Case Name: CITY OF SAN ANTONIO, Appellant, v. SAN ANTONIO INDEPENDENT SCHOOL DISTRICT, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1984-11-30
Citations: 683 S.W.2d 67
Docket Number: No. 04-83-00192-CV
Parties: CITY OF SAN ANTONIO, Appellant, v. SAN ANTONIO INDEPENDENT SCHOOL DISTRICT, Appellee.
Judges: Before CADENA, C.J., and CANTU and DIAL, JJ.
Reporter: South Western Reporter Second Series
Volume: 683
Pages: 67–76

Head Matter:
CITY OF SAN ANTONIO, Appellant, v. SAN ANTONIO INDEPENDENT SCHOOL DISTRICT, Appellee.
No. 04-83-00192-CV.
Court of Appeals of Texas, San Antonio.
Nov. 30, 1984.
Rehearing Denied Jan. 4, 1985.
Crawford B. Reeder, Asst. City Atty., San Antonio, for appellant.
Anthony Nicholas, Joseph E. Scuro, Nicholas & Barrera, San Antonio, for ap-pellee.
Before CADENA, C.J., and CANTU and DIAL, JJ.

Opinion:
OPINION
DIAL, Justice.
This is an appeal from summary judgment in favor of the San Antonio Independent School District (SAISD) exempting it from paying certain charges for gas and electric service from the utility owned by the City of San Antonio.
The City purchased the utility in 1942 pursuant to the authority of TEX.REV. CIV.STAT.ANN. art. 1111-1118 (Vernon 1963). To finance the purchase, the City entered into a trust indenture. The indenture and the applicable statutes provided that the utility would be managed by a self-perpetuating board of trustees not appointed by the City. The indenture also created a lien on the properties and revenues of the system. The indenture and the statutes provided for payment to the city from the utility in three components pertinent to the instant suit:
(1) A payment in lieu of ad valorem taxes.
(2) Reimbursement for the City's payments for gas and electricity and expenditures for street lighting extensions and improvements.
(3) An additional payment in an amount that when added to (1) and (2) above would total 14% of the utility's gross revenues.
Starting in 1975, SAISD, twelve other independent school districts in Bexar County, and the Bexar County Hospital District, either escrowed or withheld 14% of their monthly bill from the City's utility. The City sued for declaratory and monetary relief. The facts were undisputed and stipulated. All parties filed motions for summary judgment except SAISD. The City's motion for summary judgment was granted, and all others were denied.
The school and hospital districts appealed, and the Eastland Court of Appeals reversed the trial court. San Antonio Independent School District, et al v. City of San Antonio, 614 S.W.2d 917 (Tex.Civ.App.—Eastland 1981, writ ref'd n.r.e.). The appellate court held that TEX.REV. CIV.STAT.ANN. art. 1446c, § 48 (Vernon 1980) applied to the City. This resulted in exempting the school and hospital districts from paying rates which "may be used to make or to cover the cost of making payments in lieu of taxes to the municipality by which the public utility is owned." The court rendered judgment for all appellants except SAISD. Since SAISD had not filed a motion for summary judgment, judgment against it was reversed, and the cause re manded. Application for writ of error was refused, n.r.e. On remand, the trial court granted summary judgment for SAISD declaring,
Section 48 of article 1446c exempts (SAISD) from paying gas and electric utility charges to (City) which are based upon rates which are set so as to allow the following as items of expense of the system's operation:
(a) lieu of tax payments by the utility to the City;
(b) reimbursement by the utility to the City for the latter's gas and electrical expenses and expense of additions to the City's street lighting and traffic lighting systems, and
(c) profit made by the City from the utility's operation, as that term is defined in San Antonio Independent School District v. City of San Antonio, 550 S.W.2d 262 (Tex.1977); although under the terms of the Trust Indenture only part of the payments made by the System to the City is in lieu of taxes, as set forth in Section 48. This Summary Judgment is granted solely because of the holding by the Eastland Court of Appeals.
The City now brings this appeal contending that the trial court erred in granting the summary judgment in favor of the SAISD since the Eastland decision had not actually addressed the issue as to what constitutes payments "in lieu of taxes" under article 1446c, § 48. The City argues that § 48's exemption pertains only to payments made in lieu of ad valorem taxes, thus, narrowly construing the language of § 48 and preserving the school district's liability for those charges attributable to expenses other than the reimbursements for lost taxes.
The City concedes that the Eastland decision did resolve that § 48 was applicable to San Antonio's gas and electric utility, and with regard to that issue, the doctrine of the law of the case applies. The City, however, urges that the trial judge's decision to apply § 48's exemption to all three component payments as "in lieu of taxes" based solely on the Eastland decision was error since such an interpretation went beyond the scope of the Eastland holding.
The issue as to what constitutes § 48's "payments in lieu of taxes" had been presented to the Eastland Court in a cross-point, however, it was not specifically addressed in that Court's decision. Likewise, the City's motion for rehearing to that Court of Appeals and subsequent writ of error and motion for rehearing to the Supreme Court re-asserted the issue but were denied without opinion.
The doctrine of "the law of the case" is that principle where, the determination of a question of law having already been made on a prior appeal to a court of last resort, such determination will generally be held to govern the case throughout all of its subsequent stages, including a retrial and subsequent appeal. Transport Insurance Co. v. Employers Casualty Co., 470 S.W.2d 757, 762 (Tex.Civ.App.—Dallas 1971, writ ref'd n.r.e.); Houston Endowment, Inc. v. City of Houston, 468 S.W.2d 540, 543 (Tex.Civ.App.—Houston [14th Dist.] 1971, writ ref'd n.r.e.). Questions of law expressly decided in a prior appeal are subject to the doctrine.
Since the court neither expressly or by necessary implication determined the meaning of § 48's "payments in lieu of taxes," we hold that the Eastland decision is inapplicable to that issue now before this court.
We sustain City's first point of error.
The City's second point of error is that the trial court erred in failing to limit § 48's application solely to the "in lieu of taxes" component of the utility's payments to the City. In its counterpoint, SAISD argues that all of the component payments made pursuant to the indenture are "in lieu of taxes" because if the City did not receive those payments, it would have to raise the money it derives from them by taxation. The City rebuts this contention by presenting numerous sources of City revenues, the payments from which are not considered taxes. Indeed, such was the holding in Bexar County v. City of San Antonio, 352 S.W.2d 905 (Tex.Civ.App.—San Antonio 1962, writ dism'd), where this Court expressly held that sewer charge revenues which render a profit to the City were not taxes. Id. at 908. The mere fact that revenues are put into a general fund and used for public purposes, as were the payments in the case at hand, does not necessarily make them taxes.
The City's position is further supported by strong caselaw. In San Antonio Independent School District v. City of San Antonio, 550 S.W.2d 262 (Tex.1977), the Supreme Court specifically addressed the issue as to what constitutes payments "in lieu of taxes." In that case, which involved the same trust indenture as the case at bar, all the school districts in San Antonio sought a declaratory judgment against the City for the refund of portions of gas and electric payments they had paid in previous years. Their argument was similar to that presented in the present case. The schools contended that since the 14% indenture payment authorized by article 1113a was factored into the municipally-owned utility's rates, their payments as a part of that 14% was a tax on them prohibited by the Constitution. The Supreme Court denied the school districts' claims of exemptions and clarified the nature of the indenture payments. The court recognized that the first component is a payment in lieu of ad valorem taxes that would be received if the utility was not municipally owned, which the City is entitled to receive under TEX. REV.CIV.STAT.ANN. art. 1113. Component payment number (2) is free service which the City is entitled to receive under the same statute. The cash payment in number (3), was held to be a reasonable profit which the City is entitled to receive under TEX.REV.CIV.STAT.ANN. art. 1113a, which was enacted in 1949. Id. at 263-64. Thus, the whole 14% is not a payment in lieu of taxes.
Accordingly, we reverse the trial court's judgment and render as to the meaning of the phrase "payments in lieu of taxes" found in article 1446c, § 48. Our interpretation of that phrase is that it includes only payments made by the utility to the City to offset the City's lost ad valorem tax revenues.
The City may retain all funds received by it or the utility from SAISD under the Interim Payment Agreement heretofore entered into by the parties except the fractional equivalent of the monies paid by the utility to the City in lieu of ad valorem taxes for the period in question.
. Article 1446c, § 48.
No payments made in lieu of taxes by a public utility to the municipality by which it is owned may be considered an expense of operation for the purpose of determining, fixing, or regulating the rates to be charged for the provision of utility service to a school district or hospital district. No rates received by a public utility from a school district or hospital district may be used to make or to cover the cost of making payments in lieu of taxes to the municipality by which the public utility is owned.