Summary
holding that water service rates which were two times greater outside the city limits and sewer service rates which were 1.5 times greater outside the city limits were enforceable
Summary of this case from Mitchell v. City of WichitaOpinion
No. 83-938.
Filed March 29, 1985.
1. Municipal Corporations: Public Utilities. The furnishing by a city of water or sewer service to persons outside the corporate limits of the city is contractual and permissive and not a duty imposed upon the city by statute. 2. ___: ___. Public utilities generally may discriminate in respect to rates, between consumers within and those outside the municipalities primarily served.
Appeal from the District Court for Sarpy County: GEORGE A. THOMPSON, Judge. Affirmed.
Gregory Garland of Garland, Pettis Wills, for appellant.
Michael N. Schirber of Schirber Law Offices, P.C., for appellee.
KRIVOSHA, C.J., BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.
The plaintiff, C. George Bleick, is a resident of Sarpy County, Nebraska. His residence property is located outside the city limits but within the zoning jurisdiction of the city of Papillion, Nebraska (City), and within the boundaries of Sanitary and Improvement District No. 108 (S.I.D. No. 108).
On March 15, 1977, S.I.D. No. 108 entered into a contract with the City for water and sewer service to be provided to the S.I.D. by the City at rates to be prescribed by ordinances of the City, but not to exceed twice the fees charged to residents of the City. The contract provides for payment by the district of the amounts due under the contract, or direct billing to the "users." The contract provides for a term of 20 years, with automatic renewal for successive terms of 20 years each unless one of the parties to the contract advises the other of its desire not to do so at least 6 months prior to the end of the term. Under the ordinances now in effect the water service fees are twice the rate charged to residents of the City, and sewer usage fees are one and one-half times the rate charged to residents.
This action was commenced April 7, 1981, on behalf of the plaintiff and, by stipulation, all other persons similarly situated, to enjoin the City from collecting the amounts due under the contract. The plaintiff's theory of the case is that the rate which the City has fixed is unreasonable, arbitrary, and unfairly discriminatory, since the higher fees charged to the S.I.D. are based solely upon the fact that "users" within the S.I.D. are nonresidents of the City.
Both parties filed motions for summary judgment. The motions were submitted upon a stipulation of facts, documentary evidence concerning the contracts between the City and the S.I.D. and other sanitary and improvement districts, and the deposition of the city administrator of the City. The trial court sustained the motion of the defendant City and dismissed the petition. The plaintiff has appealed.
The authority for the City to enter into a contract to furnish water and sewer service beyond its limits is set out in Neb. Rev. Stat. 19-2701 (Reissue 1983), which provides:
A city of the first or second class may enter into a contract or contracts to sell electric, water, or sewer service to persons beyond the corporate limits of such a city when, in the judgment of the mayor and council of such a city not having a board of public works or of its board of public works in such a city having such board, it is beneficial to any such city to do so. No such contract shall run for a period in excess of twenty-five years. Such a city is hereby authorized and empowered to enter into contracts for the furnishing of electric service to persons, firms, associations, and corporations beyond the corporate limits of such a city.
The authority for the S.I.D. to enter into a contract for purchase of water and sewer service for resale to the residents of the district is set out in Neb. Rev. Stat. § 31-740 (Reissue 1984), which provides in part: "The district may . . . contract with corporations or municipalities for disposal of sewage and use of existing sewerage improvements, and for a supply of water for fire protection and for resale to residents of the district."
The furnishing by a city of water or sewer service to persons outside the corporate limits of the city is contractual and permissive and not a duty imposed upon the city by statute. Burger v. City of Beatrice, 181 Neb. 213, 147 N.W.2d 784 (1967). Statutory provisions such as Neb. Rev. Stat. § 16-681 (Reissue 1983), which requires the city to furnish service "subject to reasonable rules and regulations," apply only to residents of the city.
The plaintiff relies upon McGinley v. Wheat Belt P.P. Dist., 214 Neb. 178, 332 N.W.2d 915 (1983), as authority in support of his contentions. The McGinley case involved a dispute between customers within the boundaries of the district. The defendant district in that case attempted to distinguish between "old" and "new" customers and charge different rates accordingly. The case has no application here.
The plaintiff also relies upon City of Texarkana v. Wiggins, 151 Tex. 100, 246 S.W.2d 622 (1952), a 5 to 4 decision of the Supreme Court of Texas, in support of his contentions. We have examined the opinion in that case and do not consider it controlling here. Rather, we believe the law as stated in the dissenting opinion is correct.
The great majority of the cases support the rule that public utilities generally may discriminate, in respect to rates, between consumers within and those outside the municipalities primarily served. See Annot., 4 A.L.R.2d 595 (1949).
A municipally owned waterworks system supplying water without its corporate limits may, generally, charge more for that service than is charged users of the water service who reside within the corporate limits. . . . The fact that residents of the municipality have borne the cost of establishing or financing the system will justify charging a higher rate to nonresidents.
64 Am. Jur. 2d Public Utilities 120 at 647 (1972).
As the opinion in the Burger case stated, a city furnishing utility services to persons outside the limits of the city is engaged in a business enterprise. Here, the City and the S.I.D. dealt at arm's length, and we know of no reason why their contract should not be enforced as written. See City of Phoenix v. Kasun, 54 Ariz. 470, 97 P.2d 210 (1939).
The rates fixed by the City are uniform as to residents and uniform as to nonresidents. The City has no assurance that the S.I.D. will continue to purchase service in the future, and whatever expense or improvement that may be necessary in the facilities of the City will be solely the responsibility of the City.
There are additional reasons why the plaintiff could not prevail in this action. The contract in question is between the City and the S.I.D. The plaintiff is not the real party in interest, and the S.I.D., an indispensable party, was not joined. See, Neb. Rev. Stat. § 25-301 and 25-323 (Reissue 1979); Redding v. Gibbs, 203 Neb. 727, 280 N.W.2d 53 (1979); Johnson v. Mays, 216 Neb. 890, 346 N.W.2d 401 (1984).
The judgment of the district court is affirmed.
AFFIRMED.