Alabama Power Co. v. Ickes, 6580

• Decision Date: 10 May 1937
• Docket Number: No. 6580,6865.,6583,6580
• Parties: ALABAMA POWER CO. v. ICKES, Administrator of P.W.A., et al. IOWA CITY LIGHT & POWER CO. v. SAME.
• Court: U.S. Court of Appeals — District of Columbia Circuit

91 F.2d 303 (1937)

ALABAMA POWER CO. v. ICKES, Administrator of P.W.A., et al.

IOWA CITY LIGHT & POWER CO. v. SAME.^*

Nos. 6580, 6583, 6865.

United States Court of Appeals for the District of Columbia.

Argued February 15, 1937.

Decided May 10, 1937.

Edward B. Burling, Spencer Gordon, Dean G. Acheson, Walter B. Guy, Louis H. Mann, and Howard C. Westwood, all of Washington, D. C., and Newton D. Baker, of Cleveland, Ohio, for appellants.

John W. Scott, Alexander Holtzoff, and James W. Morris, all of Washington, D. C., and Jerome N. Frank, of New York City, for appellees.

Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, and GRONER, Associate Justices.

VAN ORSDEL, Associate Justice.

These are appeals from decrees of the District Court dismissing in each case bills of complaint for injunction, after hearing on the merits, to restrain loans and grants by the Public Works Administration to aid in the construction of municipal electric light and power plants in certain cities and towns in the states of Alabama and Iowa. The cases were consolidated for hearing in the court below, and were argued as one appeal in this court.

It appears that the Alabama Power Company, an Alabama corporation, owns and operates a generating, transmission, and distribution system in the state of Alabama, and distributes electrical energy to numerous communities in that state, including the cities of Florence, Decatur, Sheffield, and Tuscumbia, and the Towns of Hartselle, Russellville, and Guntersville, in each of which it owns and operates a local plant, in accordance with, and by authority of, the laws of the state of Alabama.

It also appears that the Iowa City Light & Power Company, a Delaware corporation, qualified to do business in the state of Iowa as a foreign corporation, is engaged in the generation of gas and electricity, and in the transmission, distribution, and sale thereof in Iowa City, Iowa, and in the incorporated towns of Coralville and University Heights in Johnson county, Iowa. With the exception of a limited sale of electricity by the city of Sheffield, these companies are the only agencies engaged in supplying electric light and power to the cities and towns above named.

The "loan and grant" agreements, under which these municipalities are to construct independent light and power plants, provide that the United States is to aid in the construction of the projects by purchasing from the municipalities their bonds, secured by a first pledge of the revenues derived from the operation of the projects, over and above the reasonable cost of operation and maintenance thereof. The grants made in the Alabama cases are equal to 30 per cent. of the cost of the labor and materials employed upon the projects, the balance of the cost to be loaned by the government. In the Iowa case the grant is for 45 per cent. of the cost of the project. The "loan and grant" agreements further provided: "This offer is made with the express understanding that neither the loan nor the grant herein described is conditioned upon compliance by the Applicant with any conditions not expressly set forth herein. There are no other agreements or understandings between the Applicant and the Government or any of its agencies in any way relating to said Project or the financing or the construction thereof."

These companies in their bills of complaint are challenging the authority of the defendants through the agency of the Public Works Administration to aid and assist, by use of the public monies of the United States, in the construction by the various municipalities named of competing municipal electric distribution systems. The Alabama Company charged a conspiracy between the Public Works Administration and the Tennessee Valley Authority to disrupt and destroy its business, and by the unlawful use of public funds of the United States to carry into effect the President's announced "National Power Policy" to make electricity "more broadly available at cheaper rates to industry, to domestic and to agricultural consumers," and to regulate the rates for interstate generation, distribution, and sale of electricity.

It is also charged that this plan of the Public Works Administration is effected by inducing political subdivisions of the States to conspire with them in the accomplishment of their illegal purposes and in the unconstitutional and illegal disbursements of public moneys of the United States by joint action in carrying out as Federal Public Works projects the construction of electric generating and distributing plants and systems within such subdivisions, planned, built, and financed, under the control and direction of the Public Works Administration, and to be operated in such manner from time to time as directed by that agency. In the accomplishment of this end, it is charged that the defendants threaten private electric utilities in particular locations with the construction of projects with federal money, unless the private utilities agree to establish rates satisfactory to the Public Works Administration.

It is then charged that, if the defendants are permitted to carry out these unlawful agreements, "the property right of plaintiff to operate its property and to enjoy its franchise free from injurious competition brought about by unlawful means and to conduct its intrastate business and charge rates free from unconstitutional interference and domination by an agency or agencies of the federal government, will immediately be invaded and destroyed."

Plaintiff companies pray for injunctions to restrain the defendants from in any manner aiding in the construction or financing of electric distribution systems in the cities and towns named. The court below, upon a full hearing, dismissed the bills of the plaintiffs, and from the decrees entered this appeal was taken.

We find it unnecessary to discuss in detail the various contentions relied upon by plaintiffs to establish their right to injunctions, or to enter into any discussion of the authority of the Public Works Administrator or the constitutionality of the statutes under which he purports to act, since the right of plaintiffs to the relief sought is challenged on another ground which we think disposes of these cases.

It is urged that plaintiffs have not shown any legal or equitable right which will be infringed by the making of these loans, and consequently have no standing to maintain these actions. It is disclosed by the record and indeed conceded, that in some instances plaintiffs are operating under franchises which have not expired, and in other cases, where the franchises have expired, they are operating by consent or acquiescence of the local authorities. It is not claimed, however, that there is any material difference in the status of these companies in so far as their standing to maintain these actions is concerned. In no case do the plaintiffs have an exclusive franchise. It seems clear, therefore, that any injury which these plaintiffs may sustain from the making of these loans will result from the competition which will arise when the municipal plants begin to operate, hence it is contended that plaintiffs are not in a position to question the source from which the municipalities may derive the funds to construct their plants, whether it be lawful or unlawful.

Defendants contend that no legal injury is threatened to plaintiffs; that the threatened loss of business will be due to lawful competition of the municipalities, and merely damnum absque injuria; that the loss sustained, if any, will be caused by competition, which is lawful, and from...