Zepp v. Mayor & Council of City of Athens

• Decision Date: 18 February 1986
• Docket Number: No. 42848,42848
• Citation: 339 S.E.2d 576,255 Ga. 449
• Court: Georgia Supreme Court
• Parties: ZEPP et al. v. The MAYOR & COUNCIL OF the CITY OF ATHENS.

Page 576

339 S.E.2d 576

255 Ga. 449

ZEPP et al. v. The MAYOR & COUNCIL OF the CITY OF ATHENS.

No. 42848.

Supreme Court of Georgia.

Feb. 18, 1986.

Sidney L. Moore, Jr., Decatur, for Richard G. Zepp, et al.

Dennis Galis, Athens, Robert Langstaff, Albany, for the Mayor and Council of the City of Athens, Ga.

MARSHALL, Presiding Justice.

In this case, plaintiffs are purchasers of water from the City of Athens' water system through meters located within Clarke County but outside the Athens city limits. They filed this complaint in which they aver that the rates charged them for water are 2.25 times the rates charged persons who purchase water inside the city limits. They seek a declaratory judgment that the city's water ordinance is unconstitutional in that it deprives the plaintiffs of property without due process of law. They also argue that the water-service agreement between them and the city is an open-price term contract which should be set aside under the UCC, OCGA § 11-2-305, because the city has not fixed the price in good faith. In addition, the plaintiffs argue that their agreement with the city violates the unconscionability provision of the UCC. OCGA § 11-2-302. The superior court converted defendants' motion to dismiss for failure to state a claim for relief into a motion for summary judgment, which was granted. The plaintiffs appeal, complaining of the superior court's rulings on the merits of their complaint and also complaining of the court's conversion of the motion to dismiss into a motion for summary judgment.

1. (a) In City of Moultrie v. Burgess, 212 Ga. 22, 90 S.E.2d 1 (1955), plaintiffs were nonresidents of the City of Moultrie who purchased water from a municipal water works system. In Burgess, plaintiffs were complaining that the city, in the operation of its water system outside its corporate limits, was a public utility which could not make any greater charge for its water service than that which would constitute a fair and reasonable return on the amount it had invested therein. Plaintiffs also argued that they were charged much higher rates than city residents and that such discriminatory charges for water service were unconstitutional in that plaintiffs were thereby denied equal protection of the law.

This court disagreed. In Division 1 of the Burgess opinion, it was held that, " '[a] municipal corporation does not become in any sense a public utility by reason of the fact that it is empowered to operate and does operate an electric-light and water plant.' Ga. Public Service Com. v. City of Albany, 180 Ga. 355(2) (179 SE 369) [ (1935) ]." 212 Ga. at p. 23, 90 S.E.2d 1. In Division 3, it was held, "In Barr v. City Council of Augusta, 206 Ga. 753 (58 SE2d 823) [ (1950) ], it was held: 'A municipal corporation may not compel any person outside its territorial limits to accept water service which it undertakes to furnish, nor may the municipal authorities be compelled to render such service. A municipal corporation may classify rates to be charged in outlying territories, and upon failure of customers to pay such charges, the municipal corporation may discontinue its service.' See, in this connection, Collier v. City of Atlanta, 178 Ga. 575 (173 SE 853) [ (1934) ]; Messenheimer v. Windt [211 Ga. 575 (87 SE2d 402) (1955) ]. In City of Phoenix v. Kasun, 54 Ariz. 470 (97 Pac.2d 210, 127 ALR 84) [ (1939) ], which quotes at length from Collier v. Atlanta, supra, and which deals with water customers of the city residing outside of its corporate limits, it was said that the courts may determine whether or not the terms, including rates, on which one obtains service from a city are reasonable if the service is based upon a legal right, regardless of contract; but if his right to receive service is based solely on a voluntary contract with the city, that contract is subject to review by the courts only in the same manner as any other private contract, and it is not for them to determine whether its provisions are arbitrary, unreasonable, or discriminatory." Id. at p. 24, 90 S.E.2d 1.

(b) In the landmark case of Collier v. City of Atlanta, supra, the court specifically held that the classification of water rates, under which higher charges are imposed on nonresidents of the city than are imposed on city residents, does not violate either the due process or equal-protection clauses.

(c) In Messenheimer v. Windt, supra, the City of Macon was supplying water to persons residing outside the city limits. Certain nonresidents brought suit, seeking to enjoin municipal ordinances and resolutions fixing higher water rates for consumers residing outside the city than for city residents. Arguing that they were being denied equal protection of the law and being deprived of property without due process of law, the plaintiffs contended that the city was appropriating revenues from the sale of water for purposes other than the cost of maintaining and operating the water-works system; that the effect of this was to avoid an increase in ad valorem taxation of property within the city limits; and that this was, in effect, an indirect tax upon nonresident water users. Under the holdings in...