Lyons v. Otter Tail Power Company

• Decision Date: 23 April 1941
• Docket Number: 6670
• Citation: 297 N.W. 691,70 N.D. 681
• Court: North Dakota Supreme Court

297 N.W. 691

70 N.D. 681

H. W. LYONS, Respondent, v. OTTER TAIL POWER COMPANY, Appellant

No. 6670

Supreme Court of North Dakota

April 23, 1941

Syllabus by the Court.

1. Section 4609c16, Supplement to the Compiled Laws of North Dakota 1913, which provides that no agreement for service made by a public utility with its customers shall be lawful unless and until the same shall be filed with and approved by the Commissioners (Board of Railroad Commissioners now Public Service Commission) applies to agreements by which a person becomes a customer as well as to agreements with persons who had previously been customers.

2. A plaintiff, who innocently entered into and performed an agreement made in violation of a statutory provision which was enacted for the benefit of a class to which plaintiff belonged and for the regulation of a class to which defendant belonged, was not in pari delicto with the defendant.

3. A cause of action for the rescission of a contract is stated where under the facts alleged in the complaint the contract is unlawful for causes not apparent on its face and plaintiff is not equally in fault with the defendant (Section 7206, Compiled Laws of North Dakota 1913).

4. In an action brought by plaintiff for the rescission of an unlawful contract and for restitution of benefits conferred on defendant in the performance thereof, the fact that plaintiff cannot restore the benefits received by him as a result of defendant's performance will not bar restitution to the extent that the benefits conferred on defendant may exceed those received by plaintiff.

Appeal from District Court, Stutsman County; Fred Jansonius, Judge.

Action by H. W. Lyons against the Otter Tail Power Company for rescission of an executed contract, for an accounting, and for restitution of consideration parted with by him in the performance of the contract. From an order overruling defendant's demurrer to plaintiff's complaint, the defendant appeals.

Order sustained.

See also, 68 N.D. 403, 280 N.W. 192.

BURR C. J., and CHRISTIANSON, J., dissenting.

C. S. Suck, Jr., and Field & Field, for appellant.

A. W. Aylmer, for respondent.

Burke, J. Morris and Nuessle, JJ., concur. Burr, Ch. J. (dissenting). Christianson, J. (dissenting).

OPINION

BURKE

Plaintiff brought this action for the rescission of an executed contract, for an accounting and for restitution of the consideration parted with by him in the performance of the contract. Defendant demurred to plaintiff's complaint and the appeal is from the order overruling the demurrer.

It is alleged in the complaint that plaintiff erected a building in Jamestown in 1926; that while said building was in the course of construction plaintiff entered into negotiations with the defendant Otter Tail Power Company, a public utility, to secure an extension of defendant's steam heat mains to his new building; that as a result of such negotiations plaintiff and the defendant entered into the following contract:

"Agreement

"This Agreement made this 3rd day of April, 1926, by and between H. W. Lyon and the Otter Tail Power Company, both of Jamestown, North Dakota, Witnesseth:

"The Power Company agrees to extend its heating main from the present location at Fourth Avenue and Pacific Street to Mr. Lyon's new garage, located south of the Masonic Temple. It is agreed that the steam heat main will be run to the inside of the basement at the North East corner of the building.

"The Power Company agrees to make this installation not later than August 15, 1926.

"H. W. Lyon agrees to pay to the Otter Tail Power Company Nine Hundred Seventy-six Dollars ($ 976.00) when the main is laid.

"It is understood that the payment of Nine Hundred Seventy-six Dollars ($ 976.00) is for the purpose of obtaining service and that the pipe line installed is the property of the Otter Tail Power Company and any assessments or taxes levied against this property shall be paid by the Otter Tail Power Company, and said property shall be maintained in condition by the Power Company.

"In Witness Whereof on the day and year first above written, the parties have hereunto set their hands and seals.

"H. W. Lyons,

"Otter Tail Power Company,

"By C. S. Kennedy,

"Vice Pres. and Gen. Mgr."

It is further alleged that this contract was not approved by or filed with the Board of Railroad Commissioners and was therefore unlawful under the provisions of § 4609c16, Supplement to the Compiled Laws of North Dakota 1913; that at the time of the execution of said contract and the performance thereof plaintiff was unaware that it was unlawful; that the defendant falsely and fraudulently represented to the plaintiff that there was no other way in which plaintiff could secure said extension except by paying to defendant the sum of money specified in the contract; that the defendant knowing said contract was unlawful, fraudulently concealed that fact from the plaintiff and that plaintiff relying upon the false representations of the defendant and relying upon defendant's duty as a public utility to treat honestly and fairly with its customers made and performed said contract under a mistake of law which was deliberately fostered by the defendant.

The statute relied on by plaintiff is as follows:

"Unreasonable preferences or advantages; rebates, drawbacks, etc. It shall be unlawful for any public utility corporation subject to the provisions of this Act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation or locality or any particular character of traffic or service in any respect whatsoever, or to subject any particular person, firm, corporation, company or locality or any particular character of traffic or service to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. No public utility corporation subject to the provisions of this Act shall, directly or indirectly, by any special rate, rebate, drawback or other device or method, charge, demand, collect, charge or receive from any person, firm or corporation a greater or less compensation for any service rendered or to be rendered than he charges, demands, collects or receives from any other person, firm or corporation for doing a like and contemporaneous service under the same or substantially similar circumstances and conditions.

"Nothing in this Act shall prohibit a public utility from entering into any reasonable agreement with its customers, consumers or employees, or for providing for a sliding scale of charges, unless the same is prohibited by the terms of the franchise or permit under which such public utility is operated. No such agreement or sliding scale shall be lawful unless and until the same shall be filed with and approved by the Commissioners. (Laws 1919, chap. 192, § 16.)"

Defendant contends that this statute is not applicable to contracts such as the one here under consideration, asserting that it relates only to contracts made by a utility with its customers and that plaintiff was neither defendant's customer nor a consumer of its products at the time the contract was made. Clearly the purpose of the statute is to protect the public both collectively and individually against discrimination by a utility, whether it be unfair to the public by giving an individual preferred treatment or whether it be unfair to the individual by demanding and securing exorbitant fees as a condition of furnishing service. To that end the Board of Railroad Commissioners is given supervisory control over all contracts which a utility makes with its customers....