. Atty. Gen., for the State.

BLAIR, Justice.

The state of Texas, upon the relation of its Attorney General, instituted this proceeding seeking to perpetually enjoin appellant, San Antonio Public Service Company, a Texas corporation, from doing certain acts alleged to be in violation of law and ultra vires of its corporate powers. The state alleged that appellant was incorporated under subdivision 60 of article 1121, R. S. 1911, as amended by the 35th Legislature (1917), c. 178, "for the purpose of constructing, acquiring, maintaining and operating lines of electric motor railway," and "for the manufacture, supplying and selling of electricity and gas (artificial, natural, or both), for light, heat and power to the public and to municipalities"; and that in violation of article 1349, R. S. 1925, inhibiting a corporation from employing "its stock, means, assets or other property, directly or indirectly for any purpose whatever other than to accomplish the legitimate business of its creation, or those purposes otherwise permitted by law"; and as ultra vires of its corporate powers, appellant was employing its means and assets: (1) In the purchase for sale and the sale of all kinds and character of electric and gas appliances, maintaining a department, salesrooms, and salesmen therefor, and employing in excess of $150,000 of its means and assets for such purposes; (2) in the purchase and operation of large gasoline-propelled motor vehicles for transporting sight-seeing parties to points of interest within and more than five miles beyond the city limits of San Antonio, which operations were not authorized by its charter, or in connection with its street railway system, or over routes fixed and approved by the city of San Antonio or the commissioners court of Bexar county; and (3) in making loans to various firms and corporations, varying in amounts from $500 to $105,000, and aggregating $209,000 during the past four years.

Appellant answered, in substance: (1) That as a part of its business of manufacturing, supplying, and selling electricity and gas to the public and as incident thereto, it sold electric and gas appliances to its customers for the purpose of increasing its business and to accomplish the legitimate business of its creation; and that the $150,000, or less, so used was reasonable, and was less than one-half of one per cent. of its capital investment; (2) that it was fully authorized to operate the sightseeing busses by virtue of article 6548; and (3) that as to lending money to the various firms and corporations named, all of such loans had been paid; and there was no allegation that appellant was threatening or intending to make further loans; and that in any event the loans were lawful.

A trial to the court without a jury resulted in judgment perpetually enjoining appellant from purchasing and selling electric and gas appliances and from operating the sight-seeing motorbusses; but the injunctive relief as to the alleged loans was denied. Appellant has appealed from the injunction granted against it; and the state has cross-assigned error with respect to the action of the court in refusing to enjoin appellant from making loans.

Appellant was incorporated in 1917, for the purposes aforementioned. Immediately upon its incorporation it took over the properties of the San Antonio Gas & Electric Company, a gas and electricity generating and distribution system; and the San Antonio Traction Company, an electric motor street railway system, and has continued the operation of these properties in San Antonio. On January 1, 1928, appellant acquired what is known as its South Texas Department, which includes electric systems acquired from other corporations or owners in some 30 towns adjacent to San Antonio, and serving Floresville, Boerne, New Braunfels, Stockdale, Falls City, Hondo, and other towns and villages; and in the same year extended its power lines to the city of Seguin, under a contract to sell power to said city at wholesale when needed.

Prior to 1927, appellant and its San Antonio predecessor sold some gas and electric appliances, and especially those not carried by local merchants, such as large hotel ranges and burners for industrial plants. Prior to the purchase of its South Texas Department properties, appellant's predecessors sold all kinds and character of electric appliances to their customers. As to gas appliances in 1927, and as to electric appliances in 1929, appellant entered into the purchase and sale of all kinds of such appliances in San Antonio; and it has continued the policy of its predecessors of the South Texas Department properties of selling to its customers outside of San Antonio all kinds of electric appliances.

After this suit was filed appellant ceased selling gas and electric appliances in San Antonio proper, giving as its reason that the local merchants were rendering sufficient services to its gas and electricity customers with respect to appliances. However, appellant has continued to use space in its main office for demonstrating and displaying for various merchants of San Antonio, all kinds of gas and electric appliances, and to use its funds for paying salesmen to induce its customers to purchase such appliances from the merchants selling them.

In four of the towns of its South Texas Department, appellant maintains salesrooms and salesmen for its electric business; and also at Seguin, where it does not sell electricity to the public, but only sells power to the city when needed. In each of these four towns, local merchants also sell electric appliances to the customers of appellant; and both as to the San Antonio and the South Texas Department territory the trial court found that there is an adequate supply of electric appliances available from other merchants, at prices and on terms equal and similar to those offered by appellant.

The trial court also found that "it is not the universal custom in Texas" for utility companies to sell gas and electric appliances. This finding is not material. The material issue is whether the sale of such appliances is the usual method or means employed by utilities in the accomplishment of their main business of manufacturing and selling gas and electricity to the public. The evidence on this issue shows that every privately owned electric company in Texas sells, and for many years has sold, electric appliances. That three of the ten municipally owned electric systems inquired about sell electric appliances or have sold them. That of the thirty-four gas companies operating in Texas, all except four sell gas appliances, and the four not selling appliances are related companies under one management, and one of these maintains a display of appliances in its main office.

The trial court further found as follows: "The sale of appliances is not the means usually and necessarily resorted to by utility corporations in order to supply gas and electricity for light, heat and power, and that the sale of such appliances by utilities is not a direct method of accomplishing the purpose of the incorporation; to the contrary, the sale of appliances by utilities tends only in an indirect manner to promote the interest of such corporation."

This is a mixed finding of fact and of law. It is not sustained by the evidence adduced. The evidence above detailed shows the sale of gas and electric appliances is the usual means or method employed by utilities in the extension of their service and in the accomplishing of their main business of manufacturing and selling gas and electricity to the public. Gas and electricity can only be consumed or used through proper appliances; and all witnesses questioned on the subject testified that the amount of gas or electricity sold from a gas or electric distribution system is related directly to the number of gas and electric appliances attached to the system. Typical of such evidence is that of witness Seaholm, manager of the city of Austin's electric system, as follows: "The selling of electric appliances has contributed largely to achieving the approximation of an even load, and on account of the new development of electric appliances, it is becoming more possible every day through their increased use, to achieve the desired result of an even load throughout the twenty-four hours of the day. * * * For the development of the electric light business, and for the encouragement of low rates, it is important to all electric light companies and to their revenue and to their business, that there be as many appliances put on their lines as possible."

The evidence also shows that it is a matter of primary importance as to the number of appliances a utility company may get on a proposed extension of its service. That as to the extension of its electric lines to all the small cities and towns it is serving, and particularly with respect to the rural section where appellant is serving the farmer with electricity to operate water pumps, feed choppers, dairy appliances, electric stoves, electric refrigerators, washing machines, and electric irons, appellant is the only one undertaking to sell such appliances in such territory. That in the repair and replacement of worn or defective appliances, and in serving its customers...