Court Opinion

ID: 6698018
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:59:56.553257+00
Date Added: 2024-06-11T16:01:18.694679
License: Public Domain

CoNNOR, J.
The Johnston County Electric Membership Corporation was organized under and pursuant to the provisions of chapter 291, Public Laws of North Carolina, 1935. The execution of its certificate of incorporation was authorized in accordance with the provisions of said chapter 291, Public Laws of North Carolina, 1935, and of chapter 288, Public Laws of North Carolina, 1935.
*776The provisions of chapter 291, Public Laws of North Carolina, 1935, with respect to the organization of an electric membership corporation are as follows:
“Sec. 3. When any number of persons residing in the community not served, or inadequately served, with electrical energy desire to secure electrical energy for their community and desire to form corporations to be known as electric membership corporations for said purpose, they shall file application with the North Carolina Rural Electrification Authority for permission to form such corporation.
“Sec. 4. Whenever any such application is made by as many as five members of the community, the North Carolina Rural Electrification Authority shall cause a survey of said territory to be made, and if, in its opinion, the proposal is feasible, shall issue to said community a privilege for the formation of a corporation as hereinafter set out. Whenever an application has been filed by any community with the North Carolina Rural Electrification Authority, and its application for formation of an electric membership corporation has been approved, the same may be formed as hereinafter provided.
“Sec. 5. Formation authorized. Any number of natural persons not less than three may, by executing, filing and recording a certificate as hereinafter provided, form a corporation not organized for pecuniary profit, for the purpose of promoting and encouraging the fullest possible use of electric energy in the rural sections of the State by making electric energy available to inhabitants of the State at the lowest cost consistent with sound economy and' prudent management of the business of such corporations. Whenever an electric membership corporation is formed in the manner herein provided, all property owned by the said corporation and used exclusively for the purpose of said corporation shall be held in the same manner and subject to the same taxes and assessments as property owned by any county or municipality of the State, so long as said property is owned by said electric membership corporation and is used for the purpose for which said corporation was formed.
“Sec. 6. The certificate of incorporation shall be entitled and endorsed ‘Certificate of Incorporation of . Electric Membership Corporation’ (the blank space being filled in with the name of the corporation), and shall state:
“(a) The name of the corporation, which name shall be such as to distinguish it from any other corporation.
“(b) A reasonable description of the territory in which its operations are principally to be conducted.
“(c) The location of its principal office, and the post office thereof.
“(d) The maximum number of directors, not less than three.
*777“(e) Tbe names and post office addresses of tbe directors, not less tban three, wbo are to manage tbe affairs of tbe corporation, for tbe first year of its existence, or nntil tbeir successors are cbosen.
“(f) Tbe period, if any, limited for tbe duration of tbe corporation. If tbe duration of tbe corporation is to be perpetual, tbis fact should be stated.
“(g) Tbe terms and conditions upon which members of the corporation shall be admitted.
“(b) Tbe certificate of incorporation may also contain any provision, not contrary to law, which tbe incorporators may choose to insert for tbe regulation of its business, and for tbe conduct of tbe affairs of tbe corporation; and any provisions creating, defining, limiting, or regulating tbe powers of tbe corporation, its directors and members.
“Sec. 7. Execution and filing of certificate of incorporation. Tbe natural persons executing tbe certificate of incorporation shall be residents of tbe territory in which tbe principal operations of tbe corporation are to be conducted, wbo are desirous of using electric energy to be furnished by tbe corporation.
“Tbe certificate of incorporation shall be acknowledged by tbe subscribers before an officer qualified to administer oaths. When so acknowledged, tbe certificate may be filed in tbe office of tbe Secretary of State, wbo shall forthwith prepare a certified copy or copies thereof, and forward one to tbe clerk of tbe Superior Court in each county in which a portion of tbe territory of tbe corporation is located, wbo shall forthwith file such certified copy or copies in their respective offices and record tbe same as other certificates of incorporation are recorded. As soon as tbe provisions of this section have been complied with, tbe proposed corporation described in tbe certificate so filed shall be and constitute a body corporate.”
It is provided in section 8 of said chapter that “each corporation formed hereunder shall have a board of directors, and tbe powers of a corporation shall be vested in and exercised by a majority of tbe directors in office. Tbe directors of tbe corporation, other tban those named in its certificate of incorporation, shall be elected annually by tbe members entitled to vote. Tbe directors must be members and shall not be entitled to compensation for tbeir services. Tbe board shall elect annually from its own number a president and a secretary.”
It is provided in section 9 of said chapter that tbe board of directors of a corporation organized under and pursuant to its provisions “shall have power to do all things necessary or convenient in conducting tbe business of tbe corporation, including, but not limited to, (a) tbe power to adopt and amend by-laws for tbe management and regulation of tbe affairs of tbe corporation.
*778“Tbe by-laws of a corporation may make provisions, not inconsistent with law, or its certificate of incorporation, regulating the admission, withdrawal, suspension or expulsion of members; the transfer of membership ; the fees and dues of members, and the termination of membership on nonpayment of dues or otherwise; the number, times, and manner of choosing, qualifications, terms of office, 'official designations, powers, duties and compensation of officers; defining a vacancy in the board, or in any office and the manner of filling it; the number of members, not less than a majority, to constitute a quorum at meetings, the date of the annual meeting, and the giving notice thereof and the holding of special meeting and the giving notice thereof, the terms and conditions upon which the corporation is to render service to its members; the disposition of the revenues, and receipts of the corporation; regular and special meetings of the board, and the giving notice thereof.
“(b) To appoint agents and employees and to fix their compensation and the compensation of the officers of the corporation.
“(c) To execute instruments.
“(d) To delegate to one or more of the directors or to the agents and employees of the corporation such powers and duties as it may deem proper.
“(e) To make its own rules and regulations as to procedure.”
It is provided in section 10 of said chapter “that the corporate purpose of each corporation formed hereunder shall be to render service to its members only, and no person shall become or remain a member unless such person shall' use energy supplied by such corporation and shall have complied with the terms and conditions in respect to membership, contained in the by-laws of such corporation.”
By virtue of the provisions of chapter 291, Public Laws of North Carolina, 1935, no person, although he is a member of the community for which and a resident of the territory in which an electric membership corporation organized under and pursuant to the provisions of said chapter, is- authorized to construct and operate lines and other facilities for the transmission and distribution of electric energy, is entitled to service from such corporation, unless he is or shall become a member of such corporation, in accordance with the provisions of its certificate of incorporation or by-laws. It is so expressly provided by section 11 of said chapter. This provision is consistent with all the provisions of said chapter with respect to the organization and business of such corporations. Such person, therefore, until he becomes a member of the corporation, has no legal right which is or may be affected by the organization of the corporation, or by the management of its business, or the conduct of its affairs by its board of directors. For that reason, such person cannot maintain an action in which the validity of any action of the *779board of directors of the corporation in the management of its business or in the conduct of its affairs, is challenged, on the ground that such action was unlawful or has unlawfully deprived him of a legal right.
No person, although he is a member of the community for which and a resident of the territory in which an electric membership corporation organized under and pursuant to the provisions of chapter 291, Public Laws of North Carolina, 1935, is authorized to construct and operate lines and other facilities for the transmission and distribution of electric energy, is entitled to service by such corporation because he attended meetings of members of the community and residents of the territory, at which proceedings were had preliminary to the organization of the corporation, unless after the organization of the corporation he has become a member of the corporation in accordance with the provisions of its certificate of incorporation and by-laws. Such person, until he becomes a member of the corporation, has no rights which are or may be affected by the organization of the corporation, or by the management of its business or the conduct of its affairs by its board of directors. It cannot be held that such person is a beneficiary of the corporation, because he may be eligible to membership in the corporation and for that reason may maintain an action in which the validity of an act of the board of directors of the corporation is challenged, on the principle of Gorrell v. Water Supply Co., 124 N. C., 328, 32 S. E., 720.
In the instant case, the court found that neither of the plaintiffs was a member of the Johnston County Electric Membership Corporation at the commencement of their action on 7 August, 1937. This finding of fact is supported by all the evidence, with none to the contrary. For this reason, there is no error in the judgment dismissing the action. No right of the plaintiffs or of either of them has been affected, wrongfully or otherwise, by the act of the board of directors of the Johnston County Electric Membership Corporation in accepting the proposition of the Carolina Power & Light Company, contained in the letter, dated 8 July, 1937. See Alabama Power Company v. Harold L. Idees, as Federal Hmergency Administrator of Public Works, decided at October Term, 1937, of the Supreme Court of the United States. In that case it was held that as no legal or equitable right of the plaintiff had been invaded by the defendant by his official acts, as alleged in the bill of complaint, the plaintiff was without standing in the Court to challenge the validity of said official acts. Accordingly, the judgment dismissing the bill of complaint was affirmed.
On their appeal to this Court, the defendants contend that findings of fact made by the court, and set out in the judgment, with respect to' the motives of the defendants in entering into the agreement in writing dated 8 July, 1937, and with respect to the validity of said agreement, *780are not supported by the evidence. These findings of fact are immaterial, and should be stricken from the record. It is not without significance that no member of the Johnston County Electric Membership Corporation, or other person whose rights, legal or equitable, may be affected by the agreement entered into by and between the Carolina Power & Light Company and the Johnsto'n County Electric Membership Corporation, has joined the plaintiffs in this action, although invited to do so. The record in this appeal discloses that this action was instituted by the plaintiffs upon assurance that they would not be called upon to bear any part of the expenses incurred in maintaining it.
On the facts set out in paragraph 9 of the judgment, the action was properly dismissed. For this reason the judgment as modified in accordance with this opinion is
Affirmed.