Texas Natural Gas Utilities v. City of El Campo

• Decision Date: 23 November 1939
• Docket Number: No. 11006.,11006.
• Citation: 135 S.W.2d 133
• Parties: TEXAS NATURAL GAS UTILITIES v. CITY OF EL CAMPO et al.
• Court: Texas Court of Appeals

Page 133

135 S.W.2d 133

TEXAS NATURAL GAS UTILITIES v. CITY OF EL CAMPO et al.

No. 11006.

Court of Civil Appeals of Texas. Galveston.

November 23, 1939.

Rehearing Denied January 4, 1940.

Appeal from District Court, Wharton County; M. S. Munson, Judge.

Suit by the Texas Natural Gas Utilities against the City of El Campo and others, to enjoin enforcement of an ordinance of the city prescribing maximum gas rates. From an order denying temporary injunction after a hearing, the Texas Natural Gas Utilities appeals.

Affirmed.

S. C. Cappel, Jr., of El Campo, and Williams, Lee, Sears & Kennerly, of Houston (Irl F. Kennerly, of Houston, of counsel), for appellant.

Donald M. Duson, of El Campo, for appellees.

CODY, Justice.

This is an appeal from the refusal to appellant of a temporary injunction against the enforcement of an ordinance of the City of El Campo, prescribing maximum gas rates.

For more than ten years appellant has been selling natural gas, under a franchise from appellee, within appellee's corporate limits. On August 7, 1939, appellee by ordinance fixed the rates to be effective after September 1, 1939, which were materially less than those in effect. On August 29, 1939, appellant procured a temporary restraining-order upon sworn allegations that the rates fixed by the ordinance were confiscatory, etc. A temporary injunction was refused on September 11, after a hearing. The allegations of appellant's petition are to the effect: 1. That the complained-of rates were fixed without giving appellant a hearing. 2. That the members of the council were incapable of considering and determining impartially what would constitute legal rates for the city "in the spirit of the just judge". That the complained-of rates were confiscatory.

Assuming, for present purposes and because of the form in which this appeal reaches us, the truth of appellant's allegations, we do not believe it was error to refuse the temporary injunction. If, as appellee contends, the Legislature has provided an adequate legal remedy against the adoption by the city council even of confiscatory rates, relief by injunction is not available. Rogers v. Daniel Oil & Royalty Co., 130 Tex. 386, 110 S.W.2d 891. Certainly the manifest purpose of Arts. 6058 and 6059 is to supply a remedy against the abuse, or erroneous use, of the rate-making power by city councils. Article 6058 reads: "When a city government has ordered any existing rate reduced, the gas utility affected by such order may appeal to the Commission by filing with it on such terms and conditions as the Commission may direct, a petition and bond to review the decision, regulation, ordinance, or order of the city, town or municipality. Upon such appeal being taken the Commission shall set a hearing and may make such order or decision in regard to the matter involved therein as it may deem just and reasonable. The Commission shall hear such appeal de novo. Whenever any local distributing company or concern, whose rates have been fixed by any municipal government, desires a change of any of its rates, rentals or charges, it shall make its application to the municipal government where such utility is located and such municipal government shall determine said application within sixty days after presentation unless the determination thereof may be longer deferred by agreement. If the municipal government should reject such application or fail or refuse to act on it within said sixty days, then the utility may appeal to the Commission as herein provided. But said Commission shall determine the matters involved in any such appeal within sixty days after the filing by such utility of such appeal with said Commission or such further time as such utility shall in writing agree to, but the rates fixed by such municipal government shall remain in full force and effect until ordered changed by the Commission."

Article 6059 reads: "If any gas utility or other party at interest be dissatisfied with the decision of any rate, classification, rule, charge, order, act or regulation adopted by the Commission, such dissatisfied utility or party may file a petition setting forth the particular cause of objection thereto in a court of competent jurisdiction in Travis County against the Commission as defendant. Said action shall have precedence over all other causes on the docket of a different nature and shall be tried and determined as other civil causes in said court. Either party to said action may have the right of appeal; and said appeal shall be at once returnable to the appellate court, and said action so appealed shall have precedence in said appellate court of all causes of a different character therein pending. If the court be in session at the time such right of action accrues, the suit may be filed during such term and stand ready for trial after ten days' notice. In all trials under this article the burden of proof shall rest upon the plaintiff, who must show by clear and satisfactory evidence that the rates, regulations, orders, classifications, acts or charges complained of are unreasonable and unjust to it or them."

It was said by the Austin Court in Community Natural Gas Co. v. Natural Gas & Fuel Co., 34 S.W.2d 900, 903: "Rate making is a legislative, not a judicial, function * * *; and the rate-making power here involved is vested exclusively in the city of Brownwood, with the right of appeal to and trial de novo by the railroad commission, and a further limited right of review by the district courts of Travis county (R.S. arts. 1119, 6058 and 6059)."

In the case of Texas Gas Utilities Company v. City of Uvalde, 77 S.W.2d 750, 753, decided by the San Antonio Court of Civil Appeals in 1934, the City of Uvalde brought suit in the District Court of Uvalde County to enjoin the receiver of the Texas Gas Utilities Company from charging gas rates fixed by an order of the District Court of Val Verde County and in excess of rates fixed by an ordinance of the City of Uvalde. The District Court granted the injunction, but the Court of Civil Appeals reversed the cause and dissolved the injunction, on the grounds that the District Court of Uvalde had no authority to issue the injunction. In discussing the order of the District Court of Val Verde County fixing the higher rates, which was held to be void for the want of jurisdiction, the court said: "However, when the city council refused to raise the rates, the receiver, if not satisfied, could only appeal to the State Railroad Commission, as provided for in article 6058, R.S.1925. Until this legislative remedy provided for by law had been exhausted, no court of this state has any jurisdiction of the matter, and after the legislative remedy is exhausted, article 6059 gives only the courts of Travis county jurisdiction of the matter."

In the same opinion, in outlining the procedure which should have been followed, the court uses this language: "In this state all that need be done is to follow the statutes. Article 1119 gives to cities of more than 2,000 inhabitants the legislative power of fixing gas rates to be paid by consumers. Article 6058 provides for an appeal to the Railroad Commission for a trial de novo, and this is made expressly to apply to receivers of gas companies by article 6050. When this has been done, the legislative remedy will have been exhausted and the judicial stage reached. Article 6059 limits the judicial remedy to the courts of Travis county. We consider these statutes valid, and see no reason why they should not be followed."

It is appellant's contention, however, that the City council in fixing the complained-of rates went outside of the statutory limitations which conferred the rate-making power, and has acted without any authority of law, and that such action is not merely erroneous, but absolutely null and void, and may be questioned in a court-action without resorting to, or exhausting administrative remedies. State Line Consol. School Dist. No. 6, etc., v. Farwell Independent School Dist. et al., Tex.Com.App., 1932, 48 S.W.2d 616, 617. The principle which appellant seeks to invoke, however, does not apply. The city council, in fixing the complained-of rates, merely exercised rate-making power, and rate-making power was conferred on it by Statute. Art. 1119, as amended in 1937, Vernon's Ann.Civ.St. art. 1119. What was said by the Commission in Producers' Refining Co. v. Missouri K. & T. R. Co., Tex.Com.App., 13 S.W.2d 679, of an order of the Railroad Commission which was attacked as void, applies here: "When it [The R.R.Comm.] establishes a rate, it necessarily finds that such rate is neither unreasonable nor discriminatory. The order, therefore, is not in violation of, but in exact keeping with, the requirements of the Constitution and statute. To hold as we are urged to hold * * * would be to deny that any tribunal can establish a lawful rate in any given instance as against a subsequent claim...