CLARENCE WITTLER, APPELLEE, V. CARL W. BAUMGARTNER ET AL., APPELLANTS, IMPLEADED WITH LOUP RIVER PUBLIC POWER DISTRICT, A CORPORATION, ET AL., APPELLEES, BURT COUNTY PUBLIC POWER DISTRICT ET AL., INTERVENERS-APPELLANTS, WILLIAM H. FITZPATRICK ET AL., INTERVENERS-APPELLEES.
No. 36269
Supreme Court of Nebraska
June 24, 1966
144 N. W. 2d 62
The conclusion of the trial judge that both parties are equally guilty is sustained by the record. The judgment herein is affirmed.
AFFIRMED.
Filed June 24, 1966. No. 36269.
Kenneth M. Olds and Clarence A. Davis, for interveners-appellants.
Bert L. Overcash, Allen L. Overcash, Woods, Aitken & Aitken, and Lyle Winkle, for appellee Loup River Public Power Dist.
Mathews, Kelley & Cannon and Wood, King, Dawson & Logan, for appellees The Omaha Nat. Bank et al.
Schmid, Ford, Snow, Green & Mooney, for interveners-appellees.
Heard before CARTER, SPENCER, BOSLAUGH, BROWER, SMITH, and MCCOWN, JJ., and SCHEELE, District Judge.
CARTER, J.
This is an action by the plaintiff, Clarence Wittler, as an elector residing in Platte County and an owner of bonds issued by Loup River Public Power District, asserting the unconstitutionality of Legislative Bill 764, Laws 1965, chapter 404, page 1292, enacted by the Legislature at its Seventy-Fifth Session, which we shall hereafter refer to as the “Act.”
The parties defendant are the 11 appointed and acting directors of the public corporation created by the Act; the Loup River Public Power District, a public corporation engaged in the generation, transmission, and distribution of electrical energy, hereafter referred to as Loup; and The Omaha National Bank of Omaha and the American National Bank and Trust Company of Chicago, trustee and co-trustee of Loup‘s bonds under an agreement and trust indenture dated May 1, 1949, hereafter referred to as the “trustees.”
A petition in intervention, in the form of a class action was filed by William H. Fitzpatrick, a resident of Sarpy County, and Edward H. Elstun, a resident of Douglas County, adopting the second amended petition of the plaintiff. A petition in intervention was also filed by 22 rural public power districts and an electric membership association who assert the validity of the Act.
It is contended that the motion for judgment on the pleadings is insufficient in the instant case to sustain a holding of unconstitutionality of the Act. A motion for judgment on the pleadings, like a demurrer, admits the truth of all well-pleaded facts in the pleadings of the opposing party, together with all reasonable inferences to be drawn therefrom. The party moving for judgment on the pleadings necessarily admits, for the purpose of the motion, the untruth of his own allegations insofar as they have been controverted. Board of Trustees of York College v. Cheney, 160 Neb. 631, 71 N. W. 2d 195. A motion for judgment on the pleadings does not waive a trial on disputed issues of fact. Under the foregoing rules and the pleadings, the unconstitutionality of the Act could properly be determined on a motion for judgment on the pleadings.
The public power issue in Nebraska has resulted in many problems. After the enactment of Laws 1933, chapter 86, page 337, the Platte Valley Public Power and Irrigation District and the Loup River Public Power District were organized. In 1939 Consumers Public Power District was organized under existing statutory authority to supply a market for power developed by the
The Act provided substantially for the creation of a public corporation and political subdivision described in the Act as the grid system. All public power districts serving more than 15 counties within the state on July 1, 1966, were required to be members of the grid system. Two counties, Douglas and Sarpy, were not included in the election districts created by the Act. The powers of the district were to be those prescribed in Chapter 70, article 6, R. R. S. 1943, and amendments thereto. The 91 counties of the 93 in the state, excluding Douglas and Sarpy, were divided into 9 districts from each of which a director was first to be appointed during fixed staggered terms, after which they were to be elected from their respective districts. The boards of directors of member power districts were to be superseded by the grid system board. The grid system board was to carry out all obligations of members without any impairment thereof. By the unification of control of the public power districts required to become members of the grid system, it appears to have been the purpose of the Legislature to eliminate harmful competition, avoid duplication of lines and service, and reduce the cost of electrical energy to the public. Other pertinent details of the Act will be discussed in connection with the questions of constitutionality raised.
It is the contention of the plaintiff that the Act is unconstitutional for the following reasons: (1) Because it creates a corporation by special law; (2) because it grants to a corporation, if lawfully created, special and
The public corporations required by the Act to become members of the grid system are subject to the plenary control of the Legislature. In the exercise of such power the Legislature may authorize, limit, control, or even destroy such public corporations. City of Auburn v. Eastern Nebraska Public Power Dist., 179 Neb. 439, 138 N. W. 2d 629; City of O‘Neill v. Consumers Public Power Dist., 179 Neb. 773, 140 N. W. 2d 644. The grid system is to perform proprietary functions as distinguished from those that are governmental. The Act was passed for the purpose of carrying out the public policy of the state as it relates to public power. It deals with a matter of statewide concern. It is fundamental that the Legislature has the right to classify public power districts for the purposes of legislation if a reasonable basis for the classification exists. It may not classify public power districts on an arbitrary and unreasonable basis. We cannot say that legislation dealing with all public power districts in the state which operate in more than 15 counties is unreasonable where it operates upon all alike that are within the class.
It is provided in part by
The defendant grid directors cite authorities from other states which hold that similar constitutional provisions apply only to private corporations. But whatever the law may be in those states, this court has held that
In Clegg v. School Dist. No. 56, 8 Neb. 178, an act of the Legislature, authorizing school district No. 56 to issue bonds for the erection of a school building, was held void as special legislation. In the course of that opinion this court said: “It cannot be doubted that the act in question is a special act. It relates exclusively to school district No. 56, in Richardson county. None of its provisions apply, or are intended to apply to any other district or subdivision of the state, or the people thereof. It was published only as a special law.
“It is equally clear that the powers intended to be conferred by said act—that of issuing bonds, to be binding upon, and the principal and interest thereof to be paid by the said district—are corporate powers within the meaning of the said section of the constitution.
“It was evidently the intention of the framers of the constitution to put an end to an universally admitted and then growing evil, that of local and special legislation, in all cases where the beneficial results of such legislation could be reached by general laws, and they thereby adopted a policy which it is the duty of this court to uphold.” See, also, Hallo v. Helmer, 12 Neb. 87, 10 N. W. 568; Dundy v. Board of County Commissioners of
In School District No. 56 v. St. Joseph Fire & Marine Ins. Co., 103 U. S. 707, 26 L. Ed. 601, a case arising under Nebraska law, the court said: “It is next argued that the constitutional provision was only intended to apply to private corporations, as distinguished from those which are part of the body politic, such as counties and towns. But we see no warrant for this distinction.
“There is certainly nothing in the words of the provision to suggest any such distinction or limitation. Nor do we see any reason why the local corporate bodies discharging public functions should not be governed by general and uniform laws as well as those for private enterprises. In fact, the weight of the argument seems to be the other way, for it can very well be seen that the aggregation of individual capital and energy into an associated organization may require different powers for each enterprise so established, while the powers to be exercised by cities, towns, townships and school districts in the same State may or should be uniform in character all over the State. If any such rule is defensible at all, of which it is not our province to judge, its application to the latter class of corporations seems the more appropriate of the two.”
Section 2 of the Act before us provides: “There is hereby established for the purpose of carrying out the policy of the state, a public corporation and political subdivision thereof which shall be officially named by resolution of its board of directors and which is referred to in this act as the grid system. The name chosen by the board of directors shall not be the same as the name of any district controlled by the grid system.” This section creates a single public corporation. It delegates the naming of the corporation to the board of directors which clearly indicates an intention to establish a single public corporation by a legislative act which relates solely to the corporation it purports to create.
It is evident from the Act itself that the Legislature
It is contended by the interveners Fitzpatrick and Elstun that the Act is unconstitutional in that it disfranchises the electors of Douglas and Sarpy counties in violation of
The Act establishes a new public corporation and political subdivision. It invests the grid system with the powers of a public power district organized under the provisions of Chapter 70, article 6, R. R. S. 1943. It is a governmental subdivision invested with the powers of a private corporation. When a governmental subdivision is engaged in an enterprise, commercial in nature, it does not lose its character as a public corporation. Platte Valley Public Power & Irr. Dist. v. County of Lincoln, 144 Neb. 584, 14 N. W. 2d 202, 155 A. L. R. 412; United Community Services v. The Omaha Nat. Bank, 162 Neb. 786, 77 N. W. 2d 576.
The Legislature may, of course, provide for the selection of directors of a public power district by appointment of the Governor, or by election. It is fundamental that, when they are to be elected by the people, the classification of electors must be a reasonable one. We agree with the grid system directors that constitutional provisions,
It is also fundamental that, although it is competent for the Legislature to classify for purposes of legislation, the classification, to be valid, must rest on some reason of public policy, some substantial difference of situation or circumstance, that would naturally suggest the justice or expediency of diverse legislation with respect to the objects to be classified. Safeway Stores, Inc.
The grid system applies to all public power districts in the state which operate in more than 15 counties. The Act indicates no basis for classifying the electors of 91 counties for the purpose of electing grid system directors and excluding the electors of 2 counties similarly situated. Nor are we able to find any reason why the directors of a public corporation operating statewide must come from 91 counties to the exclusion of the other 2. We conclude that the Act is violative of
It is contended that the Act is in violation of the Constitution in that the Act constitutes an encroachment by the Legislature upon the exclusive prerogatives of the Governor in violation of the distribution of powers sec-
Under the Constitution of Nebraska the supreme executive power is vested in the Governor.
In State ex rel. Beck v. Young, 154 Neb. 588, 48 N. W. 2d 677, this court said: “The power of the Legislature in the creation of an office, admittedly a legislative function, is limited to those matters which are defined as ingredients of the office. * * * It is within the power of the Legislature to create an office, define its powers, limit its duration, and provide for the compensation of the occupant. The power of appointment and removal is in the Governor except as limited by Article IV, section 12, of the Constitution, and the legislative or judicial branches may not properly trench upon the executive power thus granted.”
The appointive power here involved is executive or administrative in character. The power of the Legislature to consent or confirm executive appointments is also executive or administrative rather than a legislative function. But the Constitution itself transgresses the division of powers provision contained in it and, so far as it does, the separate departments have the power constitutionally granted. State ex rel. Johnson v. Hagemeister, 161 Neb. 475, 73 N. W. 2d 625; State ex rel. Horne v. Holcomb, 46 Neb. 88, 64 N. W. 437.
In State ex rel. Hensley v. Plasters, 74 Neb. 652, 105 N. W. 1092, 3 L. R. A. N. S. 887, we said: “Again, there can be no doubt that the legislature, after it has established an office, or in the act of establishing it, may provide for filling the office either by election by the people or, in a proper case, by appointment by some designated authority. The legislature, however, cannot itself fill the office. It cannot elect or appoint the officer.
We conclude that the power of appointment of grid system directors was the prerogative of the Governor. The right of the Legislature to prescribe reasonable qualifications of one to be appointed to office is not disputed. But the Legislature is prohibited by constitutional provision from appointing officers whose offices are created by law, either directly or indirectly. The provisions of the Act which limit the appointment of grid system directors by the Governor to a certain unnamed individual or to a limited few, is an encroachment by the Legislature upon the powers of the Governor and is void as violative of
It is argued by the directors of the grid system that OPPD advised the Legislature it intended to reduce the number of counties in which they would operate to 15 or less before July 1, 1966. It is contended that this in some way justified the exclusion of Douglas and Sarpy counties from the designated districts and removes questions of reasonable classification of electors and the discriminations against the electors of these two counties. We find nothing to support such a contention. Section 9 of the Act permits potential districts to reduce the number of counties in which they operate to 15 or less before July 1, 1966, and thereby exclude themselves from the grid system. By compliance with this section, OPPD could exclude itself from the grid system without regard to the inclusion or exclusion of Douglas and Sarpy counties, and without improperly classifying electors or discriminating against the electors of those two counties. It is asserted that although
The trustees and Loup, as well as the plaintiff, argue that the Act impairs the obligations of the bonds that have been issued by Loup and the indenture under which bondholders purchased Loup‘s bonds. The question of impairment of the bonds is argued pro and con by most of the parties to the action. Our holding that the Act is unconstitutional makes it unnecessary for us to discuss this question. A discussion of all the questions alleged relating to contract impairment would unduly extend this opinion without serving any useful purpose. Other questions presented are in a similar situation.
We conclude that L.B. 764, Laws 1965, chapter 404, page 1292, is violative of the Constitution in that it creates a public corporation by special law; because it grants special privileges to persons in the same class which it denies to others of the class; and because the Legislature in enacting the Act unlawfully encroached upon the powers of the Governor. We therefore hold L.B. 764, Laws 1965, chapter 404, page 1292, to be void and of no force and effect. The trial court having come to this same conclusion, its judgment is affirmed.
AFFIRMED.
BOSLAUGH and SMITH, JJ., dissenting in part.
We respectfully dissent from the part of the majority opinion which holds that the grid system law contravenes
The conclusion in the majority opinion is extreme.
