Cobb County Rural Elec. Membership Corporation v. Board of Lights & Water Works of Marietta

• Decision Date: 14 March 1955
• Docket Number: No. 18909,18909
• Citation: 211 Ga. 535,87 S.E.2d 80
• Parties: COBB COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION v. BOARD OF LIGHTS AND WATER WORKS OF MARIETTA.
• Court: Georgia Supreme Court

Page 80

87 S.E.2d 80

211 Ga. 535

COBB COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION v. BOARD OF LIGHTS AND WATER WORKS OF MARIETTA.

No. 18909.

Supreme Court of Georgia.

March 14, 1955.

Syllabus by the Court

The petition was properly dismissed on general demurrer, since it fails to state a cause of action for the relief sought.

On October 30, 1954, the Cobb County Rural Electric Membership Corporation filed a suit against the Board of Lights and Water Works of Marietta, Georgia, and prayed for equitable relief. The petition as amended alleges substantially the following: The plaintiff was on March 5, 1938, incorporated under the Electric Membership Corporation Act of 1937, p. 644. By an act which the legislature passed in 1906, p. 846, the defendant was created as a subsidiary corporation to the City of Marietta, Georgia, with corporate power to perform all acts necessary to supply the City of Marietta with lights and water. The Mayor of the City of Marietta is ex-officio Chairman of the Board of Lights and Water Works. The legislature in 1939, p. 1159, gave the defendant authority to extend its water mains and electric power lines beyond the limits of the City of Marietta into Cobb County at such places and to such distances as it might by resolution decide to do, and to serve customers on the mains and lines so extended at rates fixed by it. By an act which the legislature passed in 1943, p. 1441, the City of Marietta was authorized to extend its sewer lines beyond its corporate limits, and render sewerage service to residents of rural areas. In 1952, the City of Marietta extended its corporate limits so as to include an area in which the plaintiff had facilities which were being utilized by it for the purpose of furnishing electric service to the residents thereof. A controversy arose between the plaintiff and the defendant when the latter undertook to exclude the former from the area and when it began furnishing electric service to the former's customers. Negotiations between the plaintiff and the defendant concerning this culminated in a contract by the terms of which the plaintiff, for a consideration of $41,000, sold the defendant certain parts of its electric equipment and withdrew from the annexed area. The contract also contains the following clause: 'Incidental to the execution of this contract the Board represents that it has no information or knowledge indicating any probability of further extension of the limits of the City of Marietta, nor does it have any present intention of extending its lines beyond such limits into adjacent area now occupied or supplied by the Cooperative.' At the time this contract was entered into, there was a described area of approximately two square miles east of but adjacent to the City of Marietta's corporate limit, in which the plaintiff was then rendering electric service, and in which it had rendered such service since it started operations soon after being incorporated. Prior to and at the time the plaintiff was assured by the defendant that it had no present intention of extending its power lines beyond the limits of the City of Marietta and furnishing electric energy in adjacent areas then occupied or supplied with electric service by the plaintiff, several parties had plans to start and in some instances had started subdivisions in this area, and they first applied to the defendant to furnish them electric service, but were advised by the defendant that such service could not and would not be furnished by it. They then applied to the plaintiff for such service. To grant and comply with their request, the plaintiff made an application to the Rural Electrification Administration for an additional loan, obtained it, and from the proceeds thereof spent approximately $179,000 in the construction of a modern lighting system, which is amply sufficient to supply all needed electric requirements of the area, presently and in the future. To secure repayment of its additional loan, the plaintiff gave the Rural Electrification Administration a security deed to all of its properties. When the plaintiff installed its electric system in this area, it was sparsely settled; but, because of the electric current which was thereby made available, it has developed rapidly and the plaintiff now has 812 customers in the area, who pay an average electric bill of $6.17 per month, or a total monthly amount of approximately $5,010. For loans made to it by the Rural Electrification Administration, the plaintiff owes it approximately $888,000; and for its ability to repay this obligation, it is wholly dependent on the revenue it receives from the operation of its facilities. The defendant has become interested in the area recently developed by the plaintiff and proposes to furnish the residents thereof, who are customers of the plaintiff, both water and sewerage service but contingent on them purchasing electric current from it. For the purpose of supplying the residents of this area with electric current, the defendant has started the erection of poles for carrying 3-phase lines into the area, and the defendant intends to and will, unless enjoined, construct an electric distribution system in this area and operate a competitive electric business which will destroy the plaintiff's investment, since the number of customers residing therein cannot profitably compensate two suppliers of such service. The citizens of the City of Marietta are presently receiving adequate electric, water, and sewerage service, and the defendant's invasion of the plaintiff's area will not improve those services or reduce the rates charged therefor; but will jeopardize the plaintiff's financial solvency and lessen the value of its properties. An effort has been made by the plaintiff to reach an agreement with the defendant on a line which would represent the maximum area in which the defendant expects to render electric service, but the defendant has declined to commit itself respecting its future operations. The plaintiff supplies electric current to approximately 6,200 customers who reside in rural areas located in Cobb, Fulton, Cherokee, Paulding and Bartow Counties. The defendant's invasion of the plaintiff's aforesaid area for the purpose of interfering with the electric service which it is rendering violates several enumerated provisions of the Constitutions of the United States and of the State of Georgia; and, by the aforementioned declaration and conduct, the defendant is estopped from entering the aforesaid area for the purpose of supplying the residents thereof with electric service. Besides for a rule nisi, process and service, the petition prays for a temporary and permanent injunction to prevent the defendant from constructing, maintaining, and operating an electric distribution system in that area of Cobb County which is described in the complaint. The defendant demurred generally. Its demurrer was sustained and the petition was dismissed. The plaintiff excepted.

Robert D. Tisinger, Carrollton, D. M. Pollock, Monroe, J. G. Roberts, Marietta, for plaintiff in error.

Scott S. Edwards, Jr., Sam J. Welsch, Marietta, for defendant in error.

PER CURIAM (after stating the foregoing facts).

1. The Rural Electrification Act of 1936 was passed by Congress and approved by the President for the beneficent purpose of making electric energy available to persons in rural areas who were not receiving central station service. 7 U.S.C.A. § 902. The act created and established in the Department of Agriculture an agency of the United States known as the 'Rural Electrification Administration,' the powers of which are exercised by an Administrator, under the general direction and supervision of the Secretary of Agriculture. 7 U.S.C.A. § 901. Co-operative, nonprofit, electric membership corporations organized under the laws of any State or Territory of the United States are among those to whom the Administrator of the Act may make loans for the purpose of financing the construction and operation of self-liquidating electric systems furnishing current to persons in rural areas; but such loans can be made only when the Administrator finds and certifies that in his judgment the security therefor is reasonably adequate and such loan will be repaid within the time agreed. 7 U.S.C.A. §§ 904, 905. To implement the Rural Electrification Act in Georgia, the Electric Membership Corporation Act was enacted by the legislature in 1937, Ga.L.1937, p. 644. This act provides for the incorporation of co-operative, nonprofit, membership corporations with corporate power to engage in rural electrification in any area not included within the boundaries of any incorporated or unincorporated city, town, or village having a population in excess of 1,500 inhabitants, and which is not receiving electric service from any corporation subject to the jurisdiction of the Georgia Public Service Commission, or from any municipal corporation. To encourage and foster the creation and operation of such membership corporations, and in connection with the acquisition, construction, improvement, operation, and maintenance of their lines, the legislature by section 4 of the Rural Electrification Act of 1937 gave them the right to use any highway, or any right of way, easement, or other similar property right owned or held by the State or any political subdivision thereof, subject only to reasonable regulations as to safety which the State Highway Department promulgates. And the people of Georgia, by article 7, section 1, paragraph 4, of the Constitution of 1945, have, until December 31, 1961, exempted from all taxation the real and personal property which such corporations own and use for the purpose of furnishing electric current to the members they serve.

2. The plaintiff a nonprofit membership corporation, seeks an injunction to prohibit the defendant, a subsidiary corporation to the City of Marietta, Georgia, from invading a rural area...