Alabama Power Co. v. City of Scottsboro

• Decision Date: 01 June 1939
• Docket Number: 8 Div. 986.
• Citation: 238 Ala. 230,190 So. 412
• Parties: ALABAMA POWER CO. v. CITY OF SCOTTSBORO ET AL.
• Court: Alabama Supreme Court

190 So. 412

238 Ala. 230

ALABAMA POWER CO. v. CITY OF SCOTTSBORO ET AL.

8 Div. 986.

Supreme Court of Alabama

June 1, 1939

Rehearing Denied June 22, 1939.

Appeal from Circuit Court, Jackson County; A. E. Hawkins, Judge.

Bill by the Alabama Power Company against the City of Scottsboro and certain individuals as Mayor, members of the City Council and Treasurer thereof, to enjoin issue and sale of bonds and use of proceeds thereof in construction and operation of an electric utility plant. From a decree denying preliminary injunction, complainant appeals and respondents move to discharge restraining order issued by Supreme Court after submission on appeal.

Motion to discharge overruled; reversed, rendered and remanded.

Martin Turner & McWhorter, of Birmingham, and D. P. Wimberly, of Scottsboro, for appellant.

Proctor & Snodgrass, of Scottsboro, for appellees.

Leader Hill, Tenenbaum & Seedman, of Birmingham, Scott & Dawson and Leonard Crawford, all of Fort Payne, and B. W. Simmons, of Opp, amici curiae, in support of application for rehearing.

FOSTER Justice.

This is an appeal from the order of the Circuit Court of Jackson County denying appellant's motion for a preliminary injunction in a suit brought by appellant against appellee city and its officials to enjoin them from issuing and selling the revenue bonds of the city and using the proceeds of such sale in the construction and operation of an electric utility plant to be operated in competition with the electric utility system of the appellant in Scottsboro, without having obtained the consent of the Public Works Board of Alabama, or the Department of Finance, which has lately succeeded to all the rights and powers of said board.

It is alleged in the bill of complaint, as amended, that the appellant is a public utility corporation of the State of Alabama and that it is engaged in the public utility business in Scottsboro under a valid franchise now in force and effect. It is further shown that the city has entered into an agreement with the Public Works Administration for the issuance and sale of its revenue bonds for the purpose of constructing and operating an electric utility business; and that it now threatens to issue and sell such bonds for such purpose and has declared its intention so to do by filing with the Department of Finance a declaration in writing to this effect. Section 5 (20) of Act No. 112 of 1939, General Acts, approved March 7, 1939.

The theory of the bill of complaint as amended is that the issuance and sale of such revenue bonds without having obtained the consent thereto of the Public Works Board of Alabama (Gen.Acts 1935, pp. 151, 153) during its existence,--see Gen.Acts 1935, pages 195, 200,--or of the Department of Finance, which succeeded to the powers and authority of said Public Works Board of Alabama (Department of Finance Act of 1939, section 15, approved March 7, 1939), is in direct violation of these laws which prohibit, as unlawful, the issue and sale of such bonds without the required consent.

The primary questions involved here, therefore, are: 1. Whether the issue of such revenue bonds without the consent aforesaid is not an unlawful act on the part of the city. 2. Whether the use of the proceeds of the sale of such bonds for the purpose of constructing an electric utility plant to be operated in competition with appellant's existing plant without such consent will not constitute unlawful competition with appellant. 3. Whether appellant, as a taxpayer of the city, would be injured by such unlawful competition.

The motion for a temporary injunction was set down for hearing under section 8304, Code. The court refused to order the writ, and from his order doing so this appeal was sued out under section 8307, Code. The hearing was had on sworn bill and exhibits, and on defendants' plea in abatement and affidavit with exhibits.

The plea in abatement made the following allegations: "That on, to-wit, the 9th day of January 1939, the complainant, Alabama Power Company, filed its bill of complaint in this court against the identical respondents named in the present bill, in which the complainant prayed that the respondents, and each of them, be enjoined from executing the identical contract with the P.W.A. as that referred to in section 3 of the present bill * * *, and that, thereafter, on the 3rd day of February 1939, this court rendered a decree sustaining the respondents' demurrer to the bill of complaint and allowing the complainant thirty days within which to amend its bill; that, thereafter, on the 1st day of March 1939, the complainant filed an amendment to its bill of complaint, and the respondents reassigned their demurrer to the bill as last amended, and on the 8th day of March 1939, this court rendered another decree again sustaining the respondents' demurrer to the bill as last amended and dismissed said bill at the cost of the complainant, but that, thereafter, on the 11th day of March 1939, the complainant filed its security for the costs of an appeal to the Supreme Court from the decree of this court sustaining said demurrers and dismissing said bill, * * *, which said appeal was at the date of the filing of the present bill of complaint, and still is, pending in the Supreme Court of Alabama, and is undetermined, and is of record in the said Supreme Court of Alabama, undetermined and undismissed."

The affidavits were to the effect that under the Carmichael Act (H.B. 231, approved April 6, 1933, Gen.Acts 1933, Ex. Sess., p. 100), an election was duly held to determine whether the city should acquire an electrical distribution system under its authority, and that the result was favorable to doing so. Whereupon the United States, acting through the Public Works Administration and the city, made an agreement in writing whereby the United States agreed to make a grant to the city of approximately $59,000, and to purchase from the city bonds in the principal sum of $72,000, in denominations of $1,000 each, dated November 1, 1938, payable over a period extending from 1942 to 1958, and payable from and secured by a pledge of a fixed amount of the gross revenues from the proposed light plant and system. There was no other obligation to be incurred by the city with respect to their payment, by which a debt was created. It was not to be an unconditional obligation to pay money.

Appellant here insists that notwithstanding the Carmichael Act does not require an approval of the bonds thus to be issued, it is required by House Bill 482, Lee Act approved June 26, 1935, pages 195, 200, and under the Public Works Board Act, approved February 12, 1935, House Bill 155, Harrison Act, pages 151, 153, and that the requirements of the latter acts cannot be ignored with respect to undertakings proposed to be had under the former (the Carmichael Act, supra), when they are of the sort described in the Lee Act.

With a view of considering that question, we will refer to some of the features of those acts. Under the Carmichael Act of 1933, an election must be held upon the question as a condition to an exercise of the authority to enter this field. The Lee Act of 1935 has no requirement for an election. The Carmichael Act provides that such undertaking must be conducted in conformity with it "and the law of the State pertinent thereto; but not otherwise." Section 1-A. It then provides that the necessary funds may be borrowed from the Reconstruction Finance Corporation, or any other lender, and the city could pledge as security or mortgage such plant and appurtenances, evidenced by instruments in such form as may be agreed upon. No reference is otherwise made to an issue of bonds.

The Lee Act of 1935, supra, called the "Municipal Revenue Bond Act of 1935," authorizes the cities to engage in such business, and to issue revenue anticipation bonds in one or more series, and to be sold at private sale to the United States or any agency thereof, or at public sale to others. The bonds are required to have all the indicia of what are called "bonds" in financial parlance. It then provides that they shall not be issued unless the Public Works Board shall grant its consent after a finding that "such issue and/or sale serves some public need, and is in the public interest." Section 14. Such a finding and consent are not necessary under the Carmichael Act. The Lee Act also provides that it is in addition and supplemental to and not a substitution for the powers conferred by other general, special or local law, and that bonds may be issued under it without regard to any other law, except as therein (Lee Act) provided.

The argument here made is that if there is an election held under the Carmichael Act, the issuance of bonds need not be approved by the Public Works Board, but if there is no election, they are subject to the Lee Act which requires such consent. That Act in section 14 provides that bonds or obligations authorized under it shall be issued and sold only with the consent of the Public Works Board. So that if the bonds here in question are such as are authorized by it (under section 15), they are issued under it without regard to any other law except as therein expressly provided.

No one could question the fact that the bonds here in question are exactly as there authorized. When so, by its express terms, they must be issued under it. True, that feature of section 15 must be considered in connection with the other one preserving intact other laws conferring such powers. Likewise, the latter is limited by the former.

This results in interpreting both acts together, ^[1] and reconciling them as far as possible, and when not possible that which is the last expression must control. ^[2] We are not now dealing with bonds which create a...