Court Opinion

ID: 6882422
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:19:07.328086+00
Date Added: 2024-06-11T16:05:37.384519
License: Public Domain

McCORD, Circuit Judge
(dissenting).
I do not concur in the majority opinion.
On June 13, 1930, the City of Texarkana, Texas, passed an ordinance granting a franchise to the appellee gas company. The franchise agreement became effective upon the filing of the gas company’s acceptance on June 18, 1930. Section IX of the agreement provides: “If Grantee shall be finally compelled to, or should voluntarily place in any rates in the City of Texarkana, Arkansas, "less than the rates granted by this ordinance then and thereupon the lessened rate shall apply in the City of Texarkana, Texas, and Grantee shall not be authorized or permitted to charge and collect any higher rate.”
After long, drawn-out litigation the District Court of the United States for the Western District of Arkansas entered its decree restoring lower 1923 rates in the City of Texarkana, Arkansas, and ordering a refund of the excess collections from May, 1930, to December 1, 1933. City of Texarkana, Arkansas, v. Southern Cities Distributing Co., 8 Cir., 64 F.2d 944, certiorari denied 290 U.S. 650, 54 S.Ct. 67, 78 L.Ed. 563. After entry of the decree the overcharges collected by the gas company from May, 1930, to December, 1933, were immediately refunded to the Arkansas consumers, and the lower 1923 rates were put into effect in Texarkana, Arkansas. The gas company made no refunds to Texas consumers and declined to put the lower rates into effect on the Texas side. On December 12, 1933, the City of Texarkana, Texas, called upon the gas company to place the lower rates into effect in Texas and make refunds of the amounts collected as overcharges prior to that time. The gas company refused and on January 15, 1934, the Texas City filed suit in the District Court of the United States for the Eastern District of Texas and asked for refunds on the same basis as refunds were made to Arkansas consumers. Thereafter, on February 16, 1934, the gas company filed suit in the District Court of the United States for the Western District of Arkansas and sought to enjoin interference with another proposed increase in rates. Under the protection of a temporary injunction the higher rates were collected in Arkansas until a decree was entered on December 4, 1936, upholding the validity of the lower rates, and giving judgment, with interest from the date of collection, for the overcharges to Arkansas consumers from February 16, 1934, to December 4, 1936. An injunction pending appeal was denied and the lower rates prevailed and were collected in Arkansas after December 4, 1936. The Circuit Court of Appeals for the Eighth Circuit affirmed the District Court and held that the lower rates were not confiscatory. The Supreme Court denied certiorari on October 10, 1938. Arkansas Louisiana Gas Company v. City of Texarkana, Arkansas, 17 F.Supp. 447; Id., 96 F.2d 179; Id., 305 U.S. 606, 59 S.Ct. 66, 83 L.Ed. 385.
On July 30, 1937, a decree denying refunds was entered by the District Court for the Eastern District of Texas in the suit filed by the City of Texarkana, Texas, against the gas company. On appeal this, court held Section IX of the franchise agreement invalid and affirmed the judgment of the lower court. Arkansas Louisiana Gas Company v. City of Texarkana, Texas, 5 Cir., 97 F.2d 5. The Supreme Court reversed this court and held that Section IX was a valid and binding contract between the City of Texarkana, Texas, and the gas company. In that opinion the Supreme Court pointed out the course to be followed. City of Texarkana, Texas v. Arkansas Louisiana Gas Company, 306 U.S. 188, 59 S.Ct. 448, 456, 83 L.Ed. 598, and Id., 306 U.S. 620, 59 S.Ct. 448, 83 L.Ed. 1026.
As to the .confiscatory character of the rates the Supreme Court said: “If the utility has entered into a binding contract as to rates, their confiscatory character is not a defense to the claim of the city to service at the contract rates.” In upholding Section IX of the franchise agreement the Supreme Court said: “We construe ‘finally *293compelled’ as meaning the entry by a court of the final order which makes effective a challenged rate order. No right to demand the lower rate and no cause of action to enforce the right arises until that time. When such order is entered, however, the Texas consumers are entitled to have the lower rate applied to their consumption for the' same period of time it is enjoyed by the Arkansas consumers. * * * Leave to ■file a supplemental petition to bring to date the controversy over the refund of rates, collected subsequent to February 16, 1934, should be granted, upon the return of the case to the District Court, on motion of the City of Texarkana, Texas. The present action is an appropriate proceeding for the settlement of the entire rate controversy and the refund of such sums as may be determined, ultimately, to be due the Texas consumers.”
When the mandate from the Supreme Court came down, the Texas City asked for the lower Arkansas rate, for a refund of the overcharges, and for interest on the money wrongfully collected and withheld by the gas company. The District Court held that “the claim for interest as now raised comes too late, would virtually involve a new trial, and must be disallowed. * * * that the defendant is now serving gas to the City of Texarkana, Texas, at confiscatory rates. It follows that defendant is prevented from obtaining a raise in its rates only by its franchise contract. * * * even were the interest question properly raised in plaintiff’s supplemental pleading, the interest prayed for should be denied as unjust and inequitable under the circumstances of this case.”
The circumstances of this case as I see them are these: The gas company had a contract with the City of Texarkana, Texas. It refused to live up to the terms of Section IX of the contract. The gas company litigated, as it had a right to do, in every court. It lost. The Supreme Court held that it must carry out the terms of its franchise agreement and that the alleged “confiscatory character” of the rates was no defense to the claim of the City of Texarkana, Texas.
I do not think that the amount of interest that would have to be paid is of controlling . importance. Likewise, just how much consumers and litigants had to pay lawyers and accountants to aid them in getting their money back is of no moment here. If the gas company had lived up to its solemn contract, as it should have done, the expenditures pointed out in the majority opinion would not have been incurred.
There is nothing ambiguous about Section IX of the franchise agreement and I see nothing complicated about returning the overcharges with interest. It was no great task to refund the overcharges and pay interest on the Arkansas side. It seems that the case only becomes complicated when we step across to the Texas side of the street.
From December, 1933, until February, 1939, the gas company took and used the money of Texas consumers in the face of a demand that it install the lower rates and refund the overcharges it had made.
In December, 1933, the Arkansas consumers received refunds for the period from June, 1930, to December, 1933. The Texas consumers received no refunds. The Supreme Court has said that they were entitled to refunds for this period. From December, 1933, to February 16, 1934, the Arkansas consumers actually paid the lower rates and the gas company refused to give the Texas consumers the benefit of the rates as provided by Section IX of the franchise. From February 16, 1934, to December 4, 1936, the higher rates were paid by Arkansas consumers, but after the decree of December 4, 1936, they received refunds for the period, with interest. The Texas consumers paid the higher rates for the same period and have been denied interest although the gas company was invited to impound the questioned overcharges for the period. After December 4, 1936, the Arkansas consumers paid the lower rates, but the higher rates were exacted of the Texas consumers.
Article 5070, Revised Civil Statutes of Texas, provides that: “When no specified rate of interest is agreed upon by the parties, interest at the rate of six per cent per annum shall be allowed on all written contracts .ascertaining the sum payable, from and after the time when the sum is due and payable.”
The contract between the City of Texarkana, Texas, and the gas company provides in no uncertain terms for the rates to be charged in the Texas City. The amounts now due consumers can be ascertained by application of the terms of the written franchise agreement. I think the Texas interest statute applies.
The damage to consumers was complete when the overcharges were made. On the *294overcharges collected during the first period, June 30, 1930, to December, 1933, interest should be awarded from December 1, 1933, to the date of refund. On the overcharges collected after December 1, 1933, interest should be awarded from the date of collection of such overcharges to the date of refund. Arkadelphia Co. v. St. Louis S.W. Ry. Co., 249 U.S. 134, 147, 39 S.Ct. 237, 63 L.Ed. 517; Miller v. Robertson, 266 U.S. 243, 257, 45 S.Ct. 73, 69 L.Ed. 265; Davis v. Stamford Mill Co., Tex.Civ.App., 260 S.W. 1081.
The case of Atlantic Coast Line Railroad Co. v. Florida, 295 U.S. 301, 55 S.Ct. 713, 79 L.Ed. 1451, is not citation in this case.
The judgment should be reversed.
I respectfully dissent.