Case Name: J. W. McGUINN et al. v. CITY OF HIGH POINT et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1941-01-31
Citations: 219 N.C. 56
Docket Number: 
Parties: J. W. McGUINN et al. v. CITY OF HIGH POINT et al.
Judges: 
Reporter: North Carolina Reports
Volume: 219
Pages: 56–93

Head Matter:
J. W. McGUINN et al. v. CITY OF HIGH POINT et al.
(Filed 31 January, 1941.)
1. Injunction § 14—
The parties are concluded by decree granting a permanent injunction, affirmed on appeal, and the matters therein decided may not be relitigated, but courts of equity have the power to entertain a motion by the party restrained for a modification of the decree upon an assertion of substantial changes in the facts and situation of the parties obviating the grounds upon which the decree was based.
2. Municipal Corporations § 10 — Municipal power board held to have authority to rescind prior ultra vires resolution of city council.
Defendant municipality, by resolution passed by its city council, proposed to construct a hydroelectric plant. Later, the council passed an amendatory resolution under which the city proposed to submit to the control of the Federal Power Commission in the operation of the plant, and pursuant thereto obtained a Federal license. Thereafter a board of power commissioners was created and authorized by statute to exercise all the powers and duties of the city with respect to the plant contemplated in the prior resolutions. Held,: The submission by the city to the control of the Federal Power Commission being ultra, vires, the board of power commissioners has the authority to rescind the amendatory resolution of the council in regard thereto.
3. Same — Municipal board of power commissioners held without authority to change fundamental character of project it was created to prosecute.
Defendant municipality, by resolution of its council, proposed to construct a hydroelectric plant and finance same by issuing bonds under the Revenue Bond Act of 1935 (ch. 473, Public Laws of 1935). Thereafter the council amended the prior resolution by resolution making substantial changes in the original plan so that the bonds contemplated would be issued under the Revenue Bond Act of 1938 (ch. 2, Public Laws, Extra Session of 1938). The General Assembly, by private act, then created a board of power commissioners for the city and gave said board all the powers and duties of the city with respect to the plant proposed by the original resolution of the council and the amendments thereto. Held: The board of power commissioners was created and authorized to prosecute the project as then constituted, which contemplated the issuance of bonds under the Revenue Bond Act of 193S, and the board is without power to change the fundamental character of the project by resolution rescinding the amendatory resolution of the council and reenacting the original resolution of the council, so as to bring the project within the purview of the Revenue Bond Act of 1935, and thus obviate the necessity of a certificate of convenience from the Utilities Commissioner.
4. Same — Under provisions of statute creating it, municipal power board held without authority to aifect pending litigation by changing character of project.
Defendant municipality, by resolution of its council, as amended, proposed to construct a hydroelectric plant and finance same by issuing bonds under the Revenue Bond Act of 1938. The General Assembly, by private act, created a board of power commissioners for tbe city and gave said board all tbe powers and duties of tbe city with respect to tbe proposed plant, and tbe private act expressly provided that it should not affect pending litigation. At tbe time of tbe passage of the private act this action was pending and it was determined on' the former appeal that a certificate of convenience was prerequisite to tbe construction of tbe proposed plant. Held,: Since the statute creating the board of power commissioners expressly provided that it should not affect pending litigation, a fortiori, tbe board of power commissioners created by tbe act is without power to affect the pending litigation by passing a resolution rescinding the amend-atory resolution of tbe council and reenacting tbe original resolution of tbe council, seeking thus to bring the project within tbe purview of the Revenue Bond Act of 1935 so as to obviate the necessity for the certificate.
5. Municipal Corporations § 5—
Municipal corporations are creatures of the State, endowed for the public good with a portion of its sovereignty, and they must be at all times subject to its will.
6. Municipal Corporations § 8: Utilities Commission § 2: Injunction § 14— Certificate of convenience held necessary to construction of municipal hydroelectric plant in this case.
The board of power commissioners of defendant municipality was created and authorized to prosecute a project for the construction of a municipal hydroelectric plant under the provisions of the Revenue Bond Act of 1938. At the time of the- creation of the board of power commissioners, this action was pending in which it was judicially determined on the former appeal that a certificate of convenience from the Utilities Commissioner was a prerequisite to the construction of such plant, and the municipality was restrained from proceeding further with the project without obtaining a certificate of convenience. The board of power commissioners attempted to amend the project so as to bring it within the purview of the Revenue Bond Act of 1935, under which a certificate of convenience is not required, and the municipality made a motion for modification of the restraining order and asserted such alteration in the nature of the project as a change in conditions warranting such relief. Held: The board of power commissioners, being without authority to make such fundamental change in the nature of the project, its action in respect thereto is void, and the municipality has not shown a change in conditions justifying the court in modifying the permanent injunction.
7. Municipal Corporations § 8: Utilities Commission § 2—
The Revenue Bond Act of 1935 authorizing certain municipal projects without requiring a certificate of convenience from the Utilities Commissioner, was continued as to defendant municipality by chapters 65 and 561, Public-Local Laws of 1937. Held: The continuation of authority relates solely to projects within the scope of the Act of 1935, and the Public-Local Laws do not authorize the municipality to construct and finance projects beyond the scope of the Act of 1935 without obtaining a certificate of convenience.
8. Contempt of Court § 2b—
Where a municipality is permanently enjoined from prosecuting a particular project, and thereafter it makes fundamental changes in the char acter of the project to obviate tbe grounds of tbe injunction, tbe court, upon proper findings, correctly dismisses a rule for contempt for violation of tbe prior order.
9. Equity § If—
Equity follows tbe law.
10. Injunction § 14—
Upon motion for modification of a prior restraining order on tbe ground of change of conditions, tbe former decree is res judicata and the matters therein determined are conclusive and may not be relitigated, the sole question presented being whether movants have shown a change in conditions warranting the relief sought.
Barnhill, X, concurring.
Clarkson, J., concurring in part and dissenting in part.
Seawell, X, dissenting.
Appeal by Adams-Millis Corporation et al., plaintiffs by intervention, and Duke Power Company, intervening plaintiff, from judgment modifying restraining order and from order dismissing rule for contempt, from Nettles, J., at August Civil Term, 1940, of Guilford.
Tbe chronology of this case, since the former appeal, follows:
I. At the May Term, 1940, Guilford Superior Court, judgment of modification and affirmance, dated 23 May, was duly entered in conformity to the opinion of the Supreme Court rendered 17 April and reported in 217 N. 0., 449.
II. On 27 May, petition to rehear the case was filed in the Supreme Court and denied 12 June.
III. Thereafter, on 15 July, 1940, the board of power commissioners of the city of High Point adopted two resolutions:
1. The first being entitled, “A Besolution Bepealing a Besolution Adopted by the Council of the City of High Point on March 20, 1939, Entitled A. Besolution Accepting License for the High Point Hydroelectric Project Issued Pursuant to Order of the Federal Power Commission on March 10, 19397 ”
The purpose of this resolution is to free the city from its agreement to abide by the conditions imposed in the license issued by the Federal Power Commission for the construction, operation and maintenance of the project. Pursuant thereto the Federal Power Commission was requested to vacate its order of 10 March, 1939, authorizing the issuance of the license, and, also, that the city be permitted to withdraw its original application therefor. Accordingly, on 25 October, 1940, the Federal Power Commission adopted a resolution vacating its order of 10 March, 1939.
2. The second being entitled, “A Besolution to Amend and Beenact a Besolution Adopted by the City Council of the City of High Point March 20, 1939, Entitled ‘A Besolution to Amend a Besolution Adopted April 27, 1938, Entitled “A Besolution Authorizing the Construction of Hydroelectric Plant and System by the City of High Point for the Use of the City and Consumers in the City, and Authorizing the Issuance of Bevenue Bonds to Finance a Part of the Cost.” ’ ”
The end sought to be accomplished by this resolution is to relieve the city from the effects of the amendatory resolution of 20 March, 1939, placing the project under the provisions of the Bevenue Bond Act of 1938, ch. 2, Public Laws, Extra Session, 1938, and to declare its intention of proceeding under the original resolution of 27 April, 1938, as amended and reenacted by the resolution of 15 July, 1940, thus predicating the issuance of the proposed revenue bonds on authority of the city charter and the Bevenue Bond Act of 1935, ch. 473, Public Laws 1935, and seeking to obviate the need of a certificate of convenience and necessity required by the Bevenue Bond Act of 1938.
IY. At the August Term, 1940, Guilford Superior Court, with the foregoing resolutions as bases for their motion, the city of High Point and its officers, parties defendant herein, applied to the court for a modification of the judgment and restraining order previously entered in the cause.
This application was allowed, and from the judgment entered thereon the Adams-Millis Corporation et al., plaintiffs by intervention, and the Duke Power Company, intervening plaintiff, entered exceptions and gave notice of appeal.
At the same time, the court dismissed the rule for contempt — previously issued on affidavit of J. W. McGuinn, plaintiff — and based its ruling on the findings incorporated in the judgment of modification. Similar entries, as above, were noted, and appeals taken from this ruling.
Garter Dalton and John A. Myers for Adams-Millis Corporation et al., plaintiffs by intervention, appellants.
R. M. Robinson, H. 8. Haworth, Wm. B. McGuire, Jr., and W. 8. O’B. Robinson, Jr., for Duke Power Company, intervening plaintiff, appellant.
Grover II. Jones and Roy L. Deal for City of High Point et al., defendants, appellees.

Opinion:
Stacy, C. J.
This proceeding is supplemental and summary in character. By motion after judgment the defendants have applied for vacation or modification of the decree entered in the Superior Court of Guilford County at the April Term, 1939, enjoining the defendants from proceeding with the construction of a ¡hydroelectric power plant and system at Styer's dam site on the Yadkin Biver, in Yadkin County, about 25 miles from tbe city of High Point. On appeal to this Court, tbe order of tbe Superior Court was modified and affirmed. Judgment on tbe certificate was duly entered at tbe May Term, 1940, Guilford Superior Court. The present motion was made at tbe August Term, following.
Due to tbe unusuality of tbe questions presented, tbe matter was thoroughly pounded and hammered at tbe bar. In addition, tbe parties have filed elaborate briefs. Tbe restraining order heretofore entered in the cause is sought to be relaxed or obviated on account of certain changes or modifications made in tbe enterprise.
First. At tbe threshold of tbe bearing, tbe court was met with a challenge of its power to modify tbe judgment previously entered in tbe cause.
If we concede, for tbe moment, tbe authority of tbe board of power commissioners to adopt tbe resolutions of 15 July, 1940, it would seem that tbe court was justified in undertaking to modify tbe restraining order, in one particular at least, for these resolutions were intended to effect substantial changes in tbe enterprise. The' changes sought to be accomplished were, not only from fact to fact — from interstate to intrastate commerce, but also from law to law — from Federal to State authority, and from one State statute to another. Capps v. R. R., 183 N. C., 181, 111 S. E., 533. If valid, tbe undertaking was thus converted from one under tbe jurisdiction of tbe Federal Power Commission to one under tbe exclusive control of local authorities.
Tbe parties are in sharp disagreement in respect of tbe authority of tbe board of power commissioners to adopt tbe resolutions of 15 July, 1940. In tbe court below tbe case was made to turn on tbe existence of this power. Tbe appellants insisted then, and insist now, that no such power is vested in,tbe board, and that without it, tbe resolutions are unavailing. It will be noted that tbe two resolutions are not alike either in kind or purpose.
We are not disposed to question tbe authority of tbe board in so far as tbe first resolution is concerned. Its only purpose is to rescind tbe prior acts of tbe city council in applying for, accepting and agreeing to abide by tbe conditions imposed in tbe license issued by tbe Federal Power Commission for tbe construction, operation and maintenance of tbe contemplated project. As these acts were ultra vires in tbe first instance, it ought not to take any great amount of power to disavow them. Having authority to act in tbe premises, it would seem that tbe first resolution was within tbe board's determination. Nor is tbe debate as to tbe ultimate effect of this resolution particularly germane in view of tbe previous bolding that tbe city is without authority to accept tbe Federal license and to agree to abide by all tbe conditions imposed therein. Sufficient unto tbe future are tbe problems thereof. Tbe resolution is one of compliance and not one of circumvention.
Tbe second resolution, however, presents a matter of different substance.
The character of tbe project was fixed by resolution of tbe council of tbe city of High Point on 27 April, 1938, as amended by tbe supplemental resolution of 20 March, 1939, which amendatory resolution brought it within the terms of the Eevenue Bond Act of 1938, necessitating a certificate of convenience and necessity from the Public Utilities Commissioner.
Thereafter, on 4 April, 1939, the board of power commissioners of the city of High Point was created by Act of Assembly, ch. 600, Public-Local Laws 1939, and vested with full municipal authority over the project then established. The act provides that from and after 1 May, 1939, the city council "shall no longer exercise the powers or authority theretofore vested in them with respect to the said electric light, heat and power plant and system"; and that "all the powers and duties of the City of High Point, . . . with respect to the . . . electric light, heat and power plant and system of said city pursuant to the resolution adopted by the Council of the City of High Point on April twenty-seventh, one thousand nine hundred and thirty-eight, and amendments thereto, shall be vested in and exercised by the Board of Power Commissioners."
It will be observed that at the time of the creation of the board of power commissioners the municipality was proceeding under the Eevenue Bond Act of 1938. This required a certificate of convenience and necessity from the Public Utilities Commissioner for the project in question. The purpose of the second resolution adopted by the board of power commissioners on 15 July, 1940, is to take the project from under the provisions of this act and to free it from any and all supervision on the part of the Public Utilities Commissioner. This would seem to be at variance with the grant of power which the General Assembly vested in the board of power commissioners of the city of High Point. At the time of the grant, certificate from the Public Utilities Commissioner was required and the grant is with specific reference to this requirement. The project entrusted to the board of power commissioners was the one established "pursuant to the resolution" adopted by the council of the city of High Point on 27 April, 1938, "and amendments thereto." Can the board, by later resolution, thus free itself from the supervision imposed by one of these valid amendments? The supervision attached prior to the creation of the board and subsisted at the time of its creation. It is not thought that in a matter of this kind, the law-making body intended to vest uncontrolled power in a board which is itself beyond tbe reach and voice of the electorate, as is the project also. The idea of supervision may have arisen from the Federal requirement. If a Federal license when a navigable stream is involved, why not a State certificate when nonnavigable waters are touched? At any rate, it was not perceived by the General Assembly that a municipality of the State would welcome Federal domination and control and eschew all State supervision. It is axiomatic that municipal corporations, being creatures of the State, endowed for the public good with a portion of its sovereignty, must at all times remain amenable to its will.
Moreover, it is provided in the act creating the board of power commissioners, "Nor shall this act affect pending litigation." The present litigation was pending at the time of the passage of the act, and it was held on the former appeal that the city could not lawfully proceed with the undertaking without first obtaining a certificate of convenience and necessity from the Public Utilities Commissioner of the State of North Carolina. It follows, therefore, that this is still an essential requirement of the law. If the act itself is not to "affect pending litigation," what shall be said of a resolution adopted under and by virtue of the act which has as its purpose the affectation of pending litigation? The resolution appears to be one of circumvention rather than one of compliance.
In this view of the matter, it seems unnecessary to discuss the authority of the court to entertain the defendants' application for modification of the judgment. The authority may be conceded, in proper instances, upon a clear showing of changed conditions meriting relief. Wilson v. Comrs., 193 N. C., 386, 137 S. E., 151; Berrier v. Comrs., 186 N. C., 564, 120 S. E., 328; United States v. Swift & Co., 286 U. S., 105; Annotation, 68 A. L. R., 1180. This is not to say that equity will lightly set aside its decrees, nor that matters determined on the original hearing may thus summarily be relitigated. Lowe v. Prospect Hill Cemetery Ass'n., 75 Neb., 85, 106 N. W., 429. In the instant case, the matter of obtaining a certificate of convenience and necessity from the Public Utilities Commissioner was decided on the original hearing after full debate and thorough consideration. The arguments then advanced were the same as the ones now urged.
Speaking to a similar situation in Lowe v. Prospect Hill Cemetery Ass'n., supra, Holcomb, C. J., delivering the opinion of the Court, said: "It is obvious that the defendants are in these subsequent proceedings concluded by the original decree as to all matters urged as a defense in that action, as well (as) any defense which might have been presented to defeat the plaintiff's demand for a permanent injunction restraining the defendants from doing the things therein prohibited. From the consequence of the decree, as to all such matters, neither of the parties can now escape. Our present consideration of the case is limited to an inquiry as to whether, because of subsequent changes in the situation of the parties and of facts since arising creating different conditions, the defendants ought in equity to be relieved from the force and effect of a just and valid decree entered against them."
Second. From what is said above, it appears that the question of issuing revenue bonds under the city charter and the Eevenue Bond Act of 1935 has been rendered largely academic. It may be added, however, that this, too, was the subject of consideration on the former appeal. Beference was then made to the discussion of the subject in the first Williamson case, 213 N. C., 96, 195 S. E., 90, where it was pointed out that the revenue bonds contemplated by the Act of 1935 had reference to "any undertaking, within the municipality." The same matter was again presented in the petition to rehear, which was denied.
Conceding that by amendments to the city charter, chs. 65 and 561, Public-Local Laws of 1937, the city of High Point is authorized to issue within a period of four years from 15 February, 1937, revenue bonds under the terms of the Eevenue Bond Act of 1935 "for any purpose which said city is now authorized by the Municipal Finance Act or any other law to finance by the issuance of bonds," in the absence of a more definite expression, it is not thought that this would extend the provisions of the act to undertakings not originally intended to be covered by its terms, and forsooth in conflict therewith. It was said in the first Williamson case, supra, that in this act, "the right of acquisition, purpose of operation, and manner of financing an undertaking are linked together, and limit the extent of the undertaking." The act expired by its own limitation, and was continued for the benefit of the city of High Point for a period of four years from 15 February, 1937, and this, we apprehend, for undertakings originally within the purview of the act. Kennerly v. Dallas, 215 N. C., 532, 2 S. E. (2d), 538. It is provided in section 13 of the act that in case of conflict with any other general, special or local law, "the provisions of this act shall be controlling."
By the Eevenue Bond Act of 1935, the municipalities of the State were authorized, for a limited time, to construct, improve and extend self-supporting undertakings, "within the municipality," and to finance them with funds derived from the sale of revenue bonds, payable solely out of the revenues of the undertaking. No certificate of convenience or necessity was required under the provisions of this act, except the approval of the Local Government Commission.
By the Eevenue Bond Act of 1938, the municipalities of the State were again authorized, for a limited time, to construct, improve and extend "revenue-producing undertakings" of various kinds, including hydroelectric plants or systems, "wholly within or wholly without the municipality, or partially within and partially without the munici pality," and to finance them with funds derived from the sale of revenue bonds, payable solely out of the revenues of the undertaking.
Because of the extension of authority contained in this later act, it was provided that "no municipality shall construct any systems . . . useful in connection with the generation . of electric energy for lighting, heating and power, for public and private uses, without having first obtained a certificate of convenience and necessity from the Public Utilities Commissioner" (with exception not now pertinent).
It was insisted on the original hearing, on the former appeal and in the petition to rehear, that by amendments to its charter the city was authorized to proceed in the premises under the terms of the Revenue Bond Act of 1935, and to issue revenue bonds, payable solely out of the revenues of the undertaking, without first obtaining the certificate of convenience and necessity required by the Revenue Bond Act of 1938. The conclusion reached was, that the certificate should first be obtained. The judgment of the Superior Court on the motion to vacate the injunction is apparently at war with the decision in this respect.
Third. On the showing made at the hearing as appears from the first resolution of 15 July, 1940, the trial court was justified in dismissing the rule for contempt under authority of what was said in the second Williamson case, 214 N. C., 693, 200 S. E., 388.
It results, therefore, that the defendants have not yet complied with the law as it is written in respect of the undertaking in question, if it is to be financed without resort to taxation.
It should be remembered that the city of High Point is here proceeding with a project, not in the exercise of its general municipal powers, but pursuant to special legislative authority. The legislation is new and not altogether free from ambiguity. The undertaking is likewise out of the ordinary. Liability to taxation has sought to be avoided. Difficulties have been encountered. It is agreed on all hands, however, that the defendants are authorized to proceed only as the law prescribes.
Finally, it may be useful to recall that the case is controlled by the record as presented and the law as it is written. Neither is to be ignored or disregarded. Equity still follows the law. Attention is also again directed to the fact that matters heretofore determined are not to be relitigated in this subsequent proceeding. Much of what is said in favor of a different conclusion seems to overlook this circumstance and to proceed upon the assumption that the board of power commissioners can pull itself up by its own boot straps into a field of municipal activity broader than the one established by the act of its creation — a premise not heretofore regarded as sound. Briggs v. Raleigh, 195 N. C., 223, 141 S. E., 597. The original decision is res judicata on the record as it then stood. See second Williamson case, supra. The question now is whether, on account of later changes, the movants are entitled to relief from the injunction previously granted. We are not at liberty to reverse the former decision, even if regarded as erroneous, which it is not. Nor are we permitted to decide the case as legislators substituting our own notions of policy for those of the General Assembly as expressed in the statutes. S. v. Barksdale,, 181 N. C., 621, 107 S. E., 505. To say that the defendants may avail themselves of the benefits of the several enactments and at the same time repudiate their limitations and conditions, or to hold that the Court is without jurisdiction in the premises, would be to announce a doctrine at once novel and confused. The rule has always been that granted powers are to be exercised according to the tenor of the grant, and that alleged unwarranted acts of municipal corporations are proper subjects of judicial inquiry. It is not after the manner of the courts of equity to close their doors on allegations of excessive use of power, even in the face of other available remedies. See concurring opinion in McCormick v. Proctor, 211 N. C., 23, 6 S. E. (2d), 870. But these matters are beside the point. They have already been concluded. Our present concern is limited to the defendants' request for a revocation of the decree on a showing of changed conditions. The showing is not sufficient.
Error and remanded.