Alabama Elec. Co-op., Inc. v. Alabama Power Co.

• Decision Date: 10 September 1964
• Docket Number: 3 Div. 96
• Citation: 176 So.2d 483,278 Ala. 123
• Parties: ALABAMA ELECTRIC COOPERATIVE, INC. et al. v. ALABAMA POWER COMPANY et al.
• Court: Alabama Supreme Court

Page 483

176 So.2d 483

278 Ala. 123

ALABAMA ELECTRIC COOPERATIVE, INC. et al. v. ALABAMA POWER COMPANY et al.

3 Div. 96.

Supreme Court of Alabama.

Sept. 10, 1964.

Rehearing Denied April 8, 1965.

Opinion Extended on Further Denial of Rehearing June 30, 1965.

Adams, Gillmore & Adams, Grove Hill, and Rushton, Stakely & Johnston, Montgomery, for Ala. Elec. Coop.

Jas. T. Hardin, Montgomery, for Director of Finance.

Martin, Balch, Bingham & Hawthorne, Birmingham, and Steiner, Crum & Baker, Montgomery, for Ala. Power Co.

Goodwyn & Smith, Montgomery, for Gulf Power Co.

MERRILL, Justice.

This is an appeal by Alabama Electric Cooperative, Inc. and Seymore Trammell, as Director of Finance of the State of Alabama, from a judgment of the Circuit Court of Montgomery County, quashing and holding for nought the order of former Finance Director, Maurice Patterson, granting consent for appellant to issue bonds amounting to $20,350,000 to construct a steam electric generating plant and over 700 miles of electric transmission lines and related facilities in Alabama and Florida.

Appellant AEC filed its petition with the Department of Finance on February 5, 1962. Alabama Power Company was allowed to intervene on March 28, and Gulf Power Company was permitted to intervene in September, 1962. After various proceedings and hearings, Maurice Patterson, the Finance Director on January 9, 1963, approved the petition of appellant based upon the findings that:

'4. That the plan and program of petitioner as set forth in said petition involves the supply of electric energy and the promotion and extension of the use thereof.

'5. That said plan or program of petitioner serves some public need and is in the public interest.

'6. That the issuance of the note or notes and the use of the proceeds thereof as set out in said petition will be in the furtherance of the corporate powers and purposes of petitioner, will serve some public need and will be in the public interest.'

The appellees filed a petition for certiorari to the Circuit Court of Montgomery County and on July 9, 1963, that court quashed the order of the Finance Director and remanded the cause to the Director with directions to enter an order denying the petition. Maurice Patterson had been succeeded as Finance Director by Seymore Trammell and on August 6, 1963, AEC and Finance Director Trammell appealed to this court.

Alabama Electric Cooperative filed its petition with the Department of Finance pursuant to Tit. 55, § 155, Code 1940, as amended, which provides that no bonds of any authority such as AEC shall be issued without the consent of the Finance Department, given after the filing of a petition and a public hearing. 'The department of finance shall grant such consent only after it finds that such issue or sale serves some public need and is in the public interest.'

The following legal principles govern us in this review:

(1) On appeal to this court, we must review the judgment of the circuit court without any presumption of its correctness, since that court was in no better position to review the order of Director of Finance than we are. Alabama Public Service Com'n v. Decatur Transfer & Storage, Inc., 257 Ala. 346, 58 So.2d 887; Alabama Public Service Com'n v. Nunis, 252 Ala. 30, 39 So.2d 409.

(2) When we review the proceedings of an inferior tribunal on common law writ of certiorari, and the record shows jurisdiction and that the proceedings were valid and regular, the order of the lower tribunal should be sustained if there is any substantial evidence to support the order. Baker v. Denniston-Boykin Co., 245 Ala. 407, 17 So.2d 148; Alabama Power Co. v. City of Fort Payne, 237 Ala. 459, 187 So. 632, 123 A.L.R. 1337.

(3) The supervisory jurisdiction of the court on certiorari is restricted to an examination into the external validity of the proceeding had in the lower tribunal. It cannot be exercised to review the judgment as to its intrinsic correctness, either on the law or on the facts of the case. In this respect the supervisory powers of the court should not be confused with its appellate jurisdiction. And when the court examines the evidence, it does so, not to determine the probabilities preponderate one way or the other, but merely to determine whether the evidence will justify the finding as a legitimate inference from the facts proved regardless of whether such inference would or would not have been drawn by the appellate tribunal. Byars v. Town of Boaz, 229 Ala. 22, 155 So. 383; Ex parte Watkins, 268 Ala. 567, 109 So.2d 671, 10 Am.Jur., Certiorari, Sec. 3, pp. 525, 526.

The basic question before us is whether there was any substantial evidence before the Director of Finance to sustain his finding that the issuance of the bonds 'serves some public need and is in the public interest.' We have concluded that there was such evidence.

The record consists of over 3,200 pages with other voluminous exhibits certified separately. We list some of the evidence merely to show that the evidence, if believed by the Director of Finance, was sufficient to support his finding and that his finding was not arbitrary and capricious.

1. The evidence shows that the REA Administrator has contracted to lend AEC $20,350,000 to construct electric facilities and that these facilities will serve approximately 77,000 individual consumers (42,900 present and 34,700 future consumers) living in most of the counties in South Alabama and Northwest Florida; that the need and demand for electric power is growing in the State and an additional supply is beneficial to the State.

2. Many elected public officials and other representative citizens in the area testified that the proposal was in the public interest and filled some public need, and there were numerous resolutions of county and city governing bodies, industrial development boards, civic clubs and farmer associations to like effect.

3. Thirty-five year contracts signed by each of the electric distribution cooperatives to be served were introduced into evidence. The cooperatives expressed their desire to serve themselves rather than to be dependent on appellees, whom they consider to be an unfriendly source of wholesale power.

4. Appellants' engineer testified that the construction of the proposed plant and related facilities would provide a payroll of approximately $5,000,000 during construction, create from 25 to 30 new permanent jobs and that the new plant would consume about 225,000 tons of Alabama coal annually; that the State would be benefited by increasing the available power supply; that it would make available a new source, since they would contract for one-half the output of electric power from the Walter F. George Dam on the Chattahoochee River and that the cooperative could and would sell power cheaper to its patrons than they were now paying appellees for the power.

In fairness to appellees, it should be stated that they contested the evidence adduced by appellants and made a strong case for their position that the issuance of the bonds would not serve a public need and would not be in the public interest. They also had testimony from public figures, resolutions etc. from many organizations supporting their contentions. The decision of the Director of Finance was not an easy one, but once made, we are convinced that there was substantial evidence to support it, even though this court might not have drawn the same inference from all the facts. As already shown, in reviewing by common law certiorari, neither the circuit court nor this court weighs the evidence and substitutes its judgment for that of the Finance Director.

Appellees contend that the expenditure of public funds to construct electric facilities to furnish electric service to persons receiving adequate central station service is in violation of the federal law authorizing such expenditure. Central station service is defined as electric service from a generating station transmitted or distributed over a wide area, as distinguished from the generation of power by a small individual generating unit, for example a Delco plant.

Appellees' contentions are based upon the provision in the federal law (7 U.S.C.A. § 904) that the administration is authorized and empowered to make loans for rural electrification to persons and cooperative associations 'for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing of electric energy to persons in rural areas who are not receiving central station service' and it further provides that no loan for a generating plant shall be made unless the consent of the State authority having jurisdiction is first obtained. Appellees argue that they are either furnishing the central station service to most of the territory covered or that they are prepared to do so.

This very question was decided in Kansas City Power & Light Co. v. McKay, D.C., 115 F.Supp. 402, where the court said:

'1. Whether the loan contracts violate the central station service provision of the RE Act. 7 U.S.C.A. § 904.

'Plaintiffs first contend that by means of loan agreements REA undertakes to loan REA funds to construct electric facilities to serve persons in rural areas where central station service is not only available but where, in many cases, it is presently received. In this regard, the position of plaintiffs is that where, as in the case at bar, a private utility supplies power and energy to a federated cooperative which in turn meets the needs of its respective members by furnishing them with current over distribution systems initially financed by an REA loan, the purpose of the RE Act is fulfilled and that any further loans to any of the cooperatives constitute a violation of the central station service provision. Plaintiffs' position appears to be based upon the premise that central station service as contemplated in the Rural...