Prouty v. CITIZENS UTILITIES COMPANY, Civ. A. No. 2015.

• Decision Date: 09 April 1957
• Docket Number: Civ. A. No. 2015.
• Citation: 150 F. Supp. 892
• Parties: Charles T. PROUTY et al. v. CITIZENS UTILITIES COMPANY.
• Court: U.S. District Court — District of Vermont

150 F. Supp. 892

Charles T. PROUTY et al. v. CITIZENS UTILITIES COMPANY.

Civ. A. No. 2015.

United States District Court D. Vermont.

April 9, 1957.

Arthur L. Graves, St. Johnsbury, Vt., Harold I. O'Brien, Rutland, Vt., for plaintiffs.

Clifton G. Parker, Morrisville, Vt., for defendant.

GIBSON, District Judge.

Plaintiffs seek specific performance by the defendant of a contract under the terms of which plaintiffs claim they are entitled to receive $300,000 from defendant, and in turn they are ready, willing, and able to deed certain real estate located along the Clyde River — in Orleans County, Vermont — to the defendant. Plaintiffs also seek an injunction restraining the Public Service Commission of Vermont from asserting jurisdiction of a petition for condemnation of this same real estate brought by the defendant before the Public Service Commission.

The defendant, in its answer, filed four affirmative defenses: First, that this Court lacks jurisdiction; second, that the Federal Power Commission is the only agency or tribunal that has jurisdiction; third, that the Vermont Public Service Commission has jurisdiction to hear defendant's condemnation petition now pending before it; and fourth, that the plaintiffs' complaint failed to state a cause of action.

The defendant also filed a motion to dismiss and a motion for judgment before trial, each based substantially on the affirmative defenses set forth in its answer.

This Court overruled the first, second, and fourth affirmative defenses, reserving decision on the third affirmative defense.

Trial was had in Rutland on November 13, 14, and 15, 1956. An advisory jury rendered a verdict declaring the Clyde River to have been a navigable stream at the time the defendant filed its petition for condemnation before the Vermont Public Service Commission.

Findings of Fact.

1. The four individual plaintiffs, Charles Prouty, Genevieve Gage, John Prouty, and Elsinor Mallory, are citizens of Connecticut, Vermont, Vermont, and Florida, respectively. Plaintiff, the Third National Bank & Trust Co., is a Massachusetts corporation. Defendant is a utility company organized under the law of Delaware. The amount in controversy exceeds $3,000.

2. The plaintiffs are the present owners and successors in title to the lands and interests previously owned by Abbie D. Prouty, deceased, and are her only heirs.

3. Defendant is a utility company supplying electric power and energy to consumers in northern Vermont and Canada, as well as in three other states. It is the successor in ownership of the Newport Electric Light Co.

4. On July 29, 1930, the Newport Electric Light Co. and Abbie D. Prouty executed under seal a written contract providing, in substance, for a lease for a term of 25 years from the 1st of October, 1930, of land and interest in Newport, Vermont, described in the contract as follows:

"Being all and the same land and premises which were conveyed by Spaulding Brothers Corporation, a corporation, to Charles A. Prouty by warranty deed dated December 31, 1906, and recorded in Book 27, Pages 595 and 596 of the Land Records of the Town of Derby, Vermont, more particularly described as the `Spaulding Pulp Mill Property' so-called, situated on Clyde River in the City of Newport, Orleans County and State of Vermont, a little above the plant of the Newport Electric Light Company, with all waterpower and water privileges thereunto belonging or appurtaining. Being the same land and premises conveyed to said Spaulding Brothers Company, a corporation, organized and existing under the laws of the State of Vermont by three several deeds: —

"(1) By a quit-claim deed from Edward F. Spaulding to said Corporation, dated August 26, 1901, and recorded in Book 25, page 80 of the Land Records of said town of Derby.

"(2) By a quit-claim deed from Waldo Spaulding to said corporation, dated August 26, 1901, recorded in Book 25, page 81 of the Land Records of the said Town of Derby.

"(3) And by Huntley N. Spaulding, as administrator of the estate of Jonas Spaulding, by an administrator's deed dated August 26, 1901, and recorded in Book 20, page 300 of the said Land Records, to which deeds and said records thereof, reference is hereby made for a more particular description.

"Meaning to include what is known as the Pulp Mill Property, water power, dam, water privileges, and all buildings, machinery and fixtures now on said property, and being the same real estate which was conveyed to the Newport Electric Light Company by Charles A. Prouty by an instrument dated June 29, 1907, and recorded in the Derby Land Records in Book 28, Pages 367 and 368; all of said property having been willed to Abbie D. Prouty by the late Charles A. Prouty, and having been decreed to said Abbie D. Prouty by the Probate Court for the District of Orleans, State of Vermont."

5. The above-described lands constitute an irregularly shaped piece of land that lies astride the Clyde River. The Clyde River runs in a northerly direction for about 700 feet through approximately the center of this piece of land.

Prior to 1930, the date of the lease, there had been a dam across the Clyde River, known as the Pulp Mill Dam. This dam lay about 225 feet from where the Clyde River enters this property on its southerly boundary. The dam had been abandoned, however, and there were only remnants of it there at the time of the lease.

Along the Clyde River, about 200 feet northerly or northeasterly of this abandoned dam, had been an old pulp mill and shed, and at one time water from the Pulp Mill Dam was conveyed down to the old pulp mill by a penstock. That penstock was still there and being used on the date of the lease. Indeed on the date of the lease there was a penstock running the entire length of the land in question along the east bank of the Clyde River, and in the vicinity of the old pulp mill it ran squarely in the bed of the Clyde River.

The predecessor in title of the defendant had constructed the penstock from where it entered the southerly edge of this property to the old penstock at the Pulp Mill Dam and there connected with the old penstock. It also erected the penstock which ran from the northerly terminus of what I will term the "Pulp Mill Dam penstock", in the vicinity of the old pulp mill, some 325 feet until it left the above-described premises at their northern border. This penstock continued on in a northerly direction to the power station of the defendant, located near the mouth of the Clyde River. Thus there was a penstock running across this entire property, most of it adjacent to the Clyde River on its east bank, totalling approximately 725 feet in distance in existence and in use at the date of the lease.

In 1931 or 1932, the defendant's predecessor in title constructed a second penstock from Clyde Pond to its power station near the mouth of the Clyde River. This second penstock lies easterly of the first penstock and crosses these lands for about 50 feet at the southeasterly corner of these premises and again for another approximately 175 feet running along the southeasterly border of these premises.

Both penstocks were being used by the defendant for the transportation of water when the lease hereinbefore referred to expired on the 1st day of October, 1955, and the defendant is continuing to use these penstocks at the present time. Both penstocks carry water diverted from the Clyde River.

6. This lease provided that the Newport Electric Light Co., its successors and assigns would pay Abbie Prouty, her heirs, administrators, executors and assigns, monthly rental at $625 and pay one-half of all taxes and assessments levied against this property during the term of the lease.

7. The lease also contained the following provisions:

"The Lessee may acquire title to the property described herein at any time prior to October 1, 1935 by paying the Lessor therefor the sum of $150,000.00 and any rentals then due and owing in accordance with the terms hereof. If the Lessee elects to so purchase said property within said period of time and tenders the purchase price above described to the Lessor, the Lessor shall execute and deliver to the Lessee coincident with said tender of payment, a warranty deed conveying to the Lessee fee simple title to the property described herein, free and clear from all charges and or encumbrances against the same, and thereupon this agreement shall terminate, and both parties be released from further liability hereunder.

"Should the Lessee not elect to acquire title to the property described herein prior to October 1, 1935, then the Lessee agrees that within six months after October 1, 1955 it will purchase, and the Lessor agrees that within said six months period, she will sell and convey the premises herein described to the Lessee and by good and sufficient warranty deed convey said premises to said Lessee in fee simple, free and clear of all charges and encumbrances against the same at a price satisfactory to both parties hereto, or if they cannot agree upon such a price, then at a price to be determined in the following manner:

"(a) The Lessee shall within said six months period institute proceedings to acquire the property above described by condemnation, such proceedings to be instituted before the tribunal then having jurisdiction of such proceedings. The value fixed in said proceedings for the property herein described shall be the price which the Lessee shall pay, and the Lessor accepts for the deed above described to said property.

"(b) If no price is agreed upon by the parties within said six months period, or if the Lessee has not instituted condemnation proceedings within said period as provided in the preceding paragraph, then the price which the Lessor shall pay to the Lessee for said deed to said property shall be the sum of $300,000.00.

"The Lessee agrees that if it elects to proceed by condemnation proceedings as herein provided, it will prosecute said proceedings

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