Sloan v. City of Conway
555 S.E.2d 684, 347 S.C. 324, 2001 S.C. LEXIS 184 (2001)
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Rule of Law:
A municipality has no public duty to provide water to nonresident customers at reasonable rates, as any right to such rates for nonresidents arises solely from contract. A municipality may charge nonresidents a higher rate than residents to generate revenue for the sole benefit of the city.
Facts:
- Appellants are water customers who reside outside the corporate limits of the City of Conway but within the service area of the Grand Strand Water and Sewer Authority.
- By agreement between Grand Strand and the City of Conway, the City provides water service to the appellants' area.
- The City of Conway purchases all of its water wholesale from Grand Strand's Bull Creek plant.
- In 1996, Grand Strand increased the rates it charged the City for sewer treatment, a cost unrelated to providing water.
- To offset the increased sewer costs, the City of Conway enacted an ordinance that raised the water rate for all nonresident customers to double the rate charged to in-city customers.
Procedural Posture:
- Appellants, nonresident water customers, filed an action in a South Carolina trial court against the City of Conway and Grand Strand Water and Sewer Authority.
- The lawsuit challenged a 1996 city ordinance that increased water rates for nonresident customers.
- The trial judge granted summary judgment in favor of the City and Grand Strand.
- Appellants appealed the trial court's grant of summary judgment to the Supreme Court of South Carolina.
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Issue:
Does a municipality have a public duty to charge reasonable water rates to nonresident customers, absent a specific legislative directive or contractual obligation to do so?
Opinions:
Majority - Justice Moore
No, a municipality has no public duty to charge reasonable water rates to nonresident customers. The court, relying on the precedent set in Childs v. City of Columbia, held that a municipality's duty to nonresidents is purely contractual, not a public duty. The court reasoned that a city has an obligation to sell its surplus water 'for the sole benefit of the city at the highest price obtainable.' A statute requiring 'reasonable compensation' for water services does not apply to nonresidents unless they are expressly included. Here, the City's contractual obligation was only to charge the appellants rates no higher than those charged to its other out-of-city customers, a condition the City met by applying the double rate to all nonresidents.
Analysis:
This decision reaffirms the long-standing principle from Childs v. City of Columbia, cementing a municipality's broad authority to set utility rates for nonresidents. It clarifies that general statutory language requiring 'reasonable compensation' will not be interpreted to protect nonresidents unless they are explicitly named, thereby giving municipalities significant power to use utility services as a revenue-generating tool. The case underscores that nonresidents seeking protection from high rates must secure it through explicit contractual terms, as they cannot rely on a public duty of reasonableness that extends only to residents.
