Elizabeth City Water & Power Co. v. Elizabeth City

• Decision Date: 01 October 1924
• Docket Number: 12.
• Citation: 124 S.E. 611,188 N.C. 278
• Parties: ELIZABETH CITY WATER & POWER CO. v. ELIZABETH CITY.
• Court: North Carolina Supreme Court

124 S.E. 611

188 N.C. 278

ELIZABETH CITY WATER & POWER CO. v. ELIZABETH CITY.

No. 12.

Supreme Court of North Carolina

October 1, 1924

Appeal from Superior Court, Pasquotank County; Devin, Judge.

Action by the Elizabeth City Water & Power Company against Elizabeth City, for injunction. Action dismissed, and plaintiff appeals. Affirmed.

Under C.S. § 518, objection that complaint does not state cause of action is not waived by not being raised by answer or demurrer, but can be raised at any time in writing or orally.

Failure of petition or complaint to state cause of action can be reached at any time.

The facts, as set forth by plaintiff, appellant, are as follows:

"Facts.

The plaintiff was chartered in 1903, for the purpose of supplying water and power, and then acquired a 60-year franchise that in 1902 had been granted by Elizabeth City. This franchise granted in 1902 received legislative recognition, sanction and ratification in 1903, and has municipal recognition by express contract, acquiescence, and estoppel.

The plaintiff has a modern and efficient water system with nearly 13 miles of mains in service, a plant with a capacity of 1,440,000 gallons per day, while the average daily consumption of water in Elizabeth City is only 400,000 gallons; the investment being $173,577.68.

The plaintiff serves the city, its inhabitants, and persons beyond the city limits, especially those living within a radius of a mile beyond the boundaries. The bill alleges that the city has passed the ordinances authorizing a municipal bond issue of $800,000 to provide for the construction of city electric, water, and sewer plants. It is stated that the bond ordinance is invalid, in that the purpose is not in fact a public purpose, and that the city did provide in accordance with the requirements of the Municipal Finance Act but did acts prohibited by the state and federal Constitutions. The plaintiff states that the only practicable and available source of water supply is Knobb's creek, and the company from the beginning of its operations, in 1903, as well as did the predecessors of the company, the rights of which predecessors the company acquired, has made use of said stream.

The company has long had a dam across the creek, and in 1919 obtained from the Legislature of North Carolina permission to erect a permanent dam. The city has prepared, introduced, and caused to be passed a bill repealing the company's right to dam the stream; the act giving the city right to construct a dam across Knobb's creek.

It is stated that the subsoil of Elizabeth City is such that the laying of duplicate water mains and pipes will cause great damage and injury to the distributing system of the plaintiff company and prevent it from serving its customers and from carrying out its contractual and franchise obligations. The bill states that the defendant city has prepared and caused to be passed by the Legislature a city charter, which authorizes the city to construct and operate a municipal water system and that by said charter is effected a studied and consistent discrimination against the plaintiff amounting to destruction and confiscation, and in favor of the municipal water system.

The requirements that all property holders pay for the installation and cost of connection with the pipes of the municipal plant and the restriction against the taking up of paving when once laid are particularly complained against.

The bill of complaint states that the plaintiff company is a large taxpayer, that the issuance of said bonds by the city and dedication of the proceeds to the purposes intended, with no requirement that the rates charged shall pay all operating expenses, allow for depreciation, and provide for the payment of the principal and interest, violate the rights of the plaintiff, which company is under regulation by the Corporation Commission of North Carolina, and the municipal plant by law made exempt from regulation.

It is charged that the issuance of the bonds without a vote of the people is in violation of the state Constitution as construed by the highest state court at the time of the organization of plaintiff and the issuance of its securities.

The bill prays that the issuance and sale of the bonds be enjoined; that the construction of the dam across Knobb's creek and the use of the stream as a source of supply be denied; that damage to the pipes and mains be prevented; that the levying of the taxes to pay the principal and interest of the bonds be prohibited; that the inhabitants and property holders of Elizabeth City be not required to use the municipal water supply; and that the city be prohibited from using any unfair methods of competition. General relief is also prayed.

The bill of complaint was filed on February 4, 1924. As part of the bill there were filed seven exhibits. The defendant answered on February 23, 1924. On February 27, 1924, the defendant gave notice that it would, on March 17, 1924, move to dismiss the bill on the ground of insufficiency of facts to constitute a cause of action; and on February 27, 1924 the defendant gave a second notice that it would on March 8 1924, move for an order requiring the plaintiff to file a bill of particulars and to make the bill more specific, the motion itself, as made on March 8, 1924, is contained in the record.

The court heard the motion to file particulars and to make more specific on March 18, 1924, and granted the same. Immediately thereafter, on the same day, the court heard the motion to dismiss, with the amendments and particulars considered as made and filed, and thereupon passed an order dismissing the bill. The final judgment dismissing the bill followed; the court 'being of the opinion that the complaint, as so amended and amplified, does not state facts sufficient to constitute a cause of action, and that the action should be dismissed.' The plaintiff appealed from this judgment."

The facts set forth by defendant, appellee, are as follows:

"The plaintiff, Elizabeth City Water & Power Company, was duly incorporated under the laws of North Carolina on the 25th day of February, 1903, for a period of 60 years. On the 6th day of October, 1902, the respondent city attempted to grant to C. M. Ferebee and his assigns a franchise to furnish to said city and its inhabitants an adequate supply of pure, potable, and wholesome water, and an efficient sanitary sewerage and waterworks in said city, and to use the streets and public grounds of said city for that purpose.

On February 18, 1903 (Priv. Laws, c. 99), the General Assembly of North Carolina by private act authorized the city, upon ratification by popular vote, to contract with the said Ferebee and his assigns for electric lights, water, sewerage, and gas, or for any of same, for such time, not exceeding 30 years, and upon such terms and conditions, and for such consideration, in each case, as the board of aldermen of said city might deem just and expedient.

Said act further empowered the city to agree with said Ferebee or his assigns that no pipe, etc., for a water supply or sewerage should, under the authority of said city, be placed in, under, or across any of the streets, etc., of said city, at any time within 10 years from May 1, 1903, which in any way should interfere with the pipes, etc., of said Ferebee, or his assigns, laid for the purpose of performing any contract made under the authority of said act.

On March 4, 1903 (Priv. Acts, c. 262), the General Assembly by private act further empowered the city, upon prescribed conditions, to erect public utilities of its own. This act of March 4th provided that 'No contract or agreement made at any time hereafter by the corporation of Elizabeth City, under the authority contained in the aforesaid act (private act of February 18, aforesaid) shall, during the period or term for which said contract or agreement shall be made, be in any manner terminated or impaired or by virtue of any power or authority vested in the board of town aldermen of Elizabeth City by the provisions of this act.'

On the 1st day of June, 1903, the respondent city entered into a contract with the complainant, as the assignee of said Ferebee, to furnish to the city and its inhabitants an adequate supply of good, wholesome, potable water, suitable for all domestic purposes.

This contract, as will appear from the terms thereof, expired by limitation on the 31st day of May, 1913. Since the expiration of this contract no new contract has been entered into between said parties, though the respondent city and its inhabitants have continued to use, so far as possible, water furnished by the complainant upon the terms agreed or fixed by appropriate authority. No further contract between said parties is set out in the record. Nor does the complainant allege with particularity any facts constituting a renewal of said contract--complainant contenting itself with the contention that a renewal of said contract for a like period of time is to be presumed from the continuance of service after the 31st day of May, 1913.

On September 5, 1922, the city, in conformity with the Municipal Finance Act, passed by the General Assembly of North Carolina at its sessions of 1919 and 1921 (see infra), duly passed two ordinances, one providing for the issue of bonds in the sum of $550,000 to provide a combined water, electric light, and power system for said city, and the other providing for the issue of bonds in the sum of $250,000 to provide a sewerage system for said municipality and its inhabitants. These two ordinances as shown by the record were, under the authority of said Municipal Finance Act, subsequently consolidated by ordinance of October 9, 1922. Thereupon this suit was instituted, seeking...