City of Mesa v. Salt River Project Agricultural Improvement & Power DistrictCity of Mesa v. Salt River Project Agricultural Improvement & Power District
This аction was brought by the City of Mesa, hereinafter called the City, for a declaratory judgment against the Salt River Project Agricultural Improvement and Power District, called the District, to determine the respective rights of the parties to serve electrical energy in certain areas within and adjacent to the corporate limits of the City. The District counterclaimed asking that the City be permanently restrained from competing with the District or interfering in any manner with the electric service to any area being served by the District. From a judgment in favor of the District the City appeals.
The City was first incorporated on the 1st day of June, 1883, as the Town of Mesa pursuant to the general territorial laws pertaining to cities and towns then in effect. Later it increased in size and population and was organized under the general laws of the State now Title 9 of the Arizona Revised Statutes. In October 1917, the City acquired the electrical distribution system of the Southside Gas and Electric Company serving the town, together with water and gas distribution systems and since has furnished all three utilities to its residents. The City’s incorporated limits were then and for some thirty years thereafter an area of one square mile; however in 1949 and thereafter it annexed certain areas adjacent to the original townsite. In some instances territory was annexed which was unimproved in the sense that in part, at least, it was still devoted primarily to agricultural pursuits.
The District is an agricultural improvement district organized pursuant to the provisions of what is now Chapter 4, Title 45, A.R.S.1956, for the purpose of reclaiming lands susceptible of irrigation. The predecessor in interest to the District was the Salt River Valley Water Users Association, incorporated in 1903, under the General Corporation Laws of the Territory of Arizona. At the time of its organization the townsites of Phoenix,'Tempe and Mesa were excluded from its boundaries. On or about March 22, 1937, the Salt River Valley Water Users Association, subject to the rights of the United States, transferred and assigned all its properties, real and personal, and rights therein, and all water and power rights, franchises and privileges to the District but continued to operate the works and facilities. In September of 1949
In 1929 the Central Arizona Light & Power Company, the City of Mesa and the District served electrical energy in Maricopa County. In general the service areas ■of the Central Arizona Light & Power •Company were the incorporated areas of Maricopa County excluding the City of Mesa. The service of the City was confined to its incorporated limits with certain ■exceptions not of importance here. Priоr to 1929 the Salt River Valley Water Users Association provided some retail electric .service in rural areas, and supplied power at wholesale to Central Arizona Light & Power Company, and after 1922 and until 1949 to the City. In 1928 the Salt River Valley Water Users Association embarked upon a plan to provide electric service to rural areas in the Salt River Valley not then being served. Hydro-generating plants were constructed on the Salt River and a transmission system covering the entire area was shortly thereafter completed. Funds for this program were provided by the issuance of bоnds.
In 1928 and 1929 as a prerequisite for the issuance of bonds territorial agreements establishing service boundaries were entered into with the Central Arizona Light & Power Company and with the City. The agreement with the City which also provided for the sale of electric energy for distribution to the City’s customers was for a five year term, renewed in 1934 for five years and again in 1939 for ten years. Upon its expiration in 1949, the agreement was not renewed nor has any agreement been made since reserving to either party territory which each may serve to the exclusion of the other.
The great growth and develoрment of the Salt River Valley and Maricopa County consistent with suburban living has resulted in the District greatly expanding its facilities and service. In the years following the adoption of the District’s rural electrification program tens of thousands of people established homes within the District’s boundaries and the District has increased and continues to increase its generative and distributive facilities. Its bonded indebtedness at the time of trial was $55,000,000. As a result of the District’s expanding its lines and increasing its services and facilities together with the annexations made by the City whereby it extended its incorporated limits, the District is now serving customers within the City whom the City wishes to supply by its electrical services
The City claims as a minimum that it has the exclusive right to serve all areas within its corporate limits, even though the same were acquired or extended by annexation and were being served by the District prior to annexation. It urges that a municipal cоrporation has the exclusive control of its streets and alleyways and only the City can authorize the use of such streets and alleys for public utility purposes, and that no municipality or political subdivision may acquire a franchise to serve or a right to use the City’s streets and alleyways within its territorial limits without its consent.
The District’s exact status escapes a simple definition. It is not a “public service corporation” as set forth in the Constitution, Art. 15, § 2, A.R.S. and is not subject to regulation by the corporation commission as to its services and rates. State ex rel. Jones v. MacDonald,
Essentially, three principal questions are raised by the overlapping of interest. First, can the District be required to terminate its electric service within the disputed areas by reason of the City’s annexation. The answer to this question compels an examination of the District’s precise legal position.
The District asserts an unrestricted right to use the streets and alleyways of the City by reason of the Constitution of Arizona and legislative enactment. As to the Constitution, the District claims by reason of Art. 13, § 7 thereof that its powers are as broad and its immunities equal to those of a municipal corporation. Still the District may not claim by this provision more than a municipality could claim under like circumstances. Elsewhere in either the or
The District in part rests its claim to a continued use of the City’s streets and alleyways on
The accepted principle is that courts will not render an interpretation of statutes which makes them contradictory to each other but must, if sound reason and good conscience allow, construe statutes in harmony. S. H. Kress & Co. v. Superior Court of Maricopa County,
The District further claims the right to use the City’s streets and alleyways on the language of
“C. The district shall have the use of and a right of way is expressly granted to it to locate, construct and maintain the works over, through and upon any of the lands which are the property of the state or any subdivision or institution thereof.” (Italics supplied.)
It is to be noticed that subsection C refers to “the works”. This is a reference to the preceding subsection A which authorizes the District to construct, “ * * * any of the works necessary to carry out any provision of this chapter, across any stream of water, watercourse, street, avenue, highway, railway, canal, ditch or flume which * * * the district may intersect * * *."
Statutes must be construed as a whole, and hence subsection C will be interpreted in the light of and consistent with subsection A. Together subsections A and C do not import a special grant of power to enter into the distribution of electricity as a businеss in competition within the City without its consent. The whole of
While the claim of the District to the use of the streets and alleys of the City does not find support in either Art. 13, § 7 of the Constitution of Arizona or the legislative enactments referred to, it is nonetheless certain that the District may not be required by the City to terminate its operations in the annexed areаs without just compensation. Service by the District could have been initiated as early as 1913 under the amendment to the Articles of Incorporation of the Salt River Valley Water Users Association, Art. IV, Sec. 1. Thereafter by laws of 1922, Chapter 23, now
While we reject the claim of the District to the use оf the streets and alleys within the incorporated limits of the City based upon the Constitution, Art. 13, § 7 and the statutes,
If the public roads of the state or any of its pоlitical subdivisions have been used by the District in the operation of its distribution system, consent to such must necessarily be implied from the fact thereof. The District may not be ousted from the use of the public ways once having accepted by acting on the grant of the state. City of Seattle v. Western Union Telegraph Co.,
If the District has been using private rights of way or a claimed easement, the use is permissive and property within the meaning of Art. 2, § 17, Constitution of Arizona forbidding the taking or damaging thereof without just compensation. The City can not under the guise of a legislative grant to enlarge its corporatе limits impair rights so protected.
We therefore hold that the District may not without just compensation be ousted from doing business in the disputed areas nor from the streets and alleys taken over by the City at the time of annexation or thereafter. What we have said is not, however, to be understood as exempting the District from the effect of reasonable regulatory ordinances controlling the uses of its highways and alleys.
Second, it is the City’s position that if it may not oust the District from doing business, it has the right to compete with it in the disputed areas. While ordinarily two municipal corporations may not occuрy the same territory and exercise the same authority and control over it and the population at the same time, South Park Com’rs. v. Chicago City Ry. Co.,
The right to compete with the District in the disputed localities has been expressly denied by the legislature in its enactment of
“A. It is declared as the public policy of the state that when adequate public utility service under authority of law is being rendered in an area, within or without the boundaries of a city or town, a competing service and installation shall not be authorized, instituted, made or carried on by a city or town unless or until that portion of the plant, system and business of the utility used and useful in rendering such service in the area in which thе city or town seeks to serve, has been acquired.”
The legislative history of the foregoing statute is both significant and enlightening. This Court held in its modified decision in City of Tucson v. Polar Water Co.,
76
Ariz. 404,
“The city has its right or franchise in the form of a constitutional grant; the plaintiff [Polar Water Co.] has its right or franchise in the form of a certificate of convenience and necessity issued by the Arizona Corporation Commission. This court has held in effect that in the absence of legislation a municipality may operate a public utility under its constitutional grant in competition with a private utility operating under a certificate of convenience and necessity. Menderson v. City of Phoenix,51 Ariz. 280 ,76 P.2d 321 . Therein the court held that any power of regulation concerning competition rested with the legislature if anywhere. While we shall not attempt to define the limits of the regulatory power of the legislature, we do say that merely because the constitution gives municipalities the right to engage in a utility business, it does not mean that the legislature is thereby stripped of its power to protect the franchises lawfully issued by the state and the businesses operated thereunder from damage or destruction caused by the activities of the municipality under its power of operation. There is no constitutional basis for saying that the legislature may not require its municipalities to pay just compensation for the damage or destruction of the business, franchise, or property of lawfully operating private utilities, even though such damage or destruction results from competition.” 76 Ariz. 408-409,265 P.2d 775 .
Within two months the legislature enacted Chapter 105, Laws of 1954, now
The City predicates its right to compete with the District upon a claim of exclusive power to franchise utility undertakings within the confines of its incorporated limits. This claim is opposed tо the general rule enunciated in 12 McQuillin, Municipal Corporations § 34.10 (3rd ed. 1950):
“The power to grant franchises resides in the state; and a city, in granting a franchise, acts as agent for the State * * *."
This must necessarily be true since all •powers of government are lodged in the people, Constitution, Art. 2, § 2, exercised by the state subject to constitutional limitations. State ex rel. Davis v. Osborne,
The exclusive right to grant franchises within its incorрorated limits is sought to be implied from the language of Art. 13, § 4 of the Constitution stating:
“No municipal corporation shall ever grant, extend, or renew a franchise without the approval of a majority of the qualified electors residing within its corporate limits who shall vote thereon at a general or special election * * *."
The language used provides a method by which franchises granted by a municipality may be exercised. It does not expressly provide that a municipality has the right to grant franchises within its corporate limits. That such can be inferred from the language used does not meаn that the right is exclusive. The only inference of exclusiveness to be drawn is that the method of granting, extending or renewing franchises provided by the section is exclusive; otherwise, the dominant interest of the state is destroyed. It is
It is urged that
“Every municipal corporation within this State shall have the right to engage in any business or enterprise which may be engaged in by a person, firm, or corporatiоn by virtue of a franchise from said municipal corporation.”
The consequences of the City’s argument might follow if we were to hold that the City was without the means to acquire the District’s property in the incorporated area by eminent domain but we do not so hold.
This brings us to the third major question presented in this appeal. It is the City’s position that if by annexation the District is not ousted from doing business and using the streets and alleys of the City and if it may not compete with the District, then it may acquire the District’s facilities by eminent domain. In this we think the City is correct and that the trial court erred.
The District is a municipal corporation of a peculiar type. Local 266, etc. v. Salt River Project Agr. Imp. & P. Dist.,
The right of eminent domain is an inherent right of sovereignty — that is to say, it is inherent in the people, exercised by the state subject to the restrictions and limitations to be found in the constitution. In re Forsstrom,
We have heretofore noted that the District’s power to sell electricity is a power incidental to its primary purpose of providing water for irrigation. Property may be taken which is already appropriated to some public use if it appears that the public use to which it is to be applied is a more necessary public use.
“ * * * it is our view that the Legislature must have considered that appellee’s [The Tucson Gas, Elect. Light & Power Co.] whоle utility is put to a higher use when operated by a municipality, * * *."
Cf. Arizona Corp. Com’n v. Tucson, Gas, Electric Light & P. Co.,
The authority of the City to acquire by condemnation the interests of the District is clear from an examination of
The District argues that by subsection B of
The District’s interpretation would effect a repeal by implication of that portion of
The inconsistency of the District’s argument becomes more apparent when it is noted that the second sentence of
“All proceedings for condemnation must be brought in the superior court of the county in which the property is situated, in the same manner as other civil actions.” [27-909 A.C.A.1939.]
Can it be said that
The forеgoing settles the principal issues arising between the parties to this litigation. Other matters will be dealt with here summarily. The court below determined the boundaries of the disputed areas in favor of the District finding that the service area of the District was that generally established under the 1929 agreement. The City argues that some of the areas at the time of annexation were unimproved, which we take to mean principally devoted to farming, and that it can serve in the unimproved areas without paralleling the District’s line. The court below found as a fact that the District provided adequate serviсe within the disputed area when requested. It was reasonable to conclude pursuant to the language of
“The exterior boundaries of said applicant as are described in the official records of the County Board of Supervisors and County Recorder of Maricopa County, tоgether with any and all annexations, proposed additions, territory served or proposed for service', constituting the immediate environs of said municipality.”
The City maintains that such Power Purchase Certificate is authority for the City to .serve in the disputed localities and projhíhíts the District from serving such areas. The District maintains that the certificate is void as it exceeds the statutory authority granted under the Power Authority Act.
“3. The application of any incorporated city or town for a power рurchase certificate covering territory within its corporate boundaries not otherwise served with electrical energy.
“4. The application of any incorporated city or town for a power purchase certificate for electrical energy to be distributed generally within its corporate boundaries where the city or town has acquired or has consummated all steps necessary to acquire the electric facilities of the distributor or distributors then serving the inhabitants of the city or town.”
The Act within itself does not give the Commission authority to confer the right to engage in the distribution of electric energy. Its only function is to distribute available power to operating units. Any certificate granted by it to a city or town must be limited to the provisions contained in the statute. The District having been established in those areas which now the City seeks to serve, the Commission has no authority to grant electric power to the City for that purpose. To the extent that such certificate purports to embrace those areas herein disputed it is ineffectual to confer any rights.
The District points to certain water right applications executed by various landowners granting rights of way to the Unitеd States and its successors and assigns. Under the law applicable to this controversy it is unnecessary to consider what, if any, rights emanate from such water right applications. An action for declaratory relief only justifies a declaration of rights upon an existing state of facts, not one which may or may not arise in the future or which might or might not develop. Such can not form the basis for a declaratory judgment. Maricopa County v. Leppla,
Note: The Honorable RENZ L. JENNINGS being disqualified, the Honorable WILLIAM W. NABOURS, Judge of the Superior Court of Yuma County, Arizona, was called to sit in his stead.