Alabama Power Co. v. Cullman County Electric Membership Corporation

• Decision Date: 20 May 1937
• Docket Number: 6 Div. 70
• Citation: 174 So. 866,234 Ala. 396
• Parties: ALABAMA POWER CO. v. CULLMAN COUNTY ELECTRIC MEMBERSHIP CORPORATION.
• Court: Alabama Supreme Court

174 So. 866

234 Ala. 396

ALABAMA POWER CO. v. CULLMAN COUNTY ELECTRIC MEMBERSHIP CORPORATION.

6 Div. 70

Supreme Court of Alabama

May 20, 1937

Rehearing Denied June 17, 1937

Appeal from Circuit Court, Cullman County; W.W. Callahan, Judge.

Bill for injunction by Alabama Power Company against Cullman County Electric Membership Corporation. From a decree sustaining a demurrer to the bill as amended, complainant appeals.

Affirmed.

St John & St. John, of Cullman, and Martin, Turner & McWhorter of Birmingham, for appellant.

James &amp Stewart, of Cullman, for appellee.

FOSTER Justice.

This is a suit by appellant to enjoin appellee from engaging in the electric utility business within the area in which appellant has a permit to serve a like business to the public. The claim is that appellee, though a public utility, has no certificate of convenience and necessity required by section 9795, Code. That section of the Code prohibits the construction of a plant property or facility for the production, transmission, delivery, or furnishing of electricity until written application is made to the Public Service Commission, and it shall issue a certificate of convenience and necessity.

Section 9742, Code, defines a utility, when used in that article, to mean and include any person not engaged solely in interstate commerce who shall own, operate, lease, or control any plant, property, or facility for the generation, transmission, or distribution, sale, or furnishing to or for the public of electricity for light, heat or power, or other uses.

Appellant invokes the rule stated, as follows, in Springfield Gas & Electric Co. v. Springfield, 292 Ill. 236, 126 N.E. 739, 18 A.L.R. 929 (and approved in Frost v. Corporation Comm., 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483): "A private corporation lawfully operating a public utility may have an injunction against another private corporation operating without authority of law a similar utility which competes with and injures the former's business."

The only requirements of this principle which need consideration, and argued at the bar, are (1) that appellee is a utility, and (2) that it is required as such to have a certificate of convenience and necessity under section 9795, supra, to make its operations legal.

We will consider those questions in the order as stated. It must own, operate, lease, or control facilities for the distribution, sale, or furnishing of electricity to or for the public, since it is not supposed to be a utility upon any other basis. It was created and operates under authority of an act of the Legislature of Alabama, approved February 7, 1935, page 100, amended by act approved July 8, 1935, p. 229. It is alleged to be operating by authority of that act, and without a certificate of convenience and necessity. It is a public electric utility if corporations thus organized and operating are so made by that act.

It is declared in section 2 that the corporation is without "pecuniary profit for the purpose of promoting and encouraging the fullest possible use of electric energy in the State by making electric energy available to inhabitants of the State at the lowest cost consistent with sound economy and prudent management of the business of such corporations."

"Person" or "inhabitant" is defined to mean and include "natural persons, firms, associations, corporations, business trusts, partnerships and bodies politic."

"Acquire" shall "mean and include construct, acquire by purchase, lease, devise, gift or the exercise of the right of eminent domain." Section 3.

"The natural persons executing the certificate of incorporation shall be residents of the territory in which the operations of the corporation are principally to be conducted who are desirous of using electric energy to be furnished by the corporation." Section 5.

The corporate purpose is to render service to its members only, and no one shall become a member unless he shall use its service, and shall pay a membership fee of $10; provided, that if it shall acquire "electric facilities already dedicated or devoted to the public use it may, for the purpose of continuing existing service and avoiding hardship, continue to serve the persons served directly from such facilities at the time of such acquisition without requiring that such persons become members." Section 9, as amended (Gen.Acts 1935, p. 230, § 2).

It is given the power, among other things, (c) "To acquire, [which we assume means as defined in section 3, supra], hold and dispose of property, real and personal, tangible and intangible, or interests therein and to pay therefor in cash or on credit." (f) "To construct works across or along any street or public highway, or over any lands which are now or may be the property of this State or any political subdivision thereof without obtaining any franchise or other permit." (Not now considering the effect of section 220 of the Constitution.) Section 11.

No bonds or obligations of the corporation shall be issued or sold "until consent to the issuance and sale thereof shall have been given by the Public Works Board of Alabama or in the event no such body is in existence at the time, by the Alabama Public Service Commission, to be evidenced by resolution or order under seal of such body granting such consent." There must be a public hearing. The board shall declare the purpose to be subserved, and uses for the money, and it shall be used only for the purpose approved by the board or commission. Section 12 1/2.

It is also provided that the corporation may extend its operations into new territory (that is, territory not described in its certificate of incorporation as required by section 4), by an amendment to its certificate of incorporation, provided that, if it includes part of the territory of another corporation, amendment of the certificate covering the proposed extension shall contain a statement to the effect that such other corporation or corporations have been requested in writing to construct the extensions, and declined to do so. This is in section 17.

The rates charged the customer members shall be sufficient to pay operating and maintenance expenses, and the principal and interest of its obligations and reserves. The excess shall be returned to the members in some form. Section 18, as amended (Gen.Acts 1935, p. 230, § 4).

The corporation is given other powers as to management, etc., usual in a private corporation. It is not expressly required to get a certificate of convenience and necessity, nor expressly exempted from the requirement made in section 9795, supra.

To summarize the pertinent features of the act as respects the question of whether a corporation formed under it is a public utility, we note the following: (1) It is not for pecuniary profit. (2) It is to make electric energy available to inhabitants of the state (in its described area), and promote and encourage their use to the extent most useful. (3) It confers the broad right of eminent domain. (4) It does not limit or restrict the right of any person to become a member and consumer of its service. (5) It confers the right to construct its works across or along the public highways and streets, even without obtaining permission, such as is required by section 220, Constitution. (6) It can issue no bonds without a permit from the Public Works Board, or, in the alternative, Alabama Public Service Commission. (7) It cannot encroach on the territory of another such corporation until the latter has declined to serve. (8) The formula for fixing the amount of its tolls and charges is fixed by law.

The certificate of incorporation contains a declaration that "any person who shall agree to use energy supplied by the corporation (from its lines) may be admitted to membership *** upon complying with the other terms and conditions with respect to membership contained in this certificate of incorporation or in the by-laws." One purpose is declared to be "to generate, manufacture, purchase, acquire and accumulate energy for its members and to transmit, furnish, sell and dispose of such electric energy to its members and to such other customers as may validly be served by the corporation pursuant to said Electric Membership Corporation Act."

This is within the definition of a public electric utility declared in section 9742(3) Code, and the law generally. Section 23 of the Constitution provides that private property shall not be taken for private use or for the use of corporations, other than municipal, without the consent of the owner, except certain rights of way.

In conferring the general right of eminent domain, the Legislature must be given credit for intending not to violate section 23, Constitution, by conferring such power on a corporation, not municipal, for private use. Harvey v. Warren, 212 Ala. 415, 102 So. 899; Mt. Vernon-Woodberry Cotton Co. v. Alabama Interstate Co., 240 U.S. 30, 36 S.Ct. 234, 60 L.Ed. 507; 20 Corpus Juris 548, § 35.

The unrestricted gratuitous grant by the state to the corporation to make permanent structures across and along the highways must also be considered as an indication that the Legislature considered it was aiding a public or quasi public enterprise. Crawford v. Alabama Power Co., 221 Ala. 236, 128 So. 454. This right does not exist without a state grant, Mobile v. Garrell, 229 Ala. 582, 158 So. 539, though it is not an additional servitude, Crawford v. Alabama Power Co., supra; Hobbs v. Long Distance Tel. Co., 147 Ala. 393, 41 So. 1003, 7 L.R.A. (N.S.) 87, 11 Ann.Cas. 461.

But the trant of the right to construct permanent fixtures along the highways for the use in question, given to a corporation organized for a definite purpose, and for the general benefit of the...