Kansas Power & Light Co. v. City of Great Bend

• Decision Date: 08 December 1951
• Docket Number: No. 38469,38469
• Citation: 172 Kan. 126,238 P.2d 544
• Parties: KANSAS POWER & LIGHT CO. v. CITY OF GREAT BEND et al.
• Court: Kansas Supreme Court

Page 544

238 P.2d 544

172 Kan. 126

KANSAS POWER & LIGHT CO. v. CITY OF GREAT BEND et al.

No. 38469.

Supreme Court of Kansas.

Dec. 8, 1951.

Syllabus by the Court.

1. Governmental agencies and corporations, including municipal corporations, are creatures of the legislature and have only such authority as is granted by that body, and the legislature may from time to time alter the authority granted to such governmental agency or corporation and impose it upon other functionaries as experience may suggest.

2. G.S.1949, 12-1650 does not grant to cities of the second class the authority to classify and license for purposes of regulation or revenue a public utility business carried on within its corporate limits where such business has been specifically and exclusively reserved to the state as an object of regulation and taxation.

3. G.S.1949, 12-2001 provides the exclusive method by which a municipality may grant to a public utility the right to use its streets and receive compensation therefor.

Balfour S. Jeffrey, and Robert E. Russell, both of Topeka (Clayton E. Kline, M. F. Cosgrove, and C. A. Magaw, of Topeka, and R. C. Russell and Isabel Obee, of Great Bend, on the briefs), for the appellant.

Barton Carothers, of Great Bend, on the briefs, for the appellees.

WERTZ, Justice.

This action brought by appellant in the district court of Barton County was for an injunction against enforcement of Ordinance No. 1286 of the defendant city. The district court denied the injunction, and this appeal was taken from such order.

Plaintiff (appellant here) is a Kansas public utility corporation and defendants (appellees here) are the City of Great Bend and the officers of that city, and for the purpose of brevity the appellant will hereinafter be referred to as 'the utility' and the appellees as 'the city'.

The utility is engaged in distributing and supplying natural gas to a number of cities wholly within the state of Kansas including the City of Great Bend, pursuant to a certificate of convenience and authority granted by the Corporation Commission of the State of Kansas. The utility has installed its mains and services in the city pursuant to a franchise ordinance granted by the city many years ago, and until the expiration of that franchise in January, 1949, supplied natural gas to the city under that franchise. Since its expiration the utility has continued to furnish gas to the city without a new franchise.

Since January, 1949, the utility has presented a new franchise to the governing body of the city and requested its passage on the basis of the term being twenty years and, in lieu of all city occupation and license fees, that a consideration be paid to the city amounting to two percent on a gross revenue basis from the sale of domestic and commercial gas in the city, which would amount to approximately $5,000 annually. The governing body of the city has refused to pass the submitted franchise and has countered with submission of a ten-year franchise on substantially the same terms, which the utility in turn has refused to accept, the situation thereby becoming a stalemate.

Subsequent thereto and on December 9, 1950, the city published Ordinance No. 1286 entitled 'An ordinance regulating the use of the city streets and alleys by businesses furnishing natural gas for light, heat and power purposes to the inhabitants of the city, for pay, by means of pipe lines laid in the public streets and alleys of the city, providing for a license, the collection of a license fee, and providing penalties for the violation thereof'. Under terms of the ordinance, the city made it unlawful for the utility to carry on the business of furnishing natural gas for light, heat and power purposes to the citizens of the city for pay by means of pipe laid in the public streets and alleys unless a license fee of $10,000 per year was paid by the utility; as a condition precedent to carrying on such business the utility is required to pay $5,000 of the license fee on January 1, 1951, and it is further provided that if the utility should fail and refuse to pay the license fee and continue to distribute natural gas to the inhabitants of the city without paying the license fee, then it shall be deemed guilty of a misdemeanor and fined not less than $2 per day nor more than $100 per day for each day that said business is conducted without the license fee having been paid, and that each day shall constitute a separate offense.

This brings us to this question presented by the parties: Has a city of the second class such as appellee the authority under G.S.1949, 12-1650, as amended by Laws of 1951, chapter 139, to classify and license for the purpose of regulation or revenue a public utility business operated within the limits of such city and servicing other municipalities under a certificate of convenience and authority from the Corporation Commission and which business has been specifically and exclusively reserved to the State of Kansas as an object of regulation by the State Corporation Commission and as an object of taxation through the Commission of Revenue and Taxation?

As authority for publication of the mentioned ordinance, the city relies on G.S.1949, 12-1650 as amended, which in pertinent part reads as follows: 'That the governing body of any city of the second or third class shall have the power by ordinance to classify and license for purpose of regulation or revenue any and all occupations, businesses or professions pursued, conducted or carried on within its corporate limits which are not prohibited by law or which are not or shall not be specifically or exclusively reserved to the state or county as objects of taxation or regulation, subject to the constitution and laws of this state, and shall fix the amount of all license fees and provide for their collection and prescribe penalties for the nonpayment thereof. * * *' (Italics supplied.)

The utility contends that it is completely outside the scope of the mentioned statute and immune from payment of license fees and other regulatory action by the city under Ordinance No. 1286 for the reason that it is specifically and exclusively reserved to the state as an object of taxation and regulation under the Public Utilities Act, G.S.1949, Ch. 66.

G.S.1949, 66-101 provides that the State Corporation Commission is given full authority to supervise and control the public utilities doing business in Kansas and empowered to do all things necessary and convenient for the exercise of such power. G.S.1949, 66-104 provides that the term 'public utility' shall be construed to mean every corporation that now or hereafter may own, control, operate or manage any equipment, plant, or the conveyance of oil and gas through pipe lines in or through any part of the state.

G.S.1949, 66-117 provides that when any public utility governed by the provisions of the Act shall decide to make a change in any rate, joint rate or classification, schedule of changes, in any rule, regulation or practice pertaining to the service or rates for any such utility or common carrier, such utility shall file with the Corporation Commission a schedule showing the change desired to be made and put in force by such utility, and no change shall be made in any rate, schedule of changes, or any rule or regulation pertaining to...