Opinion
No. 37602.
Filed December 4, 1970.
1. Municipal Corporations: Public Utilities. A municipal corporation in fixing rates to be charged by a public utility acts in a legislative rather than a judicial capacity. 2. Public Utilities. A public utility is entitled to rates for its service that may normally be expected to yield a fair return upon the reasonable value of the property that is being used for the public convenience. 3. ___. Utility rates fixed by a city are presumed to be correct and reasonable, and the burden is on the party attacking them to show they are arbitrary, unreasonable, and confiscatory. 4. Trial: Appeal and Error. Where, on appeal from an action in equity, credible evidence on material questions of fact is in irreconcilable conflict, the Supreme Court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying and must have accepted one version of the facts rather than the other. 5. Pleadings: Statutes. A litigant who invokes the provisions of a statute may not challenge its validity. He may not seek the benefit of it and at the same time question its constitutionality.
Appeal from the district court for Cheyenne County: JOHN H. KUNS, Judge. Affirmed.
J. Robert Wilson, Duane L. Stromer, James D. Conway, Martin, Mattoon Matzke, and Wright, Simmons Hancock, for appellant.
Clinton McNish, for appellees.
Sidner, Svoboda Schilke and Loren G. Olsson, for amici curiae.
Heard before WHITE, C. J., CARTER, SPENCER, BOSLAUGH, SMITH, McCOWN, and NEWTON, JJ.
This is an injunction action. Plaintiff sought to increase rates for the sale of natural gas at retail in 108 of 141 Nebraska municipalities. Defendant city refused to grant the proposed raise in rates in its; entirety and plaintiff seeks to enjoin the city from preventing plaintiff from putting its proposed increased rates into effect.
Plaintiff produces, purchases, transports, and distributes natural gas in Kansas, Nebraska, Wyoming, and Colorado. In the vicinity of Sidney, there are several gas wells, a large storage system, and pipelines from Wyoming and Colorado connecting with plaintiff's pipeline system. Owing to these natural advantages, defendants have enjoyed the lowest retail gas rates in Nebraska. Plaintiff seeks to raise defendants' rates to place them on a comparable basis with other Nebraska municipalities. In conformity with the provisions of section 16-679, R.R.S. 1943, plaintiff applied to defendants for an increased rate of approximately 25 percent and received an increase calculated by defendants to be 6.7 percent or equivalent to the desired Nebraska increases if spread equally over all of the 141 Nebraska municipalities served by plaintiff. Plaintiff did not submit to the Sidney city council, nor to the district court, figures establishing a rate base for defendant city, but limited such figures to its Nebraska statewide system.
Evidence of the expert witnesses called to testify in regard to the proper rate base and rate of return is exceedingly conflicting. Plaintiff requested a return of 7.6 percent on a rate base figured at $27,387,028 and defendants granted a 7.45 percent return on $24,765,485.
A municipal corporation in fixing rates to be charged by a public utility acts in a legislative rather than a judicial capacity. See, Kansas-Nebraska Natural Gas Co. v. City of St. Edward, 167 Neb. 15, 91 N.W.2d 69; City of Scottsbluff v. United Tel. Co. of the West, 171 Neb. 229, 106 N.W.2d 12. By statute, the Legislature has delegated to municipalities the authority to regulate, determine, and fix rates. This power being legislative in nature, it cannot be assumed by the courts and this court cannot usurp the functions of a rate-making body. Plaintiff contends that if the rate fixed by a rate-making authority is arbitrary, unreasonable, and confiscatory, relief may be had in the courts. With this we agree. A public utility is entitled to rates for its service that may normally be expected to yield a fair return upon the reasonable value of the property that is being used for the public convenience. See Skeedee Independent Tel. Co. v. Farm Bureau, 166 Neb. 49, 87 N.W.2d 715. It will be noted that in the present instance, plaintiff has avoided establishing a rate base for the defendant city notwithstanding that the statute confers rate-fixing authority upon each individual municipality. See 16-679, R.R.S. 1943. Obviously the Legislature did not anticipate that rates should be substantially equal in all Nebraska municipalities as plaintiff now insists they should be. It is entirely possible that a proper rate base may vary from city to city depending upon the extent of plaintiff's investment in its system attributable to such individual cities. So also may its costs of supplying service vary from city to city as where one city is adjacent to a cheap supply of gas and another requires that its supply be transported over a great distance. These factors have been willfully ignored by plaintiff with the result that the record in this case completely fails to demonstrate that the rate fixed by the city of Sidney and approved by the trial court is arbitrary, unreasonable, or confiscatory.
Even when considered on a statewide rate basis such as plaintiff pursued, the evidence fails to convince us that defendants have acted unlawfully. Electric and gas rates fixed by a city for a utility company are presumed to be correct and reasonable and the burden is on the utility company to show that they are clearly, palpably, and grossly unreasonable. See, Iowa-Illinois Gas Elec. Co. v. City of Iowa City, 255 Iowa 1341, 124 N.W.2d 840; City of Wink v. Wink Gas Co. (Tex. Civ. App.), 115 S.W.2d 973. In Pell v. City of Marshalltown, 241 Iowa 106, 40 N.W.2d 53, the court, calling attention to the legislative nature of the rate-fixing power, stated: "As a general rule, the acts of a municipal corporation which are within its power are not subject to judicial review unless there is a manifest and palpable abuse of power, and it is well-established that the motives of the council acting in its legislative capacity cannot be inquired into. * * * In the present case, in exercising a power expressly authorized by statute the council has a discretion, and so far as it does not act oppressively or unreasonably under that power courts are powerless to interfere with that discretion." City of Wink v. Wink Gas Co., supra, in dealing with city-fixed gas regulations, states: "The ordinance is presumed to be reasonable. One attacking it has the burden of proving that it is unreasonable. * * * If there is a reasonable doubt as to its reasonableness, the ordinance must be sustained. If the question of reasonableness is seriously debatable, the opinion of the City Commission, not that of the courts, must prevail." Where, on appeal from an action in equity, credible evidence on material questions of fact is in irreconcilable conflict, the Supreme Court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying and must have accepted one version of the facts rather than the other. See State v. Merritt Brothers Sand Gravel Co., 180 Neb. 660, 144 N.W.2d 180.
Plaintiff urges that section 16-679, R.R.S. 1943, is unconstitutional. This question we do not determine. Plaintiff sought a raise in gas rates from the defendant city pursuant to the provisions of this statute. Being unsatisfied with the result obtained, it brought this action to enforce the rates it desired and alleged in its petition that defendants had jurisdiction over the rates by virtue of the statute. It cannot now be heard to question the constitutionality of the statute. "A litigant who invokes the provisions of a statute may not challenge its validity. He may not seek the benefit of it and at the same time question its constitutionality." Shields v. City of Kearney, 179 Neb. 49, 136 N.W.2d 174.
No error appearing, the judgment of the district court is affirmed.
AFFIRMED.