State v. Broad River Power Co.

• Decision Date: 09 July 1929
• Docket Number: 12698.
• Parties: STATE ex rel. DANIEL, Atty. Gen., v. BROAD RIVER POWER CO. et al.
• Court: South Carolina Supreme Court

153 S.E. 537

157 S.C. 1

STATE ex rel. DANIEL, Atty. Gen., v. BROAD RIVER POWER CO. et al.

No. 12698.

Supreme Court of South Carolina

July 9, 1929

Original proceeding for writ of mandamus by the State, on the relation of John M. Daniel, Attorney General, against the Broad River Power Company and others, wherein the South Carolina Railroad Commission and others intervened.

Writ granted.

The petition directed to be reported was as follows:

To the Honorable Supreme Court of the State of South Carolina:

The petitioner above named, suing on behalf of the public and of all municipalities, corporations, citizens, and of all who may care to come in and be made parties to this proceeding respectfully shows to the Court:

1. That the State of South Carolina is a body politic and has certain rights in the streets of the original City of Columbia, the capital city thereof, which likewise has certain rights and duties as to the control of said streets; and the relator John M. Daniel is the duly elected and qualified Attorney General of said State.

2. On information and belief that the defendants Broad River Power Company and Columbia Railway, Gas & Electric Company are corporations created and existing under the laws of the State of South Carolina, and having their principal place of business in the City of Columbia, S. C.; that the said Power Company was chartered in July, 1924, with capital stock of twenty million ($20,000,000.00) dollars, with power, among other things, to operate street car, gas and electric light service and to acquire stock in other corporations (Corporation Book "A," page 510), and did thereafter acquire all the stock in and become merged with and invested with the rights and liabilities of the defendant Railway, Gas & Electric Company; and that the defendant F. D Campbell is general manager of both said Companies.

3. On information and belief that the Columbia Railway, Gas & Electric Company (formerly named Columbia Electric Street Railway, Light & Power Company, the name having been changed by amendment to its charter dated 18 May, 1911), was created with a capital stock of seventy-five thousand ($75,000.00) dollars by the Act of 16 December, 1891 (20 Stat. 1453) which authorized the consolidation into one grant of the powers to construct and operate a street railway system with horsepower (formerly conferred upon the Columbia Street Railway Company by Act of February 9, 1882, 17 Stat 876) to make, manufacture and sell gas and electricity required in the City of Columbia and neighboring towns for lighting buildings and railway cars, to provide electric motor power for transportation or other purposes (formerly granted to the Congaree Gas and Electric Company by Act of December 24, 1887 (19 Stat. 1103), and to provide electric motor power for any purposes and to operate street cars with electric power, with consent of City Council, over the streets of Columbia, formerly imposed upon the Columbia Electric Street & Suburban Railway & Electric Power Company by Act of December 24, 1890, 20 Stat. 969, and vested the same in said company "subject to all the debts and liabilities" of said companies; that the said Columbia Electric Street Railway, Light & Power Company accepted the consolidated franchise and agreed to furnish street car service, gas and electric light and power as long as it enjoyed such franchise, as required by law in the public interest.

4. On information and belief that in pursuance of such powers the said Railway, Gas & Electric Company thereupon obtained the consent of the City of Columbia to furnish such public services, and from time to time to install the equipment therefor, subject to the obligation to obey the city ordinances (Sec. 594), to run their cars at regular intervals daily (Sec. 583), and to maintain its tracks "in good condition" "at all times" (sec. 710), as set forth in the ""Revised Ordinances" of the City of 1920 and amendments thereto; and thereafter built a large plant for the manufacture of gas and electricity for sale to the public generally and for the operation of street car service, laid a system of trackage in and around the city and community, using the same poles to carry both the electric light wires and the trolley wires used in the street car service, and generally operating its street car, gas, electric light and power privileges by the same force and equipment as parts of one business.

5. On information and belief that as the city and community grew (from approximately 15,000 in 1890 to over 50,000 in 1925) the said Railway, Gas & Electric Company likewise enlarged and amended its privileges and obligations; acquired the rights and assumed the liabilities of the Columbia and Eau Claire Electric Street Railway (in 1896) and of the Suburban Transit Company (in 1912), which companies had been chartered in perpetuity for furnishing and maintaining street car service to the communities of Eau Claire and Colonial Heights; entered into contracts with the Columbia Land & Investment Company (a company then developing the portion of the city known as Shandon), on 23 May, 1902, to maintain and operate its street cars to and from such communities and the City of Columbia, daily at regular intervals, continuously, for 99 years, that is to 15 August, 2001, and with the North Columbia Land Company in 1906 and 1908 in consideration of five thousand ($5,000.00) dollars to operate such street car service to and from its property and the city continuously, in perpetuity; and made a like contract with the Shandon Annex Company, and that by means of said companies and contracts the City of Columbia and surrounding towns and communities have been largely built up during the past thirty-five years; and that such contracts were intended to and did inure to the benefit of the public who, in purchasing property and settling in the community, relied upon the faith that the street car service would continue to be operated under such obligations in perpetuity; that the said company continued to furnish such combined public services to the community in a fairly satisfactory manner down to about the year 1925, and enjoyed correspondingly greater patronage and income from the business, increasing its capital stock from time to time up to three million ($3,000,000.00) dollars in 1911 and in 1912 had its charter amended so as to continue its rights, powers and privileges and all liabilities and limitations imposed upon it by law (Corporation Book "A," page 384) in force and effect in perpetuity.

6. On information and belief that at some time during the year 1924 or 1925 the defendant, Broad River Power Company (or its allied interests), having acquired the stock in the defendant, Railway, Gas & Electric Company and its subsidiary companies, and having determined to discontinue the street car branch of its franchise (and having during the previous year been prevented from abandoning street car service in Spartanburg, S. C., by a Supreme Court decision (Jan., 1924), holding that the obligation to operate the street cars was inseparably connected with the other branches of similar charter rights), conceived the plan, for the purpose of escaping such obligation, of separating the street car department from the other branches of said franchise and of thereafter abandoning the charter rights as a street railway company; and thereafter did, in pursuance of such scheme, on June 15, 1925, attempt to have the Railway, Gas & Electric Company transfer all its valuable property and rights to the defendant Power Company, except certain rights said to be connected with the street car department (Deed Book "CT," page 604), so as to leave the said Railway, Gas & Electric Company a mere shell of its former self and financially unable to perform its obligations to the public in the operation of the transportation system, said alleged transfer being made with the intent and purpose of having said Railway, Gas & Electric Company thereafter abandon its charter rights and escape the obligation to operate the said railway system; that such ostensible transfer and attempted separation was wholly pretensive, being from one branch of the same organization to another, the Power Company owning all the stock in and having absolute control of the said Railway, Gas & Electric Company, both companies having the same offices and officers and being in fact and operating as one public service corporation, and was without consideration, intended to hinder and delay its creditors and particularly the public, and was illegal, null and void.

7. On information and belief that the defendants have since attempted to justify such alleged separation under the Merger Act, which was passed in 1925, at the instance of defendants for the ostensible purpose of enabling the defendant Railway, Gas & Electric Company, Parr Shoals Power Company, Columbia Gas Light Company, and other subsidiary companies, to merge and consolidate with, and transfer their rights to, the defendant Broad River Power Company; but that such act was not intended to and does not authorize such a pretensive transfer or separation or the discontinuance of street car service, and on the contrary expressly provides that any merger or sale should be ""without prejudice" "to any rights of any creditors" and should be "subject to the restrictions, omissions and conditions contained" in the franchises of said companies (Act 1925, page 842), and that such fictitious sale and separation, intended to defeat the creditors of said companies and to deprive the public of its rights, was wholly beyond and contrary to the true intent and purpose of said Merger Act.

That moreover if at the time of the said act it was the purpose and intention of defendants thereafter to...