Dallas Power & Light Co. v. Carrington

I am unable to concur in the disposition of this appeal made by the majority of the court. The following opinion was prepared as the opinion of the court but not concurred in by my brethren. Since it contains statements of fact shown by the record that I consider material, at the expense of repetition in some other respects of what is contained in the majority opinion, I am filing same as a dissenting opinion:

On January 18, 1917, the city of Dallas enacted an ordinance granting J. F. Strickland a franchise to acquire, own, construct, maintain, use, and operate, in the city of Dallas, an electric heat and power plant and transmission and distributing system; to use the streets and highways of the city of Dallas for the purpose of transmitting and conducting electricity and supplying the same to persons, corporations, and industries both within and beyond the limits of said city. Appellant is now the owner of said franchise and is operating a light and power plant thereunder in the city of Dallas and furnishing electric current both in the city of Dallas and beyond the city limits.

Appellees are residents of Highland Park, an incorporated town in Dallas county, and adjacent to the city of Dallas. Until June 1, 1920, appellant was supplying residential consumers of electricity for lighting purposes both within and without the city of Dallas at the rate provided for in the franchise which at, and for some time prior to, said date, was 6 cents per kilowatt hour with a minimum charge of 50 cents per month. On June 1, 1920, appellant advanced the rate for this class of consumers outside the city of Dallas, including the appellees and all other users of electricity for lighting purposes in Highland Park, to a minimum of $1.50 per month and a rate of 15 cents per kilowatt hour for the first 10 kilowatts, 10 cents per kilowatt hour for the next 25 kilowatts, and 8 1/2 cents per kilowatt hour for the next 65 kilowatts. The evidence shows that this rate, when practically applied, is an average rate of approximately 10 1/2 cents per kilowatt hour.

Appellees, for themselves and all other consumers of electric current for lighting purposes in Highland Park, brought this suit to enjoin appellant from putting the new rate into effect and to restrain them from cutting off such consumers or discontinuing their service upon their failure to pay said rate or any other rate in excess of that applied and charged to residential consumers of current for lighting purposes in the city of Dallas; alleging that they are entitled to the Dallas rate under the terms and provisions of the franchise; and in the alternative, regardless of the franchise, that to charge them a higher rate than is charged to the same class of consumers within the city of Dallas would be an unjust discrimination and therefore prohibited by law.

The district judge, to whom plaintiff's bill was presented, granted a temporary injunction on October 18, 1920, and after trial and hearing on the merits by judgment of date July 28, 1921, perpetuated the injunction restraining appellant, as prayed by appellees in their petition.

Appellant has appealed from this judgment and brings the case before this court on numerous assignments of error and questions raised in motion for a new trial. In the disposition of the case it will not be necessary to discuss all of these questions in detail, and I will consider only the two points referred to above in the appellees' petition as grounds for the injunction sought.

The franchise under consideration is rather a voluminous document going into minute detail as to the respective powers and duties of the city and the grantee. For the purpose of this opinion, I quote and state the substance of some of its provisions as bearing upon the questions involved.

Section 2 of the franchise, among other things, provides:

"If the present or future corporate limits of the city shall be extended so as to include within the city limits property of the grantee which was theretofore outside of the city limits, then such property shall be subject in all respects to this ordinance."

By the terms of the franchise, a valuation of the property that the grantee obligated himself to acquire was agreed upon and fixed, for the purpose, among other things, of affording a basis for dividends or a return upon the investment for the owners of the property.

Section 25 makes provisions for adding to this valuation or property value, as it is termed in the ordinance, whenever extensions, betterments, or improvements are made and added to the plant either within or without the city of Dallas when connected with and becoming a part of the system. Appellees quote as sustaining their first contention the following excerpt from said section:

"Except as herein specifically provided, otherwise, everything in this ordinance contained relating in any way to the property and business of the grantee within the city shall equally apply to all property and business of the grantee in Dallas county without the city, to the extent that the same are operated in connection with and as a part of the general physically connected system of the grantee operated within the city."

The franchise authorizes the grantee or his assigns to pay 9 per cent. per annum to stockholders or owners of the property as a return upon their investment and requires them out of their earnings to establish certain reserve funds and maintain the same. The income of the grantee or assignee of the franchise to be derived from the operation of the plant consist, not only of receipts from users of lights for residential purposes, but also from users of electricity for all other purposes, including power, heating, and commercial lighting. Users of current other than those for residential lighting purposes pay for the same by contract based on various schedules to be approved by the city commissioners or supervisor. The rate for residence lights is fixed by the franchise beginning on a basis of 8 cents per kilowatt hour with a minimum charge of 50 cents per month. When the reserve funds above referred to, reach certain amounts, this rate is automatically lowered; and, if the reserve funds shall become depleted, the rate may be increased until the reserve funds are brought back to the required amount. The franchise requires the grantee and his assigns to furnish electric current for power and heating purposes by contract as above referred to and for commercial lighting as well as for residential lighting purposes.

I quote the following from paragraph 23 of the franchise:

"It shall be the duty of the board of commissioners and the supervisor to co-operate with the grantee and to make rules and regulations by ordinance or otherwise to bring about the greatest and most general commercially practical use of grantee's service in such way as will improve grantee's load factor and thereby tend to reduce the unit cost of grantee's service, to the end that the public welfare may be better served by promoting the industrial development of the city and that the level of grantee's rates may be reduced in the public interest."

The portion of the franchise referred to providing for rates for residential lighting service does not expressly refer to consumers outside of the city limits. No inference can be drawn from the language quoted or other portions of the franchise that would indicate an intention upon the part of the city commissioners to fix a rate for such service outside the city. The language quoted above from the twenty-fifth section of the franchise, relied upon by appellees as applying to rates outside the city limits, when construed in connection with other portions of the franchise quoted, seems to me to apply only to the question of valuation. The language of the franchise taken as a whole manifests a clear intention on the part of the city commissioners to legislate in the interest of the municipality of Dallas and its inhabitants. This, in fact, is all they had power to do. Treating this franchise as a contract between the city of Dallas and Strickland and those claiming under him, appellees are in the position of third parties, not privy to the contract but claiming rights under it. As a general rule, third persons not parties to a contract can claim no rights under it unless the contract was made especially for their benefit and can maintain no suit upon such contract unless the right to sue is expressly conferred. Taylor v. Dunn, 80 Tex. 652, 16 S.W. 732; House v. Houston Waterworks Co., 88 Tex. 238, 31 S.W. 179, 28 L.R.A. 532.

In Taylor v. Dunn, Chief Justice Stayton, passing upon an ordinance of the city of Austin granting a temporary right of way over the streets for a railroad to be used in the construction of the capitol and an indemnity bond given by Taylor, the grantee of the franchise, says:

"In construing such a contract the power of a municipality to contract, as well as the subject-matter of the contract and the purpose intended to be accomplished by it, should all be looked to, and it ought never to be inferred that a contract made by a municipal corporation was intended to inure to the benefit of an individual, further than this may be necessary for the protection of the municipality, unless its charter expressly or by necessary implication confers the power to make contracts to inure to the sole benefit of individuals, and the intent so to do clearly appears in the contract itself."

Appellees are not entitled to the benefits of the rate fixed by the franchise.

As to the question of discrimination, the trial court seems to have based his holding upon that issue upon evidence which is undisputed showing that many of the consumers of current for residential lighting purposes in Dallas reside at a greater distance from appellant's power plant than do appellees and other users of current for such purposes residing in Highland Park. There is other evidence in the case showing, without contradiction, that the rate made to residents of Dallas for lighting purposes in itself would involve a loss to appellant, but that, taking all of its receipts from all classes of business including residence lighting, power, heating, and commercial lighting, that it has been able out of its earnings to pay a dividend of 9 per cent. on the investment and create and maintain its reserve funds. It further appears that under a fair allocation of its portion of the operating expenses that the 6-cent rate does not produce sufficient income from Highland Park consumers to pay operating expenses. It further appears that the consumption of current by the inhabitants of Highland Park for any other purpose except residential lighting is negligible. The evidence also shows that the rate appellant undertook to put into effect in Highland Park on June 1, 1920, would yield sufficient income to pay something less than 9 per cent. interest upon the investment, and that the rate here complained of is the rate applied to all consumers of electric current for residential lighting purposes outside of the City of Dallas.

Vernon's Sayles' Ann.Civ.St. 1914, art. 1283f, included in chapter 21a, relating to gas, electric current, and power corporations, provides:

"It shall be unlawful for any corporation organized under this act to discriminate against any person, corporation, firm, association or place in the charge for such gas, electric current or power, or in the service rendered under similar and like circumstances."

Appellant had the right, in view of the facts disclosed by this record, to separate its customers into classes as it did, that is, one class residing in the city of Dallas and the other class outside said city, and apply a different rate to each class. Clearly, the consumers of electric current for residential lighting in Dallas are not similarly situated to those outside in view of the great amount of current consumed by industries and commercial enterprises in the city. Service furnished this class of consumers is a source of income that enables appellant to make the 6-cent rate for residential lighting to users of current in Dallas, and this is a benefit they are entitled to under the franchise. Considered from the standpoint of income received for current from all classes of customers within Dallas as a unit, and from those without, the evidence does not show discrimination, under the statute, because appellees are not similarly situated to the same class of consumers in Dallas.

A difference in the rate charged one customer or group of customers and another by a public service corporation is not necessarily an unjust or illegal discrimination. Varying conditions under which the service is rendered will justify a higher rate to one class than to another, and, unless the evidence shows a higher rate charged one class than that charged another under similar and like conditions, there is no discrimination. H. T. C. Ry. Co. v. Rust et al., 58 Tex. 98; Cock et al. v. Marshall Gas Co., 226 S.W. 464; Western Union Tel. Co. v. Call Publishing Co., 181 U.S. 92, 21 S. Ct. 561, 45 L. Ed. 769; 10 Corpus Juris, § 749, p. 473.

I conclude that the trial court erred in granting the injunction and rendering judgment perpetuating the same, and that said judgment should be reversed, the injunction dissolved, and judgment rendered for appellant.