Brown v. Tuskegee Light & Power Co.

• Decision Date: 14 May 1936
• Docket Number: 5 Div. 208
• Citation: 232 Ala. 361,168 So. 159
• Parties: BROWN et al. v. TUSKEGEE LIGHT & POWER CO.
• Court: Alabama Supreme Court

168 So. 159

232 Ala. 361

BROWN et al. v. TUSKEGEE LIGHT & POWER CO.

5 Div. 208

Supreme Court of Alabama

May 14, 1936

Appeal from Circuit Court, Macon County; W.B. Bowling, Judge.

Suit in equity by L.J. Brown, S.O. Kennedy, and R.M. Boyd against the Tuskegee Light & Power Company and the City of Tuskegee, with a cross-bill by respondent City of Tuskegee. From a decree denying relief, original complainants and cross-complainant appeal.

Affirmed.

Jacob A. Walker, Thos. D. Samford, and Thos. D. Samford, Jr., all of Opelika, for appellants.

Rushton Crenshaw & Rushton, of Montgomery, and Powell & Powell, of Tuskegee, for appellee.

BOULDIN Justice.

Broadly speaking, the purpose of the suit in equity was to assert title and right of possession on behalf of the city of Tuskegee in an electric lighting system in possession of and being operated as a public utility by Tuskegee Light & Power Company, a corporation. The original bill was filed March 18 1933, by individual appellants, as citizens and taxpayers making the city of Tuskegee, a municipal corporation party respondent. The city, by answer and statutory cross-bill, admitted the substantial averments of the original bill, and sought the same relief.

On final hearing the trial court denied relief on both original and cross-bills.

Separate appeals are prosecuted.

The matters complained of date back to 1919, more than thirteen years before the filing of the bill. The theory of the bill is that the initial light plant was owned and operated by the city of Tuskegee; that the town council undertook to lease or dispose of same to respondent corporation without authorization by vote of the qualified electors of the town in an election called for the purpose as required by section 2 of an act of the Legislature at Special Session 1909. General and Local, etc., Acts of 1909, p. 253 et seq.

A further charge is that the majority and dominant members of the governing body were adversely interested as stockholders in respondent corporation; a matter not disclosed by the charter or corporate records at the time.

That no preliminary resolution was passed as per above statute, nor election held is admitted; admitted also that members of the council were beneficial owners of stock in the corporation organized for the purpose of succeeding and relieving the city of the obligation to furnish electric light and power service to the city and to its inhabitants.

The entire history of the transaction, and the events of succeeding years are presented in pleading and proof in a rather voluminous record.

Able and elaborate briefs on both sides present the contentions of the parties; both of law and fact.

On November 21, 1919, the city council passed a resolution, as follows:

"Whereas, the City of Tuskegee is desirous of having adequate and sufficient electric light and power service.

"And, whereas, with its present apparatus, engines and equipment it is unable to provide the same.

"And, whereas, it is possible, or appears possible that private capital may be induced to take over the line of the City and furnish lights and current for power;

"Be it resolved by the City Council of the City of Tuskegee of the State of Alabama as follows:

"1st. That the City make and offer to any corporation or individuals to grant it or them the following:

"1. A perpetual franchise; the use of its lines, poles, transformers and rights of way and such other equipment as may be hereafter agreed upon.

"2. And agree to charge no license fee for the operation and maintenance of an electric lighting system for said city.

"In consideration of which

"The Company agrees to maintain the said lines and equipment as furnished by the City and to install and maintain 50 200-watt street lights on the city streets and in consideration of which it shall maintain an adequate and suitable lighting system and furnish 24 hour a day current to customers at rates not in excess of those now charged by the said City.

"And, in consideration of its furnishing adequate and sufficient current for pumping the City water at a rate not in excess of three cents per K.W. hour."

Events and conditions leading to this resolution may be summarized thus: The city then owned a municipal light plant, first installed about 1905. The plant in 1919 consisted of a generating plant, and distribution system furnishing lights to the city streets and to domestic consumers, and small power consumers. It was a going and functioning plant. We hold, without elaboration, that the whole was an electric light plant within the meaning of the statute.

We further find that the recitals in the preamble of the above resolution, to the effect that the city was unable with its present equipment to provide adequate and sufficient electric light and power service, were true, and expressed the bona fide judgment and finding of the members of the city council, leading business and professional men, fully informed by actual experience.

The city also owned its waterworks. Power from the light plant was used to run the pumping station. Lack of adequate water service, especially for fire protection, sufficiently appears. Owing to high prices of coal in 1919, operating expense was heavy. The mayor, at times, advanced the funds to buy coal to keep it going. Light and water rates were high.

Omitting further details, the plant was not esteemed a valuable asset.

Some years before, the Alabama Power Company had extended its high voltage hydro-electric power lines to Auburn, some twenty miles from Tuskegee. The town council, as well as interested citizens, conceived it much to the advantage of Tuskegee to bring that power to the city. Efforts had been made to this end for some years. Finally, through a committee of the council, a tentative promise had been obtained from the Alabama Power Company to build a line into Tuskegee on condition that $30,000 be paid in advance, with provision that this sum be refunded by deductions from annual bills for current sold, if, and when the annual returns from current furnished should exceed a stated sum.

The city had neither money nor credit to obtain the required sum of $30,000. Thereupon, leaders on and off the town council collaborated in promoting a private corporation, Tukegee Light & Power Company, with $30,000 cash capital. Promptly a subscription list was circulated among the citizens deemed financially able to take stock. Members of the council actively participated in the movement and took about one-fifth of the stock in the names of friends or kindred.

A charter was speedily obtained and an offer presented to the town council to accept the proposition made by the city in the above resolution.

Thereupon, the town council, on November 25, 1919, adopted an ordinance reciting the history to that date, and ordaining:

"That the City of Tuskegee, does hereby lease, turn over and deliver to the Tuskegee Light & Power Company, its successors, or assigns, a private corporation, its Electric Light Plant, and all fixtures connected therewith, that may be needed in the conduct of said business by said corporation, together with the electric wires, poles, cross arms, transformers, and fixtures of every nature and description, connected therewith, and needed in the management of said business; with the right to use the Power House and appurtenances thereunto belonging, and grounds around same; all machinery, apparatus and fixtures connected therewith, or contained therein, where such are needed by said Corporation. Such property as is not needed by said Corporation, when it takes over the said Plant and fixtures, as herein described, to be delivered back to said City, and sold and disposed of by it, as it sees fit. And the said City of Tuskegee does hereby grant to said Tuskegee Light & Power Company the authority and right to use the lines of said Light Plant as now located in, on, or upon the Streets of said City; to maintain said lines, replace said poles, replace said wires and other fixtures connected therewith, construct new poles, and add new wires and other fixtures when necessary and in all respects to use, maintain and operate the said plant and lines connected therewith, as fully and completely as has been done, or could be done by said City itself."

The ordinance further granted a franchise for the use of streets and public places in furnishing electric service throughout the city limits. In consideration of which the light company bound itself to maintain adequate 24-hour service for light and power purposes, to furnish current for 50 street lights, to fix rates to consumers not in excess of those in force, and to furnish power to the waterworks at not exceeding 3 cents per K.W. hour.

Thereupon, the light company paid over to the Alabama Power Company the $30,000, made a contract with that company to construct the power line and furnish current at lawful rates. The council granted Alabama Power Company a franchise to enter the city.

Pending a construction of the power line, the city continued to operate the plant. But the light company, at the same time, proceeded to repair, reconstruct, or improve the distribution system to meet the requirements of engineers looking to the new and high voltage service. Both city and light company functioned during this interim through the same management. The light company, in this preparatory work, expended in improvements and replacements a sum variously given at $6,500 to $10,000. The company never took over the generating machinery. The city sold the older and larger of the two units, and the newer and smaller one was turned back to the vendors under conditional sale contract. Default on the indebtedness had already intervened.

The...