Reimer v. KN Energy, Inc.

• Decision Date: 13 June 1986
• Docket Number: 85-323,Nos. 85-322,s. 85-322
• Citation: 223 Neb. 142,388 N.W.2d 479
• Parties: Henry F. REIMER et al., Appellants, v. KN ENERGY, INC., a Nebraska Corporation, Appellee.
• Court: Nebraska Supreme Court

Page 479

388 N.W.2d 479

223 Neb. 142

Henry F. REIMER et al., Appellants, v. KN ENERGY, INC., a Nebraska Corporation, Appellee.

Nos. 85-322, 85-323.

Supreme Court of Nebraska.

June 13, 1986.

Syllabus by the Court

1. Courts: Municipal Corporations: Public Utilities: Rates. District courts have power to protect a supplier of natural gas from municipal action which deprives it of a fair, reasonable, and compensatory rate, and power to protect a consumer of such gas from an arbitrary, unreasonable, and confiscatory rate.

2. Standing: Actions. In order to maintain an action, one must have some legal interest in the outcome of the litigation.

3. Standing: Actions. In order to maintain an action to enforce private rights, a plaintiff must show that he or she will be benefited by the relief to be granted.

4. Municipal Corporations: Actions: Injunction. One seeking to restrain the act of a municipal body must show some special injury peculiar to himself or herself aside from and independent of the general injury to the public, unless the matter involves an illegal expenditure of public funds or an increase in the tax burden.

5. Actions: Pleadings: Demurrer. In testing whether a petition which has been challenged by a demurrer states a cause of action, a court is required to accept as true all the facts which are well pled, together with the proper and reasonable inferences of law and fact which may be drawn therefrom; a court does not, however, accept as true the conclusions of the pleader.

6. Public Utilities: Rates. The setting of natural gas rates is a legislative act.

7. Collateral Attack: Appeal and Error. The validity of a legislative act from which there is no appeal is subject to judicial review through a collateral attack. Robert I. Eberly, Lincoln, for appellants.

James D. Conway of Conway, Connolly & Pauley, P.C.; B.J. Becker, Hastings, and James W. Symonds of Cronin, Hannon & Symonds, O'Neill, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN and GRANT, JJ.

CAPORALE, Justice.

In these two suits, which have been consolidated for argument in this court, the plaintiff-appellant, Henry F. Reimer, challenges, on his own behalf and purportedly on behalf of others similarly situated, the validity of the $4-per-month minimum customer service rate which defendant-appellee, KN Energy, Inc., a supplier of natural gas, charges under a municipal franchise and ordinance. Specifically, he seeks to enjoin KN Energy from collecting the disputed rate from himself and others (for heating use only purchases in case No. 85-322 and for unlimited use purchases in case No. 85-323), to have the disputed rate declared uncollectible, to obtain refunds of the moneys previously collected therefor, to enjoin collection of the disputed rate pendente lite, and for other just and proper equitable relief. The trial court sustained KN Energy's demurrer to the petition in each case. Upon Reimer's election not to amend his petitions, the trial court dismissed each suit. Reimer's six assignments of error coalesce to claim that the trial court erred in ruling that each of the petitions fails to state a cause of action against KN Energy. We reverse and remand for further proceedings.

Each of the petitions alleges the following facts: That KN Energy is engaged in the business of selling natural gas; that the city of O'Neill, Nebraska, granted KN Energy a franchise to sell to its residents; that Reimer and the others similarly situated are residents of said city and customers of KN Energy; that said city adopted an ordinance fixing customer rates; that the disputed rate was billed to KN Energy's customers beginning September 1982; that the customers received and continue to receive nothing for the disputed rate; that Reimer and the others have protested and refused to pay the disputed rate, although they have paid the other rates for gas supplied; and that KN Energy has made demand for payment of the disputed rate and has threatened to disconnect gas service if such is not paid. From the foregoing facts Reimer concludes that the disputed rate is unlawful for a variety of reasons, including that it violates the terms of the franchise and is arbitrary, unreasonable, and confiscatory.

Stripped of surplus language, KN Energy's demurrer in each case alleges that (1) the district court lacks subject matter jurisdiction, (2) plaintiff lacks legal capacity to sue, and (3) the petition fails to state facts sufficient to constitute a cause of action. Neb.Rev.Stat. § 25-806 (Reissue 1985).

The task of this court is to determine whether KN Energy's demurrers were properly sustained on the basis of any one or more of the foregoing three grounds. Harmon Care Centers v. Knight, 215 Neb. 779, 340 N.W.2d 872 (1983).

As to the question of subject matter jurisdiction, this court has previously declared that while the Legislature has delegated to municipalities the authority to regulate, determine, and fix natural gas rates, the district courts of this state have the power to grant relief from such rates as are arbitrary, unreasonable, and confiscatory. Kansas-Nebraska Nat. Gas Co., Inc. v. City of Sidney, 186 Neb. 168, 181 N.W.2d 682 (1970); Nebraska Natural Gas Co. v. City of Lexington, 167 Neb. 413, 93 N.W.2d 179 (1958); Kansas-Nebraska Natural Gas Co. v. City of St. Edward, 167 Neb. 15, 91 N.W.2d 69 (1958). It is true that each of the above-cited cases was brought by the gas supplier to enjoin the municipality from preventing the implementation of fair, adequate, and compensatory rates. However, in Myers v. Blair Tel. Co., 194 Neb. 55, 230 N.W.2d 190 (1975), this court, in dealing with the power of the Public Service Commission to regulate telephone service and rates, answered the telephone company's argument that its rate of return should not be confiscatory so as to deprive it of property without compensation by saying:

We fully agree, and have so held. As a corollary thereto, however, neither should the utility be permitted to confiscate the ratepayers' fees without giving the reasonably adequate service for which those rates were set. The commission can no more permit the utility to have confiscatory rates for the service it performs than it can compel a utility to provide service without just and equitable compensation. As a matter of elemental justice, consumers of utility services are entitled to the same protection against confiscation of property or arbitrary action on the part of the utility as are the utilities.

Id. at 62, 230 N.W.2d at 196.

Thus, we hold that just as the district court has the power to protect a supplier of natural gas from municipal action which deprives it of a fair, reasonable, and compensatory rate, so, too, does the district court have the power to protect a consumer of such gas from an arbitrary, unreasonable, and confiscatory rate.

Hence, the district court has jurisdiction over the subject matter of these actions.

The next question is whether the petition shows on its face that Reimer does not have the legal capacity to sue.

We neither consider nor decide whether the suits may proceed as class actions, for not only is that issue not addressed in the briefs but if Reimer has the capacity to sue on his own individual behalf and has stated causes of action, the suits may, in any event, proceed as his individual actions. Harmon Care Centers v. Knight, supra; Roadrunner...