State v. Central Power & Light Co.

• Decision Date: 29 April 1942
• Docket Number: No. 7851.,7851.
• Citation: 161 S.W.2d 766
• Parties: STATE v. CENTRAL POWER & LIGHT CO.
• Court: Texas Supreme Court

Page 766

161 S.W.2d 766

STATE v. CENTRAL POWER & LIGHT CO.

No. 7851.

Supreme Court of Texas.

April 29, 1942.

Error from the Court of Civil Appeals of Ninth Supreme Judicial District.

Suit by the State of Texas against the Central Power & Light Company to recover civil penalties for alleged violation of anti-trust laws and to restrain the performance of a contract between defendant and the City of Yorktown. A judgment of dismissal was affirmed by the Court of Civil Appeals, 147 S.W.2d 230, and plaintiff brings error.

Judgments of Court of Civil Appeals and of District Court affirmed.

Gerald C. Mann, Atty. Gen., and George W. Barcus, Walter R. Koch, Frederik B. Isely, and Ocie Speer, Asst. Attys. Gen., for plaintiff in error.

Kemp, Lewright, Dyer, Wilson & Sorrell and Frank M. Kemp, all of Corpus Christi, and Edward Clark and Everett L. Looney, both of Austin, for defendant in error.

ALEXANDER, Chief Justice.

The State of Texas, by its Attorney General, brought this suit against Central Power & Light Company to recover civil penalties for alleged violation of the antitrust laws of this State and to restrain the performance of a contract between the defendant company and the city of Yorktown. The city is not a party to the suit. The question to be decided is whether or not the provisions of the contract whereby the city bound itself not to erect a municipal power plant for a period of ten years created a "trust" in violation of Article 7426, Revised Civil Statutes, 1925.

The State alleged in its petition that on April 3, 1936, the city of Yorktown, by a majority vote of its citizens, adopted a resolution submitted by its city council authorizing the issuance of revenue bonds for the erection of a municipal light and power plant. This projected municipal plant would have been a competitor of the company's electric power and distribution system in the city of Yorktown. The city had applied to the Federal Emergency Administration of Public Works for a grant to aid in the construction of an electric light and power plant, and its application had been accepted. Thereafter, on October 18, 1937, the city, acting by its mayor and city secretary, entered into a written agreement with the Central Power & Light Company, wherein the foregoing facts were recited, and further providing as follows:

"(1) Company will pay City the sum of Ten Thousand Dollars ($10,000.00) to fully reimburse it for any and all expenditures made and obligations erected (incurred) in connection with its purpose to erect and construct an electric light and power plant and street lighting and distribution systems.

"(2) The City will not issue, sell or offer for sale bonds of the City which the City Council is authorized to issue by the election held on April 3, 1936.

(Paragraph 3 provided that the City would withdraw and cancel its application for Federal aid to construct a power plant.)

"(4) The City has this day entered into a contract with Company for the purchase from Company for a period of ten years from date thereof, of electric energy for municipal water pumping, and said contract shall be fully performed for the entire term thereof.

"(5) Company has this day entered into a contract with the City for the purchase from City of water in the amount of not less than Three Hundred Dollars ($300.00) worth each year for a period of ten years, for use at ice plant located in Yorktown, and Company shall fully perform said contract for the entire term thereof.

"(6) During the period of ten years which the said contracts described in paragraphs (4) and (5) above are in effect, City agrees not to built (build), erect or construct, nor attempt to build, erect or construct, or have built, erected or constructed either directly or indirectly, an electric light and power plant and street lighting and distribution systems, or either or any of them, nor issue or attempt to issue the bonds authorized by the election held on April 3, 1936, or any other securities of any sort whatever, for the purpose of erecting or constructing an electric light and power plant and street lighting and distribution systems, or either of them.

"(7) The City Council of the City of Yorktown shall pass all ordinances and resolutions, either or both, necessary to carry out the intent of this agreement in such form and manner as are satisfactory to counsel for Company."

It is further alleged "that it was the intent and purpose of defendant to set aside the will of the people as expressed in the election authorizing the city to set up a competing electric light and power plant and distributing system, and further to prevent and lessen competition, restrain trade, and block the free channel of business, and the defendant by this contract induced the city to agree to abstain from producing or distributing electric light and motor power during the term of the contract in competition with the defendant, all in violation of Article 7426 through Article 7428, Revised Civil Statutes, 1925."

It was further alleged that said agreement and combination had been carried out so as to actually prevent and lessen competition and to restrain trade and block the channels of normal business in the manufacture, sale, and purchase of electric light and motor power in said city.

The trial court sustained a general demurrer to the State's petition, and, upon the Attorney General's refusal to amend, dismissed the...