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Dempsey v. Holiday Utilities Corp.

OPINION FILED MAY 24, 1982.

ROBERT DEMPSEY ET AL., PLAINTIFFS-APPELLEES,

v.

HOLIDAY UTILITIES CORPORATION, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Madison County; the Hon. CLAYTON R. WILLIAMS, Judge, presiding.

JUSTICE KASSERMAN DELIVERED THE OPINION OF THE COURT:

After a bench trial in the circuit court of Madison County, the court granted plaintiff homeowners' petition for permanent injunction against defendant water company and awarded plaintiffs money damages, including punitive damages and attorney fees. The following facts appear from the pleadings, exhibits, and the testimony adduced at the trial on February 29 and April 2, 1980: Plaintiffs, Robert and Becky Dempsey, purchased Lot 1880 in Holiday Shores subdivision in Madison County, Illinois, in April 1978 and began construction of a new house on that lot the following month. At the time of the purchase, a water meter and a "yard hydrant" had been installed on the lot. The hydrant was not a fireplug; instead, it was a faucet or spigot to which a garden hose could be fitted. According to the plaintiffs, the hydrant was locked when they purchased the lot. Dan Smith, president and chief operating officer of defendant, Holiday Utilities Corporation, testified that the hydrant was private property and that the lock was not defendant's. Defendant, which had been owned by the Dan Smith Company since 1977, had provided water service to the entire subdivision since 1967. In July of 1978, prior to completion of the house on Lot 1880, defendant billed plaintiffs for $12.50 for the quarterly billing period ending June 30, 1980, and for $368.75 for a previous unpaid bill. As of July 25, the due date of this bill, no portion of it had been paid. Plaintiffs' attorney wrote defendant on August 14, 1978, inquiring as to why this bill had been sent and demanding that defendant not deny plaintiffs water service when plaintiffs did apply for such service. Mr. Smith replied by letter dated August 16, 1978, that the lot was served by a yard hydrant; that the recorded utility covenant for the subdivision provided for a $12.50 minimum charge per quarter for "water availability"; that such charge was binding upon the purchaser and his heirs and assigns; and that the lot owner must pay for the service or face a lien against the property, enforceable by foreclosure.

According to Mr. Dempsey, he became aware in August 1978 that there was no water service at the house. The house was completed, except for water service, near the end of September 1978. Mr. Dempsey related that he went to defendant's office in the subdivision where Tom Albrecht gave him an application. Mr. Dempsey completed it and returned it to Albrecht, who said that everything appeared to be in order and that it would probably be a week before water was hooked up at the house. Albrecht also stated that the application would have to go to St. Louis for approval. Mr. Dempsey tendered no payment with the application.

Mr. Smith testified that the only office defendant maintained in the subdivision was for the use of defendant's water treatment operator and that it was not an office for customer service or contact. Defendant's office for those purposes was in St. Louis. Albrecht was a supervised maintenance man who worked briefly for defendant and had no responsibility for customer service, applications, or collections. Defendant's records did not indicate an application by Mr. Dempsey in August.

By letter to defendant dated September 13, 1978, plaintiffs' attorney agreed that plaintiffs were responsible for the $12.50 quarterly minimum charge from the date of plaintiffs' purchase of the lot but disclaimed responsibility for the unpaid charges of $368.75 incurred prior to the purchase. In the letter, plaintiffs' attorney also sought assurance that upon proper application and payment of currently due quarterly use charges, water would be supplied. There is no indication of a response by defendant to this letter.

On September 28, Mr. Dempsey spoke to Mr. Smith at Mr. Smith's house. According to Mr. Dempsey, Mr. Smith told him that until the last bill was paid, plaintiffs would not receive water. Mr. Smith testified that he might have so stated. Mr. Dempsey testified that he told Mr. Smith that he would pay any bill plaintiffs had incurred since they had owned the lot but not the prior owner's bill. Mr. Smith testified that Mr. Dempsey did not tender an application or offer to pay any portion of the previous bill.

By letter to defendant dated October 2, 1978, the Consumer Assistance Office of the Illinois Commerce Commission stated that plaintiffs had agreed to pay all charges accrued since their ownership of Lot 1880 and observed that, under Illinois Commerce Commission General Order 172, service could not be denied based on a previous owner's bill. The letter requested that plaintiffs be provided water service. By letter dated October 6, defendant replied that the balance due under the recorded water covenant for the subdivision was $382.50 as of July 25, 1978, and noted that plaintiffs' deed stated that it was subject to all covenants and restrictions of record. By letter to defendant dated October 9, 1978, plaintiffs' attorney again demanded water service for plaintiffs.

Plaintiffs' complaint for injunction, damages, and attorney fees was filed October 18, 1978. Their petition for a temporary restraining order or preliminary injunction to prevent defendant from refusing water service until a hearing could be had on the complaint for permanent injunction was filed October 19, 1978. Plaintiffs had been billed on October 9, 1978, for $382.50 previous balance plus $12.50 for the quarter ending September 30; no portion of that bill was paid as of its due date of October 25. On October 26, 1978, a "Temporary Restraining Order" was entered which stated in part: "Defense counsel agrees on behalf of the Defendant that upon application and payment of undisputed bills, water service will be provided. Plaintiffs agree to do so. This case, therefore, continued by agreement." On October 29, Mr. Dempsey went to defendant's attorney's office, wrote out an application form and paid $25. Water service was hooked up the same day.

In order No. 58638, dated December 6, 1978, the Illinois Commerce Commission announced various findings and conclusions relating to the billing practices of defendant as determined in hearings before the Commission in March and May of 1978 and at various other hearings since 1973. The order, in pertinent part, provided as follows:

"Respondent [defendant] claims that the purchase contracts for lots within its certificated area, the tariffs on file with the Commission and the record in the original certificate proceeding each recognized the collection by Respondent of an available for use charge. Contending that it is authorized to collect an available for use charge from its non-metered customers, including both those customers with applications and those customers without applications on file with the Company, Respondent commenced to bill all lot owners for water service in its certificated area.

Since April, 1977, the Consumer Assistance Section of the Commission has received numerous complaints concerning the Company's billing practices. These complaints include, inter alia, the practice of (1) billing lot owners who never signed an application for water, (2) demanding that present customers pay delinquent water charges incurred by their predecessors in title, and * * *. The Company supports [its] position stating that certain covenants dealing with the Holiday Shores Subdivision were made a part of the sale contract when lots in the subdivision were purchased and provide in part `the purchaser contracts and agrees to pay a minimum water use charge not to exceed $12.50 per quarter and/or such water use charges as may be set and/or approved by the Illinois Commerce Commission.' Respondent claims that such a covenant runs with the real estate and is binding upon grantees of the original purchaser.

The Commission is of the opinion that the record of the original certificate proceeding does not authorize or otherwise allow Respondent to collect an available for use charge, in fact, it appears abundantly clear to this Commission that Respondent's witness in the certificate proceeding and its witness in this proceeding prior to its being reopened, intended that only those lot owners who applied for service would be billed.

[U]nder Respondent's tariffs it is authorized to charge only those individuals who have signed applications for water service or are otherwise ...


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