Wall v. City of Durham , 41 N.C. App. 649 ( 1979 )

255 S.E.2d 739 (1979) 41 N.C. App. 649

J. E. WALL, As Trustee in Bankruptcy for Roberts Construction Company, Inc., R-A Properties, and Palm Park, Inc. (successor to Hazard Cannon d/b/a Cannon Construction Company); Robinson O. Everett and Kathrine R. Everett d/b/a Holly Hills Apartments, and Holly Hills Apartments, Inc., and Poplar Apartments, Inc.
v.
CITY OF DURHAM, a Municipal Corporation.

No. 7814SC810.

Court of Appeals of North Carolina.

June 19, 1979.

Everett, Everett, Creech & Craven by Robinson O. Everett and Robert D. Holleman, Durham, for plaintiffs-appellants.

William I. Thornton, Jr., and Claude V. Jones, Durham, for defendant-appellee.

HEDRICK, Judge.

By assignments of error thirteen, sixteen, and seventeen, plaintiffs contend that the court erred in concluding that the defendant's ordinance and billing practice was not unreasonably discriminatory and was justified by a factual basis. We agree.

The authority of a municipal corporation to own, operate, and finance a public utility is granted by G.S. § 160A-312. The authority to fix and enforce rates is contained in G.S. § 160A-314(a), which provides:

A city may establish and revise from time to time schedules of rents, rates, fees, charges, and penalties for the use of or the services furnished by any public enterprise. Schedules of rents, rates, fees, charges, and penalties may vary according to classes of service, and different schedules may be adopted for services provided outside the corporate limits of the city. [Emphasis added.]

A public utility, whether publicly or privately owned, may not unreasonably discriminate in the distribution of its services or the establishment of rates. Dale v. City of Morganton, 270 N.C. 567, 155 S.E.2d 136 (1967); Town of Taylorsville v. Modern Cleaners, 34 N.C.App. 146, 237 S.E.2d 484 (1977). Numerous cases have recognized the rule that the statutory authority of a city to fix and enforce rates for public services furnished by it and to classify its customers is not a license to discriminate among customers of essentially the same character and services. In State ex rel. Utilities Commission v. Mead Corp., 238 N.C. 451, 462, 78 S.E.2d 290, 298 (1953), our Supreme Court stated: "There must be substantial differences in service or conditions to justify difference in rates. There must be no unreasonable discrimination between those receiving the same kind and degree of service." In 12 McQuillan, Municipal Corporations § 35.37b, at 485-86 (3d ed. 1970), the general rule is stated as follows:

A municipality has the right to classify consumers under reasonable classifications based upon such factors as the cost of service, the purpose for which the service or the product is received, the quantity or the amount received, the different character of the service furnished, the time of its use or any other matter which presents a substantial difference as a ground of distinction.

In the present case, it is undisputed that the "decapping" procedure employed by the defendant in computing the charges for water and sewer service furnished to the plaintiffs results in a higher charge than is applied to a similarly situated user who is not subjected to the "decapping" procedure. Thus, the effect of "decapping" is to subject the plaintiffs to a different, and greater, rate schedule than is applied to other customers of the defendant who consume an identical quantity of the same service. There are no findings of fact in this record to justify the different treatment accorded the plaintiffs by the defendant. Indeed, the only finding made by the trial judge pertaining to the cost and conditions of service was that "the delivery of water to a meter serving a number of apartment units costs the city of Durham no more than delivery of this same quantity of water to a meter serving a different user." Thus, application of the above-stated principles of law to the ordinance requiring "decapping," the "policy" adopted by the City Council on 5 April 1976, and the resultant billing procedures, compels the conclusion that the defendant unreasonably discriminates against the plaintiffs, and that the defendant's efforts to classify the plaintiffs by use of the "decapping" procedure is clearly not justified by any "factual basis." Furthermore, the unchallenged findings of fact disclose that the plaintiffs are entitled to have their charges for water and sewer service calculated on the same basis as all other customers served through a single or "master" meter.

We note that the procedure referred to in the findings of fact as "recapping" also appears, on this record, to be discriminatory since according to the findings of fact, some apartment complexes receive the benefits of "recapping," and there are no findings showing any factual basis for distinction between apartments allowed to "recap" and the plaintiffs.

By assignment of error number eighteen, plaintiffs contend the trial court erred in its conclusion that by their conduct in electing to install only one water connection and one meter to serve several buildings in an apartment complex when they could have installed separate meters for each unit, the plaintiffs are now estopped from contending that the water and sewer rate structure is unreasonably discriminatory. We think the doctrine of equitable estoppel has no application in the present case.

It is essential to an estoppel that the person asserting the estoppel must have changed his position to his detriment in reliance upon the statements or acts of the parties sought to be estopped. State Highway Commission v. Thornton, 271 N.C. 227, 156 S.E.2d 248 (1967); Webber v. Webber, 32 N.C.App. 572, 232 S.E.2d 865 (1977). The only change of position of the defendant occurred when it amended its ordinances 2394 and 2395 on 6 July 1965 and authorized common sewer and water connections for various types of multiple building developments, including apartment complexes, motels, hospitals, schools, and industrial buildings. There is no evidence whatsoever that the defendant in any way relied on any statements or acts of the plaintiffs to its detriment in changing its ordinances. Thus, the trial court's conclusion that the plaintiffs have been estopped from challenging the validity of the water and sewer charges of the defendant is erroneous.

Because of our disposition of this case, we find it unnecessary to discuss plaintiffs' remaining assignments of error.

The result is: That portion of the judgment declaring that the defendant does not unreasonably discriminate against the plaintiffs is vacated; the cause is remanded to the Superior Court for the entry of a conclusion that the defendant unreasonably discriminates against these plaintiffs in its charges for water and sewer service; for further proceedings to determine what amount, if any, each plaintiff is entitled to recover from the defendant for the alleged overpayments; and for entry of an appropriate judgment.

Vacated in part; and remanded.

MORRIS, C. J., and WEBB, J., concur.