United Gas Corporation v. City of Monroe

109 So. 2d 433, 236 La. 825, 1958 La. LEXIS 1325
CourtSupreme Court of Louisiana
DecidedDecember 15, 1958
Docket44138
StatusPublished
Cited by4 cases

This text of 109 So. 2d 433 (United Gas Corporation v. City of Monroe) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Gas Corporation v. City of Monroe, 109 So. 2d 433, 236 La. 825, 1958 La. LEXIS 1325 (La. 1958).

Opinion

FOURNET, Chief Justice.

The plaintiff, United Gas Corporation, a Delaware corporation authorized to do business in Louisiana and engaged in distribuí *828 ing and selling natural gas within the corporate limits of the City of Monroe pursuant to a franchise granted by that City for a term of twenty-five years from April 28, 1947, instituted' this suit on May 19, 1958, to enjoin the defendant City from enforcing the schedule of rates for the sale of gas contained in the franchise on the ground that the rates were non-compensatory and confiscatory and also from interfering with increased gas rates put into effect by the plaintiff. From a judgment of the District Court making absolute the rule for a preliminary injunction, and restraining and enjoining the defendant, its officers and agents from maintaining and enforcing the rates contained in the franchise as well as from prohibiting or in any way interfering with plaintiff in the assessment and collection of rates for natural gas service as set forth in a schedule attached to the petition “until other legal rates are established,” the defendant has appealed.' Certain public bodies (the Ouachita Parish School Board, the Monroe City School Board, and the Ouachita Parish Police Jury) have also appealed from the dismissal of their intervention by which they sought to have continued in effect the special franchise rates for gas sold to schools and certain public buildings.

There is no dispute concerning the facts, which are that for a period of years beginning in 191.6 under franchise contracts which expired by their terms in 1946, the plaintiff had been supplying gas to the defendant City and its people; in anticipation of such expiration the Commission Council gave public notice inviting proposals for furnishing of natural gas to the City and only one bid was received, that of the plaintiff; the Commission Council (by Resolution dated June 14, 1946) stated that “for a number of reasons” the proposal was unsatisfactory and that the members were unable to recommend its acceptance and adoption, whereupon negotiations were begun between the City and plaintiff with the result that a franchise was drawn which was mutually acceptable. This was adopted by the Commission Council as a delayed ordinance and laid over until the proposition had been submitted to the voters at a special election on April 22, 1947, called pursuant to R.S. 33:552, 1 when it was’approved; the franchise, Ordinance No. 2858, was then formally adopted by the Council on April 28, 1947, subject to definitive written acceptance by the plain *830 tiff, which was executed by letter dated May 12, 1947. A schedule of fixed rates for gas furnished under the terms of the agreement (with no provision for review, regulation or revision) is set out in detail in Section 4 of the Ordinance 2 — there having been eliminated from Section 4 of the rejected franchise a specific provision for rate regulation and revision from time to time by the Louisiana Public Service Commission. Service under the new franchise was continued for some eight years without incident.

On July 1, 1955, the plaintiff filed with the Louisiana Public Service Commission a petition requesting that the Commission determine and fix just and reasonable rates for Monroe and certain other places in the surrounding area where natural gas was being furnished by United Gas Corporation, but following litigation the Commission was held by this Court to be without jurisdiction to fix rates within the City of Monroe; 3 the plaintiff then wrote, on June 21, 1957, to the Mayor and Commission Council of the City, and making reference to this Court’s ruling of June 10, 1957, it advised that the rates fixed by the franchise were confiscatory and that it desired an immediate hearing in order to present evidence to prove the need of increased rates; 4 but by Resolution of July 23rd the Commission Council refused the hearing on the ground that no useful purpose would be served by such action since the rates prescribed in the Ordinance *832 contract were effective for the term of the agreement. Upon receipt of a certified copy of that Resolution the plaintiff formally filed with the said authorities “the new rate schedules for all gas hereafter used by its consumers in the City of Monroe,” and on the same day, July 25, 1957, by petition filed in the Federal district court, prayed for injunctive relief from enforcement of the rates fixed in the franchise or interference with the imposition of higher rates. That effort in its final outcome, however, was likewise unsuccessful, 5 and this suit followed.

The plaintiff in its petition for a temporary restraining order, preliminary and permanent injunction, alleges that because of increasing costs the rates contained in the franchise of April 28, 1947, are now confiscatory and have been for several years past; that within the corporate limits of the City it operated at a loss for the years 1954, 1955 and 1956, and that additionally during this period the revenues had contributed nothing for depreciation and amortization expenses, nor was any return realized upon its investment in facilities; and that its property is being taken without due process of law in violation of State and Federal constitutional guarantees. The City’s exceptions of no cause of action and no right of action were referred to the merits. A petition of intervention and third opposition, filed by the Ouachita Parish School Board, Monroe City School Board and Ouachita Parish Police Jury, each asserting identity as a political subdivision and legal entity of *834 the State, set forth that the rates for gas supplied to their respective buildings were specially fixed in the franchise, were contractual and binding on them and on United Gas Corporation, and prayed that both plaintiff company and defendant City be enjoined from interfering with the said rates. Plaintiff’s exceptions to this intervention (no right or cause of action) were referred to the merits. The defendant in its answer based its case on the binding effect of the contract terms, and the matter was then submitted on the pleadings and numerous exhibits — many of those offered by plaintiff consisting of lengthy written statements, explanatory of financial reports and the accounting principles employed in their preparation, made by plaintiff’s agents and employees in the form of answers to prepared questions and supported by affidavits that the answers were given by those persons to the best of their knowledge and belief. The district judge observed, after quoting excerpts from the jurisprudence of this Court and the Federal courts, that the rate making power is one of the highest attributes of sovereignty and is inherent in the state as an element of a police power which, under the Constitution of Louisiana, can never be irrevocably surrendered, but may be delegated; that under this Court’s holding in City of Monroe v. Louisiana Public Service Commission, 6

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Cite This Page — Counsel Stack

Bluebook (online)
109 So. 2d 433, 236 La. 825, 1958 La. LEXIS 1325, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-gas-corporation-v-city-of-monroe-la-1958.