Newman v. City of Indianola

• Decision Date: 29 August 1975
• Docket Number: No. 56702,56702
• Parties: Jesse NEWMAN, Appellant, v. CITY OF INDIANOLA, a Municipal Corporation, Appellee.
• Court: Iowa Supreme Court

Page 568

232 N.W.2d 568

Jesse NEWMAN, Appellant, v. CITY OF INDIANOLA, a Municipal Corporation, Appellee.

No. 56702.

Supreme Court of Iowa.

Aug. 29, 1975.

P. F. Elgin, of Elgin & Hoyman, Indianola, for appellant.

Darrell Goodhue and James F. Fowler, Indianola, for appellee.

Heard before MOORE, C.J., and MASON, LeGRAND, REYNOLDSON, and HARRIS, JJ.

MASON, Justice.

Plaintiff, Jesse Newman, owns a mobile home park within the city of Indianola. Defendant City owns and operates the municipal electric utility and transmission lines for the production and sale of electrical services within Indianola and in effect has an exclusive franchise for the transmission and sale of electrical power. Charges for the sale of electrical power are made on a rate suchedule fixed and determined by city ordinance.

Plaintiff petitioned for a declaratory judgment to determine the validity of charges made for the extension of electrical service to his mobile home park. The City counterclaimed for monies it claimed were due from plaintiff on account of the extension. The trial court found in favor of Indianola on its counterclaim and plaintiff appeals.

This case presents an uncomplicated factual situation. Plaintiff owns and operates the trailer court which has a maximum capacity of 64 trailers. In connection with this, water is provided to each unit as a part of the rental charge, but each trailer unit is separately metered for electric service. Plaintiff has built and continues to maintain the road system within the trailer park.

Mobile home parks are not a permitted use in Indianola's one and two-family residential zoning classifications but are permitted in the mixed residential zoning classification which also permits multiple dwellings.

August 26, 1971, at plaintiff's request, defendant extended its electrical transmission lines approximately 500 feet along the western border of Newman's mobile home park in order to provide service to three additional mobile home units.

The cost to the City to complete this extension of its system was $473.47 which was the fair and reasonable charge for the installation. Plaintiff, subsequently billed for this amount, has refused to remit payment.

Before plaintiff's request for this particular extension of the electrical transmission lines and the installation and completion thereof by defendant the Indianola city council unanimously adopted two relevant resolutions.

April 11, 1970, saw the adoption of 'A Resolution Setting a Schedule of Charges for New Electrical Installations and Hookups in the City of Indianola, Iowa,' wherein it was provided, 'the City of Indianola shall charge and collect from the developer, owner or builder the following amounts for all new electrical hook-ups or installations made with the city's electrical system after the date of this Resolution.' (Exhibit A).

A schedule of charges was provided for overhead hookups, underground hookups, new subdivision hookups and installation of hookups requested through an unplotted or open area.

July 6, 1971, the city council adopted a resolution entitled 'A Resolution Setting a Schedule of Charges for New Electrical Installations for Commercial, Industrial, and Multiple Dwelling Users in the City of Indianola, Iowa,' wherein it was resolved 'That any developer, builder or owner who obtains a new electrical installation and connection with the city's electrical system to service a commercial, industrial, or multiple dwelling facility shall pay to the city's electrical fund the total reasonable cost expended by the city in making the hookup.' (Exhibit B).

In this resolution provision was made for furnishing an estimate for various types of hookups to be paid to the City before commencement of the installation. Any difference between the estimate and the actual cost was to be adjusted by allowance of credit or payment of additional charges.

These two resolutions, as well as a city ordinance, were the bases of the City's claim against defendant. Plaintiff's petition for declaratory judgment sought determination of the following:

'1. Propriety of charges for extensions of electrical lines within the City of Indianola, Iowa.

'2. The applicability of the Resolutions referred to as Exhibits A and B hereof to a mobile home park.

'3. Whether the seller of electrical power and services can charge for the sale of same in accordance with the rate schedule and also charge for extensions made to the transmission system which extensions are for the purpose of service of additional users.'

The trial court found the City, in providing electric utility service, acts in a proprietary function; that it enjoys discretion whether to extend its transmission lines--as opposed to a public utility which does not--and that this discretion was not abused. It was held the two resolutions were applicable to mobile home parks, but declined to reach questions one and three 'in view of the agreement by Plaintiff to pay for the work.' The court placed '* * * its decision on the basis that there was a request by Plaintiff to Defendant to extend the service and pay the reasonable cost thereof, not on the power under Section 397.27 of the Code of Iowa.'

In finding for defendant on its counterclaim, the trial court held the amount charged was reasonable.

It has been pointed out that the amount in controversy as shown by the pleadings in this matter was $473.47. Rule 333, Rules of Civil Procedure, provides:

'Amount in controversy. Except where the action involves an interest in real estate, no appeal shall be taken in any case where the amount in controversy, as shown by the pleadings, is less than one thousand dollars, unless the trial judge, within thirty days after the judgment or order is entered, certifies that the cause is one in which appeal should be allowed. The right of appeal is not affected by any remission of any part of the verdict or judgment.'

Compliance with this rule is jurisdictional. Benttine v. Jenkins Truck Lines, Inc., 182 N.W.2d 374, 376 (Iowa 1970) and Bridal Publications, Inc. v. Richardson, 229 N.W.2d 771, 773--774 (Iowa 1975).

In the present case plaintiff moved the trial court for a certificate permitting an appeal even though the amount in controversy is less than the jurisdictional amount fixed by the rule. The certificate was granted. Thus, there was compliance with the rule.

In this connection we point out issuance by the trial court of the certificate allowing an appeal does not preclude this court from making its own determination of the propriety of the issuance of such certificate. A review of the questions urged for consideration by this appeal convinces us the trial court was correct in this instance in issuing the certificate since those questions involve the future rights and obligations of both a city owning and operating a utility and of those customers requesting electrical service.

I. No complaint is directed toward the rate charged by the municipality for electrical power after installation of the service.

The question is whether a municipality owning and operating an electrical transmission system should be required to absorb as a normal operating cost the fair and reasonable initial cost of constructing as a part of its system an extension line to a distribution point within the established service area of the utility in order to provide a hookup point for additional users or should such costs be paid by the developer, owner or builder requesting such extension.

It was stipulated in the trial court that the only two methods available to the City for recovering the costs of electrical extensions to its transmission system were by increased rates or, if legal and valid, requiring the applicant desiring the extension to pay for the same. Plaintiff maintains costs of such extension are normal operating costs which must be considered in determining the reasonable rate or rent charged for the supply of electrical service but the City operating a power plant and transmission system in its proprietary function may not in addition to such rate for its service also charge for reasonable extensions made to the transmission system within its established service area which are for the purpose of service to additional users.

Of course, absorbing the expense of installation of such extensions of the transmission system through higher rates would spread the costs while charging specifically would place greater burdens on individual developers.

The trial court's decision requiring Newman to pay the reasonable costs of the extension was based on a theory of contract because there was a request by plaintiff to extend the services and pay the reasonable cost thereof, not under the power granted by section 397.27, The Code.

Plaintiff contends there is no support in the record for this theory. Although plaintiff concedes he requested an extension of the electrical service he points out that the record is void of any evidence he agreed to pay for the work.

The portion of the stipulation apparently relied upon by the trial court reads as follows: 'That on or about the 26th day of August, 1971, at the request of the plaintiff, the defendant extended electrical services * * * for the purpose of serving three (3) additional mobile home units with electrical power. * * *.'

As indicated, the factual circumstances leading to this lawsuit were stipulated. There is nothing in the stipulation which would support a finding plaintiff had Expressly agreed to pay the reasonable costs for the extension involved. Thus, any agreement in order to serve as a basis for the court's theory must be one implied in fact.

Before determining whether such implied contract was established we turn to plaintiff's contention that section 397.27, The Code, as in effect at the time material hereto provided the exclusive methods of financing the expenses of running, operating, renewing and extending works operated by a municipality.

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