Trico Electric Cooperative, Inc. v. Ralston, 5040

• Decision Date: 12 July 1948
• Docket Number: 5040
• Citation: 67 Ariz. 358,196 P.2d 470
• Parties: TRICO ELECTRIC COOPERATIVE, Inc. v. RALSTON et al
• Court: Arizona Supreme Court

196 P.2d 470

67 Ariz. 358

TRICO ELECTRIC COOPERATIVE, Inc. v. RALSTON et al

No. 5040

Supreme Court of Arizona

July 12, 1948

Appeal from Superior Court, Pinal County; Frank E. Thomas, Judge.

Affirmed.

John F Connor, of Phoenix, for appellant.

Tom Fulbright, of Florence, and Whitney, Ironside & Whitney, of Phoenix (Walter Roche, of Phoenix, of counsel), for appellees.

Gibbons Superior Judge. LaPrade and Udall, JJ., concur. Chief Justice Stanford having disqualified himself, the Honorable J. Smith Gibbons, Judge of the Superior Court of Apache County, was called to sit in his stead.

OPINION

Gibbons Superior Judge.

The Eloy Light, Power and Utility Company, a defendant below, herein called "Eloy Company", is an Arizona public service corporation and owns water and electric plants, lines, and systems in the unincorporated town of Eloy, Pinal County, Arizona, and in the vicinity thereof, by which it serves the public generally with electrical energy for general purposes and for pumping of water for irrigation of farm lands and supplying water in the town of Eloy for domestic and commercial use. Plaintiffs (appellees) are customers of the Eloy Company and each receive one or more of the services above named. The appellant, Trico Electric Cooperative, Inc., herein called defendant, is a nonprofit nonstock membership corporation organized under the provisions of article 4, chapter 53, A.C.A.1939, formed to take advantage of the grant of loans to nonprofit cooperatives for rural electrification, pursuant to the provisions of the Rural Electrification Act of 1936, title 7, U.S.C.A., chapter 31, sections 901-914.

On October 29, 1946, the Eloy Company, for a nominal consideration of $ 5, granted defendant for a period of sixty days the option to purchase for the sum of $ 200,000 all its electric transmission and distribution lines and facilities and all water distribution properties. Within said sixty-day period defendant Trico exercised said option and announced its election to purchase said properties.

On December 5, 1946, plaintiffs commenced this class action against defendant and the Eloy Company in the superior court of Pinal county, Arizona, for themselves and on behalf of all the consumers of water and electric energy furnished by Eloy Company, asking for declaratory relief adjudicating said option agreement and contemplated sale and transfer of properties thereunder to be unlawful, illegal and void, and for injunctive relief enjoining defendants from consummating said sale and transfer of possession, control, or ownership of said properties.

Defendant filed a motion to dismiss plaintiffs' amended complaint on the grounds: (a) that the court lacked jurisdiction of the subject matter of the action; and (b) that the said complaint failed to state a claim upon which the relief prayed for could be granted. This motion was denied by the trial court; both defendants thereupon answered separately on the merits, each admitting that a controversy existed between plaintiffs and defendant Trico. Eloy Company further asked that the court grant declaratory relief adjudicating the validity and legality of said option and the proposed sale thereunder.

Thereupon, plaintiffs moved for judgment on the pleadings, which motion was granted by the court, and in said judgment it was decreed that said option and the contemplated sale thereunder were unlawful, illegal and void and of no force and effect. No injunctive relief was granted. Defendant Trico appeals from said judgment, but Eloy Company, though served with copies of notice and designated record on appeal, did not join therein and is not before this court either as an appellant or appellee.

There are six assignments of error and an equal number of propositions of law, some of which are fused and intermingled, and not entirely clear as to their application to the issues involved. In the interest of clarity and brevity, we shall consider only those which are necessary in this appeal.

One of the basic questions is whether the courts or the corporation commission has the jurisdiction and power to determine the validity of said option agreement.

In the instant case the record discloses that plaintiffs brought this suit before the matter of the sale therein contemplated could be presented to the corporation commission for approval or disallowance. Counsel for defendant Trico is contending that the court in entertaining this suit testing the validity of the contract in question is usurping the corporation commission's jurisdiction.

Each department above named was created by and owes its existence to the organic law of this state; and each must rely upon the constitution and implementing statutes thereto to define its powers and duties.

In Corporation Commission v. Pacific Greyhound Lines, 54 Ariz. 159, 94 P.2d 443, 447, we said: " In construing the provisions of the constitution, it is clearly necessary that we consider the instrument as a whole, and endeavor to give such a construction to each and every part as will make it effective and in harmony with all the other parts. * * *"

See also Arizona Eastern Railroad Co. v. State, 19 Ariz. 409, 171 P. 906.

Applying this rule to the instant case, there are several constitutional provisions which must be considered in determining what department has the jurisdiction to construe the validity of a contract. Article 3 of the constitution provides: "The powers of the government of the state of Arizona shall be divided into three separate departments, the Legislative, the Executive, and the Judicial; and, except as provided in this constitution, such departments shall be separate and distinct, and no one of such departments shall exercise the power properly belonging to either of the others."

Section 1 of article 6 provides: "The judicial power of the state shall be vested in a Supreme Court, superior courts, justices of the peace, and such courts inferior to the superior courts as may be provided by law."

and sections 3, 4 and 6 of article 15 read as follows:

" Section 3. The corporation commission shall have full power to, and shall, prescribe just and reasonable classifications to be used, and just and reasonable rates and charges to be made and collected, by public service corporations within the state for service rendered therein, and make reasonable rules, regulations, and orders, by which such corporations shall be governed in the transaction of business within the state, and may prescribe the forms of contracts and the systems of keeping accounts to be used by such corporations in transacting such business, and make and enforce reasonable rules, regulations, and orders for the convenience, comfort, and safety, and the preservation of the health, of the employees and patrons of such corporations; * * * Provided further, that classifications, rates, charges, rules, regulations, orders, and forms or systems prescribed or made by said corporation commission may from time to time be amended or repealed by such commission."

" Section 4. The corporation commission, and the several members thereof, shall have power to inspect and investigate the property, books, papers, business, methods, and affairs * * * of any public service corporation doing business within the state, and for the purpose of the commission, and of the several members thereof, shall have the power of a court of general jurisdiction to enforce the attendance of witnesses and the production of evidence by subpoena, attachment, and punishment, which said power shall extend throughout the state. Said commission shall have power to take testimony under commission or deposition either within or without the state."

" Section 6. The law-making power may enlarge the powers and extend the duties of the corporation commission, and may prescribe rules and regulations to govern proceedings instituted by and before it; but, until such rules and regulations are provided by law, the commission may make rules and regulations to govern such proceedings."

In State v. Tucson Gas etc. Co., 15 Ariz. 294, 138 P. 781, 785, after quoting article 3 of the constitution, we said: "* * * The functions of the Corporation Commission are not confined to any of the three departments named, but its duties and powers pervade them all; hence the provision 'except as provided in this Constitution, such departments shall be separate and distinct.'" (Emphasis supplied.)

Article 3 and section 1 of article 6 of the constitution confer all judicial power of the state in the courts, "except as provided in this constitution". No judicial power is vested in or can be exercised by the corporation commission unless that power is expressly granted by the constitution. None of the constitutional provisions set forth above confer upon the commission the jurisdiction to pass upon the construction and validity of contracts. It is urged by defendant that such power of the commission is conferred by the provisions of sections 69-217 and 69-236, A.C.A.1939. In the first place these statutes are of a supervisory and regulatory nature, designed to protect the public interest; and in the second place, being statutory, they cannot grant powers beyond the limits prescribed by the constitution.

The power of the legislature to extend the jurisdiction of the corporation commission was discussed in Menderson v. City of Phoenix, 51 Ariz. 280, 76 P.2d 321, 323, wherein section 6, article 15 of the constitution was under consideration. We said: "* * * The reasonable and natural construction of section 6, supra, is not that the legislature may enlarge the jurisdiction granted by the Constitution to the Corporation Commission to molude subject matter obviously intended to be excluded from such...