Duke Power Co. v. Bell

• Decision Date: 25 April 1930
• Docket Number: 12909.
• Citation: 152 S.E. 865,156 S.C. 299
• Parties: DUKE POWER CO. v. BELL, County Treasurer.
• Court: South Carolina Supreme Court

152 S.E. 865

156 S.C. 299

DUKE POWER CO. v. BELL, County Treasurer.

No. 12909.

Supreme Court of South Carolina

April 25, 1930

Appeal from Common Pleas Circuit Court of Lancaster County; J. Henry Johnson, Judge.

Action by the Duke Power Company against O. R. Bell, as County Treasurer of Lancaster County. Decree for plaintiff, and defendant appeals.

Affirmed.

The order of Judge Johnson is as follows:

This is an action for the recovery of certain county taxes and penalty, paid by the plaintiff under protest to the defendant as County Treasurer.

The cause came on to be heard at the April Term of this Court. A jury trial was waived, and it was agreed by the parties that all issues of fact and of law raised by the pleadings should be determined by the Court. The issues thus raised were, for the most part, issues of law; but certain facts and conclusions of facts as alleged in the complaint not having been formally admitted by the answer, it was agreed that the plaintiff might introduce in evidence the affidavit of C. C. Sadler and that said affidavit, in so far as the facts therein stated were deemed relevant by the Court should be treated and considered as testimony offered and adduced on behalf of the plaintiff.

The facts relevant to a determination of the issues raised, as alleged and admitted by the pleadings and established by the evidence, are as follows:

The Great Falls Power Company was a New Jersey corporation, which was duly domesticated in South Carolina during the years 1925, 1926, and 1927. By its charter it was authorized and empowered "to acquire, develop, control and operate plants for the generation of electricity by water or other power" and ""to manufacture generate, accumulate, store, and sell electricity or electrical current." In March, 1925, the Great Falls Power Company owned, and for several years prior thereto had owned, a dam across Catawba River between the Counties of Lancaster and Fairfield. At the end of the dam in Fairfield County it owned and operated, and had for several years prior thereto owned and operated, a power station for the generation of electricity. By a Joint Resolution, approved the 5th day of March, 1925, hereinafter set out, the General Assembly of South Carolina exempted from all county taxes, except for school purposes, "manufactories" desiring to locate in the County of Lancaster and in certain other counties, not including the County of Fairfield, "for five (5) years from the time of their establishment." In June, 1925, the Great Falls Power Company commenced the construction of a power station on the Lancaster side of the dam above referred to. This plant, called the Cedar Creek Power Station, was put in partial operation in August, 1926, and was completed in September, 1926. Its construction required the taking out or removal of a considerable part of the old and the construction of an altogether new dam about two hundred fifty (250) feet in length on the Lancaster side, which, however, was connected with the old dam. Said Cedar Creek Power Station was and is an electrical power plant, consisting of machinery and a brick building equipped with the apparatus, machinery, and appliances required for the generation and/or manufacture of electric current for lighting, heating, and power purposes. The capital stock of the Great Falls Power Company was largely in excess of One Hundred Thousand Dollars ($100,000.00), and the cost of the construction of the said Cedar Creek Power Station in Lancaster County was considerably in excess of One Million Dollars ($1,000,000.00). It would have been entirely practicable to have increased or enlarged the capacity of the Power Station on the Fairfield side of the river. Instead of so doing this Cedar Creek Power Station, which was entirely new construction, was erected on the Lancaster side of the river as a complete and self-contained unit for the generation of electric power. Homes for all necessary employees were erected near the station in the County of Lancaster. The property value of the Cedar Creek Power Station, so constructed in Lancaster County, was assessed for taxation for the year 1927, at Five Hundred and Thirty Thousand Dollars ($530,000.00).

On or about December 1, 1927, the Great Falls Power Company was merged into and consolidated with the Duke Power Company, a New Jersey corporation, domesticated in South Carolina. By its charter the Duke Power Company was authorized and empowered "to manufacture, generate, buy, sell, accumulate, store, transmit, furnish, and distribute electric current for light, heat, and power," and "to erect, buy, operate, lease, and let power plants and generating stations for the manufacture, generation, accumulation, storage, transmission, and distribution of electric current," etc. By the terms of the agreement of merger it was provided that upon the consummation of the act of merger "all and singular the rights, privileges, powers, and franchises" of the Great Falls Power Company should "be vested in said Duke Power Company"; and "all property, rights, privileges, powers, and franchises, and all and every other interest" of the said Great Falls Power Company should "be as effectually the property of the said Duke Power Company as they were of the said Great Falls Power Company."

Prior to the completion of the Cedar Creek Power Station in September, 1926, neither the Great Falls Power Company, the Duke Power Company, nor any of its affiliated corporations, owned or operated a power station or plant for the generation of electricity in the County of Lancaster. County taxes were charged upon said Cedar Creek Power Station in the sum of Ten Thousand Three Hundred and Thirty-five Dollars ($10,335.00). On January 31st, 1928, the plaintiff paid, under protest, to the defendant, as Treasurer of Lancaster County, the amount of said county taxes, and in addition thereto a penalty of one per cent. (1%) thereof amounting to one Hundred Three and 35/100 Dollars ($103.35). Within thirty (30) days thereafter this suit was commenced by the plaintiff to recover the amount so paid.

The exempting Statute (34 St. at Large, page 891), under the provisions of which the plaintiff seeks the recovery of said amount, is as follows:

"A Joint Resolution to Exempt Certain Manufactories in York, Richland, Lancaster, Georgetown, Greenwood, Marion, Sumter, Clarendon, Cherokee, Saluda, and Laurens Counties From County Taxes for a Period of Five Years.

"Section 1. Tax Exemption of Manufactories in Certain Counties.--Be it resolved by the General Assembly of the State of South Carolina: Any and all manufactories desiring to locate in the Counties of York, Richland, Lancaster, Georgetown, Greenwood, Marion, Sumter, Clarendon, Cherokee, Saluda and Laurens, with a capital of not less than one hundred thousand ($100,000.00) dollars shall be exempt from all county taxes, except for school purposes, for five (5) years from the time of their establishment.

"§ 2. All Acts or parts of Acts inconsistent herewith are hereby repealed.

"§ 3. This Resolution shall take effect immediately upon its approval by the Governor.

"Approved the 5th day of March, A. D. 1925."

In his answer the defendant sets up five defenses. For the purposes of this order, the positions taken and the points thus raised in the answer will be considered and disposed of as follows:

First: It is contended (second defense) that the said Cedar Creek Power Station is not a manufactory within the contemplation and meaning of the Statute.

That contention must be overruled under the authority of the decision of our court in the case of Columbia Railway, Gas & Electric Co. v. South Carolina Tax Commission, 134 S.C. 319, 132 S.E. 611, wherein it was expressly held that a company engaged in the business of generating electricity is a ""manufacturer" within the meaning of a Statute imposing a tax upon a ""corporation engaged in the business of manufacturing." The word "manufactory" means, primarily, a physical plant, or a place or building, where manufacturing is carried on. If a company engaged in the generation of electricity is a ""manufacturer" for the purposes of a Statute imposing a tax, the plant or structure wherein the process of generating such electricity is carried on is a manufactory for the purposes of a tax exempting Statute. In re Consolidated Electric Storage Company (N. J. Ch.) 26 A. 983; Society for Establishing Useful Manufacturers v. Paterson, 88 N. J. Law, 123, 96 A. 92; Kentucky Electric Co. v. Buechel, 146 Ky. 660, 143 S.W. 58, 38 L. R. A. (N. S.) 907, Ann. Cas. 1913C, 714; People ex rel. Brush Electric Mfg. Co. v. Wemple, 129 N.Y. 543, 29 N.E. 808, 14 L. R. A. 708; People ex rel. Edison Electric Illuminating Co. v. Wemple, 129 N.Y. 664, 29 N.E. 812; People ex rel. Edison Electric Light Co. v. Campbell, 88 Hun, 527, 34 N.Y.S. 711. I am, therefore, of the opinion, and so find and hold, that the property assessed and taxed is a "manufactory" within the meaning of that word as used in the Statute.

Second: It is contended further in this connection (third defense) that the said Cedar Creek Power Station is not a new manufactory within the contemplation and meaning of the Statute, but is an addition to property in said County and State already being used for generating electricity, and as such is not exempt from taxation under the said statute.

By the terms of the Joint Resolution the exemption is granted to "any and all manufactories desiring to locate *** with a capital of not less than One Hundred Thousand Dollars ($100,000.00)." Even if it appeared that this Cedar Creek Power Station was an addition to or enlargement of an existing manufactory or plant within the County of Lancaster it is by no means clear that...