Wittler v. Baumgartner

144 N.W.2d 62, 180 Neb. 446, 1966 Neb. LEXIS 553
CourtNebraska Supreme Court
DecidedJune 24, 1966
Docket36269
StatusPublished
Cited by61 cases

This text of 144 N.W.2d 62 (Wittler v. Baumgartner) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wittler v. Baumgartner, 144 N.W.2d 62, 180 Neb. 446, 1966 Neb. LEXIS 553 (Neb. 1966).

Opinions

Carter, J.

This is an action by the plaintiff, Clarence Wittier, 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 Loupi 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.

[449]*449All parties to the action filed pleadings making up the issues, including the questioned constitutionality of the Act. The directors of the public corporation created by the Act, whom we will subsequently refer to as the grid system directors, thereupon filed a motion for judgment on the pleadings. Interveners Elstun and Fitzpatrick also moved the court for a judgment on the pleadings on the ground that the Act was unconstitutional. The trial court, after hearing, sustained the motion of interveners Elstun and Fitzpatrick for a judgment on the pleadings, held the Act to* be unconstitutional, and enjoined the grid system directors from effectuating the purposes of the' Act. All other motions for judgment on the pleadings were denied. The directors of the grid system, and 23 interveners have appealed.

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 v/as organized under existing statutory authority to supply a market for power developed by the [450]*450first two public corporations. Existing statutes permitted each of these three public corporations to render service outside their district boundaries, with the result they became so competitive as to seriously impair the best interests of the public. All attempts to solve the problem failed and the Legislature in 1965 passed the Act with which we are here concerned, in an attempt to solve the problems of the public power industry in Nebraska.

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 [451]*451exclusive privileges; (3) because it grants to individuals special and exclusive privileges; (4) because it is special and class legislation which freezes the class; (5) because the Legislature unlawfully encroached on the powers of the executive department; and (6) because it impairs the obligations of Loup’s contract with its bondholders.

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 onerate in more than 15 counties is unreasonable where it operates upon all alike that are within the class.

It is provided in part by Article XII. section 1, Constitution of Nebraska, as follows: “The Legislature shall provide by general law for the organization, regulation, supervision and general control of all corporations, * * *. No corporations shall be created by special law, nor their charters be extended, changed or amended, except those corporations organized for charitable, educational, penal or reformatory purposes, which are to be and remain under the patronage and control of the state. All general laws passed pursuant to this section [452]*452may be altered, from time to time, or repealed.” The Act is not within the exception contained in the foregoing section.

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Bluebook (online)
144 N.W.2d 62, 180 Neb. 446, 1966 Neb. LEXIS 553, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wittler-v-baumgartner-neb-1966.