Phenix City v. Alabama Power Co.

• Decision Date: 09 May 1940
• Docket Number: 4 Div. 123.
• Citation: 239 Ala. 547,195 So. 894
• Parties: PHENIX CITY v. ALABAMA POWER CO.
• Court: Alabama Supreme Court

195 So. 894

239 Ala. 547

PHENIX CITY v. ALABAMA POWER CO.

4 Div. 123.

Supreme Court of Alabama

May 9, 1940

Appeal from Circuit Court, Russell County; J. S. Williams, Judge.

Suit in equity by the City of Phenix City against Alabama Power Company, to declare null and void certain franchises granted by the municipality and to adjudge that respondent is using the streets, avenues, and alleys of complainant without authority from the City Commission of said City. From a decree dismissing the bill, complainant appeals.

Affirmed.

J. W Brassell, of Phenix City, and Jacob A. Walker, of Opelika for appellant.

Martin Turner & McWhorter and J. C. Blakey, all of Birmingham, for appellee.

FOSTER Justice.

In 1903, Phenix City and Girard were separate corporations in Alabama, just across the river, the dividing line there between Alabama and Georgia. They were each cities with less population than 6,000. and had the charter power under acts of the legislature of Alabama to grant rights of way along its streets to street railway and electric light companies (Phenix City, Acts 1894-95, p. 41; Acts 1896-97, p. 307; Acts 1898-1899, p. 1183: Girard, Acts 1892-93, p. 944). The franchise granted to the Columbus Railroad Company by each city during that year was for the operation of a street railway and electric light system for public use.

The Constitution of 1901 was in effect, and section 220 made it unlawful to use the streets for the operation of any public utility or private enterprise without obtaining the consent of the city: section 228 makes a limitation of thirty years upon a franchise grant by a city of more than 6,000 population. The franchises were granted to the Columbus Railroad Company, a Georgia corporation, whose activities extended from Columbus, Georgia, across the river to the two adjacent cities, and were made to "exist and run during the life of the present charter of the Columbus Railroad Company, as incorporated by the legislature of the state of Georgia, and for any period of time that said charter may be extended by any renewal or renewals hereafter granted." At that time the charter of said corporation was under an act of the Georgia legislature, and extended from September 10, 1887 to September 10, 1937. In May 1930, its charter was extended by an act of the Georgia legislature for a period of one hundred and one years, or until May 12, 2031, A. D.

On October 1, 1930, said corporation, whose name was then Georgia Power Company, sold and conveyed its electric system and franchise to Alabama Power Company, with approval of Alabama Public Service Commission.

So that the franchises in question expired September 10, 1937, as appellant contends, or were extended to May 12, 2031, A. D., as appellee contends, on account of the extension of the charter of the Columbus Railroad Company, as it was originally named.

In 1926, the two cities having been then consolidated (see State v. Gullatt, 210 Ala. 452, 98 So. 373), an ordinance was passed permitting an abandonment of the street railway, but ratifying and confirming the franchises of 1903 in so far as they extended to the supply of light, heat and power. In November 1936, a contract with the city was made for electricity for street lighting, extending for five years, and beyond the period of the existence of the charter of the Columbus Railroad Company, as originally constituted; but after its charter had been renewed for one hundred and one years.

Appellant contends that the franchise cannot be made to extend for a period subject to the power of the legislature of another State.

The question of whether a certain legal situation is a delegation of legislative authority, and, therefore, in violation of the Constitution which designates the legislature to perform that service is here involved. The Court has held that the Constitution is violated when a statute is made to operate differently according to the discretion of any person or authority other than subsequent legislation; except with respect to certain details to be ascertained by a fact finding administrative authority, and subject to the fixation of minor rules and regulations applicable alike to all persons similarly situated. Wheeler v. River Falls Power Co., 215 Ala. 655, 111 So. 907; Parke v. Bradley, 204 Ala. 455, 86 So. 28; 16 Corpus Juris Secundum, Constitutional Law, § 133, 340; Patterson v. Jefferson County, 238 Ala. 442, 191 So. 681; 16 Corpus Juris Secundum, Constitutional Law, § 135, 344, 345; Mitchell v. State, 134 Ala. 392, 32 So. 687; 11 Am.Jur. 931, sections 221, 222, 230; Whaley v. State, 168 Ala. 152, 52 So. 941, 30 L.R.A.,N.S., 499.

For this reason, this Court has held that it is a violation of this feature of the Constitution for legislation to be so set up as to have a different effect on certain foreign corporations doing business in Alabama because they were created in a state whose laws are unfavorable to such corporations created in Alabama, and doing business in that state. Clark v. Mobile, 67 Ala. 217; State v. Firemen's Fund, 223 Ala. 134, 134 So. 858; State v. Praetorians, 226 Ala. 259, 146 So. 411.

This is said to be an unauthorized delegation of legislative authority. Many states have however held to a contrary view. 11 Amer.Jur. 931, section 220; 91 A.L.R. 798.

But broadly speaking, an act complete within itself can be made to depend upon some contingency for its operation to become effective. In re Opinion of the Justices, 232 Ala. 60, 166 So. 710; In re Opinion of the Justices, 227 Ala 291, 149 So. 776; Porter Coal Co. v. Davis, 231 Ala. 359, 165 So. 93; Ward v. State, 154 Ala. 227, 45 So. 655; Ex parte Hall, 156 Ala. 642, 47 So. 199; McNiell v. Sparkman, 184 Ala. 96, 63 So. 977; Currin v. Wallace, 306 U.S. 1, 59 S.Ct. 379, (23, 24, 25), 83 L.Ed. 441; McCreless v. Tennessee Valley Bank, 208 Ala. 414, 94 So. 722; 16 Corpus Juris Secundum, Constitutional Law, § 141, 415; 11 Amer.Jur. 926, section 216.

There are limitations. In re Opinion of Justices, 232 Ala. 56, 166 So. 706.

If we assume that by contract for a valuable consideration, a city can bind itself to a utility for the use of its streets for its service to the public, to continue during the corporate existence of such utility, the question now under consideration is whether such right is affected by the fact that its corporate existence is controlled by the power of some other state in which it was created, and which has sole control of that matter.

Is the fixation of the limit of existence of a foreign corporation doing business in Alabama, legislating for Alabama when the contract made by the corporation with an Alabama city or a grant to it by such city is to extend during the existence of the corporation? We will show that a franchise granted by a city to a utility and acted on, and on its faith and effect the utility has expended money in setting up in permanent fashion a distribution system not useful except by virtue of such franchise, is in the nature more of a contract than legislation.

It is well understood that municipal corporations in passing ordinances in the exercise of their police power, of taxation and of eminent domain, are performing a function of government which may be delegated to them by the state to prescribe local regulations of self government, and in so doing the state legislature is not regarded as transferring legislative power committed by the constitution to it. But since they in general derive their powers from the legislature, they can enjoy no powers which the legislature itself does not possess, unless they are conferred by the constitution. Since they are a part of the government, less than the whole, limitations upon the power of the state to legislate also mark the powers of municipal corporations to do so. 19 R.C.L. 706, section 17; 43 Corpus Juris 182, section 179.

We therefore cannot say that a city in the exercise of its delegated power to make regulations for its local self government can make them fluctuate at the will of some other state.

But in the exercise of a legislative grant, the city and utility may contract for the period of the duration of a franchise without limit, except as contained in the constitution or some legislative enactment. When the city has a population of less than 6,000, there is no limit prescribed in the Constitution, and none is provided by law. When so, it can be made to extend during the corporate existence of the utility. City of Owensboro v. Owensboro Water Works Co., 243 U.S. 166, 37 S.Ct. 322, 61 L.Ed. 650.

A franchise grant, as we will show, is the creation of a property right, and is more than mere legislation.

Legislation can be not only the enactment of a law, but it may also be a contract subject to the rules of construction of other contracts, and be protected from inviolability applicable to their obligations. State of Indiana v. Brand, 303 U.S. 95, 58 S.Ct. 443, 82 L.Ed. 685, 113 A.L.R. 1482; United States v. Bekins, 304 U.S. 27, 58 S.Ct. 811, 82 L.Ed. 1137.

Parties to a franchise contract, it has been held, may fix its duration to depend upon action by the stockholders of the corporation, which is a party to it, to renew its charter, as in the Owensboro case, supra. When they make duration to depend upon the corporate existence of one of its parties, and stipulate that such existence may be extended by the power that created it, the city is not thereby delegating legislative authority to such power to fix the duration of its enactments in violation of the rule set out in our cases cited above. The parties to a contract may either prescribe a fixed term for its duration or make it depend upon some prescribed contingency. See generally 17 Corpus Juris Secundum, Contracts, 877, § 385.

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