Greenwood County v. Duke Power Co.

• Decision Date: 06 November 1939
• Docket Number: No. 4466.,4466.
• Citation: 107 F.2d 484
• Parties: GREENWOOD COUNTY v. DUKE POWER CO. et al. DUKE POWER CO. v. GREENWOOD COUNTY et al.
• Court: U.S. Court of Appeals — Fourth Circuit

107 F.2d 484 (1939)

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

No. 4466.

Circuit Court of Appeals, Fourth Circuit.

November 6, 1939.

D. W. Robinson, Jr., of Columbia, S. C. (W. H. Nicholson, of Greenwood, S. C., and Jas. F. Dreher, of Columbia, S. C., on the brief), for appellant.

W. S. O'B. Robinson, Jr., of Charlotte, N. C. (W. B. McGuire, Jr., of Charlotte, N. C., and Haynsworth & Haynsworth, of Greenville, S. C., on the brief), for appellees.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from an order dismissing a petition filed by defendant Greenwood County after the suit of the plaintiff Duke Power Company had been dismissed and injunction orders therein granted had been dissolved. The petition asked restitution of profits alleged to have been lost by the county and received by the power company as a result of the injunctive orders and also recovery of damages under the $50,000 injunction bond given by the power company to secure the preliminary injunction, which was in effect from February 1, 1937 to June 1, 1937. The facts are as follows:

On or about November 16, 1933, Greenwood County, South Carolina, made application to the Public Works Administration of the United States for a loan and grant for the construction of a proposed power plant at Buzzard Roost Falls on the Saluda River. By resolution of June 20, 1934, the Public Works Administration allotted to this project the sum of $2,767,000. The power company protested, but the protest was overruled and on November 7, 1934 contract was entered into between the county and the United States Administrator of Public Works providing for the making of the loan and grant under the allotment. This contract was abrogated and a new contract substituted for it on November 30, 1935.

On November 7, 1934 this suit was instituted by the power company to enjoin the Federal Administrator from making, and the county from receiving and using the loan and grant in the construction of the proposed power plant. On April 23, 1935, a motion to dismiss the bill of complaint was denied (D.C., 10 F.Supp. 854); and on August 26, 1935 decree was entered granting the injunction prayed (D.C., 12 F. Supp. 70). Defendants appealed to this court; but, while the appeal was pending, they entered into the contract of November 30, 1935; and the case was remanded for retrial in the light of that contract. 4 Cir., 79 F.2d 995. On the retrial thus granted, the court refused to vacate the injunctive order of August 26, 1935, and defendants again appealed to this court, which reversed the decision below. 4 Cir., 81 F.2d 986. Certiorari was then granted by the Supreme Court, 298 U.S. 651, 56 S.Ct. 941, 80 L.Ed. 1379; and that court, without ruling on the merits, reversed the decision of this court for errors of procedure and remanded the case to the District Court with direction that the decrees theretofore entered be vacated and the case retried. 299 U.S. 259, 57 S.Ct. 202, 81 L.Ed. 178. The District Court on January 19, 1937, vacated the injunctive decrees in accordance with the mandate of the Supreme Court, but on February 1, 1937 granted a temporary restraining order which remained in effect until decree dismissing the bill of complaint on the merits was entered on June 1, 1937. D.C., 19 F.Supp. 932. Under the terms of the temporary restraining order, a bond in the sum of $50,000 to cover damages which might arise from the granting of the order was required of and was given by the power company. That company appealed from the decree of June 1st dismissing the bill of complaint; and on June 19, 1937, this court granted a temporary restraining order pending appeal, but without requiring bond, and on August 6, 1937 affirmed the decree of the District Court. 4 Cir., 91 F.2d 665. The Supreme Court promptly granted certiorari, 302 U.S. 675, 58 S.Ct. 120, 82 L.Ed. 521, and affirmed the decision of this court on January 3, 1938. 302 U.S. 485, 58 S.Ct. 306, 82 L.Ed. 381.

The District Court provided in the temporary restraining order granted on February 1, 1937, that such order should not prevent the payment to or receipt by the county of a sum not exceeding $100,000 for the payment of "legal, engineering and other administrative expenses", the order being modified on February 25th to permit the payment and receipt of an additional $150,000; and this court, in granting the restraining order pending appeal on June 19, 1937, provided that an additional amount of $150,000 might be advanced to the county to be used in paying legal, engineering and other administrative expenses and in the purchase of necessary lands, should an emergency arise for such purchase.

No bond was required as a condition of the granting of the restraining order of June 19, 1937, the court, after reciting the prior proceedings had in the cause and the granting of certiorari by the Supreme Court to the United States Court of Appeals for the District of Columbia in a similar case, saying: "It thus appears that the U. S. 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. In the meantime for appellees to proceed with the undertaking, while the appeal is pending, would tend to frustrate the purpose of the appeal and, in the event of a reversal or modification of the decree appealed from, to render the action of the Appellate Court of no effect and to cause irreparable injury to appellants. Under these circumstances the rule is well settled that the status quo of the case should be preserved pending the appeal, or until the further order of this Court."

It is alleged in the petition that, as a result of the injunctive orders granted in the case, the construction of the county's project was delayed for more than three years, and that during this delay the power company sold electric current to consumers who had contracted to buy from the county upon the completion of its plant, as well as to its potential customers, and profited by such sales to the extent of $250,000 per year; and the county, in this connection, relies upon testimony of one of the power company's witnesses, taken upon the injunction hearing, to the effect that, unless the company should reduce its rates to meet rates fixed by the county, it would suffer a loss of business from which it was realizing gross income of $250,000 per year. It appears from the record, however, that the estimated capacity of the county's project was approximately 33,000,000 K.W.H. primary power and 11,000,000 K.W.H. secondary power per year; that the contracts held by it called for less than half this amount; and that its estimated net income from the sale of its entire output after deduction of operating expense, maintenance and fixed charges, but without deduction of depreciation, was only $87,400.

The injunctive orders were in effect between August 26, 1935 and January 19, 1937, and between February 1, 1937 and January 10, 1938; but the petition alleges that the pendency of the suit effectively prevented the county from proceeding with the construction of its project during the remaining part of the time that the suit was pending, paragraph 9 of the original petition, which was never withdrawn, being as follows:

"That this petitioner was actually enjoined by the erroneous decrees of the court between the dates of August 26, 1935 and January 19, 1937, and between February 1, 1937 and January 10, 1938. This suit in equity, however, was pending from November 7, 1934 and though this petitioner was not actually enjoined except as indicated above, the pendency of this suit, particularly after the erroneous ruling refusing to dismiss the complaint by this court, of April 23, 1935, acted as a de facto injunction, effectively preventing this petitioner from proceeding with the construction of its project during the entire period of the suit."

The petition alleges that the county suffered costs and damages up to and exceeding $50,000, the amount of the injunction bond given on February 1, 1937, because of additional engineering expenses and legal fees, increase in cost of labor and materials and because of loss of profits that would have been made by the county "had the construction and operation of the plant been allowed to go forward without interference from the plaintiffs". There was no allegation, however, that any part of this loss was directly traceable to the temporary injunction order of February 1, 1937, which was in effect for only four months and which was the only order covered by the bond; and the allegation quoted above clearly negatives the possibility that any part of the loss alleged could have been traceable to that order as distinguished from the other orders entered in the case and the general effect of the fact that it was pending in court.

The county does not contend that it is entitled to damages on account of the institution of the suit, nor, except as to the temporary injunction of February 1, 1937, on account of the granting of injunctive orders therein. It is not alleged or contended that the suit was instituted, or that the injunctive orders were obtained, maliciously or without probable cause; and no such contention could well be made in view of the division of opinion in the court below as well as in this court and of the granting of certiorari by the Supreme Court in both this and the Alabama Power Company cases. As stated by the learned judge below, the doctrine is well settled that there is no liability for damages resulting from a suit for an injunction or from an injunction erroneously granted, unless the suit was prosecuted maliciously and without probable cause. 32 C.J. 464; Russell v. Farley, 105 U.S. 433, 26 L.Ed. 1060; Meyers v. Block, 120 U.S. 206, 7 S.Ct. 525, 30 L.Ed. 642; United Motors Service v. Tropic-Aire, 8 Cir., 57 F.2d 479, 483...