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01/09/89 the City of Marshall, v. the City of Casey Et Al.

January 9, 1989





532 N.E.2d 1121, 177 Ill. App. 3d 1065, 127 Ill. Dec. 292 1989.IL.9

Appeal from the Circuit Court of Clark County; the Hon. William J. Sunderman, Judge, presiding.


JUSTICE SPITZ delivered the opinion of the court. McCULLOUGH, P.J., and LUND, J., concur.


Plaintiff City of Marshall appeals from the order of the circuit court of Clark County dismissing its three-count amended complaint against the defendants, City of Casey and City of Martinsville. Plaintiff's amended complaint involves allegations centered around three sets of written contracts.

On June 11, 1964, the parties hereto entered into a written contract with Midwestern Gas Transmission Co. (hereinafter Midwestern) whereby the three cities would be supplied natural gas. This contract was superseded by a new contract on May 24, 1983, and then again by yet another contract entered into on April 15, 1985. Under the terms of these contracts, the three cities, collectively referred to as "Buyer," are to receive from Midwestern the quantities of gas specified and to pay Midwestern at the rate calculated pursuant to the terms of the contract. For clarity, this first set of contracts will be referred to as the "Midwestern agreement."

Prior to contracting with Midwestern, Casey and Marshall entered into a second contract called a "Transportation Agreement," which was dated February 5, 1962. By this transportation agreement, Marshall agreed to transfer and deliver to Casey all the natural gas requirements of Casey and Marshall, not to exceed the combined total peak day allocations approved by the Federal Power Commission . The point of delivery was a metering station constructed and maintained by Marshall. Casey agreed to pay one cent per thousand cubic feet (Mcf) as recorded on the meter identified as the "Casey meter." Marshall was to bill this charge monthly.

This transportation agreement was amended January 1, 1974. The amendment recites that Casey and Marshall had "fully complied with all of the terms, conditions and provisions" of the 1962 agreement, but they decided to amend that earlier agreement in order to more nearly equalize between the parties the costs and expenses being incurred in connection with the transportation of natural gas. The amendment raised the fee Casey was to pay Marshall to 3.3 cents per Mcf.

A third contract was entered into by the three cities with regard to the purchase, distribution, and payment for natural gas supplied by Midwestern. This contract, dated June 8, 1964, set forth the procedure to be used to determine the amount each city was to pay Midwestern for the gas supplied. At the end of each billing period, representatives of each city were to jointly read the respective meters, and it is from these readings that the amount of gas used by each city during each billing period is to be determined. In order to determine the amount of gas delivered to Marshall, the agreement provided that the total volume of gas delivered by Midwestern, as measured at the "Marshall meter," was to be reduced by the amount recorded on the Casey meter. The amount delivered to Casey was to be established by the volume recorded on the Casey meter, less the volume shown on the "Martinsville meter" (installed by Casey near Martinsville). Deliveries to Martinsville are measured by the volume recorded on the Martinsville meter. Midwestern was to bill Marshall, with a copy going to Casey and Martinsville as well. Casey and Martinsville were then to deliver payment to Marshall which was, in turn, to remit all their payments to Midwestern.

With regard to the instant litigation, Marshall considers paragraph 4 of the June 8, 1964, agreement to be significant. Paragraph 4 states:

"4. The amount which each city shall owe to Midwestern for each billing period shall be determined by applying the rates, as specified in the contract between the municipalities and Midwestern, and as approved by the Federal Power Commission, to the meter reading for such billing period."

Marshall initially filed a complaint on February 28, 1986, consisting of two counts against Casey only. Subsequently, Marshall filed an amended complaint on April 9, 1987, containing two counts. Count I was directed against Casey and Martinsville. Count II was directed against the City of Casey alone. Marshall later added count III, directed against Casey and Martinsville.

Under count I of the amended complaint, Marshall sought recovery from the defendants under an implied, equitable contribution theory based on the Midwestern agreements. Count II asks the court to require Casey to pay Marshall $3,863.74 for unpaid transportation costs occasioned by plaintiff's failure to utilize a factor of supercompressibility in measuring the amount of gas transported between March 1, 1976, and April 30, 1985. Count III seeks recovery for breach of the June 8, 1964, written contract because, according to Marshall: (1) paragraph 4 of said contract requires the rates to be those specified in the Midwestern agreement, as approved by the FPC and as applied to the meter readings; (2) article IV of the Midwestern agreement provides that the legally effective rate shall be that contained in Midwestern's rate schedule as filed with the FPC, together with the general terms and conditions applicable thereto; and (3) volume one, general ...

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