Iowa Public Service Co. v. City of Emmetsburg

• Decision Date: 21 November 1929
• Docket Number: 39608
• Citation: 227 N.W. 514,210 Iowa 300
• Parties: IOWA PUBLIC SERVICE COMPANY, Appellant, v. CITY OF EMMETSBURG et al., Appellees
• Court: Iowa Supreme Court

227 N.W. 514

210 Iowa 300

IOWA PUBLIC SERVICE COMPANY, Appellant, v. CITY OF EMMETSBURG et al., Appellees

No. 39608

Supreme Court of Iowa, Des Moines

November 21, 1929

REHEARING DENIED APRIL 16, 1930.

Appeal from Palo Alto District Court.--D. F. COYLE, Judge.

Action for an injunction, commenced by the plaintiff-appellant, Iowa Public Service Company, as an alleged taxpayer, challenging the validity of a certain ordinance enacted by the defendant-appellee City of Emmetsburg, Iowa, and voted on favorably by the electors. The ordinance in question granted to the Municipal Utilities Company a franchise, and also contained an option contract for the acquisition of said utility by said city at a future date, upon the conditions defined in the franchise ordinance. The trial court denied the application for a temporary injunction, and the plaintiff appeals.

Affirmed.

Price & Burnquist, for appellant.

A. J Burt and Clark, Byers & Brunk, for appellees.

DE GRAFF, J. ALBERT, C. J., and STEVENS, KINDIG, and WAGNER JJ., concur. MORLING, J., not participating. EVANS, FAVILLE, and GRIMM, JJ. (dissenting).

OPINION

DE GRAFF, J.

In the light of our conclusion in this cause, we deem it unnecessary to quote in extenso from the language of the ordinance franchise in question. The title of said ordinance reads as follows:

"An ordinance granting a franchise to the Municipal Utility Company, its successors and assigns, to erect, construct, maintain and operate an electric light plant, transmission lines, sub-stations and distribution system for the generation, distribution and sale of electricity for light, heat, power and other purposes, in and through the city of Emmetsburg, and to use the streets, allevs and other public places thereof for such purpose, and providing an option to the said city of Emmetsburg to take over said plant under certain conditions, and repealing all ordinances and parts of ordinances in conflict therewith."

The Utilities Company was under obligation to finance the enterprise, and when certain conditions, hereinafter stated, were fulfilled on the part of the Utilities Company, the city was then privileged to exercise its option to take over the plant. There was no debt created on the part of the city. The contract price was to be paid from the earnings of the plant. Taxation is not involved.

The plaintiff-appellant, Iowa Public Service Company, challenges the franchise granted by the city of Emmetsburg, Iowa, to the Municipal Utilities Company. Both corporations, under their respective franchises, serve the city of Emmetsburg, Iowa, with electric power, and it must be, and is, conceded that they are, and will be, competitors. This conceded proposition is in no sense controlling in the determination of this case. The primary question is whether the plaintiff utility company is a taxpayer, in the sense that it is in any way affected, as such, so that it may be said that it is a real and proper party in interest in this matter. The plaintiff corporation is not a user of electricity furnished by the defendant corporation, and consequently cannot be affected by or interested in the rates prescribed by the ordinance franchise granted to the Municipal Utilities Company. The plaintiff is not a taxpayer so far as the Municipal Utilities Company is concerned, and may never be such. Although the plaintiff is a taxpayer as to general taxes in said city, the purchase of the municipal plant is to be made by the profits derived from the Municipal Utilities plant, and in no event are taxes to be levied or collected to pay therefor. The taxpayers of the city of Emmetsburg may never be affected in the least by the municipal venture. What the plaintiff claims is purely anticipatory.

The plaintiff, Public Service Company, cannot object to the option at least until the city council seeks to exercise the option under the franchise. At that time, if there is any theory upon which a taxpayer would be prejudiced, it would be sufficiently early to object to that particular clause of the franchise. In any event, the franchise could be valid without the particular clause, so far as the plaintiff is concerned. If, in any event, the plaintiff might be affected in the future,--that is, if, after the city becomes the owner of the plant (which is also purely speculative), the city does not make operating expenses, and it is then necessary to tax property owners,--the plaintiff might be affected by the fact that it is a taxpayer. However, this is all conjecture, and is prospective only, and until that event happens, it may not be said that the plaintiff has an interest in the subject-matter. As pointed out, the plaintiff sues as a taxpayer, and upon no other ground.

Section 7 of the franchise ordinance provides:

"The city council of the city of Emmetsburg shall fix and determine the rate the city shall pay for electrical energy actually used for the lighting of its streets and alleys."

This provision clearly exempts the city from the operation of the rates fixed and agreed upon by the ordinance for private consumers. The plan does not contemplate the levy, collection, or use of a dollar of taxes in the acquisition of the plant. In brief, the plant, when acquired,--if it is ever acquired,--will have cost the municipality absolutely nothing. The right of the city council to fix the rate is wholly unimpaired. Therefore, there is nothing for the taxpayers to complain of, although, as stated, the plaintiff brings this action as a taxpayer, and upon this basis only. We may visualize the situation. We have the spectacle presented of a corporation already in possession of a franchise and business in the city of Emmetsburg, seeking to enjoin its competitor from charging private users unreasonable or extortionate rates. We must presume that the rate stipulated...