Bush v. Aiken Elec. Co-op.

• Decision Date: 24 January 1955
• Docket Number: No. 16953,16953
• Citation: 85 S.E.2d 716,226 S.C. 442
• Court: South Carolina Supreme Court
• Parties: Nathaniel BUSH, by G. A. L., Jackson Bush, Respondent, v. AIKEN ELECTRIC COOPERATIVE, Inc., Appellant.

Page 716

85 S.E.2d 716

226 S.C. 442

Nathaniel BUSH, by G. A. L., Jackson Bush, Respondent, v. AIKEN ELECTRIC COOPERATIVE, Inc., Appellant.

No. 16953.

Supreme Court of South Carolina.

Jan. 24, 1955.

Whaley & McCutchen, Hoover C. Blanton, Columbia, Joe F. Anderson, Edgefield, for appellant.

B. F. Nicholson, J. R. Folk, Edgefield, for respondent.

OXNER, Justice.

This action, which is based on the 'attractive nuisance' doctrine, was brought for the recovery of damages sustained by plaintiff when he climbed one of defendant's poles and came in contact with a high voltage electric wire. The case is here on appeal from and order (1) overruling a demurrer interposed by the defendant upon the ground that as a non-profit rural electric cooperative, it is not subject to liability for tort, and (2) refusing a motion by defendant to make the complaint more definite and certain by alleging therein the date of the birth of the plaintiff, a minor. These two questions are unrelated and will be separately discussed.

Appellant, defendant below, was organized under Chapter 15, Title 12, Volume 1, of the 1952 Code, known as the 'Rural Electric Cooperative Act'. This legislation authorizes the organization of a cooperative non-profit membership corporation 'for the purpose of supplying electric energy and promoting and extending the use thereof in rural areas', Section 12-1021, by five or more natural persons or two or more cooperatives, Section 12-1022, and confers upon such a cooperative, in addition to the powers conferred on all private corporations by Section 12-101, the power to generate, manufacture, purchase, distribute and sell electric energy to its members, to governmental agencies, and to other persons not in excess of 10% of its members in number; to make loans to persons to whom it supplies electricity for the purpose of writing their homes and installing therein electrical fixtures and appliances, and in connection therewith to purchase and sell or lease such fixtures and appliances; to construct, purchase and sell electrical transmission and distribution lines and generating plants; to borrow money and contract indebtedness, to exercise the power of eminent domain; and to do all acts and exercise all powers necessary, convenient or appropriate to accomplish the purpose for which the cooperative is organized. Section 12-1025.

Such cooperative is exempt from the jurisdiction and control of the Public Service Commission, Section 12-1005, from all income and excise taxes upon the payment of an annual fee of $10.000 for each hundred persons served, Section 12-1013, and from all property taxes, Section 65-1522(44) of the 1952 Code.

It is further provided that the revenues of a cooperative, after paying the expenses of operation and maintenance, meeting the principal and interest requirements on its obligations, setting aside certain reserves, and providing a fund for the dissemination of information concerning the effective use of electric energy and other services rendered by such cooperative, shall, unless otherwise determined by a vote of the members, 'be distributed by the cooperative to its members as patronage refunds prorated in accordance with the patronage of the cooperative by the respective members paid for during such fiscal year.' Section 12-1037. A cooperative may be dissolved by its members and upon dissolution, the assets, after the payment of all debts, obligations and liabilities, are distributed 'among its members in proportion to the aggregate patronage of each such member during the seven years next preceding the date of such filing of the certificate' of dissolution. Section 12-1062.

We had occasion in Bookhart v. Central Electric Power Cooperative, Inc., 219 S.C. 414, 65 S.E.2d 781, 784, to discuss the history and purpose of the 'Rural Electric Cooperative Act'. As there pointed out, this legislation was designed to make electric energy available in rural areas as cheaply as possible and to advance this purpose, the Federal Government, under the Rural Electrification Act, 7 U.S.C.A. § 901 et seq., authorized long term loans to these cooperatives on favorable terms and the State has relieved them of certain governmental controls and taxes. We held in the Bookhart case that they were public service corporations and, as such, obliged to make membership available without arbitrary or unreasonable limitations. It was further stated that the members of these cooperatives 'take the place of the stockholders and customers of privately owned utilities; they are both owners and customers.'

The question of whether a cooperative formed under the Rural Electric Cooperative Act enjoys immunity under the laws of South Carolina from tort liability was squarely presented in Byrd v. Blue Ridge Rural Electrical Cooperative, Inc., 4 Cir., 215 F.2d 542. In a well reasoned opinion, the Court held that these cooperatives are not exempt from liability for torts. We are in full accord with this decision.

We do not understand appellant to claim immunity on the ground that it is a governmental agency. Indeed, there could be no basis for freedom of liability on this ground. Appellant came into existence at the volition of the incorporators. The State has not undertaken to name its governing board or to control its affairs. It may be dissolved at the will of its members and upon such dissolution the State receives none of its property. Although serving a public purpose, it is a voluntary association to provide its members the benefits of electrical service at the lowest possible cost. Accordingly, the cases of Rice Hope Plantation v. South Carolina Public Service Authority, 216 S.C. 500, 59 S.E.2d 132, and Benjamin v. Housing Authority of Darlington County, 198 S.C. 79, 15 S.E.2d 737, have no application. In the former it was held that the defendant was not subject to liability for tort because it was an agency of the State and as such entitled to immunity attaching to the sovereignty. In Benjamin v. Housing Authority of Darlington County, supra, it was held that the defendant, a body set up to construct low cost houses for the purpose of eliminating slums and providing homes for families of low incomes in rural areas, was exempt from taxation. There the defendant was an instrumentality of the county, operated exclusively for the benefit of the public and the property owned by it was public property. None of these considerations exist here.

Appellant claims that the act clearly discloses a legislative intent to exempt electric cooperatives from tort liability. It is said that they are special statutory corporations serving a public purpose, free from control of the Public Service Commission, and that to subject them to liability for damages would necessitate writing into the act a provision for tort liability which the legislature saw fit to omit, contrary to the provision that the act 'shall be construed liberally.' Attention is called to the fact that these are non-profit organizations, which have been exempted from taxation, and that in directing how their revenues shall be disbursed, no provision is made for payment of tort liability.

The statute contains no express grant of immunity from tort liability. In the absence of such, it may not be fairly assumed that the legislature intended that these corporations, which are extensively engaged in selling and distributing a highly dangerous commodity and which benefit primarily only their members, should be immune from liability for their negligence or recklessness. The fact that they have been exempted from certain taxes is no proof of an intent to exempt them from tort liability. Tax exemptions are governed by wholly distinct considerations. We have various tax exemption statutes relating to private corporations, but no one would contend that this indicates an intent to relieve them from liability in actions ex delicto. Nor does immunity from tort liability follow from the fact that these electric cooperatives are characterized as non-profit organizations. It is true that no dividends are paid on invested capital and it may be proper, as held in Greene County Rural Electric Cooperative v....