Marchi v. Brackman

MR. JUSTICE ANGSTMAN: Plaintiffs brought this action to enjoin the defendants from proceeding with the installation of lighting structures in a special improvement district described in the complaint. Upon the filing of the complaint a temporary restraining order and an order to show cause issued, restraining the installation until the further order of the court and requiring- the defendants to appear before the court at a fixed time to show cause why they should not be permanently restrained from proceeding with the lighting project. Defendants filed motions to strike most of the allegations from the complaint and the defendant Montana Power Company filed a motion to quash, vacate and set aside the restraining order. After hearing the court entered an order granting the motions to strike and the motion to quash. Plaintiffs have appealed from that order. The proceedings sought to be enjoined by the complaint were proceedings taken by the city council of the City of Helena to create a special improvement district for lighting streets under R.C.M. 1947, section 11-2245 et seq. Most of the complaint is directed at an attack upon the contract made by the city council with the Montana Power Company under section 11231 2252. After the appeal was perfected the Montana Power Company entered into an agreement with the city council whereby the contract was cancelled and rescinded. Because of that fact the defendants moved for a dismissal of the appeal upon the ground that the questions involved have become moot by reason of the cancellation of that contract. Thereafter defendants filed the following withdrawal of objection from the motion to dismiss the appeal: “In order that this appeal may go to the question of the power of the respondent City of Helena to subscribe for the street lighting service offered it by the respondent, The Montana Power Company, respondents do now withdraw from their Motion to dismiss the appeal, the objection that the Orders of the District Court specified in the Notice of Appeal, are not appealable under the statutes.” In the state of the record there is some uncertainty as to what is before this court for consideration. The contract made between the city council and the Montana Power Company has been cancelled and we are not advised as to what contract, if any, took its place. The resolution creating the district is still in effect and under it and the statute the defendants are obliged to make another contract. R.C.M. 1947, section 11-2252, provides in part that: “The lights in each district shall be maintained by contract for such period of time and in such way or manner as the city or town council shall elect; provided, however, that the city or town council shall not let a contract for a period to exceed three (3) years.” The resolution creating the district provides that, “The mayor and the Clerk of the Commission of the City of Helena, Montana, are hereby authorized and directed to enter into a contract with the Montana Power Company for the installation of the herein described improvements and for the maintenance thereof. ’ ’ The contract attached as an exhibit to the complaint having been cancelled, we of course cannot be expected to determine its validity. But issues are still tendered by the allegations — 232 — stricken from the complaint as to tbe validity of tbe resolution creating tbe district if tbe allegations of fact are material to tbe statement of a cause of action. In response to the order to show cause why the temporary restraining order should not be made permanent, defendants filed the motion to strike and nothing more. Hence, the only cause for refusing the injunction on the record before us is the motion to strike. The order granting the motion to strike and dissolving the restraining order was, in effect, an order refusing to grant an injunction. From that order an appeal to this court lies. R.C.M. 1947, section 93-8003, and State ex rel. Olsen v. 30 Club, 124 Mont. 91, 219 Pac. (2d) 307. Hence we have before us the question whether the court erred in sustaining the motion to strike. The allegations stricken question the validity not only of the contract but of the resolution creating the special improvement district. No useful purpose would be subserved in setting out the stricken allegations in full here. It is sufficient to say that the allegations are pertinent and material to the statement of a cause of action if plaintiffs’ hypothesis is correct that section 11-2245 et seq. have to do only with a municipally owned lighting plant or if the proceedings taken by defendants contemplated such a project. Defendants contend however that the statutes are sufficiently broad to authorize the creatioh of an improvement district to provide for the maintenance of an electric lighting system and the furnishing of electrical current to the system, constructed and owned by a private corporation and that such is the character of the district attempted to be created here. R.C.M. 1947, section 70-301, expressly empowers an electric light or electric power line company to install appliances necessary for service along and upon public roads and streets, and section 11-909 gives the city council power to provide for the lighting of streets, alleys and avenues. Reading sections 70-301 and 11-909 with the statutes relating to the creation of special improvement districts it — 233 — seems to us that an improvement district may be created for the purpose of maintaining a system owned by a corporation or individual and the furnishing of electrical current therefor. The statutes quite clearly authorize an improvement district for such purposes as well as for installing a system and it does not appear to have been the legislative intent that the purposes might not be separated and a district created merely for the purpose of maintaining the system and furnishing the electrical current therefor. It has been held that it is proper to assess the cost of furnishing electrical current to property in a special improvement district. Ankeny v. City of Spokane, 92 Wash. 549, 159 Pac. 806, L.R.A. 1917A, 1093. If there be no cost to the property owners in erecting the posts, wires and other needed appliances, then there is no occasion to resort to section 11-2249 by the issuance of warrants or bonds. It is a fact question as to what character of improvement district is here attempted which in turn depends upon the truth of the allegation in plaintiffs’ complaint that “the amount to be charged the city and the property owners includes an item to retire the construction costs of said structure over a fifteen year period.” For the purpose of the motion to strike, this allegation must be accepted as true. Paramount Publix Corp. v. Boucher, 93 Mont. 340, 19 Pac. (2d) 223. In legal effect this allegation is equivalent to a statement that the Montana Power Company advances the cost of installation initially rather than proceeding under section 11-2249 to issue bonds or warrants. The power company is then repaid the installation cost over a fifteen-year period. Defendants’ position is that the power company is entitled to depreciation in the fixing of its rates and that the plan here-attempted accomplishes this result, and that if the rate be excessive relief must be sought before the board of railroad commissioners. This depends upon the question as to who actually bears the construction costs of the lighting system. If the system be owned by the municipality as contended by plaintiffs, then it is at least doubtful whether the public service — 234 — commission would have anything to say regarding the rates in view of section 36 of Article V of our Constitution. Compare Town of Holyoke v. Smith, 75 Colo. 286, 226 Pac. 158, and People ex rel. Public Utilities Commission of State of Colorado v. City of Loveland, 76 Colo. 188, 230 Pac. 399. Ye do not pass upon this point at this time since we have not yet learned what type of system is proposed to be constructed — -whether municipally or privately owned. That is one of the issues between the parties. If the lighting system be constructed and owned by the Montana Power Company, then the rate should be fixed and determined after maintenance charges and depreciation are taken into account. It is not proper to fix the rate for supplying the electrical current which would and should be fixed after allowing for depreciation, and then at the same time have a separate maintenance charge which was not considered in establishing the rate. Such a plan would be allowing double charge for depreciation or perhaps more since the service life of most of the lighting facilities would probably greatly exceed 15 years. The proper method of dealing with depreciation and maintenance charges is explained in the well considered opinion in Lindheimer v. Illinois Bell Tel. Co., 292 U.S. 151, 54 S.Ct. 658, 78 L.Ed. 1182, in which it is made plain that maintenance charges may be sufficiently high that it would result in very little depreciation. Here the resolution creating the district recites that there is proposed to be eighty-six 4000 lumen fixtures on steel poles and thirteen 2500 lumen fixtures on wood poles in the district. The monthly charge for supplying current and maintaining each of the 4000 lumen fixtures, according to the resolution, is $2.89, and for each of the 2500 lumen fixtures $1.26. But according to the rate schedules on file in the office of the public service commission, of which we take judicial notice, Tt.CJVI. 1947, section 93-501-1, the charge for supplying electrical energy monthly for each 2500 lumen fixture is $0.61 and for each 4000 lumen fixture is $0.89. Hence about 68 per cent of the entire cost for maintaining the system — 235 — here proposed and supplying the current goes for maintenance. We are not advised as to how the maintenance costs and expenses are calculated and determined except that the above allegation charges they include “an item to retire the construction costs of said structure over a fifteen year period.” It is our conclusion that the court erred in sustaining the motion to strike without going to a hearing upon these and other factual issues tendered by the stricken allegations which do not appear to be immaterial, sham or otherwise subject to a motion to strike. It cannot be said that plaintiffs have an adequate remedy before the public service commission .even though the case be one wherein that board may fix the rate. Initially the city council must fix the rate as well as the cost of maintenance. R.C.M. 1947, section 11-2252, paragraph 1, and section 11-2247, paragraph 7. Whatever rate is fixed by the city council must stand until it is changed by the public service commission, and as against excessive charges plaintiffs have no right of reparation. Montana Citizens Freight Rate Ass’n v. Board, 128 Mont. 127, 271 Pac. (2d) 1024. Plaintiffs are entitled in these proceedings to have the city council proceed under the statutes to have proper charges fixed initially so far as that may be done under the law. By R.C.M., 1947, section 11-2247, the posts in an improvement district are required to be of “uniform size and character and shall be distributed uniformly.” It is alleged that this requirement is proposed to be ignored. Defendants in their brief contend that the lack of uniformity is occasioned by the fact that different sized poles are proposed to be used in the alleys than in the streets. If there be a bona fide issue regarding this point, it too should not be determined on a motion to strike. There were allegations stricken from the complaint to the effect that the proposed improvement will necessitate the excessive trimming of trees and shrubbery in the area and result in decreasing the value of plaintiffs’ property. These allegations fail to make it clear just how plaintiffs’ property — 236 — is damaged, since it is not alleged that any of the trees or shrubbery are on their property, but they are not subject to a motion to strike. It is possible that plaintiffs may connect up the damage to their property by proof, or may see fit to amend the allegations in that respect. We do not question the principles of law stated in the dissenting opinion, but question their applicability here at this stage of the proceedings. If upon the trial it developed that the installation costs are to be paid by the property owners then some of those principles would have application. If the Montana Power Company installs the lighting system without cost to the property owners then we fail to see how they are in a position to complain that warrants or bonds were not issued bearing interest as provided in section 11-2249, and that their property is not therefore to be assessed for the installation costs as provided in section 11-2251. And if there is to be no installation cost to the property owners it is of no consequence that bids were not called for under section 11-1202, which has to do with contracts for supplies etc., “for which must be paid a sum exceeding one thousand dollars ($1000.00)”. The same is true as to maintenance charges. Section 11-2252, supra, is a special statute giving the city council plenary authority to contract for the maintenance of the lights in the district for a period of not more than three years “in such way or manner as” the council may elect. Under such a statute there is no room for the application of section 11-1202 which is a general provision reaching cases for which specific provision otherwise is not made. In re Wilson’s Estate, 102 Mont. 178, 195, 196, 56 Pac. (2d) 733, 105 A.L.R. 367. For to apply section 11-1202 here is to that extent to nullify the discretion specifically given the council in contracting for the maintenance of a lighting district, i. e., by section 11-2252. Of course, the contract made consistent with this latter statute may not be for a period exceeding three years; .and too, the special improvement district created under section 11-2245 for the purpose of lighting the streets included within — 237 — its boundaries may not be utilized to require tbe payment of maintenance costs, which in truth and in fact are not the cost of maintenance at all, but are rather designed to reimburse the power company for its own costs incurred in installing its own lighting system as is the import of the allegations of the complaint which have been stricken. In short the difficulty met in disposing of this appeal is encountered because of the factual uncertainties inherent in this record. Until we are advised precisely what contract is closed between the parties, and where the truth of the factual issues raised in the light of that contract is to be found, neither this court nor the district court is in position to decide the controversy here, primarily, because no one knows yet either the facts from which the controversy comes nor the shape which it will assume when the facts are known. In such a situation it is peeularily appropriate that the case should go back to the district court with directions to set aside its order striking from the complaint and to proceed thereafter in the usual way to a trial that the facts involved may be fully developed before any ruling on the merits is made. We have no case here which properly may be decided upon the complaint alone and without opportunity for defendants to plead or be heard on the merits. Here, if then the plan proposed is permissible under our statutes, and we think such a plan may be proposed as will meet at all points the requirements of the statute, then the situation is exactly the same as is the ease where any other public utility furnishing services to residents of a city such as a gas company furnishing its own line would be. The cause is remanded with directions to set aside the order sustaining and to enter an order overruling the motion to strike, to reinstate the restraining order pendente lite and to allow defendants a reasonable time to plead to the complaint to the end that issues may be framed and a trial thereof had on the merits. — 238 — MR. JUSTICES ANDERSON and DAVIS, concur.