Shawnee Hills Mobile Homes, Inc. v. Rural Water Dist. No. 6, No. 47697

CourtUnited States State Supreme Court of Kansas
Writing for the CourtFONTRON
Citation537 P.2d 210,217 Kan. 421
Docket NumberNo. 47697
Decision Date14 June 1975
PartiesSHAWNEE HILLS MOBILE HOMES, INC., Appellee and Cross-Appellant, v. RURAL WATER DISTRICT NO. 6, a corporation, Appellant and Cross-Appellee.

Page 210

537 P.2d 210
217 Kan. 421
SHAWNEE HILLS MOBILE HOMES, INC., Appellee and Cross-Appellant,
v.
RURAL WATER DISTRICT NO. 6, a corporation, Appellant and
Cross-Appellee.
No. 47697.
Supreme Court of Kansas.
June 14, 1975.

Page 211

Syllabus by the Court

1. Where the tangible property securing a lien held by the federal government is threatened, the government or its responsible agency is a contingently necessary party within the meaning of K.S.A.1974 Supp. 60-219(a).

2. Rates charged consumers for water furnished by a municipally owned and operated water plant must be reasonable in the sense that they are not excessive or confiscatory.

3. It is a generally recognized rule that water rates set by a municipal corporation are presumed to be valid and reasonable until the contrary has been established.

4. The burden of overcoming the presumption pointed out on the foregoing syllabus

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rests upon the party challenging the rates.

5. Rate-making is a legislative or administrative, not a judicial, function. A rate fixed by the appropriate administrative authority, while it may be annulled if in violation of legal rights, is not subject to readjustment or correction by the court as a reviewing or supervisory body.

6. Judicial interference in the ratemaking process should not occur unless the case clearly presents such a flagrant attack on the rights of property under the guise of regulation as to compel the court to say that the rates prescribed will necessarily have the effect of denying just compensation for private property taken for public use.

7. The rule generally followed is that a municipal corporation operating a water system has authority to charge such rates as will yield a fair profit so long as the rate is not disproportionate to the service rendered.

8. The prevailing rule is that evidence of water rates in another community is not admissible in the absence of evidence that all or substantially all the physical and economic factors affecting the reasonableness of rates are similar in both communities.

9. A municipally owned water plant is not a money-making institution and the accumulation of cash reserves should bear a rational relationship to the needs of the water system.

10. While no individual water consumer, or class of consumers, should be discriminated against in the matter of rates, it has been recognized that [217 Kan. 422] discrimination is a relative term and that absolute equality is seldom if ever wholly realized.

11. The quantity of water used by each consumer is not the only criterion of the reasonableness of the rate; other factors must be considered, such as, for example, the nature of the use, the benefit derived therefrom, the number of persons wanting water for such use, and the effect of a certain method of determining prices on the revenues to be obtained and interests of property owners.

12. No principle is more firmly embedded in the law than the presumption of validity which attaches to a legislative enactment.

13. The constitutionality of a statute is presumed; all doubts must be resolved in favor of its legality; and before it may be stricken down it must clearly appear to violate constitutional requirements.

14. The general doctrine prohibiting the delegation of legislative authority does not preclude the legislature from vesting municipal corporations with certain powers relating to matters of purely local concern.

15. The record is examined in an action challenging rates fixed by a municipal purveyor of water as being invalid, and for reasons expressed in the opinion it is held: (1) the trial court did not err (a) in finding that the Farmers Home Administration was not a contingently necessary party to the proceedings and (b) in holding the Rural Water District Act to be constitutional; (2) the trial court erred in holding the water rates charged by the district were unreasonable and in enjoining their collection.

William Hergenreter, of Shaw, Hergenreter, Quarnstrom & Wright, Topeka, argued the cause and was on the brief for appellant an cross-appellee.

Jan W. Leuenberger, of Glenn, Cornish & Leuenberger, Topeka, argued the cause, and Henry J. Schulteis, Topeka, was with him on the brief for appellee and cross-appellant.

FONTRON, Justice:

This litigation erupted over a dispute as to water rates. The plaintiff, Shawnee Hills Mobile Homes, Inc. (sometimes called Mobile Homes herein), operates a mobile home court lying south and west of Topeka and within the boundaries of Rural Water District No. 6. Mobile Homes became

Page 213

unhappy with the rate which applied to it and filed this injunction action. The trial court agreed [217 Kan. 423] that the rate charged Mobile Homes was unreasonable and enjoined the district from collecting the same. District No. 6, feeling aggrieved, brings the present appeal. Mobile Homes has filed a cross-appeal.

A short history is in order. On July 24, 1961, Water District No. 6 (herein referred to as defendant or district) was organized as a quasi-municipal corporation by order of the Board of Shawnee County Commissioners, pursuant to K.S.A. 82a-612 et seq., to which we will refer as the Rural Water District Act or, more simply, as the Act. On the same date Rural Water District No. 7, adjoining District 6 was organized, also pursuant to the Act. To assist them in constructing their individual water systems each district obtained a loan from the Farmers Home Administration (F.H.A.), a government agency administered by the Department of Agriculture, and each district secured its loan by real estate mortgage. At the bidding of F.H.A. the two water districts entered into a contract whereby District 6 agreed to provide water to District 7, which had no independent source of its own, at the rate of 65 cents per 1000 gallons, subject to certain adjustments of no importance here.

Under provisions of K.S.A.1974 Supp. 82a-619, rural water districts are given authority, among other powers, to sue and besued, to enter into contracts, to hold real estate and personal property, to construct, install, maintain and operae such ponds, reservoirs, pipelines, pumping installations or other facilities for the storage, transportation or utilization of water as may be necessary to carry out the purposes of its organization, to cooperate with and enter into agreements with the secretary of the United States Department of Agriculture, or his duly authorized representative, to accept such aid as the secretary of agriculture is authorized to give and to acquire loans for financing up to ninety per cent of the original cost of construction projects needed to carry out the purpose for which the district is organized. A district may secure its loan by mortgaging its assets, but may not levy any taxes.

Management of district affairs is vested by the Act in a board of directors, with authority to adopt such rules and regulations, in conformity with the provisions of the Act and the bylaws of the district as are deemed necessary for the conduct of the business of the district. An integral feature of the plan outlined in the Act is the 'benefit unit.' The statute provides that the total benefits of any improvement shall be divided into a suitable number of benefit units and 'each landowner within the district shall subscribe to a [217 Kan. 424] number of such units in proportion to the extent he desires to participate in the benefits of the improvements.' Where the capacity of the facilities permit, participating members may subscribe to additional units on payment of the fee for each unit.

Bylaws of District 6, adopted by the landowners as outlined in K.S.A.1974 Supp. 82a-621, provide that no landowner can become a water subscriber unless he has subscribed and paid for one or more benefit units; that units are considered donations to the district and are not refundable; that they follow title to the land and transfer cannot be made without board approval. A benefit unit entitles the owner to not to exceed one water line to his property, each line to serve not to exceed one residence or business establishment with usual outbuildings. The bylaws authorize the board to fix charges for water services and to establish equal rates for farm members and non-farm members according to the amount of services furnished. Cost of a benefit unit was originally set at $225 but was increased to $450 at the annual district meeting held February 2, 1972.

The rate schedule for individuals was adopted by the board May 2, 1962. Under the schedule, individual users are charged as follows:

$8 per month for up to 3,000 gallons,

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$1.50 per 1,000 gallons for the next 2,000 gallons, and

$1 per thousand gallons for all over 5,000 gallons.

Subsequently the $8 minimum was broken down into two figures; $6 denominated 'debt retirement' and $2 for a minimum of 3000 gallons. The testimony disclosed that the revenue derived from both charges went into the district's operating fund.

At the time the defendant installed its water system Mr. and Mrs. Donald W. Campbell owned the mobile home court, which then had some fifty residential or living units. On December 18, 1962, the Campbells entered into a written agreement with the district whereby they purchased ten benefit units for the court and it was agreed their water rate would be:

$80 per month for the first 30,000 gallons, and

50 cents per thousand gallons over the minimum.

Washburn Rural High School, which is located within the water district, also purchased ten benefit units, and the rate for this user was fixed at $80 per month for the first 30,000 gallons and $1 per thousand gallons over that minimum.

In 1965 Mr. Dwight Tollefson purchased the Campbells' interest [217 Kan. 425] in Shawnee Hills Mobile Homes, Inc., and the benefit units accruing thereto were transferred to him. Mr. Tollefson continued to receive water at the same rate as had the Campbells until approximately June 1, 1966, when...

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13 practice notes
  • Hansen v. City of San Buenaventura
    • United States
    • California Court of Appeals
    • April 8, 1985
    ...(1980) 81 Ill.App.3d 60, 37 Ill.Dec. 142, 149, 401 N.E.2d 1235, 1242; Shawnee Hills Mobile Homes Inc. v. Rural Water Dist. No. 6 (1975) 217 Kan. 421, 537 P.2d 210, 217.) Several states take the sensible position that a municipal water system should be operated to serve its residents and tha......
  • Unified School Dist. No. 229 v. State, No. 70931
    • United States
    • United States State Supreme Court of Kansas
    • December 2, 1994
    ...to stand unless it is shown to violate a clear constitutional inhibition. Shawnee Hills Mobile Homes, Inc. v. Rural Water District, 217 Kan. 421, 435, 537 P.2d 210 (1975). It is generally agreed that the Kansas Constitution limits rather than confers power and any power and authority not li......
  • Rural Water Dist. No. 4 v. City of Eudora, Kan., Case No. 07-2463-JAR.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • March 9, 2009
    ...Cir.2001) (quoting Sequoyah County Rural Water Dist. No. 7, 191 F.3d at 1203). 96. Id. at 1271. 97. Id. (emphasis added). 98. Id. 99. 217 Kan. 421, 537 P.2d 210 (1975). 100. Id. at 217. 101. Post Rock, 243 F.3d at 1272. 102. Id. at 1271. 103. See Shawnee Hills Mobile Homes, Inc., 537 P.2d 2......
  • Rural Water Dist. No. 4 v. City of Eudora, Nos. 09–3282
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 26, 2011
    ...our case law with the decisions of the Kansas Supreme Court. See, e.g., Shawnee Hills Mobile Homes, Inc. v. Rural Water Dist. No. 6, 217 Kan. 421, 537 P.2d 210, 217 (1975) (holding that water rates set by a municipal corporation such as a water district are generally presumed to be valid an......
  • Request a trial to view additional results
13 cases
  • Hansen v. City of San Buenaventura
    • United States
    • California Court of Appeals
    • April 8, 1985
    ...(1980) 81 Ill.App.3d 60, 37 Ill.Dec. 142, 149, 401 N.E.2d 1235, 1242; Shawnee Hills Mobile Homes Inc. v. Rural Water Dist. No. 6 (1975) 217 Kan. 421, 537 P.2d 210, 217.) Several states take the sensible position that a municipal water system should be operated to serve its residents and tha......
  • Unified School Dist. No. 229 v. State, No. 70931
    • United States
    • United States State Supreme Court of Kansas
    • December 2, 1994
    ...to stand unless it is shown to violate a clear constitutional inhibition. Shawnee Hills Mobile Homes, Inc. v. Rural Water District, 217 Kan. 421, 435, 537 P.2d 210 (1975). It is generally agreed that the Kansas Constitution limits rather than confers power and any power and authority not li......
  • Rural Water Dist. No. 4 v. City of Eudora, Kan., Case No. 07-2463-JAR.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • March 9, 2009
    ...Cir.2001) (quoting Sequoyah County Rural Water Dist. No. 7, 191 F.3d at 1203). 96. Id. at 1271. 97. Id. (emphasis added). 98. Id. 99. 217 Kan. 421, 537 P.2d 210 (1975). 100. Id. at 217. 101. Post Rock, 243 F.3d at 1272. 102. Id. at 1271. 103. See Shawnee Hills Mobile Homes, Inc., 537 P.2d 2......
  • Rural Water Dist. No. 4 v. City of Eudora, Nos. 09–3282
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 26, 2011
    ...our case law with the decisions of the Kansas Supreme Court. See, e.g., Shawnee Hills Mobile Homes, Inc. v. Rural Water Dist. No. 6, 217 Kan. 421, 537 P.2d 210, 217 (1975) (holding that water rates set by a municipal corporation such as a water district are generally presumed to be valid an......
  • Request a trial to view additional results

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