Ky. Utilities Co. v. Board of Com'Rs of Paris
| Decision Date | 15 December 1933 |
| Citation | 254 Ky. 527 |
| Parties | Kentucky Utilities Co. v. Board of Commissioners of City of Paris et al. |
| Court | United States State Supreme Court — District of Kentucky |
6. Constitutional Law; Franchises. — Statute requiring sale of franchise by municipality to highest and best bidder on expiration of prior franchise held not unconstitutional as impairing obligation of contract (Ky. Stats., secs. 2741m-1, 2741m-2; Constitution Ky., sec. 19; Constitution U.S. art. 1, sec. 10).
7. Municipal Corporations. — Statute requiring sale of franchise by municipality to highest and best bidder on expiration of prior franchise held not violative of constitutional prohibition against Legislature imposing taxes for municipal purposes (Ky. Stats., secs. 2741m-1, 2741m-2; Constitution, sec. 181).
8. Statutes. — Statute requiring sale of franchise by municipality to highest and best bidder on expiration of prior franchise held not violative of constitutional provision requiring title to indicate contents of act (Ky. Stats., secs. 2741m-1, 2741m-2; Constitution, sec. 51).
9. Electricity. — City's desire to construct municipally owned electric plant held not to render inapplicable statute providing for sale of franchise by municipality to highest and best bidder on expiration of prior franchise (Ky. Stats., sec. 2741m-1; Constitution, secs. 163, 164).
Ky. Stats., sec. 2741m-1, requiring sale to highest and best bidder of franchise by municipality on expiration of prior franchise applied, notwithstanding city desired to enter same field of service as that occupied by electric company, since contrary to city's contention, the expressions "kind of utility" and "kind of service" in the proviso in such section, which provides that, if there is no public necessity for kind of public utility in question and if municipality shall desire to discontinue entirely the kind of service in question, the section shall not apply, refer only to distinctions between various kinds of utilities specifically mentioned in Constitution sec. 163, and do not include distinction between municipally and privately owned plants.
10. Electricity. — Suit by electric company whose franchise had expired to compel city to offer for sale new franchise to highest and best bidder held not barred by laches or estoppel under circumstances (Ky. Stats., secs. 2741m-1, 2741m-2).
The facts disclosed that city in constructing its municipally owned electric plant did not act in reliance on belief that electric company had abandoned its claim involved in pending suit respecting right to have new franchise offered for sale, but because city was confident that it could legally refuse to offer franchise for sale and would prevail in any effort to compel city to sell franchise.
Appeal from Bourbon Circuit Court.
DICKSON, BRADLEY & BLANTON and GORDON, LAURENT & OGDEN for appellant.
RAYMOND CONNELL for appellees.
Reversing.
The questions presented on this appeal are: First, the constitutionality of chapter 137 of the Acts of 1926, now embraced in sections 2741m-1 and 2741m-2 of the Statutes; secondly, if constitutional, the construction to be placed upon it; and, thirdly, whether or not appellant has been guilty of laches or is estopped now to assert its alleged rights in this action.
The appellant, Kentucky Utilities Company, which was the plaintiff below, is engaged in the business, among others, of manufacturing, distributing, and selling electrical energy. In 1909, the city of Paris, through its governing body, sold an electric franchise to the Paris Electric Light Company. This franchise by mesne assignments has come into the ownership of the appellant. Under this franchise, the predecessors in title of appellant established an electric plant and distribution system for the purpose of supplying the city of Paris and its inhabitants with electricity and has so supplied the city and its inhabitants since that time. Many hundreds of thousands of dollars have been invested by the appellant and its predecessors in title in the plant and distribution system. The franchise by its terms and under the Constitution expired in 1929. More than eighteen months prior to the expiration of the franchise, the appellant requested, and since that time has repeatedly requested the legislative body of the city of Paris, including the present mayor and board of commissioners, the appellees herein, to offer for sale to the highest and best bidder a municipal electric franchise similar to that expiring in 1929, containing terms and conditions fair and reasonable to the public, to the prospective grantee of such franchise, and to the patrons of such prospective grantee, and specifying the quality of service to be rendered. The appellees and their predecessors in office have consistently and without exception refused to comply with this request. It seems as though the city of Paris was then planning to install a municipally owned electric lighting plant to supply the city and its inhabitants with electrical energy, and it did not wish that such plant, if installed, should be subjected to competition from private ownership. The city has since constructed and installed such municipally owned lighting plant. On October 23, 1930, the appellant filed the present suit to compel the appellees to offer such a franchise as above described, basing its claim to the relief sought on chapter 137 of the Acts of 1926, the first section of which, now section 2741m-1 of the Kentucky Statutes, reads:
The pleadings filed by the parties presented the issues as above stated. The lower court held that chapter 137 of the Acts of 1926 was unconstitutional and dismissed the petition of the appellant. From that judgment, this appeal is prosecuted.
Addressing ourselves to the question of the constitutionality of this chapter 137 of the Acts of 1926, we find that it is assailed on the ground that it contravenes sections 163, 164, 19, 181, and 51 of the Constitution of Kentucky, and section 10 of article 1 of the Constitution of the United States.
Chapter 137 of the Acts of 1926 applies to all classes of cities of the commonwealth except cities of the first class. As to them, the Legislature in 1904 passed an act (chapter 81) substantially identical in its terms with chapter 137 of the Acts of 1926, and which is now known as section 3037d-1 of the Statutes. So far as exhaustive research on the part of the learned counsel in this case and our own study of the precedents are concerned, no case has been found expressly passing on the constitutionality either of the act of 1904 or of the act of 1926, excepting that of City of Louisville v. Louisville Home Telephone Company (C.C.A.) 279 F. 949, to which more extended reference will hereafter be made. It is true that these acts have been before this court in sevral cases, but in each of them their validity has been assumed without discussion. In the case of Gathright v. H.M. Byllesby & Co., 154 Ky. 106, 157 S.W. 45, 54, reference was made to a judgment theretofore entered in the Jefferson circuit court in the case of Underwood v. Kentucky Heating Company and City of Louisville, which was never appealed. In the Underwood Case, the city had sought by cross-petition to eject the heating company from the streets because its franchise had expired. The Jefferson circuit court held that, because the city had failed to offer for sale a similar franchise as provided in section 3037d-1 of the Statutes, it was not entitled to the relief sought. In referring to this in the Gathright Case, this court said:
"If the Kentucky Heating Company should choose to require the city to carry out the judgment of the chancellor, by offering a franchise similar to its expired franchise, the city will have to do so."
In the case of City of Ludlow v. Union Light, Heat & Power Co., 231 Ky. 813, 22 S.W. (2d) 909, 910, the franchise of the utility company having expired, a new one was offered for sale. The municipality refused to...
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