author: SANDSTROM, Justice.

text:
    2007 ND 127
    HOME OF ECONOMY, a North Dakota Corporation, Plaintiff and Appellant v. BURLINGTON NORTHERN SANTA FE RAILROAD, a National Railroad Corporation, Defendant and Appellee.
    No. 20070002.
    Supreme Court of North Dakota.
    July 27, 2007.

      Garry A. Pearson, Pearson Christensen & Clapp, PLLP, Grand Forks, N.D., for plaintiff and appellant.
    Stephen W. Plambeck, Nilles, Ilvedson, Stroup, Plambeck & Seibo, Ltd., Fargo, N.D., for defendant and appellee.
   SANDSTROM, Justice.

[¶ 1] Home of Economy appeals from a summary judgment dismissing its action for damages and for an injunction to require Burlington Northern Santa Fe Railroad (“BNSF”) to reopen a grade crossing in Grand Forks. We hold N.D. Const, art. XII, § 13, and Nowling v. BNSF Ry., 2002 ND 104, 646 N.W.2d 719, do not preclude Home of Economy’s claim for a prescriptive easement for a public road under N.D.C.C. § 24-07-01 and there are disputed factual issues about adverse and hostile use under that statute. We reverse and remand.

I

[¶2] In June 2003, without obtaining permission from any public entity or Home of Economy, BNSF closed a grade crossing in Grand Forks that provided access from State Mill Road across a spur line to property referred to by the parties as “the Olson property.” Home of Economy purchased the Olson property, which is west of the spur line and immediately adjacent to Home of Economy’s property, from Clifford Olson in 1994. According to Olson, his family had operated a family business on the Olson property since 1925, and a 30-foot-wide road from State Mill Road across the grade crossing had provided the only access to the Olson property from the 1920s to the 1950s. In the early 1950s, Highway 81 was routed to the west of the Olson property, providing a second method of access to the Olson property, and thereafter, customers to the Olson property used each access equally. According to Olson, BNSF maintained the access road from State Mill Road to the spur line, and his family maintained the road on the west side of the spur line. Olson testified by deposition that he placed a culvert in the access road on the west side of the spur line to facilitate drainage, and BNSF occasionally replaced planks in the grade crossing. There was evidence that BNSF runs between 40 and 70 railroad cars per day on the spur line.

[¶ 3] According to Wade Pearson, a vice president for Home of Economy, he received a telephone call from a BNSF representative in 1994, seeking to close the grade crossing. Wade Pearson informed the BNSF representative that BNSF could not close the grade crossing, but Pearson agreed to the placement of a stop sign at the crossing. According to Wade Pearson, the access road was approximately 30 feet wide, BNSF had maintained the grade crossing to the east edge of the Olson property, and there were planks placed on either side of and in the middle of the spur line. According to Scott Pearson, a vice president for Home of Economy, the access road from State Mill Road is essential to Home of Economy in the event of a restriction or closing of Highway 81, and many Home of Economy customers use the access road because it is quicker and easier than using Highway 81. According to both Scott and Wade Pearson, Home of Economy’s principle motivation for purchasing the Olson property in 1994 was to obtain access from State Mill Road to Home of Economy’s store.

[¶ 4] Home of Economy sued BNSF in North Dakota district court for damages and to reopen the crossing, alleging an easement for access from State Mill Road had continuously existed across the grade crossing to the Olson property since the 1920s. The district court granted BNSF’s motion to dismiss Home of Economy’s action, concluding the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”) vested jurisdiction over the regulation of railroad operations in a federal agency, the Surface Transportation Board, and preempted the North Dakota district court’s jurisdiction over Home of Economy’s lawsuit. In Home of Economy v. Burlington Northern Santa Fe R.R., 2005 ND 74, ¶ 1, 694 N.W.2d 840, we reversed and remanded, concluding the “ICCTA does not preempt state jurisdiction over grade crossings.” We declined to address BNSF’s argument that Home of Economy’s claim for an easement across the right-of-way of an operating railroad was precluded by N.D. Const, art. XII, § 13, and Nowling, 2002 ND 104, 646 N.W.2d 719, because the district court had not addressed that issue. Home of Economy, at ¶ 18.

[¶ 5] On remand, the district court granted summary judgment for BNSF, concluding BNSF’s railroad right-of-way is a public road under N.D. Const, art. XII, § 13, and Nowling, 2002 ND 104, 646 N.W.2d 719, and an easement by prescription for a public road over the railroad right-of-way may not be granted because that use of the land would be inconsistent with BNSF’s use of the right-of-way for railroad purposes. The district court decided that even if N.D. Const, art. XII, § 13, and Nowling allowed an action for an easement by prescription over BNSF’s right-of-way, Home of Economy had presented no evidence to establish that those who traveled over the grade crossing have asserted a right that was hostile to BNSF. The court said the public’s use of the grade crossing was permissive and Home of Economy failed to establish an easement by prescription. The court decided there was not an easement by necessity because there was another means of access to the property. The court also ruled there was not an easement by estoppel, because Home of Economy presented no evidence that BNSF had communicated to Home of Economy that an easement existed at the grade crossing.

[¶ 6] The district court had jurisdiction under N.D. Const, art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const, art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶ 7] We consider the issues raised in this appeal in the posture of summary judgment, which is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that reasonably can be drawn from the undisputed facts, or if the only issues to be resolved are questions of law. Johnson v. Nodak Mut. Ins. Co., 2005 ND 112, ¶ 9, 699 N.W.2d 45. A party moving for summary judgment must show there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. Green v. Mid Dakota Clinic, 2004 ND 12, ¶ 5, 673 N.W.2d 257. A party resisting a motion for summary judgment cannot merely rely on the pleadings or unsupported concluso-ry allegations, but must present competent admissible evidence by affidavit or other comparable means that raises an issue of material fact and must, if appropriate, draw the court’s attention to relevant evidence in the record by setting out the page and line in depositions or other comparable documents containing testimony or evidence raising an issue of material fact. Beckler v. Bismarck Pub. Sch. Dist., 2006 ND 58, ¶ 7, 711 N.W.2d 172. On appeal, we view the evidence in the light most favorable to the opposing party, and that party must be given the benefit of all favorable inferences. Hurt v. Freeland, 1999 ND 12, ¶ 7, 589 N.W.2d 551. Whether a district court properly granted summary judgment is a question of law that we review de novo on the entire record. Johnson, at ¶ 9.

Ill

[¶ 8] Home of Economy argues the district court erred in granting summary judgment, because the public’s use of the road was either without BNSF’s permission, which constitutes an easement by prescription under N.D.C.C. § 24-07-01, or with BNSF’s permission, which constitutes an easement by estoppel. BNSF responds a railroad right-of-way cannot be lost to adverse possession, acquiescence, prescription, or estoppel under Nowling, and alternatively, Home of Economy failed to prove the essential elements of its claims for an easement by prescription or an easement by estoppel.

[¶ 9] In Nowling, 2002 ND 104, ¶¶ 2-3, 646 N.W.2d 719, private landowners sued a railroad and its lessee under the doctrines of adverse possession and acquiescence to quiet title to a rectangular tract of land that was part of the railroad’s operating line. The landowners alleged they, or their predecessors in interest, had been in actual, open, hostile, continuous, and exclusive possession of the disputed tract of land for more than 20 years and were entitled to ownership of the land by adverse possession. Id. at ¶ 3. They also alleged a road had been the boundary between their land and the railroad’s land for 100 years and the railroad’s silence constituted acquiescence in the road’s serving as the boundary between the parties’ land. Id. The district court concluded the parties had acquiesced in the boundary between their property and quieted title to the landowners. Id. at ¶ 4. We reversed the judgment quieting title to the landowners, concluding a railroad right-of-way was a public highway under N.D. Const, art. XII, § 13, which could not be taken by adverse possession or the related doctrine of acquiescence. Howling, at ¶ 14. We said a common thread from cases with a constitutional provision similar to N.D. Const, art. XII, § 13, is that a railroad right-of-way for an operating railroad line is a public highway that may not be taken by adverse possession, or the related doctrine of acquiescence. Howling, at ¶¶ 11,14.

[¶ 10] In Howling, 2002 ND 104, ¶ 7, 646 N.W.2d 719, we cited Lincoln v. Great Northern Ry. Co., 26 N.D. 504, 511, 144 N.W. 713, 715 (1914) (on petition for rehearing), for the principle that a railroad had no right to grant an easement inconsistent with its own use of a right-of-way for railroad purposes, because the railroad was itself a public servant and its own interest in the land was largely in the nature of an easement. In Lincoln, a landowner sought to compel a railroad to reduce the elevation of its track at a private grade crossing. The landowner claimed he had acquired an interest in the railroad property and sought to enforce his claim in the private grade crossing. This Court concluded the landowner had not proven a prescriptive right to a private crossing. Lincoln, 26 N.D. at 509-11, 144 N.W. at 714.

[¶ 11] Howling involved a private claim for ownership of a tract of land under the related doctrines of adverse possession and acquiescence, and Lincoln involved a claim for a prescriptive right to a private grade crossing. Moreover, Howling involved an action for adverse possession and to establish a boundary by acquiescence, both of which result in a change in title to real property. In contrast, Home of Economy’s action involves a claim for a prescriptive easement for a public road across a railroad’s right-of-way. In other contexts, this Court has recognized that a public road may cross a railroad’s public highway. See City of Grafton v. St. Paul M. & M. Ry., 16 N.D. 313, 316-19, 113 N.W. 598, 599-600 (1907) (action by municipality to condemn property across railroad right-of-way for street purposes). We have also said that an easement grants a right to nonexclusive use of land for a specific, limited purpose, Riverwood Commercial Park, LLC v. Standard Oil Co., Inc., 2005 ND 118, ¶ 11, 698 N.W.2d 478, while a valid claim for adverse possession confers title to the claimant. Gruebele v. Geringer, 2002 ND 38, ¶ 10, 640 N.W.2d 454. Other courts have recognized the difference between a prescriptive use of land that culminates in an easement and adverse possession that creates a change of ownership. Johnson v. Kaster, 637 N.W.2d 174, 178 (Iowa 2001); Newell Rod & Gun Club, Inc. v. Bauer, 409 Pa.Super. 75, 597 A.2d 667, 669-70 (1991). See 16 Richard R. Powell, Powell on Real Property § 91.01[3] (2007); 25 Am.Jur.2d Easements and Licenses § 49 (2004). One recognized authority has explained that although adverse possession and prescription are related, adverse possession differs from prescription:

The terms “adverse possession” and “prescription” differ from each other primarily in regard to the kinds of land interests acquirable under the two processes. On the one hand, adverse possession concerns itself chiefly with the acquisition of a present possessory estate, that is, fee simple absolute or a possessory interest of more restricted duration. Prescription, on the other hand, concerns itself wholly with the acquisition of rights in the land of another, such as easements.

16 Powell on Real Property, at § 91.01[3].

[¶ 12] Section 24-07-01, N.D.C.C., authorizes public roads by prescription and provides that “[a]ll public roads and highways within this state which have been or which shall be open and in use as such, during twenty successive years, hereby are declared to be public roads or highways and confirmed and established as such whether the same have been laid out, established, and opened lawfully or not.” Under that provision, the public acquires an easement of passage and the remaining interest in the property stays with the owner of the fee. Casey v. Corwin, 71 N.W.2d 553, 555 (N.D.1955). The plain language of N.D.C.C. § 24-07-01 says roads meeting the requirements of that statute are declared to be public roads “and established as such whether the same have been laid out, established, and opened lawfully or not.” Under prior statutory language, this Court recognized a public highway need not be opened by officials and a public road may be opened by the public’s use of the road. Kritzberger v. Traill County, 62 N.D. 208, 212, 242 N.W. 913, 915 (1932) (statute provided all public highways that have been or may hereafter be used as such, for twenty years or more, shall be deemed public highways).

[¶ 13] An easement for a public road was not at issue in either Nowling or Lincoln, and the foregoing authorities demonstrate that a proceeding under N.D.C.C. § 24-07-01 is an action that recognizes and authorizes the enforcement of a prescriptive easement for a public road “whether the same has been laid out, established and opened lawfully or not.” Although a railroad right-of-way for an operating railroad line is a public highway under N.D. Const, art. XII, § 13, we conclude that provision and Nowling do not preclude an action for an easement by prescription for a public road across BNSF’s spur line under N.D.C.C. § 24-07-01.

[¶ 14] Under N.D.C.C. § 24-07-01, a party asserting the existence of a public road by prescription has the burden of establishing by clear and convincing evidence the general, continuous, uninterrupted and adverse use of a road by the public under a claim of right for 20 years. Mohr v. Tescher, 313 N.W.2d 737, 739 (N.D.1981); Backhaus v. Renschler, 304 N.W.2d 87, 89 (N.D.1981); Berger v. Berger, 88 N.W.2d 98,100-03 (N.D.1958).

[¶ 15] In Berger, 88 N.W.2d at 100-03 (citations omitted), this Court explained the type of use needed to establish a public road by prescription:

Mere user of land by the public as a highway is insufficient of itself to establish a highway by prescription or long use. The user must be adverse and hostile to the rights of the owners; and mere travel by the public does not of itself constitute adverse use of the property by the public. Regardless of how long it is continued, a user by license or permission of the owner of the land sought to be impressed with the public easement of travel is not adverse and affords no basis for prescription....
Permissive use has reference to the conduct of the landowner in acquiescing and consenting that the road be traveled by the public while adverse user imports an assertion of right on the part of those traveling the road, hostile to that of the owner. The hostile use of a road over privately owned land necessary to establish a prescriptive right means a use inconsistent with the owner’s right to exclusive use. It does not imply enmity or ill will and is consistent with friendly relations between user of the road and landowner....
To establish a public way by prescription it is necessary for the plaintiff to prove an adverse use of the land which had continued for more than 20 years under a claim of right and with the acquiescence of the defendants or their predecessor in title. The mere fact of the user by the public for the period required to establish a public way, raises no presumption that such use is adverse. To establish such a use a further fact must be proved, or admitted, that the general public used the way as a public right; and that it did, must be proved by facts which distinguish the use relied on from rightful use by those who have permissive right to travel over the private way. In this last case it is said:
“If all the evidence which was introduced was equally consistent with the view that the uses relied on were of the latter character, (permissive use), the plaintiff failed to sustain the burden of proof resting upon him to show a use under a claim of right.”

[¶ 16] Here, in the posture of a motion for summary judgment, the district court decided Home of Economy had not presented any evidence that those who have traveled over the grade crossing have asserted a right that is adverse and hostile to BNSF and that the public’s use of the crossing was permissive. Although the use by the public for the period required to establish a public road does not raise a presumption that the use is adverse, Berger, 88 N.W.2d at 103, the issue of adverse and hostile use is ordinarily a question of fact. Hartlieb v. Sawyer Twp. Bd., 366 N.W.2d 486, 488 (N.D.1985); Mohr, 313 N.W.2d at 739; Backhaus, 304 N.W.2d at 90. Viewing the evidence in the light most favorable to Home of Economy, we conclude the district court erred in deciding this issue in the context of a summary judgment.

IV

[¶ 17] Home of Economy also argues the public’s use of the road was either adverse and without BNSF’s permission, which constitutes an easement by prescription, or with BNSF’s permission, which constitutes an easement by estoppel. Home of Economy thus asserts there are disputed factual issues about its claim for an easement by estoppel.

[¶ 18] A party claiming an easement by estoppel must show a representation was communicated to the promisee, the representation was believed, and there was a reliance upon the communication. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762, 774-75 (3rd Cir.1994); Exxon Corp. v. Schutzmaier, 537 S.W.2d 282, 285 (Tex.Civ.App.1976); 25 Am.Jur.2d Easements and Licenses, at § 15. See Hille v. Nill, 58 N.D. 536, 548, 226 N.W. 635, 639 (1929) (easement may be created by estoppel and grantor’s representations that grantee would have passageway were sufficient to estop grantor from denying grantee use of street).

[¶ 19] Here, the district court decided Home of Economy had not provided any evidence that BNSF specifically communicated to Home of Economy that an easement existed at the grade crossing. The court further decided there was no evidence that had such a representation been communicated and believed, any reliance was detrimental to Home of Economy because there was another access to Home of Economy’s property from Highway 81.

[¶ 20] This is not a boundary dispute in which acquiescence may be sufficient to establish the boundary between adjacent property. See Fischer v. Berger, 2006 ND 48, ¶¶ 11-13, 710 N.W.2d 886 (because permission of owner is fatal to claim for prescriptive use, acquiescence is not applicable to claim for easement by prescription for trail across another’s property). Viewing the evidence in the light most favorable to Home of Economy, however, we believe the evidence of the 1994 telephone call from BNSF to Home of Economy seeking to close the grade crossing, the denial of the request by Home of Economy, and the agreement to the placement of a stop sign at the crossing raises a disputed issue of material fact about whether or not BNSF, in seeking and receiving permission for the stop sign, communicated to Home of Economy that an easement existed at the grade crossing. According to Wade Pearson, the telephone call was made in 1994, the stop sign was erected shortly thereafter, and the crossing remained open until June 2003. This evidence supports an inference that Home of Economy relied upon its communications with BNSF to establish an easement by estoppel at the grade crossing. We therefore conclude the district court erred in granting summary judgment on Home of Economy’s claim for an easement by estoppel.

V

[¶ 21] BNSF nevertheless argues the district court’s dismissal should be affirmed because the North Dakota Public Service Commission has primary jurisdiction to establish and regulate grade crossings in North Dakota. BNSF argues Home of Economy could have petitioned the Public Service Commission, the North Dakota Department of Transportation, the City of Grand Forks, or some other road authority to establish a public road and grade crossing for access from State Mill Road to the Olson property. The statutory procedures for opening and vacating roads also authorize a proceeding before the Public Service Commission under N.D.C.C. § 24-09-10 to vacate a grade crossing. See Great North. Ry. Co. v. McDonnell, 77 N.D. 802, 812-13, 45 N.W.2d 721, 725-26 (1950) (recognizing party may file proceeding with Public Service Commission for vacation of grade crossing at public highway). Although our statutes do not preclude a proceeding to vacate a grade crossing, BNSF did not raise an issue about primary jurisdiction in the district court, and we decline to address that issue in this appeal. See Riemers v. Omdahl, 2004 ND 188, ¶21, 687 N.W.2d 445 (failure to raise issue in district court precludes party from raising issue for first time on appeal).

VI

[¶22] We conclude there are disputed issues of material fact regarding adverse and hostile use under N.D.C.C. § 24-07-01, and we reverse and remand for proceedings consistent with this opinion.

[¶ 23] DOUGLAS L. MATTSON, D.J., GERALD W. VANDE WALLE, C.J., MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ„ concur.

[¶ 24] The Honorable DOUGLAS L. MATTSON, D. J., sitting in place of CROTHERS, J., disqualified.


source: Caselaw Access Project

license: Public Domain

text:
    2007 ND 128
    CAPITAL ELECTRIC COOPERATIVE, INC., Plaintiff and Appellant v. CITY OF BISMARCK, North Dakota, Defendant and Appellee and Montana-Dakota Utilities, Inc., a Division of MDU Resources Group, Inc., Defendant, Counterclaimant, and Appellee and The Public Service Commission of North Dakota, Defendant Montana-Dakota Utilities Company, a Division of MDU Resources Group, Inc., Appellant v. The Public Service Commission of North Dakota and Capital Electric Cooperative, Inc., Appellees.
    Nos. 20060199, 20060270.
    Supreme Court of North Dakota.
    July 27, 2007.
    Rehearing Denied Aug. 27, 2007.

      Carol K. Larson (argued), Pringle & Herigstad, Minot, N.D., for Capital Electric Cooperative, Inc., The Public Service Commission of North Dakota and Capital Electric Cooperative, Inc.
    Randall J. Bakke (argued) and Mitchell D. Armstrong (on brief), Smith Bakke

      Porsborg & Schweigert, Bismarck, N.D., for City of Bismarck, North Dakota.
    Daniel S. Kuntz (argued), MDU Resources Group, Inc., Bismarck, N.D., Jerome C. Kettleson (appeared) and Patrick W. Durick (on brief), Pearce & Durick, Bismarck, N.D., for Montana-Dakota Utilities, Inc., a Division of MDU Resources Group, Inc., Montana-Dakota Utilities Company, a Division of MDU Resources Group, Inc.
    William W. Binek (argued), Special Assistant Attorney General, Public Service Commission, State Capitol, Bismarck, N.D., for appellee Public Service Commission of North Dakota.
   SANDSTROM, Justice.

[¶ 1] Capital Electric Cooperative and Montana-Dakota Utilities Company (“MDU”) both contend they are entitled to provide electric service to certain customers within the City of Bismarck. Capital Electric appeals from a judgment that “denied” its appeal from a Bismarck City Commission decision construing Bismarck’s electric distribution franchises with Capital Electric and with MDU to allow MDU, and not Capital Electric, to provide electric service to new customers in the Boulder Ridge First Addition in northwest Bismarck. MDU appeals from a judgment affirming a Public Service Commission (“PSC”) decision ordering MDU not to provide electric service to Boulder Ridge. We conclude each utility’s franchise authorizes it to provide electric service to Boulder Ridge, and, therefore, the PSC’s decision controls the distribution of electric service in Boulder Ridge. We reverse the judgment in Capital Electric’s appeal and affirm the judgment in MDU’s appeal.

I

[¶ 2] In 1987, Bismarck, a home rule city with an ordinance requiring electric service providers to have a franchise to provide service within the city, adopted a resolution renewing a twenty-year “nonexclusive” franchise for MDU to operate an electric distribution system in Bismarck as “now, or hereafter constituted.” MDU’s franchise did not include any geographic limitations.

[¶ 3] In 1973 and again in 1993, Bismarck also granted Capital Electric a twenty-year “non-exclusive” franchise to operate an electric distribution system in Bismarck as “now, or hereafter constituted.” Capital Electric’s franchise included a geographic limitation that provided:

1. In order to avoid a duplication of facilities between [Capital Electric] and other electrical franchises, the authority granted Capital Electric under this franchise is limited geographically to the areas within the city described in the Area Service Agreement dated July 5, 1973 executed by Capital Electric Cooperative, Inc., and Montana-Dakota Utilities Co., as modified by Amendment dated October 25, 1990, and any future amendments to the Area Service Agreement agreed to by [Capital Electric] and Montana-Dakota Utilities. [Capital Electric] shall enjoy all of the privileges and rights described in the Area Service Agreement. If the Area Service Agreement and Amendments thereto are canceled by either electric supplier during the term of this franchise, all privileges, rights, obligations and restrictions as therein stated shall continue to apply to both Capital Electric Cooperative, Inc., and Montana-Dakota Utilities Co.

[¶ 4] In 1973, Capital Electric and MDU executed an area service agreement that included an attached map outlining each company’s respective service areas and provided MDU would continue to serve the area encompassing the city of Bismarck and new areas contiguous to Bismarck and Capital Electric would continue to serve rural areas not receiving central station service and other areas identified in the area service agreement. The area service agreement further provided:

4. It is agreed that the interests of the consumer can best be met by providing that [MDU] serve those consumers within the area bounded by the heavy dashed black line on the attached map, which shall be made a part of this agreement, as well as any new consumers who come into that area and that [Capital Electric] will continue to serve its present consumers within the heavy dashed black line and will serve new consumers within the heavy dashed black line only under conditions further stipulated in this agreement. The principal service area of [Capital Electric] will be that area which lies outside the heavy dashed black line. The agreement shall apply only to area described by the map.
5. In the event there is need for either party to this agreement to serve a prospective consumer located in the area served by the other party, such service shall be supplied only with the written consent of the other party, provided that such individual exception shall not in any way alter the basic intentions of the parties, that each shall serve or offer service to the new consumers within their respective service areas.
8.It is mutually agreed by both parties that each will continue to serve customers it now has within the boundaries of the other party as stipulated and identified in the agreement. Such customer identification shall be from the books and records of each of the parties as of date of signing of this agreement. If an exchange of customers can be agreed upon by both parties and to the satisfaction of the consumer or consumers, such an exchange can be made.
9. This agreement will in no way affect [MDU’s] or [Capital Electric’s] needs or plans to construct transmission line facilities for the purpose of providing adequate electric power for the consumers in the area it serves.
10. This agreement is subject to approval, order, and other actions of the Public Service Commission of North Dakota or any other governmental agencies or bodies having jurisdiction over transactions and service herein covered.
11. It is realized that the foregoing instrument will not cover all conditions which may arise, but if followed in good faith by both parties, will serve as a guide to future developments and growth for both organizations, thus it is mutually agreed that this agreement will be reviewed at least once every five years for the purpose of evaluating its operation and to discuss possible modifications which may be desirable to more efficiently carry out the intent of both parties.

The area service agreement was subject to cancellation “by either party by giving twelve month’s written notice to the other party of such cancellation.” By letter dated June 26, 2002, MDU provided Capital Electric with “12 months written notice ... of Agreement cancellation for all areas covered by the Agreement outside the city limits of Bismarck and thereby not covered by Capital Electric’s limited electric franchise from the City of Bismarck.”

[¶ 5] In April 2005, the Boulder Ridge First Addition was annexed to Bismarck. Boulder Ridge is a subdivision in northwest Bismarck in section 16 of Township 139 North, Range 80 West, Haycreek Township. Capital Electric provides electric service in the rural areas outside and urban areas inside and outside Bismarck and had provided electric service to at least some customers in Boulder Ridge before the annexation. The Boulder Ridge area is “outside the heavy dashed black line” on the map attached to the area service agreement and was located in the “principal service area” of Capital Electric under the language of that agreement. Both MDU and Capital Electric sought to provide electric service to new customers in Boulder Ridge.

[¶ 6] In August 2005, MDU petitioned the Bismarck City Commission for a declaration of MDU’s franchise rights to provide electric service to Boulder Ridge. After a hearing before the Bismarck City Commission and a subsequent special meeting, the Commission issued November 2005 findings of fact and conclusions of law on MDU’s petition. The Commission concluded it was authorized to “decide questions regarding the franchises issued by it.” The Commission said MDU and Capital Electric had offered differing opinions regarding the meaning of the franchises and the area service agreement and decided the area service agreement was ambiguous. The Commission considered extrinsic evidence from the early 1960s to indicate the parties’ intent to allow Capital Electric a limited presence in the city, with MDU being the primary electric supplier. The Commission interpreted the area service agreement and related provisions of Capital Electric’s franchise to mean:

The intention of the parties in the Area Service Agreement and by extension, the intention of the City when it awarded a franchise to [Capital Electric], was for MDU to remain the main provider of electric services within the City, except for [Capital Electric’s] existing customers and any other customers or service areas conceded to [Capital Electric] by MDU. It was not the intention of the parties or of the City, that the map attached to the Area Service Agreement would be in place for 40 years without amendment but rather that it would be amended as the City grew to allow for healthy efficient growth for both utilities. It was not the intent of the City that [Capital Electric] would become the exclusive electric power supplier for all new areas of the City outside the line shown in the Area Service Agreement. It was the City’s intent, in including the Area Service Agreement in the [Capital Electric] Franchise, that the line on the Area Service Agreement map would move outward as the City grew.
[Capital Electric’s] Franchise is limited to those areas within the City that are described in the Area Service Agreement or any amendments thereto. The areas “within the City” described in the Area Service Agreement are as shown on the Area Service Agreement map outside the bold line and within the City. The “areas within the City” would also include any areas later annexed to the City that were named by an amendment to the Area Service Agreement. Customers of [Capital Electric] within the City in 1973 and any other customers specifically consented to by MDU would also be included under the express terms of the Area Service Agreement. [Capital Electric’s] Franchise does not grant the authority to serve all new areas of the City that are outside the bold line on the map without amendment to the Area Service Agreement. The ability of the parties to execute new amendments ended on June 26, 2003, the effective date of cancellation of the Area Service Agreement by MDU.

The Bismarck City Commission decided MDU was entitled to provide electric service to Boulder Ridge, subject to Capital Electric’s right to retain any existing customers in that area.

[¶ 7] In November 2005, Capital Electric brought a declaratory judgment action against Bismarck, MDU, and the PSC, seeking a declaration of Capital Electric’s rights under its franchise with Bismarck. The district court decided declaratory relief was not an available remedy to challenge Capital Electric’s claim that Bismarck’s decision was wrong. The court treated Capital Electric’s declaratory judgment action as an appeal, and in a March 2006 decision, the court concluded that Bismarck’s interpretation of the franchises to allow MDU to provide electric service in Boulder Ridge, subject to Capital Electric’s right to retain any existing customers in the area, was not arbitrary, capricious, or unreasonable. A June 2006 judgment dismissed Capital Electric’s declaratory judgment action and “denied” Capital Electric’s appeal.

[¶ 8] Meanwhile, in September 2005, Capital Electric filed a complaint against MDU with the PSC under N.D.C.C. § 49-03-01.3 of the Territorial Integrity Act, seeking to enjoin MDU from providing electric service to Boulder Ridge. After an administrative hearing, the PSC, in a June 2006 split decision, found MDU’s extension of its facilities into Boulder Ridge interfered with and constituted an unreasonable duplication of Capital Electric’s available facilities and services in Boulder Ridge. The PSC ordered MDU to stop providing and extending its electric service to Boulder Ridge and required MDU to sell its Boulder Ridge electric distribution facilities to Capital Electric. In October 2006, the district court affirmed the PSC decision. We stayed the October 2006 judgment affirming the PSC decision, and we consolidated Capital Electric’s appeal with MDU’s appeal.

[¶ 9] The district court had jurisdiction to hear a declaratory judgment action under N.D. Const, art. YI, § 8, and N.D.C.C. §§ 27-05-06 and 32-23-01; to hear an appeal from a city commission decision under N.D. Const, art. VI, § 8, N.D.C.C. §§ 27-05-06 and 28-34-01, and Tibert v. City of Minto, 2006 ND 189, ¶ 6, 720 N.W.2d 921; and to hear an appeal from the PSC decision under N.D. Const, art. VI, § 8, and N.D.C.C. §§ 27-05-06 and 28-32-42. The appeals are timely under N.D.R.App.P. 4(a) and N.D.C.C. § 28-32-^9. This Court has jurisdiction under N.D. Const, art. VI, §§ 2 and 6, and N.D.C.C. §§ 28-27-01 and 28-32-49.

II

[¶ 10] In Capital Electric’s appeal from the judgment upholding the Bismarck City Commission decision, Capital Electric argues the district court erred in deciding an action for declaratory relief was not a remedy available to challenge Bismarck’s decision, because N.D.C.C. § 32-23-02 authorizes a declaratory judgment action for the construction of a franchise. Capital Electric argues the district court erred in treating Capital Electric’s declaratory judgment action as an appeal, because no statutes authorize an appeal from Bismarck’s decision, and in the absence of a statute authorizing an appeal, declaratory relief is available to challenge Bismarck’s interpretation of the franchises. Capital Electric argues its franchise authorizes it to provide electric service to areas within its principal service area, which is outside the heavy dashed black line on the map attached to the area service agreement, as those areas are annexed to Bismarck.

[¶ 11] Bismarck and MDU respond that Capital Electric is not seeking a declaration of rights before the rights have been violated as required by an action for declaratory relief, but is challenging Bismarck’s interpretation of the franchises, and an appeal is authorized by N.D.C.C. § 27-05-06(4) and by N.D.C.C. ch. 28-34. Bismarck and MDU nevertheless argue Capital Electric was not prejudiced by the district court’s consideration of the action as an appeal, because the court’s analysis under the arbitrary, capricious, and unreasonable standard is the same whether the case is treated as an appeal or as a declaratory judgment action. They argue the heavy dashed black line on the map attached to the area service agreement was intended to move outward as new areas were annexed to Bismarck. They claim MDU has an exclusive right to provide electric service to Boulder Ridge and Bismarck’s interpretation of the franchises to allow MDU to provide electric service to new customers in Boulder Ridge was not arbitrary, capricious, or unreasonable.

[¶ 12] Municipalities possess only those powers expressly granted by constitution or statute or necessarily implied from an express grant. See Bigwood v. City of Wahpeton, 1997 ND 124, ¶ 10, 565 N.W.2d 498; Ebach v. Ralston, 469 N.W.2d 801, 804 (N.D.1991); Munch v. City of Mott, 311 N.W.2d 17, 20 (N.D.1981); Roeders v. City of Washburn, 298 N.W.2d 779, 782 (N.D.1980); City of Fargo v. Cass County, 286 N.W.2d 494, 500 (N.D.1979); City of Fargo v. Harwood Twp., 256 N.W.2d 694, 697 (N.D.1977). Under N.D. Const, art. VII, § 11, “[t]he power of the governing board of a city to franchise the construction and operation of any public utility or similar service within the city shall not be abridged by the legislative assembly.” Section 40-05-01(57), N.D.C.C., authorizes the governing body of a municipality to “grant franchises ... to extend for a period of not to exceed twenty years, and to regulate the use of the same, franchises granted pursuant to the provisions of this title not to be exclusive or irrevocable but subject to the regulatory powers of the governing body.” Section 40-05.1-06(10), N.D.C.C., also authorizes home rule cities “to grant and regulate franchises” for utilities.

[¶ 13] Bismarck has enacted an ordinance that requires electric suppliers to have a franchise from the city before providing electric service within the city. City of Bismarck, N.D., Code of Ordinances § 10-11-01. MDU has a non-exclusive franchise to provide electric service in Bismarck without any geographic limitations, and Capital Electric has a non-exclusive franchise to provide electric service in Bismarck with some geographic limitations. Under North Dakota law, Capital Electric must have a franchise to serve Boulder Ridge after that area was annexed to Bismarck. See Montana-Dakota Utils. Co. v. Divide County Sch. Dist., 193 N.W.2d 723, 730-31 (N.D.1971) (holding right of electric cooperative without franchise to provide electric service to area outside city terminated when area became annexed to city that required franchise to provide service within city). If both MDU and Capital Electric have franchises to provide electric service to Boulder Ridge, the PSC has authority to decide whether either entity’s extension of services in Boulder Ridge will unreasonably interfere with and duplicate services of the other under N.D.C.C. § 49-03-01.3 and this Court’s decisions culminating in Cass County Elec. Coop. v. N.S.P., 419 N.W.2d 181 (N.D.1988), and N.S.P. v. P.S.C., 452 N.W.2d 340 (N.D.1990). In Cass County Elec. Coop., 419 N.W.2d at 183, both a public utility and a rural electric cooperative were authorized by the City of Fargo to serve the South Pointe area that had been annexed to Fargo. This Court decided the PSC must look at both entities’ existing facilities in the entire surrounding area to determine whether the public utility’s extension of services into South Pointe would constitute an unreasonable duplication of capital-intensive facilities and services already provided by the rural electric cooperative and remanded for further proceedings. Id. at 187. After remand, this Court held that a preponderance of evidence supported the PSC’s decision that the public utility’s extension of services into the South Pointe area was a duplication of the electric cooperative’s facilities in the area. N.S.P., 452 N.W.2d at 345.

[¶ 14] Under the foregoing legal principles, the central issue in this case involves the meaning of the geographic limitations in Capital Electric’s franchise and whether that franchise effectively precludes Capital Electric from providing electric service to new customers in Boulder Ridge.

[¶ 15] A franchise is a contract. Western Elec. Co. v. City of Jamestown, 47 N.D. 157, 169-70, 181 N.W. 363, 367-68 (1921); 12 Eugene McQuillin, The Law of Municipal Corporations § 34:5 (3rd ed.2006); 36 Am.Jur.2d Franchises from Public Entities § 6 (2001). The interpretation of a written contract to determine its legal effect is a question of law for a court to decide, and on appeal, this Court will independently examine and interpret the contract to determine whether it has been erroneously construed. See Peoples State Bank of Truman, Inc. v. Molstad Excavating, Inc., 2006 ND 183, ¶ 19, 721 N.W.2d 43; City of Bismarck v. Mariner Constr., Inc., 2006 ND 108, ¶ 11, 714 N.W.2d 484; Bemabucci v. Huber, 2006 ND 71, ¶ 15, 712 N.W.2d 323; Tri-State Ins. Co. v. Commercial Group West, LLC, 2005 ND 114, ¶ 10, 698 N.W.2d 483.

[¶ 16] Except as otherwise provided by law, public and private contracts are interpreted by the same rules of interpretation. N.D.C.C. § 9-07-01. A contract’s language governs its interpretation if the language is clear and explicit and does not involve an absurdity. N.D.C.C. § 9-07-02. The object of interpreting and construing a contract is to ascertain and give effect to the parties’ mutual intention at the time of contracting. N.D.C.C. § 9-07-03. The parties’ intention must be ascertained from the writing alone, if possible. N.D.C.C. § 9-07-04. A contract must be construed as a whole to give effect to each provision, if reasonably possible. N.D.C.C. § 9-07-06. Several contracts relating to the same subject between the same parties and as part of one transaction are construed together. N.D.C.C. § 9-07-07. A contract must be interpreted to make it lawful, operative, definite, reasonable, and capable of being carried into effect.. N.D.C.C. § 9-07-08. Words in a contract must be construed in their ordinary and popular sense. N.D.C.C. § 9-07-09. A contract may be explained by reference to the circumstances under which it was made and the matter to which it relates. N.D.C.C. § 9-07-12. Particular clauses of a contract are subordinate to its general intent. N.D.C.C. § 9-07-15. If a contract is uncertain, the language of the contract should be interpreted most strongly against the party who caused the uncertainty to exist; however, for contracts between a public entity and a private party, it is presumed that all uncertainty was caused by the private party. N.D.C.C. § 9-07-19; See Mariner Constr., Inc., 2006 ND 108, ¶ 11, 714 N.W.2d 484.

[¶ 17] “If a written contract is unambiguous, extrinsic evidence is not admissible to contradict the written language.” Lire, Inc. v. Bob’s Pizza Inn Rests., Inc., 541 N.W.2d 432, 434 (N.D.1995). If a written contract is ambiguous, however, extrinsic evidence may be considered to show the parties’ intent. Id. “Whether or not a contract is ambiguous is a question of law.” Id. An ambiguity exists when rational arguments can be made in support of contrary provisions as to the meaning of the language in question. Id.

[¶ 18] Our rules of interpretation are consistent with the well-established general principle that franchises are construed against the grantee and in favor of the public. See 12 Eugene McQuillin, The Law of Municipal Corporations, at § 34:62; 36 Am.Jur.2d Franchises from Public Entities, at § 24; 37 C.J.S. Franchises § 19 (1997). Moreover, in Western Elec. Co., 47 N.D. at 172-73, 181 N.W. at 369, this Court ruled that parties to an electric distribution franchise, by their acts and conduct, had adopted a practical construction of the franchise that controlled whether a city was required to pay an electric company for electricity furnished to the city for a room in the city hall. See also Old Colony Trust Co. v. City of Omaha, 230 U.S. 100, 118, 33 S.Ct. 967, 57 L.Ed. 1410 (1913) (parties’ practical interpretation of franchise for any considerable period before controversy arises is of great, if not controlling, influence). See generally 36 Am.Jur.2d Franchises from Public Entities, at § 25.

[¶ 19] This Court has also recognized that although the enactment of a municipal ordinance is a legislative function, the interpretation of an ordinance by a municipality’s governing body is a quasi-judicial act, and we have frequently recognized the authority of municipalities to interpret their ordinances. See Bigwood, 1997 ND 124, ¶ 10, 565 N.W.2d 498; A & H Servs., Inc. v. City of Wahpeton, 514 N.W.2d 855, 857-58 (N.D.1994); Mini Mart, Inc. v. City of Minot, 347 N.W.2d 131, 136 (N.D.1984); Munch, 311 N.W.2d at 22. We also have said a court’s review of a municipality’s interpretation of an ordinance is limited by the doctrine of separation of powers, and courts will not substitute their judgment for that of the municipality’s governing body in interpreting or applying ordinances unless the municipality’s governing body acted arbitrarily, capriciously, or unreasonably. GO Comm. ex rel. Hale v. City of Minot, 2005 ND 136, ¶ 8, 701 N.W.2d 865 (citing A & H Servs., 514 N.W.2d at 858). In Hentz v. Elma Twp. Bd., 2007 ND 19, ¶4, 727 N.W.2d 276 (quoting City of Fargo v. Ness, 551 N.W.2d 790, 792 (N.D.1996)), we recently explained this Court will “fully review the interpretation of an ordinance, and a governing body’s failure to correctly interpret and apply controlling law constitutes arbitrary, capricious, and unreasonable conduct.”

[¶ 20] We have applied those standards in actions for a declaratory judgment, see GO Comm, ex rel. Hale v. City of Minot, 2005 ND 136, ¶¶ 1, 8, 701 N.W.2d 865; Bigwood, 1997 ND 124, ¶¶8-10, 565 N.W.2d 498; for injunctive relief, see Ness, 551 N.W.2d at 791-92; A & H Seros., 514 N.W.2d at 856-58; Munch, 311 N.W.2d at 20-23; for mandamus, see Mini Mart, 347 N.W.2d at 133, 141-42; and in appeals from decisions by a municipality. See Tibert, 2006 ND 189, ¶8, 720 N.W.2d 921; Pic v. City of Grafton, 1998 ND 202, ¶ 11, 586 N.W.2d 159.

[¶ 21] Here, we need not decide whether the district court erred in dismissing Capital Electric’s declaratory judgment action and treating that action as an appeal, because under either procedure we conclude Bismarck failed to correctly interpret and apply controlling law in construing Capital Electric’s franchise, and therefore Bismarck’s interpretation was arbitrary, capricious, and unreasonable.

[¶ 22] The plain language of the franchises granted both Capital Electric and MDU “non-exclusive” franchises to provide electric service in Bismarck as “now, or hereafter constituted.” MDU’s franchise was not limited geographically, but Capital Electric’s franchise was “limited geographically to the areas within the city described in the Area Service Agreement dated July 5, 1973 ... as modified by Amendment dated October 25, 1990, and any future amendments.” Capital Electric’s franchise provided that Capital Electric would “enjoy all of the privileges and rights described in the Area Service Agreement,” and if that agreement was cancelled by either electric supplier during the term of Capital Electric’s franchise, “all privileges, rights, obligations and restrictions as therein stated shall continue to apply to both” Capital Electric and MDU. The area service agreement allowed MDU to “serve those consumers within the area bounded by the heavy dashed black line on the attached map, ... as well as any new consumers who come into that area” and allowed Capital Electric to “continue to serve its present consumers within the heavy dashed black line and serve new consumers within the heavy dashed black line only under conditions further stipulated” in that agreement. The agreement further provided that Capital Electric’s “principal service area ... will be that area which lies outside the heavy dashed black line,” which includes Boulder Ridge. The area service agreement said Capital Electric and MDU “mutually agreed ... that each will continue to serve customers it now has within the boundaries of the other party,” and:

In the event there is need for either party to this agreement to serve a prospective consumer located in the area served by the other party, such service shall be supplied only with the written consent of the other party, provided that such individual exception shall not in any way alter the basic intentions of the parties, that each shall serve or offer service to the new consumers within their respective service areas.

The parties recognized the agreement would not cover all conditions that may arise, but if followed in good faith by both parties, it would serve to guide future developments and growth for both organizations. The parties agreed to review the agreement once every five years to evaluate its operation and discuss modifications to carry out the intent of both parties.

[¶ 23] Bismarck interpreted the franchises to mean MDU would be the main provider of electric service within Bismarck except for Capital Electric’s existing customers and the heavy dashed black line that generally separated the parties’ respective service areas on the map attached to the area service agreement would move outward as Bismarck grew. Bismarck said it did not intend for Capital Electric to be the exclusive electric supplier for all new areas outside the heavy dashed black line on the map attached to the area service agreement. Bismarck decided MDU was entitled to provide electric distribution service to Boulder Ridge, subject to Capital Electric’s right to retain any existing customers in that area, concluding:

[Capital Electric’s] Franchise is limited to those areas within the City that are described in the Area Service Agreement or any amendments thereto. The areas “within the City” described in the Area Service Agreement are as shown on the Area Service Agreement map outside the bold line and within the City. The “areas within the City” would also include any areas later annexed to the City that were named by an amendment to the Area Service Agreement. Customers of [Capital Electric] within the City in 1973 and any other customers specifically consented to by MDU would also be included under the express terms of the Area Service Agreement. [Capital Electric’s] Franchise does not grant the authority to serve all new areas of the City that are outside the bold line on the map without amendment to the Area Service Agreement. The ability of the parties to execute new amendments ended on June 26, 2003, the effective date of cancellation of the Area Service Agreement by MDU.

[¶ 24] We conclude Bismarck’s interpretation of the franchises ignores the plain language of the franchises. Nothing in the plain language of the franchises authorizes either entity to be the exclusive provider of electric service in Boulder Ridge upon annexation to Bismarck. Rather, the plain language of both franchises gives both entities a “non-exclusive” franchise in Bismarck as “now, or hereafter constituted.” The plain language of MDU’s franchise does not include any geographic limitations and does not preclude the extension of MDU’s franchise to areas that are subsequently annexed to Bismarck, including Boulder Ridge. The geographic limitation in Capital Electric’s franchise, with the attached map, specifically authorizes Capital Electric to serve the Boulder Ridge area, albeit before that area was annexed to Bismarck. The area service agreement specified that the “basic intentions of the parties [were] that each shall serve or offer service to the new consumers within their respective service areas,” and Capital Electric’s “principal service area” was the area outside the heavy dashed black line, which includes Boulder Ridge. Nothing in the plain language of the franchises indicates the parties intended the heavy dashed black line to move outward as Bismarck grew. Rather, the language of the geographic limitation in Capital Electric’s franchise specified that if the area service agreement were cancelled by either party during the term of Capital Electric’s franchise, “all privileges, rights, obligations and restrictions as therein stated shall continue to apply to both” Capital Electric and MDU.

[¶ 25] Bismarck’s reliance on extrinsic evidence from the early 1960s to show intent in 1973 and 1993 is misplaced, because contracts are construed to give effect to the parties’ mutual intention “at the time of contracting.” N.D.C.C. § 9-07-03. Capital Electric did not receive an electric franchise from Bismarck in the early 1960s; rather, Capital Electric first received a franchise from Bismarck in 1973, and the franchise was renewed in 1993.

[¶ 26] Moreover, the records on these appeals include evidence that between 2003 and 2005, Capital Electric served areas that had been annexed to Bismarck and were outside the heavy dashed black line on the map attached to the area service agreement without objection by Bismarck or MDU. In construing the scope of Capital Electric’s franchise, the parties’ practical interpretation of the franchise is entitled to some weight. See Old Colony Trust Co., 230 U.S. at 118, 33 S.Ct. 967; Western Elec. Co., 47 N.D. at 172-73, 181 N.W. at 369.

[¶ 27] We conclude the “non-exclusive” franchises, when construed as a whole and in conjunction with the area service agreement, authorize both Capital Electric and MDU to provide electric service in Bismarck as “now, or hereafter constituted” and Capital Electric’s franchise does not preclude it from serving Boulder Ridge. The practical effect of interpreting the franchises to give both Capital Electric and MDU a franchise in the Boulder Ridge area is that the issue of unreasonable duplication is subject to the jurisdiction of the PSC under N.D.C.C. § 49-03-01.3 and this Court’s decisions culminating in Cass County Elec. Coop., 419 N.W.2d at 181, and N.S.P., 452 N.W.2d at 340. In the absence of any explicit language providing otherwise, we believe that interpretation ultimately favors the public’s interest in preventing unreasonable duplication of facilities, while recognizing a municipality’s constitutional authority to grant a franchise. That interpretation does not interfere with Bismarck’s constitutional authority to issue a utility franchise; rather, that interpretation recognizes that Bismarck has granted both Capital Electric and MDU a franchise for Boulder Ridge. We conclude Bismarck erred in construing Capital Electric’s non-exclusive franchise to provide electric service in Bismarck as “now, or hereafter constituted” to preclude Capital Electric from providing electric service to Boulder Ridge. We hold that both Capital Electric and MDU have franchises to serve Boulder Ridge, and we reverse the district court judgment in Capital Electric’s appeal.

III

[¶ 28] In MDU’s appeal from the district court judgment affirming the PSC’s decision, MDU argues the PSC’s decision failed to consider Bismarck’s authority to franchise utility services within a city. Several of MDU’s arguments are premised on the incorrect assumption that Capital Electric does not have a franchise to serve Boulder Ridge. To the extent MDU argues the PSC’s decision failed to consider Bismarck’s authority to franchise utility services in Bismarck, we reject those arguments because both Capital Electric and MDU have a franchise to serve the Boulder Ridge area involved in this proceeding. The PSC therefore has jurisdiction under N.D.C.C. § 49-03-01.3 and this Court’s decisions in Cass County Elec. Coop., 419 N.W.2d at 181, and N.S.P., 452 N.W.2d at 340.

[¶ 29] MDU also argues the PSC’s findings of fact are not supported by a preponderance of the evidence and the PSC’s findings do not sufficiently address MDU’s evidence.

[¶ 30] An appeal from a decision by the PSC is governed by the Administrative Agencies Practice Act in N.D.C.C. ch. 28-32. N.S.P., 452 N.W.2d at 342. Under N.D.C.C. § 28-32-46, a district court must affirm an administrative agency order unless:

1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8. The conclusions of law and order of the agency do not sufficiently explain the agency’s rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

[¶ 31] In an appeal from a district court’s decision on an administrative appeal, this Court reviews the agency order in the same manner as the district court. N.D.C.C. § 28-32-49. The agency’s decisions on questions of law are fully reviewable. Cass County Elec. Coop., 419 N.W.2d at 184. In reviewing an agency’s findings of fact, however, we do not substitute our judgment for that of the agency or make independent findings. N.S.P., 452 N.W.2d at 343; Power Fuels, Inc. v. Elkin, 283 N.W.2d 214, 220 (N.D.1979). In Power Fuels, at 220, we explained the constitutional underpinnings for our deferential standard of review of an agency’s findings of fact:

In construing the “preponderance of the evidence” standard to permit us to apply the weight-of-the-evidence test to the factual findings of an administrative agency, we do not make independent findings of fact or substitute our judgment for that of the agency. We determine only whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record.

[¶ 32] The PSC’s decision was issued under N.D.C.C. § 49-03-01.3 of the Territorial Integrity Act, which provides, in part:

Sections 49-03-01 through 49-03-01.5 shall not be construed to require any such electric public utility to secure such order or certificate for an extension of its electric distribution lines within the corporate limits of any municipality within which it has lawfully commenced operations; provided, however, that such extension or extensions shall not interfere with existing services provided by a rural electric cooperative or another electric public utility within such municipality; and provided duplication of services is not deemed unreasonable by the commission.

[¶ 33] In Cass County Elec. Coop., 419 N.W.2d at 186-87, this Court held that in determining interference with existing services and unreasonable duplication of services, the PSC must not look solely at actual customers in the area. Rather, the PSC must look at the existing electric facilities that the rural electric cooperative and the public utility have in place in the area and determine whether the extension of services into the area would constitute an unreasonable duplication of capital-intensive facilities and services provided by the other entity. Id. The question of “ ‘which electric suppliers’ facilities are actually duplicative or wasteful’ is one of fact for the PSC to determine.” N.S.P., 452 N.W.2d at 345.

[¶ 34] Here, the PSC found:

13. Before Boulder Ridge was platted and annexed to the City of Bismarck, Capital was the only provider of electric service in the part of Haycreek Township now named Boulder Ridge. Capital provided electric service to a location in Section 16 since 1949. In 2005 that service extension was removed in preparation for the development of Boulder Ridge. Capital had other services in Section 16, since the mid-1990s, still in place in 2005. Capital had three-phase lines along the west and south sides of Section 16 since 1973, still in place in 2005.
14. At the time Boulder Ridge was annexed, Capital’s service in the subdivision was limited to two street lights and a CATV booster located in the road right-of-way along 43rd Avenue. Previous service to a pasture well by Capital within Boulder Ridge was abandoned prior to the annexation of Boulder Ridge.
15. Both Montana-Dakota and Capital extended distribution facilities to serve customer locations within Boulder Ridge. Montana-Dakota constructed its distribution facilities by extending a three-phase feeder line approximately 2,000 feet from a location in French’s Addition south of 43rd Avenue and east of Washington Street. Capital extended distribution facilities form [sic] its three-phase feeder lines location along Washington Street and 43rd Avenue. Montana-Dakota’s extension of its underground feeder line crossed Capital’s overhead feeder line along 43rd Avenue. Montana-Dakota was in the process of installing its facilities at the time Capital began installing its facilities.
16. Capital has a three-phase framework around the area of Capital’s northwest Bismarck service area, served from 4 different substations. Capital’s facilities nearest to Boulder Ridge are three-phase facilities immediately contiguous to Boulder Ridge along the west side of Section 16 (east of Washington Street) and along the south side of Section 16 (North of 43rd Avenue) of Haycreek Township. Capital’s three-phase facilities were in place before Boulder Ridge was platted and before part of Boulder Ridge was annexed to the City of Bismarck. The facilities were also in place before Montana-Dakota extended its facilities to provide electric distribution services in Boulder Ridge.
17. Capital’s feeder lines located along 43rd Avenue and Washington Street were built prior to 1973 to tie together Capital’s substations at other locations. The use of these feeder facilities has not changed in the last 20 years. Prior to 1973, Capital did not have a franchise with the City of Bismarck or an Area Service Agreement with Montana-Dakota.
18. Capital has substantial facilities within the corporate limits of Bismarck and within a two-mile radius of Boulder Ridge and in the area designated as “The principal service area of the Cooperative [Capital]” under the 1973 Area Service Agreement.
19. Capital is the only provider of electric service in areas outside the corporate limits of Bismarck within a two mile radius of Boulder Ridge.
20. Capital included “The principal service area of the Cooperative [Capital]” under the 1973 Area Service Agreement in its long range plans and has made substantial investments to serve it. Capital has invested in excess of 7 million dollars in the area northwest of Bismarck, west of Highway 83, including Boulder Ridge. These facilities were planned and constructed to provide an electric system for new developments, such as Boulder Ridge.
21. Capital’s framework is a reliable system of substations and distribution lines that can be operated in a looped fashion. In the event of an outage, Capital can provide looped service to Boulder Ridge. Capital’s three-phase framework in the area northwest of Bismarck, west of Highway 83, is supplied from four different substations, the closest of which is within one mile of Boulder Ridge. Capital’s system includes a 5th delivery substation under construction.
22. Montana-Dakota’s facilities nearest to Boulder Ridge are in the southerly part of French’s 1st Addition, approximately 1/2 mile from the southerly boundary of Boulder Ridge. It is off these facilities that Montana-Dakota extended its facilities to Boulder Ridge. Montana-Dakota has no other facilities closer to Boulder Ridge. Montana-Dakota’s facilities in Boulder Ridge cannot be operated in a looped fashion in the event of an outage.
23. Montana-Dakota’s extension of facilities into Boulder Ridge crossed Capital’s facilities in two places, in French’s 1st Addition and on the north side of 43rd Avenue in Boulder Ridge and Montana-Dakota’s extension of its facilities ran parallel to Capital’s facilities in two places, in French’s 1st Addition an[d] on the north side of 43rd Avenue in Boulder Ridge.
24. Boulder Ridge is entirely surrounded by areas served by Capital.
25. The Commission finds Montana-Dakota’s extension of its facilities crossing and running parallel to Capital’s facilities in the northerly part of original French’s 1st Addition, crossing 43rd Avenue into Boulder Ridge, and crossing and running parallel to Capital’s facilities on the north side of 43rd Avenue, interferes with and constitutes an unreasonable duplication of investment and available facilities and services in Boulder Ridge provided by Capital.
26. The Commission finds that service by Capital would best promote and serve orderly and economic development of electric service in the Boulder Ridge subdivision. Capital is able to extend service to Boulder Ridge through a shorter extension at a lower cost. Service by Capital to Boulder Ridge will not result in checker boarding of customers served by Montana-Dakota and Capital.
27. The Commission finds Montana-Dakota’s extension of its facility to Boulder Ridge, an area not contiguous to Montana-Dakota’s existing service areas, would create a checkerboard of service areas.
28. The Commission finds Capital is best able to serve Boulder Ridge economically due to the nature and extent of its investment in plant, facilities, framework, and system.
29. The Commission finds Montana-Dakota’s extension of its electric distribution lines into Boulder Ridge 1st Addition interferes with and constitutes an unreasonable duplication of investment and services provided by Capital.

[¶ 35] Under our deferential standard of review of agency decisions, we conclude a reasoning mind reasonably could have decided the PSC’s findings about interference with existing services and unreasonable duplication of services were supported by the weight of the evidence from the entire record. We do not reweigh or reevaluate the evidence regarding duplication that was presented at the PSC hearing, and we do not function as a super board and second guess the PSC’s findings. We conclude the PSC’s decision is supported by a preponderance of the evidence, and we affirm the district court judgment affirming the PSC’s decision.

IV

[¶ 36] Because of our resolution of these appeals, it is not necessary to address other issues raised by the parties. We reverse the district court judgment upholding Bismarck’s decision that Capital Electric does not have a franchise to serve Boulder Ridge, and we affirm the district court judgment affirming the PSC’s decision.

[¶ 37] CAROL RONNING KAPSNER, Acting C.J., WILLIAM F. HODNY, S.J., RONALD E. GOODMAN, S.J., and DANIEL J. CROTHERS, J., concur.

[¶ 38] The Honorable RONALD E. GOODMAN, S.J., and WILLIAM F. HODNY, S.J., sitting in place of VANDE WALLE, C.J., and MARING, J., disqualified.


author: KONENKAMP, Justice.

text:
    2007 SD 64
    Lana E. DAHL, Plaintiff and Appellant, v. Wade A. DAHL, Defendant and Appellee.
    No. 24301.
    Supreme Court of South Dakota.
    Considered on Briefs April 23, 2007.
    Decided June 27, 2007.

      Al Arendt, Pierre, South Dakota, Attorney for plaintiff and appellant.
    Mark A. Moreno of Schmidt, Schroyer, Moreno, Lee & Bachand, P.C., Pierre, South Dakota, Attorneys for defendant and appellee.
   KONENKAMP, Justice.

[¶ 1.] In this child support action, a parent contends that the child support referee and circuit court erred in denying her motion for modification. We reverse and remand.

Background

[¶ 2.] Lana E. Dahl and Wade A. Dahl were married in 1983. They had two children during the marriage: a son, born June 8, 1988, and a daughter, born August 1, 1990. Lana sued Wade for divorce. In resolving their differences, the parties entered into a Property Settlement Agreement (Agreement), dated July 26, 2004. Each was represented by counsel. A judgment and decree of divorce incorporated the Agreement.

[¶ 3.] The Agreement divided the parties’ property and debts. Each agreed not to seek spousal support from the other. Lana received primary physical custody of their daughter, and Wade received primary physical custody of their son. They would “share joint legal custody of their minor children.” In addressing child support, the parties entered into an arrangement that would later give rise to the present dispute: “In recognition of the parties’ mutual obligations for child support, and their respective incomes, the parties shall not pay any child support owed by one to the other.” The Agreement recited that each “does release absolutely and forever all right and claim of alimony, support, medical payments, maintenance or otherwise in consideration of the cash obligations and transfer of property as herein above set forth.” They also agreed that each “shall not make application for payment of alimony, medical payments or other periodic payments.”

[¶ 4.] In May 2006, their son graduated from high school and in June turned eighteen. Shortly afterwards, Lana petitioned for modification of the parties’ child support obligations. She requested that Wade be ordered to pay support for their daughter. The matter was heard by a child support referee, with both parties appearing telephonically. Lana asserted that a change in circumstances existed because their son turned eighteen and graduated from high school. She contended that the Agreement only relieved each parent of their obligation to pay child support to the other based on the parties’ “mutual obligation of support” for their minor children. Because Wade no longer had a support obligation for their son, Lana argued that there was no “mutual obligation of support.”

[¶ 5.] Wade responded that the issue of child support was settled with the executed Agreement. When they agreed not to seek support from each other, they were both fully aware that their son would turn eighteen three years before their daughter. Moreover, according to Wade, he “gave up legitimate property and support interests in exchange for [Lana’s] right to seek support in the future for [their daughter], and ... since [she] could financially support [their daughter], [Lana] should be required to live up to her end of the Agreement.”

[¶ 6.] The Referee noted that the parties were represented by “competent counsel” when they executed their Agreement. He found that the language of the Agreement “does appear to take into account the argument and perception that the parties were making a settlement that called for no support to be paid now or in the future.” Further, he observed that the Agreement stated that the parties gave up the right to seek “payment of alimony, support, medical payments or otherwise,” in consideration of the property transfers and cash obligations.

[¶ 7.] The Referee also took into consideration the policy reasons why child support agreements are always subject to modification. He concluded, however, that the policy concerns were not present here because Lana had sufficient income to support their daughter and in light of the language of the parties’ Agreement. Moreover, the Referee recognized that Lana was aware that their daughter would be fifteen when their son turned eighteen and “could have easily” included language in the Agreement that “it was her intent to come back and seek support for” their daughter. Based on the language of the Agreement and the current financial circumstances of the parties, the Referee denied Lana’s request for modification of child support.

[¶ 8.] Lana filed an objection to the Referee’s report in circuit court. A hearing was held, and the court upheld the Referee’s report and recommendation. Lana now appeals to this Court, arguing that the circuit court erred when it (1) failed to issue findings of fact and conclusions of law; and (2) affirmed the Referee’s decision not to award child support.

Standard of Review

[¶ 9.] Findings of fact of a child support referee are reviewed under the clearly erroneous standard of review. Mathis v. Mathis, 2000 SD 59, ¶ 7, 609 N.W.2d 773, 774 (quoting Hendricksen v. Harris, 1999 SD 130, ¶ 7, 600 N.W.2d 180, 181 (citing Permann v. Dept, of Labor, Unemployment Ins. Din., 411 N.W.2d 113, 116 (S.D.1987); Janke v. Janke, 467 N.W.2d 494, 496-97 (S.D.1991))). Questions of law, however, are reviewed de novo. Id. (citations omitted). “When the circuit court has adopted a child support referee’s findings and conclusions, we apply the clearly erroneous standard of review to the findings and give no deference to conclusions of law.” In re Loomis, 1998 SD 113, ¶ 6, 587 N.W.2d 427, 429 (citing Wolff v. Weber, 1997 SD 52, ¶7, 563 N.W.2d 136, 138 (citing Whalen v. Whalen, 490 N.W.2d 276, 280 (S.D.1992)); Janke, 467 N.W.2d at 497).

Analysis and Decision

1. Findings of Fact and Conclusions of Law

[¶ 10.] Lana first contends that the circuit court was required to issue findings of fact and conclusions of law in support of its decision to affirm the Referee’s report and recommended order. According to Lana, because the Referee’s report does not contain anything “denominated as findings or conclusions,” the circuit court was required, under SDCL 15-6 — 52(a), to issue findings and conclusions.

[¶ 11.] Although the Referee’s report does not contain sections entitled “Findings of Fact” and “Conclusions of Law,” a review of the report reveals that the Referee made factual findings and legal conclusions. The report discusses the claims of the parties, the pertinent background information, the issues presented, and the arguments made. Thereafter, the report states that the Referee considered the terms of the Agreement, possible policy concerns, and the parties’ circumstances. Also, the report contains the Referee’s legal ruling based on the findings. In sum, the report contains findings of fact and conclusions of law, even if it did not entitle them so.

[¶ 12.] Clearly, SDCL 25-7A-22 permits a court to “adopt” a referee’s report after holding a hearing on and reviewing a party’s objection to the report. “The findings of a referee, to the extent that the court adopts them, shall be considered as the findings of the court.” SDCL 15-6-52(a). Circuit courts are not required to issue separate findings of fact and conclusions of law after adopting a referee’s report. Because the report here contains factual findings and legal conclusions, it was not error for the court to adopt the Referee’s report and recommended order without issuing separate findings and conclusions.

2. Mutual Agreement to Seek No Support

[¶ 13.] From Lana’s perspective, the Referee’s report, adopted by the court, forecloses her from any future child support modifications. She argues that the court had the authority to modify the Agreement and was required to establish Wade’s obligation to pay support for their daughter. She also contests the rationale used by the Referee in which he denied her request for modification because she makes enough money to pay for her daughter’s support herself. She also challenges the Referee’s conclusion that support is not warranted because Wade gave up property and support interests in making the Agreement.

[¶ 14.] Wade did not dispute that the son’s change in status was a substantial change in circumstances. SDCL 25-7A-22(1). He contends, however, that Lana still had the burden of showing that a modification was called for under the circumstances, a burden she did not meet. Wade relies on the language of the parties’ Agreement. Its terms, Wade asserts, clearly express the parties’ intent that each parent would not seek child support for the child in his or her primary care. He believes there is no violation here of public policy by enforcing the terms of the Agreement, as the Agreement is always subject to future modification if called for under the circumstances.

[¶ 15.] In our analysis, we start with the proposition that parents have a statutory duty to support their children. Vander Woude v. Vander Woude, 501 N.W.2d 361, 363 (S.D.1993) (citing SDCL 25-5-18.1; SDCL 25-7-6.1); see also Kost v. Kost, 515 N.W.2d 209, 214 (S.D.1994). Circuit courts retain jurisdiction to modify a divorce agreement as it relates to the “custody, care, and education of the children of the marriage as may seem necessary or proper[.]” SDCL 25-1-45; Thomas v. Hauge, 2002 SD 12, ¶¶ 9-10, 639 N.W.2d 520, 522-23 (per curiam); see also Jacobson v. Jacobson, 2000 SD 60, ¶ 12, 611 N.W.2d 210, 213-14 (citing Jameson v. Jameson (Jameson II), 306 N.W.2d 240, 242 (S.D.1981); State ex rel. Larsgaard v. Larsgaard, 298 N.W.2d 381, 383 (S.D.1980)).

[¶ 16.] While the original Agreement provided that neither parent would pay support to the other, this Agreement was expressly premised on a “mutual obligation of support.” Wade no longer has an obligation to support their son, a condition which, as Wade agreed, constitutes a substantial change in circumstances under SDCL 25-7A-22(l). Wade acknowledges that he has a statutory obligation to support his daughter. See SDCL 25-5-18.1; SDCL 25-7-6.1. Nonetheless, Wade argues that he should not be required to pay support for their daughter because the Agreement was intended to waive current and future child support, because he gave up property interests in consideration for this understanding, because Lana earns considerably more money than he does and thus she has an independent ability to adequately support their daughter, and because the change in circumstances here is insufficient to justify modifying child support.

[¶ 17.] It is immaterial that Wade claims to have given up property interests in consideration for not having to pay support for his daughter. Courts having considered this question conclude that parents cannot contract away obligations for future child support. See Reimer v. Reimer, 502 N.W.2d 231, 233 (N.D.1993) (agreement relinquishing property rights in lieu of having to pay support was invalid); Kelley v. Kelley, 248 Va. 295, 449 S.E.2d 55, 56 (1994) (agreement declared null and void where husband relinquished all his interest in the marital home in return for not having to pay child support). Furthermore, because both parents have an obligation to support their children, Lana’s independent financial means will not relieve Wade of his support obligations. By statute, child support is based on both parent’s income levels and requires that both parents provide support within their means. SDCL 25-7-6.1; see Billion v. Billion, 1996 SD 101, ¶ 41, 553 N.W.2d 226, 235.

[¶ 18.] As we stated in Thomas,

[T]he father may not by contract avoid his duty to support and educate his minor children, and a wife cannot contract away the right of children to be supported by their father. An agreement between the father and mother which attempts to relieve the father of his obligation is, as between the father and children, ineffective as a violation of public policy; and where the father and mother are equally and jointly charged by statute for the maintenance of their children, an agreement by the mother to perform her statutory duty does not discharge the father’s statutory obligation.

2002 SD 12, ¶ 8, 639 N.W.2d at 522 (citation omitted); Estes v. Albers, 504 N.W.2d 607, 609 (S.D.1993); see also Knorr v. Knorr, 527 Pa. 83, 588 A.2d 503, 505 (1991) (parents’ “right to bargain for themselves is their own business”; however, “[t]hey cannot in that process set a standard that will leave their children short”). Although a stipulation may be valid and fair when executed, it may not be later when circumstances change.

[¶ 19.] Wade argues, in the alternative, that if the support order is to be modified, he requests an equitable offset for the value of the property interests and support he gave up as part of the Agreement. He relies on several North Dakota Supreme Court cases, which have held that “as a matter of equity, a divorcing parent attempting to satisfy [their] child support obligation by foregoing a rightful share of the marital property [are] entitled to offset the amount of marital property given up against [their] child support obligation.” See Hewson v. Hewson, 708 N.W.2d 889, 893-94 (N.D.2006) (citing Rueckert v. Rueckert, 499 N.W.2d 863, 870-71 (N.D.1993)); Reimer, 502 N.W.2d at 233-34.

[¶ 20.] Even if we were to adopt North Dakota law on this point, a decision we need not reach today, there is nothing sufficiently detailed in the language of the Agreement that indicates Wade was fulfilling his future obligation to support his daughter by giving up certain property and support interests. The provisions of the Agreement that Wade interprets to allow an equitable offset are not specific to him. Rather, both Wade and Lana agreed that they released the other against any “claim for alimony, support, medical payments, maintenance or otherwise in consideration of the cash obligations and transfers of property as hereinabove set forth.” They also agreed that each “shall not make application for payment of alimony, medical payments, or other periodic payments.” Absent any specific financial details, this language fails to confirm that Wade actually gave up some interest he would have otherwise received in exchange for a release of his child support obligation.

[¶ 21.] Under the circumstances of this case, we conclude that excusing Wade of his statutory obligation for child support is not in his daughter’s best interests. The circuit court erred when it adopted the Referee’s report denying modification of child support. We reverse and remand for reconsideration based on the child support guidelines.

[¶ 22.] Reversed and remanded.

[¶ 23.] GILBERTSON, Chief Justice, and SABERS, ZINTER, and MEIERHENRY, Justices, concur.

       Because the petition to modify support was filed within three years of the date of the support order, a showing of substantial change in circumstances was required. SDCL 25-7A-22(l). Both the circuit court and the referee agreed that there was a substantial change in circumstances here, which can, but does not require a modification. See, e.g„ Mathis, 2000 SD 59, ¶ 12, 609 N.W.2d at 776-77; contra McKittrick v. McKittrick, 2007 SD 44, ¶ 7, 732 N.W.2d 404, 406-07.