State ex rel. Spillman v. Interstate Power Co.

• Decision Date: 16 July 1929
• Docket Number: No. 26291.,26291.
• Citation: 118 Neb. 756,226 N.W. 427
• Parties: STATE EX REL. SPILLMAN, ATTY. GEN., v. INTERSTATE POWER CO. ET AL.
• Court: Nebraska Supreme Court

118 Neb. 756

226 N.W. 427

STATE EX REL. SPILLMAN, ATTY. GEN.,

v.INTERSTATE POWER CO. ET AL.

No. 26291.

Supreme Court of Nebraska.

July 16, 1929.

Syllabus by the Court.

The production, sale and distribution of electricity within the state of Nebraska is within the purview of section 3432, Comp. St. 1922, providing: “Any person, firm or company, association or corporation, foreign or domestic, doing business in the state of Nebraska and engaged in the production, manufacture or distribution of any commodity in general use, that shall intentionally, for the purpose of destroying the business of a competitor in any locality, discriminate between different sections, communities, or cities of this state by selling such commodity at a lower rate in one section, community or city, than is charged for said commodity by said party in another section, community or city, after making due allowance for the difference, if any, in the grade or quality and in the actual cost of transportation from the point of production, if a raw product, or from the point of manufacture, if a manufactured product, shall be deemed guilty of unfair discrimination, which is hereby prohibited and declared unlawful.”

Any person or corporation who shall monopolize or attempt to monopolize or combine or conspire with any other person or persons to monopolize any part of trade or commerce in what is commonly known as electricity within the state of Nebraska, and also, when engaged in business of producing, selling or distributing the same, shall enter into a contract, combination or conspiracy to, or who shall give direction or authority to, do any act for the purpose of driving out of business any other person engaged therein, or who for such purpose shall in the course of such business sell any article or product at less than its fair market value or at a less price than it is accustomed to demand or receive therefor in any other place, under like conditions, is within the prohibitions of sections 3448, 3449, and 3453, Comp. St. 1922, and such acts are in contravention of the public policy established thereby.

Evidence examined, and held to justify and support the findings and decree of the district court.

Appeal from District Court, Cedar County; Ryan, Judge.

Suit by the State, on the relation of O. S. Spillman, Attorney General, against the Interstate Power Company and others. From an adverse decree, named defendant and certain others appeal. Affirmed.

Goss., C. J., and Rose, J., dissenting.Hainer, Flansburg & Lee, of Lincoln, and H. E. Burkett, of Hartington, for appellants.

O. S. Spillman, Atty. Gen., T. J. McGuire, of Omaha, B. Ready, of Hartington, and C. P. Craft, of Aurora, for appellees.

Heard before GOSS, C. J., and ROSE, DEAN, GOOD, EBERLY, THOMPSON, and DAY, JJ.

EBERLY, J.

This is a suit in equity to enjoin the defendants from alleged combining and conspiring to and from unlawfully destroying the business of a competitor, and also from combining and conspiring to and actually monopolizing and restraining intrastate commerce in contravention of law and in violation of the public policy of this state. Plaintiff's petition reduced to its briefest terms had for one of its important and immediate purposes the enjoining of defendants named from putting into force a schedule of rates for electrical energy carrying a top rate of 6 cents per K. W. H. in the city of Hartington, Nebraska, which schedule, it was alleged, was adopted and maintained to further and effect the unlawful purposes above recited. In opposing this petition the defendants challenged its sufficiency as a matter of law, and the truth of its allegations as a matter of fact. In a trial to the court evidence offered in behalf of both parties to the litigation was voluminous. Upon consideration of the evidence adduced the trial court determined that as to the defendants, Interstate Power Company of Delaware, Interstate Power Company of Nebraska, Tri-State Utilities Company, Cedar Light & Power Company, the allegations contained in the petition were sufficient as a matter of law and true as a question of fact, and to this general finding added certain special findings consistent therewith, and based thereon, entered an order enjoining the proposed schedule of rates, which will be hereafter referred to as the “6 cents per K. W. H. rate.” From this order the defendants last named above prosecuted an appeal and the matter is before this court for a trial de novo.

[3] We have made a careful examination of the record. Our conclusion is that the defendants, at the time of the institution of this action, were not engaging in, or proposing to engage in, merely a bona fide effort to meet competition, but that a fair preponderance of the evidence adduced in the case sustains the conclusion of the trial judge on this question of fact, who found to the contrary, and it must be conceded had the advantage of hearing and observing the many witnesses who appeared in person before him and testified in his presence.

There is little or no conflict in the evidence as to the essential nature and interrelations of the several defendants. They owe respectively their existence to the result of a definite plan and policy. This plan contemplated the Interstate Power Company of Delaware, a Delaware corporation, as a parent or controlling organization. Pursuant to this plan the properties and assets of the Minnesota Electric Distributing Company, the TriState Utilities Company, as well as those of other owners, were, in effect, merged in and consolidated with the Interstate Power Company of Delaware, so that at the time of the institution of this suit by the state in the district court, that company owned and controlled more than 42 million in assets situated in Iowa, Illinois, Wisconsin, Minnesota, North Dakota, South Dakota, Nebraska, and Oklahoma. The evidence obtained from defendant sources discloses that this plan, so far as amalgamation of properties of the Tri-State Utilities Company (including later the Hartington plant) was concerned, had been substantially effected, though possibly not formally completed, on or before May 1, 1926. The defendant Interstate Power Company of Nebraska, organized and existing under the laws of Delaware, was formed in 1927 to acquire and operate the properties formerly belonging to the Minnesota Electric Distributing Company and the Tri-State Utilities Company in Nebraska. The purchase price of the properties thus acquired and placed in the name of the Interstate Power Company of Nebraska was exclusively represented by all of the stock of the Interstate Power Company of Nebraska, none of which was disposed of to the public, but all of which passed to, and was, and are owned, held and controlled by the parent company, the Interstate Power Company of Delaware. It was the latter company that secured the cancellation and retirement of all of the “underlying securities” of the Tri-State Utilities Company and the Minnesota Electric Distributing Company, including all stocks and bonds issued by the last two organizations, and which organizations thereafter, so far as practical purposes were concerned, ceased to exist.

Horace H. Dodd, commercial manager of the Interstate Power Company of Delaware, as well as other affiliated entities, appearing as a witness in this case in behalf of the defendants, and in his testimony referring to that company and its subsidiary components, summarizes the existing situation in the following language: “The Interstate Power Company * * * owns and operates certain properties in its own name, it owns. Then it owns certain of these other companies, the reason being that in certain states it is more easy to comply with the local laws by having a separate company operatingin the state. From an operating standpoint as far as the operating organization goes, we consider it all one company.” In substance, Mr. Dodd said: “We consider the Interstate Power Company of Delaware and the Interstate Power Company of Nebraska all as one company. In my capacity, as manager, I circulate all over and conduct it and operate it in that way.”

It further appears that the Interstate Power Company of Delaware is itself subsidiary to, and is owned and controlled in a manner quite similar by, the Utilities Power & Light Corporation of Chicago, which operates, owns and controls similar properties in some twelve different states.

The Cedar Light & Power Company is also a defendant, and in its name the business at Hartington, Nebraska, formerly operated by the Tri-State Utilities Company, the ostensible control of which was taken over by the Interstate Power Company of Nebraska, purports to be carried on. The Cedar Light & Power Company was organized after the Hartington Electric Light Company had been granted a franchise by the city of Hartington. It was known at that time there would be competition to be met at this point. It appears that the articles of incorporation of the Cedar Light & Power Company were drawn up and executed in the law office of Matthews & Koegel of Chicago, who are now and were then attorneys for the Utilities Power & Light Company of Chicago, the ultimate control, and are and were then attorneys for all subsidiaries thereto at that time, including the Interstate Power Company of Delaware and the Interstate Power Company of Nebraska. The incorporators executing these articles were Francis E. Matthews of the last-named firm of attorneys, J. N. Canavan, vice-president of the Utilities Power & Light Company of Chicago, also vice-president of the Interstate Power Company of Delaware, and also vice-president of the Interstate Power Company of Nebraska, and later president of the Cedar Light & Power Company. The third incorporator was J. W. Perkins “who works in the law office of Matthews & Koegel.” The directors of this corporation were J. N. Canavan, J. W. Perkins, already mentioned, and C. C. Summers who was the managing officer of...