Duke Power Company v. City of High Point

205 S.E.2d 774 (1974) 22 N.C. App. 91

DUKE POWER COMPANY and Hall Printing Company
v.
CITY OF HIGH POINT et al.

No. 7418SC428.

Court of Appeals of North Carolina.

June 19, 1974. Certiorari Denied August 30, 1974.

Tally & Tally by J. O. Tally, Jr., and James D. Garrison, Fayetteville, and Knox Walker, City Atty., High Point, for defendants appellants.

Morgan, Byerly, Post & Herring by W. B. Byerly, Jr., High Point, and William H. Grigg by George W. Ferguson, Jr., Charlotte, for plaintiffs appellees.

Certiorari Denied by Supreme Court August 30, 1974.

BRITT, Judge.

Did the court err in the entry of the judgment? Except as hereinafter set forth, we hold that it did not.

Regarding the facts set forth in the judgment, we call attention to paragraph 11 and defendants' document entitled "Plan of Acquisition of Duke Power Company's Electrical Customers and Facilities by the City of High Point, June 21, 1973." Considering the pleadings in this case, we do not think the document referred to had any standing in the proceedings, and the court should not have set forth any facts predicated on it. Defendants go so far as to ask the court to approve the plan proposed in the document, when there is no reference in the pleadings to it. In their answer, defendants asked for no affirmative relief, only that plaintiffs be denied relief and that the action be dismissed. In fact, the document was filed more than five months after the answer was filed and four days after plaintiffs filed their motion for judgment on the pleadings or summary judgment.

With respect to the conclusions of law made by the court, we will discuss them in the order set forth in the judgment.

A. It is clear that the North Carolina Utilities Commission has general and supervisory jurisdiction over the retail electric rates and service charged and rendered by Duke. G.S. § 62-1 et seq. It appears that defendants do not question this conclusion.

B and C. We agree that Duke may not abandon service to any customer, (subject, of course, to the customer paying his bill, etc.), without the consent of the customer or authorization of the Utilities Commission; and that the power of a municipality to grant franchises to public utilities for the use of its streets and to provide service to its citizens, must yield to the paramount right of the State to regulate, through the Utilities Commission, public utilities even when they are operated within the corporate boundaries of a municipality.

G.S. § 62-118 provides in pertinent part: "Upon finding that public convenience and necessity are no longer served, or that there is no reasonable probability of a public utility realizing sufficient revenue from a service to meet its expenses, the Commission shall have power, after petition, notice and hearing, to authorize by order any public utility to abandon or reduce such service."

G.S. § 62-38 provides: "The Commission shall have the same power and authority to regulate the operation of privately owned public utilities within municipalities as it has to regulate such public utilities operating outside of municipalities, with the exception of the rights of such municipalities to grant franchises for such operation under G.S. 160-2, paragraph 6, and such public utilities shall be subject to the provisions of this chapter in the same manner as public utilities operating outside municipalities."

While the facts in Power Co. v. Membership Corp., 253 N.C. 596, 117 S.E.2d 812 (1961), are quite different from those in the case at hand, we think some of the principles declared there are applicable here. Included are the following (pages 604, 605 and 606, 117 S.E.2d page 817, respectively):

"The Legislature, by granting to municipalities the right to franchise, did not deprive itself of the power to control or to delegate to other public agencies the right to control specific utilities in whole or in part. That it did not intend to give exclusive or unlimited control to municipalities by grant of the right to franchise is, we think, apparent from other legislative acts."

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"The cited sections of our statute law clearly indicate, we think, a legislative delegation of power to the Utilities Commission to say when and under what conditions power companies shall furnish service, and this authority relates to service inside of as well as outside of municipalities. The reason for such legislative action is, we think, readily apparent. Except for those areas served by municipally owned plants or electric membership corporations, the citizens of the State depend primarily on four power companies, Duke, Carolina Power & Light, Virginia Electric & Power, and Nantahala Power & Light, to supply them with current. To invest each of the towns served by these companies with the power to regulate and prescribe and the manner in which service may be rendered inhabitants of the town might well lead to a chaotic condition seriously interfering with the ability of the utility to render equal service to all residing in the area served by it."

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"Courts called upon to determine final authority as between municipalities and State utilities commissions over the operation of public utilities have generally interpreted the statutes in favor of utilities commissions. The reasons are manifest. Willits v. Pennsylvania Utilities Commn., 183 Pa.Super. 62, 128 A.2d 105; Jennings v. Connecticut Light & Power Co., 140 Conn. 650, 103 A.2d 535; City of Genesco v. Ill. Northern Utilities Co., 363 Ill. 89, 1 N.E.2d 392; Annotation, 39 A.L.R. 1519. ``Generally, however, the power given by statute to public service commissions to supervise and regulate public utilities supersedes the power of municipalities to regulate such utilities, except where the power is specifically reserved to the municipalities.' 43 Am. Jur. 702."

A city or other municipal corporation is a creature of the State and has no power except that given by the State. 5 Strong, N.C. Index 2d, Municipal Corporations, § 1, page 602, et seq. In State v. Gulledge, 208 N.C. 204, 207, 179 S.E. 883, 885 (1935), we find:

"``It is a general and undisputed proposition of law that a municipal corporation possesses, and can exercise, the following powers, and no others: First, those granted in express words; second, those necessarily or fairly implied; third, those essential to the declared objects and purposes of the corporation— not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.' 1 Dillon Mun. Corp., § 89; State v. Webber, 107 N.C. 962, 12 S.E. 598, 22 Am.St.Rep. 920; State v. Darnell, 166 N.C. 300, 81 S.E. 338, 51 L.R.A. (N.S.) 332."

Quoted with approval in Smith v. Winston-Salem, 247 N.C. 349, 354, 100 S.E.2d 835, 839 (1957).

Admittedly, a city in this State has authority to grant, upon reasonable terms and for a period of not more than 60 years, a franchise for the operation of an electric power transmission or distribution system within the city. G.S. § 160A-319. A city also has the power to operate its own electric power transmission or distribution system, 160A-311 et seq., which system is not subject to the control and jurisdiction of the Utilities Commission, G.S. § 62-3(23)d. And, the Utilities Commission has the same power and responsibility to regulate the operation of privately owned public utilities within cities as it does their operation outside of cities. G.S. § 62-38. Defendants argue that the city's right to grant a franchise gives it the right to oust a franchise holder, either wholly or gradually, when the franchise expires.

The record reveals that High Point owns and operates an electric power distribution system and desires eventually to sell electric power to all residents of the city. It admits, however, that it is not in position to take over all of Duke's customers at one time. In fact, the "plan" which it filed proposes a gradual transfer of customers which would extend until June of 1976. Thus, Duke is placed in the position of (1) being subject to regulation of the Utilities Commission, (2) being subject to contractual and statutory obligations to Hall and others similarly situated, and (3) being told by defendant city how and when to stop serving various customers.

Controlling statutes must be construed in pari materia. In reconciling here what appears to be a conflict in the effect of the statutes with respect to authority of a municipality as opposed to the Utilities Commission, we are resolving the doubt against the municipality as directed in State v. Gulledge, supra, and cases therein cited, and in favor of the Utilities Commission as directed in Power Co. v. Membership Corp., supra.

While this does not bear directly on the question presented here, we observe that by the enactment of Chapter 287 (G.S. § 160A-331 et seq.), the 1965 General Assembly took a considerable step in recognizing rights of non-municipal suppliers of electric power in cities operating their own systems.

We think our holding that Duke cannot abandon its service to Hall, absent its consent, without the approval of the Utilities Commission, finds support in cases from other jurisdictions. Among these are City of Genesco v. Ill. N. Utility Co., 363 Ill. 89, 1 N.E.2d 392 (1936), and in a second appeal, 378 Ill. 506, 39 N.E.2d 26 (1941); and C & P Tel. Co. v. City of Morgantown, 144 W.Va. 149, 107 S.E.2d 489 (1959).

For the reasons stated above, we hold that the last part of paragraph C of the conclusions of law set out in the judgment, beginning with the word "Accordingly," should be eliminated from the judgment. High Point's "Plan of Acquisition, etc." was not properly before the court and no adjudication as to it should be made in this action.

D and E. We approve the conclusions of law set forth in these paragraphs except that the provision in D "and Hall would be without electric service for power for an undetermined period of time" does not appear to be supported by the admitted facts; therefore, that provision will be eliminated.

F. This conclusion of law relates to High Point's "Plan of Acquisition" and for the reasons hereinbefore stated, it is eliminated from the judgment.

G. We hold that the allowance of plaintiffs' motion for summary judgment was proper.

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The adjudication and relief provided by the judgment are fully supported by the conclusions of law.

Except as hereinbefore modified, the judgment is affirmed.

Modified and affirmed.

HEDRICK and CARSON, JJ., concur.