The Town of Seaford v. Eastern Shore Public Service Co.

• Decision Date: 05 January 1942
• Citation: 24 A.2d 436,41 Del. 438
• Parties: THE TOWN OF SEAFORD, a municipal corporation of the State of Delaware, v. EASTERN SHORE PUBLIC SERVICE COMPANY, a corporation of the State of Delaware, THE PENNSYLVANIA COMPANY FOR INSURANCE ON LIVES AND GRANTING ANNUITIES, a corporation of the Commonwealth of Pennsylvania, and AMERICAN EMPLOYERS' INSURANCE COMPANY, a corporation of the Commonwealth of Massachusetts
• Court: Delaware Superior Court

24 A.2d 436

41 Del. 438

THE TOWN OF SEAFORD, a municipal corporation of the State of Delaware, v. EASTERN SHORE PUBLIC SERVICE COMPANY, a corporation of the State of Delaware, THE PENNSYLVANIA COMPANY FOR INSURANCE ON LIVES AND GRANTING ANNUITIES, a corporation of the Commonwealth of Pennsylvania, and AMERICAN EMPLOYERS' INSURANCE COMPANY, a corporation of the Commonwealth of Massachusetts

Superior Court of Delaware, New Castle County

January 5, 1942

Superior Court for New Castle County, No. 149, September Term, 1939.

This was an action of debt brought upon three several appeal bonds executed by the defendant in connection with certain litigation in the State of Delaware. Since Bond No. 2 was a mere enlargement of the amount covered by Bond No. 1, and with the same condition, we will consider these two as one bond for $ 7,500. These first two bonds were given in connection with an appeal by the Eastern Shore Public Service Company and The Pennsylvania Company for Insurance on Lives and Granting Annuities to the Supreme Court of Delaware from an adverse decree of the Chancellor of the State of Delaware dated November 30, 1937. This decree was based upon an opinion found in Del. Ch., 2 A.2d 258. The decree of the Chancellor was subsequently affirmed by the Supreme Court of Delaware, 2 A.2d 265. The third bond was for $ 8,500, was given in connection with a further appeal in the same litigation and a petition for a writ of certiorari from the Supreme Court of the United States. The appeal and certiorari were denied, 306 U.S. 616, 59 S.Ct. 483, 83 L.Ed. 1024 rehearing denied, 306 U.S. 668, 59 S.Ct. 589, 83 L.Ed. 1063. While the precise questions of law involved in the cited cases are not here material, some statement of facts is essential.

For some years the Eastern Shore Public Service Company, or its predecessors, had been using the streets of the Town of Seaford, pursuant to a franchise theretofore granted, for its posts and poles, wires and fixtures, to supply various customers in the Town of Seaford with electricity. The Town having considered the franchise at an end notified the Public Service Company to vacate the streets, and the propriety and legality of that ouster was the subject of the litigation in which these appeal bonds were given.

Contemporaneously with the litigation above referred to the Town of Seaford entered into an arrangement with the Seaford Light and Power Company, whereby the latter company erected an electric light plant in the Town, and the Town was given an option to purchase said plant within the time and upon the terms mentioned in such arrangement. This arrangement or agreement resulted in litigation which terminated in the decision of the Supreme Court, in Simon v. Town of Seaford, 197 A. 681. At the time of the termination of the litigation last mentioned, the option agreement had not been exercised. Subsequently, and on October 15, 1938, the Town exercised the option reserved to it and purported to purchase, as upon conditional sale, the electric light plant, for a fixed consideration, together with the cost of additions extensions and improvements, after deducting net earnings of the plant, with interest thereon, and the agreement contained provisions how these various amounts should be computed.

The plaintiff generally contends that except for the appeal from the order of ouster that it would have exercised its option to purchase said electric plant at an earlier date than it was exercised, and that except for the appeal the purchase price of the plant would have been reduced by the profits which would have been made by the vendor of the plant while the option remained unexercised, and while the appellant, by reason of the appeal, competed in business.

The plaintiff therefore contends that for the period from the date of the decree of ouster (December 10, 1937) to the date of the exercise of the option to purchase the plant (October 15, 1938) it suffered damages by reason of the appeal, and that these damages consisted of (a) loss of net earnings; (b) counsel fees; (c) taxes and expenses, the total of which amounted to upwards of $ 13,000, and greatly exceeded the penalty of the first two bonds sued on, viz., $ 7,500. Therefore the plaintiff claims the sum of $ 7,500 for its damages for the mentioned period.

For the period after the purchase of the plant (October 15, 1938), and after the date of Bond No. 3 (October 20, 1938) the plaintiff seeks to recover under Bond No. 3, which was in the sum of $ 8,500. As to this period the plaintiff specified his claim as follows:

Loss of net earnings from consumers

$ 1,655.23

Counsel fees

1,000.00

Expenses

114.56

$ 2,769.79

The total claim of the plaintiff then is $ 7,500 on the first two bonds, and $ 2,769.79 on the third bond, or $ 10,369.79.

The defendant denies that there is any liability on the bonds. It contends:

1. That the Town of Seaford has no title to or interest in the electric light plant or distribution system; that the action of the Town in entering into such contract of purchase was ultra vires and void.

2. That every item of damage is too remote and does not constitute legal damage.

3. That the defendant did not cause the plaintiff to pay a higher price than provided by the option contract.

The action was in debt on three several bonds. The defendant pleaded performance. The plaintiff in his replication assigned breaches of the bond and subsequently, and in answer to a declination to plead without a Bill of Particulars, filed such Bill of Particulars of its claim. The defendant filed a rejoinder which was substantially in the following form: that the plaintiff ought not to have or maintain its action against the defendant "because it saith that the said Town of Seaford was not forced to spend any moneys nor did said Town of Seaford suffer or incur the loss of any moneys by reason of the stay of the execution of the decree entered in the Court of Chancery of the State of Delaware, dated November 30, 1937; nor was the Town of Seaford damnified by reason or on account of the said stay of execution of the said decree."

The case was tried by the court without the intervention of a jury. At the conclusion of the case the defendant made some fifteen motions to strike certain items of testimony and for findings in its favor. These will be disposed of in the consideration of the appropriate subjects to which they are applicable.

The plaintiff contends that, under the pleadings, no defense can be raised as to the lack of power of the Town of Seaford to purchase an electric light plant, nor as to the invalidity of the contract of October 18, 1938.

To this question we will first address ourselves.

Judgment entered in favor of the plaintiff for the sum of $ 1,655.23.

James R. Morford (of Marvel and Morford) for plaintiff.

Daniel O. Hastings (of Hastings, Stockly and Layton) and Frederick W. C. Webb (of Salisbury, Md., pro hac vice) for defendants.

RODNEY and SPEAKMAN, J. J., sitting.

OPINION

RODNEY, J.

The plaintiff contends that his action in declaring generally on the bonds and reserving the assignment of breaches to the replication is in accordance with established practice. This is not controverted. The plaintiff, however, contends that the action of the defendant in failing to demur to the replication, but on the contrary of filing the rejoinder, is, in effect, a plea of confession and avoidance of the matters set forth in said replication and Bill of Particulars. Without prolonging the discussion, we will briefly state our views.

The condition of the bonds here sued on are in effect of double aspect. Such condition is (a) to prosecute the appeal "with effect" and pay all costs or otherwise abide the decree in appeal if they fail to make their plea good, and (b) to pay the whole amount of such damages as complainant may suffer by reason of the stay of the execution of the decree.

The replication of the plaintiff says the defendant did not prosecute the appeal with effect and pay the damages, and the Bill of Particulars sets out the damages claimed.

In Moffat Tunnell Imp. Dist. v. United States F. & G. Co., 7 W. W. Harr. (37 Del.) 473, 185 A. 186, it was held that the words "with effect" in an appeal bond meant "with success." The rejoinder filed by the defendant was, in effect, in confession and avoidance of the statement of its failure to prosecute the appeal with effect. The rejoinder admitted that the appeal had not been prosecuted with success. The rejoinder did not admit, but on the other hand expressly denied, any damage to the plaintiff. These items of damage were set up in the Bill of Particulars but, as such, are not self-proving, but must be supported by evidence. No demurrer would lie against the Bill of Particulars, as such, and the existence of legal damage was denied by the rejoinder. The rejoinder did not confess the items of damage set up in the Bill of Particulars. At the trial testimony was offered in support of the Bill of Particulars, and objected to, and motions to strike this testimony from the record have been made.

We think that the state of the pleadings does not estop the defendant from raising questions as to the lack of power of the Town of Seaford to purchase the electric light plant, nor as to the validity of the contract of October 18, 1938.

We shall now briefly consider the question of the power of the Town of Seaford to acquire an electric light plant, leaving the questions of the method of acquisition for later discussion.

There are three statutes which have some claimed materiality:

1. Chapter 153, Vol. 29, Laws of Delaware, p. 487 which is the Charter of the Town. Under this act the corporate authorities are authorized "to provide lamps and to light...