Glen Oaks Utilities, Inc. v. City of Houston

340 S.W.2d 783, 161 Tex. 417, 4 Tex. Sup. Ct. J. 128, 1961 Tex. LEXIS 589
CourtTexas Supreme Court
DecidedNovember 23, 1961
DocketNo. A-7875
StatusPublished
Cited by33 cases

This text of 340 S.W.2d 783 (Glen Oaks Utilities, Inc. v. City of Houston) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Glen Oaks Utilities, Inc. v. City of Houston, 340 S.W.2d 783, 161 Tex. 417, 4 Tex. Sup. Ct. J. 128, 1961 Tex. LEXIS 589 (Tex. 1961).

Opinion

Mr. Chief Justice Hickman

delivered the opinion of the Court.

This action was instituted by Glen Oaks Utilities, Inc., and Greenfield Utilities Corporation, petitioners, against the City of Houston, respondent, for an injunction to prevent the enforcement of an ordinance fixing rates to be charged by them for water and sewer service in the city. The City filed a plea to the jurisdiction of the district court to entertain the suit, which was sustained and the case dismissed. The Court of Civil Appeals affirmed the trial court’s judgment of dismissal. 334 S.W. 2d 469.

The plea to the jurisdiction was based upon two grounds:

1. Since the ordinance is regular and valid on its face the court had no jurisdiction to inquire into the facts upon which it was based.

2. The petitioners had not exhausted their administrative remedies. The trial court filed no conclusions of law, and it cannot be determined upon which of these grounds it based its ruling. The Court of Civil Appeals affirmed on the ground that, since Section 3 of the ordinance provided that a party dissatisfied with the rate set could apply for a new rate hearing before the City Council, the plaintif had not exhausted their administrative remedies.

[419]*419 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. Interstate Commerce Commission v. Louisville & Nashville Railroad, 227 U.S. 88, 33 Sup. Ct. 185, 57 L. Ed. 431; Ohio Bell Telephone Co. v. Public Utilities Commission of Ohio, 301 U.S. 292, 57 Sup. Ct. 724, 81 L. Ed. 1093; Highway Transportation Co. v. Southwestern Greyhound Lines, Inc., 124 S.W. 2d 433, er. ref. 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 the further position of the City that the ordinance is presumed valid as a matter of law and that the court has no jurisdiction to consider the question of its validity at a hearing on temporary injunction. We cannot sustain that contention. The law has been settled in this State against it. General Telephone Company of the Southwest v. Wellington, 156 Texas 238, 294 S.W. 2d 385; City of Houston v. Southwestern Bell Telephone Co., 263 S.W. 2d 169, er. ref. A court may exercise its equity powers to enjoin the enforcement of a rate-fixing ordinance which is attacked because the rates set are confiscatory, and may issue a temporary injunction pending final determination of the validity of the ordinance. The court does not actually decide the validity of the ordinance at the hearing on temporary injunction, but decides only whether it is probable that the plaintiff may succeed in his attack on the ordinance at the final disposition of the case. If it so appears, the temporary injunction may properly be issued.

The second ground of the plea to the jurisdiction was that petitioners had not exhausted their administrative remedies. That ground is based on the fact that Section 3 of the ordinance provides, in substance, that if either company is dissatisfied with the rates as established, the City Council upon application will, as soon as practicable, set a new rate hearing for the purpose of adjusting the rates therein set or, in the alternative, for the purpose of establishing new rates. It is the position of the City that since it has provided a means for obtaining a new hearing on the rates, petitioners must exhaust that remedy before being entitled to apply to the courts for relief. That [420]*420ground was sustained by the Court of Civil Appeals, and upon it the trial court’s judgment of dismissal was affirmed. It is not questioned that administrative remedies must be exhausted before the courts will intervene to give relief. Generally the plaintiff has not actually suffered any injury until the administrative processes have been completed and the ruling complained of has been put into effect. In the present case the ordinance is to go into effect immediately. No provision is made for a stay of the ordinance pending the outcome of the new hearing which the utilities are authorized to request. It follows that if the facts developed on the hearing show that the ordinance is void, and the utility companies are sustaining an immediate injury by its enforcement, the courts will not require them to continue to suffer the injury until the City has completed its second hearing on the subject. An administrative body cannot, by reserving for itself the power to change a ruling, deprive the courts of jurisdiction to the detriment of the parties injured by the ruling. Railroad Commission v. Houston Chamber of Commerce, 124 Texas 375, 78 S.W. 2d 591; Southern Surety Co. v. Hendley, 226 S.W. 454, er. ref. Since the ordinance in question went into effect immediately upon its enactment, petitioners had the immediate right to turn to the courts for relief.

We turn next to an examination of the plaintiffs’ petition. The court would not remand a case for trial on the ground that the trial court erred in holding that it had no jurisdiction, if the petition itself shows on its face that there are no facts which would entitle the petitioners to relief. The City argiues that that is the case in the instant suit. We have concluded, however, that the petition as a whole does set out facts which, if proved, would entitle the plaintiffs to some relief.

The petition may be briefly summarized as follows:

It alleges that the plaintiffs are utility companies serving an area of Houston which was annexed on January 1, 1957; that thereafter in an action in the district court a temporarly injunction was granted the City restraining plaintiffs from increasing utility rates charged by them, conditioned on the City’s commencing a rate hearing within thirty days from the date of a request by the companies. On August 14, 1957, a rate hearing was commenced and was continued until August 29, 1957. After that hearing- no ordinance was enacted to fix rates, and the City and the utility companies began negotiations towards the purchase of the companies’ water and sewer systems by the City. These negotiations continued through 1958 [421]*421without any agreement being reached. On April 22, 1959, plaintiffs submitted a written offer of a sales price, the offer to remain open for thirty days. The City made no response to this offer.

Beginning in May, 1959, and on several dates thereafter, plaintiffs requested a resumption of the rate hearing so that up-to-date information could be presented and the hearing concluded. The City never held any further hearing, but on July 15, 1959, enacted the ordinance here attacked. It was alleged that the evidence adduced at the 1957 hearing was no longer current and could not be a proper basis for a rate ordinance hearing, inasmuch as there had been many additions to plaintiffs’ plants since the hearing.

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Bluebook (online)
340 S.W.2d 783, 161 Tex. 417, 4 Tex. Sup. Ct. J. 128, 1961 Tex. LEXIS 589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/glen-oaks-utilities-inc-v-city-of-houston-tex-1961.