Farmers' Elec. Co-op., Inc. v. Missouri Dept. of Corrections
| Citation | 977 S.W.2d 266 |
| Decision Date | 20 October 1998 |
| Docket Number | No. 80704,80704 |
| Parties | FARMERS' ELECTRIC COOPERATIVE, INC., Appellant, v. MISSOURI DEPARTMENT OF CORRECTIONS and City of Cameron, Missouri, Respondents. |
| Court | United States State Supreme Court of Missouri |
Patrick A. Baumhoer, Victor S. Scott, Jefferson City, for Appellant.
Jeremiah W. (Jay) Nixon, Atty. Gen., Gary L. Gardner, Asst. Atty. Gen., John R. Munich, Deputy Atty. Gen., Mark G. Anderson, Jefferson City, for Respondents Mo. Dept. of Corrections.
Mark G. Anderson, Gary W. Duffy, Jefferson City, for respondent City of Cameron, Mo.
1
This is an appeal from the trial court's grant of respondents' motions for summary judgment, judgment in favor of the department of corrections on appellant's breach of contract claim, and judgment in favor of respondents on their counterclaim for a declaratory judgment. Appellant raises two points on appeal: First, appellant claims the trial court erred in ruling that it could not serve the Crossroads Correctional Center and that the September 10, 1986, contract between appellant and the department of corrections was illegal. Second, appellant contends the trial court erred in entering judgment in favor of the department of corrections on appellant's petition for breach of contract.
Farmers' Electric Cooperative, Inc., ("Farmers' ") is a rural electric cooperative organization, engaged in the business of providing and selling electric power and energy at retail to its members. The city of Cameron, Missouri, ("city") provides electric service to its customers in the city. On September 10, 1986, Farmers' and the department of corrections ("department") entered into a twenty-year contract for the purchase and sale of all the electricity that the department may need upon a tract of land located in DeKalb County, Missouri ("contract"). The land in the contract is described as follows:
First Tract--Southeast quarter (S.E.1/4) of Section II, Township 57, Range 30, DeKalb County, Missouri.
Second Tract--All of the west 1109 feet of southwest quarter (S.W.1/4) of Section 12, Township 57, Range 30, DeKalb County, Missouri.
Pursuant to the contract, the department was accepted as a member of Farmers', and the department was required to purchase all of its electrical power for the tracts listed in the contract from Farmers'. At the time the department contracted with Farmers', the land described in the contract was not within the city boundaries of Cameron, Missouri, nor was the land within any city, town or village having a population in excess of 1,500 inhabitants.
From 1986 to 1988, the department built the Western Missouri Correctional Center (WMCC) near the city boundaries, on part of the tract of land described in the contract. In 1988, the department commenced operation of the WMCC. On September 22, 1988, Farmers' began supplying retail electric energy to the WMCC.
In 1994, the department signed a petition of annexation, requesting voluntary annexation of the land in the contract. The department requested annexation in exchange for a financial contribution from the city of a part of the cost of constructing a wastewater pretreatment lagoon on the land described in the contract. The city agreed to annexation because it increased the city's population, which in turn caused an increase in the motor fuel tax revenues received by the city from the department of revenue.
In February 1994, the state of Missouri and the DeKalb County commission signed a petition for annexation and the DeKalb County commission ordered and approved the petition. A notice of public hearing regarding the proposed annexation was thereafter issued. On April 5, 1994, the city passed an ordinance annexing certain adjacent territory into the city, including the tract of land described in the contract. When the land was annexed, the city had a population in excess of 1,500 inhabitants, so that the annexed land ceased to be located in a rural area. On or about April 14, 1995, the city and the department agreed that if the department would select the city as the site for the construction of the new, 1200 bed, level four correctional facility, the city would pave Pence Road from just beyond the entry road to the WMCC to the proposed entry road to the new correctional facility and water and wastewater service for the new facility would be purchased and sold under the existing contract between the city and the department for the purchase and sale of water and wastewater service, with the addition of a surcharge for water or wastewater service above 403,200 gallons per day.
Prior to April 21, 1995, the department decided to build the new facility on part of the land described in the contract. On April 24, 1995, the division of design and construction, on behalf of the department, requested that Farmers' and the city provide it with information and rates for providing electrical service to the new facility. Both Farmers' and the city responded to the department's request. On May 16, 1995, the division of design and construction, on behalf of the department, notified Farmers' and the city that it would obtain electric service from the city for the new facility to be built on part of the land described in the contract.
The correctional facility is named Crossroads Correctional Center ("Crossroads"). Crossroads was constructed on part of the land described in the contract. Electricity for Crossroads' construction was provided by the city. Farmers' has never provided electricity to Crossroads.
Farmers' filed an action against the department, alleging breach of the 1986 contract. The department filed an answer and a counterclaim for declaratory judgment. The department and the city filed a joint first amended counterclaim for declaratory judgment, requesting that the court enter an order declaring that the facility being constructed on the tract of land described in the 1986 contract was a "new structure" within the meaning of section 394.315.1(2). 2 They further requested that the circuit court's order declare that sections 386.800.2 and 394.315.1 made the 1986 contract illegal and void. Farmers' filed its answer to the joint first amended counterclaim on November 30, 1995.
After a stipulation of facts and motions for summary judgment were filed, the trial court entered its order, finding that Crossroads was a new structure within the meaning of section 394.315.1(2), and only the city could lawfully supply electricity to Crossroads under the statute. The trial court also concluded that Farmers' could not provide electricity to Crossroads under section 394.315.2. The trial court further found that the 1986 contract was illegal as it applied to Crossroads. The trial court denied Farmers' motion for summary judgment, granted the department's and the city's motions for summary judgment, and entered judgment in favor of the department on Farmers' breach of contract claim and in favor of the department and the city on their counterclaim for declaratory judgment. This appeal followed.
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 380 (Mo. banc 1993); Rule 74.04(c). Because the trial court's judgment is founded on the record submitted and the law, this Court need not defer to the trial court's order granting summary judgment. ITT, 854 S.W.2d at 376. Appellate review is essentially de novo, and the criteria on appeal for testing the propriety of summary judgment are no different from those that should be employed by the trial court to determine the propriety of sustaining the motion initially. Rice v. Hodapp, 919 S.W.2d 240, 243 (Mo. banc 1996).
Farmers' first point on appeal is that the trial court erred in ruling that it could not serve Crossroads and that the September 10, 1986, contract between Farmers' and the department was illegal. Farmers' contends that even if Crossroads is a new structure in accordance with section 394.315.1(2), Farmers' has the authority to continue selling electricity to its member, the department, in a formerly rural area pursuant to section 394.080.1(4), and, therefore, the contract is not illegal.
We first address the issue of whether Farmers' is legally entitled to serve the electrical needs of the department in the formerly rural area, which ceased to be rural because of annexation into the city. Section 394.080 establishes the powers of a rural electric cooperative. Pursuant to section 394.080.1(4), a rural electric cooperative has the authority to sell electricity to its members in rural areas. 3 The relevant portion of section 394.080 provides as follows:
1. A cooperative shall have power: ...
(4) Except as provided in section 386.800, RSMo, to generate, manufacture, purchase, acquire, accumulate and transmit electric energy, and to distribute, sell, supply, and dispose of electric energy in rural areas to its members, to governmental agencies and political subdivisions, and to other persons not in excess of ten percent of the number of its members; provided, however, that where a cooperative has been transmitting, distributing, selling, supplying or disposing of electric energy in a rural area which, by reason of increase in its population, its inclusion in a city, town or village, or by reason of any other circumstance ceases to be a rural area, such cooperative shall have the power to continue to transmit, distribute, sell, supply or dispose of electric energy therein until such time as the municipality, or the holder of a franchise to furnish electric energy in such municipality, may purchase the physical property of such cooperative located within the boundaries of the municipality, pursuant to law, or until such time as the municipality may grant a franchise in the manner provided by law to a privately owned public utility to...
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