Southwestern Gas & Elec. Co. v. Town of Hatfield, 4-9523

• Decision Date: 12 November 1951
• Docket Number: No. 4-9523,4-9523
• Citation: 243 S.W.2d 378,219 Ark. 515
• Parties: SOUTHWESTERN GAS & ELECTRIC CO. et al. v. TOWN OF HATFIELD.
• Court: Arkansas Supreme Court

Page 378

243 S.W.2d 378

219 Ark. 515

SOUTHWESTERN GAS & ELECTRIC CO. et al. v. TOWN OF HATFIELD.

No. 4-9523.

Supreme Court of Arkansas.

Nov. 12, 1951.

Hal L. Norwood, Mena, Townsend & Townsend, Little Rock, Arnold & Arnold, Texarkana, for appellants.

Robert Steel, Nashville, Louis Tarlowski, Little Rock, for appellees.

MILLWEE, Justice.

This is an appeal from a judgment of the Pulaski Circuit Court entered on review of an order of the Arkansas Public Service Commission, hereinafter called 'Commission'. Appellants are Southwestern Gas and Electric Company and Rich Mountain Electric Cooperative, Inc., hereinafter called respectively, 'Southwestern' and 'Rich Mountain'. Appellee is the town of Hatfield, Arkansas, hereinafter called 'Hatfield'.

Since 1927 Southwestern has owned and operated electric distribution systems in the towns of Hatfield and Cove, Arkansas. On March 25, 1950 appellants filed with the Commission their joint application for an order authorizing Southwestern to sell the distribution systems in said towns to Rich Mountain under an agreement which stipulated that it should be subject to prior approval of the Commission and the town councils of Hatfield and Cove. Following a hearing before the Acting Chairman of the Commission on May 25, 1950, the matter was taken under advisement. On June 8, 1950 the Commission entered an order approving the proposed sale as being in the public interest and reciting, '* * * the record reflects that both towns have acquiesced in the transfer.'

Hatfield was not represented at the hearing on May 25, and on June 20, 1950 filed a petition with the Commission alleging that ninety percent of the citizens of the town opposed the sale; that such opposition had been noted by proper resolution of the town council opposing the sale, notice of which action had been filed with the Commission prior to the hearing; that J. M. Stephenson, Manager of Rich Mountain, had subsequently, by misrepresentation, persuaded at least two members of the council to sign a paper which they did not understand; and that by reason of such misrepresentation the Commission had approved the sale. Prayer of the petition was that the Commission grant a rehearing and give Hatfield an opportunity to present its objections to the proposal, and that the application of appellants be denied. The town of Cove apparently acquiesced in the proposed sale.

On July 14, 1950 the Commission entered an order directing that its order of June 8 be held in abeyance until such time as additional testimony might be taken. This order recites: 'At the time of the hearing the Commission, as the record will reflect, was informed that the citizens of the Cities had no objection to this transfer. The Commission further requested that the Cooperative furnish documentary proof that such was the case. Such proof was forthcoming for the City of Hatfield in the form of individual letters filed by Councilmen for that City. However, on June 20, 1950, the Commission received a Petition from the City of Hatfield which, through its allegations, cast doubt in the minds of the Commission as to whether or not the information elicited at the hearing and thereafter was conclusive as to the position of the citizens of the City of Hatfield.'

On August 9, 1950 the Commission held a hearing on the petition filed by Hatfield and again took the matter under advisement.

On August 29, 1950 the Commission entered an order denying the petition of Hatfield and confirming the order of June 8, 1950. This order contained a finding as follows: 'On March 21, 1950, the Town Council of the town of Hatfield, Arkansas, was duly assembled in a called meeting at which time the Southwestern Gas and Electric Company was represented by Mr. C. L. Leighton and the Rich Mountain Electric Cooperative, Inc., was represented by Mr. Jim Stephenson. The matter of the sale of the electric distribution system was presented to the Town Council, and Mr. Leighton and Mr. Stephenson were dismissed from the Council Chambers and returned a short time later and were advised that the Town Council had voted their approval of such sale; under date of March 22, 1950, a letter was written to the Public Service Commission advising this Commission of the action of the Town Council and was signed by Mr. Kermit Myers, as Mayor, and Mr. Harold Faulkner, as recorder, which says that a unanimous vote in favor of the sale was had and no protest would be offered; that there was no fraud practiced upon the Town Council or any member thereof to obtain this resolution and agreement; that the meeting constituted a called meeting of the Town Council; that all members of the Town Council were present and took part in the meeting.'

On September 2, 1950 Southwestern filed application for rehearing and amendment of the order of August 29, and on September 5 Hatfield also applied for a rehearing. The Commission overruled Hatfleld's petition, but Southwestern's application for amendment of the order of August 29 was granted. This amendment was to the effect that Southwestern had a legal right to sell the properties without liability of any nature to it and that upon consummation of said sale, Southwestern should be relieved of all contracts, obligations and duties in then had or could have with respect to the two towns and the inhabitants thereof.

On September 18, 1950 Hatfield filed a petition in circuit court pursuant to Ark.Stats. § 73-233 for review and vacation of the Commission's final order. The petition alleged that the Town Council of Hatfield had not approved the proposed sale but had expressly disapproved same, that the alleged council meeting of March 21, 1950 was not, and did not purport to be, a legal council meeting but was informally held for the purpose of hearing explanation of the proposed sale and not for the purpose of taking final action thereon; that any expressions coming from said meeting for or against the proposal were not made as, and did not purport to be, the action of a legal meeting of the council; that, even if said meeting was valid, the results thereof were abrogated and superseded by a resolution opposing the sale which was duly adopted at a valid meeting of the council on April 21, 1950. In separate responses to the petition by the Commission and Southwestern, the latter specifically requested that court to adjudicate the matter of whether the town council of Hatfield had approved the contract between Southwestern and Rich Mountain.

The able trial judge made extensive findings which were incorporated in the judgment dismissing the petition of Hatfield and confirming only that part of the order of the Commission entered on June 8, 1950 which approved the sale as being in the public interest. In reaching this conclusion the court found:

'The case under consideration here involves, (1) a contract between seller and purchaser; (2) a contract between Hatfield and Southwestern; and (3) the legality of the action of the Hatfield Council. These are questions to be determined by a Court of competent jurisdiction and not by the Public Service Commission.

'By its petition filed in this Court on September 18, 1950, Hatfield undertakes to have the order of the Public Service Commission disposing of the above questions, contrary to the contentions of Hatfield, set aside. A review of the authorities cited above leads to the conclusion that this Court does not have jurisdiction, and that the Public Service Commission was without jurisdiction in the first instance to pass on any question other than whether the proposed sale would be in the public interest.'

In view of the disposition we make of the case, we find it necessary to decide only the question of the Commission's jurisdiction to determine whether the town council of Hatfield validly approved the proposed sale. In deciding that the Commission was without jurisdiction to determine the validity of the action of the Hatfield council, the trial court held that such determination involved the exercise of judicial powers and functions, while the Commission was only competent to exercise legislative or administrative powers. The court cited the following cases as a basis for this conclusion: Jones v. Cooper, 154 Ark. 308, 242 S.W. 550; St. Louis-San Francisco Ry. Co. v. Mo. Pac. R. Co., 156 Ark. 259, 245 S.W. 806; and City of Fort...