United Gas Corporation v. City of Monroe, 6349.

• Decision Date: 27 September 1957
• Docket Number: No. 6349.,6349.
• Citation: 154 F. Supp. 667
• Parties: UNITED GAS CORPORATION v. CITY OF MONROE, Louisiana.
• Court: U.S. District Court — Western District of Louisiana

154 F. Supp. 667

UNITED GAS CORPORATION v. CITY OF MONROE, Louisiana.

No. 6349.

United States District Court W. D. Louisiana, Monroe Division.

September 27, 1957, Nunc pro Tunc August 29, 1957.

W. O. Crain, Shreveport, La., George Gunby, Sholars, Gunby & Guthrie, H. F. Madison, Jr., Madison, Madison, Files & Shell, R. H. Oliver, Jr., Oliver & Oliver, Murray Hudson, Hudson, Potts & Bernstein, Monroe, La., C. Huffman Lewis, John M. Madison, and Vernon W. Woods, Wilkinson, Lewis, Wilkinson & Madison, Shreveport, La., for plaintiff.

Haynes L. Harkey, Jr., Hayes, Harkey and Smith, Kent Breard, McHenry, Lamkin, Snellings & Breard, Monroe, La., for defendant.

BEN C. DAWKINS, Jr., Chief Judge.

This cause having been heard on the motion of plaintiff for a preliminary injunction; service of process having been made, and due notice having been given to defendant; the Court having considered the evidence in affidavit form, together with the supporting exhibits filed by both parties in Open Court upon hearing; the Court having considered defendant's plea to the jurisdiction, its motion to dismiss, its motion for summary judgment and its answer; and also having studied the briefs of the parties, and the authorities relied on, in advance of the hearing, and having considered the extensive arguments of counsel at the hearing; being fully advised in the premises, the Court hereby makes and enters the following:

Findings of Fact

1. Plaintiff United Gas Corporation, is a corporation organized under the laws of the State of Delaware, duly qualified to do, and doing, business in the State of Louisiana, with its principal office in Shreveport, Caddo Parish, Louisiana.

2. Defendant, the City of Monroe, located in Ouachita Parish, Louisiana, is a municipal corporation created and existing under a charter granted by the Legislature of Louisiana by Act No. 47 of 1900, as amended, and subject to the provisions of Act No. 207 of 1912, as amended, providing for a commission form of government for municipalities, adopted by the City of Monroe on July 17, 1918.

3. The subject matter in controversy between plaintiff and defendant is in an amount substantially in excess of Three Thousand Dollars, exclusive of interest and costs.

4. Plaintiff is, and has been, for many years, engaged in the business of distributing and selling natural gas within the corporate limits of the defendant municipality, by authority of a franchise granted by defendant, for a term of twenty-five (25) years from April 28, 1947. This franchise contains a schedule of rates for natural gas service in the City.

5. On July 1, 1955, plaintiff filed with the Louisiana Public Service Commission a petition asking that Commission for a hearing in order to determine and fix just and reasonable rates for natural gas service rendered by plaintiff in the City of Monroe and other places. Following this application, in which defendant intervened, and in litigation conducted before the State Courts, defendant successfully contended that it, and not the Louisiana Public Service Commission, has regulatory authority over rates for natural gas service within defendant's corporate limits, all as finally determined by the Supreme Court of Louisiana in its opinion and decree dated June 10, 1957, in the case of the City of Monroe v. Louisiana Public Service Commission, La., 97 So.2d 68.

6. Thereafter, by letter dated June 21, 1957, plaintiff advised defendant of its position that the rates prescribed in the franchise were noncompensatory and confiscatory. It asked defendant for a hearing at which plaintiff would present evidence to support the increased schedule of rates it proposed.

7. In reply, by resolution of defendant's Commission Council dated July 23, 1957, adopted without notice to plaintiff and without hearing upon its application, defendant refused to grant plaintiff a rate hearing, stating that the rates contained in the franchise constituted a binding contract for the duration of the franchise, and that plaintiff could not recede from the schedule of rates set forth therein. It further advised that no useful purpose would be served by granting plaintiff a hearing, and that none would be held.

8. By its affidavits, and other documents in evidence, plaintiff has made a prima facie showing that from the distribution and sale of natural gas within defendant's corporate limits, it has suffered actual "out-of-pocket" losses during the preceding three years as follows:

                        1954            $207,654.00
                        1955            $184,940.00
                        1956            $281,521.00
                

Additionally, during this time, plaintiff's revenues contributed nothing for depreciation and amortization expense, and plaintiff realized no return upon its investment in facilities.

9. When plaintiff's total cost of rendering service within defendant's corporate limits for the year 1956 is adjusted to reflect known changes which have occurred, revenues under existing rates fail by $714,724 to return the cost of service so adjusted. On the evidence presented, there is every reason to expect that a similar loss will occur during 1957.

10. The schedule of rates set forth in plaintiff's Exhibit 12 is the same as suggested and requested by plaintiff's letter to defendant of June 21, 1957, (Exhibit 2). Plaintiff, by letter dated July 25, 1957, formally filed this schedule of rates with defendant and advised defendant that it would make said rates effective for all gas used by customers thereafter.

11. Defendant has adduced no evidence controverting the validity of plaintiff's showing as to its entitlement to rate relief; and defendant's counsel have advised the Court that they have no such evidence at this time.

Conclusions of Law

1. Since there is complete...