Court Opinion

ID: 9777030
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:52:11.650791+00
Date Added: 2024-06-11T07:32:46.406447
License: Public Domain

FONES, Justice,
dissenting.
OPINION
I respectfully dissent.
I agree that the Chancellor’s construction in the first suit, of the ambiguous paragraph tying increases to the “lowest residential rate to all other customers” is binding on the parties in this suit.
I do not agree with the majority’s assertion that the mathematical formula used in the first suit to determine the percent of increase of the 1974 rate schedule over the 1965 rate schedule “is the essence of the Chancellor’s decision.”
In deciding the first case between these parties, the Chancellor noted that Fayette-ville had used only the percentage of increase by which the 1974 minimum charge exceed the 1965 minimum charge, to calculate the rate due by the Utility Districts under paragraph four of the contracts. He correctly observed that the minimum charge was in fact the highest residential rate and that the lowest rate was the last figure in the schedule, applicable after the consumption of 3,000 cubic feet in 1965, 2,000 in 1969, and 2,000,000 in 1974.
Construing paragraph four of the contract, the Chancellor held as follows:
“It is deduced that the lowest residential rate as used in the contracts was not intended by the parties to mean either the lowest rate mentioned in the schedule or the minimum rate. It is concluded instead that it was intended to mean the lowest residential rate all customers would pay, taking into account the whole *425residential rate structure. The contracts are speaking of the lowest residential rate ‘to all other customers’ and these customers pay rates based on the amount of water used from a minimum to a maximum.”
In his memorandum opinion, the Chancellor approximated the “composite increase” applicable to Mulberry on a consumption of 70,000 cubic feet per month to be about fifty (50%) percent and about thirty (30%) percent applicable to Highland Rim, on 600,000 cubic feet per month, and directed the parties make the necessary calculations.
In the final judgment, entered May 2, 1975, a formula to compute the rate to charge the Utility Districts in any given month was expressed as follows:
“ . . .to determine if a change has been made in the ‘lowest residential rate’ as used in the contracts, compute the cost of water to be used by a utility district in any given month at the residential rates shown in the 1965 and 1974 schedules as if the district was to pay for the water at these rates. Compute the percentage of change and apply it to the rate mentioned in the contract. Use the changed rate to compute the cost of water to the district.”
In the second case, Fayetteville filed an answer and the affidavit of the manager of the water system, setting out the 1975 residential rate schedule and a detailed calculation of the rate to be charged Highland Rim and Mulberry for the month of July, 1975, using the formula prescribed in the final decree of May 2, 1975. Fayetteville’s motion for summary judgment on the ground the 1975 rate increase had been applied in accord with the construction of the contract made by the Court in the prior suit was sustained.
It is necessary to distinguish between the Chancellor’s interpretation of paragraph four, as expressed in his memorandum opinion, which is a part of the final decree in the first suit, and the formula applied to the 1974 rate schedule. That formula produced a result that was in accord with paragraph four, when applied to the 1974 rate schedule, but it can be readily seen that it does not do so when applied to the 1975 schedule. It is paragraph 4 of the contracts that controls computation of the increased rate to be charged Highland Rim and Mulberry, not the formula used to compute the 1974 rates. The application of that formula to the 1975 rates appears to have produced a result inconsistent with the intent of the contracts.
The gravamen of the second action was that the formula applied to the 1975 schedule resulted in an increase of Highland Rim’s rate from 19.35 cents to 39.9 cents per 100 cubic feet, in excess of one hundred (100%) percent, and an increase of Mulberry’s rate from 23.06 cents to 39.18 cents per one hundred (100) cubic feet, in excess of seventy (70%) percent; that the 1975 rates have increased the cost of water to residential users only eleven (11) to thirteen (13%) percent; that the 1975 schedule does not have a proportionate “across the board” rate of increase, but volume commercial users are charged as low as thirty-eight (38) cents per one hundred (100) cubic feet while the lowest rate in the formula applied to the Utility Districts’ contracts is eighty (80) cents. Plaintiffs alleged that the 1975 schedule was deliberately structured and designed to produce that inequitable result, in combination with the formula used in 1974, because of Fayetteville’s dissatisfaction with the Utility District contracts.
The record before us reflects that the 1975 rate schedule was structured in a manner that represented a substantial departure from the three (3) prior rate schedules issued during the life of the contracts. Pri- or schedules contained reduced rates as volume increased, the 1974 schedule reducing from eighty (80) cents per one hundred (100) cubic feet after the first one thousand (1,000) cubic feet to a low of twenty-seven (27) cents per one hundred (100) cubic feet.
The 1975 schedule, the subject of this suit, did not reduce any after reaching its lowest rate of eighty (80) cents per one hundred (100) cubic feet after the first one thousand (1,000) cubic feet. However, a commercial rate schedule was simultaneously issued that carried a scheduled reduction *426downward to its lowest rate of thirty-eight (38) cents per one hundred (100) cubic feet. The complaint of the utility districts alleges that 1975 was the first rate schedule to contain a commercial rate schedule and, so far as the record before us reflects, that is true.
In my opinion, the utility districts were entitled to a trial on the merits of their allegations that Fayetteville deliberately and in bad faith designed a 1975 rate schedule that, when computed by the 1974 mathematical formula, produced a disproportionate increase to them, as compared to residential users, in violation of paragraph four (4) of the contract. Therefore, I would affirm the result reached by the Court of Appeals and remand the case for trial.
I am authorized to state that Justice BROCK concurs in this dissent.