State of South Carolina v. South Carolina E. & Gas Co.

• Decision Date: 26 September 1941
• Docket Number: No. 576.,576.
• Citation: 41 F. Supp. 111
• Court: U.S. District Court — District of South Carolina
• Parties: STATE OF SOUTH CAROLINA, ex rel. MAYBANK, Governor, et al. v. SOUTH CAROLINA ELECTRIC & GAS CO.

41 F. Supp. 111

STATE OF SOUTH CAROLINA, ex rel. MAYBANK, Governor, et al. v. SOUTH CAROLINA ELECTRIC & GAS CO.

No. 576.

District Court, E. D. South Carolina, Columbia Division.

September 26, 1941.

COPYRIGHT MATERIAL OMITTED

Cordie Page, of Conway, S. C., and Barnard B. Evans, of Columbia, S. C., for plaintiff.

J. B. S. Lyles and W. C. McLain, both of Columbia, S. C., for defendant.

WYCHE, District Judge.

The State of South Carolina, in this action, sues the South Carolina Electric and Gas Company for specific performance of a contract and the recovery of one billion dollars for the breach thereof upon three causes of action. The matter before me is the motion of the defendant to dismiss on the ground that this Court has no jurisdiction of the controversy. The defendant is a resident of South Carolina.

All the causes of action are based on the ownership of the property known as the Columbia Canal by the State of South Carolina prior to 1887, the successive conveyances thereof to defendant's two predecessors in title and to defendant by deeds pursuant to the authority of and expressly subject to the duties and liabilities imposed by the Act of the General Assembly of South Carolina, adopted in 1887, 19 Stat. 1090, as amended by the Act of 1890, 20 Stat. 967.

The Act of 1887 created a Board of Trustees of the Columbia Canal and directed the conveyance of the property to this Board for the benefit of the City of Columbia, the Board to take the deed subject to the duties and liabilities imposed by the Act. The amendatory Act of 1890 authorized the Board to sell and convey the property to any person or corporation, subject to the duties and liabilities imposed by the Act of 1887.

A statement of some of the historical and geographical facts within judicial knowledge may make the objectives of the Act of 1887 more easily understood.

The canal as it stood in 1887 was a partial and incomplete reconstruction and enlargement of an older and smaller canal which was originally constructed to take boats around the extensive shoals at the confluence of the Broad and Saluda Rivers, forming the Congaree River, just opposite the City of Columbia. The Congaree joins with the Wateree below Columbia to form the Santee River, which empties into the Atlantic Ocean at the City of Georgetown, South Carolina.

The old Columbia canal had been constructed about or prior to 1800 and used as an aid to navigation of the Broad and Congaree Rivers to the Cities of Columbia and Georgetown, and through the old Santee-Cooper canal to the City of Charleston. This commerce could not survive the competition of the railroads when they came into existence, and the old canal had been practically abandoned for some years prior to 1887.

The new canal was projected to run from Bull's Sluice on the Broad River, a point north of the City of Columbia, through the western edge of the city, to Rocky Branch on the Congaree River, a point south of the city, a total length of about five miles. No part of the new canal had been completed in 1887; but the northern section had been excavated by the State from Bull's Sluice on the Broad River down to Gervais Street in the City of Columbia, a distance of approximately three miles.

The object of the Act of 1887 was to bring about the construction of the new canal, according to the enlarged dimensions specified in the Act, to promote navigation and develop water power primarily for the benefit of the City of Columbia but indirectly for the benefit of all citizens of the State. The northern section of the canal, from the Broad River entrance down to Gervais Street, was completed by the Board of Trustees, including a diversion dam in Broad River, together with water gates and locks at the Broad River entrance of the canal, prior to the sale of the property by the Board to Columbia Water Power Company in 1892.

The theory of the complaint, including all three causes of action, is that the acceptance of the deeds to the property constituted a contract by defendant and its predecessors, respectively and successively, with the State of South Carolina, to perform the duties and discharge the liabilities imposed by the Act of 1887; and all the rights asserted by the State in this complaint are based on this contract.

The first cause of action is predicated on the requirements of sections 1, 3 and 7 of the Act of 1887 that the canal be completed to Gervais Street, of the dimensions specified, within the time limit imposed, and particularly the proviso of section 1 that a failure to complete the canal to Gervais Street shall cause the property to revert to the State; and seeks a judgment of forfeiture under the allegation that the canal has never been completed to Gervais Street as required.

The State commenced a suit in 1917 against a predecessor in title of defendant, claiming a forfeiture of this property because of a failure to extend the canal down to the Congaree River, at Rocky Branch, "as soon as is practicable", as required by section 7 of the Act of 1887. On an interlocutory appeal the Supreme Court of South Carolina construed this requirement to constitute a condition subsequent working a forfeiture under the laws of South Carolina, and later affirmed a judgment of the trial court for the possession of the property entered on this theory. State v. Columbia Ry., Gas & Electric Co., 112 S.C. 528, 100 S.E. 355, and Id., 129 S.C. 68, 123 S.E. 646.

On writ of error the Supreme Court of the United States, 261 U.S. 236, 43 S.Ct. 306, 67 L.Ed. 629, reversed this judgment because the construction of the contract made by the Supreme Court of South Carolina was not supported by the language of the Act of 1887, and held that the provision in question was a covenant rather than a condition. The Supreme Court based the federal appellate jurisdiction on the action of the trial court in giving force and effect to a legislative declaration of forfeiture found in section 1 of the South Carolina Act of 1917. This Act also created a Canal Commission to recover possession of the property, and this Commission instituted the suit in the name of the State as authorized by the Act. 30 Stat. 348.

Upon the commencement of the forfeiture action, the defendant filed therein its petition and bond for removal to the federal court, alleging that the suit arose under the Constitution of the United States because the complaint alleged and relied upon the legislative forfeiture declared in the Act of 1917. But the state court declined to accept the petition and bond upon the objection of the State; it held that "plaintiff does not make its claim under the Constitution of the United States," and that defendant could not insert and anticipate a constitutional question so as to make the case a removable one, citing Arkansas v. Kansas & Texas Coal Company et al., 183 U.S. 185, 22 S.Ct. 47, 46 L.Ed. 144; Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 1218. The federal district court remanded the case upon the same ground on the motion of the State. The State successfully contended in this former action that the rights which this complaint again asserts arose under the laws of South Carolina and not under the laws of the United States.

What has been said with reference to the first cause of action is equally pertinent to the second, which alleges that various requirements of the Act of 1887 as to the construction and maintenance of the canal are covenants binding on the defendant as grantee and seeks specific performance of them, evidently in the alternative; and also to the third cause of action, which seeks general damages of a billion dollars for the past failure of defendant and its predecessors in title to perform these same covenants. The rights asserted by the State in the second and third causes of action are likewise rights arising under the contract made by the South Carolina statute and the conveyances pursuant thereto.

The doctrine of judicial notice applies to this motion. Lindsley v. Natural Carbonic Gas Company, 220 U.S. 61, 69, 31 S.Ct. 337, 55 L.Ed. 369, Ann.Cas.1912C, 160; State v. John P. Nutt Co., 180 S.C. 19, 185 S.E. 25. The federal court will take judicial notice of the common law and statutes of the State, Owings v. Hull, 9 Pet. 607, 9 L.Ed. 246; Bowen v. Johnston, 306 U.S. 19, 59 S.Ct. 442, 83 L.Ed. 455, as well as the decisions of the highest court of the State construing such statutes. Holly v. McDowell Coal & Coke Co., 4 Cir., 203 F. 668, at page 670; Barker v. Eastman, C.C.N.H., 192 F. 659, affirmed 1 Cir., 206 F. 865; Hennessy v. Tacoma Smelting & Refining Co., 9 Cir., 129 F. 40. Judicial notice of a statute includes the facts recited or recognized in the statute. Watkins v. Holman, 16 Pet. 25, 10 L.Ed. 873; State v. Broad River Power Co. et al., 177 S.C. 240, 181 S.E. 41, 48.

By the Act of 1925, 34 Stat. 852, and section 3 of the contract thereby authorized, the State released defendant's predecessor in title, its successors and assigns, from all duties and obligations imposed by the Act of 1887 (page 853), excepting only the duty to keep the canal open for navigation, and this was by section 12 of the contract (page 858) limited to the canal as it then existed and now exists. Section 2 of the Act (page 858) reserved to the State the right to extend and complete the canal according to the plan of the Act of 1887, so that the State has assumed any duty to keep the new or extended portion of the canal open for navigation, if and when such extension shall be made. The property was conveyed to defendant following this settlement in 1925. The Attorney General brought an action against defendant, under its former name of Broad River Power Company, and defendant's predecessor in title to test the validity of this Act and settlement contract, pursuant to instructions of the Act of 1933. 38 Stat. 1180. The trial court held that the Act and settlement contract of 1925 were based on substantial and...