Title: Otter Tail Power Co. v. SIOUX VALLEY E. ELEC. ASS'N.

State: south-dakota

Issuer: South Dakota Supreme Court

Document:

131 N.W.2d 111 (1964) OTTER TAIL POWER COMPANY, a corporation, Plaintiff and Respondent, v. SIOUX VALLEY EMPIRE ELECTRIC ASSOCIATION, Inc., a Corporation, and Louis H. Smith and Gerrit Van Dyke, Defendants and Appellants. No. 10175. Supreme Court of South Dakota. October 30, 1964. *112 Louis H. Smith, Sioux Falls, Leo P. Flynn, Milbank, for defendants and appellants. Davenport, Evans, Hurwitz & Smith, Sioux Falls, Field, Arvesen, Donoho & Lundeen, Fergus Falls, Minn., for plaintiff and respondent. HANSON, Judge. This is a sequel to the case of Smith v. Otter Tail Power Company, S.D., 123 N.W.2d 169, in which the Otter Tail Power Company seeks to have itself declared the proper supplier of electric energy to a farm located in Moody County, South Dakota, to the exclusion of the Sioux Valley Empire Electric Association, a rural electric cooperative. Plaintiff further requests injunctional relief to restrain the defendant farm owner, Louis H. Smith, the farm tenant, Gerrit Van Dyke, and the Sioux Valley Electric Association from changing, cooperating, or conspiring to change electric suppliers to the farm from investor-owned Otter Tail to the Sioux Valley rural electric cooperative. On application of Otter Tail an interlocutory injunction was granted and defendants have appealed. As this action has not been tried on its merits it is necessary to obtain background facts from the complaint, affidavits, and other pleadings of record. The complaint alleges: It further appears that under compulsion of the judgment in the case of Smith v. Otter Tail Power Company, S.D., 123 N.W.2d 169, plaintiff removed its meter from the Smith farm on March 10, 1964. Its poles, wires and equipment remain in place under its easement. Shortly after Otter Tail disconnected service the tenant, Van Dyke, applied for an alternative writ of mandamus to compel Sioux Valley to furnish electric service. Otter Tail was not made a party to such action and alleges it was a friendly proceeding commenced by defendants in furtherance of a common design to create the appearance of a farm not receiving central station power whereby Sioux Valley would ostensibly be compelled by court order to extend service contrary to their announced policy of not serving a customer already receiving central station power. A writ of mandamus was issued by the Honorable Francis G. Dunn on March 17, 1964. There followed considerable legal maneuvering as a result of which Judge Dunn, on his own motion, vacated the peremptory writ of mandamus and disqualified himself from acting further in the matter. No appeal was taken in the mandamus action and the Honorable Harold O. Lund was appointed to act in place of Judge Dunn. He issued the interlocutory injunction in the present proceeding from which defendants have appealed. They contend the trial court abused its discretion granting the injunction as Otter Tail has no standing or capacity to complain; the issues are res adjudicata; and Otter Tail has shown no injury and no protectible right in the subject of this action. *115 SDC 1960 Supp. 37.4304 authorizes the issuance of an interlocutory injunction in the following cases: This remedy does not issue as a matter of course, Duke v. Bruce Independent School District, 77 S.D. 568, 96 N.W.2d 172, and the right to relief must be established with reasonable certainty, Hofer v. Bridgewater Independent School Dist., 76 S.D. 483, 81 N.W.2d 300, by showing the threat of substantial injury or the threatened invasion of some legal right respecting the subject of the action. Plaintiff has failed to sustain this burden. In general the courts have sustained the right of an electric or power company operating under a franchise from a municipality or other public body, to enjoin unlicensed, illegal, or unauthorized competition by another. For cases and comprehensive annotation of subject see 90 A.L.R.2d 7. However, in the rural areas of South Dakota competition in the field of electric energy has not been replaced or modified by regulation. Neither the investor-owned utility nor the rural electric cooperative is under the jurisdiction of the Public Utilities Commission. Consequently neither can claim any regulatory rights therefrom. Otter Tail does not allege, or claim to have, an express or exclusive franchise or territorial right in the area of the Smith farm. It has only the right, granted by the Board of County Commissioners, pursuant to SDC 1960 Supp. 28.1001, "to erect and maintain poles and wires for the purpose of conducting electricity for lighting, heating, and power purposes * * * in and along any public highway * * *", but the grantee of such right "shall not in any case have the exclusive right to use such highway for the conducting of electricity * * *." In the case of Smith v. Otter Tail Power Company, S.D., 123 N.W.2d 169, this court held Otter Tail had no contract or public utility right to continue furnishing electric service to the Smith farm in defiance of the owner's request for discontinuance. It was further determined that Smith had a clear and absolute right "to a discontinuance of electric service to his premises regardless of the motive which induced him to desire it". Notwithstanding, Otter Tail contends, as it did in the prior case, that the Federal Rural Electrification Act of 1936, 7 U.S.C.A. § 901 et seq., authorizing the Administrator of the Rural Electrification Administration to loan funds to cooperatives and others for the purpose of furnishing electric energy "to persons in rural areas who are not receiving central station service" is an implied limitation on the authority of Sioux Valley to furnish electric service to any persons in the rural areas of our state who are receiving central station service from another source. The same contention was advanced in the case of Missouri Power & Light Co. v. Lewis County Rural Electric Coop. Ass'n, 235 Mo. App. 1056, 149 S.W.2d 881, and in our opinion correctly and fully answered by the Missouri court as follows: Cases from other jurisdictions cited by Otter Tail fail to support its contention in this respect. Each involves the construction and application of a state Rural Electrification Act which expressly incorporates the restriction contained in the Federal Act relating to central station service. The Rural Electrification Act of Florida involved in Tampa Electric Co. v. Withlacoochee River Elec. Coop., Fla., 122 So. 2d 471, provides that "no cooperative shall distribute or sell any electricity, or electric energy to any person residing within any town, city or area which person is receiving adequate central station service or who at the time of commencing such service, or offer to serve, by a cooperative is receiving adequate central station service from any utility agency, privately or municipally owned individual partnership or corporation". The Arkansas Rural Electrification Act applied in Arkansas Elec. Coop. Corp. v. Arkansas-Missouri P. Co., 221 Ark. 638, 255 S.W.2d 674, permits a rural cooperative to transmit, distribute, sell, furnish, and dispose of electric energy "to its members only". Membership is confined to "All persons in rural areas proposed to be served by a corporation, who are not receiving central station service * * *." The Electric Membership Corporation Act of Georgia involved and applied in City of Moultrie v. Colquitt County Rural Elec. Co., 211 Ga. 842, 89 S.E.2d 657, and in Georgia Power Co. v. Okefenokee Rural Elec. Mem. Corp., 217 Ga. 219, 121 S.E.2d 777, declares the purpose of such Act to be that of furnishing electric energy "to persons in rural areas who are not receiving electric service from any corporation subject to the jurisdiction of the Georgia Public Service Commission, or from any municipal corporation." The Texas Electric Cooperative Act construed in State ex rel. Southwestern Gas & Electric Co. v. Upshur Rural Electric Cooperative Corp., Tex., 298 S.W.2d 805, authorizes the organization of cooperatives for the purpose of furnishing "electric energy to persons in rural areas who are not receiving central station service." In considering the Montana Rural Electric Cooperative Act in Montana Power Co. v. *117 Park Electric Co-operative, 140 Mont. 293, 371 P.2d 1, the court observed that it was more restrictive than similar statutes in other states. The court said their Act "spells out the limits of the Co-operative service, restricting it to rural areas and where service is not otherwise available from existing facilities and plants." The defendant, Sioux Valley Empire Electrical Association is an electric cooperative organized under the South Dakota Electric Co-operative Law, SDC 1960 Supp. 11.22, which states the purpose to be that "of supplying electric energy and promoting and extending the use thereof, in rural areas." Rural areas are defined as "any area not included within the boundaries of an incorporated or unincorporated city or town having a population in excess of fifteen hundred inhabitants, and includes both the farm and non-farm population thereof." If the Montana Rural Electric Co-operative Act is one of the most restrictive of its kind, ours is one of the most liberal and nonrestrictive. In construing the similarly liberal Rural Electric Co-op. Act of South Carolina in Heath Springs Light & P. Co. v. Lynches River E. Coop., 231 S.C. 34, 97 S.E.2d 79, the court said "It is significant to note that the act fails to limit or is silent as to the right of a cooperative organized under the Chapter to serve the various designated persons or agencies or subdivisions where they are being served by private electric companies, and, it must, therefore, be assumed that the legislature intended for the cooperatives organized under the laws of such title to serve customers and governmental agencies and political subdivisions in all rural areas of the State of South Carolina regardless of whether or not the said rural areas were then or hereafter being served by private electric utilities." The South Dakota Electric Co-operative Law constitutes a declaration of public policy with reference to the organization and operation of rural electric co-operatives in this state. Territorial and other competitive restrictions on their conduct are variable matters of legislative concern. We cannot add restrictions by interpretive implication. As Otter Tail has failed to allege or show the threatened invasion of any protectible franchise, public utility, or contractual right to continue serving electric energy to the Smith farm, it has no standing to complain of others lawfully doing so. Where two utilities are authorized by law to serve the same rural territory consumers therein are free to choose and to change their supplier. Cass County Electric Coop. v. Otter Tail Power Co., N.D., 93 N.W.2d 47. An injunction may be issued only to prevent unlawful competition. Sheridan County Elec. Co-op. v. Montana-Dakota U. Co., Mont., 270 P.2d 742, and see annotation 90 A.L.R.2d 7 et seq. Reversed with instructions to vacate and set aside the order granting the interlocutory injunction. All the Judges concur.