Missouri Utilities Co. v. Scott-New Madrid-Mississippi Elec. Co-op.

• Decision Date: 13 December 1971
• Docket Number: MADRID-MISSISSIPPI,No. 56088,SCOTT-NEW,56088
• Citation: 475 S.W.2d 25
• Parties: MISSOURI UTILITIES COMPANY, a Corporation, Appellant, v.ELECTRIC COOPERATIVE, Respondent.
• Court: Missouri Supreme Court

Page 25

475 S.W.2d 25

MISSOURI UTILITIES COMPANY, a Corporation, Appellant, v. SCOTT-NEW MADRID-MISSISSIPPI ELECTRIC COOPERATIVE, Respondent.

No. 56088.

Supreme Court of Missouri, En Banc.

Dec. 13, 1971.

Rehearing Denied Jan. 10, 1972.

Jack L. Oliver, Oliver, Oliver & Jones, Cape Girardeau, for appellant, Missouri Utilities Co.

James D. Sickal, Blanton, Blanton & Rice, Sikeston, for respondent, Scott-New Madrid-Mississippi Electric Cooperative.

BARDGETT, Judge.

This case involves a determination of the right of a rural electric cooperative operating pursuant to Chap. 394, RSMo 1969, V. A.M.S., ¹ to continue its operations within the boundaries of a municipality of less than 1500 people in an instance where the area incorporated was, prior to incorporation, served by the cooperative and by a private electric utility corporation operating pursuant to Chap. 393, and where subsequent to incorporation the utility obtained a nonexclusive franchise from the municipality but the cooperative did not obtain such a franchise.

The litigation originated on September 30, 1968, when Missouri Utilities Company, plaintiff-appellant (hereafter Utility), sued Scott-New Madrid- Mississippi Electric Cooperative, defendant-respondent (hereafter Co-op), seeking an order 'permanently enjoining and restraining the defendant from extending its existing electric power lines to the construction site of the Ramada Inn within the corporate limits of the Village of Miner, Scott County, Missouri, for the purpose of rendering electrical service to said Mid-America Motels, Inc., at the site of its Ramada Inn Motel within the corporate limits of the Village of Miner, Scott County, Missouri, and permanently enjoining and restraining defendant, its agents, servants and employees from interfering with plaintiff's business and property rights within the corporate limits of . . . Miner . . . by solicitation of customers therein, and for such other and further relief as may be meet and just.'

The circuit court issued its temporary restraining order against Co-op. Thereafter the parties stipulated to the facts, a hearing was had at the conclusion of which the circuit court found against plaintiff Utility and in favor of defendant Co-op; dissolved the temporary restraining order; awarded defendant Co-op $2,000 damages on its counterclaim and dismissed Utility's petition. Utility appealed to this court and Division Two held that this court did not have jurisdiction and transferred the appeal to the Springfield Court of Appeals. Missouri Utilities Co. v. Scott-New Madrid-Mississippi Elec. Co-op., Mo., 450 S.W.2d 182. The Springfield Court of Appeals affirmed the judgment of the circuit court and indicated in its opinion that it would be inclined to view favorably a motion for transfer to the Supreme Court because of the general interest and importance of the questions involved in the case. Utility filed such a motion which was sustained by the Springfield Court of Appeals and the cause was transferred here. We have jurisdiction. Const. of Mo., V.A.M.S., Art. V, § 10.

The Village of Miner is not a party to this litigation. The facts were stipulated to by the parties. They reflect the following:

Utility is a privately owned public utility deriving its power as a utility from Chap 393 and is subject to regulation by the Missouri Public Service Commission (hereafter P.S.C.).

Co-op is a rural electric cooperative operating under and deriving its power from Chap. 394.

The Village of Miner was incorporated as a village pursuant to Chap. 80 on August 20, 1951, by the County Court of Scott County, Missouri, and has a population of less than 1500. ²

Utility's predecessor in 1912, and Co-op in 1938, obtained permission from the County Court of Scott County to utilize the public roads of Scott County to erect, poles, etc., to transmit and distribute electric power in Scott County.

Prior to the incorporation of Miner in 1951, both parties were lawfully serving electric customers in the area subsequently incorporated.

In 1961 Utility was granted an electric franchise by Miner. In April 1962 and June 1962 Co-op was refused an electric franchise by Miner.

The stipulation of facts filed by the parties, October 21, 1968, recites that Utility is serving 228 electric customers and Co-op is serving 22 electric customers in Miner.

The event that precipitated this litigation occurred on September 23, 1968, when Co-op contracted with Mid-America Motels, Inc., to provide temporary electric service to the construction site of a Ramada Inn, then under construction, within the corporate limits or Miner; furnished such service to the Ramada Inn; and threatened to furnish permanent electric services to the Inn.

The trial court made findings of fact and conclusions of law. Its findings of fact are not in dispute on this appeal.

The conclusions of law entered by the trial court and pertinent to this appeal are as follows:

'1. Plaintiff is a private utility company governed by Chapter 393 RSMo 1959, V.A.M.S., and by virtue of said statutes, plaintiff is without authority to operate or provide electric service to customers within the corporate limits of the Village of Miner without the proper consent of said Village.

'2. Plaintiff's franchise, granted by the Village of Miner on May 9, 1961, is a non-exclusive franchise granting it the right to operate and provide electric service to customers in Miner, and by reason of said non-exclusive franchise, plaintiff has the right to restrain and enjoin a conpetitive supplier of electricity who is supplying service to customers within the Village of Miner, unlawfully and without authority.

'3. Defendant is an electric cooperative organized, existing and operating under and by authority of Chaper 394 RSMo 1959, V.A.M.S.; that as an electric cooperative, defendant has the right and authority, by virtue of said Section 394.080, to operate and provide electric service to its members in rural areas throughout the State of Missouri.

'4. Defendant's right to operate in rural areas, including incorporated villages with a population of 1,500 or less, is by reason of legislative grant and the consent of said incorporated village of 1,500 or less, is not required.

'5. Defendant, as an electric cooperative, is granted the right by Section 394.080 to operate and extend its operations to new members within an incorporated village until such time as said village reaches a population in excess of 1,500 and thereby ceases to be rural; that upon this event defendant has the right to continue its then existing operations until such time as its facilities may be purchased as provided for in Section 394.080(4).

'6. By reason of said statutory grant, the defendant is presently operating lawfully and with authority within the corporate limits of the Village of Miner, and as a result thereof, the plaintiff, as the holder of a non-exclusive franchise is not entitled to prohibit defendant's operation or the contemplated extension of its operation to the Ramada Inn.'

On this appeal Utility contends the trial court erred in its conclusions of law--numbers 4, 5, and 6, supra, and in failing to declare that Co-op was equitably estopped to assert the existence of prior rights or to deny the existence of Utility's franchise rights.

The principal and controlling issue is whether or not a rural electric cooperative operating under Chap. 394 is required to obtain the consent of a municipality with a population under 1500 in order to serve its members and customers therein.

The holder of a nonexclusive franchise is entitled to injunctive protection against competitors acting 'unlawfully and without authority', City of Campbell v. Ark.-Mo. Power Co., 8 Cir., 55 F.2d 560; Mo. Pub. Service Corp. v. Fairbanks, Morse & Co., 8 Cir., 95 F.2d 1, 3(1); Ark.-Mo. Power Corp. v. City of Kennett, 8 Cir., 113 F.2d 595, 596(1). In order for the complainant to be entitled to injunctive protection however, the activities of the competitor must be unlawful. If the activities of Co-op in Miner are lawful, then Utility is not entitled to injunctive relief. Ark.-Mo. Power Co. v. City of Kennett, 8 Cir., 78 F.2d 911, 914(3).

Co-op is a rural electric cooperative organized and operating pursuant to Chap. 394. Section 394.080 entitled 'Powers of cooperative' provides, in part, that a cooperative shall have power:

'(4) To generate, manufacture, purchase, acquire, accumulate and transmit electric energy, and to distribute, sell, supply and dispose of electric energy in rural areas to its members, to governmental agencies and political subdivisions, and to other persons not in excess of ten per cent of the number of its members . . ..'

'(7) To construct, purchase, take, receive, lease as lessee, or otherwise acquire, and to own, hold, use equip, maintain, and operate, . . ..' (Emphasis ours.)

'(10) To construct, maintain and operate electric transmission and distribution lines along, upon, under the across all public thoroughfares, including without limitation, all roads, highways, streets, alleys, bridges and causeways, and upon, under and across all publicly owned lands, subject, however, to the requirements in respect of the use of such thoroughfares and lands that are imposed by the respective authorities having jurisdiction thereof upon corporations constructing or operating electric transmission and distribution lines or systems'. (Emphasis ours.)

'Rural area' is defined in § 394.020(1) as being 'any area of the United States not included within the boundaries of any city, town or village having a population in excess of fifteen hundred inhabitants, and such term shall be deemed to include both the farm and nonfarm population thereof'.

Utility suggests that upon the incorporation of Miner the area within the boundaries of Miner ceased to be a 'rural area' as that term is defined supra. In State ex rel. Consumers Public Service Co. v. Public Service Commission, Banc, ...