Chrysler Light & Power Co. v. City of Belfield

• Decision Date: 10 April 1929
• Docket Number: No. 5546.,5546.
• Citation: 224 N.W. 871,58 N.D. 33
• Court: North Dakota Supreme Court
• Parties: CHRYSLER LIGHT & POWER CO. v. CITY OF BELFIELD.

58 N.D. 33

224 N.W. 871

CHRYSLER LIGHT & POWER CO.

v.CITY OF BELFIELD.

No. 5546.

Supreme Court of North Dakota.

April 10, 1929.

Syllabus by the Court.

Under the Constitution (Constitution N. D. § 139), an electric light plant may not be constructed or operated within any city or incorporated village in this state without the “consent of the local authorities having the control of the street or highway proposed to be occupied for such purposes.”

The power so reserved to the local authorities of a city or village to either grant, or refuse, permission to an electric light company to occupy the streets thereof with its structures is not limited to a simple granting or denial of such permission; the local authorities of such city or village may permit such use of the streets on certain conditions only, and, if the electric light company accepts the permission or franchise, all valid conditions or restrictions attached thereto become binding upon it.

A city council has authority to provide for the lighting of the streets, alleys, avenues, and public grounds of the city and to that end may contract with an electric light company to furnish electric current for such lighting.

The local authorities of a village or city, on granting a franchise to an electric light company, may impose as a condition that such company shall furnish certain service to the city at a stipulated price, and upon acceptance of the franchise such condition becomes a contract between the city and the electric light company.

Where a rate for electric current to be furnished by an electric light company to a city is fixed by contract in the franchise granted by the city to such company, the rates are controlled by the obligation resulting from the contract.

The board of railroad commissioners has only such powers to regulate the rates of an electric light company as have been conferred upon it by the Legislature.

The power to regulate such rates is conferred upon the board of railroad commissioners by chapter 192, Laws 1919, commonly known as the Public Utilities Act. Following Western Electric Co. v. Jamestown, 47 N. D. 157, 181 N. W. 363, it is held that such act does not confer upon the board of railroad commissioners power to interfere in any manner with rates for electric current to be furnished by an electric light company to a city for the lighting of its streets, where such rate is fixed by contract in the franchise granted by the city to the electric light company.

A right of action at law to recover moneys paid under mistake does not arise out of contract of the parties, but out of an obligation imposed by law upon the recipient of the money to return the same to the rightful owner.

Section 5855, C. L. 1913 (which defines a mistake of law), is a part of the law of contracts and relates to the legal consent of contracting parties. If the apparent consent of a party to a contract has been obtained through a mistake of law, as defined in that section, the party whose consent has been so obtained may rescind the contract, and thereupon invoke an appropriate remedy to vindicate his rights; but said section does not confer any right of action to recover moneys paid under mistake of law, and has no relation to such action except insofar as it may lay a foundation therefor by the rescission of a contract for a mistake of law. City of Bismarck v. Burleigh County, 49 N. D. 205, 190 N. W. 811, distinguished.

A city is vested with two classes of power: The one governmental, legislative, or public; the other, in a sense, proprietary or quasi private.

The rule that payments made by a public officer under a mistake of law may be recovered as trust funds illegally disbursed is not applicable to claims arising out of a transaction involving the business or proprietary powers of a city. In such case the right of a city to recover moneys paid by mistake is governed by substantially the same rules as apply to payments made by the agents of private corporations.

In the instant case the board of railroad commissioners made an order purporting to increase the rates for street lighting, which had been fixed by contract in the franchise granted by the defendant city to the plaintiff electric light company. Thereafter the plaintiff presented bills to the city council for electric current furnished for street lighting, based upon the rates specified in such order, and the city council duly approved and allowed the bills so presented, and such bills were paid in the regular course of business. Later, the defendant city refused to pay according to the rates fixed in the order of the railroad commissioners, claiming that the rates fixed in the franchise were controlling and that the rate increase allowed by the railroad commissioners was illegal and void. The plaintiff electric light company brought suit to recover according to the rates fixed by the railroad commissioners and the defendant city interposed a counterclaim for the payments made in excess of the rates fixed in the franchise. For reasons stated in the opinion, it is held, that the order of the railroad commissioners granting the increase in rates was illegal and void, but that the payments made by the city to the electric light company were made voluntarily with full knowledge of all facts and all rights and without fraud, duress, or compulsion, and that the city is not entitled to recover the amounts so paid in excess of the rates fixed in the franchise.

Appeal from District Court, Stark County; Pugh, Judge.

Action by the Chrysler Light & Power Company against the City of Belfield, in which defendant filed a counterclaim. From the judgment, both parties appeal. Affirmed.J. W. Sturgeon, of Dickinson, for plaintiff.

H. E. Haney, of Belfield, and C. H. Starke, of Dickinson, for defendant.

CHRISTIANSON, J.

Plaintiff brought this action to recover for electric current furnished to light the streets of the defendant city. The action is predicated upon an order of the board of railroad commissioners fixing the rates to be charged for such electric current, and directing that the minimum monthly charge against the city shall be $100. The defendant admits that the electric current was furnished and alleges by way of an affirmative defense that the plaintiff was operating an electric light plant within the defendant city under a franchise granted by the city; that such franchise fixed the rates to be charged for electric current to be furnished by the plaintiff to the defendant for street lighting purposes; that the defendant accepted such franchise and thereby entered into a contract with the defendant city to furnish electric current at the rates so specified; that the rates so fixed in the franchise under which the plaintiff did business are controlling upon the rights of the parties to this action. By way of counterclaim the defendant alleges that it has paid the plaintiff $887.01 in excess of the rates prescribed by the franchise; and defendant demands judgment that plaintiff's action be dismissed and that it have judgment against the plaintiff for the amount so paid in excess of the franchise rates. The plaintiff interposed a reply wherein it admits that the rates fixed in the franchise were as alleged by the defendant; also that defendant has made payments as alleged in its answer and counterclaim; but it alleges that the board of railroad commissioners upon application made by the plaintiff, after hearing had on April 7, 1921, made an order increasing the rates to be paid by the defendant for the electric current furnished by the plaintiff for street lighting purposes; that defendant voluntarily paid for electric current according to the rates fixed by the railroad commissioners; that the rates so fixed by the railroad commissioners are controlling; and that, consequently, defendant has not overpaid plaintiff, and is still indebted to it for the amount demanded in the complaint.

The case was submitted to the court for determination upon a stipulated statement of facts. The trial court disallowed defendant's counterclaim, but ordered judgment in favor of the plaintiff only for such sum as would be owing to it according to the rates specified in the franchise. In other words, the trial court held that plaintiff was not entitled to recover in accordance with the rates fixed in the order of the board of railroad commissioners and was entitled to recover only according to the rates agreed upon in the franchise, but that the defendant was not entitled to recover from the plaintiff the overpayments which it had made. Judgment was entered accordingly and both parties have appealed.

As indicated, the material facts in this case are not in dispute. They are as follows: On or about March 18, 1915, the then village of Belfield granted a franchise to one George S. Chrysler to construct and maintain an electric light and power plant within the village of Belfield and to carry on the business of manufacturing and selling electric light and power to consumers thereof for a period of 25 years. The ordinance consists of some 17 sections and contains specific regulations relating to the construction of the plant and the operation thereof. It also contains a provision giving the village of Belfield an option to purchase the plant at the end of 15 years. The franchise was duly accepted by Chrysler in the manner prescribed in the ordinance. On June 29, 1915, George S. Chrysler duly assigned and transferred the franchise to the plaintiff Chrysler Light & Power Company and such assignment was agreed to by the village of Belfield.

Under the terms and conditions of the ordinance granting such franchise the plaintiff company agreed to furnish electricity to the village of Belfield for street lighting purposes, at the following rates:

First 100 kilowatts at 12 cents per kilowatt hour. Next 100 kilowatts at 10 cents per kilowatt hour. Next 100 kilowatts at 9 cents per kilowatt hour. All additional kilowatts to...