APPELLATE COURT OF ILLINOIS, SECOND DISTRICT
CORA MAE WEST, for Herself and all those similarly
508 N.E.2d 1124, 155 Ill. App. 3d 925, 108 Ill. Dec. 547 1987.IL.665
Appeal from the Circuit Court of Kane County; the Hon. Marvin D. Dunn, Judge, presiding.
JUSTICE NASH delivered the opinion of the court. LINDBERG, P.J., and INGLIS, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE NASH
Plaintiff, Cora Mae West, sought to bring a class action against the defendant, the city of Batavia, on behalf of customers of the city's electric utility to recover a $1 million refund which Commonwealth Edison paid to the city in settlement of litigation over wholesale electric rates charged by Edison. Plaintiff appeals from the dismissal of her complaint for failure to state a cause of action, contending that Batavia's utility customers were entitled to recover on the theory that: (1) the defendant had passed unreasonable wholesale costs on to its customers in the form of excessive rates, and (2) that the city exceeded its statutory authority in resolving to apply the settlement proceeds toward expansion of the utility rather than rebate to its electrical customers.
Plaintiff's amended complaint alleged the following: The city of Batavia owns and operates an electric utility which supplies all electric power within the city limits. Plaintiff was at all relevant times a resident of the city of Batavia and, among 5,600 other members of the class, a customer of the electric utility. The city purchased electric power from Commonwealth Edison, which had charged the city a wholesale rate substantially higher than the rate it charged its other customers. Batavia joined the neighboring municipalities of Geneva and St. Charles in litigation against Edison before the Federal Energy Regulatory Commission and in Federal court, alleging that the rates charged by Edison were unreasonable and discriminatory. That litigation culminated in a settlement whereby the parties agreed to a new rate schedule and Edison agreed to make substantial refunds to the municipalities which, in the case of the city of Batavia, totaled over $1 million. The amount of the settlement was based upon the rates which Edison had charged the city of Batavia between February 6, 1982, and July 2, 1984. Plaintiff further alleged that the excessive rates which Edison had charged the city of Batavia were passed on to her and its other consumers.
Plaintiff further alleged that prior to the settlement, the Batavia city council had approved a bond issue to finance expansion of its electric utility. On October 1, 1984, however, the city council adopted a resolution withdrawing the bond offer and approving the use of the Edison settlement proceeds to finance the expansion. Plaintiff alleged that the city was prohibited by statute from using past utility rate payments to finance future expansion of the utility.
Count I of the amended complaint sought certification of the class. Count II sought reparation and distribution of the settlement proceeds to plaintiff and all members of the class on a pro rata basis. Count III sought a declaration that the resolution of the city council to use the settlement proceeds to finance expansion of the utility deprived plaintiff and members of the proposed class of property without due process of law. Count IV sounded in tort, alleging that the city of Batavia breached its duty to consumers by failing to inform them that they had a right to intervene in the legal proceedings between the city and Edison.
Defendant moved to dismiss plaintiff's complaint for failure to state a cause of action upon which relief could be granted on the grounds that plaintiff lacked any property interest in the refund and defendant was empowered to regulate its own rates and to determine the use of the refund. The circuit court dismissed plaintiff's complaint in its entirety on January 3, 1986, and plaintiff appeals only the dismissal of counts II and III., Plaintiff contends first that count II of her amended complaint properly alleged a cause of action for reparation of unreasonable municipal utility rates.
A complaint should not be dismissed for failure to state a cause of action unless it clearly appears that no set of facts could be proved under the pleadings which would entitle the plaintiff to relief. (Gregor v. Kleiser (1982), 111 Ill. App. 3d 333, 335, 443 N.E.2d 1162, appeal denied (1983), 93 Ill. 2d 542.) A motion to dismiss admits all well-pleaded factual allegations, but does not admit Conclusions of law, the pleader's construction of a statute, or Conclusions of fact unsupported by allegations of specific facts. Village of Niles v. City of Chicago (1980), 82 Ill. App. 3d 60, 68, 401 N.E.2d 1235, appeal denied (1980), 81 Ill. 2d 593.
The Illinois Municipal Code authorizes municipalities to own and operate public utilities. (Ill. Rev. Stat. 1985, ch. 24, par. 11-117-1.) Unlike privately owned utilities, which are subject to the jurisdiction of the Illinois Commerce Commission under the Public Utilities Act (Ill. Rev. Stat. 1985, ch. 111 2/3, par. 1-101 et seq.), municipally owned utilities set and regulate their own rates (Ill. Rev. Stat. 1985, ch. 24, par. 11-117-1). Rates charged by a municipally owned utility must not be unreasonable or discriminatory and are subject to review by the courts. Conner v. City of Elmhurst (1963), 28 Ill. 2d 221, 227, 190 N.E.2d 760; Inland Real Estate Corp. v. Village of Palatine (1982), 107 Ill. App. 3d 279, 283, 437 N.E.2d 883, appeal denied (1982), 91 Ill. 2d 570; Village of Niles v. City of Chicago (1980), 82 Ill. App. 3d 60, 68-69, 401 N.E.2d 1235, appeal denied (1980), 81 Ill. 2d 593.
We agree with plaintiff that a cause of action for reparations may lie against a municipally owned utility. At common law, there existed a right to recover reparations for unreasonable charges by a utility or common carrier. (Terminal R.R. Association v. Public Utilities Com. (1922), 304 Ill. 312, 317, 136 N.E. 797; Chicago, Burlington & Quincy R.R. Co. v. Jones (1894), 149 Ill. 361, 374.) This action was based upon the theory that the defendant had funds which in right and Justice belonged to the plaintiff and which it ought to restore because it received the funds by charging a rate in excess of the lawful rate. (A.L. Jones Co. v. Chicago, Milwaukee & St. Paul Ry. Co. (1919), 213 Ill. App. 283, 288.) Although the common law right to recover reparations from a public utility has been superseded by the Public Utilities Act (Terminal R.R. Association v. Public Utilities Com. (1922), 304 Ill. 312, 317, 136 N.E. 797; Cummings v. Commonwealth Edison Co. (1965), 64 Ill. App. 2d 320, 323-24, 213 N.E.2d 18, appeal denied (1966), 33 Ill. 2d 626), that act was not intended to apply to municipally owned ...