City of Billings v. Public Service Commission of Montana

• Decision Date: 29 July 1981
• Docket Number: No. 80-358,80-358
• Parties: CITY OF BILLINGS, Petitioner and Appellant, v. PUBLIC SERVICE COMMISSION OF MONTANA; County Water District of Billings Heights, Respondents and Respondents.
• Court: Montana Supreme Court

Page 1295

631 P.2d 1295

193 Mont. 358

CITY OF BILLINGS, Petitioner and Appellant, v. PUBLIC SERVICE COMMISSION OF MONTANA; County Water District

of Billings Heights, Respondents and Respondents.

No. 80-358.

Supreme Court of Montana.

Submitted June 9, 1981.

Decided July 29, 1981.

Calton Law Firm, Billings, Calvin A. Calton argued, Billings, for petitioner and appellant.

Crowley, Haughey, Hansen, Toole & Dietrich, Billings, Thomas N. Kelley argued, Billings, Robert Smith argued, Helena, for respondents and respondents.

HASWELL, Chief Justice.

The City of Billings (hereinafter referred to as City) filed a complaint with the Public Service Commission (PSC) on June 17, 1974, to protest the unilateral expansion by the County Water District of Billings Heights (District) of its boundaries. The City had entered a contract with the District in 1963 pursuant to which the City was obligated to sell water to the District. The City alleged that the contract had been nullified, or in the alternative that the contract required the City to furnish water solely for use within the original District boundaries. Following a hearing on the matter, the PSC issued its Order No. 4366 in Docket No. 6349, dated July 20, 1977, in which it determined that it had no jurisdiction to interpret the contract, that it had no authority to fix the District's boundaries, that it would have the power to modify the contract if rates or service were adversely affected, but that such a showing had not been made by the City. The City filed a petition for judicial review of the PSC's order and a complaint seeking declaratory judgment defining the rights of the parties under the contract.

Pursuant to stipulation this action was submitted to the District Court without a hearing for a decision based on the PSC record and the District Court record. On July 24, 1980, the District Court entered its findings, conclusions and judgment affirming the PSC order and declaring the contract valid. The District Court further concluded that the City was obligated to provide water to the expanded District and that the District need not obtain the City's or the PSC's approval prior to expanding its boundaries. From the judgment the City appeals.

The City of Billings purchased the City Water Utility from the Montana Water Company in 1915. The Montana Public Service Commission has assumed jurisdiction over the utility since the Commission was created in 1913. Since the adoption of the Municipal Revenue Bond Act of 1939 (section 7-7-4401 et seq., MCA), all major capital improvements have been made pursuant to the Act.

In 1958 the County Water District of Billings Heights was created under the authority of section 7-13-2201 et seq., MCA. In June of 1963 it contracted with the City to receive water service from the City system. Water bought from the City is sold by the District to its customers in Billings Heights who are within the District boundaries as established by the electors.

The contract provided that the District would build a water main from the District's reservoir to connect with a water main to be constructed by the City. Both parties performed these obligations under the contract, and the City has been providing water to the District through this system.

In 1971, the City petitioned the PSC for an increase in water rates in order to fund improvements necessary to meet the increasing demand for water. The PSC granted the rate increase and as part of its order No. 4044, Docket No. 6108, specifically approved the contract between the City and the District.

In 1972, the City sent a letter to William Johnson of the PSC recommending "the service area for the Billings Water Department" and requesting approval of the same. On February 23, 1972, the PSC sent the City a letter approving the map of the water service area filed by the City. No hearing was conducted concerning the letters or the map, and the District was not notified at all. The Billings Heights service area was included on the map. The City has followed the same procedure for enlarging its service area since the PSC approval in 1972. Some enlargements of the Billings Heights service area were placed on the map in the same fashion.

On August 23, 1973, the District notified the City that it had received petitions asking that certain land be added to the District. The letter contained a notice of an election to be held on September 19, 1973, pursuant to section 16-4531, R.C.M. 1947, (now codified as section 7-13-2341, MCA). The District explained that a new school was to be built on part of the land involved, that the school grounds were to be watered from a well, and that a few new homes would also be added. The letter stated that no additional burden to the City's water system was expected as a result of these additions.

The City objected to the election, contending that land could not be added to the District without PSC approval. The City had been experiencing severe water shortages. The District conducted the election and the land was added to the District. In a letter to the City, the District explained the urgent need for water service to the school in view of the fact that many of the wells were contaminated by sewage and the use of such water as drinking water could result in a health hazard.

The City filed a complaint with the PSC against the District for having added land to the District without the approval of the City and the PSC. The City contended that due to the water shortage the added service area would adversely affect the City's capability to serve its customers.

At the time of the hearing, a major expansion of the City water plant was underway to improve the water supply and distribution system. The PSC found it had no jurisdiction to interpret the contract between the City and the District but that it would have jurisdiction to modify the contract if an adverse impact on the City's ability to provide service was proved. No such impact was shown and the PSC declined to modify the contract.

The dispute was taken to the District Court in a combined action for judicial review of the PSC order and for declaratory judgment interpreting the contract. The District Court issued extensive findings of fact and conclusions of law affirming the PSC's order No. 4366 and otherwise supporting the District's position that the City was obligated by contract to provide water service to the expanded District.

The issues raised on appeal may be stated generally as follows:

1) Whether the District Court erred in denying the City's motion to amend the findings and conclusions?

2) Whether the District Court erred in its determination of the extent of the PSC's jurisdiction of the matters arising in this litigation?

3) Whether the District Court erred in its determination of the issue presented for declaratory judgment, including questions of duration of the contract, rates and maximum service obligation?

Subsequent to oral argument on this matter, counsel for the City of Billings filed a motion requesting this Court to cause an investigation to be made to discover whether the full transcript of the PSC hearing and all exhibits were available to the District Court and to this Court. We find such an investigation unnecessary as the transcript, exhibits and maps are included in our record and were available to the District Court.

I. REVIEW OF DISTRICT COURT PROCEDURE.

The City argues that the District Court erred in denying the City's motion to amend the findings and conclusions. The City first contends that the District Court erred in adopting verbatim the proposed findings and conclusions of the District. The City argues that the court abandoned its duty under Rule 52(a), M.R.Civ.P., to "find the facts specially and state separately its conclusions of law thereon." In support of its argument the City cites Compton v. Gilmore (1977), 98 Idaho 190, 560 P.2d 861; Matheson v. Harris (1977), 98 Idaho 758, 572 P.2d 861; Pattison Trust v. Bostian (1976), 90 N.M. 54, 559 P.2d 842; Duffin v. Patrick (1973), 212 Kan. 772, 512 P.2d 442. However, the City has misconstrued these cases. In the instant case, the district judge invited both parties to submit proposed findings and conclusions prior to making his decision. In the cases cited by the City, the judge made his decision and then requested prevailing counsel to draft the findings. The latter practice has been disapproved by the United States Supreme Court; nevertheless the findings are allowed to stand unless they are not supported by the evidence. U.S. v. El Paso Natural Gas (1964), 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12; U.S. v. Crescent Amusement Co. (1944), 323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 160.

In Tomaskie v. Tomaskie (1981), Mont., 625 P.2d 536, 38 St.Rep. 416, we discouraged the practice of adopting verbatim the proposed findings and conclusions submitted by the prevailing party. The purpose of the findings and conclusions is better served if the court prepares its own findings and conclusions, relying on the parties for guidance and assistance. However, the standard for review of the findings and conclusions remains the same:

"(The adopted) findings, though not the product of the workings of the district judge's mind, are formally his; they are not to be rejected out-of-hand, and they will stand if supported by the evidence." U.S. v. El Paso Natural Gas, 376 U.S. at 656, 84 S.Ct. at 1047, 12 L.Ed.2d at 17.

We conclude that the findings are supported by the evidence and that the District Court committed no error in adopting the proposed findings of the District, particularly in view of the complexity of this case.

The issues to be determined in the declaratory judgment action were submitted to the court by a stipulation of the parties. The City contends that the District Court did not resolve in its findings and conclusions all of the issues presented by the City in that stipulation.

The District Court is not...