Houston Electric Co. v. Mayor Etc., City

^* Writ of error granted, October 15. 1919. This appeal proceeds from an order entered in chambers by the judge of the Sixty-First district court refusing the Houston Electric Company's application for a temporary injunction and for a peremptory writ of mandamus. By that means the company had sought to have the mayor and city council of the city of Houston not only restrained from enforcing an ordinance of November 6, 1918, fixing street car fares upon its lines at five cents, and from interfering with it in collecting instead six-cent fares, claimed to be permissible under a prior ordinance of September 19, 1918, but also required through the writ of mandamus to exercise their judgment and discretion as manifested in this last-mentioned ordinance, and not to attempt to delegate their rate-making powers to any other agency. In other words, the objective was to have the five-cent fare enactment declared invalid and inoperative, and that prescribing six cents held to be and kept effective in place of it.

No evidence was offered, the hearing being solely upon the petition of the Electric Company and the answer of the city, both of which were verified by affidavit, the court's judgment thereon being couched in these terms:

"In Chambers. "On this February 10, 1918, came on to be heard in chambers the petition of the plaintiff for injunction and peremptory writ of mandamus, and the court having heard and considered the plaintiff's bill for injunction and mandamus, and no evidence being offered to show that the rate fixed in the ordinance of November 6, 1918, was confiscatory within the meaning of the federal Constitution, the court is of the opinion that the plaintiff should be denied all and singular the relief asked in said bill, and the application for temporary injunction and mandamus is hereby in all things refused and denied, to which judgment the plaintiff then and there in open court excepted and gave notice of appeal to the Court of Civil Appeals at Galveston.

"Henry J. Dannenbaum, Judge."

Before special consideration of the particular case presented, however, it may not be amiss to bear in mind at least two wellsettled general principles applicable to preliminary or temporary injunctions:

(1) The granting or refusal of them is a matter that rests very largely within the sound discretion of the trial court, the exercise of which will not ordinarily be interfered with upon appeal; not, indeed, unless there has been a clear abuse of power. S. O. G. Co. v. M. O. G. Co., 186 S.W. 446; 14 Ruling Case Law, p. 312, pars. 11 and 12.

In the Oil Gas Company Case cited this rule is thus stated by the Court of Civil Appeals at Dallas:

"The granting of a temporary injunction is a matter resting very largely in the sound discretion of the court, and its refusal, especially when asked for on the sworn petition of the complainant unsupported by other testimony, will not be disturbed on appeal, unless it clearly appears that such discretion has been abused."

(2) The averments of the bill by which so drastic a remedy is asked, contrary to the rule in ordinary actions, will be taken most strongly against the applicant, and must negative any reasonable inference from the facts stated that he may not be entitled to the recovery sought. Miller v. City, 204 S.W. 1174 (2); Ross v. Veltmann, 161 S.W. 1073, and cited authorities.

The sworn pleadings of the parties having thus exclusively formed the basis for the action below, under application of the two familiar rules mentioned, the sole question upon appeal must be: Did the appellant's bill, after proper appraisement of the effect of the city's answer, so clearly show it entitled to the extraordinary writs prayed for as deprived the district judge of all discretion in the matter and required the granting thereof as a matter of right?

By appropriate assignments, and through distinguished counsel, the Electric Company very ably presents in this court two main contentions:

(1) "It appears from the undisputed facts recited in plaintiffs bill that the ordinance passed on the 6th day of November, 1918, repealing the six-cent fare ordinance passed on the 19th day of September, 1918, and the further ordinance passed on November 6, 1918, re-enacting the five-cent fare ordinance, were arbitrary, unreasonable, and unjust, and, this fact being made to appear by recitations in plaintiff's bill which are undisputed, this court should have granted the temporary injunction as prayed for."

(2) "The trial court should have granted a mandamus, because the city council had fully exercised and exhausted its discretion in passing the ordinance of September 19, 1918, and it was its duty to carry out that discretion, and not delegate it to some one else. Where the thing to be done imposes a positive and absolute duty, a mandamus will lie to compel performance of that duty."

While in the condition of the record here neither of these positions is thought to be well taken, it is deemed preferable to dispose of them in an order inverse to that of their statement. The material allegations of the bill — in the view here taken upon that feature of the case — relating to the passage by the city council of the two ordinances involved, which are not specially denied under oath, and must therefore be taken as true, may be quickly stated: On September 19, 1918, the council passed the first of these ordinances, fixing fares which might be charged at six cents, in lieu of the pre-existing rate of five cents, section 3 thereof being as follows:

"The rate of fare fixed in the last two preceding sections shall become effective on and after September 30, 1918, midnight, and be lawful until January 1, 1919, and thereafter until same shall be changed by proper orders of the city council of the city of Houston, and the city, on passing this ordinance and permitting these fares, reserves the right to regulate and change such fares, either increasing or diminishing the same as future conditions may warrant, and such changes shall be made from time to time as seems fair and just to the said council after giving notice for at least ten days to the person, firm, or corporation affected by said change."

On the date of its passage the mayor and city commissioners issued a statement, saying that the ordinance had been passed for the temporary emergency relief of the company during the war, on account of the increased cost to it of labor and materials occasioned by war conditions. Thereafter, and before it became by its terms effective, pursuant to articles 7a and 7b of the 1913 amendment to the Houston City Charter of 1905, known as the initiative and referendum clauses, this ordinance was first suspended, and the question of whether it should become effective at all then submitted to a popular vote of the qualified voters of the city, a majority of whom declared against it. Thereupon, on November 6, 1918, the next day after this election, the council repealed the six-cent ordinance, and re-enacted the old one, carrying the five-cent rate. No reason, however, was recited therein for the passage of the two latter enactments, and no reference was made to any vote of the people as an inducing cause, there being merely recitations that an emergency requiring their final passage on that date existed.

Further public statements of the mayor and different members of the council from time to time between the passage of the sixcent fare ordinance on September 19th and the election held on November 5th, purporting to give the reasons of those officials for passing that ordinance, and particularly quoting the mayor as having said on the eve of the election that the city council would treat and observe its result as an instruction in the matter, were attached as exhibits to the petition.

The Electric Company's claim that, in the circumstances thus presented, it was entitled to a decree of the court declaring the six-cent fare ordinance to be still in full force and effect, and ordering through the requested writs its observance as such by the city council — notwithstanding the temporary character and the formal repeal thereof in the manner shown, not to mention the adverse vote of the people thereon — is merely tantamount to saying that the court could control the exercise by that body of its legislative function. We do not understand that to be the law. Upon the contrary, in so far as the passage of ordinances is concerned, as distinguished from the matter of their enforcement, our understanding is that it has been uniformly held that a city council, when acting upon subjects over which it has the power to legislate, is an entirely independent lawmaking body, and cannot be interfered with nor subjected to inquiry by the courts as to its motives, reasons, or purposes in enacting ordinances. 14 Ruling Case Law, p. 437, par. 139; Gray v. Lumber Co., 197 S.W. 233 (3); McQuillin on Municipal Corporations, vol. 2, p. 1527, par. 703 et seq.; City of Dallas v. Railway, 105 Tex. 337, 148 S.W. 292.

By its express terms this six-cent fare ordinance was for emergency purposes and only to remain in effect until January 1, 1919, or until changed by the city council. That having been done on November 6, 1918, before the filing of this suit, the resulting situation was the same as if it had never been passed by the council, and, under the authorities last cited the court wan without power to enter the legislative domain exclusively occupied by the city's lawmaking body, and compel the re-enactment of a measure it had just repealed.

This conclusion eliminates all issues raised as to the validity and effect of the referendum election, or as to whether it may have induced or contributed to the repealing act of November 6th, and obviates any necessity for determining whether the city council could have lawfully delegated its rate-making power to the qualified voters of the city at large.

If, then, the city council was in the proper exercise of its legislative prerogative in repealing the ordinance thus temporarily and provisionally permitting the increased rate and in re-enacting that carrying the lower one, should the court nevertheless have enjoined, pending a full hearing upon all the facts, the enforcement of the five-cent rate, merely upon the company's claim, as embodied alone in its sworn application, that such a rate was unreasonable, unjust and not sufficient to enable it to pay operating expenses, keep up its property, and pay a fair return upon its investment?

This presents a question not without its difficulties. The learned trial judge, as the terms of his above-quoted order disclose, gave as his reason for denying the relief asked for that appellant had presented no evidence showing the five-cent rate to be confiscatory within the meaning of the federal Constitution. Even if it be conceded, as we think must be done, that refusal of the injunction asked could not properly be grounded upon that consideration alone, the judgment would not on that account necessarily be wrong, but might, and a majority of the court think did, present an instance of an insufficient reason being given for a correct decision. Texas B. Co. v. Henry, 197 S.W. 227 (10), 4 C.J. par. 2557; Calvin v. Neel, 191 S.W. 791.

In other words, if the decree entered was a permissible one under the verified pleadings of the parties, and did not constitute a clear abuse of a rather far-reaching discretion, its validity is not affected, nor will it be reversed upon appeal, merely because the trial court based his decision upon an erroneous ground. Corpus Juris, vol. 4, par. 2557, footnotes 92 and 97 and collated authorities.

As already indicated, it is not thought to have been incumbent upon the Electric Company to show the five-cent rate to be confiscatory within the meaning of the federal Constitution, but that it would have been entitled to restrain its enforcement, had it actually shown that rate to be unreasonable, unjust, and insufficient to maintain and pay a fair return upon the value of the property. As we understand the authorities, such is now the accepted rule. Dillon on Municipal Corporations, vol. 1, §§ 589, 591; City of Austin v. Cemetery Ass'n, 87 Tex. 838, 28 S.W. 528, 47 Am. St. Rep. 114; Railway v. City of Dallas, 98 Tex. 417, 84 S.W. 648, 70 L.R.A. 850; City of Brenham v. Seelhorst, 153 S.W. 348; Royal Indemnity Co. v. Schwartz, 172 S.W. 583.

Did appellant's bill declare upon such a plain, clear, and independent case of that character as left the trial court, in the exercise of a sound judicial discretion, after giving due weight to the answer of the appellees, no alternative than to grant it? We think not, mainly upon these considerations: From preamble to invocation the bill may be finely combed without discovery of a single direct, unequivocal, and independent general averment, even that the five-cent rate was at that time, December 27, 1918, unreasonable, and not sufficient to enable the company to pay operating expenses, keep up its property, and have a fair return upon its investment; much further is it from containing a full, clear, and plain statement of any specific and then existing facts claimed to show such a result to be then flowing from operation under that rate as an actual consequence. The nearest approach to such an averment is found in paragraph 19, reading as follows:

"The plaintiff further alleges that the ordinance passed by the city council of the city of Houston on November 5, 1918, repealing the six-cent fare ordinance and copied in paragraph eleven thereof, and the ordinance passed by the city council on the same date and copied in paragraph twelve hereof, are part and parcel of the same transaction, and grew out of, and are inseparately connected with, the prior ordinance of September 19, copied in paragraph eight hereof; that it conclusively appears from the face of these proceedings and from the recitations in these ordinances that both of the ordinances passed and enacted on November 6th are unreasonable and arbitrary and wrong, and that they deprive this plaintiff of a common right, to wit, the right to earn a sufficient sum of money to pay operating expenses and keep up its property and to have a fair return upon its investment."

It thus appears that the dominating allegation and idea throughout the entire petition is that the acts repealing the six-cent rate and reinstating the old five-cent one are shown to be unreasonable by the recitations of the six-cent fare ordinance itself, of which they are said to be in reality part and parcel, and not by reason of any present, independent, and outstanding facts; indeed, this is necessarily the effect of the quoted averment, because, as previously indicated, neither of these two acts of November 6th contained any reference to the passage of the one of September 19th fixing the fare at six cents, or the statement of any other matter which could possibly make either unreasonable upon its face, both merely reciting that an emergency demanded their immediate passage, while that last mentioned, the one of September 19th, did contain, among similar ones, the statement that "the said company is not receiving from the present rate of fares sufficient return to pay its operating expenses and maintain its property in an efficient condition."

So that the net purport of this pleading is an assertion that appellant was on February 10, 1919, the date of the hearing, entitled to restrain the enforcement of a regularly enacted and in itself unobjectionable public ordinance of the city of Houston of November 6, 1918, fixing street car fares at five cents, as being unreasonable, solely because a provisional measure of September 19, 1918, which never became effective by reason of its subsequent repeal, recited in its preamble that the Electric Company was at that time not receiving from the rate then prevailing enough to pay operating expenses and keep up its property.

The only other parts of the bill cited in the arguments in this court as presenting allegations of unreasonableness are paragraphs 6 and 7 and that portion of 20 reading as follows:

"The plaintiff avers that there was no change in the condition of affairs discussed in its application of September 4th, set out in the 7th paragraph hereof, between that date and the 6th of November, 1918; that all the unfavorable and adverse conditions surrounding the operation of its properties with reference to the price of labor and material obtained on the last date as they did on September 4th; that there has been no change of these conditions since that time; that the temporary cessation of hostilities and the approach of peace has not bettered any of these conditions, or reduced any of these prices, or in any way reduced operating expenses for the plaintiff company."

But here again the averment proves to be, not a direct and plain statement of any then subsisting facts rendering the five-cent fare ordinance of November 6th unreasonable when standing alone, but merely links in a narrative chain of allegations constituting in final substance a charge that it was shown to be so upon the face of the group of ordinances of which it was said to be a part and parcel; that is likewise necessarily the boiled down effect of this part of the petition also, because, when preceding paragraph 7 is looked to, to determine what was there set out about "the condition of affairs discussed in its application of September 4th," it is found to contain a mere recitation that the city authorities, following the filing of its application for increased rates of June 1, 1918, had a full inquiry into the facts therein stated and into its affairs made, and while that application was still pending undisposed of, the company addressed a further petition to the city council in which certain statements, copying them at length, were contained. That is all; nowhere does "a plain and intelligent statement," to use the language of our statute, appear that any particular facts contributing to the conditions it thus directly avers it discussed in the applications to the city council of June 1 and September 4, 1918, were at that very time still existing, and that these specific and then prevailing things were such as would render enforcement of the five-cent rate an unreasonable invasion of appellant's common rights.

The same thing may be said of paragraph 6, the first recitation of which is this:

"That because of the advances in wages and increase in prices and other unfavorable operating conditions which beset the company, it applied to the city of Houston on June 1, 1918, for an increase in fares of from five to six cents for adult passengers, and to three cents for half fares, filing with the city the following formal application for increase in fares."

It then concludes with setting out a full copy of the statement referred to of date June 1, 1918, purporting to show a deficit in the operations for 1918 of $131,000, without further averment of any kind.

It may have been in the mind of the pleader to charge that all the detailed and statistical conditions "discussed" in the company's application to the city council of June 1 and September 4, 1918, respectively, obtained in unchanged measure and form on December 27, 1918, when the bill was filed, and on February 10, 1919, when it was presented to the court, and that the indulgence of every fair inference and reasonable intendment in its favor would give it that effect; but, under the rules of pleading applying in injunction suits, that may not be done.

Aside, however, from the mere form of its pleading here, and looking to the grounds on which the company thus in June and September of 1918 asked the privilege of increasing the rates of fare, it is disclosed that the only causes assigned for its inability to meet operating expenses were:

(1) That for the years 1914 to 1918, inclusive, the operation of "jitneys" in competition with it reduced its earnings in certain specified sums for each year.

(2) That since the beginning of the World War the cost of materials and labor used by it had continuously and rapidly increased, and that the added amounts paid its employés in wages since January 1, 1915, aggregated $363,876 per annum.

There is no specification as to the amounts or proportions by which the cost of material had increased, while, as to the advances in wages of employés, it is positively averred in paragraph 8 of the bill that these were granted solely because of the passage of the sixcent fare ordinance, and neither could nor would have been accorded but for that action; but it is nowhere alleged either that the properties could not be operated without payment of such increases, or that they might not have been reduced following repeal of the ordinance.

To meet the case presented, as thus in substance outlined, the city, after demurrers, special exceptions, and a general denial upon information and belief that the aggregate value of the company's properties was as alleged, interposed the following special answer, verified by the mayor's affidavit:

"V. Further answering, these defendants deny the allegations in paragraph 20 of plaintiff's bill, that there has been no change in conditions of affairs discussed in said bill and affecting the cost of operating the said street railway since September 4, 1918, and says that the fact is that the said ordinance of date September 19, 1918, was passed for the purpose of granting temporary relief to the plaintiff on account of the temporary conditions brought about by war that was then in progress; that since said date the armistice has been signed and hostilities have ceased, and some, if not all, of the material necessary for the operation of said street railways have declined in price; and these defendants have reason to believe that the conditions will be much more favorable in the near future, and that the purposes which moved and impelled the council to pass the said ordinance of September 19, 1918, have now ceased to exist.

"VI. Further answering, these defendants say that it is a fact, as appears from plaintiff's bill, that its difficulty in realizing sufficient earnings was brought about and occasioned by what is known as the jitney competition that began in the latter part of the year 1914, and continued during the years 1915, 1916, 1917, and 1918, but that since the year 1915 such competition has greatly decreased, until at this date it amounts to but very little, and the earnings of the company have again reached its highest point, or practically the highest point, in its existence; and with the increased earnings brought about by the elimination of such jitney competition, and the probability of falling prices due to the cessation of hostilities and the termination of the war, the said plaintiff should and could be able to earn sufficient to pay its fixed charges, set aside a reasonable replacement fund, and pay a reasonable net earning upon the amount invested."

Even if it were conceded, as appellant insists must be done, but in which position we are unable to concur, that as a special denial under oath this answer is insufficient to "swear away the equities of the bill," under the rule announced in McAmis v. Railway Co., 184 S.W. 332, and authorities there cited, still it did state facts, we think, clearly bringing it within this further rule quoted by the court in that opinion.

"On motion for an injunction made on bill and answer, statements made under oath in the answer, where responsive to the bill, will be taken as true, and, if in such answer under oath the facts constituting the claim of the complainant for the interposition of the court are controverted by defendant, the court will not generally interfere, but will deny the injunction." 22 Cyc. 945, 946.

In other words, if at the time of trial, February 10, 1919, the war had ended, most of the material necessary for the operation of the street railway had declined, the conditions which impelled the council to grant the temporary relief of September 19, 1918, had ceased to exist, and the "jitney" menace had then become so nearly obliterated that the earnings of the company had again reached practically the highest point in its existence, a state of things was interposed which required something more than the mere ipse dixit of the applicant therefor to entitle it to the far-reaching writ sought; to say the least, it is thought a refusal below, under such conditions, would not constitute a plain and clear abuse of the wide discretion so wisely vested in the trial court.

This court, therefore, must decline to interfere.

The judgment has been affirmed, with PLEASANTS, C.J., dissenting.

Affirmed.