Mississippi Power & Light Co. v. Town of Coldwater

Decision Date03 November 1958
Docket NumberNo. 40824,40824
Citation106 So.2d 375,234 Miss. 615
PartiesMISSISSIPPI POWER & LIGHT CO., a Corporation, v. The TOWN OF COLDWATER, Miss., a Municipal Corporation, et al.
CourtMississippi Supreme Court

Green, Green & Cheney, Jackson, Fred B. Smith, Ripley, McClure, Fant & McClure, Sardis, Byrd, Wise & Smith, Jackson, for appellant.

Johnson & Troutt, Senatobia, Sumners & Hickman, Oxford, John D. Eldridge, Jr., Augusta, Ark., for appellees.

LEE, Justice.

The Mississippi Power & Light Company, by its original and supplemental bills, sought, in the Chancery Court of Tate County, an injunction against the Town of Coldwater, North Central Mississippi Electric Power Association, a corporation, and Woodruff Electric Co-Operative Corp., a corporation, to prevent the consummation of certain alleged illegal proceedings already had and about to be had in connection with the acquisition by the town of an electric distribution system. A temporary injunction was issued.

The answers of the defendants denied in detail the material allegations of the bills.

On the hearing to dissolve, the complainant offered evidence as follows:

The complainant, a Florida corporation, has had a nonexclusive electric franchise to operate in DeSoto County since November 4, 1927; and has had such a franchise in the Town of Coldwater since November 11, 1941, where, on March 29, 1956, it had between 325 and 350 customers. It is a taxpayer in the town, and, through the years, has been ready, willing and able to supply electric energy to anyone in the town, and has actually supplied such energy to those who desired it. In addition, on August 8, 1956, it filed with the Public Service Commission, in accordance with Chapter 372, Laws of 1956, its application for a certificate of public convenience and necessity, showing its then operation under franchises in those areas.

For several years prior to March 29, 1956, North Central, chartered under the laws of this State, with its domicile in the Town of Coldwater, where it owns real estate, pays taxes, and has 18 or 20 customers, had been operating as a co-operative in that area.

Woodruff was chartered under the laws of Arkansas as an R.E.A. Co-Operative with its domicile at Augusta, Arkansas, for the purpose of serving seven counties in the eastern part of that state.

In 1956 North Central was operating at a loss. It was 'not exactly broke, but badly bent'. In fact at the end of July 1957, its grand total loss including depreciation and other proper charges, was $421,381.92. W. G. Durley was mayor of Coldwater and was also a director and the secretary of North Central.

The official minutes of the Mayor and Board of Aldermen of Coldwater of date of May 14, 1956, showed that a resolution was adopted which declared the intention to issue revenue bonds of the town in the sum of $98,500, to provide funds for the acquisition of an electric distribution system for the town; which called an election to be held on June 12, 1956, to submit the proposition to the qualified electors; which directed the publication of the notice 'in the Tate County Democrat, a newspaper published in the city of Senatobia in Tate County, Mississippi, in which the Town of Coldwater is situated, said newspaper being qualified under Chap. 427, Laws of 1956'; and which ordered the election commissioners to conduct the same. The report of the election commissioners, of date of July 3, 1956, showing that the election had carried 131 for to 50 against, stated that the notice of the election was published 'in the Tate County Democrat, a newspaper published in the Town of Senatobia, Tate County, Mississippi, in which the Town of Coldwater is situated', being the same language as was used in the resolution; and the Mayor and Board of Aldermen of Coldwater, on August 7, 1956, in adopting the report of the election commissioners recited that 'notice of said election was given and said election was held in accordance with and as required by the laws of the State of Mississippi and by the aforesaid resolution of this Mayor and Board of Aldermen.'

It was shown that the notice of the advertisement for bids for the construction of a distribution system for the town was given for an insufficient time.

It was shown that the Town, without complying with Section 3519-24, Code of 1942 Rec., as to notice of the price, terms and conditions thereof, entered into a contract to lease to North Central its system to be acquired with an option of North Central to purchase; that North Central was in desperate financial condition and unable itself to perform such a contract; that Woodruff came upon the scene, and, by means of a loan of $85,000 to North Central, took over the complete management of North Central, with an option to purchase all of its property at any time within ten years from the date thereof; that T. E. Bostic, the manager of Woodruff for the past 18 years, was also made the manager of North Central, and was also made the manager of the Town's system when and if it was acquired, and that with him, as the guiding pilot, Woodruff would be in complete control of the distribution system even though this co-operative was not even qualified to do business in the state and had no certificate of convenience and necessity from the Public Service Commission; that the printed, but not validated bonds, in the amount of $98,500, were sold, without advertising, to J. S. Love Company, the broker for Woodruff, and after consummation thereof, the bonds and the purchase price thereof were redelivered to J. S. Love Company in escrow; that thereafter North Central, without a permit from the Public Service Commission, except for 3 1/2 miles, procured five Co-Operatives to make extensive improvements and convert 8 or more miles of its lines from 1-phase to 3-phase at a cost of $35,000, and that Woodruff also did considerable work thereon without a permit from the proper authority.

It was further shown that, from the inception, W. G. Durley was Mayor of Coldwater and was a Director and the Secretary of North Central, except that he resigned just before the execution of the contract between the Town and North Central because he did not think that it would be proper for him to sign the contract as Mayor for the Town and as Secretary for North Central, and following the execution thereof, he was re-elected Secretary. Copies of the applicable minutes of the Mayor and Board of Aldermen of Coldwater, attached as exhibits, were introduced in evidence. Copies of the pertinent minutes of the Board of Directors of North Central were also introduced in evidence, together with copies of the contracts and mortgage between North Central and Woodruff, as well as the contract and agreement between North Central and the Town of Coldwater.

Succinctly stated, that gist of this proof was to the effect that the Mayor and Board of Aldermen of Coldwater, after approval by a majority of the qualified electors, issued the bonds in the sum of $98,500 for the purpose of acquiring an electric distribution system, and sold the bonds to J. S. Love Company for its client Woodruff; that the governing authorities of the Town had no real purpose to operate the system themselves, but rather to acquire North Central's system, and, under a lease and purchase agreement, when North Central had paid the full cost of the system, including the bonds and interest, the Town would then convey the system to North Central; that North Central was in poor financial condition and could not make such a commitment until it perfected an agreement with Woodruff whereby that corporation would, in fact, take over the management of North Central under a like option to purchase the system at any time within ten years; that, to assure overall control by Woodruff, the North Central co-operative would continue its organization, but T. E. Bostic was made manager of the system for all three of the interested parties, namely, Woodruff, North Central, and the Town. Besides, according to the report of the engineers, it was estimated that, within one year, the new system, because of the cheaper rates then obtaining to the patrons of North Central and which rates were to be effective under the lease and sale agreement, would acquire 95% of the users of electricity within the Town, and, on that basis, it was concluded that the purchasers of the bonds would have a safe investment. With the loss of such a large number of its customers, the complaint would not be able to operate its property in the Town of Coldwater at a profit.

The defendants denied the conclusions of the adversary pleadings, but of course the municipal minutes, those of North Central, and all of the contracts in writing were indisputable. However W. G. Durley testified that the reason why he endeavored to negotiate the contract between the Town and North Central was that they 'were trying to get cheaper power in Coldwater'.

From these allegations and proof, the complainant maintained, among other contentions, (1) that the advertisement for bids for the construction of the system was void; (2) that the contract of sale and lease between the Town and North Central, not approved by the qualified electors of the town, was void; (3) that the election and the bonds attempted to be issued and sold thereunder were illegal and void; (4) that North Central was required to get a permit from the Public Service Commission before doing the work complained about and changing the line from 1-phase to 3-phase; (5) that the several illegal acts proved that the Town, North Central and Woodruff had formed a conspiracy to deprive the complainant of its property and vested rights; (6) and that for the foregoing, and other, reasons, the temporary injunction should be made permanent.

The court held that the contract of lease and sale, and the advertisement for bids for the construction of a system were both void. He declined to adjudge whether the issuance and sale...

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21 cases
  • Mississippi Public Service Com'n v. Mississippi Power Co., 54059
    • United States
    • Mississippi Supreme Court
    • March 23, 1983
    ...the meaning of the predecessor to the above cited statute: In view of the above language, this Court in Mississippi Power & Light Company v. Town of Coldwater , 106 So.2d 375 (Miss.) said that the trial court erred in holding that it was not necessary for the co-operative there involved, be......
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