*1 IN THE SUPREME COURT. Light Membership Corp. v. Oo. POW CAROLINA MEMBERSHIP CORPORATION v. PEE DEE ELECTRIC Original COMPANY, and THE TOWN OF Defendant; ER & LIGHT ROCKINGHAM, TREECE, and RAYMOND BELER DIXON Additional Defendants. January, 1961.) (Filed 20 Electricity Municipal Corporations 2— 18: § § 1. municipality power company franchise with a to a has a Where electricity municipality, upon lights sell to citizens .the vide street municipality power company territory by has annexation duty territory legal right to customers within the an- serve the the nexed with another doing by except precluded from to the extent it is valid contract public utility in the area. Membership membership corporation in electric Electricity 2— § municipality. by annexation terminated legislation relating Although, and State to rural elec- Federal under membership corporation operate only trification, is created to an electric areas, who' are residents of serve members such and to areas rural by membership corporation a becomes an served urban an area when by municipality, membership of annexation the electric area corporation reason may from its distribution continue to serve lines constructed persons prior were who theretofore members and de- to annexation membership and to receive from their service such to continue cide persons corporation, prior in the annexed area who were not but members eligible membership, eligibility are not for annexation since membership application be determined as the date for mem- bership is made. Municipal Corporations 18—§ 3. Same: municipality part territory of a Upon served annexation corporation corporation, membership such is entitled to an electric "living area, within its customers the annexed service to continue purpose for this its lines to maintain continue annexation, municipality power and neither the nor area company having from it is entitled to restrain a franchise the member- continuing corporation ship from maintaining necessary lines theretofore constructed this require dispose purpose it to of or dismantle such lines. J., concurring. Parker, concurring opinion. J., joins
Moore, May-June Special Judge, Civil Fountain, Appeal by plaintiff 1960, Term, Richmond. May 27, against action Dee) instituted (Pee Plaintiff (Power Company). There- Light & the Carolina (Rockingham), municipal corpora- Town after, the Treece, permitted defendants, Dixon and individual tion, and parties defendant. additional to intervene N.C.]
Membekship Coup. Oo. *2 North Carolina Membership Corporation, Electric of which Pee Dee is member, granted was appear leave to as amicus curiae. Company, seeks to the Power and the Power Com- pany Rockingham enj and the oin Dee, Town seek to Pee from dis- tributing (Richmond power portion electric in a County) an area known as Knob Hill, which, by January on 9, 1957, annexation was included within corporate Rockingham. Dixon limits Treece, who own Hill, by residences Knob demand service Power Company.
The court judgment based its stipulated on facts. (1940) Dee, membership corporation, of Pee an electric charter provides operations principally that its “shall be conducted in those parts county Anson, Union, or Stanly, Montgomery, counties Richmond, and Scotland, Carolina, State of North which are not now served- or inadequately which served with energy, electric which are by now served the Anson Corporation.” Mutual Electric 1945, In this provision charter was amended so as to add Moore County territory. to Pee Dee’s Pee Dee constructed distribution lines in Knob Hill to four
serve All of Hill residences. was within one mile of the original city Rockingham. limits of There sixty-six residences in Knob Hill on 9, 1957, when Knob Hill was annexed to part Rockingham. and became a All of these residences were then served Pee Dee. lines,
Pee Dee’s distribution to along, places are located and at some cross, public what are now Rockingham. streets of private Where Pee lines cross property, Dee’s permitted the construction thereof was the owner or owners. granted, has not grant, and refuses to to Dee Pee permitting operate corporate franchise within its limits or to along construct or maintain its lines across what are now Rockingham. streets of Company
Prior to the Power did not supply elec- tricity any Hill residence Knob and had no lines or facilities By merger, February therein. on or about Com- pany acquired granted by Rockingham franchise to Yadkin River 23, 1911, which, on November sixty for the term of years, granted permission “to construct maintain its lines for electricity along, transmission over -and highway under the Rockingham, Town of . . and to carry . conduct and on within Rockingham, Town of said business authorized* and under the terms of” its charter. Pursuant to this franchise, the Power Com- IN THE SUPREME COURT.
Membership Cobp. electricity to residences (and predecessor) supplied pany successive Rockingham; and, under limits within in- functions, electricity municipal contracts, supplied for various cluding lighting. street thirty Dee, Pee requested within January 16, 1957, Rockingham
On of its facilities days, arrangement for the transfer work out an request. comply with this Company. the Power Pee Dee refused to February permitted it be proposed On Rockingham, rejection by lighting Upon vide street in Knob Hill. August proposal was “withdrawn nullified” Pee Dee. On install street 6, 1957, Rockingham instructed the Power system lights and a alarm in Knob Hill. fire through its con- August 28, Prior to *3 in- tractor, “began the work of Utilities Construction Hill stalling poles lighting lines to in the Knob furnish street Superior area”; and date instituted an action in the on that County injunctive relief. An tem- parte Court of for ex Richmond 1957, by porary restraining August 28, order issued dissolved an was September voluntary order of took nonsuit 11, 1957. Pee Dee then a Thereafter, Company in said the in said action. “Power constructed Hill adequate supply area distribution facilities to lines and street lighting said and all needs the other electrical of inhabitants of said area.” by Pee Dee in prior lines constructed Knob Hill
The distribution capacity “adequate supply also to all the 9, 1957, are Hill electricity presently area, by merely needed said Knob add- required.” transformers, be ing extensions, etc., places, Company’s parallel the distribution lines some Power are hundred feet of the lines Pee Dee had to and within three The of January 9, 1957. residences Dixon and Treece are three hundred feet the distribution within Pee Dee and feet are within three hundred of the distribution lines of Pow- the Company. er 20, September or about Dixon became
On a member of Pee July Dee; 22, 1958, then until Dixon’s residence was served by May 20, 1958, applied Dixon Pee Dee. On to the Power Com- pany residence; service to his and, upon electrical the Power Company’s acceptance application, Dixon notified Pee to discontinue his residence. Treece, who then May 15, 1958, constructing was a
On residence Company Power applied supply Hill, in Knob his residence application His accepted. was service. with electrical N.C.]
Membekship Cokp. ser- supplying The electrical Company was restrained issued by vice to order parte the Dixon and an ex Treece residences July by herein on May 1958. This was modified order July serving Since the Dixon has been (Note: July Treece dissolved residences. order of temporary were then restraining persons as to who except order Dee.) members of Pee
A contract entered into 1956, provides under date by sale power energy to Pee Dee of all required system for its by electric purchased excess Dee from (generated States United of America in the Govern- plant ment’s at John Reservoir), H. Kerr set forth Dam at rates on an attached schedule relating electricity to the sale of “to a non- profit rural electric membership corporation for sale to ultimate con- sumers.” Article 8 of provisions: these contract contains
"(a) party, by unless ordered so to do a lawful order Neither properly authority, issued constituted shall distribute or who, energy anyone proposed furnish at the electric time service, receiving other, service from the electric whose premises capable being existing served facilities system the other without extension of its distribution other than by exceeding of lines not construction three hundred feet in length.
“(b) party, Neither unless ordered to do lawful order properly issued authority, duplicate constituted shall *4 facilities, except other’s as duplication insofar such shall be necessary in order to energy transmit electric between unconnected points lines, on its but no shall be rendered from such interconnecting competition facilities in party.” with the other July superseded Prior of November contracts January 5, 1956, had provisions said contained contract similar said Article 8. The record those set forth is silent to whether as submitted to approved by said contract of was prior Utilities Commission. The July the North Carolina contract of in accordance with a form 1, 1951, was drafted contract theretofore hearing, by without formally approved, notice Com- Utilities mission. executed, Pee Dee any said contracts did
When not have any corporate members within the any lines or facilities limits of municipality. IN TPIE SUPREME COURT.
Membership Corp. defendants’ accord with complete judgment The court entered denied. Pee injunctive relief was prayer Dee’s for contentions. Pee corporate service within the enjoined supplying electric Dee from was interfering in Hill, and from Rockingham, including limits of supplying any of the Power manner with activities lines enjoined maintaining its service. Dee was Pee public ways streets, roads and “upon, along or over facilities of or dismantle Rockingham,” dispose of the Town and ordered specified The Power time. and remove its lines and facilities within perform duty” supplying “its franchise Company was ordered to with electricity to residences of and Treece in accordance Dixon (Note: The these court entered a further its contracts with individuals. pending said staying designated provisions judgment order final therefrom.) disposition appeal Dee’s Pee Dee, assignments sets forth 35 appealing judgment, Pee exceptions. of error based on 121 'plain- Brock & Hux, Branch & G. Pittman and McLendon W. for appellant.
tiff, Arledge Bynum Bynum A. Thompson, Reid & de- W. Y. for Light Company, appellee. Power & Carolina fendant B. A. A. Webb and C. Deane additional Town for defendant Rockingham, appellee. n &Blount Treece, additional Dixon ap- Leath defendants pellees. Crisp Membership Corpo- T. North Carolina Electric William ration, curiae. amicus respective parties may basic J. The contentions Bobbitt, stated follows: be (1) provisions contends: Article of the contract (2) applicable to Knob Hill. accordance therewith, it is entitled to from serving residences within three hundred feet of distribution con- (3) structed It is entitled all within three hundred feet serve residences of its said lines not- withstanding by Rockingham the annexation Knob Hill and the Rockingham grant (franchise) permission refusal of operate limits and within its construct and maintain its lines over *5 public Rockingham. now streets what are Company (1) provisions The Power contends: The of Article 8 not apply the contract do to Knob Hill but N.C.] V. LIGHT CO.
MEMBERSHIP COBP. oper- Dee is authorized applicable only are in which Pee areas (2) Rockingham, ate, namely, annexation Upon rural areas. of a mu- integral part
Hill ceased to be a rural area and became an population nicipality had which, at all times since has annexation, the Power Com- twenty-five Upon excess of (3) hundred. through- pany obligated service provide became under its franchise to including enlarged out corporate applied therefor, to who limits all Dixon and Treece. (1) Upon annexation, contends: obligated by
is provide throughout enlarged franchise to corporate (2) applied limits to all who Pee Dee no right therefor. has operate corporate within its limits or to construct or maintain distribution lines over what of Rockingham. are now streets
Dixon and They Treece entitled, contend: as owners of resi- dences in Rockingham, apply for receive the same service the Company provides Power property the owners residential located corporate elsewhere within the limits.
Pee Dee does not seek herein to Power constructing and maintaining in Knob Hill such distribution lines necessary be lighting street fire sys- alarm tems. Nor does Pee Dee challenge now Company’s right to serve residences in Knob Hill elsewhere than within three hundred feet of distribution lines January Pee Dee 9, 1957.
Significant differences between factual situation here considered that considered Power Co. v. Membership Corp., ante, (1) following: include The is record as to whether silent contract approved was submitted to and 1(2) Utilities Commission. Pee Dee no -had distribution facili- ties and no rendered service within the Rocking- limits of ham before its boundaries were extended so as to include Knob Hill. (3) The said provision contract contains no similar to paragraph “TWENTY-THIRD” of the contract between Duke Ridge, and Blue quoted in the cited case. provisions
Under Article of said contract of party is provided each barred as therein unless ordered to “by service in the restricted vide area a lawful order issued authority.” properly constituted public utility subject corporation, jurisdiction to the of the Utilities Commission any, subject what if extent, To jurisdiction of Commission need not be presently Utilities determined. This Court membership corporation has held that an electric is not required (by *6 IN THE SUPREME COURT. 6.16
Membership Cokp. Light v. Co. of its operation 62-101), beginning G.S. “before the construction electricity for serving by furnishing them facilities for its members lights the of North power, and Utilities Commissioner obtain necessity requires certificate convenience and Carolina a that or will of facilities. require operation” construction and 211 192 Membership Corp., Co. v. Electric N.C. S.E. 48; 105; High 56, 219 13 S.E. Point, 77, McGuinn v. N.C. 2d Grimes 117, However, land 2d Washington, 125, 234 N.C. 66 S.E. 794. jurisdiction in respect would seem that Utilities Commission has power company of the and terms under sell rates which supply Municipal power to Dee for resale. Utilities Commission v. Pee 243 N.C. 2d Corporations, 193, 90 S.E. 519. statutory authority provisions relating
Relevant of Corp., Membership Utilities Commission are in Power cited Co. v. supra. say, in the nothing Sufficeto record indicates that the Utilities any Commission has made order to be relevant in the vided Pee Dee or Knob Hill area. made, must be on the Unless and until such order is decision based factual situation as now. conceded, Company, clear, apparently
It that legal duty franchise, right under has the to serve Knob its said doing provisions Hill is barred from so except to the extent it January 5, 8 Article contract Dee It is and the Power when presumed both 1956, they January 5, contract of executed said advertent statutory provisions relating to the extension boundaries of seq., relating et municipality, powers 160-445 con- G.S. body municipality of a upon governing respect ferred of terri- limits, of, corporate 160-226, mile tory outside, but within a G.S. However, 8 of the contract of Article G.S. 160-203. inapplicable purporting to render it provision no as to terri- contains tory included within the mu- subsequently limits of a nicipality. provisions 8 of applicability Article said contract 1956, depends upon right of Pee Dee after in the defined 1957, opinion, render service area. We
9, Company is not from serving barred hold, that the a custo- lawfully serve. may mer Pee USCA, of 1936,” Act Electrification Title The "Rural § creating the North Carolina Rural seq., et the Act Electrification providing Art. and the Act G.S., Ch. Authority, the forma- membership corporations, G.S., Ch. nonprofit es- tion Art. N.C.] CORP. V. LIGHT
MEMBERSHIP tablished a policy Federal-State the benefits of electric service in rural areas not served or inadequately served with elec- *7 tricity. Municipal p. Utilities Commission v. Corporations, supra,
Congress defined “rural “any area” as of the area United States not included within the any city, boundaries of village, borough or having population in a fifteen excess of hundred inhabitants, and such term shall be deemed to include both the popula- farm and nonfarm tion thereof.” USCA, 7, Title legislation The North Carolina § does not define “rural area.” membership
To form corporation, persons an electric interested must approval first of the North obtain Carolina Rural Electrifi- Authority. cation If approval “(a)ny G.S. such is obtained, 117-9. persons number of may natural not less than corpo- three . form . . a (but) ration organized pecuniary profit for the purpose of promoting encouraging possible and energy the fullest use of electric in the rural making section State energy electric available to inhabitants of the State at lowest cost consistent sound with economy prudent and management of the corpora- business of such (Our tions.” italics.) G.S. 117-10.
G.S. that provides purpose 117-16 of such member- ship corporation “to is render to its members only,” and “no or person person shall become remain member unless such shall corporation energy supplied complied use such and shall have respect with in membership terms conditions contained bylaws corporation.” in the such in G.S. 117-16 was amended 1959 (S.L. 2) by adding “Provided, following: c. s. that membership reasonable; terms conditions of shall be further, applicant fide that no bona who is provided membership, satisfy abide terms willing able and all such and conditions arbitrarily, capriciously, shall be denied with- membership, impels legislation good out cause.” Consideration the Federal-State membership corporation an electric is authorized the conclusion that operate only in a “rural area” serve members who are residents of such “rural area.” when lines a “rural area” Pee Dee’s distribution
Knob Hill was
is
a “rural
This is true if the
longer
It
no
area.”
were constructed.
legislation
adopted.
is
Be
area” in the Federal
of “rural
definition
stipulated
was
that Knob Hill
now a “residential
it may,
as it
that
county
Rockingham, seat of
Rockingham.
Richmond
section”
according to the
population,
census,
has
1960
County since
5,512.
COURT.
IN THE SUPREME
MembeRship Corp. v.
Co.
relates
difficulty,
fraught with considerable
question,
The crucial
in an
operate
area which
authority
of Pee Dee to continue
but
constructed
was
“rural
lines were
area” when
distribution
no
part
Rockingham.
Present statutes
integral
now an
dissenting
by Wyatt, Presiding Justice,
As
his
answer.
stated
County
(Ga.),
opinion City
Colquitt
Rural
Moultrie
Elec.
duty of
2d
666:
therefore
a court
“It
becomes
S.E.
justice
do
equity
to fill in the
the law and
vacuum created
parties
doing,
must
in mind
equity
keep
to all
we
concerned.”
statutory purpose
of Pee Dee.
basic
these
of all
leads to
conclusions:
Consideration
relevant factors
serve from distribution
continue to
persons
Hill
were its members
who
membership and to
on
date and who desire to continue their
in the
area who did
receive service from Pee Dee. Persons
annexed
*8
prior
January 9, 1957,
not
members of
Dee
to
are not
become
Pee
membership
be
eligible
membership. Eligibility
to
de-
is
City
is
as of the date
made.
Moultrie
application
termined
therefor
p. 665;
Upshur
Colquitt County
Co., supra,
v.
Rural Elec.
State v.
Corp.
Cooperative
(Texas),
Electric
We lawfully territory by municipality, is annexed G.S. additional when to con- municipality of a with reference powers 160-449, and to Dee, Pee streets, 160-222. But where accordance trol of its G.S. lawfully statutory authority, its distribution constructed express with January 9, 1957, its annexation on prior to in Knob Hill lines may not Pee Dee discontinue service force to Town prior of Pee Dee persons to those who members lines long they members as continue to However, Pee on Dee, of its service. and continuance and desire right existing extend then January had no to facilities 9,1957, after serving whom it was persons other than members when serve to part Rockingham. Hill became N.O.]
Membership Coup. Oo. “upon, along It was error to maintaining Pee Dee from over the streets, Rockingham,” public ways roads of the Town and to January distribution lines it prior had constructed to order Dee dispose to lines and facilities Pee and dismantle such within a specified enj It was also oin Pee Dee from con- time. error tinuing facilities con- distribution prior structed it January persons who were then members of Pee membership Dee who continued their desire a continuance of its judgment service. thereof, On account court is below judgment vacated in ac- remanded for cause cordance with the law as stated herein.
It is noted: answer, The pur- in its offered to chase at fair value useful portion” “the of Pee Dee’s lines and facili- ties in willing Knob Hill. Its brief indicates still to do so. Such offer is significant only adjustment negotiated in relation to matters in controversy. adjudication It relevant an legal rights of the respective parties.
If it be considered undesirable that both Pee Dee and the Power (different) part Rocking- should serve customers in ham within three hundred feet of distribution lines Dee Pee contemplated this de- cision, suggests this legislation defining the need for policy in a situation such as that here under review. on costs appeal will be taxed as follows: One-third to Pee
Dee, one-third to the and one-third to the Town of Rockingham.
Error and remanded. enjoined The trial court Electric J., concurring. *9 PARKER, maintaining its lines and Corporation facilities Membership ways streets, public and of the town “upon, along or over the roads dispose re- of it of or dismantle and Rockingham,” and ordered within specified and Court holds move its lines facilities time. that is error. this on the in agree opinion present
I with the Court facts the record. my respect I put desire to on record views in
However, to this “The question. N.C.G.S., provides: governing body 160-222 the of § city power control, . . . the streets and shall have sidewalks , license, prohibit, . city regulate, control, prevent . and and . digging sidewalks, placing in streets and or therein of pipes, poles, fixtures, appliances every kind, on, and wires, whether or above, THE COURT. IN SUPREME
Stanley v. Cox. thereof regulate the use below the and control thereof, surface and by persons obstructions, encroach- ; prevent, abate, . . and remove . ments, pollution or litter therein. ...” 3rd Corporations, McQuillin, Municipal is said in The Law of
This Ed., “Municipal ordinarily and do corporations Vol. 24.588: § poles, police exercise control over the erection and maintenance others in wires, pipes apparatus utility companies similar or and they alleys where streets, public ways. They can, respect, in this and improvements generally accepted which reasonably, compel act all safety tend to decrease obstruction of the streets or increase public Municipal police power in or convenience of the in their use. respect purposes precluded and for these not the fact such structures have been erected and maintained under franchise permission, power grant or the franchise vested the fact that legislature utility company in or the a sole and fact that the has city. in A lighting part of the munici- privilege, exclusive street e.g., police with over exist- pality incorporation power on becomes vested ing pipes, underground apparatus conduits and other poles, wires, on, public utility companies others, in or over streets and located municipality, irrespective permits ways within the franchises and under these structures have been erected are maintained.” which my police the town of in the exercise of opinion, its power 160-222, vested in N.C.G.S. and control has § quoted McQuillin, in law set forth extract over general in equipment, property streets, and plaintiff’s operations, alleys ways. J., joins Mooee, opinion. concurring K. STANLEY v. MERLE D. COX. MAE STANLEY R. wife, HARRY January, 1961.) (Filed 20 Alimony and Wife 12—§ Husband 20: § Divorce designated payment separation for the of a a deed Provisions property do for division their not monthly wife to the sum alimony, “alimony” the executed or a contract constitute stipulation separation, of a absence deed of such visions contrary subsequent contained, their affected divorce. therein Mortgages 1—§ *10 agreement every executory by agreement, be created Liens