Duke Power Co. v. GREENWOOD, COUNTY, SC

• Decision Date: 23 April 1935
• Docket Number: No. 451.,451.
• Citation: 10 F. Supp. 854
• Court: U.S. District Court — District of South Carolina
• Parties: DUKE POWER CO. et al. v. GREENWOOD COUNTY, S. C., et al.

10 F. Supp. 854

DUKE POWER CO. et al. v. GREENWOOD COUNTY, S. C., et al.

No. 451.

District Court, W. D. South Carolina.

April 23, 1935.

W. S. O'B. Robinson and J. H. Marion, both of Charlotte, N. C., W. R. Perkins, of New York City, and H. J. Haynsworth, of Greenville, S. C., for plaintiffs.

Robinson & Robinson, of Columbia, S. C., and W. H. Nicholson and R. F. Davis, both of Greenwood, S. C., for defendant Greenwood County and its Finance Board.

Henry T. Hunt, of Washington, D. C., for defendant Harold L. Ickes, Federal Emergency Administrator of Public Works.

I. Outline of Proceeding.

WATKINS, District Judge.

This matter comes before the court upon motions on behalf of all the defendants to dismiss the original bill, as modified and amended by plaintiffs' supplemental bill. The separate motion of Harold L. Ickes, as Federal Emergency Administrator of Public Works, is based upon the ground that the bill, as amended, "does not state any matter of equity entitling the plaintiffs to the relief prayed for, nor are the facts as stated sufficient to entitle the plaintiffs to any relief against the defendants." The motion filed on behalf of all other defendants is based upon three grounds:

"1. Because it appears in the bill of complaint as amended and supplemented that a proceeding entitled R. H. Park, in his own right and as a citizen and taxpayer of Greenwood county, and in behalf of other persons similarly situated v. Greenwood county et al., has heretofore been instituted in the original jurisdiction of the South Carolina Supreme Court, and has been decided against the taxpayer in that action; therefore the questions attempted to be raised by the plaintiffs in this action are res adjudicata.

"2. In that the complaint as amended and supplemented shows upon its face that there is an insufficiency of fact to constitute a valid cause of action in equity against these defendants.

"3. In that the complaint as amended and supplemented shows upon its face that the plaintiffs have no standing in court to question the action of the defendants in the particulars set out in the bill and in the supplemental bill."

The last-mentioned motion was filed February 23, 1935; that of Mr. Ickes, as Federal Emergency Administrator of Public Works, on April 9, 1935. The final brief of counsel upon these motions reached me on April 9, 1935. The purpose set out in the bill is to enjoin the defendants from doing certain acts complained of as illegal and unconstitutional, all of which will fully appear by reference to the pleadings, and will be more specifically detailed later on in this opinion. The Federal Emergency Administrator of Public Works was not made a party to the original bill, but upon his petition, concurred in by the other defendants, an order was passed allowing him to intervene and requiring that he be made a party defendant. Thereupon, the defendants submitted a motion to require the plaintiffs to amend the complaint by setting out the contract finally executed by and between the defendants, in lieu of the contract alleged in the complaint. This motion was refused, for the reason that the plaintiffs had used every effort to ascertain the terms of the contract, which had not then been signed, and, being advised by the defendants, who readily furnished the information, of what was then proposed, set out in the bill as an exhibit thereto the terms of the then proposed contract. Subsequently, the defendants made certain changes in the proposed contract, and advised the plaintiffs thereof, notwithstanding which the actual signing of the contract had not taken place, nor had the plaintiffs been advised of the changes proposed when the bill was filed, nor up to the time that the motion was filed. The defendants then answered, setting up the contract, which had been duly signed at the time of the filing of the answers, and filed motions to dismiss on the same substantial grounds as here presented. Following what the court conceived to be the proper practice, as indicated by the Supreme Court in Borden's Farm Products Co. v. Baldwin, 293 U. S. 194, 55 S. Ct. 187, 79 L. Ed. ___, the court refused the motions to dismiss. Thereafter, the plaintiffs were permitted to file their amended and supplemental bill, and after all the answers were in, the motions to dismiss, above outlined, were filed, and, at the arguments thereon, it was agreed that the court should proceed with the hearing and render its decree based upon the truth of the facts alleged in the bill, which, for the purposes of the motions to dismiss, must be admitted. It was expressly understood, however, that the contract between the defendants, as finally signed, must be accepted as the true contract, in lieu of that originally alleged in the bill. In passing, it should be stated that it appeared to be first contemplated that certain testimony would be taken, but, as stated above, it was finally decided by both sides that this would be dispensed with.

II. Findings of Fact.

By way of preface to these findings, the court thinks it proper to state that, upon the determinative issues involved, as it views the case, there are but few, if any substantial, issues of fact disclosed by the pleadings, and counsel for both sides have shown a commendable spirit of co-operation in their agreement by which the case may be brought to an early conclusion. Since the motions under consideration admit the truth of all the allegations of fact contained in the bill, and are, of course, part of the record, and since it would too greatly prolong this opinion here to quote them in full, I think it only necessary here to find that the allegations of fact, as contradistinguished from conclusions of law, set out in the bill are true. To clarify the opinion, however, and for the convenience of the appellate courts which may subsequently be called upon to review this opinion, I will briefly summarize certain of the findings upon which my conclusions must and do rest, as follows:

1. The plaintiffs are electrical public utilities corporations, engaged in the intrastate sale and distribution of electric power and energy within the state of South Carolina. Their business and their rates for such sales are subject to the exclusive jurisdiction, regulation, and control of the Railroad Commission of said state. They have invested many millions of dollars in electric power facilities for the purpose of serving the territory in which the defendant Greenwood county intends, through its proposed Buzzard Roost Project, to engage in the generation, distribution, and sale of electric power in competition with the plaintiffs. The plaintiffs are adequately serving this territory and their established and available facilities are amply sufficient so to serve said territory for many years; their rates are just and reasonable and have been duly approved by said Railroad Commission, and they have heretofore secured and now own and use, for the purpose of conducting their business in said territory, valuable franchises and operating rights. Attention will be hereafter called to the provisions of the South Carolina statutes, imposing upon the plaintiffs numerous obligations, such as continued maintenance of service, enlargement of facilities, taxation, adherence to rates fixed by the Commission, and other duties, to many of which burdens the law does not subject Greenwood county. The bill of complaint adequately alleges the property rights of the plaintiffs, for the protection of which injunctive relief is sought in this suit.

2. The Federal Emergency Administrator of Public Works has entered into an agreement with his codefendants, dated December 8, 1934, for the construction, on the Saluda river, in the state of South Carolina, at a point known as Buzzard Roost, of a hydroelectric plant, together with transmission and distribution lines extending into and through the counties of Greenwood, Newberry, and Laurens, for the purpose of engaging in the business of furnishing electrical energy to municipalities, industrial enterprises, private individuals, and the public generally, for domestic, commercial, and industrial uses. The principal customers with whom the county has entered into contracts, and with whom it proposes to enter into contracts, for the sale of electrical energy to be produced by said plant, are now, and for a number of years have been, customers of the plaintiffs.

3. It is proposed to construct the plant under the supervision and direction of the Administrator, under an agreement by which he purports to be acting under title 2 of the National Industrial Recovery Act 40 USCA § 401 et seq.. The contract provides for a loan and grant by the Administrator to his codefendant county in an aggregate sum not to exceed $2,852,000. The grant will amount to 30 per centum of the cost of the labor and materials employed upon said project, and the loan will be represented by bonds to be issued by the county to the United States of America; both principal and interest of said bonds to be payable only out of the revenues of the plant. The contract specifically provides that the principal and interest on the bonds, and the maintenance and operation of the hydroelectric system, shall be paid solely and exclusively from the operation of said system, and that the cost of constructing and completing the system shall be paid exclusively from the proceeds of the bonds and the grant described in the contract.

4. It appears from the bill that the county has estimated, through its engineers, that the cost of the completion of the project will come within the limits of the amount to be furnished through the loan and grant, and that the county has set rates for the sale of power based upon these estimates, but that the project will actually cost an excess of more than $1,000,000 beyond the county's estimate; that the project will not be self-liquidating and self-supporting; and that, therefore, the rates fixed...