Abbott v. Iowa City
| Decision Date | 18 January 1938 |
| Docket Number | 44158. |
| Citation | 277 N.W. 437,224 Iowa 698 |
| Parties | ABBOTT et al. v. IOWA CITY et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Johnson County; Wm. W. Scott, Judge.
Action in equity to enjoin the city of Iowa City, its officers, and representatives, from proceeding with the establishment of a municipal light and power plant and distribution system pursuant to a special election alleged to be void. The lower court denied the relief demanded, and plaintiff, Abbott, and intervener, Iowa City Light & Power Company, appeal.
Modified and affirmed, with instructions.
Popham, Toomey & Davis and Dutcher, Ries & Dutcher, all of Iowa City, and Lane & Waterman, of Davenport, for appellants.
Stipp Perry, Bannister & Starzinger, of Des Moines, and D. C. Nolan and Robert L. Larson, both of Iowa City, for appellees.
The plaintiff, Harry Abbott, is a resident, citizen, elector, taxpayer, and consumer of electricity in Iowa City. The intervener, Iowa City Light & Power Company, is the owner and operator of a gas plant, and an electric distribution system in the city of Iowa City, and as such supplies gas and electricity to Iowa City and its inhabitants. Intervener, as owner of the gas plant, is also a property owner, taxpayer, and consumer of electricity in Iowa City.
Its franchise for distributing electricity to the city of Iowa City expired on January 11, 1934. Since that time it has furnished the city and its inhabitants with electricity at rates regulated and fixed by the City. The Iowa City Light & Power Company is the only person or concern engaged in supplying electric light and power to Iowa City and its inhabitants and possesses the only facilities now available for so doing.
In January, 1934, the city of Iowa City made an application to the Federal Emergency Administration of Public Works for a free public grant of funds to be used toward the construction of a municipal light and power plant in Iowa City. This grant has since been allowed in the sum of $412,650, which is available toward the payment of said plant.
The city council of Iowa City had refused to order an election for the establishment of a municipal plant in that city. Thereupon petitions signed by the requisite number of property owners were filed with the mayor of Iowa City requesting him to submit " the question of establishing a city-owned and city-operated electric light and power plant and distribution system," to the voters at a special election as authorized by section 6132 of the Code of 1931. Thereafter in March, 1934, the mayor issued a notice for a special election called for April 17, 1934, reciting therein that the election was called pursuant to petitions filed by the requisite number of property owners of Iowa City.
Between that time and the date of election, a heated contest for and against the proposition was conducted through the press and otherwise.
The result of the election showed 2,959 votes in favor of the proposition and 2,804 against. The city council then in power refused to establish a plant pursuant to the mandate of the election and refused to authorize the execution of a contract therefor. About six months after the refusal of the then council to provide for the establishment of a plant, an ordinance was adopted by a new administration providing for the establishment of a municipal plant.
On January 8, 1934, the city of Iowa City made an application to the Federal Emergency Administration of Public Works for a loan and grant to construct a municipal electric plant and distribution system in Iowa City. This application was later withdrawn, and on June 17, 1935, the city made another application asking for a grant of 45 per cent. of the cost of the labor and material in connection with the proposed municipal plant. On October 7, 1935, an agreement was entered into between the Federal Emergency Administration of Public Works and the city of Iowa City under which the Federal Emergency Administration of Public Works offered to make an outright grant of 45 per cent. of the cost of the project, such grant, however, not to be in excess of $413,000. Thereafter, on March 6, 1936, the city of Iowa City entered into a contract with the Federal Emergency Administration of Public Works for a grant in the approximate sum of $412,650, the city proposing to raise the balance of the funds from the sale of revenue bonds under the Simmer Law in an amount not to exceed $917,000. The defendant city concedes its intention of paying more than the sum of $917,000 in the construction of the project in the event the federal grant is received. Engineering and legal services were then engaged preliminary to the execution of a contract for the establishment or construction of a plant.
Plaintiff, Abbott, commenced this action in his own behalf and in behalf of all other residents, taxpayers, and users of electrical energy in the defendant city. The action was commenced in equity to restrain the city from proceeding to construct a municipal plant upon the alleged ground that the election was invalid and conferred no authority upon the city for the establishment thereof. The lower court held that the appellants were not entitled to the relief demanded and denied the application for an injunction. Plaintiff, Abbott, and Iowa City Light & Power Company appeal. Additional facts are stated in the opinion.
Appellants contend that the court erred in holding that they had no legal rights which could be violated and were therefore not entitled to the relief asked. One of the reasons urged as showing that the Iowa City Light & Power Company had no legal rights that could be violated is that its franchise for distributing electrical energy in Iowa City had expired in January, 1934, and is therefore no longer interested.
It is the general rule of law that, although the franchise of a public utility company has expired, it must nevertheless continue to serve the city under contract or otherwise as long as no other source of electricity is available, or until a municipal or other plant is established. A utility company has the same rights it had under its franchise, except that it may be compelled to discontinue using the public streets after the expiration of reasonable notice so to do. City and County of Denver v. Denver Union Water Company, 246 U.S. 178, 38 S.Ct. 278, 62 L.Ed. 649; Iowa City, Iowa, et al. v. Iowa City Light & Power Company et al., 8 Cir., 90 F.2d 679, 112 A.L.R. 618; Cedar Rapids Water Company v. City of Cedar Rapids, 118 Iowa 234, 91 N.W. 1081; Miller et al. v. Incorporated Town of Milford et al., Iowa, 276 N.W. 826, decided in December, 1937, not yet reported in State report.
The undisputed evidence also shows that, after the expiration of its electric franchise, the rates for electrical energy were fixed by the city council, and thereafter and at the present time the city of Iowa City and its inhabitants, by arrangement between the city and the company, are being furnished with electrical energy by said company. Appellants therefore claim to be entitled to use the streets of the city until a reasonable time after receiving notice from said city to vacate.
The evidence also shows without dispute that, in addition to its electric light plant, the Iowa City Light & Power Company is also the owner of the Iowa City gas plant, which was also operated by the Iowa City Light and Power Company under a franchise which expired January 13, 1934, and as such is a consumer of electrical energy. The record also shows that the Iowa City Light & Power Company is the largest taxpayer in Iowa City.
Appellees contend that, in order to maintain this suit, appellants must show definite and certain legal damages suffered by them and that no such damages have been shown.
To authorize a contract for the construction or acquisition of a municipal light and power plant, an election on the proposition must first be had and the proposition be carried by a majority of the legal electors voting thereon. Without an election the fundamental right to enter into the contract does not exist. A holding that a citizen and taxpayer, or all the citizens in the city, cannot question the right of the city council to enter into such a vast undertaking as the construction of a municipal light and power plant, unless special personal damages are shown, would practically result in a situation where no one would have a right to question the rights of the council's illegal act in so doing.
In discussing the right to enjoin such proceedings, Judge Dillon in his work on Municipal Corporations, 5th Ed., par. 1579 says: ...
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