Northern States Power Co. v. National Gas Co.

• Decision Date: 30 December 1999
• Docket Number: No. 99-1486.,99-1486.
• Parties: NORTHERN STATES POWER COMPANY, Plaintiff-Appellant, v. NATIONAL GAS COMPANY, INC., Defendant-Respondent.
• Court: Wisconsin Court of Appeals

232 Wis.2d 541

2000 WI App 30

606 N.W.2d 613

NORTHERN STATES POWER COMPANY, Plaintiff-Appellant, v. NATIONAL GAS COMPANY, INC., Defendant-Respondent.

No. 99-1486.

Court of Appeals of Wisconsin.

Submitted on briefs November 18, 1999.

Decided December 30, 1999.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Joseph R. Mirr of Garvey, Anderson, Johnson, Gabler & Geraci, S.C. of Eau Claire.

On behalf of the defendant-respondent, the cause was submitted on the brief of Thomas A. Lockyear of Lockyear Law Offices, S.C. of Madison.

Before Eich, Vergeront and Deininger, JJ.

¶ 1. VERGERONT, J.

Northern States Power Company (NSP) appeals the summary judgment dismissing its complaint against National Gas Company, Inc. The complaint alleges that portions of the agreement between National Gas and the owner of a mobile home park in the Town of Shelby, La Crosse County, are void because they interfere with NSP's obligation to provide service to the public and are therefore against public policy.¹ Under that agreement, the owner of the mobile home park agreed to require the residents of the park to purchase their propane and natural gas from National Gas at its customary rates. The trial court concluded it was not clear that the public policy of the State of Wisconsin obligated NSP to provide service to persons who are already receiving satisfactory service. The court therefore decided it should not declare the contract void as against public policy. We agree with the trial court that the contract does not violate a clear statement of public policy regarding NSP's duties as a public utility. We therefore affirm.

BACKGROUND

¶ 2. The relevant facts are not disputed. NSP is a Wisconsin public utility that provides electricity and natural gas to the public, subject to rules adopted by the Wisconsin Public Service Commission (PSC). In February 1960, the Town of Shelby, by municipal ordinance, granted NSP a franchise for the furnishing and sale of natural gas in the town. In March 1960, by order of the PSC, NSP was granted authority to provide natural gas service in the Town of Shelby and other municipalities.

¶ 3. National Gas is a Wisconsin corporation engaged in the distribution and sale of propane gas, and is not a public utility. In May 1972, it entered into an agreement with the Roesler family which granted National Gas the perpetual and exclusive right to supply natural and propane gas² to the tenants of a mobile home park owned by the Roeslers, now known as Pineview Mobile Home Park.³ The agreement also obligated the Roeslers to incorporate into the rules for tenants one which requires those tenants using either natural or propane gas to purchase that gas from National Gas at its customary rates. National Gas installed non-portable propane storage facilities, underground piping and metering facilities to provide propane gas service to the residents. The agreement has remained continuously in effect, and National Gas presently provides propane fuel to approximately one hundred current tenants.

¶ 4. In early 1997 several tenants requested that NSP provide natural gas service to them. In anticipation of providing those services, NSP obtained an easement from the owner to allow NSP to install underground natural gas pipes and other facilities in the park. At some point NSP became aware of the agreement with National Gas and commenced this action, seeking a determination that the portions of the agreement described above are void because they interfere with NSP's obligation to provide service to the public and are therefore against public policy.

¶ 5. NSP moved for summary judgment. The trial court denied that motion but granted summary judgment in favor of National Gas Company. The court concluded that the agreement did not clearly violate the public policy of the State of Wisconsin because there was apparent authority under the administrative code for a mobile home park owner to restrict the tenants' choice of vendors of utility services, and there is no case law declaring the public policy applicable in circumstances similar to this case.

DISCUSSION

¶ 6. On appeal NSP renews the argument it presented to the trial court. It contends the provision of the agreement granting National Gas the exclusive and perpetual right to furnish park residents with propane or natural gas is void as against public policy because it prevents NSP from fulfilling its obligations as a public utility.

[1, 2]

¶ 7. In reviewing the trial court's grant of summary judgment, we apply the same standard of review as the trial court. Brownelli v. McCaughtry, 182 Wis. 2d 367, 372, 514 N.W.2d 48, 49 (Ct. App. 1994). Summary judgment is proper if there are no genuine issues of material fact and one party is entitled to judgment as a matter of law. Section 802.08(2), STATS. Since the facts are undisputed, the interpretation of the contract presents a question of law, Yauger v. Skiing Enters., Inc., 206 Wis. 2d 76, 80, 557 N.W.2d 61 (1996), as does the application of public policy considerations to a contract. Bowen v. Lumbermens Mut. Cas. Co., 183 Wis. 2d 627, 654, 517 N.W.2d 432, 443 (1994). We review questions of law de novo, while benefiting from the trial court's analysis. Lomax v. Fiedler, 204 Wis. 2d 196, 206, 554 N.W.2d 841, 844-45 (Ct. App. 1996).

¶ 8. The general rule is that parties are free to contract as they see fit; however, contracts that impose obligations that are contrary to the public policy of the state are unenforceable. State ex rel. Journal/Sentinel, Inc. v. Pleva, 155 Wis. 2d 704, 710-11, 456 N.W.2d 359, 362 (1990). A contract may be held unenforceable on grounds of public policy only in cases free from doubt. Continental Ins. Co. v. Daily Express, Inc. 68 Wis. 2d 581, 589, 229 N.W.2d 617, 621 (1975). Public policy may be expressed by statute, see Pedrick v. First Nat'l Bank, 267 Wis. 436, 438-39, 66 N.W.2d 154, 155 (1954); by administrative regulation, see M&I First Nat'l Bank v. Episcopal Homes Management, Inc., 195 Wis. 2d 485, 507, 536 N.W.2d 175, 186 (Ct. App. 1995)

; or by the court's expression of the policy of the common law. See Hawkins Realty Co. v. Hawkins State Bank, 205 Wis. 406, 417, 236 N.W. 657, 662 (1931).

¶ 9. As a source of its duty to provide services, NSP begins with § 196.03(1), STATS., which states:

Subject to s. 196.63, a public utility shall furnish reasonably adequate service and facilities. The charge made by any public utility for any heat, light, water, telecommunications service or power produced, transmitted, delivered or furnished or for any service rendered or to be rendered in connection therewith shall be reasonable and just and every unjust or unreasonable charge for such service is prohibited and declared unlawful.

¶ 10. NSP then refers us to a number of cases decided under ch. 196, STATS., that have addressed whether a public utility must extend service to a person requesting it. In the first of this line of cases, Northern States Power Co. v. Public Serv. Comm'n, 246 Wis. 215, 16 N.W.2d 790 (1944), NSP sought judicial review of a PSC order that it furnish heating service to a resident who had requested service and been denied by NSP. The supreme court upheld the PSC's order rejecting NSP's argument that the residence was outside of its area of undertaking and would be unreasonably expensive to service. See id. at 228, 16 N.W. at 795. In reaching this conclusion the court stated: "By the enactment of the public utility act (ch. 196, STATS.) the legislature has determined that the public interest requires that public utilities shall, within their undertaking, furnish their service to all who reasonably require the same." Id.

¶ 11. This statement from Northern States has been relied upon to define a public utility's duty in subsequent cases in which a public utility sought judicial review of PSC orders that it provide services to persons who did not have service and for whom the utility had refused to provide service on the ground they were located outside its area of undertaking. See City of Milwaukee v. Public Serv. Comm'n, 268 Wis. 116, 120, 66 N.W.2d 716, 718 (1954); Town of Beloit v. Public Serv. Comm'n, 34 Wis. 2d 145, 149, 148 N.W.2d 661, 663 (1967). The Northern States statement has also been relied upon in cases in which individuals already had telephone service, but in their view it was unsatisfactory because they had to use a foreign exchange in order to call the commercial and social centers nearest them. See Lodi Tel. Co. v. Public Serv. Comm'n, 262 Wis. 416, 420-22, 55 N.W.2d. 379, 381-82 (1952),

and Weyauwega Tel. Co. v. Public Serv. Comm'n, 14 Wis. 2d 536, 541-42, 111 N.W.2d 559, 562 (1961) (both affirming PSC orders that reasonably adequate service to public requires extension of service by a second telephone company in the area of that company's undertaking, even though this will result in a duplication of lines).

¶ 12. We agree with the trial court and with National Gas that none of these cases establish a public policy that is applicable in the context of this case — where there is no contention that the mobile home tenants do not have service, or are receiving inadequate service, or are being charged unreasonable rates for the service. ¶ 13. NSP also relies on the common law existing prior to the enactment of ch. 196, STATS.⁴ In Krom v. Antigo Gas Co., 154 Wis. 528, 533, 140 N.W. 41, 44 (1913), the court explained:

[The predecessor to § 196.03(1)] is plainly declaratory of the common law and adds nothing to the obligations of persons or corporations who, having received legislative authority to carry on the business of a public utility, undertake to do so.

Such persons and corporations have always been under a legal duty to furnish reasonably adequate service at reasonable rates and without discrimination to all who are entitled to apply for service. Shepard v. Milwaukee G.L. Co., 6 Wis. [526] [*]539 [(1858)]; Munn v.

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