Holmes v. City of Fayetteville
| Citation | 150 S.E. 624,197 N.C. 740 |
| Decision Date | 20 November 1929 |
| Docket Number | 285. |
| Parties | HOLMES v. CITY OF FAYETTEVILLE. |
| Court | United States State Supreme Court of North Carolina |
Appeal from Superior Court, Cumberland County; Cranmer, Judge.
Suit by O. W. Holmes against the City of Fayetteville. From the judgment dissolving a temporary restraining order, plaintiff appeals. Affirmed.
Municipality owning and operating water plant may dispose of excess to outside consumers.
Municipality furnishing water renders service for public purpose.
This was a motion to continue to the hearing an order restraining the defendant from paying out any of its funds for the purpose or erecting and maintaining an electric transmission line beyond its corporate limits and furnishing an electric current to persons, firms and corporations outside the corporate limits, heard by Cranmer, J., at chambers, on March 26, 1929. The temporary restraining order was dissolved and the plaintiff excepted and appealed upon error assigned.
In 1905 the General Assembly amended the charter of the defendant by creating a "Public Works Commission," to consist of three members, who should have charge, control, supervision and management of all the defendant's public utilities including waterworks, sewerage, electric light plant, etc and who should have power and authority to make necessary contracts for the construction, repair, alteration, enlargement, and proper management of any of said public utilities, and to fix rates for their use. Private Laws 1905, c. 311. In 1925 this act and other acts were amended and the corporate powers of the defendant were enlarged. Private Laws 1925, c. 28. By these amendments the defendant was authorized and empowered to purchase, conduct, own, lease, and acquire utilities and to provide for all things in the nature of public works, and to acquire, establish, and operate waterworks, electric lighting systems, etc. Section 3 of article 2 says that all ordinances enacted in the exercise of the police power for sanitary purposes or the protection of the defendant's property shall, unless otherwise provided by the aldermen, apply with equal force to the territory outside the city limits within one mile in all directions from the corporate boundaries. Article 3 provides for acquiring by purchase or condemnation rights of way, easements, and privileges for water, sewer, and electric light systems either within or outside the city, and section 7 of article 7 for the supervision of electric light, water, and sewerage plants. On March 16, 1929, section 3, art. 2, of the Act of 1925, supra, was amended by adding thereto the following: "Sec. 4--That said City of Fayetteville be and it is hereby authorized and empowered in its discretion, to extend, construct, maintain, and operate its water, sewerage, and electric light lines and systems for a distance of not exceeding three miles in all directions beyond the corporate limits of said city as the same now exist or may hereafter be established; and to make reasonable charges for the use of such utilities." All laws in conflict with the act were repealed. Private Laws 1929, c. 190.
"The city may own and maintain its own light and waterworks system to furnish water for fire and other purposes, and light to the city and its citizens," etc. C. S. § 2807. This statute was amended in 1929 by inserting after the word "citizen" the following: "And to any person, firm or corporation desiring the same outside the corporate limits, where the service is available." Public Laws 1929, c. 285, § 1. This act (section 2) amends C. S. § 2808, by adding the following: "Provided, however, that for service supplied outside the corporate limits of the city, the governing body, board, or body having such waterworks or lighting system in charge, may fix a different rate from that charged within the corporate limits, with the same exemption from liability by the city or town as is contained in section two thousand eight hundred seven."
Brooks, Parker, Smith & Wharton, of Greensboro, and C. Murchison Walker, of Fayetteville, for appellant.
Robinson, Downing & Downing and Nimocks & Nimocks, all of Fayetteville, for appellee.
The defendant has no plant of its own for producing and furnishing electricity as a public utility, but it owns and maintains a system of poles, wires, and appliances for transmitting and delivering electricity to persons, firms, and corporations within the city. Some years ago it made a contract with the Carolina Power & Light Company, which is now in effect, for the purchase of an electric current for the use of the city and for resale or redistribution within the corporate limits and within adjacent territory, distant not more than 3 miles from the corporate boundaries. The contract is to continue 10 years from September 10, 1924. The company is to supply all the electric power requirements of the city not to exceed certain electrical horsepower. The city shall not sell or permit others to use power supplied under the contract except when expressly provided for in the rate classification under which the service is furnished, and the company shall have the right to serve only such power customers within the area as shall require an installation aggregating not less than 25 horse power.
After the creation of the Public Works Commission, the city extended its light and water systems beyond the corporate limits, thereby supplying a normal school, a women's home, and various individuals outside the city with light and water, and at the commencement of this action was engaged in constructing lines for selling electricity to persons and corporations outside the city limits, but within the 3-mile zone. It intends, unless restrained, to complete this work. For more than 10 years it has owned and operated transmission lines beyond the corporate boundaries, by which, it is alleged, electricity has been sold and is now sold to nonresidents at a profit.
Some time ago the plaintiff put up poles and lines outside and within less than 3 miles of the city boundaries, and the city furnished meters and electricity to persons using these lines under an agreement with the plaintiff; and it is now the purpose of the city to abide by its agreement if the plaintiff's lines are maintained in such way as to enable the defendant to provide reasonable service to its customers.
The plaintiff recently conveyed his transmission lines to the Holmes Electric Company, Inc., and this company, soon after the conveyance, applied to the Carolina Power & Light Company for the purchase of an electric current for resale or distribution to persons and corporations within and beyond the three-mile limit. The plaintiff's application was rejected by the power and light company, and its subsequent effort to secure from the superior court a writ of mandamus to compel an acceptance of its application was denied. Holmes Electric Co., Inc., v. Carolina Power & Light Co., 197 N.C. 766, 150 S.E. 621.
The relief sought by the plaintiff in this action is a perpetual injunction to restrain the defendant from using its funds to erect and maintain a line for transmitting an electric current to persons, firms, or corporations outside the boundaries of the city. In dissolving the restraining order, the judge determined the action upon its merits and rendered a final judgment. Lutterloh v. Fayetteville, 149 N.C. 65, 62 S.E. 758. This judgment the plaintiff assails on the ground that the defendant has no legal right to engage in a private interprise beyond its corporate limits and because the act of 1929, purporting to grant the power, was enacted in violation of the State and Federal Constitutions.
The plaintiff specifically rests his right to relief on two propositions, the first of which is this: A municipality which is not engaged in the manufacture of electricity, but is supplied an electric current from an electric power company, cannot engage in the business of selling such electric current to inhabitants outside of the boundaries, where its activities outside of its corporate limits in no way contribute to a fulfillment of its municipal functions or duties to the citizens within its boundaries.
The powers of a municipal corporation are those granted in express words, those necessarily or fairly implied in, or incident to, the powers expressly granted, and those essential to the declared objects and purposes of the corporation. 1 Dillon (5th Ed.) § 237. The sources of its powers are its charter, special acts, general statutes, and the organic law. 1 McQuillin (2d Ed.) 363.
The dual capacity or twofold character possessed by municipal corporations is governmental, public, or political, and proprietary, private, or quasi private. In its governmental capacity a city or town acts as an agency of the state for the better government of those who reside within the corporate limits, and in its private or quasi private capacity it exercises powers and privileges for its own benefit. Scales v. Winston-Salem, 189 N.C. 469, 127 S.E. 543. "In its proprietary or private character the theory is that the powers are supposed not to be conferred, primarily or chiefly, from considerations connected with the government of the state at large, but for the private advantage of the compact community which is incorporated as a distinct legal personality or corporate individual; and as to such powers, and to property acquired thereunder, and contracts made with reference thereto, the corporation is to be regarded quoad hoc as a private corporation, or at least not public in the sense that the power of the Legislature over it or the rights represented by it are omnipotent." 1 Dillon (5th Ed.) § 109, quoted in Asbury v. Albemarle, 162 N.C. 247, 253, 78 S.E. 146, 149, 44 L. R. A. (N. S.) 1189.
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