Texas Power & Light Co. v. City of Garland

• Decision Date: 27 March 1968
• Docket Number: No. A--11680,A--11680
• Citation: 431 S.W.2d 511
• Court: Texas Supreme Court
• Parties: TEXAS POWER & LIGHT COMPANY, Petitioner, v. CITY OF GARLAND et al., Respondents.

Page 511

431 S.W.2d 511

TEXAS POWER & LIGHT COMPANY, Petitioner, v. CITY OF GARLAND et al., Respondents.

No. A--11680.

Supreme Court of Texas.

March 27, 1968.

Rehearing Denied July 24, 1968.

Burford, Ryburn & Ford, Robert E. Burns, H. P. Kucera, Dallas, for petitioner.

Cary Young, Garland, McGinnis, Lochridge, Kilgore, Hunter & Wilson, James W. Wilson, Austin, for respondents.

SMITH, Justice.

Texas Power & Light Company sued the City of Garland a home rule city, to enjoin the City from requiring the Company to obtain a permit before it extended its electrical line to a new customer and from interfering with the Company's franchise rights. The Company also sought a declaratory judgment that an ordinance stating reason for the City's denial of a permit is an unconstitutional impairment of its franchise. The City answered and sought a declaration that the ordinance is a valid exercise of the powers reserved to a City by Article 1, § 17 of the Texas Constitution, Vernon's Ann.St.; the ordinance was a lawful exercise of its police powers and the ordinance was impliedly incorporated into the franchise as a part of the Company's franchise with the City. The trial court without a jury, sustained the Company in its contentions and permanently enjoined the City from requiring a permit as a condition precedent to the extension of its line to the new customer. The Company then constructed its line. The Court of civil appeals reversed the trial court. 405 S.W.2d 380. We reverse the judgment of the intermediate court and affirm the judgment of the trial court.

On August 2, 1915, City granted the Company a franchise extending to August 1, 1965. The Company does not contend that its franchise was an exclusive one. On March 28, 1949, the City enacted an ordinance requiring the Company to obtain a permit before extending any of its services. The 1949 ordinance authorizes the denial of a permit for any one of thirteen reasons. On August 4, 1964, the City by ordinance, extended the term of the original franchise from August 1, 1965, to August 1, 1990.

The City, some time after it granted the 1915 franchise, installed its own electric plant and it now provides about eighty-five per cent of the electrical service to the inhabitants of the City. In 1965 the firm of Chiles & Stockton planned to build a 118-unit apartment complex on the south side of Walnut Street in Garland. It applied to the Company for service because it preferred the Company's service to that of the City. The Company then applied to the City for a permit to extend its line 1500 feet to and across Chiles & Stockton's property. The City Council denied the Company's application. The only reason given for the denial is found in the City Manager's recommendation to the City Council that 'the City of Gerland has always intended to serve this area and due to the fact that Texas Power & Light Company's nearest source would require the construction of a new line of approximately 1,500 feet.' Our decision requires an examination of the three relevant documents:

1915 Franchise

'Section 1: That there is hereby granted to Texas Power and Light Company, its successors and assigns, (herein called the Grantee) the right, privilege and franchise until August 1st, A.D.1965 to construct, maintain and operate in the present and future streets, alleys and public places of the City of Garland, and its successors, electric light and power lines with all of the necessary or desirable appurtenances, (including underground conduits, poles, towers, wires, transmission lines and telegraph and telephone wires for its own use), for the purpose of supplying electricity to the said city, the inhabitants thereof and persons and corporations beyond the limits thereof, for light, heat, power and other purposes.

'Section 2: Poles or towers shall be so erected as to interfere as little as possible with traffic over streets and alleys. The location of all poles and towers or conduits shall be fixed under the supervision of the street and alley committee of the City Council or the successors to the duties of that committee, but not so as to unreasonably interfere with the proper operation of the said lines.

'Section 3: The service furnished hereunder to said City and its inhabitants shall be first class in all respects, considering all circumstances, and shall be subject to such reasonable rules and regulations as the grantee may make from time to time. The Grantee may require reasonable security for the payment of its bills. Where meters are used they shall be furnished and maintained by the Grantee, without rental or other charge.

'Section 4: The Grantee shall hold the City harmless for all expense or liability for any act or neglect of the Grantee hereunder.

'Section 5: The Grantee shall file its written acceptance of this franchise within thirty days after its passage and approval.'

Section 10 of the 1949 Ordinance

'The permit provided for herein may be denied in the discretion of the Governing Body if any of the electrical facilities, appurtenances, apparatus, poles, wires, transformers, cross arms used to conduct, transmit or generate electrical power, energy, or current, or any one of them whether in combination or singly constitutes:

'(a) a nuisance, a hazard or is likely to become such; or

'(b) results in duplication of services in an area, addition or portion of the City of Garland, with electric facilities installed, contemplated or planned as extensions of the City's Municipal Electrical Systems; or

'(c) an interference with the orderly, economic, prudent and useful extension of the electrical facilities, equipment, transmission lines and generating facilities of the municipally owned electrical power plant and distributing equipment, or likely to become such; or

'(d) a denial or a likely interference with electrical services requested to be furnished by the municipally owned electrical power plant and facilities, or an expressed preference for such municipally owned electrical service; or

'(e) an unnecessary extension of the transmission facilities; or

'(f) an extension of electrical services resulting or likely to result in a loss of domestic and commercial customers, reduced income from investment by the City of Garland and its municipally owned electric plant and equipment; or

'(g) is likely to cause any reduction or earning power or capacity or reduction of net income to the City of Garland in the operation of its municipally owned electric plant; or

'(h) a direct or indirect impairment of any outstanding City of Garland revenue or general obligation bonds, or is likely to result in a reduction of net income available to retire revenue bonds of the City of Garland, and those bonds to be liquidated out of electric plant operations; or

'(i) an interference with any governmental or proprietary function of the City of Garland; or

'(j) a direct or indirect condition or situation that might influence the granting, extension, regranting or renewal of any franchise; or

'(k) unnecessary above ground transmission facilities; or

'(l) unsightly, unusual and unnecessary above ground transmission facilities depreciating or likely to depreciate the value of adjoining private and public property; or

'(m) a possible basis or claim to be a vested right in property or to a contract upon the expiration of a franchise.

'A determination by the Governing Body that any one of the foregoing reasons exists shall be sufficient basis for denial of the permit.'

1964 Ordinance Extending 1915 Franchise

'Section 1. That the electric light, heat and power franchise heretofore granted to the Texas Power & Light Company by ordinance adopted by the City Council of the City of Garland, Texas, on August 2, 1915, be extended for a period of twenty-five (25) years from and after the expiration date named therein so that the term of such franchise will extend to the 1st day of August, 1990.

'Section 2. The grantee in such franchise, to-wit Texas Power & Light Company, shall file its written acceptance of this extension of said franchise within sixth (60) days after the passage and approval of this ordinance.'

The City's basic contention is that Article 1, § 17, of the Texas Constitution reserves in the City the power to prohibit future, expansion of the Company's facilities and to do so unilaterally by an amendment or partial revocation of the franchise which it granted and the Company accepted. It relies upon Mayor, etc. of City of Houston v. Houston City St. Ry. Co., 83 Tex. 548, 19 S.W. 127 (1892) which discussed the constitutional reservation of powers. The Company, however, relies upon the direct holding of the same case and argues that Article 1, § 19 of the Constitution must be construed with § 17. The two provisions of the Bill of Rights are:

'Sec. 17. No person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person; and, when taken, except for the use of the State, such compensation shall be first made, or secured by a deposit of money; And no irrevocable or uncontrollable grant of special privileges or immunities, shall be made; but all privileges and franchises granted by the Legislature, or created under its authority shall be subject to the control thereof.' (Emphasis added.)

'Sec. 19. No citizen of this State shall be deprived of life, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due course of the law of the land.'

The franchise in City of Houston, as is the case with that granted by City of Garland, was not exclusive. In both cases the municipality granted a franchise for a term of years for the use of all streets. In City of Houston the franchise was to a street railway company to operate 'over any and all streets of the City of Houston.' In this case the franchise granted 'the right, privilege and franchise * * * to construct, maintain and...