Story Case

Walter Hildebrand, a citizen of Owensboro, Kentucky, applied to the Owensboro Gas Light Company for permission to use its gas. The company demanded a deposit of $20 as security for the use of its gas. This Hildebrand refused to pay, and the company refused to furnish its light. Hildebrand brought an action to demand its service, and showed, during the trial, that the company had no general rule to enforce such payment of money in advance. What should be the decision of the court ?

Ruling Court Case. Harbison Vs. Knoxville Water Company, Volume 103 Tennessee Reports, Page 421

Sam Harbison fixed a hydrant in his yard to which he attached the hose for sprinkling his lawn. There was no meter at his house, but water rates were fixed according to number of faucets or fixtures. For the fixture in the yard, Harbison paid the regular rate for sprinkling service. In January, he notified the Knoxville Water Company that he did not intend to use any water for sprinkling, and asked that the rate for his house be changed, so that he would be charged for water for domestic purposes only. The company refused to reduce the rate, unless he would take off the hydrant in the yard or file off the thread so that a hose could not be attached. Harbison refused to do either. It was the rule of the company that payment was required in advance, and accordingly, Harbison was requested to pay in advance, the rate including the sprinkling charge. He refused to do this, whereupon the company threatened to shut off his water altogether. In anticipation of that action, Harbison brought this suit in equity, asking that the company be enjoined and that it be compelled to supply him with water in his house, without requiring payment for the sprinkling hydrant which he was not using. The water company contended that in the absence of a meter rate, a charge based upon the number of faucets attached to the supply pipe was a reasonable charge, and that it could be applied fairly only if all fixtures were counted, whether they were used or not.

The court held that the company was justified in requiring payment in advance, and in refusing to serve Harbison, unless he either paid for the sprinkling hydrant or had it removed. It would be impossible to prevent fraud and inequalities if mere statements as to the use made of the water were to be accepted as sufficient basis for reducing the charge. The bill of Harbison was therefore dismissed.

In an opinion by Mr. Justice Wilson, the court said: "It is well settled that public service companies may adopt reasonable rules for the conduct of their business, and such rules may be enforced, even to the extent of denying service to those who refuse to comply with them. We think that the rule of the defendant company requiring the prepayment of a quarter's rent for water is reasonable. The regulation that the party taking and paying for water for domestic purposes only must put his hydrant appliances in condition for such use only, is also, we think, reasonable and enforcible. Such a regulation for the sale of water furnished through hydrants, where the quantity used is not measured, is essential to protect the rights of the company, and may be necessary to enable it to meet its obligations to the public, and its duty to furnish water to all inhabitants of the city alike, and without discrimination. It has no right to base a rule on the theory that the population as a whole is dishonest. But it has the right to adopt a rule which, while giving the honest citizen what he pays for, will prevent the dishonest one from getting what he never paid for and never intended to pay for, and said he never wanted. It was the duty of Harbison to put his hydrant and its appliances in a condition to get water for domestic purposes only. Having failed to do that, he had no right to demand that the company furnish him with water."

Ruling Law. Story Case Answer

A public utility company is entitled to a fair compensation for its service or commodity, and it is entitled to make reasonable rules to protect itself in the collection of its compensation. Thus, a railroad company may demand that its charges be paid in advance for the carriage; a light company may refuse to render service where its former bills remain unpaid', a telegraph company may require the sender of a message which required an answer, to pay the charges for the answer in advance. Reasonable rules may be established, fixing a minimum charge, or rent, or fixing different charges for service, where the service is not of like quality or quantity; thus, a large consumer may reasonably pay less in proportion to the amount consumed, than a small consumer.

But a public service company has not the right to make unreasonable rules, not to discriminate between the public. Thus, if, in the Story Case, Hildebrand shows that the company does not apply its rules to all customers alike, he can demand its service without abiding by the rules. The same rule applied to an interesting Alabama case, where the city of Mobile, Alabama, owned a sewer system and a water system, the latter in competition with a private company. The city established a rule, whereby any citizen who used its sewer could use its water; that is, the charge was for the sewer alone. The Bienville Water Supply Company, the private company, brought an action against the city to compel it to establish a rate for the water to all its users, and a rate for the sewer, on the ground that its conduct was an unjust discrimination against the company's customers. The city was required by the court to fix the separate charges.