City of Mason v. West Texas Utilities Co. (237 S.W.2d 273, 1951)

SHARP, Justice.

The City of Mason filed this suit against the West Texas Utilities Company for a ■mandatory injunction to compel compliance with an ordinance of the city requiring the West Texas Utilities Company to remove all poles, wires, transformers, conduits, and other property used by it in, upon, under, across, and along the public streets and alleys within the City of Mason. The case was tried before the court without a jury, and the trial court entered judgment in favor of the City of Mason. An appeal was taken to the Court of Civil Appeals, and that court reversed the judgment of the trial court and rendered judgment that the West Texas Utilities Company had the right to maintain its poles and lines in the City of Mason, without the city’s consent, for a period of ten years after November 13, 1945, the date of the city’s incorporation. 229 S.W.2d 404.

In 1925 the Commissioners’ Court of Mason County granted the respondent a franchise to operate and maintain its lines for conducting electric current and supplying light, heat, and power to cities and towns in Mason County, and gave it an easement over and along public county roads and highways, and upon and across streets, alleys, sidewalks, and public grounds of unincorporated towns. Such franchise was to run for a period of fifty years from October 13, 1925. Respondent accepted the terms of the franchise, and built its lines into the City of Mason in 1926. Mason was incorporated November 13, 1945, and in 1948 constructed its own electric power system.

This case involves the construction of House Bill 393, Chapter 228, Acts 51st Legislature, 1949, now Article 1436a, Vernon’s Annotated Civil Statutes.

It is of primary importance in construing a statute to ascertain the purpose for which the statute was enacted. Unquestionably this act was passed to give relief to utility companies from the consequences resulting from the two recent decisions of this Court in State ex rel. City of Jasper v. Gulf States Utilities Company, 144 Tex. 184, 189 S.W.2d 693, and Incorporated Town of Hempstead v. Gulf States Utilities Company, 146 Tex. 250, 206 S.W.2d 227. Prior to- those decisions it was the opinion of many that the commissioners’ courts of counties in this state had the authority to permit the use of the streets and alleys of unincorporated towns by utility companies in the conduct of their business. It is undisputed that some utility companies, including respondent, acting under this belief, and in good faith, invested considerable sums of money in unincorporated towns, and that the two decisions mentioned above caused them great losses in their investments. The history of the enactment of the statute under’ consideration clearly shows that the very purpose of its enactment was to afford relief to such utility companies for the losses resulting from the effect of the two decisions cited above.

It is agreed that under the law as decided in the Jasper and Hempstead cases, supra, the City of Mason had the right, to order respondent to remove its poles and lines from its streets and alleys, prior to the enactment of Article 1436a.- It is also agreed that as to towns incorporated after the enactment of. Article 1436a, the utility Companies affected would have ten years after the date of incorporation of any such town within which to operate their business therein without the consent of such town. The parties disagree over the question whether Article J436a should be construed to confer the right on utility companies to maintain their previously built lines .in cities incorporated before the enactment .of Article 1436a, without the consent of such cities,'for a period of ten years from and after the date of incorporation of any such city.

Two bills were introduced, one in the Senate and the other in the House. The House and the Senate were unable to agree on a bill. On account of - the disagreement, the bill was referred to a free, conference committee, where the differences were adjusted, and the bill was finally passed by both branches of the Legislature, and was approved by the Governor. The record shows that the bill had been radically amended in several particulars before its final passage, and that it undertakes to control several classes of utility companies; and it is obvious that the language used in expressing the intention of the Legislature is not entirely clear.

The record shows that at the time the Legislature was considering Senate Bill No. 205 and House Bill No. 393, the Governor addressed a special message to the Legislature on' this very question, and submitted the two bills as emergency matters for its consideration. In that message the attention of the Legislature was called to the importance of the question and that immediate relief should be given companies affected by the two decisions mentioned above. We quote from the message as follows:

“Austin, Texas, March 9, 1949.

“To the Members of the Slst Legislature:

“The continued expansion of facilities for the distribution of electric light and power in rural areas of Texas is of great importance. All of us know ■ that many electric ’lines have been built along the right-of-way of state highways and county roads. Many thousands of miles of lines have been so constructed and built by rural electric cooperatives and other utilities engaged in the distribution of electric power. These lines were built in good faith under franchises granted by the various Commissioners’ Courts of Texas, and they provide the means of getting electric light and power to many small towns and rural communities.

“In what are known as the Hempstead arid Jasper cases, the Supreme Court of Texas has held that the Commissioners’ Courts had no authority to grant such franchises. The result of this decision is that all such lines co >

In my opinion, this language, like the' preceding portions of Section 1 of the Act, is intended to be prospective in operation. It grants a right, under certain conditions and for a limited time, to continue to exercise rights which for the first time are granted by the preceding sentences of Section 1 of this Act. The first sentence of this section grants to corporations affected the right to build and maintain their lines on and along roads and streets in unincorporated areas, which right did not theretofore exist under the Jasper and Hempstead cases. The sentence quoted above is intended to apply to the situation which may arise, after the passage of the Act, where an unincorporated area becomes incorporated. In such event, the Legislature intended, as it says in so many words, that the corporation "shall continue to have the right” to build, maintain and operate its lines in the newly incorporated area for ten years from and after the date of the incorporation. The language used in the quoted sentence is appropriate only to the situation where an incorporation of a city occurs after a utility company has rightfully built or maintained its lines in an area; and the right to build or maintain such lines, under our decisions, arose only upon the passage of House Bill 393. Moreover, the words “In the event,” “passes,” and “becomes,” also indicate strongly a situation which, the Legislature expects, may arise in the future. Viewed in this way, the sentence quoted logically fits into the legislative plan of granting certain rights, attaching conditions and obligations to their exercise, and providing for their continuance in the event that conditions should change after the passage of the statute.

As to cities already incorporated at the time of the passage of the statute, the first sentence of Section 1 'expressly provides that utility corporations may erect, operate and maintain their lines “with the consent and under the direction of the governing body of such city or town.” The Legislature evidently intended to cover a different situation by the sentence we have quoted above, beginning, “In the event * * * ” and the natural meaning of the words used is that this provision shall apply where a city or town is incorporated after the passage of the statute.

The caption of the Act expressly requires the consent of the governing body of an incorporated town before the lines of an electric company may be “constructed, erected and maintained” within the city limits of such town. To hold that the provision as to the right of an electric company to remain for a period' of ten years after the date of such incorporation in an unincorporated town which after-wards becomes incorporated, refers to a town incorporated at the time of the passage of the Act, would read into the caption a conflict. In like manner, the body of the Act in Section 1 gives an electric company the right to erect, construct, maintain and operate its lines “over, under, across, upon and along any State highway or county road in this State, except within the limits of an incorporated city or town * * *.” (Emphasis added.) As to incorporated cities or towns the Act expressly provides that such lines may be erected, maintained and operated only “with the consent and under the direction of the governing body of such city or town.” These provisions are plain and unambiguous and cover all cities or towns incorporated at the time of the passage of the Act. Unless the provision under discussion is held to apply only to towns incorporated after the passage of the Act, we will have a conflict in the provisions of Section 1 of the Act. It is the duty of the Courts in construing the acts of the Legislature to construe them so as to avoid a conflict in the provisions of such acts. This can only be done in the case at bar by holding that the “In the event * * ” provisions apply only to towns incorporated after the effective date of the Act.

The emergency clause, Section 4, of the Act nowhere refers to any emergency arising by virtue of cities and towns then incorporated, but refers to those which were unincorporated at the time lines were built, and shows conclusively that the Legislature did not intend to give electric companies a right to remain in such towns, except by permission of the governing body of such city or town as set out in Section 1 of the Act. Section 4 refers only to “areas outside of the limits of incorporated cities” and “along the edge of the right-of-way * * * and public roads,” or to authorize “the maintenance and operation of lines” that have been so built under county franchises, etc., and to “standard of construction” of said lines.

Not only is this view in accord with the ordinary and plain meaning of the language of the whole statute, as I understand it, but it is also in agreement with accepted rules of construction that statutes are presumed to be prospective in their operation, and that statutes granting franchises or privileges in derogation of public rights should be strictly construed.

As to the first of these rules of construction, in Piedmont and Arlington Life Insurance Co. v. Ray, 50 Tex. 511, 519, this Court said: “It is a well-settled rule that statutes are always held to operate prospectively, unless a contrary construction is evidently required by their plain and unequivocal language.”

Similar language was used in State v. Humble Oil & Refining Co., 141 Tex. 40, 43, 169 S.W.2d 707, 708: “It is the law of this State, and the law generally, that, in the absence of any special indication or reason, a statute will not be applied retrospectively, even when there is no constitutional impediment against it.”

See also 59 C.J., Statutes, § 692 ; 50 Am. Jur., Statutes, § 478.

As to the second rule of construction applicable here, this Court said with reference to a similar statute in Incorporated Town of Hempstead v. Gulf States Utilities Co., 146 Tex. 250, 256, 206 S.W.2d 227, 230:

“The generally accepted principle that the words of a grant from the public must be taken most strongly against the grantee is also of assistance in appraising the rights the company has obtained under the legislation here under consideration. (Whether the rights asserted by the company be denominated a grant, a franchise, or a privilege is not presently of any importance. The principle involved applied equally to all grants from the public in favor of persons or private concerns.) Tersely this principle is stated as follows: ‘The general rule is that a grant of a franchise is to be construed in favor of the public, and, if the language used is ambiguous, the grant is to be construed in favor of the grantor and against the grantee.’ 37 C.J.S., Franchises, § 21b. ‘The general rule is that nothing passes by implication by the grant of a franchise, except what may be necessary to give effect to the obvious intent of the grant.’ 37 C.J.S., Franchises, § 21c. Another well-put statement of it is in 23 A-m.Jur., Franchises, § 16:

“ ‘While it is the accepted doctrine that all grants are to be construed according to the intention of the parties, yet there are certain general rules of construction by the light of which such contracts are to be examined. These rules are well settled by numerous authorities. One is that in all grants by the government to individuals or corporations, of rights, privileges, and franchises, the words are to be taken most strongly against the grantee, contrary to the rule applicable to the grant from one individual to another. One who claims" a franchise or privilege in derogation of the common rights of the public must prove his title thereto by a grant clearly and definitely expressed, and cannot enlarge it by equivocal or doubtful provisions or probable inferences.’ ”

The respondent also relies upon the legislative history of the statute to sustain its contentions. Since, in my opinion, the language of the statute plainly should be construed in the way I have indicated, there is no necessity of referring to the legislative history. However, in my ' opinion, a consideration of the legislative history of this statute would not lead to a different conclusion as to the intention of the Legislature. The "majority opinion attaches much importance to Governor Jester’s message to the Legislature, dated March 9, 1949, in which he recommends passage of House Bill 393.

Throughout Governor Jester’s message, he referred to “electric lines built along the right-of-way of State highways and county roads,”, and the enjoyment o'f the benefits of electrical services by the people in the rural areas and Wiincorporated, towns. Not a single time did Governor Jester refer to the streets of an incorporated city or town, nor did he speak of the enjoyment of the benefit of electrical services by the inhabitants of an incorporated city or town. That Governor Jester-had no idea that the Act would be sought to be ápplied to a city or town which was. incorporated prior to the effective date of the Act is further shown from the fact that the bill as originally introduced, and at the time Governor Jester wrote his. letter, contained the following legislative interpretation of the Act: “Nothing herein shall be construed as granting the right to such corporation to maintain existing-lines in any area, which is included within the corporate limits of a city or town prior to the effective date of this Act, without the consent of the governing body of such-city or town.”

The James Amendment was not made until March 28, 1949.

In adopting this legislative interpretation of House Bill 393, Governor Jester-said: “It is my understanding that Senate Bill No. 203 and House Bill No. 393 will’ effectuate the desired purpose in this connection, and I hereby submit these bills, as emergency matters under the authority of Sec. 5, of Article III, of the Constitution of Texas.”

House Bill 393, as originally introduced,, contained the above quoted legislative interpretation. This clause, by its terms, shows the legislative intent as to the meaning of"the "Act; that is, that the Act was. not to be construed as operating retroactively, but that a corporation, such as this company, could not maintain its lines in a city or town which was incorporated prior to the effective date of the Act without the consent of the town’s governing body. It was with this legislative interpretation that Governor Jester recommended House Bill 393 to the Legislature. It was with this construction that Governor Jester felt that the bill would effectuate the desired purpose.

House Bill 393 was passed by the House with the James Amendment attached, but when it reached the Senate this amendment was stricken. Because of the conflict between the two houses, a Free Con•ference Committee was requested by the House to consider the bill. In compromise, this committee eliminated both the clause reflecting the legislative intent and the James Amendment. The bill was then passed by both houses and signed by the Governor.

By striking the clause which directed how the Act should be construed, nothing was taken away from the Act for no right that did not already exist was granted by such clause. However, it is clear that the James Amendment did give an affirmative .right to corporations, situated as is this company. This right was to continue to maintain and operate its distribution system and necessary facilities incidental thereto within a city or town which was incorporated prior to the effective date of the Act until the expiration date contained in the franchise agreement between the corporation and the Commissioners’ Court or ten (10) years whichever is less. By striking this amendment, the Legislature revoked an affirmative right which was given by the amendment. The fact that the original clause specifically exempting cities and towns which were already incorporated from the effect of the bill and the James Amendment which nullified such clause were stricken upon final passage does not indicate a legislative intent that the Act should be construed retroactively for the original paragraph was only a legislative interpretation of the text of the Act and did not give any rights which did not already exist. By its deletion, nothing was taken from the Act, but it does reflect a legislative construction of the Act. On the other hand, by striking the James Amendment an affirmative right granted to the utility, situated as is this company, was revoked.

It is also contended that the statute is remedial or curative in effect, and therefore should receive a liberal construction. See 39 Tex.Jur., Statutes, sec. 145. While this rule may properly be applied in appropriate cases, I do not think it should be used to change the ordinary meaning of statutory language, or to give retrospective effect to a statute granting a franchise in derogation of public rights.

Prior to the passage of House Bill 393, this company had no right, power or authority to use the streets and roads of the 'City for the erection and maintenance of its poles and lines. This was conclusively held in the Jasper and Hempstead cases and was the undoubted law of this State at the time the City passed its ordinance on March 8, 1949. Since there was no right, the majority opinion gives a right, which is effective as of the date of the incorporation of the City without reference to the effective date of the Act. There was no defect in the law which required remedying. The language used in Slate v. City of Fort Worth, Tex.Civ.App., no writ history, 193 S.W. 1143, 1144, is especially applicable in this case.

“In this connection (contention that statute is remedial) our views are most,aptly expressed in Hamilton County v. Rosche, 50 Ohio St. 103, 33 N.E. 408, 19 L.R.A. 584, 40 Am.St.Rep. 653, where this language is used:

“ ‘This statute, it is contended, is remedial, and remedial statutes may be retroactive. It is remedial, no doubt, in that enlarged sense of that term, where it is employed to designate law which supply defects in, or pare away hardships of, the common law, but not remedial in the sense of providing a more appropriate remedy than the law before afforded, to enforce an existing right or obligation. The statute under consideration provided no new .method of procedure; it simply imposed' upon Hamilton County an obligation toward these plaintiffs in error that did not attach to the transaction when it occurred. In attempting to accomplish this result the Legislature transcended its constitutional powers.’ ”

The only possible conclusion that may be reached is that here the company is acquiring a new right that did not exist prior to that time under Article 1436, Revised Civil Statutes of Texas, 1925.

As stated in 39 Tex.Jur., Sec. 19, p. 41: “A validating or curative statute is one enacted for the purpose of curing defects in past proceedings or confirming rights arising out of past transactions.”

The defects described are those where there was neglect in complying with some requirement of law or failure to comply with some “technical legal requirements.” 10 Words & Phrases, p. 665. The past transaction sought to he cured here is not a technical legal requirement, as contended by the respondent, but is the creation of a new cause of action or defense that had not existed prior to that time. A remedial statute is one which affords a remedy for the enforcement of the obligation or contract. De Cordova v. City of Galveston, 4 Tex. 470 and Slate v. City of Fort Worth, Tex.Civ.App., 193 S.W. 1143.

Broad powers to build, operate, and maintain utility lines on and along public highways are given to utility corporations under the construction I would adopt; and the statute therefore is not rendered nugatory, but on the contrary, is given full effect. The result of this construction would be merely to deny retrospective operation to the statute as against cities incorporated prior to the passage of the statute, and I believe that in so doing we would be following the plainly expressed legislative intent.

I would reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

HICKMAN, C. J., and CALVERT, and SMITH, JJ., join in this dissent.