Untitled Texas Attorney General Opinion

Honorable D. C. Greer Opinion No. WW-344
State Highway Engineer
Texas Highway Department Re: The effect of Section 17, Artl-
Austin, Texas cle I and Section 7a, Article
VIII of the Constitution of
Texas and your recent opinions
numbered WW-45; ww-78; ww-125
and WW-236 on whether or not
State and Federal Highway Funds
can be legally used by the State
Highway Department for the pay-
ment of the cost of removal, re-
locat5.oi!OL' ad ;ji.!stment
of the
telephone f'acilities belonging
to Southwestern Bell Telephone
Company, the gas lines'belong-
ing to Southern Union Gas Com-
pany and the water, electrical
and sanitary sewer facilities
belonging to the City of Austin
which are located within the
public right of way along East
Avenue and the streets which
intersect East Avenue in Austin,
Texas.

Dear Mr. Greer:

you have requested an opinion of this office concerning the
legality of the use of State and Federal Highway Fund~s for the pay-
ment of the cost of removal, relocation or adjustment of certain
utility facilities in connection with the construction of a section
of expressway in Austin, Texas. In connection with your request
you state:
"The expressway along East Avenue forms a part of
the National System of Interstate and Defense Highways,
and I would appreciate your advice, in view of Section
17, Article 1, and Section 7a of Article 8, of the Con-
stitution of Texas, and your recent opinions numbered
ww-45, ww-78, WW-125 and ~~-236 on whether or not we
can legally use State and Fed,eral Highway funds for the
payment of the cost of removal, relocation or adjustment
Honorable D. C. Greer, Page 2 (WW-344).

of the telephone facilities belonging to Southwestern
Bell Telephone Co., the gas lines belonging to Southern
Union Gas Co., and the water, electricity and sanitary
sewer facilities belonging to the City of Austin which
are located within the public right of way along East
Avenue and the streets which intersect East Avenue."

In addition your request also states:

"Plans for the construction of the last section
of the Expressway through Austin along East Avenue
are nearing completion and it is now apparent that the
utility facilities located within the limits of the
present streets must be adjusted, removed, or relocated
to permit the full utilization of the right of way for
highway purposes. Specifically, the telephone facili-
ties belonging to Southwestern Bell Telephone Co., the
gas lines belonging to Southern Union Gas Co., and the
water, electricity and sanitary sewer facilities belong-
ing to the City of Austin must be adjusted, removed~ or
relocated.

"We are informed that the utility facilities be-
longing to the telephone and gas companies are lo-
cated in the right of way of the streets of Austin
under the authority of franchises granted by the City,
whfich, among other things, requires the companies to
adjust, remove or relocate their facilities at their
own expense should their use of the right of way inter-
fere or conflict with the use of such right of way by
the public for street purposes.
II
. . .I,

This office in Attorney General's Opinion No. WW-236 (1957)
written to you on August 26, 1957, sets forth certain points of
law which we believe applicable and controlling in all cases of
this nature. We, therefore, call your attention to this former
opinion and wish to use it as a point of departure in what we say
below.

In accord with the holding in our Opinion No. ~~-236, we
shall first undertake to d~etermine if the utilities in question
are possessed of such rights as to come within the provisions of
Section 17 of Article I of the Constitution of Texas.

Section 17, Article I of the Constitution of Texas pro-
,vid~esin part:
"No person's property shall be taken, damaged or
destroyed for or applied to public use without ade-
quate compensation being made, unless by the consent
of such person; . . ."
_-

Honorable D. C. Greer, Page 3 (WW-344),

We shall analyze the rights of the private utilities first
in as much as they both occupy their present locations within the
public right of way by virtue of franchise from the City of Austin,

The Supreme Court of the United States has held that when
a utility assumes, the duty to perform a particular service under a
franchise this co’nstitutes a contract and vests in the acceotina
corporation or individual a property right which is to be pro- u
tected by the Federal Constitution. Russell v. Sebastian, 233 U.S.
1955 (1913); Ownesboro v. Cumberland Tel. C0.) ou 93 (1913);
Boise Water Co. v. Boise City, 230 U.S. 64 (i912). *"

The Texas cases are In aocord and hold that where a utility
invests,its money by placing Its fixtures within the streets of a
city and undertakes to supply the service required by the fran-
chise, there is created a contract which results in the vesting of
;u;;E;erty right, which, as such, Is to be protected by the Constl-
City of Fort Worth v. Southwestern Bell Telephone Co., 80
Fed.2d.842 (CCA 5th 1936). Texarkana Gas and Electric Co. v. City
of Texarkana, 123 slw. 213'(Tex. cl A 1909 It hi story);
Corpus Christi Gas Co. v. City of C&pu~PChristi,n~8~S.W. 281
TTex. App. 1926, error ref.).

It would further appear that regardless of whether the
"right" Involved be called an eaaement or a franchise, there IS an
element of oronrletars interest Involved which makes It taxable,
alienable and &-ansferable. Texas & Pac. Rwy. Co. v. City of Ei
Paso, 126 Tex. 86, 85 S.W.2d m 193) City of Ft. Worth v.
Southwestern Bell Telephone Co., 0 Fedi2d 842 (CCA 5th, 193b 1.

It being a valuable right which has accrued to the utility
Involved, It naturally follows, we believe, that any relocation of
facilities which results in a "taking" or "damaging" of this fran-
chise or easement involves the "taking" or "damaging" of a compen-
sable property right, whibh Is properly to be protected by Section
17 of Article I, Constitution of Texas.

We believe, however, that a "taking" of this property right
would only occur In those situations where the utility in question
is required to remove its facilities from the right of way of a
city street and to purchase an easement out of its own funds. ThUS,
If the relocation merely involves a moving of the facilities from
one spot In the right of way to another spot in the right of way,
and the utility In question is not deprived of its "easement" in
the street, then there Is in our opinion no "taking" of property
so as to come within the well recognized provisions of eminent
domain.

It also follows, we believe, that in as much as any compen-
sable property right, which the utility might have, arises out of
the franchise which was entered Into between the utility and the
City of Austin, the utility must be bound by the provisions of that
franchise and If the utility Is required to move its facilities
under the provisions of the franchise, then it could certainly not
be damaged within the meaning of the provisions of Section 17,
Honorable D. C. Greer, Page 4 (WW-344).

Article I of the Constitution of Texas. It is our opinion that
House Bill No. 179 cannot abrogate the provisions of the fran-
chise granted to the respective utilities.

It is also well to point out that the Courts have long
held that private utilities occupy the space in a public street
subject to the public uses of that street, and in making use of
the street for that superior purpose, the public is not invading
or injuring private property but is only appropriating that wtih
it its own. City of San Antonio v. San Antonio Street Rwy. Co. ,
39 S.W. 136 (189b, writ ref.). New Orleans Gas Light Co. v.
Drainage Commission of New Oricans, 19’i U.S. 453 (1905); State -V.
Marin Municipal-County-District, 17 Cal.2d 706; 111 Pac.2-
(1941). Commonwealth v. Means & Russell Iron Co., 299 Ky. 465,
183 S.i.2d 9bO (1945); Public Water Supply Dist. No. 2 of Jack: :on-
County v. State Highway Commission, MO. , 244 S.W.2d ii
(1951) ; City of N.Y. v. Hudson & M. R. Co., mi1.Y. lbl; 128’1J.E.
152 (1926); ltiAm. Jur. 843, Emine nt Domail;, S(:ct';~on
212.

3.”
We, therefore, fail to see how the utility has been "d~amagel
as that term is used in Section 17, Article I of the Constitution
of Texas, and, as set forth above, we are also of the opinion that
unless the private utility is forced to go outside of the right of
way in question and purchase an easement for its facilities, then
there is no "taking" of the utilities'property so as to come with-
in the provisions of this section of the Constitution.

This being so, we are of the opinion that we must construe
Section 4a of House Bill No. 179, Acts 55th Legislature, Regular
Session, 1957, in the light of Section 51 of Article III of the
Constitution of Texas. Attorney General's Opinion No. ~~-236
(1957).
Section 51 of Article III prohibits the granting of public
moneys to any individual, association of individuals, municipal
or other corporations whatsoever. We believe that the use of fund,s
as provid~ed for in Section 4a, House Bill No. 179 is just such a
grant of public moneys to corporations as is envisioneii by this
section of the Constitution, and as is pointed out in Attorney Gene-
ral's Opinion No. ~~-236 (1957) if this be so, then by its own pro-
visions Section 4a of House Bill No. 179, would prohibit the use of
these funds for this purpose.

You have also requested the legality of the use of State
and, Federal Highway funds for the payment of the cost of removal,
relocation or adjustment of the wats?r, electricity and sanitary
sewer facilities belonging to the City of Austin, which are relo-
cated within the right of way along East Avenue and the streets
which intersect East Avenue.

As in the case of privately owned utilities, we must first
determine what compensable property right the municipally owned
utility has acquired in the city streets. The Court, speaking in
City of Mission v. Popplewell, 26 Tex. 91, 294 S.W.2d 712 (1956),
Honorable D. C. Greer, Page 5 (WW-344).

said:

"This Court has also held that the legal title
to city streets belongs to the state, which has full
control and authority over them, and the cities
exercise only such control and authority as has been
delegated to them by the Home Rule Amendment to the
Texas Constitution, Art. II, S 5, or by the legisla-
ture. West v. City of Waco, 11.6Tex. 472, 294 S.W.
832; City of San Antonio v. Fetzer, Tex. Civ. App.,
241 S.W. 1034; 30A Tex. Jur. 434; 39 Tex. Jur. 603.
In City of Beaumont v. Gulf States Utilities Co., Tex.
Civ. App., 163 S.W.2d 426. (429 er. ref. w.o.m.), the
Court of Civil Appeals quoted with approval from Mc-
Quillin on Municipal Corporations, 2d Ed., par. 2902,
page 12: "'Courts everywhere decline to recognize
that the city possesses any property rights In the
streets, although they may be a source of profit to
the municipality. Their interest is exclusively
public juris, and Is in any respect wholly unlike pro-
perty of the private corporation which is held for its
own benefit and used, for its private gain and, advantage.""'

It Is clear from this opinion that even as to streets lo-
cated, within the corporate limits of a given city, the city has no
legal title and Is limited. to such control and authority as is dele-
gated to it by the Constitution of Texas and the Legislature. This
is true whether the city in question be a Home Rule City or not.
City of Beaumont v. Gulf States Utilities Co., supra, p. 429.

In our opinion the above authority clearly indicates that
under the laws of Texas an incorporated~ city, even though it be a
Home Rule City, has no legal title to the streets within its corp-
orate limits, and that where these s.treets have been designated a
State Highway, they are subject to the control of the State Highway
Commission. For this reason, it is logical to conclude that where
the city utility is located within th e designated right of way of a
State Highway, the city d~oes not automatically holds a compensable
property right in any given portion of the street by virtue of the
location of its utilities within the right of way, but rather oc-
cupies this space und.er authority of a right in the nature of a per-
missive user.
This is not to say, of course, that the facilities of a muni-
cipally owned utility cannot be said to occupy an "easement" within
the city street just as does the privately owned utility merely be-
cause the city does not grant itself a franchise. As in the case
of a privately owned utility, it does not follow that by placing
fixtures within the right of way of a street the city has not
thereby become vested with a property right of the same nature as
that under consideration in Texarkana Gas and Electric Co. v. City
of Texarkana, supra, and Corpus Christ1 Gas Co. v. City of Corpus
Christi, suora.
Honorable D. C. Greer, Page 6 (WW-344).

It is, therefore, our opinion that where the City has
placed its facilities within the right of way of a street, it has
thereby become vested with a property right which is subject to
compensation where there has been a "taking" or "damaging" of that
right.

Likewise, we believe that just as in the case of a pri-
vately owned utility, if the municipally owned utility is required
to remove its facilities from the right of way of the street Andy
relocate them outside of that right of way, or if an easement,
which the utility owns outside of the right of way, is encompassed,
then there is a "taking" involved. In these cases payment under
the provisions of Section &a, House Bill No. 179, would be authorized.

However, if the municipally owned utility 3~s only required~
to relocate from one spot in the rig'nt of way to another, there is
no "taking", or "damaging" involved., and we believe the utility oc-
cupies any given location subject to the superior primary function
of a street, that being the use by the public as a thoroughfare.

Therefore, the municipal utility may, we believe, be made to
bear the cost of actually removing the facility from one given lo-
cation in the right of way to another, for here there is no "taking"
or "damaging" of the "easement" for the same reasons as have been
previously pointed out in our discussion of private utilities. As-
suming that there is no "taking" of or "damaging" a property right
involved, we must next turn to the question of the granting of pub-
lic moneys.

Section 5l.Article III of the Constitution of Texas. as
quoted above, prohibits the grant of public moneys to any municipal
corporation. Tine Court, in Road. District No. 4, Shelby County v.
Allred~, Attorney General, 123 Tex. 77, b6 S.W.2d lb4 (193.X); after
setting out Section 51, Article III of the Constitution, held:
1,
. It is the settled law of this state that the above-
quoted Constitutional provision 3.3 intended to guard against
and pr0i;ibi.tthe granting or giving away of public money es-
2ept for strictly governmental purposes. The prohibition3
an absolute one, except as to the zlai>s ,exemp,tedtherefrom,
and operates to prohibit the Legislature from making gratui-
tous donations to all kinds of corporations, private or pub-
lic, municipal or political . . . .' (Emphasis ours)

It has been held that in operating water and electrical supply
w&ems. the municioalitv is operating in its proprietary capacity.
Crosbvton v. Texas-New Mexico Utility-Co., 157-S.W.2d 418, (Tex. -
Civ. App. ~19111, s v. Abilene. 276 S.W.2d 922.
(Tex. Civ. App. 135~5, error rm River Oaks v. Moore, 272-S.W.2d
389 (Tex. Civ. App.1954 reh. den.j. The operation of a sanitary
sewer system hasbeen held. to be a governmental function. Gotcher
v. Farmersville, 137 Tex. 12, 151 S.W.2d 56"; (1941).

We believe that the holding of the Court in Road District
. ._ .

Honorable D. C. Greer, Page 7 (WW-344).

No. 4, Shelby County, v. Allred, supra, is controlling on this point,
and are therefore of the opinion- unless there is a "taking" of
the property right of the City of Austin in the public right of way
involved in your request, the water and electrical facilities of the
city, being a proprietary function, may not be adjusted, removed or
relocated und:er the provisions of Section 4a of House Bill No, 179,
Acts of the 55th Legislature, 1957.

Likewise, the holding in the Allred case will allow the use
of State and Federal fund.s to pay forcost of relocating the
sanitary sewer facili.tics of the City of Austin located in the pub-
lic right of way in question in as much as this function has been
held to be a governmental function of a city.

The above holdingsare in accord with and supported by the
recent opinions of this office which you have mentioned in your re-
quest, to-wit, WW-45, ~~-78, WW-125 and ~~-236.

You have also requested our opinion as to the effect of Sec-
tion 7a, Article VIII of the Constitution of Texas on the use of
State and Fed~eral Highway funds as provided for in Section 4a of
House Blll No. 179, Acts 55th Legislature, Regular Session, 1957.
This section provides in part:

"Subject to legislative appropriation, alloca-
tion and direction, all net revenues remaining
after payment of all refunds allowed by law and ex-
penses of collection derived from motor vehicle re-
gistration fees, and all taxes, except gross produc-
tion and ad valorem taxes, on motor fuels and lubrl-
cants used to propel motor vehicles over public road-
ways, shall be used for the sole purpose of acquiring
rights-of-way, constructing, maintaining, and polic-
ing such public roadways, and for the administration of
such laws as may be prescribed by the Legislature per-
taining to the supervision of traffic and safety on
such roads; . . .'

This section provides that the funds involved "shall be used for
the sole purpose of acquiring rights-of-way, constructing, main-
taining and policing" the public roadways of the State. There-
fore, it is our opinion that in so far as this section might af-
fect any funds to be used for the payment of relocation expenses
under the provisions of Section 4a of House Bill No. 179, it
clearly prohibits the use of fund~s for this purpose for the re-
location of utility facilities does not fall within the purposes
of acquiring rights-of-way, constructing; maintaining or polic-
ing of the public roadways.

We, therefore, are of the opinion that unless the relo-
cation of the particular facilities In question involve a "taking"
or "d.amaging", as we have construed. these terms above, then the
use of State and Federal Highway funds for the payment of the cost
of removal, relocation or adjustment of the telephone facilities
 . . _

Honorable D. C. Greer, Page 8(WW-344).

belonging to the Southwestern Bill Telephone Company, the gas
lines belonging to Southern Union Gas Company and the water and
electricity facilities belonging to the City of Austin which are
located within the public right of way along East Avenue in the
City of Austin Is prohibited by the provisions of Section 11a of
House Bill No. 179, Acts 55th Legislature, Regular Session, 1957.
It also is our opinion that the sanitary sewer facilities ,beIong-
ing to the City of Austin may be removed under the provisions of
Section &a, House Bill No. 179, Acts 55th Legislature, R.S. 1957,
even though there be no %aking" or "damaging" as we have defined
those terms above.

SUMMARY

Unless the relocation of the particular facilities In
question involves a "taking" or "damaging" of a property
right as we have construed these terms, then the use of
State and Federal Highway funds for the payment of the
cost of removal, relocation or adjustment of the telephone
facilities belonging to Southwestern Bell Telephone Company,
the gas lines belonging to Southern Union Gas Company, and
the water and electricity facilities belonging to the City
of Austin, which hre located: wlthin~thepublic right of way
along East Avenue in the City of Austin, is prohibited by
the provisions of Section 4a of House Bill No. 179, Acts
55th Legislature, Regular Session, 1957. Also the sanitary
sewer facilities belonging to the City of Austin may be re-
moved under the provisions of Section 4a, House Bill No.
179, Acts 55th Legislature, Regular Session, 1957, even
though there be no "taking" or "damaging" as defined above.

Yours very truly,

WILL WILSON
Attorney General of Texas

BY
hd>,C. Rivers, Jr.
Assistant
WCR:ls

APPROVED:

OPINION COMMITTEE

Geo. P. Blackburn,CChafnman
Milton Richardson
Leonard Passmore
John Reeves

REVIEWED FOR THE ATTORNEY GENERAL
BY W. V. Geppert