Kentucky Utilities Co. v. Ginsberg
| Decision Date | 09 May 1934 |
| Citation | 255 Ky. 148 |
| Parties | Kentucky Utilities Co. et al. v. Ginsberg et al. |
| Court | United States State Supreme Court — District of Kentucky |
W.E. CABELL, J.E. SAMPSON, N.R. PATTERSON and GORDON, LAURENT & OGDEN for plaintiffs.
PELHAM JOHNSTON and ARTHUR RHORER for defendants.
OPINION BY JUDGE DIETZMAN.
Granting temporary injunction.
Middlesboro is a city of the third class and has adopted the commission form of government. The defendants herein are its mayor and board of commissioners. For many years the plaintiff Kentucky Utilities Company has been furnishing light and power to the inhabitants of this city. In the case of City of Middlesboro v. Kentucky Utilities Co., 237 Ky. 523, 35 S. W. (2d) 877, it was determined that the Kentucky Utilities Company had no franchise to operate in the city of Middlesboro. By agreement, however, the judgment in that litigation, which was entered in the circuit court on the mandate from this court, provided that the utilities company would be required to remove its poles and lines from the streets of the city of Middlesboro in accordance with the decision in that case only on six months' notice from the city. On July 27, 1932, pursuant to the authority vested in it by chapter 119 of the Acts of 1932, now sections 3480d-1 to 3480d-22, inclusive, of the Kentucky Statutes Supplement 1933, the city of Middlesboro enacted an ordinance providing for the construction by it of an electrical generating plant and distribution system to be financed by the sale of 6 per cent. bonds in the sum of $300,000, the principal and interest of which bonds were to be paid solely out of the net revenues derived from the operation of the plant so constructed. However, no market was found for these bonds, and, an application to the Reconstruction Finance Corporation not producing any results, the matter was allowed to lie dormant. After the United States government had provided through its Public Works Administration for loans to be made to municipalities for the construction of public works, the United States donating to the cost of such work 30 per cent. thereof, the city of Middlesboro entered into negotiations with the United States government for a loan of $328,000, of which 30 per cent. was to be a gift of the government, the balance to be repaid with interest at the rate of 4 per cent. out of the net revenue of a municipal electric light plant and distribution system to be built from the funds thus advanced. It will no doubt be noticed that the estimated cost of the plant had risen from $300,000 to $328,000 between July, 1932, and February, 1934. This was due to the advance in cost of material and labor in that period. On February 6, 1934, there was introduced and passed on its first reading by the commissioners of the city of Middlesboro an ordinance entitled:
"An ordinance approving a loan agreement between the City of Middlesboro, Bell County, Kentucky, and the United States of America, covering a Federal loan and grant in the aggregate amount of $328,000.00, for the purpose of financing the construction of a municipal electric power plant and distribution system, and declaring an emergency."
The ordinance by its terms provided that the city of Middlesboro should accept and agree to a loan agreement drawn up by the United States government for financing the cost of constructing a municipal electric power plant and distribution system. The loan agreement is then set out in full. It is a very elaborate affair, providing for the amount of the loan, the disposition of the bonds, their security, registration, interest, and maturites, for the deposit of the bond proceeds, the retirement fund, the service rates, etc., and providing certain conditions as to the wages that were to be paid in the construction work, as to the character of labor to be employed, with especial reference to preferences among classes of labor, as to the number of hours the workmen were to work, as to where the materials were to be bought, and many other details not material to be here mentioned. The mayor and the city were authorized by this ordinance to execute this agreement for and on behalf of the city. By section 3 of this ordinance, it was provided that an emergency existed, requiring the ordinance to become effective forthwith upon its passage and approval, because of the need of the immediate preservation of the public peace, health, and safety. This ordinance was again passed at a special meeting of the board of commissioners on February 12, 1934, and again at a regular meeting of that board on the next day. On that day, in accordance with the provisions of section 3480b-23 of the Statutes, a petition signed by 58 6/10 per cent. of the total number of votes cast at the last regular election for mayor was presented to and filed with the board of commissioners, asking that a referendum be held on this ordinance. The petition was ignored by the board. Thereupon this suit was brought by the Kentucky Utilities Company, J.H. Woodson, and J.M. Hurst to enjoin the mayor and the board from carrying into execution this loan agreement. The plaintiffs pitched their cause of action, first, on the ground that the ordinance in question was subject to a referendum in accordance with the provisions of sections 3480b-23 to 3480b-26, inclusive, of the Statutes, and that, unless and until the ordinance was approved by the voters at a referendum election held pursuant to these sections, the loan agreement could not be carried into execution. Secondly, on the ground that the loan agreement was itself invalid for many alleged reasons, among which may be mentioned the following: Its terms prevent free, open, and unrestricted competitive bidding as required by law; it delegates to individuals and bodies other than the board of commissioners of Middlesboro the execution of powers which are by law vested exclusively in that board. Thirdly, on the ground that the powers and duties of the board of commissioners limited and specified by the Statutes are incompatible with the express purpose of the loan agreement. A motion was made for a temporary injunction, which was denied by the circuit court, and the case is now before me on a motion to grant the temporary injunction refused by the chancellor.
Two preliminary questions must be disposed of before we reach the merits of this controversy: First, as to the contention that this case is not now properly before me. The order of the circuit court overruling the motion for a temporary injunction reads thus:
It is insisted that under section 296 of the Civil Code of Practice the order of the lower court overruling a motion for a temporary injunction must provide that it shall become effective on a date not exceeding 20 days from the entry of the order by the court, and that hence in the instant case the plaintiff, in the place of being granted an indefinite time within which to file a motion before a judge of the Court of Appeals for the temporary injunction refused by the chancellor, should have been restricted to a reasonable time not exceeding 20 days. Since the order did not so provide, it is contended that it does not give me, as a judge of the Court of Appeals, jurisdiction to consider the motion now made before me. The case of McCreary County v. Bryant, 173 Ky. 363, 191 S.W. 119, is relied upon. That was a case which presented the question of a reinstatement of an injunction dissolved by the circuit court. Section 296 of the Civil Code of Practice in part reads:
"If the circuit court or the judge thereof, upon the application of a plaintiff for a temporary injunction as provided for in Chapter 1 of this article, refuse to grant such injunction; or after such injunction has been granted, if the same has been dissolved, the plaintiff may within twenty days apply to a judge of the Court of Appeals for an order directing the circuit court or the judge thereof to issue such temporary injunction as may be proper, or to reinstate or modify any such injunction as may have been dissolved by such court or judge; and upon motion of the plaintiff the...
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