Interstate Power Co. v. City of Cushing, 1719.

• Decision Date: 12 October 1935
• Docket Number: No. 1719.,1719.
• Citation: 12 F. Supp. 806
• Court: U.S. District Court — Western District of Oklahoma
• Parties: INTERSTATE POWER CO. v. CITY OF CUSHING et al.

12 F. Supp. 806

INTERSTATE POWER CO. v. CITY OF CUSHING et al.

No. 1719.

District Court, W. D. Oklahoma.

October 12, 1935.

Brown Moore, of Stillwater, Okl., E. J. Lundy, of Tulsa, Okl., and Ames, Cochran, Ames & Monnet, of Oklahoma City, Okl., for plaintiff.

S. J. Berton, of Cushing, Okl., and Miley, Hoffman, Williams, France & Johnson, of Oklahoma City, Okl., for defendants.

VAUGHT, District Judge.

The plaintiff, a Delaware corporation, domesticated under the laws of Oklahoma, files its bill of complaint, amended and supplemental bill of complaint, and amendment thereto alleging that it has heretofore been engaged in furnishing, transmitting, distributing, and supplying electric light and power service to the city of Cushing, Payne county, Okl., under a franchise granted by said city, which franchise expired on the 23d day of December, 1932; that no renewal of said franchise has been granted by said city, but said plaintiff has expended for improvements and additions to its properties, since the expiration of said franchise, an amount in excess of $5,000, and it has continued, since the expiration of its franchise, to furnish light and power to the city of Cushing.

The plaintiff further alleges that, since the expiration of said franchise, said city has taken steps to install a municipal light and power plant to be owned by said city and that it applied to the Federal Emergency Administration of Public Works for aid in financing said municipal plant; that an election was held in said city for the purpose of voting bonds in the sum of $280,000 and said city purposes to and has entered into a contract of sale with said Federal Emergency Administration of Public Works for the sale of said bonds and that said Federal Emergency Administration agreed, as a part of its contract, to purchase said bonds, to grant to said city, as a gift, the sum of $70,000 to be used in the construction of said plant; that plans and specifications were approved and contracts let to defendants Charles M. Dunning Construction Company and Mattison-Wallock and Company, contractors, to erect and equip said plant and distributing system; that said contracts with the Federal Emergency Administration and with the contractors above named are violative of the laws of the state of Oklahoma and of the rights of the plaintiff as a public utility providing light and power to said city of Cushing, and as a taxpayer which would be obligated by taxation to participate in the payment of the bonds issued by said city, and the interest thereon.

The plaintiff furthermore alleges that if said city is permitted to consummate its contracts with the said Federal Emergency Administration and to erect said plant, this plaintiff would be deprived of substantial rights under the Constitution of the United States and of the state of Oklahoma, and prays for a perpetual injunction permanently enjoining and restraining said city, the officers thereof, and said contractors from constructing and operating said competing municipal project, from issuing bonds, making contracts, and doing any other acts and things in furtherance of said project, and for a temporary injunction pending final hearing in this case.

The defendants have filed their joint and separate answers to the amended and supplemental bill of complaint, in which it is admitted that the plaintiff is a nonresident corporation and is alleged that the franchise of the plaintiff expired on the 23d day of December, 1932; that said plaintiff has since operated without any valid, legal right, without a franchise, and without any request or acquiescence of, or from the city officials or citizens thereof, either express or implied; that said plaintiff, prior thereto and on March 16, 1931, filed an initiative petition submitting the question of a proposed ordinance to the voters of Cushing, Okl., proposing the granting of a franchise to said plaintiff, and thereafter an election was held under said initiative petition on the 8th day of March, 1932, at which time 3,121 votes were cast, 1,925 of which were cast against said proposition and 1,189 were cast for the proposition, with 7 mutilated ballots.

The answers further allege that the city of Cushing passed an ordinance on the 24th of January, 1934, calling an election to be held in the said city of Cushing to vote on the proposition of issuing general obligation bonds in the sum of $280,000 to provide funds for the purpose of constructing an electric power plant, electric distribution and transmission lines for furnishing electric current to the city of Cushing and the citizens of said city, to be owned exclusively by the city of Cushing; said election was duly and legally held and resulted in a vote of 490 in favor of the bonds and 183 against the bonds; that said city made application to the Federal Emergency Administration of Public Works for the sale of its bonds to the United States of America by and through the Federal Emergency Administration of Public Works, has sold and delivered $210,000 of said bonds to said Federal Administration, and that the city now has on deposit the proceeds from the sale of said bonds; that under the said contract there are $70,000 remaining of said bonds to be delivered to the United States government when funds are needed by said city; that, as a part of said agreement between the city and the Federal Emergency Administration to sell said bonds on behalf of the city and to purchase same on behalf of the Federal Emergency Administration, an additional sum of $70,000 was to be furnished by the United States government as a gift or grant to said city, based upon the assumption that 30 per cent. of the labor and material used in said construction would not exceed $70,000; the defendants have already delivered to the United States government $210,000 of the general obligation bonds, $105,000 of said bonds having been directly delivered to the United States government, and at the government's request and direction, $105,000 of said bonds were delivered to the First National Bank of Cushing, the city of Cushing having received $210,000 and accrued interest for said bonds.

The defendants further allege that the city of Cushing has a legal, valid right to the gift or grant, and that no ratification by the voters of the city is needed to accept the gift or grant of $70,000 as proposed by said Federal Emergency Administration, or to accept any other free gift or grant to the city of Cushing, all as provided by the charter of said city.

The defendants furthermore deny that the voting of general bonds was in any wise illegal or that the actual facts or any data filed with the Federal Emergency Administration were misrepresented, and further allege and state that the plaintiff is now, and has been since December 23, 1932, without any right to operate a power and lighting system within the city of Cushing, and further deny that the city is estopped either in law or in equity under the Constitution of the state of Oklahoma, the general law or the charter of the city of Cushing, which was in effect at the time of the expiration of the franchise of the plaintiff, from proceeding with said construction work.

The defendants further allege that said bonds were legal and were submitted to the Attorney General of the state of Oklahoma as provided by the laws of the state of Oklahoma, and that on the 7th day of March, 1935, the Attorney General of the state of Oklahoma validated and issued his written approval of said bonds; that in an action instituted in the District Court of Payne county, Okl., which was later appealed to the Supreme Court of Oklahoma, said bonds were held to be valid and legal in all particulars and that it was not necessary for the Federal Emergency Administration to deposit the 2 per cent. guaranty for the purchase of said bonds; that the said plaintiff filed a plea of intervention in said cause...