Nelson-Johnston & Doudna v. Metropolitan Utilities Dist.

• Decision Date: 12 April 1940
• Docket Number: 30703.
• Citation: 291 N.W. 558,137 Neb. 871
• Parties: NELSON-JOHNSTON & DOUDNA v. METROPOLITAN UTILITIES DIST.
• Court: Nebraska Supreme Court

291 N.W. 558

137 Neb. 871

NELSON-JOHNSTON & DOUDNA v. METROPOLITAN UTILITIES DIST.

No. 30703.

Supreme Court of Nebraska.

April 12, 1940

Syllabus by the Court.

1. A district organized under the provisions of articles 10 and 11, ch. 14, Comp.St. 1929, is a public corporation empowered to perform functions usually performed by cities of the metropolitan class and is, in its broader sense, a municipal corporation.

2. A municipal corporation may exercise only such powers as are expressly granted, those necessarily or fairly implied in or incidental to powers expressly granted and those essential to the declared objects and purposes of a municipality.

3. Statutes granting powers to municipalities are to be strictly construed, and where doubt exists such doubt must be resolved against the grant.

4. But where a power is granted to a municipality in its proprietary capacity, such as the power to manufacture, sell and distribute gas, the power is implied to do whatever is reasonably necessary to effectuate the purposes and objects for which the grant of power was made.

5. The authority given a municipality to engage in the operation of a business enterprise carries with it the power to conduct it in the same manner in which a private corporation would deal with its property under similar circumstances.

6. A municipal corporation having the power to manu facture, sell and distribute gas to its inhabitants has the implied power to engage in the selling of gas appliances such business being intimately connected with and incidental to the sale and distribution of gas, in that it directly and proximately tends to accomplish the general purpose and object for which the primary power was granted.

Appeal from District Court, Douglas County; Dineen, Judge.

Suit by Nelson-Johnston & Doudna, a Nebraska corporation, against the Metropolitan Utilities District, a corporation, to enjoin defendant's alleged unlawful selling of gas appliances. Defendant's general demurrer was sustained and plaintiff's petition dismissed, and from the decree, plaintiff appeals.

Affirmed.

Leon, White & Lipp, of Omaha, for appellant.

Dana Van Dusen, of Omaha, for appellee.

A. G. Humphrey, of Mullen, J. R. Mueller, of Syracuse, Beeler, Crosby & Baskins, of North Platte, Paul C. Holmberg, of Grand Island, J. C. Reavis, of Falls City, Thomas Stibal, of Schuyler, A. J. Denney, of Fairbury, John E. Mekota, of Crete, Clyde Barton, of Pawnee City, Harry K. Livingston, of Tecumseh, C. R. Stasenka, of Wilber, P. M. Everson, of Wymore, John Ferneau, of Auburn, C. A. Sorensen, of Lincoln, and C. N. McElfresh, of Columbus, amici curiae .

Heard before SIMMONS, C. J., ROSE, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ., and ELLIS, District Judge.

CARTER, Justice.

This is an appeal from a decree of the district court for Douglas county sustaining defendant's general demurrer to plaintiff's petition filed to secure an injunction against alleged unlawful trading on the part of the Metropolitan Utilities District of the city of Omaha. The plaintiff refused to plead further and plaintiff's petition was thereupon dismissed. Plaintiff appeals.

The plaintiff is a corporation with its principal place of business within the territory served by the Metropolitan Utilities District, a taxpayer of the city of Omaha and a patron and user of the gas and water facilities of the district. The defendant is a municipal corporation created and existing under the laws of the state of Nebraska (Comp.St.1929, §§ 14-1001 to 14-1030 and 14-1101 to 14-1105) and empowered by such laws to engage in the business of supplying the inhabitants of the city of Omaha and surrounding territory with water and gas, and to manufacture and produce coke and by-products in connection with the operation of its gas plant, and to sell and deliver the same to its customers.

The record shows that plaintiff is now and for many years has been engaged in the sale at retail of gas ranges, gas stoves, gas heaters, mechanical refrigerators and other household appliances in the city of Omaha. Plaintiff further alleges that the defendant district is now operating a retail appliance store in the city of Omaha and is selling and offering for sale gas stoves, gas ranges, gas heaters, mechanical refrigerators and other household appliances, that defendant carries on an extensive advertising campaign, including the giving to its customers free merchandise and articles used in connection with the cooking and preparation of foods, and that it extends to its patrons unusual and long terms of credit on merchandise sold which private competitors cannot meet. It is further alleged that there are numerous private mercantile establishments engaged in the gas-appliance business in the city of Omaha, that there is no scarcity of such appliances and that there is no price fixing by dealers, combinations or trusts to stifle competition or thwart the beneficent results of free enterprise.

Plaintiff contends that defendant is unlawfully engaging in the gas-appliance business contrary to the statutory law of this state and to the damage of the plaintiff, and that it is entitled to an injunction restraining the unlawful acts of this defendant in carrying on such gas-appliance business.

The defendant is a municipal corporation created by statute to take over, control and operate the artificial gas system of the city of Omaha, and other public utilities. Keystone Investment Co. v. Metropolitan Utilities District, 113 Neb. 132, 202 N.W. 416, 37 A.L.R. 1507.A noted text-writer defines a municipal corporation as follows: " We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of the inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation and regula tion with respect to their local and internal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a municipal corporation proper. The phrase ‘ municipal corporation' is used with us in general in the strict and proper sense just mentioned; but sometimes it is used in a broader sense that includes also public or quasi corporations, the principal purpose of whose creation is as an instrumentality of the State, and not for the regulation of the local and special affairs of a compact community." 1 Dillon, Municipal Corporations, 59. While the Metropolitan Utilities District does not have all the attributes of a municipal corporation strictly defined, yet it performs the functions of a municipal corporation and in its broader sense is a municipal corporation.

The rule has long been established in this state that a municipal corporation " possesses and can exercise the following powers and no others: First, those granted in express words second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to...