Blue Ridge Elec. Co-op. v. Combined Utility System of City of Easley

• Decision Date: 11 May 1983
• Docket Number: No. 21923,21923
• Court: South Carolina Supreme Court
• Parties: BLUE RIDGE ELECTRIC COOPERATIVE, Respondent, v. The COMBINED UTILITY SYSTEM OF the CITY OF EASLEY, South Carolina, Appellant.

Page 91

303 S.E.2d 91

279 S.C. 135

BLUE RIDGE ELECTRIC COOPERATIVE, Respondent, v. The COMBINED UTILITY SYSTEM OF the CITY OF EASLEY, South

Carolina, Appellant.

No. 21923.

Supreme Court of South Carolina.

May 11, 1983.

J.D. Todd, Jr., of Leatherwood, Walker, Todd & Mann, of Greenville, and Felix L. Finley, Jr., of Finley, Ponder & Warlick, of Pickens, for appellant.

Henry F. Floyd, of Acker, Acker, Floyd & Welmaker, of Pickens, for respondent.

John W. Thomas, of Dial, Jennings, Windham & Thomas, of Columbia, for S.C. Elec. Co-op. Ass'n, Inc., amicus curiae.

GREGORY, Justice:

This declaratory judgment action was brought by respondent Blue Ridge Electric Cooperative (Blue Ridge) to determine the constitutionality of S.C.Code Ann. § 58-27-1360 (1976) which pertains to the acquisition of facilities and properties of a supplier of electricity by a city or town or with the consent of the governing body of the city or town, an electrical utility furnishing electricity in such city or town pursuant to a franchise, contract, permit, or other consent when the service area of the supplier of electricity is incorporated as a city or town or is annexed to an existing city or town. We affirm.

The City of Easley owns and operates the Combined Utility System of the City of Easley (Combined Utility System), appellant. Prior to April 11, 1979, Blue Ridge supplied electricity to an area near Easley known as Five Forks. On April 11, 1979, a two hundred (200) acre portion of Five Forks was annexed to Easley.

At that time, Blue Ridge served only one customer in the annexed area, but served many customers in the areas to the north and south of the annexed area. Connecting the north and south areas was a 4817 foot electric transmission line traversing the annexed area.

Upon receiving a resolution of Combined Utility System and the City of Easley whereby they determined to serve electricity to the annexed area, Blue Ridge sought, pursuant to § 58-27-1360 of the Code, to compel Combined Utility System to purchase all of its facilities and properties within the annexed area, including the 4817 foot transmission line.

The parties appointed representatives to negotiate the sale and transfer of respondent's facilities. The representatives were unable to reach an agreement as to just compensation. This action was then brought.

Appellant contended Blue Ridge should continue using the 4817 foot transmission line because it was the best method for serving Blue Ridge's area to the south of the annexed area. Appellant offered to purchase the line and lease it back to respondent at no cost.

Respondent did not agree to this no-cost lease back. It contended § 58-27-1360 required appellant to purchase its line. Thus, respondent's line would have to be reintegrated and a line constructed around the annexed area for some 31,000 feet. The trial judge agreed that § 58-27-1360 was mandatory and required appellant to purchase respondent's line; however, he made no finding as to whether respondent's line would have to be reintegrated and constructed around the annexed area.

Appellant contends requiring it to take more than it needs constitutes a denial of due process, and asserts the trial judge should have ruled that the arbiter could make no award for reintegration of respondent's system. We disagree.

The clear language of § 58-27-1360 dictates "such supplier of electricity in the annexed or incorporated area shall have the right to compel such city or town or an electrical utility operating therein ... to purchase such facilities and properties and to compel the payment of just compensation therefor ...." We believe the legislative intent was to balance the rights and powers of cities and towns to expand their areas and provide services to those areas against the interest and property rights of suppliers of electricity, including the cooperatives. The Legislature, through § 58-27-1360, recognizes the value of services provided over the years by the cooperatives and the significant role they have played in rural South Carolina.

§ 58-27-1260 serves to protect cooperatives from becoming completely useless. Were a city or town allowed to expand its territory and services virtually at its desire and pay only for those facilities it decides are advantageous for it to take, cooperatives would face losing future as well as present revenue and would forfeit existing as well as potential customers. As respondent stated at oral argument, this may cause the city to rethink whether it wants to annex or incorporate an area. And, in cases as this, where the annexed area is rapidly developing and the cooperative is losing the right to serve that area, the city might be required to purchase all of the facilities in the annexed area, upon the electric supplier's request. It is the arbiter's duty to make the decision and he may reject any proposal he deems unreasonable.

Next, respondent contended the statutory formula provided in § 58-27-1360 to compute just compensation was an unconstitutional exercise of the legislative authority of the General Assembly to define just compensation, and the definition denied respondent equal protection of law since the term was not defined in any other condemnation proceeding. The trial judge held the statutory formula was constitutional so long as it was construed as a minimum, not a limitation, on what factors the arbiter could use to determine just compensation. Appellant excepted to this holding.

The purpose of payment of just compensation is to put the condemnee in as good a position pecuniarily as he would have been had his property not been taken.

The method of ascertaining just compensation is left for legislative determination. See South Carolina State Highway Dept. v. Southern Ry. Co., 239 S.C. 1, 121 S.E.2d 236 (1961); Chick Springs Water Co. v. State Highway Department, 159 S.C. 481, 157 S.E. 842 (1931).

"While the Legislature may fix the procedure to be followed in asserting a claim for compensation, it may not impair or deny an essential element thereof." South Carolina State Highway Dept. v. Southern Ry. Co., 239 S.C. 1, 121 S.E.2d at 240 (Oxner, J., dissenting); See also Chick Springs Water Co. v. State Highway Department, supra. We find no error.

Next, both appellant and respondent requested the trial judge to instruct the arbiter with respect to the formula to determine just compensation. However, appellant requested the trial judge to determine what facilities of respondent it was required to acquire and then to instruct the arbiter as to what elements of compensation respondent was entitled to receive. The trial judge found that instructing the arbiter as appellant requested would constitute a denial of arbitration.

To do as appellant requests would require the trial judge to hold a hearing on the merits to determine what facilities appellant must acquire. The arbiter would then be little more than an adding machine. This would frustrate the plain language of § 58-27-1360 which provides that an arbiter shall make a decision on just compensation. We find no error.

Finally, both parties request guidance from this Court as to the method of review of the arbiter's decision. Both parties submit a trial de novo is the most practical, fair and preferable form of review. A...