City of South St. Paul v. Northern States Power Co.
| Decision Date | 28 April 1933 |
| Docket Number | No. 29358.,29358. |
| Citation | 248 N.W. 288,189 Minn. 26 |
| Parties | CITY OF SOUTH ST. PAUL v. NORTHERN STATES POWER CO. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Dakota County; A. P. Stolberg, Judge.
Action by the City of South St. Paul against the Northern States Power Company. From an order denying a new trial, plaintiff appeals.
Affirmed.
Warren Miller, of South St. Paul, for appellant.
A. William Groth and Cyrus Erickson, both of Minneapolis, and D. L. Grannis, of South St. Paul, for respondent.
Plaintiff appeals from the order denying a new trial. In 1912 the city of South St. Paul granted to Kenneth Clark and George H. Prince, and their assigns, a 25-year franchise to construct and operate a system to supply the city and its inhabitants with gas. Later this franchise was assigned to the South St. Paul Gas & Electric Company, and the latter in 1926 assigned it to Northern States Power Company, respondent. The assignments were with the consent of the city. This action was brought by the city to recover the license fee provided by the ordinance granting the franchise. The ordinance is known as No. 102, and section 6 therein, relating to the license fee, so far as here pertinent, reads: The rate was graduated from 1 per cent. to 5 per cent. The recovery sought was for the years 1913 to 1931, inclusive, and amounted to $30,201.21 exclusive of interest. The defenses pleaded were the statute of limitations (Minn. St. 1927, § 9191) as to license fees accruing more than 6 years prior to suit; that from the time the franchise was granted in 1912 up to the beginning of this action no claim or demand for the payment of any license fee had been made by the city and hence that during that time the parties by their acts and conduct construed the said ordinance as not requiring or imposing upon defendant or its predecessors in interest the duty or obligation to pay license fees thereunder, which interpretation and construction continued during the time defendant held the franchise until suit was brought; and that under such interpretation and construction defendant has made large expenditures in extending its service and in reducing its rates not only for gas but also for steam and electric service for which defendant holds franchises under ordinances of like import with ordinance No. 102, so far as relates to the payment of annual license fees. The court made findings that the claims for the years 1913 to 1925, inclusive, accrued more than 6 years before suit and were barred; that plaintiff and its officers, with knowledge of all the facts, failed to make any claim for license fees against defendant or its predecessors; that it was understood by the holders of the franchise that no annual license fee need be paid by reason of the fact that the franchise was subject to assessment and taxation under the statutes of the state; that the city and respective franchise holders construed the franchise to mean that there was no obligation to pay a license fee under the ordinance since the franchise was under the laws of the state taxable; and that in reliance on such construction defendant had, in dealings with the city in respect to extension and rates, made concessions and placed itself in position it would not have done had it anticipated the claims now made, and that it will now be impossible to place the defendant in statu quo. The conclusion of law was that plaintiff take nothing. Although the South St. Paul Gas & Electric Company was named as defendant, it appears that it was dissolved before the suit was brought, and hence respondent is the sole defendant.
There are 58 assignments of error, and it would be impracticable to attempt to discuss each in an opinion. Many of the assignments of error go to the refusal of the court to amend the findings and conclusions of law. Counsel for plaintiff has well grouped the assignments of error under a few headings which we consider determinative of the merits of the appeal. It is conceded that the court correctly applied the statute of limitations.
The point is made by plaintiff that by section 7 of chapter 7 of the charter, every holder of a franchise accepts all the charter provisions applicable to franchises. It seems to us that there is no significance to this, since sections 3, 4, and 5 of chapter 7 of the charter—the only ones that can be said to be applicable—are in the very language of the provisions of the part of the franchise held by defendant and above quoted. If the proviso in the ordinance is ambiguous and hence open to construction, so must be the meaning of the charter provisions in almost identical language. The ordinance granting the franchise which defendant now holds is a contract and the license fee claimed by the city must be claimed under the terms of that contract. City of St. Cloud v. Water, Light & Power Co., 88 Minn. 329, 92 N. W. 1112. The rights of the parties under a contract may be more readily affected by the interpretation they place thereon in its performance than the rights of a taxpayer may be by the conduct of the authorities charged with the enforcements of taxation statutes. In the latter case the state or municipality ordinarily cannot be deprived of the tax by the conduct of the officials whose duty it is to lay and enforce it. Under the present law (section 2206, Mason's Minn. St. 1927) the bar of the statute of limitations is lifted from all taxes. State v. Brooks, 183 Minn. 251, 236 N. W. 316.
It is conceded that no license fee has been paid, nor has it been under the franchise from the time it was granted in 1912 until the present suit was brought. This fact does not prevent a recovery if defendant under the plain language of the contract (Ordinance No. 102) agreed to pay the same. It is only when there is doubt as to the meaning of the terms used that courts resort to the rule of practical construction. St. Paul & Duluth Ry. Co. v. Blackmar, 44 Minn. 514, 47 N. W. 172. Had there been no proviso in section 6 of the ordinance this would be true. Plaintiff contends the proviso is clear and unambiguous that the license fee is to be paid unless a state tax on the franchise is imposed and paid. Defendant would construe the language as meaning that no license fee is payable if the franchise is subject to be taxed under the state law; and, in any event, that ambiguity appears in the language of the proviso, so that resort may be had to the practical construction which both parties to the franchise have placed thereon for almost 20 years. In our opinion the meaning of the proviso is doubtful. By sections 1974, 1999, 2004, and 2021, Mason's Minn. St. 1927, it is clear that franchises are subject to taxation. Said section 2004 reads: "The capital stock and franchises of corporations and persons, except as otherwise provided, shall be listed and taxed in the county, town, or district where the principal office or place of business of such corporation or person is located in this state; if there be no such office or place of business, then at the place in this state where...
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