Missouri Public Service Co. v. Platte-Clay Elec. Co-op., Inc., PLATTE-CLAY

• Decision Date: 21 November 1985
• Docket Number: No. 66830,PLATTE-CLAY,66830
• Parties: MISSOURI PUBLIC SERVICE COMPANY, Appellant, v.ELECTRIC COOPERATIVE, INC., Respondent.
• Court: Missouri Supreme Court

Page 838

700 S.W.2d 838

MISSOURI PUBLIC SERVICE COMPANY, Appellant, v. PLATTE-CLAY ELECTRIC COOPERATIVE, INC., Respondent.

No. 66830.

Supreme Court of Missouri En Banc.

Nov. 21, 1985.

Rehearing Denied Dec. 17, 1985.

John R. Phillips, William H. Sanders, James D. Conkright, Preston Dean, Kansas City, for appellant.

Eugene J. Feldhausen, Donald W. Petty, Kansas City, for respondent.

Gary W. Duffy, Mark W. Comley, Jefferson City, for amici curiae Investor-Owned Utilities.

Rodric A. Widger, Eugene E. Andereck, Jefferson City, for Assoc. of Mo. Elec. Co-op., Inc. ROBERTSON, Judge.

This is a suit for injunction and declaratory relief brought by the Missouri Public Service Company (hereafter MoPub) against Platte-Clay Electric Cooperative, Inc. (hereafter the Cooperative) to declare MoPub's exclusive right to provide electric service to a tract of land within MoPub's franchise area presently served by the Cooperative. The issue is whether § 394.315, RSMo Cum.Supp.1984, entitles a rural electric cooperative to provide a new kind of electric service to a unitary tract currently served by the cooperative in an urban area for which an electrical corporation has been granted a franchise. The trial court ruled that the Missouri Public Service Commission has original jurisdiction over this matter and dismissed the appellant's petition. The Court of Appeals, Western District, reversed. This Court granted transfer to examine this issue of first impression. For the reasons stated herein, we affirm.

The trial court prepared extensive and thoughtful findings of fact. Neither party raised an objection to those findings. The trial court's findings of fact, therefore, are controlling.

Appellant MoPub is a public utility operating under a Certificate of Convenience and Necessity from the Missouri Public Service Commission. In 1957, the City of Kansas City granted appellant a 30-year franchise to provide electrical service to certain parts of Kansas City. In 1962, MoPub's franchise was extended to include certain newly annexed areas of Kansas City including the subject property in Platte County, Missouri.

Respondent is a rural electric cooperative existing under and subject to the Rural Electric Cooperative Law, Chapter 394, RSMo 1978 (as amended). The Cooperative provided electrical service to the subject property on December 28, 1981, when it was purchased by the DeLaval Division of Alfa-Laval, Inc. (hereafter DeLaval), a Swedish corporation engaged in the business of developing and marketing, among other things, dairy equipment, including milking machines, milk processing equipment, vacuum pumps, tank coolers, waste management products and computer controlled feeding systems. Respondent continued to supply electrical service to the property after December 28, 1981, continuously and exclusively.

The subject property, which has not been subdivided, consists of approximately 80 acres of land. Prior to DeLaval's purchase, the Ramey family operated the property as a family farm. The Ramey farm was improved by a small, one-story frame house, a two-car garage, a small barn and a small shed.

The electrical service to the property at the time of DeLaval's purchase, and on August 13, 1982, was a single-phase electrical transmission line to the farm house and to one light bulb in the garage. DeLaval razed the farm house and the barn and erected a new, modern house and new farm structures to provide an in-use environment for dairy product testing, including an up-to-date dairy barn.

DeLaval found that the single-phase electrical service to the property was insufficient to support its activities there. In response to DeLaval's electrical service requirements, in October, 1982, respondent began to provide three-phase delta electrical service to the property. Three-phase delta service had never been provided to the property prior to its purchase by DeLaval. The DeLaval facility also required and continues to require an increased volume of electricity and higher voltages than did the property prior to DeLaval's purchase.

Rural electric cooperatives are authorized "for the purpose of supplying electric energy and promoting and extending the use thereof in rural areas." § 394.030, RSMo 1978. A "rural area" is defined as "any area of the United States not included within the boundaries of any city ... having a population in excess of 1500 inhabitants." § 394.020, RSMo 1978. By its passage of the rural electric cooperative law, the General Assembly intended to encourage the provision of electric service to persons living in rural areas not otherwise served with electricity. Missouri Public Service Co. v. Platte-Clay Electric Cooperative, 407 S.W.2d 883, 894 (Mo.1966) (hereafter MoPub I ).

The General Assembly recognized that rural areas do not always remain so. Section 394.080(4), RSMo Cum.Supp.1984, provides that where a cooperative had been providing retail electric service in a rural area which was subsequently annexed, the cooperative maintains the authority to continue to provide electric service until such time as a municipality or a franchisee of the municipality may purchase the physical property of the cooperative. A cooperative is under no obligation to sell its assets and may continue to operate with its existing customer base at the time of annexation if it so chooses. MoPub I.

Appellant relies on MoPub I at 892, for its position that it has the exclusive right to provide electric service to the DeLaval facility. MoPub I is the first of several appellate decisions attempting to resolve the dispute which continues to exist between appellant and respondent. See also Missouri Public Service Company v. Platte-Clay Electric Cooperative, Inc., 435 S.W.2d 350 (Mo.1968) (MoPub II ), and Missouri Public Service Company v. Platte-Clay Electric Cooperative, Inc., 532 S.W.2d 800 (Mo.App.1975) (MoPub III ). As the seminal case, MoPub I stands for the proposition that a cooperative has the authority to continue to provide service after annexation to:

(1) Members [of the cooperative] receiving service at the time of annexation; (2) persons accepted as members who become subsequent occupants of houses and places of business actually connected to the cooperative's lines on the date of annexation ... and (3) persons to whom membership predating annexation may be transferred in compliance with the provisions of the bylaws [of the cooperative].

MoPub I at 894.

Appellant argues that the new DeLaval facility does not fall within any of the three classes to which a cooperative may continue to provide electrical service after annexation under MoPub I. As far as it goes, appellant's argument is correct. DeLaval was not a member of the Cooperative at the time of annexation, 1962. The new facilities constructed by DeLaval on the Ramey farm were not actually connected to the Cooperative's lines on the date of annexation. The record does not reveal that the Ramey's membership in the Cooperative was transferred to DeLaval or that the by-laws of the Cooperative permit such a transfer.

On August 13, 1982, two new Missouri laws, codified as § 393.106 and § 394.315, RSMo Cum.Supp.1984, took effect. In...