Title: NORTH CAROLINA CON. POWER, INC. v. Duke Power Co.
Citation: 206 S.E.2d 178, 285 N.C. 434
Docket Number: 87
State: north-carolina
Issuer: north-carolina Supreme Court
Date: July 1, 1974

206 S.E.2d 178 (1974)
285 N.C. 434
NORTH CAROLINA CONSUMERS POWER, INC. and the City of Shelby, a municipal corporation of the State of North Carolina, Petitioners-Plaintiffs,
v.
DUKE POWER COMPANY et al., Respondents-Defendants, and
Charles R. McBrayer et al., Additional Respondents-Defendants.
No. 87.

Supreme Court of North Carolina.
July 1, 1974.
*180 Crisp, Bolch &amp; Smith by Thomas J. Bolch, Raleigh, Tally &amp; Tally by J. O. Tally, Jr. and James D. Garrison, Fayetteville, Wood, Dawson, Love &amp; Sabatine, New York City, of counsel, for petitioners-plaintiffs.
*181 Joyner &amp; Howison by R. C. Howison, Jr., Raleigh, and William I. Ward, Jr., Charlotte, of counsel; Fleming, Robinson &amp; Bradshaw by Robert W. Bradshaw, Jr., Charlotte, and Horn, West, Horn &amp; Wray, Shelby, for respondents-defendants.
BRANCH, Justice.
At the threshold of this appeal we are confronted with the question of whether an appeal lies from the trial judge's refusal to dismiss the action.
G.S. § 1-277 in effect provides that no appeal lies to an appellate court from an interlocutory order or ruling of the trial judge unless such ruling or order deprives the appellant of a substantial right which he would lose if the ruling or order is not reviewed before final judgment. Raleigh v. Edwards, 234 N.C. 528, 67 S.E.2d 669; Veazey v. Durham, 231 N.C. 357, 57 S.E.2d 377.
Many decisions of this Court hold that refusal of a Motion to Dismiss is not a final determination within the meaning of the statute and, therefore, is not appealable. G.M.C. Trucks v. Smith, 249 N.C. 764, 107 S.E.2d 746; Cox v. Cox, 246 N.C. 528, 98 S.E.2d 879; Johnson v. Pilot Life Ins. Co., 215 N.C. 120, 1 S.E.2d 381; Clements v. Southern R.R., 179 N.C. 225, 102 S.E. 399; Plemmons v. Southern Improvement Co., 108 N.C. 614, 13 S.E. 188.
Johnson v. Pilot Life Ins. Co., supra, was an action to set aside a release and recover on an insurance policy. The insurer appealed from an Order denying its Motion to Dismiss. The Court dismissed the appeal and Chief Justice Stacy, writing for the Court, stated:
Duke relies upon the cases of Kilby v. Dowdle, 4 N.C.App. 450, 166 S.E.2d 875, and Elliott v. Ballentine, 7 N.C.App. 682, 173 S.E.2d 552, to support its contention that the denial of its Motions to Dismiss is immediately appealable.
Kilby is distinguishable from the case before us. In Kilby plaintiff instituted an action to recover for personal injuries allegedly resulting from the negligent operation of a motor vehicle owned by defendant, Carolina Truck and Body Company, Inc., and operated by its employee Dowdle. Defendant, Carolina Truck and Body Company, alleged, as a plea in bar, that plaintiff was its employee at the time of the accident and that the North Carolina Industrial Commission had exclusive jurisdiction of the claim. The trial judge overruled the plea in bar and set the cause for trial.
Defendant Truck Company appealed from this ruling and the Court of Appeals held that an appeal lies immediately from refusal to dismiss a cause of action for want of jurisdiction. However, no such *182 jurisdictional question arises in instant case.
We are unable to find a valid distinction between instant case and Elliott. In Elliott the cause of action involved an interpretation of a will under the Declaratory Judgment Act. Defendants demurred on the grounds that the complaint did not state a cause of action, and that there was a misjoinder of parties and causes of action. The trial court overruled the demurrer and the Court of Appeals considered defendant's appeal. It would seem that the holding in Elliott would, by implication, support Duke's position. On the other hand, the Court of Appeals in the later case of Acorn v. Jones Knitting Corp., 12 N.C. App. 266, 182 S.E.2d 862, flatly held, and we think correctly so, that no immediate right of appeal lay from the trial court's order denying defendant's Motion to Dismiss because of a prior action pending in another jurisdiction between the same parties. In dismissing the action the Court, inter alia, quoted from Johnson v. Pilot Life Ins. Co., supra, the following: "No appeal lies from a refusal to dismiss an action."
Judge Friday's refusal to allow Duke's Motion to Dismiss did not put an end to the action or seriously impair any substantial right of Duke that could not be corrected upon appeal from final judgment. The Court of Appeals incorrectly denied petitioners-plaintiffs' Motion to Dismiss Duke's appeal. Nevertheless since the Court of Appeals decided this case upon its merits and because we believe that decision of the principal question presented would expedite the administration of justice, we elect, in the exercise of our supervisory jurisdiction, to consider the principal question. Moses v. State Highway Commission, 261 N.C. 316, 134 S.E.2d 664; Allred v. Graves, 261 N.C. 31, 134 S.E.2d 186.
We are thus brought to the consideration of whether the trial judge correctly denied defendant's Motion to Dismiss.
A Motion to Dismiss pursuant to Rule 12(b)(6) performs the same function as the old common law general demurrer. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161. Thus well pleaded allegations in the Complaint and such relevant inferences of fact which might be deduced therefrom are taken as true. The Motion to Dismiss will be allowed only when the Complaint affirmatively shows that plaintiff has no cause of action. Forrester v. Garrett, Comr. of Motor Vehicles, 280 N.C. 117, 184 S.E.2d 858; Sutton v. Duke, supra. The Motion is seldom an appropriate pleading in actions for declaratory judgments, and will not be allowed simply because the plaintiff may not be able to prevail. It is allowed only when the record clearly shows that there is no basis for declaratory relief as when the complaint does not allege an actual, genuine existing controversy. Newman Machine Company v. Newman, 275 N.C. 189, 166 S.E.2d 63; Woodard v. Carteret County, 270 N.C. 55, 153 S.E.2d 809; Walker v. Charlotte, 268 N.C. 345, 150 S.E.2d 493; Hubbard v. Josey, 267 N.C. 651, 148 S.E.2d 638; Nationwide Mut. Insurance Company v. Roberts, 261 N.C. 285, 134 S.E.2d 654; 22 Am.Jur.2d, Declaratory Judgments, § 91 (1965).
Since this action is bottomed on the System Contract (Exhibit C-1) between Consumers and Shelby we quote pertinent portions of the contract to which reference will hereinafter be made:
Consumers and Shelby contend that the declarations they seek are not related to the feasibility of the generation and transmission of electric power, but are concerned with the validity or invalidity of the System Contract which has been executed by Consumers and Shelby so as to impose present obligations upon the parties to the contract, and that an actual controversy exists between petitioners-plaintiffs and Duke concerning the validity and construction of the System Contract.
In support of their position Consumers and Shelby point to Section 5.01(b) of the contract which designates Consumers as the sole agent of Shelby in negotiating power contracts, effective upon execution of the contract. Further, they note that effective upon its execution, Section 5.01(d) of the System Contract imposes heavy restrictions upon Shelby's right to contract, including Consumers' right to require Shelby to assign to Consumers its wholesale power contracts. They further contend that the immediate effectiveness of the contract is shown by its provisions which obligate Shelby to purchase its total electric power requirements from Consumers beginning on 1 July 1984. See Contract Sections 4.01 and 5.01(a). Consumers and Shelby aver that the bilateral and binding nature of the contract is disclosed *186 by those portions of the agreement whereby Consumers agreed to diligently seek to complete preliminary work, and to obtain state and federal governmental approvals to the end that the Initial System be in operation by 1 January 1983. Section 3.01 System Contract. By Section 1.02(a) of the Contract Consumers proposes to obtain similar contracts from the other participants.
Consumers and Shelby argue that any one of the obligations of the contract could be ultra vires (as contended by Duke in its Answer) and that an actual controversy exists which should be decided under the Declaratory Judgment Act.
Duke, on the other hand, contends that the obligations cited by petitioners-plaintiffs as creating an existing contract and presenting subject matter presently adjudicative under the Declaratory Judgment Act are merely incidental to the real and ultimate purpose of the System Contract which is to provide a means whereby 45 municipalities and 28 electric membership corporations may develop, finance, construct and operate an electric generation and transmission system; that each of the participants as shown on Exhibit A to the contract is assigned a participating share to accept and pay for the development and construction of the system, and for delivery of electricity; and that Shelby, possessing a share of only 1.172%, is the only participant presently obligated to bear the expense of planning, designing, constructing and operating the electric generation and transmission facilities. Duke relies upon Sections 1.01 and 1.02 of the System Contract to support its contentions that no substantial portion of the contract will be effective until the system goes into operation. Duke further contends that since the contract contemplates that all expenses of planning, construction and operation of the transmission system shall be borne by participants according to their allotted participating share, it is impossible for Consumers and Shelby to now be involved in a controversy with Duke concerning the construction and operation of an electric generation and transmission system. See System Contract 1.02(12), 3.02(b), 4.02(a).
The core of this appeal lies in the determination of whether plaintiffs have by their complaint alleged an actual genuine existing controversy.
The purpose of the Declaratory Judgment Act is to settle and afford relief from uncertainty concerning rights, status and other legal relations, and although the Act is to be liberally construed, its provisions are not without limitation. Uniform Declaratory Judgment Act, G.S. §§ 1-253 to 1-267. Since its passage the Act has spawned a host of decisions defining its scope and objectives. The rules of law set forth in these decisions are, as here, often difficult to apply to the facts of a given case.
Many of the now accepted principles concerning the scope of the Declaratory Judgment Act were stated by Justice Ervin in the case of Lide v. Mears, 231 N.C. 111, 56 S.E.2d 404, as follows:
In the case of Tryon v. Duke Power Co., 222 N.C. 200, 22 S.E.2d 450, the City of Tryon granted a franchise to Tryon Electric Service Company to supply electric current to the town. Later Duke Power Company succeeded to all rights and obligations under the franchise and ordinance which granted the franchise.
Section 6 of that franchise provided:
The plaintiff asked the Court to render a declaratory judgment construing the contract and franchise and to determine whether or not in the event the Town of Tryon decided to own and operate its own electrical lighting plant it might first acquire, either by purchase or condemnation, the property of defendant corporation.
*188 By an amendment to its pleadings, the plaintiff alleged the following:
Defendant power company admitted that the town had asked it to name a price on its properties and that it had declined to do so, and that it had denied the right of the town to condemn. Defendant further admitted that a difference of opinion existed in respect to plaintiff's right to condemn defendant's property, which it denied.
The trial judge allowed the defendant's Motion to Dismiss.
This Court affirmed the ruling of the Superior Court and, in part, stated:
We find guidance in the rules stated in Carolina Power &amp; Light Co. v. Iseley, 203 N.C. 811, 167 S.E. 56. There Carolina Power and Light Company brought an action against the City of Raleigh and the residents thereof to determine the validity of a contract between the power company and the city by the terms of which the power company was to change its electric cars to buses. The trial court held that the action was properly brought under the Declaratory Judgment Act. In affirming the trial court, this Court, inter alia, stated:
A citizen-taxpayer may maintain a class action to enjoin the governing *189 body of a municipal corporation from transcending its lawful powers or violating any legal duty which will injuriously affect the taxpayer, Kornegay v. City of Raleigh, 269 N.C. 155, 152 S.E.2d 186; Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d 139; and class actions for declaratory judgments may be utilized to determine the validity of contracts between a municipality and a private corporation. 22 Am.Jur.2d Declaratory Judgments § 33 (1965); Borchard, Declaratory Judgments, 519 (2d ed. 1941); Woodward v. Fox West Coast Theaters, 36 Ariz. 251, 284 P. 350.
We note, parenthetically, that the question of whether Duke as a taxpayer or the individual citizens-taxpayers might have successfully brought a class action for injunctive or declaratory relief is not presented by this action.
Clearly there is no controversy between the parties to the contract. The individual citizens-taxpayers have abandoned any vestige of hostility which might have created a justiciable controversy between them and petitioners-plaintiffs by joining in plaintiffs' prayer for relief without denying any substantial allegations of the complaint. The relationship between Duke and the plaintiffs is not as easily catalogued. We cannot say that petitioners-plaintiffs and Duke are engaged in a friendly suit or that they have entered into a collusive agreement to set up a fictitious controversy, as is often the case where parties seek academic enlightenment concerning legal questions. It is clear that Duke will oppose any viable effort by anyone to obtain approval for or to erect and operate a nontaxpaying electric generation and transmission system in competition with it. However, Duke is not a party to the contract before the Court and has not elected to assume the posture of a citizen-taxpayer of Shelby seeking injunctive or declaratory relief. In fact, the pleadings do not reveal that Duke made any objection to or attack upon the contract until it was compelled to file its pleadings.
It is not necessary for one party to have an actual right of action against another for an actual controversy to exist which would support declaratory relief. However, it is necessary that the Courts be convinced that the litigation appears to be unavoidable. 22 Am.Jur.2d, Declaratory Judgments § 11 (1965).
In Borchard, Declaratory Judgments (2d ed. 1941) at page 39, we find the following:
and on page 60 of the same treatise it is stated:
The complaint does not allege that Duke has made any claims or challenges which casts uncertainty upon plaintiffs' rights or liabilities growing out of the System Contract. Duke's overt acts and statements only indicate opposition to the construction and operation of a competitive generation and transmission system.
We are not in accord with Duke's contention that all of the participants must sign contracts before the possibility of a justiciable controversy may exist between petitioners-plaintiffs and Duke. Nevertheless, the complaint reveals that as of now there is no practical certainty that plaintiffs *190 have the capacity or power to perform the acts which would inevitably create a controversy with Duke. Thus it does not appear that litigation between the parties concerning the System Contract is unavoidable.
Taking all of the allegations in the complaint and all relevant deducible inferences therefrom to be true, the complaint affirmatively shows that there is no actual or real presently existing controversy between plaintiffs and defendant growing out of their opposing contentions as to the validity and construction of the System Contract.
The decision of the Court of Appeals is
Affirmed.