A municipally owned utility cannot cut off its services for non-payment of bills unless customers have a fair chance to challenge disputed charges, the Supreme Court ruled 6 to 3 yesterday.
"Utility service is a necessity of modern life," Justice Lewis F. Powell Jr. wrote in the opinion for the court. "Indeed, the discontinuance of water or heating for even short periods of time may threathen health and safety.And the risk of an erroneous deprivation, given the necessary reliance on computers, is not insubstanial."
The case, involves the city-owned Memphis Light, Gas and Water Division and a residence, previously a duplex, with one water meter but two separate gas and electric meters.
After Willie S. and Mary Craft moved into the building in October 1972, they began receiving computerized separate monthly bills for each set of meters. A contractor they hired to combine the meters didn't do it right, causing them to continue to receive dual bills.
Several times, Mrs. Craft tried in food faith to find out why the "double billing" persisted. Despite this. Memphis Light, alleging non-payment, cut off service five times during a 15-month period ended in January 1974. Finally, the Crafts sued. The sum at issue was about $35.
Only after that did the Crafts learn that they had continued to receive double bills because Memphis Light had failed to combine the two accounts properly. They also had been overcharged for gas and for "city service fees."
The 6th U.S. Circuit Court of Appeal held that under the guarantee in the Constitution of due process of law, and a Tennessee statute, the Crafts had been entitled to a notice not only informing them of termination, but also of a procedure for challenging a disputed bill.
Instead, the Memphis Light "final notice" simply said that payment was overdue and that if it was not made by a certain date, service would be cut off.
For the Supreme Court, Justice Powell said, "We agree with the Court of Appeals that due process requires the provision of an opportunity for the presentation to a designated employe of a customer's complaint that he is being overcharged or charged for services nit rendered.
In the dissenting opinion, Justice John Paul Stevens, joined by Chief Justice Warren E. Burger and Justice William H. Rehnquist, wrote that the ruling "confuses and trivalizes the prinicple that the state may not deprive any person of life, liberty, or property without due process of law."
Memphis Light has designated scores of employes to process more than 30,000 over-charge complaints annually, but except for the crafts' problem, nothing in the record suggests arbitrary treatment, Steven said.
The majority warned municipal utilities that they may be acting unconstitutionally unless they provide "some kind of hearing," but Stevens said, "just what, or why, additional procedural safeguards are constitutionally required is most difficult to discern."
Each month, Memphis Light cuts off service to about 2,000 customers. Yet "the record does not reveal any actual case of harm to health or safety," Stevens said. Tax Exempt Property
In a case from Illinois that eventually may have wide repercussions, the Cook County assessor to collect real estate taxes on property leased to commercial enterprises by a tax-exempt educational institution.
Like other educational institutions, Northwestern University has a charter from the state providing - for 123 years, in this case - that all of its property "of whatever kind or description shall be forever free from taxation for any and all purposes."
Under a 1939 state revenue law, the assessor has tried repeatedly to tax property that Northwestern has leased at what it said were "fair market rental values." At least in the cases of land least to Nabisco, Inc., the lease terms call for deduction from their rental charges of any taxes that may be levied on them.
The ruling upholding the assessor was made by the Illinois Supreme Court last September.