Cass County Elec. Co-op. v. Wold Properties, Inc.

• Decision Date: 27 December 1976
• Docket Number: No. 9257,9257
• Citation: 249 N.W.2d 514
• Parties: CASS COUNTY ELECTRIC COOPERATIVE, INC., a corporation, Plaintiff and Appellee, v. WOLD PROPERTIES, INC., a corporation, Defendant and Appellant, Northern States Power Company, a corporation, Defendant and Appellee, and North Dakota Public Service Commission, Defendant. Civ.
• Court: North Dakota Supreme Court

Page 514

249 N.W.2d 514

19 P.U.R.4th 341

CASS COUNTY ELECTRIC COOPERATIVE, INC., a corporation Plaintiff and Appellee, v. WOLD PROPERTIES, INC., a corporation, Defendant and Appellant Northern States Power Company, a corporation, Defendant and Appellee and North Dakota Public Service Commission, Defendant.

Civ. No. 9257.

Supreme Court of North Dakota.

Dec. 27, 1976.

Rehearing Denied Jan. 20, 1977.

Syllabus by the Court

1. Under Chapter 10--13, N.D.C.C., relating to rural electric cooperatives, such cooperatives may serve nonmembers, including those not eligible for membership, provided the limitation of Section 10--13--03, subsection 1, as to number of nonmembers allowed is not exceeded.

2. The Territorial Integrity Act (§§ 49--03--01.1 to 49--03--01.5, N.D.C.C.) was intended to keep to a minimum wasteful duplication and conflict between suppliers of electricity.

3. Rural electric cooperatives may serve a customer in rural areas unless private utility obtains a certificate of public convenience and necessity from Public Service Commission to serve such customer.

4. One of the matters to be considered by Public Service Commission in deciding whether to grant certificate of public convenience and necessity to utility is customer preference. Such preference is not controlling.

5. Requirement of Section 49--03--01, N.D.C.C., that public utility obtain a certificate of public convenience and necessity before it begins service construed to provide that authority granted by such certificate continues until rescinded, altered, or amended by Commission. Sec. 49--05--09, N.D.C.C.

6. A portion of a brief is not subject to being stricken merely because the party submitting the brief has changed its position on some, but not all, of the questions decided favorably to it in the trial court.

John D. Kelly, of Vogel, Vogel, Brantner & Kelly, Fargo, for plaintiff and appellee Cass County Elec. Coop., Inc. J. Philip Johnson, of Pancratz, Wold & Johnson, Fargo, for defendant and appellant Wold Properties, Inc.

Wheeler, Wolf, Wefald & Peterson, Bismarck, and Tenneson, Serkland, Lundberg & Erickson, Fargo, Harold J. Bagley, Minneapolis, Minn., of counsel; argued by R. W. Wheeler, Bismarck, for defendant and appellee Northern States Power Co.

VOGEL, Justice.

This action is one of a continuing series of disputes between, on the one hand, rural electric cooperatives, organized under Chapter 10--13, N.D.C.C., and, on the other hand, private electric utilities, organized under the general corporation statutes of this or other States, which are authorized, if granted certificates of public convenience and necessity or municipal franchises, to provide electric service within this State. Resolution of the disputes in this case requires, but is not necessarily simplified by, reference to our principal cases and statutes which include, in chronological order:

1937 'Electric Cooperative Corporation Act' adopted by Chapter 115, 1937 Session Laws, subsequently codified as Chapter 10--13, North Dakota Revised Code of 1943.

1956 Williams Electric Cooperative, Inc. v. Montana-Dakota Utilities Co., 79 N.W.2d 508 (N.D.1956).

1957 Substantial amendment of Chap. 10--13, N.D.R.C.1943, by Chap. 105, 1957 S.L.

1958 Cass County Electric Cooperative, Inc. v. Otter Tail Power Co., 93 N.W.2d 47 (N.D.1958), construing pre-1957 statutes.

1965 'Territorial Integrity Act' adopted by Chap. 319, 1965 S.L., later codified in Chap. 49--03, N.D.C.C.

1967 Montana-Dakota Utilities Co. v. Johanneson, 153 N.W.2d 414 (N.D.1967), construed Chap. 319, 1965 S.L., and held Sec. 3 unconstitutional.

1969 Application of Otter Tail Power Co., 169 N.W.2d 415 (N.D.1969), established criteria for determination by Public Service Commission of certificates of public convenience and necessity over opposition of rural electric cooperatives.

1971 Montana-Dakota Utilities Co. v. Divide County School District No. 1, 193 N.W.2d 723 (N.D.1971).

1974 Application of Montana-Dakota Utilities Co. (Naaden & MDU v. Hagen), 219 N.W.2d 174 (N.D.1974).

1974 Tri-County Electric Cooperative, Inc. v. Elkin, 224 N.W.2d 785 (N.D.1974).

The issue in the case before us now is whether Cass County Electric Cooperative, Inc., a rural electric cooperative (hereinafter Cass Electric), can be required to serve, or is precluded from serving, Wold Properties, Inc. (hereinafter Wold), the owner of a Holiday Inn which was, at the time the action was started, located outside the city limits of Fargo. The trial court held that Cass Electric was precluded from continuing such service on three grounds:

1. That Cass Electric lacked authority to serve Wold because the Holiday Inn was receiving central station service from Northern States Power Company (hereinafter NSP), relying on Section 10--13--01, N.D.C.C.;

2. That Wold was not eligible for membership in Cass Electric because it was receiving central station service from NSP, and therefore could not be served by Cass Electric; and

3. That NSP has the right to furnish electric service to the Fargo Holiday Inn to the exclusion of Cass Electric because NSP holds a certificate of public convenience and necessity.

The statement of the case on appeal is summarized as follows: This action was initiated upon a complaint of Cass Electric, seeking a declaratory judgment as to whether it was legally precluded from providing electric service to Wold. NSP obtained an ex parte temporary restraining order to prevent the disconnection of existing service of NSP or the connection of The parties have stipulated many of the facts and agreed upon others in their statement of the case on appeal. The stipulation may be summarized: NSP provides electric service within the city of Fargo and is subject to the jurisdiction of the PSC. Wold operates the Holiday Inn upon a tract of 7.6 acres located in Cass County and outside the boundaries of any municipality. Cass Electric operates an electric distribution system serving members in Cass County and adjacent counties of North Dakota. In January 1971, NSP discussed gas and electric service for the then proposed Holiday Inn with Dr. Clifford Wold, one of the organizers of Wold. NSP has provided service to the property since October of 1971. It obtained a certificate of public convenience and necessity from the PSC after application and order. On September 30, 1971, Cass Electric advised the PSC that it had no objection to the granting of such certificate of public convenience and necessity. Prior to that date, representatives of Wold advised Cass Electric that they preferred to have NSP provide electric service to the Holiday Inn. Wold was not otherwise notified or made a party to the PSC proceeding. The original application for electric service to the Holiday Inn was made by the general and electrical contractors engaged in construction of the Holiday Inn, and they executed agreements with NSP without the knowledge or approval of Wold. There were disputes as to natural gas curtailments and cost differentials in electric service, and Wold, in early March of 1975, requested NSP to terminate electric service and requested Cass Electric to provide such service. On July 23, 1975, Wold made a written demand upon Cass Electric for electric service. After the action was commenced Cass Electric and Wold signed an agreement providing that Cass Electric furnish electric service to Wold 'solely to avoid any claim for resulting damage should the court finally determine that Cass Electric is legally obligated to provide said service.' On September 21, 1975, an electrical contractor hired by Wold for that purpose disconnected the NSP service. After such disconnection, Cass Electric connected its electric service, without the knowledge or consent of NSP.

electric service by Cass Electric. Upon a hearing, the temporary restraining order was dissolved and the application of NSP for a temporary injunction was denied. The matter was submitted upon stipulation of facts to District Judge Roy K. Pedetzke, who issued a memorandum opinion dated June 14, 1976, and findings of fact, conclusions of law, and order for judgment dated June 18, 1976, holding that Cass Electric was not legally authorized to provide electric service because of the PSC certificate of public convenience and necessity and the fact that electric service was being supplied by NSP. Cross-claims and counterclaims between Wold and NSP were dismissed.

There have been three major statutory enactments in this State relating to rural electric cooperatives. The first was in 1937, by Chapter 115, S.L. 1937. It created the general structure under which rural electric cooperatives still operate. It defined 'rural area' as

'. . . any area not included within the boundaries of any incorporated or unincorporated city, town, village or borough, having a population in excess of twenty-five hundred inhabitants, and includes both the farm and non-farm population thereof.'

It provided that rural electric cooperatives could be organized under Chapter 115, S.L. 1937 (now codified as Chapter 10--13, N.D.C.C.),

'. . . for the purpose of engaging in rural electrification by any one or more of the following methods:

'(1) The furnishing of electric energy to persons in rural areas who are not receiving central station service.

It gave to such cooperatives the power, among other powers,

'(4) To generate, manufacture, purchase, acquire and accumulate electric energy and to transmit, distribute, sell, furnish and dispose of such and it provided:

electric energy to its members only, . . .'

' § 12. Qualification of Members.) All persons in rural areas proposed to be served by a corporation, who are not receiving central station service, shall be eligible to membership in a corporation. No person other than the incorporators shall be, become or remain a member of the corporation unless such person shall use or agree to use electric energy or, as the case may be, the facilities, supplies,...