Southwest Water Services, Inc. v. Cope (531 S.W.2d 873, 1975)

OPINION

MASSEY, Chief Justice.

This is an appeal by defendant Southwest Water Services, Inc., hereinafter termed Southwest, from order of the trial court granting permanent injunction to plaintiffs. Plaintiffs’ suit was a T.R.C.P. 14 class action for relief. Named plaintiffs in the class action were Frank Cope and others.

Judgment order affirmed.

Each of the plaintiffs who were members of the class had purchased property in what is known as Oak Trail Shores, a land subdivision in Hood County, Texas. The subdivision was land carved into approximately 3800 lots. It had been established in 1969. Western Resort Properties, Inc. was the owner and developer. The promoters of Western Resort Properties were not only its officers and stockholders but also those of two other corporations separately organized to function in respect to laying out and platting the subdivision, running water lines, and operating the water works supply to the lots within the subdivision as it was being developed. Of these the operator of the water works was the defendant, Southwest.

Pursuant to promotion of the subdivision there was thereat a crew of salesmen, with a sales manager, all trained in their primary jobs of lot sales. Part and parcel thereof were representations authorized relative to water supply to be afforded any lot purchaser. The location was some six miles south of Granbury, Texas, the nearest town. Of interest is the fact that the sewage disposal for each lot (or land parcel) was to be effected by use of septic tanks; making obvious the importance that there be a means of water supply to any prospective lot purchaser through water lines rather than individual wells. The sales force was authorized and directed not only by Western Resort Properties but by Southwest to sell lots by representing, among other inducements, that a purchaser would be entitled to receive water from Southwest at a specified rate, to-wit: that until water meters were installed there would be a “flat rate” charged regardless of the amount of water used, with a “metered rate” to apply once water meters were installed at a rate of cost which would not be in excess of the rate paid by the residents of the City of Granbury who were customers of its municipal water works, and such rate would be that charged so long as the purchaser owned his lot.

On this, since it developed that the City of Granbury charged a different rate to customers living outside its city limits from the rate charged to customers living within its limits, there was testimony that what was represented and intended to be represented was that the rate charged residents of Oak Trail Shores would be that charged the residents living inside the city limits of the City of Granbury, Texas. This testimony came from the man who had formerly been the sales manager at the Oak Trail Shores subdivision, though engaged in other employment at time of the trial.

From the evidence it would appear that as applied to Western Resort Properties and Southwest each might properly be said to have constituted the alter ego of the other as applied to the transaction of initial sale of the lots of Oak Trail Shores. In any event the evidence established that there was pre-existent agency authorization for Southwest by the sales organization at the subdivision, and also ratification on the part of Southwest after sales, of the promissory representation above stated in inducement of lot purchases, viz: by representing that Southwest would supply water to lot purchasers at the rates charged by the City of Granbury for as long as they continued to own their lots.

Indeed, after the lots were purchased Southwest presented a written form of contract which was substantially in accord with the representations made; or at least not in contradiction.

The written contract prepared by Southwest and used initially upon each lot owner becoming applicant for water service, included among its provisions, the following: “Applicant agrees and acknowledges that such rates are for residential use only and that Supplier has the right at any time to install a meter and charge for water used at the same rate as charged for residential water service by the City of Granbury, Texas.” Nothing in this contract related to-time and duration. It was only in parol evidence that time and duration of entitlement was shown. Such evidence was that as part of inducement for each lot purchase there was representation that the rate would persist so long as the purchaser owned his lot. There was no like agreement when a lot owner appeared before Southwest and contracted for water.

Beginning about September 13, 1971, Southwest began to install meters. As they were installed it began to charge its customers the “metered rate” which was the same charge being made to those residents living inside the City of Granbury by their municipal water works. December 30,1971, Southwest sent notices to its Oak Trail Shores customers advising of a certain increase of rates to be charged for “metered service”. These rates were above those charged in Granbury. This did not occasion action by its customers. There was some sort of difficulty with a federal agency encountered at this time by Southwest. Pending resolution of the difficulty Southwest notified its customers that charge for water would revert to the old “flat rate”. The difficulty was resolved. In June, 1972, without notice, Southwest began to charge at a “metered rate” slightly in excess of that which was then being charged in the City of Granbury to residents within its city limits. This did not occasion action by the Oak Trail Shores customers of Southwest.

In December of 1973, however, action taken by Southwest did occasion counteraction. In January, 1974, with some qualification of its December 30, 1971, program for charges upon “metered rates” for water supplied residents of Oak Trail Shores, Southwest finally settled upon the position it would take. It prepared and forwarded notices to its customers in Oak Trail Shores that effective beginning January 15, 1974, the monthly rates to be charged would be a $7.50 minimum for the first 5,000 gallons (or any lesser amount), plus 90