Schenker v. City of San Antonio ( 1963 )

MURRAY, Chief Justice

(dissenting).

I do not concur in the opinion of the majority and now give my reasons for my dissent.

The trial court makes it plain in its judgment that it holds that the district court does not have jurisdiction to hear a cause between a consumer or rate-payer of a municipally owned utility, though his property is being confiscated as a result of the City Council or some other body’s fixing gas and electric rates so high as to confiscate his property.

The majority readily admit that if the council of a home rule city fixes rates so low as to conficate the property of a utility company, that such utility company, after exhausting prescribed administrative remedies, can go into court and enjoin the city from enforcing such confiscatory rate. There is no question but that rate fixing is a legislative function that can be performed in Texas, under our Constitution and laws, by the Legislature, in the first place, and by the City, where such power has been delegated to the City, but where the City fixes utility rates so low as to confiscate the property of the utility, it can go into court, not to fix rates, a legislative function, but to enjoin the enforcement of such •confiscatory rate. The majority say they are not deciding, in their opinion, whether the courts are equally open to a consumer or rate-payer, where the rate fixed by the City Council is so high as to confiscate his property. The majority have held in their opinion that appellants herein do not have a justiciable interest in the subject matter of this suit that will permit them to maintain this suit. It occurs to me that in making this decision the majority have decided the above question in the negative.

The first ground, according to the opinion of the majority, why the district court does not have jurisdiction of this suit is that administrative remedies of appellants must be exhausted before the courts will intervene. The statutes of this State, the ■charter and ordinances of the City of San .Antonio, give to a consumer or rate-payer • of the City’s utility company no administrative remedy whatever, much less an adequate one. If people who are having their ■property confiscated are to be denied a hearing in the courts, there must be prescribed, either by State statute, or, as here, by the charter or ordinances of the City, .an adequate administrative remedy, or otherwise appellants will be denied the ■ equal protection of the law and their property is taken from them without due proc- ■ ess of law.

In 1 Tex.Jur.2d, § 37, p. 676, we find the -.following:

“Conformity to the statutory requirements is essential to invest a court with authority and jurisdiction to hear and determine the issue involved by the decision, ruling, or order of an administrative agency. As a condition precedent to the right to contest the validity of an agency’s order or decision, an aggrieved person is not required, absent statutory requirement therefor, first to apply to the agency to rescind or modify the action which it has taken. Where, however, the legislature has provided a mandatory method of review by an administrative agency, under the doctrine of exhaustion of administrative remedies resort must first be had to such method before the courts will entertain jurisdiction, unless the administrative agency or commission has refused to act, or has acted illegally, arbitrarily, or beyond the scope of its authority.

“Where review is sought in a suit to set aside the agency’s action, the court acquires jurisdiction on the proper filing of the suit.” (Emphasis mine.)

In attempting to show that there was a prescribed administrative procedure to be followed by utility consumers for relief from confiscatory rates, the majority have set forth a part of Sec. 135 of the San Antonio City Charter. The quotation shows upon its face that while a right to a hearing before the City Council is extended to a utility company or a franchise holder as to whether utility rates should be increased, no right whatever is given to the consumer or rate-payer to be heard as to whether rates should be decreased. A rate hearing can only be initiated by the franchise holder by petition to the council or by the council on its own initiative, with notice to the franchise holder, but apparently great pains were taken to not give such a privilege to a consumer or rate-payer. The utility is entitled to notice but not the rate-payer, he is completely ignored by Section 135, as well as the other sections of the charter.

When we consider that the purchase and operation of the Gas and Electric Company was done without liability on the City of any taxpayer, and that all of the cost of this entire transaction was to be borne by the consumers of the utility services and products, it would seem that these payers of all obligations should have some consideration and should have some tribunal where they can be heard as a matter of right, when the City enacts rates, or permits trustees to do so, that confiscate their property. Neither the statutes nor the city charter, nor any city ordinances accord to the consumer the right to be heard, and now he finds the .courts closed to him. He must silently suffer his property to be confiscated without a hearing before any tribunal, judicial or administrative. As was said by Chief Justice Hickman, speaking for the Supreme Court, in Glen Oaks Utilities, Inc. v. City of Houston, 161 Tex. 417, 340 S.W.2d 783:

“We cannot sustain the City’s position that the court has no jurisdiction over the question of procedural due process because the ordinance on its face is regular and valid, and the court is not authorized to go behind the ordinance to investigate the facts of its passage. It is settled law that procedural due process requires that a rate-fixing body give due notice to the utility involved and grant a hearing before enacting an ordinance. * * * Justice requires that a court must have authority to go behind an ordinance which is valid on its face and inquire into the facts surrounding its enactment ; otherwise the utility would have ' a right without a remedy.”

It is true that the Court was speaking of the rights of utilities, but the principle laid down applies equally to consumers of utility products.

The majority have held that the consumer must first exhaust his administrative remedy. I ask, what administrative remedy? Where is it to be found? It has not as yet been pointed out by any one.

There are numerous cases holding that, while the courts will hear a utility company’s contention that rates are so low that its property is being confiscated, the consumer will not be heard to contend that the rates are so high as to be confiscatory of his property. The only reason given for this unjust discrimination is that a consumer is not required to buy the services and products of a utility company, and if he considers such rates too high he can simply do without such services and products. If there ever was a time when this was true, it is not true today in the large City of San Antonio of well over a half million people. To say that a person can live in one of our large metropolitan cities today and not subscribe to public utilities is to ignore reality. How could a person maintain his home or business in the City of San Antonio today without electricity, gas, telephone, water and sewerage connections ? It simply cannot be done, it is an utter impossibility. This doctrine of existing in a large city without public utilities has been repudiated in this State by our Supreme Court in City of Texarkana v. Wiggins, 151 Tex. 100, 246 S.W.2d 622.

The majority hold that appellants herein do not have a justiciable interest to assert this cause of action. In support of this contention they cite San Antonio Conservation Society v. City of San Antonio, Tex.Civ.App., 250 S.W.2d 259; Estes v. City of Granbury, Tex.Civ.App., 314 S.W.2d 154; West Texas Utilities Co. v. Smith, Tex.Civ.App., 168 S.W.2d 665; Powell v. City of Baird, Tex.Civ.App., 132 S.W.2d 464; City of Corpus Christi v. Flato, Tex.Civ.App., 83 S.W.2d 433. I do not disagree with the holdings of these cases, they are, speaking generally, suits by taxpayers, property owners, conservation societies, competing utility companies and other organizations and inhabitants of a city, to enjoin the city from entering into a certain contract, or something similar. None of those cases deal with a consumer or ratepayer who comes into court alleging that the City is permitting' the utility company to collect from him money at a rate that is confiscatory of his property. It cannot be logically said that a person who is having money wrongfully taken from him each month by a confiscatory rate has no justici-ble interest in endeavoring to put a stop to such procedure. Before he can have his money wrongfully taken away from him by a public utility he must be accorded “due process of law,” which right is accorded to him by both the federal and state constitutions. U. S. Const., Amendments 5 and 14; Texas Const. Art. 1, §§ 3, 13, 17, 19, Vernon’s Ann. St.

In 13 Words and Phrases, p. 539, we find the following definition of “due process of law”:

“ ‘Due process of law’ does not mean legislative enactment, but condemnation by judicial decree. The Legislature cannot usurp the right and the power of the courts to determine every question concerning life, liberty, or property.”

Other definitions of “due process of law,” found in the above work, are as follows:

“ ‘Due process of law’ requires notice to all interested parties and an opportunity for them to be heard. * * *

“ ‘Due process’ implies a notice and hearing but the hearing must not of necessity be in the courts, and it may be before the appropriate administrative agency. * * *

“ ‘Due process of law,’ guaranteed by Constitution, includes notice and hearing as matter of right in matters wherein one’s property rights are involved. * * *

“ ‘Due process of law as to procedure means notice and opportunity to defend in an orderly proceeding before a competent and impartial tribunal having jurisdiction of the case. * *

“ ‘Due process of law’ is a law which hears before it condemns, which proceeds upon inquiry and renders judgment only afterwards, and such due process of law is required both by Federal and State Constitutions.”

Whether or not the trial court had jurisdiction of this cause must be determined by the pleadings. No hearing on the merits was undertaken. According to the allegations, appellants are being charged by the Gas and Electric Company for its products and services at a rate that is confiscatory of their property. The City of San Antonio has contracted away its legislative right to fix utility rates and has not exercised such legislative right since it purchased the public service company in 1942. The indenture trustees now fix utility rates and they are making and collecting money from appellants at rates that are unreasonable and confiscatory, and unless they can appeal to the courts they have no legal remedy against this alleged confiscation of their property. Even if appellants’ petition were subject to general demurrer, the trial court would not be justified in dismissing this cause. Rule 90, T.R.C.P.

The majority have held that the cause was properly dismissed “Since there was no allegation that plaintiffs had complained of excessive rates to the City Council or sought to have them lowered.” If the pleadings were defective in this respect, the defect related to a matter that might have been cured by amended pleadings. No such opportunity was given appellants.

According to the allegations of the petition, appellants’ property is being confiscated by exorbitant rates fixed not by the City Council, but by the indenture trustees. No administrative procedure is provided whereby they may be heard as to their complaint. Under such circumstances the doors of the court should be open to them, so that they can be accorded due process of law. Art. 1, § 13, Vernon’s Ann.Tex. Const., provides in part as follows: •

“ * * * All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.”

I would reverse the judgment of the trial court, not only because the suit was dismissed with prejudice, but also because I feel that appellants were entitled to be heard upon the numerous allegations of their petition. In any event, they should have been given an opportunity to amend.