South Texas Public Service Co. v. Jahn

• Decision Date: 04 April 1928
• Docket Number: (No. 7198.)
• Citation: 7 S.W.2d 942
• Parties: SOUTH TEXAS PUBLIC SERVICE CO. et al. v. JAHN et al.
• Court: Texas Court of Appeals

7 S.W.2d 942

SOUTH TEXAS PUBLIC SERVICE CO. et al. v. JAHN et al.

(No. 7198.)

Court of Civil Appeals of Texas. Austin.

April 4, 1928.

Rehearing Denied June 13, 1928.

Appeal from District Court, Comal County; M. C. Jeffrey, Judge.

Suit by R. S. Jahn and others against the South Texas Public Service Company and others. Decree for plaintiffs, and certain defendants appeal. Affirmed.

Henne & Fuchs, of New Braunfels, and Templeton, Brooks, Napier & Brown, of San Antonio, for appellants.

Adolph Seidemann, of New Braunfels, and Dibrell & Mosheim, of Seguin, for appellees.

McCLENDON, C. J.

Jahn and others, tax-paying citizens of New Braunfels (referred to as the city), obtained a decree against the city, its mayor, commissioners, and South Texas Public Service Company (referred to as the service company), canceling a contract between the city and the service company, an ordinance ratifying it, and a bill of sale, whereby the former sold to the latter its electric street lighting system. The city and the service company have appealed.

The controlling facts (undisputed except where noted) follow:

In 1911, the city issued $67,000 of bonds "for the purpose of construction and extension of additions to the waterworks of said city." From the proceeds of this bond issue the city expended $7,272 in the construction of a street-lighting system, which it operated in conjunction with its waterworks system. This street-lighting system consisted of a dynamo, transformers, poles, and wires, and had been in continuous operation since its construction in 1912. The city did not supply private consumers. The service company, under a franchise from the city, supplied the inhabitants with electric light and power. On January 6, 1927, the city and service company entered into the contract in question, by which the city sold to the service company its entire street lighting system (the dynamo being excluded from the sale), consisting of poles, wires, etc., for the sum of $7,560 cash. By the same contract the service company agreed to furnish the city with lights for its streets and parks for a period of five years at a stated price per light per month, and to make specified additions to the street-lighting system when called upon by the city. For the first two-year period the city was to pay for the service designated a lump sum in advance of $7,560, and for any additional service and for the remaining three years payment was to be made monthly. It was shown that the entire expenses of operating the street lighting system under the city's administration was borne by the revenues from the waterworks plant. The contract was subject to approval by the service company's attorneys.

This suit was brought on May 31, 1927, and all defendants were served before August 22, 1927, on which day an ordinance was passed confirming the contract. A bill of sale was delivered by the city to the service company of the property covered by the contract, and the service company and the city exchanged checks for $7,560 each. The service company went into possession of the property, and has since been rendering the contracted-for service. The decree canceling the contract, ordinance, and bill of sale awarded to the service company the sum of $2,573 for service rendered under the contract. This portion of the decree, however, is not questioned.

The controlling issue is whether, under article 1112, R. S. 1925, the city had the power to sell its electric street-lighting system without submitting the question to the electorate. The pertinent language of the article reads:

"No such light or water system shall ever be sold until such sale is authorized by a majority vote of the qualified voters of such city or town."

Appellants contend that the word "such" limits the class of systems requiring for their sale the approval of the electorate to those which are revenue-producing and therefore capable of being incumbered. Appellees contend that "such" refers to the general class of systems legislated concerning, namely, those municipally owned. We sustain the latter view. Article 1112 was originally enacted as a part of section 6, chapter 112, Laws of 1911. In the 1925 codification the sections of this chapter with some omissions, rearrangement, and change in language are embraced in title 28, chapter 10, subdivision 2 (articles 1111-1118). The first portion of section 6 is omitted from the codification, and in the latter portion, which is brought forward as article 1112, immediately following original section 1 (article 1111), the language "no such system shall ever be sold" is changed in article 1112 to read, "no such light or water system shall ever be sold." The purpose of this omission and rearrangement is not apparent to us, but we attach to it no significance so far as the question before us is concerned; nor do we attach any significance to the added words, "light or water," in article 1112. Had it been the purpose of the codifiers to change the meaning expressed in the original act by limiting the class of systems embraced in article 1112 below those contemplated in the latter portion of section 6, we feel sure that they would have used apt language to evidence such purpose.

Article 1111 (original section 1) grants to cities and towns the "power to mortgage and incumber their light systems or water systems, either or both, and the franchise and income thereof," etc. This language is broad enough to cover any character of municipally owned water or light system. We do not think there is merit in the contention of appellants that a water or light system which supplies only municipal needs and is being operated without revenue from the city is excluded from the systems authorized in article 1111 to be incumbered. It may be conceded that as a practical proposition money could not be raised on such security, in the absence of a stipulation in the incumbrance agreement whereby the city would be required to pay into a separate fund a reasonable charge for the service it received from the system, to be applied to interest and provide a sinking fund for the principal of the incumbrance debt, and stipulation for a franchise embodying the right to collect such reasonable charge from the city, to be exercised by the purchaser in case of sale under the incumbrance. This subject is covered generally in the other provisions of subdivision 2 of chapter 10. There is nothing in the several articles which would deny to the city this power, and it is to be noted that authority to furnish free service is limited to "city public schools, or buildings and institutions operated by such city." Article 1113.

We do not think this language, even under a liberal construction, embraces service for street lighting or general fire protection; but, even if so construed, it is not mandatory. Whether from a practical viewpoint a loan of this character could be floated would depend upon the revenue-bearing capacity of the system as compared with the amount of the loan. There is nothing in article 1111, or other related provisions, which would indicate that the systems referred to are only those which supply private consumers and are revenue-bearing at the time they are sought to be incumbered. If article 1111 is not limited to systems which serve private consumers, then clearly article 1112 is not so limited. The latter article is certainly as broad as the former. It is not even contended by appellants that the word "such" in article 1112 limits the systems therein mentioned to those which have been in fact incumbered. There would be no basis for such construction. The inhibition against selling a municipally owned plant without the consent of the electorate applies equally to those free from incumbrance as to those incumbered. The manifest purpose of the inhibition was to prevent disposition of such plants, and a consequent change from municipal to private ownership, without consent of the electorate, and this regardless of whether the system was in fact incumbered.

It is a matter of common knowledge that many cities and towns have owned water and light plants, one or both, which supplied only municipal needs, such as street, park, and public building lighting, and fire protection and sanitation. These systems are a modern development. Originally at common law the supplying of water and lights for purely municipal purposes was not a municipal duty. But, while no duty may rest upon the municipality in that regard, it is clearly a proper municipal function, and whether express legislative authority to its exercise is necessary is a question upon which there is...