Opinion
13787
February 20, 1934.
Before RAMAGE, J., Lexington, June, 1930. Reversed and complaint dismissed.
Action by the Town of Brookland against the Broad River Power Company. Decree for plaintiff, and defendant appeals.
The decree of the Circuit Judge, directed to be reported, follows:
The testimony in this case was taken by the Clerk of Court of Lexington County, to whom it was referred for that purpose only. On motion of the plaintiff, the case was heard by me at chambers in Saluda, S.C. on the 31st day of July, 1931, at which hearing counsel for both parties were heard as fully as desired and given further time to file written arguments.
The plaintiff complains that the defendant is now using the streets, ways, and public places of the Town of Brookland under the claim that they are so doing by virtue of an instrument executed on the 4th day of September, 1908, to the Columbia Electric Street Railway, Light Power Company, which instrument is invalid; neither the intendent and town clerk or the town council having authority to execute the same, because it is not supported by a legal consideration, and is further illegal in that it purports to bind the town in perpetuity; that this instrument is a cloud upon the title of the plaintiff to said franchise rights, hinders, delays, and embarrasses plaintiff in either constructing a municipal plant or disposing of its franchise in a legal manner, which franchise right is very valuable; that plaintiff has no adequate remedy at law and is being irreparably injured. Plaintiff prays that its title to the franchise right be quieted; the said instrument declared invalid; that it be adjudged that the defendant has no legal right to the franchise; that the Court fix a reasonable time for the defendant to negotiate for a legal franchise, and, failing in that, defendant be required to close out its business in Brookland under the direction of this Court, etc.
By way of answer the defendant alleges that the town is estopped, etc.
The testimony shows that the defendant is operating in Brookland by virtue of an instrument substantially as alleged in the complaint. Mr. Coit, the vice-president and general manager of the defendant, testified that to the best of his knowledge the company had a franchise in Brookland and that he would produce it. At a subsequent reference, in response to a notice to produce given by plaintiff, the instrument, of which the following is a copy, was produced and offered in evidence, viz. (omitting formal parts):
"Be it Ordained by the Intendent and Wardens of the Town of Brookland, constituting the Town Council of said Town, That in consideration of the installation and equipment necessary to furnish the citizens of Brookland with incandescent electric light and motor service by the Company, hereinafter named, that the Columbia Electric Street Railway, Light and Power Company, their successors and assigns, be granted a franchise in perpetuity to erect poles in the streets of said Town, run their wires therein, and do all things necessary to furnish the said citizens with the incandescent electric light and motor service, and to charge therefor such rates as the Company may establish.
"The use of the streets of said Town must be in a proper manner and subject to regulation by the Council.
"Ratified in Council assembled, this 4th day of September, 1908."
The defendant contends that it was operating in Brookland prior to the date of the said instrument, which I shall hereinafter call a permit, but I do not think the evidence susceptible of that construction, and certainly it is not proven by the preponderance of the evidence.
No election was held in 1908 on the question of granting the franchise, as required by Section 4424 (Civ. Code 1922), but in 1926 an election was held in Brookland on the question of granting an exclusive franchise to the Broad River Power Company; the vote being unanimously against granting such a franchise.
Plaintiff contends that the permit was without consideration and illegal, because the town had no authority to grant a franchise in perpetuity. The permit shows on its face that it was without consideration as far as the town was concerned. See Mauldin v. City Council, 33 S.C. 1, 11 S.E., 434, 8 L.R.A., 291. The question of the authority of the town to grant the franchise must be governed by the applicable statutes, which are Sections 4521 and 4388 of the Code of Laws for 1922. Under the rules of construction relating to the authority of municipal corporations laid down by the Courts and text-writers, I am of the opinion that neither Section 4521 or Section 4388 conferred authority upon the Town of Brookland to grant a perpetual franchise, and that the franchise granted September 4, 1908, is invalid. See Luther v. Wheeler, 73 S.C. 89, 52 S.E., 874, 4 L.R.A. (N.S.), 746, 6 Ann. Cas., 754; Grady v. Greenville, 129 S.C. 99, 123 S.E., 494; Detroit Citizens St. Ry. Co. v. Detroit Ry. et al., 171 U.S. 48, 18 S.Ct., 732, 43 L.Ed., 67; Wabash R. Co. v. City of Defiance, 167 U.S. 88, 17 S.Ct., 748, 42 L.Ed., 87; Houston v. West Greenville, 126 S.C. 484, 120 S.E., 236; Mauldin v. City Council, 33 S.C. 1, 11 S.E., 434, 8 L.R.A., 291; and Iowa Tel. Co. v. Keokuk (D.C.), 226 F., 82.
Counsel for defendant contends that Article 8, § 4, of the Constitution of 1895, confers power upon a municipality to grant a perpetual franchise. I do not construe that provision of the Constitution as conferring any authority upon municipality, but as a limitation on the power of the General Assembly. If, however, it could be construed as granting power to municipalities to grant franchises, I do not believe it grants power to give perpetual franchises. Certainly there is no "explicit permission," and the authority to grant a perpetual franchise is not "indispensable" to the other powers granted by that section of the Constitution; and hence, under the rules of construction laid down by the cases hereinbefore cited, that section of the Constitution does not confer authority upon a municipality to grant a perpetual or exclusive franchise.
Counsel for defendant further contends that, under the charter of the defendant, it has a franchise and the vested right to continue its business in Brookland. They cite the Act of incorporating the Congaree Gas Electric Company, passed in 1887, as follows: Under my construction of that charter, it only enumerates what kind of business the company can legally do, but does not state where it can legally do it, or that it can do it in Brookland. The provisions of that charter specifically state that they are "subject to proper municipal ordinance and restriction." These words to my mind mean that the said company can only do business in a municipality with such permission as a municipality can legally give, or subject to such ordinance as the particular municipality can legally pass, or is legally authorized to pass; any other interpretation would make nugatory any clauses in municipal charters restricting the powers of the councils thereof.
As to the plea of estoppel: It is well settled in this State that the plea of Statute of Limitations, adverse possession, and presumption of a grant does not apply to the streets of a municipal corporation. See Crocker v. Collins, 37 S.C. 334, 15 S.E., 951, 34 Am. St. Rep., 752; Croker v. Town of Beaufort, 45 S.C. 269, 22 S.E., 885; Grady v. Greenville, 129 S.C. 100, 123 S.E., 494; and Solen Corporation v. Robertson, 142 S.C. 56, 140 S.E., 236.
In Grady v. City of Greenville, 129 S.C. 100, 123 S.E., 494, 498, the Court said that "the application of the doctrine of equitable estoppel to cases involving the streets of a municipality is, on principle, so doubtful that Courts and text-writers agree that the case in which it may be invoked should be exceptional." In 7 A.L.R., 1249, the general rule is stated, as follows: "The general rule is well settled that a municipality is not estopped from denying the validity of a contract made by its officers when there was no authority for making such a contract (19 R.C.L., § 350)."
This general rule prevails in South Carolina. It was followed in the case of Carolina Nat. Bank v. State, 60 S.C. 465, and the reason of the rule given at page 475, 38 S.E., 629, 633, 85 Am. St. Rep., 865, as follows: "The doctrine of equitable estoppel has no application to a sovereign state. Equitable estoppel rests upon an implication of fraud in the party sought to be estopped, and fraud ought not to be imputed to the sovereign. The state can only act under its constitution and through its legislative enactments pursuant thereto, and can only ratify in the manner in which it could originally authorize; and, if it could be estopped to assert the truth the effect might be to fix upon the state responsibilities in conflict with its constitution and laws. All men are bound to take notice of the special authority of the state's officers, and when dealing with them outside their authority they assume the peril with their eyes open, and cannot be heard to say that they placed reliance upon the state. The question is not one of intention, but of power; and, if the officer has not power to act his action is not state action, and so affords no basis upon which to predicate estoppel against the state. And if it were, in any sense, a question of intention, the state's intention can only be evidenced in a constitutional way."
Again, on page 476 of 60 S.C. 38 S.E., 629, 633, in the same case, the Court said: "In the case of Filor v. United States, 9 Wall., 45, 19 L.Ed., 549, the supreme court of the United States held that the unauthorized acts of officers cannot estop the government from insisting upon their invalidity, however beneficial they have proved to the United States."
The power company went into Brookland with the permission of the town under an ordinance which allowed the power company to fix its own charges for services; they received large sums for the services rendered — over $12,000.00 during 1930 alone. The facts of this case do not appeal to the equitable conscience of the Court to the extent the facts in Grady v. Greenville, 129 S.C. 100, 123 S.E., 494, and in Solen Corporation v. Robertson, 142 S.C. 56, 140 S.E., 236, do.
My conclusion is that the defendant is operating in Brookland by virtue of an ordinance passed in 1908, which, like all other ordinances, may be amended, modified, or repealed by the town council at any time (see Houston v. West Greenville, 126 S.C. 484, 120 S.E., 236, and Wabash R. Co. v. City of Defiance, 167 U.S. 88, 17 S.Ct., 748, 42 L.Ed., 87), that as a perpetual franchise, said ordinance is illegal and is a cloud upon the right of the Town of Brookland to grant a legal franchise, and that the town is not estopped to assert its illegality. In view of the fact that the defendant is a public service corporation, it should be allowed a reasonable time within which to close up its business, remove its wires from the streets, and take its poles and other property off the streets and lands of the plaintiff, Town of Brookland.
Under Section 4424 of the Civil Code, even had an election been had in 1908, the time would have expired in 1938 anyway.
I think the question of estoppel, convenience of the people, expenditures of money by defendant as set out in the answer, are pertinent to the question of a reasonable time to close out business and remove property, etc., from the streets and lands of the plaintiff, as well as any alleged inconvenience that might result to the people of the said Brookland from such removal. There is nothing before the Court showing that any formal ordinance was passed revoking the 1908 ordinance, and I make no finding one way or another whether the 1908 ordinance ought to have been formally revoked as a condition precedent to removing the property of the defendant from the streets, as that question was not made and argued before me.
It is therefore ordered, adjudged, and decreed:
(1) That the ordinance of September 4, 1908, of the Town of Brookland is in violation of Section 4424, which was the law in 1908, under another number of the Code, and therefore is illegal and contrary to the statute law of this State.
(2) That the case be and the same is hereby referred to H.L. Harmon as special referee to take the testimony on the issue as to "What is a reasonable time for defendant to remove its wires and property, etc., from the streets of the plaintiff town," and that he report the testimony so taken to this Court.
(3) If plaintiff be so advised, plaintiff may bring another action for such relief as may be demanded within thirty days after this order becomes effective, and the bringing of such action shall ipso facto be an abandonment of any further proceedings in the present action.
Messrs. Elliott, McLain, Wardlaw Elliott and Timmerman Graham, for appellant, cite: Power of municipal corporation to grant franchise: 37 S.C. 334; 1 Hill, 224; 14 S.C. 103; 40 Am. Dec., 156; 69 Am. Dec., 489; 67 S.C. 516; 67 S.C. 525; 129 S.C. 100. Contracts: 157 S.C. 1; 4 Wheat, 519; 4 L.Ed., 629; 148 U.S. 138; 37 L.Ed., 397; 82 U.S. 623; 21 L.Ed., 215; 83 U.S. 232; 21 L.Ed., 457; 188 U.S. 385; 47 L.Ed., 513; 12 R.C.L., 179.
Messrs. J. Wesley Crum and B.W. Crouch, for respondent, cite: Presumption of grant: 129 S.C. 100. Contracts: 167 U.S. 88; 17 S.Ct., 748; 126 S.C. 484; 37 S.C. 333.
February 20, 1934. The opinion of the Court was delivered by
The action was brought some time prior to July 31, 1931, as on that date the Circuit Judge heard the case upon testimony taken before the Clerk of Court; it being referred to him for the purpose of taking the testimony only. The decree was dated January 22, 1932.
The complaint alleges that on the 4th day of September, 1908, the intendent and the Clerk of the Town of Brookland undertook to grant to the Columbia Electric Street Railway, Light Power Company the right to the use of the streets of the town for the purpose of furnishing electric current in perpetuity. It further alleges that the instrument is invalid for the reason that the intendent and clerk had no authority to grant same and also for the reason that it was a grant in perpetuity. It therefore demanded judgment that the instrument be declared void; that it be set aside as a cloud upon the franchise rights of the plaintiff; that the defendant be required to close out its business in the town, removing all of its poles, wires, and other equipment therefrom, under the direction of the Court; and that the town and its inhabitants be protected in their legal rights during the process of closing out.
The answer of the defendant denied the material allegations of the complaint; alleged the use of the streets for more than twenty years at the instance and request of the plaintiff and the residents of the town, that the public has vested rights in the continued service, that the town is estopped to assert the invalidity of the franchise; denies all claim of damage or irreparable injury; and prays a dismissal of the complaint.
Upon these pleadings much testimony was taken, the gist of it, for the plaintiff, being that the defendant is operating in the town without a franchise; that such a franchise is valuable; that there is no town record of a franchise ever having been granted; and that there are no available records of the town prior to 1920. The testimony of the defendant consisted of facts derived from the witnesses on cross examination, together with legislative records of the charters of various companies, including that of the defendant herein. Because the records of the town could not be found, the attorney for the plaintiff served notice upon the defendant to produce the franchise under which the defendant was operating, and the defendant thereupon produced a copy of same, as follows:
"Be it Ordained by the Intendent and Wardens of the Town of Brookland, constituting the Town Council of said Town, That in consideration of the installation and equipment necessary to furnish the citizens of Brookland with incandescent electric light and motor service by the Company, hereinafter named, that the Columbia Electric Street Railway, Light and Power Company, their successors and assigns, be granted a franchise in perpetuity to erect poles in the streets of said Town, run their wires therein, and do all things necessary to furnish the said citizens with the incandescent electric light and motor service, and to charge therefor such rates as the Company may establish.
"The use of the streets of said Town must be in a proper manner and subject to regulation by the Council.
"Ratified in Council assembled, this 4th day of September, 1908."
The Circuit Judge rendered his decree in which he granted the relief demanded in the complaint; held that the ordinance of 1908 was invalid, being a violation of Section 4424, Civil Code of 1922, now Section 7269 of the Code of 1932; ordered the cause referred to a special master to determine "what is a reasonable time for Defendant to remove its wires and property from the streets of the plaintiff town"; and then provided that the plaintiff might bring another action in thirty days after the effective date of his order for such relief as may be demanded and that the bringing of such other action should ipso facto be an abandonment of any further proceedings in this action.
From this order the defendant has appealed upon nine exceptions, all of which we have considered with interest. Some of the exceptions might be sustained and yet no material benefit would inure to the defendant, as they are not of such materiality as would affect the result of the decree.
The important ruling is that the Circuit Judge held the defendant to be without authority to operate in the Town of Brookland, required the defendant to remove its equipment from the streets, and declared the action of the town council invalid under Section 7269 of the Code of 1932.
A very unusual situation, to say the least, is presented by the town in this case. It makes no point of unsatisfactory service by the defendant, nor does it complain of the rates charged. Its witnesses swear to the benefits received by the town from the service of the defendant and of the inconvenience and hardship which would follow if the prayer of the complaint be granted. The town is demanding something, by suit, which it really does not desire, to wit, the abandonment of service by the defendant. Some testimony was directed to the value of a franchise and to the effect that the defendant had paid considerable sums of money for a franchise to do business in other towns. It is not an inference of this Court, but a fact admitted by the attorneys, that the town hopes, by this suit, to force the defendant to pay a substantial sum for a franchise. Such a position does not, in the least, appeal to the conscience of this Court. Nor can we refrain from allowing our imagination to run and to consider the dire consequences which might follow a voluntary effort on the part of the defendant to do what the plaintiff is nominally trying to force it to do.
But resuming the discussion of this case, after a possibly useless digression, we now consider the attitude of the town in regard to the instrument of 1908. The records of the town, being lost or destroyed, at least not available, prior to 1920, the allegation is made that the intendent and town clerk undertook to grant the right to the Columbia Electric Street Railway, Light Power Company to establish lines, poles, etc., for the purpose of furnishing electric current in the town. It would appear that the town was under the impression that no corporate action was taken and that it relied upon the recollection of a witness who had seen a copy of the ordinance and who tried to reproduce it from memory. When the defendant, complying with notice, offered a copy of the original ordinance, the plaintiff accepted the copy as correct, but is now endeavoring to invalidate its own ordinance, an ordinance under which the parties hereto have worked in harmony since 1908.
It is always presumed that legislative acts are regular and that all necessary steps have been taken until the contrary is shown, and there is no effort made on the part of the plaintiff to show that the ordinance of 1908 was in any respect irregularly passed. An inspection of the copy, heretofore set out in this case, fails to disclose any irregularity as to its passage, and, as before stated, with no proof to the contrary, we must accept it as a valid exercise of authority by the town.
The town objects to the ordinance upon the further ground that the council had no right, authority, or power to grant a perpetual franchise. We are saved the necessity of passing upon this objection to the ordinance by the concession of the attorney for the power company, made in his brief and also in open Court, that no claim is made that the ordinance granted a perpetual franchise. The franchise is a legal one, but, by reason of the conceded interpretation passed upon it, we hold the same to be one of limited duration only.
The decree of the Circuit Judge discusses various points made by the defendant, overrules them, and then rests his order upon the sole ground that the ordinance is in violation of present Section 7269 of the Code. It would therefore appear that a decision on this issue will be determinate of this appeal; no request having been made to sustain the decree upon additional grounds.
A most casual reading of Section 7269 discloses the fact that it applies solely to exclusive franchises and has no reference to the ordinary franchise which a city or town may grant under its general powers of government. There is no effort made to show that the town did not have authority to enact an ordinance granting a franchise under its governmental functions and its broad police power. The Circuit Judge was evidently of the opinion that the defendant claimed an exclusive franchise and held that the section of the Code, above referred to, had been violated. His holding would have been correct if the defendant claimed an exclusive franchise, but such is not the case. We can therefore see no reason why the ordinance, regular upon its face, is violative of that section of the Code. The Circuit Judge was in error in so holding.
There is no contention over the fact that the present defendant is the successor, in title, of the Columbia Electric Street Railway, Light Power Company and that it is entitled to all the privileges granted that company by the ordinance above quoted.
We have examined carefully the record in this case, together with the authorities cited in the Circuit decree, and find nothing therein to controvert the decision herein.
It is the judgment of this Court that the decree of the Circuit Judge be, and the same is hereby, reversed, and that the complaint herein be dismissed.
MESSRS. JUSTICES STABLER and BONHAM concur.
MR. CHIEF JUSTICE BLEASE and MR. JUSTICE CARTER concur in result.
In concurring in the result of the opinion in this case, I wish to state that, under my view, the franchise in question, which is held to be not exclusive and not perpetual, may be revoked in the same manner it was granted.