Duke Power Co. v. Greenwood County

• Decision Date: 03 December 1938
• Docket Number: No. 451.,451.
• Parties: DUKE POWER CO. et al. v. GREENWOOD COUNTY et al. Ex parte GREENWOOD COUNTY.
• Court: U.S. District Court — District of South Carolina

25 F. Supp. 419

DUKE POWER CO. et al. v. GREENWOOD COUNTY et al.

Ex parte GREENWOOD COUNTY.

No. 451.

District Court, W. D. South Carolina.

December 3, 1938.

W. H. Nicholson and R. F. Davis, both of Greenwood, S. C., and D. W. Robinson, Jr., of Columbia, S. C., for petitioner.

W. S. O'B. Robinson, Jr., and W. B. McGuire, Jr., both of Charlotte, N. C., and H. J. Haynsworth, of Greenville, S. C., for plaintiffs.

John W. Scott, Sp. Asst. Atty. Gen., and Wm. J. Dempsey, of Washington, D. C., for Harold L. Ickes.

MYERS, District Judge.

This suit was brought by the plaintiffs, electric utility corporations operating in Greenwood County, South Carolina, and in adjoining counties, to enjoin the making of a loan and grant by the Federal Administrator to Greenwood County, under the provisions of Title 2 of the National Industrial Recovery Act of June 16, 1933, § 201 et seq., 48 Stat. 195, 200, Chap. 90, 40 U.S.C.A., § 401, et seq., for the construction by Greenwood County of a local electric power plant to be operated by the County in competition with plaintiffs. The plaintiffs, by their amended and supplemental bill of complaint, challenged the constitutional authority of the Federal Government, as well as the statutory authority of the Federal Administrator, to make the loan and grant and also challenged the authority of the County and its officials to receive and use the loan and grant for the construction of the proposed power plant. The suit was instituted on November 7, 1934, and, after protracted litigation, was finally terminated, adversely to plaintiffs, on January 3, 1938, by a decision of the United States Supreme Court, holding that plaintiffs had no standing to maintain the suit. 302 U.S. 485, 58 S.Ct. 306, 82 L.Ed. 381.

After the mandate of the Supreme Court was filed in this court, Greenwood County filed its petition for restitution and for an award of damages under the bond given by plaintiffs in obtaining a preliminary injunction. This matter, together with plaintiffs' exception to taxation of costs, was heard by me in the city of Greenville, South Carolina, by proper designation of the Senior Circuit Judge, and has been fully considered upon argument then heard and upon briefs subsequently filed.

Petitioner alleges in its petition that it would have completed the proposed power plant and put it in operation by February 1, 1936, but for the delays occasioned by this suit and the alleged erroneous decrees of injunction entered herein; that by reason of said delays the completion of the plant is not expected to occur until about June 1, 1939; that during the period of delay plaintiffs sold power to consumers who were prospective customers of petitioner; that by reason of such sales plaintiffs profited at the rate of $250,000 a year, or a total for the entire period of $850,000; and petitioner alleges, on information and belief, that but for the alleged erroneous decrees it would have realized this profit from the sale of electric energy to private and public consumers; and that the plaintiffs have been unjustly enriched by reason of said alleged erroneous decrees and now retain large profits to which they are not entitled, and which in equity and good conscience they should be required to restore to petitioner.

In stating its claim for damages under the injunction bond, petitioner alleges that the preliminary injunction was wrongfully obtained; that plaintiffs are therefore liable to petitioner for such costs and damages as petitioner may have suffered by reason of the injunction; and that petitioner has suffered costs and damages up to and exceeding $50,000, the penalty of the bond, consisting of additional engineering expenses and legal fees, increased cost of labor and material, and loss of profits that would have been made by petitioner had the construction and operation of the plant been allowed to go forward without interference from the plaintiffs.

The plaintiffs, in their return to the petition, incorporated a motion to dismiss the petition, and the cause has been heard on the motion. The grounds of the motion are that the petition does not state facts sufficient to entitle petitioner to any relief, and upon its face is wholly without equity; and that it appears from the record of the cause that petitioner is not entitled to any relief against the plaintiffs.

The facts, as alleged in the petition and established by the record, and as admitted by the motion to dismiss, are as follows:

1. This court first denied defendants' motion to dismiss the bill for want of equity, 10 F.Supp. 854; then heard the case on the merits, and on August 26, 1935, entered a final decree of injunction, 12 F. Supp. 70; on appeal the Circuit Court of Appeals, upon motion and showing by the Administrator that defendants, after the entry of the injunction decree, had rescinded the loan and grant agreement dated December 8, 1934, in existence at the time of the decree, and entered into a new agreement dated November 30, 1935, remanded the case to this court for reconsideration in the light of the new agreement, 4 Cir., 79 F.2d 995; after the remand this court took further testimony and on December 21, 1935, entered a second decree refusing to set aside and vacate the original decree; on appeal the Circuit Court of Appeals reversed the decrees of this court and ordered the bill dismissed for lack of equity, 4 Cir., 81 F. 2d 986, Judge Soper dissenting; on certiorari the United States Supreme Court, considering that the courts below had not acted in accordance with the standards of proper procedure in considering the changed situation brought about by the new contract, and that the record had been improperly made up, refused to pass on the merits, and in order that the cause might be retried, reversed the decree of the Circuit Court of Appeals and remanded the case to this court with directions to vacate the decrees of August 26, 1935, and of December 21, 1935, to permit the pleadings to be amended and to retry the case, 299 U.S. 259, 57 S.Ct. 202, 81 L.Ed. 178; on receipt of the mandate the prior decrees were vacated, the pleadings amended, the cause retried, and on June 1, 1937, a final decree entered dismissing the bill on is merits, D.C., 19 F. Supp. 932; on appeal the Circuit Court of Appeals affirmed, Judge Soper dissenting, 4 Cir., 91 F.2d 665; and on certiorari the Supreme Court affirmed the decree of the Circuit Court of Appeals, 302 U.S. 485, 58 S.Ct. 306, 82 L.Ed. 381.

2. On February 1, 1937, after the injunction decree of August 26, 1935, was vacated, this court, on motion of plaintiffs, granted a preliminary injunction restraining the defendants until the further order of the court from advancing, receiving or using federal funds for the construction of the contemplated power plant; and required the plaintiffs as a condition of the granting of the injunction to execute, and plaintiffs did execute, the usual injunction bond in the penal sum of $50,000. The court incorporated in the order granting the preliminary injunction a provision that the injunction should not prevent the payment to Greenwood County by the Federal Administration of funds up to $100,000 to be used by the County in paying legal, engineering and other administrative expenses, and later modified the order so as to permit the County to obtain further funds up to the additional amount of $150,000 to be used in paying legal, engineering and other administrative expenses, and in purchasing necessary lands for the development of the project.

3. This preliminary injunction remained in effect until June 1, 1937, a period of four months, when it was vacated by the final decree entered on that date. It did not delay the ultimate determination of the suit, or cause petitioner any additional damage or expense beyond that resulting from the principal suit.

4. On the appeal of plaintiffs from the final decree of June 1, 1937, the Circuit Court of Appeals on June 19, 1937, granted plaintiffs' motion for a restraining order, during the pendency of the appeal, similar in effect to the preliminary injunction granted by the District Court. The plaintiffs were not required to give a bond for damages, but the court incorporated in the order a provision that it should not prevent the payment to Greenwood County, in addition to funds already advanced, of further funds up to $150,000 for use by the County in paying legal, engineering and other administrative expenses, and in the purchase of necessary land should the emergency arise for such purchase. The court in granting the order recited the prior proceedings in the case as showing "The importance of the case and of the issues involved therein", and stated: "It thus appears that the United States Supreme Court has already determined that the questions involved in this case are of such importance that they should be finally settled and determined by that Court...