*1 LILLETHUN, Plaintiff Sherman Appellant,
v. COOPERATIVE, ELECTRIC
TRI-COUNTY INC., Respondent. Defendant and
Civ. 8390.
Supreme North Dakota. Court of
July 7, 1967. *2 applicable to
ample, all-electric rate an heater have a water they farmers larger. capacity thirty gallons energy from plaintiff uses *3 plant, for locker the defendant for his food store, and store, a grocery for his hardware this He furnished apartment. for his 220-volt, one-phase connection. energy on a is measured plaintiff’s power All of the meter, single a and of the Commercial charged to him under was change to a plaintiff requested rate. The Rate,” which “Combination the rate called trial The a lower rate than Commercial. and, defendant, from court found for the finding, judgment on such entered court, de- plaintiff appealed manding de novo. trial that the defendant The contends the different clas- authority to make has no Lake, Duffy Haugland, & Devils it established for sifications which appellant. and energy. He its various member users of Noack, Carrington, Fabian Mark F. and mem- points that all of such users are out Minot, Purdy, respond- for defendant and and, under of the bers ent. bylaws of incorporation articles and defendant, authority to clas- there is no dif- charge them member users sify STRUTZ, Chief Justice. that the He ferent rates. further contends incorporation provides bylaws The defendant articles of and in in de- a number of counties form entire contract Dakota, users, county including central North member fendant and McHenry Foster the town of in of incor- bylaws and that the articles and county, where poration permit is merchant. or authorize a do not elep- supplier only defendant is the members de- classification of the area, tric in the and the fendant.
compelled get this source.
As such power, user the defendant’s bylaws is true plaintiff is a member the defendant provisions incorporation co- the articles operative. The record discloses that his de do constitute contract between the a use of is constant from month fendant individual month. pro patrons. bylaws specifically so vide, read, part: they
The defendant has various established purposes, classifications Cooperative, by patrons and all “The of the its users Cooperative, are listed under one of clas- dealing these acknowl- with sifications. Three classifications have edge that the terms established, been are designated Incorporation By-Laws as Article of “Commercial,” “Regular,” and “Combina- shall and be a contract between constitute tion.” Certain variations from these patron, clas- and each provided for, as, sifications are patrons also for ex- are both part fully time contract is entered into forms contract, as a a bound individually as if it of that contract the same were ex- though patron had each therein, pressly incorporated obliga- and the containing signed instrument separate by the the contract determined tions of provi- provisions. The such terms and at the time it is made. law in force By-Laws sions Article of the of this attention called to the general This be the rule seems to Cooperative by con- posting jurisdictions. Am.Jur.2d, See 17 spicuous of- place Cooperative’s “Contracts,” 257, page 654. See fice.” 330, 295, page Contracts also 17A § C.J.S. contends further that, says generally, the where author has classified its members applicable law thereto time *4 charged others the a few place part a making of its much of the is as higher a than has mem- charged been incorporated if it expressly contract as were placed classifications; that, bers in other in the contract. the charged had been the same charged rate as that majority the the plain Thus contract between co-operative, members of the defendant he tiff and the defendant this action is not to paid would have a $1,041.97less total of provisions solely by be determined than he paid under the classification incorpora bylaws and the articles of by defendant; made that the classifica- tion, by but force at the time law in tion of its member users the defendant the contract was into. entered unauthorized; is unlawful that, as co-operative defendant derives its result, a receive entitled to 10-13, powers authority Chapter under patronage paid by a credit for the excess so Code, Century to relating North Dakota him. co-operatives, and under pro- electric The decision in 10-15, this case thus turn will Chapter North visions of Dakota question on the whether the Code, articles Century co-operatives relating gen- to incorporation bylaws and the defend- 10-13-01, erally. which Section sets forth co-operative ant are the entire be- contract purposes co-opera- which an tween the parties, or whether statutes organized, provides that such an tive Legislative Assembly enacted also operat- organization may be established and part become a contract general governing ed “under the laws co- co-operative patron. operatives clear chapter”. and this that, only if we consider the articles of in- 10-13-03, Century Dakota North corporation bylaws, and the Code, powers sets forth the which electric prevail, must co-opera- for the defendant co-operatives given the law. Subsec- tive authority would no have make a to provides an tion 8 that section that elec- reasonable classification membership of its power— tric have the and to fix different rates for the various classifications. rates, fix, regulate, To and collect “8. fees, rents, charges other or that, court has gen held aas This other facili- rule, eral contracting parties enter into ties, supplies, equipment, or serv- their law, contract in existing reference to ” * * * it; ices furnished and that all existing relevant at the laws power that to contends time of the. part the contract become a “fix, regulate, gives and collect rates” to contract and must be read it. In into make the electric to Cleveringa Klein, State ex rel. v. N.D. 63 its member 514, classification reasonable 118, 1523, N.W. 86 A.L.R. we said hand, plaintiff, other users. The on that the law of the land in at the existence merely gives not cost defendant as much to furnish provision contends fix, regulate, him as it to users who does “Commercial”; rates, rates must are classified there- but that collect fore, bylaws, under the own defendant’s to all members. same par- form the contract between 10-15, Dakota Cen Chapter North ties, capital entitled to a law re general forth the Code, sets tury paid by for the him credit excess over and co-operatives, ferring to furnishing actual above the cost applicable electric co chapter are him. that the points He out de- 10-15-03(12) of operatives. Section operate bylaws require it fendant’s that, provides unless specifically chapter basis; nonprofit a articles, co its otherwise pay by capital obligated credits ato ac- may— operative patron bylaws count because the specifically provide: “The necessary powers Exercise “12. obligated pay by credits ac- purposes.” its convenient to effect count for each amounts all such expenses.” excess of costs and that a reasonable appear It would electric co an of members of classification plaintiff’s contention thus is but abso only operative is not convenient *5 patron the account of must be that each of necessary purposes lutely to effect separately, individually and and considered true, then such If that is co-operative. him furnishing energy the cost of to in in record justified. The is classification dividually be must determined de re plaintiff that while the this case shows ; that the defendant is fendant whether choice, one-phase service, his ceives of own any profit making be determined from must him if is available three-phase to service patron each that a account; individual and in users Other he desires it. Commericial placed cannot be in a and the cost class The three-phase McHenry have service. applied furnishing energy to class be availability this service is one determining patron in whether such in that was consideration factors taken into paying an amount in excess of setting up the Commercial classification. expenses. costs that, of inter shows in case The record also failure, ruption in due service reading bylaws A would indicate priority Commercial accounts receive over plaintiff’s there is some merit to the that in all classifications the restoration contention, bylaws provide for the do that that The record further shows service. patron furnishing to each the cost of have elec generally Commercial accounts must But the record be determined. also operate a demand tric motors which on absolutely impossible that it shows basis; type requires, on this that of service furnishing break down cost service by the average, greater investment each of the hundreds individual consumer supplier energy in transformation defendant; consumers served furnishing electricity the consum necessary that it is to fix classifications er; classified who are consumers basis, upon the general depending on a busi- “Commercial” other advan have certain the con- ness and available to the service tages over other classifications. Thus ; placed are that various users sumer maintains that the classification defendant upon categories depending or classifications justified. reasonable and both type such business and the of service however, to such ad- contends, is furnished consumers plaintiff The for gives reasons, vantages which classification fact that he including various falling All tísers into various receiving power them. for three businesses his alike, though meter, are even apartment categories treated it does for his on one requirements patrons classification, their individual needs and may within the crediting classification a pro differ some- rata basis. consumer, what. The account of each individual however, separately. cannot considered further that the de- discloses record justi- If the classification reasonable and plaintiff fendant informed the that it was fied, case, as we believe it is his impossible give him a different rate account must considered on basis of apart- his various businesses and belongs. the class which he ment unless meter his would separately residence his other uses. We find has failed to refused to do this. establish that the classifications adopted are unreasonable that, although require- We believe based on conditions and circumstances consumption ments some unjustified which make its classifications users be such that the defendant under the three- law. slight profit makes on certain individual phase him he service avilable to if desires accounts, each individual account cannot it. interruption In case of service due possibly separately. be considered The de- failure, given his businesses fendant it has hundreds of users whom priority in restoration of over other users power, requiring furnishes defend- service. He himself has determined ant to consider the individual accounts separate he does not want to install a meter separately operation would make the for his residence. bookkeeping defendant’s business and the business that it so burdensome could further find that the We classifica not be carried on. defendant, tions fixed under rec case, necessary ord before us in this were actually is also true that the purposes convenient to effect the *6 only service, receiving single-phase but justified were therefore un the he operates businesses fall within the provisions 10-15-03(12), der the of Section three-phase classification where service is Century North Dakota Code. available and which he can have on notice. only Not three-phase service available to being The burden on the him, advantages but certain to given establish, by preponderance a fair of the belongs class to which are he available evidence, that circumstances and con actually enjoyed by to and are him. justify ditions do classifica not adopted, tions which were and the believe that We amount claims, having failed to establish such which obligated pay the defendant is judgment of the district court is affirmed. patronage capital, under a reasonable interpretation bylaws, would be such PAULSON, KNUDSON ERICK consumer, sum as the individual rea STAD, JJ., concur. classification, sonable pays in excess operating expenses energy costs and furnished classification to which he TEIGEN, (dissenting). Justice
belongs. Thus, if there is an excess'above expenses costs I that the Articles of for furnish I dissent. believe ing power Incorporation Bylaws de- class to which a consumer and the belongs, co-operative each member are the entire contract of that class should fendant parties, be credited on that the statutes with the between the account part by amount taking majority arrived at the total which allude not a cooperative by amount of and the between the contract by majority comparing patron. it rule stated to the total amount of
153 may that “The law of land existence the classifications this Court review a contract the time is entered into forms made. The bases his case on part it of that contract the same as if power of the court to con- enforce the therein, expressly incorporated parties. and the between were tractual relation these obligations are determined my opinion contract contract established clear, time it made” Bylaws, the law in force at the by the and is Articles proper is a rule of unambiguous, sound law situations. and within the bounds of many ex We have held times. State rel. question so before us is not statutes. Klein, 514, Cleveringa may v. 63 N.D. 249 N.W. have what 118, 1523; Gray, N.D. 86 A.L.R. Baird v. 63 Bylaws, provisions must in its nor whether 640, 718; Riebe, 249 v. 70 N.W. Werner integrated he into the contract force 1254; 422, 533, 156 A.L.R. N.D. 296 N.W. statute, but whether the Gresz, N.D. Dunham Lumber Co. v. up to the con- lived 491, 60; 175, 141 A.L.R. Kaiser N.W.2d tract it and as Inc., N.D., Gamble-Skogmo, shot v. 96 N.W. co-operative’s forth in the contract is set N.D., Vogel, v. 105N.W.2d 666; 2d Shimek Bylaws. The statutes Articles and 677; Progressive statutes, Ireland’s Lumber Yard v. regulatory majority cite are not Contractors, N.D., 122 554. How N.W.2d an merely prescribe but ever, the rule is limited to which in laws ex- has and necessary operation control legal a direct or The instant con- ercise if it so desires. contract, obligation or per- affect of such was made within the field of the tract application care should be taken repugnant to legislation is not missive lengths beyond not rule is extended to statutes. nor conflict with the purpose. its 17A Contracts 330. § C.J.S. parts the contract The salient state authorizing The statutes of North Dakota follows: co-operative corporations the formation of 1. op Section provide they organized shall be statutory erated within the bounds set at all times scope limitations. statutes limit the These non-profit basis operated cooperative on a operation purposes of their stated patrons. No the mutual benefit of its therein, powers and limit those paid dividends shall interest or granted. An corpora any capital payable by the tion 10-13-03(8), is authorized patrons. furnished its N.D.C.C., fix, regulate, and collect rates *7 2. Section energy furnished, for electrical but the statute does not direct an electrical co energy the Co- furnishing In electric of operative corporation to fix classifications con- operative’s operations shall be so 10-13-06, N.D.C.C., of pro rates. Section through their patrons will ducted that all vides that the revenues of an electrical capital the Co- furnish for patronage co-operative corporation required not patronage operative. In order induce maintenance, operation, the cost of and for Cooperative the will that and to assure reserves, the creation of shall be returned all its non-profit basis to operate aon from time to time to the members re- received and patrons for all amounts cash, in in abatement cur of furnishing of electric the ceivable from charges rent energy, for electrical or other and operating costs energy in of excess wise, as the board of directors deter the chargeable against expenses properly mine, basis, pro on a according rata the energy. All such electric furnishing of amount of done during business with each and operating costs in excess of amounts period. the The not sug has by receipt the of expenses at moment gested that an electrical can the Cooperative are with the received rates, not establish they classification of that are furnished understanding or that 154 expressly that member. It understood is capital. Cooperative The as patrons
the in paid amounts electric ex- capital a pay by credits to obligated is of cost of are furnished cess service amounts patron all such each account for capital and each member expenses. members as operating costs and in of excess capital fur- with the Cooperative shall credited so of records books and The By-laws. in nished these a man- as kept in such up and shall be set year each fiscal end of that at the ner any, capital, furnished if so the amount of plain- The evidence establishes clearly reflected by each patron tiff, single-phase although he received record appropriate in an credited power, charged volt rate a commercial person, each capital of account higher charged is a than a reasonable Cooperative shall within power. other members who receive the same year the fiscal after the time close It is established as reason for this classi- notify patron amount each fication that the served from a All his account. capital credited to so three-phase serve commercial line capital ac- amounts credited such patrons, plaintiff’s which was built past have the same patron count of premises to serve elevator. a commercial paid to though they had been status as however, record, also establishes legal a pursuance in patron in cash although a is served from had patron
obligation do so three-phase line, the cost to the Cooperative cor- then furnished furnishing single-phase himto 220 volt capital. responding amounts line greater from this than the no Cooperative, cost served to other users patrons single-phase single- volt Cooperative, acknowl- dealing with phase 220 they volt lines and for provisions of edges that the terms lower, regular, billed combination Incorporation By-Laws Article of rate, and during period question a contract shall constitute and be paid $1,041.97 in this patron, and action each paid more than he patrons are he would have had been both the contract, though regular at the fully billed as rate. bound individually patron signed each had The record also establishes that the de- separate containing such instrument fendant not credited to the terms provisions. plaintiff’s capital account amounts all of the By-laws shall be called this Article of received it from in excess to the attention of expenses properly costs conspicuous Cooperative by posting chargeable against furnishing of such place Cooperative’s in the office. energy, and that additional properly amount creditable 3. period question during account $1,041.97. shall, appears sum to me that the Each member as soon as *8 available, energy from entitled from the purchase shall be recover energy used defendant credit as additional amount, applica- capital premises specified to his account the said pay judgment the trial membership, tion and shall there- therefore monthly judgment court should be reversed and a rates which shall up requiring Board of entered defendant to set time to time fixed Directors; provided, on its credit to however books a in the it has Board limit amount amount of excess which of Directors charged him for over of electric required regular one furnish above rate.