IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

September 21, 2004 Session

PICKWICK ELECTRIC COOPERATIVE v. ALCORN COUNTY

ELECTRIC POWER ASSICATION

A Direct Appeal from the Chancery Court for McNairy County

No. 7939 The Honorable Dewey C. Whitenton, Chancellor

No. W2003-02699-COA-R3-CV - Filed November 15, 2004

This is an appeal from the trial court’s grant of an injunction against Appellant to remove its

electrical lines and facilities from McNairyCounty. The trial court found that Appellant was a “nonconsumer owned electric system” and, as such, subject to injunction under T.C.A. §65-34-103.

Finding that Appellant is, in fact, an “electric and community service corporation,” we hold that

Appellant is not subject to injunction under T.C.A. §65-34-103. We reverse and remand.

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Reversed and

Remanded

W. FRANK CRAWFORD, P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,

J. and DAVID R. FARMER, J., joined.

James E. Price, Jr. of Corinth; Terry L. Wood of Corinth for Appellant, Alcorn County Electric

Power Association

Terry Abernathy of Selmer for Appellee Pickwick Electric Cooperative

J. Richard Lodge, Jr., and Russell S. Baldwin of Nashville for Tennessee Electric Cooperative

Association as Amicus Curiae

OPINION

Alcorn County Electric Power Association (“ACE,” “Defendant,” or “Appellant”) is a

member-owned non-profit electric service cooperative organized and doing business under the laws

of the State of Mississippi for the purpose of providing electric services to its members in Alcorn

County, Mississippi, pursuant to a certificate of authority from the Mississippi Public Service

Commission. Pickwick Electric Cooperative (“PEC,” “Plaintiff,” or “Appellee”) is a member-owned

non-profit electric cooperative organized and doing business under the laws of the State of Tennessee

for the purpose of providing electric service to its members within its exclusive geographic territory,

which includes McNairy County, Tennessee. In the fall of 2002, ACE constructed a three-phase,
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12,000 volt electric line and related electric distribution facilities (including lighting and secondary

facilities for serving ultimate consumers) within PEC’s territory in McNairy County.

On April 22, 2003, PEC filed a Complaint in theChanceryCourt of McNairy County against

ACE seeking a mandatory injunction to compel ACE to remove its power lines and distribution

facilities from McNairy County. The sole ground relied upon by PEC in the complaint was that the

erection and maintenance of these lines and facilities violated T.C.A. §65-34-103 because ACE was

allegedly a “non-consumer owned electric system” within the meaning of that statute. On May 5,

2003, ACE filed its Answer denying that it was a “non-consumer owned electric system.”

Incorporated into ACE’s Answer was a Motion to Dismiss on the grounds that the restrictive

provisions of T.C.A. §65-34-103 were not applicable to ACE because ACE was an “electric and

community service corporation,” as that term is used in the Tennessee statutes.

The matter was heard by the court sitting without a jury on August 25, 2003. On October 24,

2003, the trial court entered its “Final Decree and Judgment” (the “Judgment”), which incorporates

the “Trial Opinion” by reference. Specifically, the trial court held that: (1) ACE is a “non-consumer

owned electric system” under Tennessee law and, therefore, that ACE has violated T.C.A. §65-34-

103 by constructing and maintaining its electrical distribution facilities outside its geographic

territory; (2) that ACE’s facilities directly encroach upon PEC’s exclusive territorial rights as

provided by Tennessee law; (3) that ACE’s facilities limit or preclude PEC’s ability to expand or to

safely maintain its system; (4) that ACE’s equipment is placed in violation of the National Electric

Safety Code (“NESC”).

ACE appeals and raises one issue for review as stated in its brief: Whether ACE is a “nonconsumer owned electric system” within the meaning of Section 65-34-103, Tennessee Code

Annotated. If ACE is not a “non-consumer owned electric system” as that term is defined by

Tennessee law, then Section 65-34-103, Tennessee Code Annotated, is not applicable to it; and the

trial court erred in overruling its motion to dismiss.

The trial court’s interpretation of the statutory scheme at issue in this case is a question of

law. As such, our review of the trial court’s order is de novo upon the record with no presumption

of correctness accompanying the trial court’s conclusions of law. See Tenn. R. App. P. 13(d);

Waldron v. Delffs, 988 S.W.2d 182, 184 (Tenn. Ct. App. 1998); Sims v. Stewart, 973 S.W.2d 597,

599-600 (Tenn. Ct. App. 1998).

T.C.A. §65-34-103 (1993), under which the trial court granted PEC’s request for an

injunction, reads, in pertinent part, as follows:

65-34-103. Non-consumer owned electric system – Expansion

limits. – No non-consumer owned electric system may construct,

acquire, or maintain facilities, lines, poles, or other equipment used

or useful for the distribution or sale of electricity outside its current

geographic territory, nor may any non-consumer owned electric
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system provide, by sale or otherwise, electricity to any parcel of land

located outside its current geographic territory.

A “non-consumer owned electric system” is defined at T.C.A.§65-34-102(4) (1993) as follows:

“Non-consumer owned electric system” means any public electric

system other than electric and community service cooperatives and

municipal electric systems....

ACE argues that it is an “electric and community service cooperative” and, therefore, not a “nonconsumer owned electric system,” which is subject to the restrictions of T.C.A. §65-34-103. An

“electric and community service cooperative” is defined at T.C.A. §65-25-202(4) (Supp. 2003) as

follows:

“Cooperative” or “cooperatives” means one (1) or more nonprofit

cooperative membership corporations heretofore or hereafter

organized under or otherwise subject to this part, including

corporations transacting business in Tennessee pursuant to §65-25-

221 under this part or under its predecessor, the Electric Cooperative

Law, hereinafter called “foreign corporations.”

T.C.A. §65-25-221(a) (1993) defines a “foreign corporation” as follows:

Any corporation organized on a nonprofit or a cooperative basis for

the primary purpose and/or for one (1) or more secondary purposes

and operating in a state adjacent to this state shall be permitted to

transact business in this state without complying with any statute of

this state pertaining to the qualification of foreign corporations for the

transaction of business in this state.

Under the statutory scheme outlined above, if ACE qualifies as an “electric and community service

cooperative” under T.C.A. §65-25-202(4), then it is not a “non-consumer owned electric system”

subject to injunction under T.C.A. §65-34-103. According to the stipulated facts, ACE is a member

owned nonprofit corporation organized for the primary purpose of providing electricity to its

members in Mississippi, a state adjacent to Tennessee. We find, therefore, that ACE is an “electric

and community service cooperative” under T.C.A. §65-25-202(4), and could also be defined as a

foreign corporation under T.C.A. § 68-25-221(a). Because ACE is not a “non-consumer owned

electric system,” we find that the trial court erred in enjoining ACE to remove its lines and facilities

under T.C.A. §65-34-103. 

Although PEC does not allege any grounds other than those found at T.C.A. §65-34-103 in

its Complaint, at the hearing on this matter, PEC proffered the testimony of its employee Carl

Dudley. Mr. Dudley testified that the placement of ACE’s lines and facilities is in violation of the
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NESC, and that ACE’s equipment interferes with PEC’s ability to service and/or expand their

equipment located in the area. Despite the fact that PEC’s Complaint was not amended to include

allegations that ACE’s equipment was placed in violation of the NESC or that it hindered PEC’s

ability to service its own system, no objection was made regarding this evidence. Rule 15.02 of the

Tenn. R. Civ. P. reads, in relevant part, as follows:

When issues not raised by the pleadings are tried by express or

implied consent of the parties, they shall be treated in all respects as

if they had been raised in the pleadings. Such amendment of the

pleadings as may be necessary to cause them to conform to the

evidence and to raise these issues may be made upon motion of any

party at any time, even after judgment; but failure so to amend does

not affect the result of the trial of these issues.

(Emphasis added).

Consequently, the fact that PEC’s Complaint does not include an allegation that the

placement of ACE’s equipment is a safety hazard or a hinderance to PEC’s own maintenance and/or

expansion efforts does not invalidate the trial court’s finding on the matter. 

Mr. Dudley’s testimony is largely undisputed; however, there was not a comprehensive

inquiry below as to ACE’s alleged violations of safety standards, or as to the extent, if any, of their

interference with PEC’s equipment. 

For the foregoing reasons, we reverse the trial court’s Judgment. We remand the case for

such further proceedings as may be necessary to determine whether and to what extent ACE’s lines

and facilities are placed in violation of the NESC, whether and to what extent ACE’s equipment

hinders PEC’s ability to expand and/or maintain its own equipment and, if any violations exist, then

to determine the means by which those violations may be remedied. Costs of this appeal are

assessed one-half to Appellant, Alcorn County Electric Power Association, and its surety, and onehalf to the Appellee, Pickwick Electric Cooperative.

__________________________________________

W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.