Kansas-Nebraska Natural Gas Co. v. City of St. Edward
| Decision Date | 14 September 1955 |
| Docket Number | 523.,Formerly Civ. No. 521,522,Formerly Civ. No. 88-54 |
| Citation | 134 F. Supp. 809 |
| Parties | KANSAS-NEBRASKA NATURAL GAS COMPANY, Inc., a Kansas Corporation, Plaintiff, v. The CITY OF ST. EDWARD, Nebraska, a Municipal Corporation, et al., Defendants. KANSAS-NEBRASKA NATURAL GAS COMPANY, Inc., a Kansas Corporation, Plaintiff, v. The CITY OF CENTRAL CITY, Nebraska, a Municipal Corporation, et al., Defendants. KANSAS-NEBRASKA NATURAL GAS COMPANY, Inc., a Kansas Corporation, Plaintiff, v. The CITY OF ORD, Nebraska, a Municipal Corporation, et al., Defendants. KANSAS-NEBRASKA NATURAL GAS COMPANY, Inc., a Kansas Corporation, Plaintiff, v. The CITY OF RAVENNA, Nebraska, a Municipal Corporation, et al., Defendants. |
| Court | U.S. District Court — District of Nebraska |
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James D. Conway (Conway & Irons), and E. J. Jackson, Hastings, Neb., and Frank D. Williams (Cline, Williams, Wright & Johnson), Lincoln, Neb., and Douglas Gleason, Ottawa, Kan., for plaintiff in all cases.
Earl Hasselbalch, St. Edward, Neb., for defendants in No. 88-54, Omaha Division.
Charles H. Phares (Raecke & Phares), and Donald F. Sampson (Sampson & Armatys), Central City, Neb., for defendants in No. 521, Grand Island Division.
Edward L. Vogeltanz, Ord, Neb., for defendants in No. 522, Grand Island Division.
Moller R. Johnson, Ravenna, Neb., for defendants in No. 523, Grand Island Division.
Formerly Civ. No. 88-54, Omaha Division, Formerly Civ. Nos. 521, 522, 523, Grand Island Division.
On April 21, 1955 the court filed in No. 88-54, Omaha Division, a memorandum opinion1 equally applicable to all of these actions explanatory of its ruling under date of April 20, 1955, denying the plaintiff's several applications or motions for preliminary injunctions. Since that filing the several actions have come to issue and they have been finally submitted to the court in a consolidated trial upon the prayers of the separate complaints for permanent injunctions. This memorandum is prepared to announce and explain the final ruling of the court upon the merits of each action.
Since this announcement is principally, if not altogether, designed for the advice of counsel, it is believed that it may profitably be abbreviated by reference to, and the adoption of, certain portions of the earlier memorandum, without the necessity of their verbal restatement.
Thus, the general nature of each case on trial, the granting and dates of the several franchises involved, the franchise rate provisions, including the later amendment of the rate section of the franchise in No. 521 Grand Island, and the broad ground asserted in each case for injunctive relief, as those matters are set out in the respective complaints, are sufficiently referred to in that memorandum and will not now be repeated. It may be noted, however, that the amended and currently effective rate structure fixed by the amendatory ordinance in No. 521, Grand Island, is as follows:
" Schedule of Rates
For the first 500 cu. ft. or less $.90
For the next 1,500 cu. ft. Per Month .90 Per MCF
For the next 3,000 cu. ft. Per Month .70 Per MCF
For the next 5,000 cu. ft. Per Month .55 Per MCF
For the next 40,000 cu. ft. Per Month .45 Per MCF
For the next 50,000 cu. ft. Per Month .38 Per MCF
For the next 100,000 cu. ft. Per Month .34 Per MCF
All over 200,000 cu. ft. Per Month .30 Per MCF
Minimum monthly charge $.90 per month
per meter; not subject to discount."
That schedule is not set out in the earlier announcement of ruling.
In each case by amendment to the complaint the plaintiff alleges that its acceptance of the franchise involved (including the amendatory rate ordinance in No. 521, Grand Island) was made by a formal written instrument and sets out a copy of such instrument. Then, too, each amendment amplifies the assertion in the complaint of plaintiff's request for an increase in rates whose denial led to the suit. It alleges that the request was first made orally to the defendants in the particular case, and shortly thereafter was renewed and summarized in a written report thought to justify the increase of which a copy accompanies the amendment, and that the "plaintiff suggested said rate increase be accomplished by the enactment of a new franchise ordinance to be supplemented by a separate rate ordinance establishing the increased rates", of each of which suggested ordinances a copy accompanies the amendment. The amendment also amplifies the complaint's averment of a reiterated request for increase by alleging that plaintiff then "suggested said increased rates be put into effect either by the enactment of a new franchise ordinance and supplemental rate ordinance", being the proposed ordinances just mentioned, "or by enacting an ordinance amending the existing franchise ordinance. * * * to make said increased rates effective" of which alternatively proposed ordinance a copy is also attached to the amendment.
Those several proposed ordinances, none of which were adopted will be discussed later herein, for an issue is made touching each of them.
Each answer2 admits plaintiff's incorporation; the corporate character of the affected municipality; the official qualification of the individual defendants; the nature of the business and qualification and operation in Nebraska of plaintiff; the details of the plaintiff's requested rate schedule; the granting and effectiveness of the franchise to plaintiff alleged in the complaint and the rate provisions under which plaintiff is rendering service; the defendants' failure, neglect and refusal to act on the proposed rates and employment, along with other municipalities, of a competent engineering firm to examine plaintiff's records for the purpose of determining the propriety of the requested new rate for the provision of a fair and reasonable return on plaintiff's invested capital required for the service of gas customers in the defendant city; the making, as of September 27, 1954, by such engineering firm of a report supporting and corroborating plaintiff's need for the establishment of the rates requested by it in order to provide for it a fair and reasonable return on invested capital (although it elsewhere appears that defendants actually do not intend to admit that the report supports such need); the engagement by plaintiff (in addition to its distribution at retail of gas within the affected city) in the production, purchase and acquisition of natural gas in Kansas and other states, and the transportation of such gas by pipeline to its customers in Nebraska, including those in the answering city; the jurisdiction of Federal Power Commission over the facilities required for the transportation of natural gas to the town border station of the affected city; the legal necessity under the Natural Gas Act, 15 U. S.C.A. § 717 et seq., of certification and authority as a prerequisite to the construction of such facilities; the Commission's jurisdiction over rates chargeable by plaintiff for natural gas sold in Nebraska for resale; and plaintiff's engagement in the sale to other customers in Nebraska of natural gas for resale to consumers.
Each answer denies the complaint's allegations of the failure of the rates erected by the existing franchise ordinance involved3 to give plaintiff a fair and reasonable return on its invested capital required for the service of gas customers in the answering city; action by the answering defendants in a confiscatory manner and their deprivation of the plaintiff of its property without due process of law; the necessity of the demanded rates if plaintiff is to be provided with a fair and reasonable return on its invested capital; plaintiff's lack of an adequate remedy at law; plaintiff's subjection to irreparable injury if the demanded rates be not allowed; the validity of plaintiff's prayer for injunctive relief as prayed; plaintiff's successive demands for an increase in rates to provide it with sufficient revenue to earn a fair and reasonable rate on its invested capital, and their own failure, neglect and refusal so to do.4
It should be understood that the several admissions and denials reflected in the last two paragraphs are directly responsive to allegations upon the same subjects made by plaintiff in each of its complaints as amended.
Each answer affirmatively alleges that the ordinance or ordinances already in effect in the answering city respecting plaintiff's franchise and natural gas rates, was, or were as the case may be, proposed, prepared and submitted by plaintiff on its own initiative and enacted in the manner required by law at the request and in the presence of representatives of plaintiff; that each such franchise and rate ordinance, upon its enactment was by the plaintiff formally accepted in writing; that plaintiff's present request for an increase in natural gas rates was not a simple request for such an increase, but was rather accompanied by a request that such increase be granted through the enactment of an ordinance or ordinances5, which "included substantial changes and modifications, other than changes in rates, in the terms of the existing franchise" of plaintiff; that plaintiff has never either orally or in writing requested defendants to increase its natural gas rates without coupling such request with, or conditioning it on, other substantial changes and modifications in the existing franchise provisions; that defendants refused to enact the requested ordinances so increasing rates and changing the franchise or either or any of them6; that the legislature of Nebraska has delegated the exclusive power to establish natural gas rates, for the furnishing of natural gas to municipalities and their inhabitants, to such municipalities; that the existing...
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Kansas-Nebraska Nat. Gas Co. v. City of St. Edward, Neb.
...face show that the actions were dismissed for lack of jurisdiction but this may be inferred from the court's memorandum opinion. D.C., 134 F.Supp. 809. It was contended by the plaintiff below, and it renews the same contentions here, that: (1) in the event the Johnson Act applies to the act......
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