Worcester Electric Co. v. Hancock

Adkins, J., delivered the opinion of the Court. The question in this case is the right of the municipality of Snow Hill, Md., without an act of the Legislature, to dispose of its interest in the Snow Hill Electric Light and Power Company, which the city holds under a contract of sale with the Snow Hill Electric Light and Power Company dated July 14th, 1924. By chapter 179 of the Acts of 1924, the city was “authorized and empowered to acquire by purchase and to operate and maintain the existing electric light plant in Snow Hill for the lighting of the public buildings ⁶⁷² and highways of said town, and to sell light ox heat, or light and heat for private and public buildings to any or all consumers to the same extent that a private owner of said plant might so supply the.same,” and to issue and sell coupon bonds to the amount of twenty thousand dollars to provide a fund therefor. The act provided that nothing therein should be construed as relieving the Mayor and Council of Snow Hil] from any of the provisions of the Public Service Commission law.

By the above-mentioned contract, made in pursuance of said act, and subject to- the approval of the Public Service Commission of Maryland, it was provided that “the said party of the first part (the company) does hereby bargain and sell to the said party of the second part (the city), and the said party of the second part does hereby purchase from the said party of the first part, as of the first day of July, 1924, said existing electric light plant in Snow Hill, including all the property, rights, appurtenances, privileges, contracts, assets, bills, notes and accounts receivable, excepting, however, cash on hand and in bank, at and for the sum of fifteen thousand dollars with interest from July 1, 1924, * * *”; that the parties should immediately upon its execution unite in an application to the Public Service Commission for its approval of the contract; that the city should, immediately upon securing such approval, exercise the authority conferred upon it by said act of assembly, and take the necessary legal steps looking to a prompt sale of the bonds authorized by said act, and immediately upon receipt of the proceeds of said bonds pay to the said company the purchase price of fifteen thousand dollars, with interest from July 1, 1924; whereupon the company should execute and deliver to the city a good and sufficient deed and bill of sale conveying said property. The bill of complaint filed by certain citizens and taxpayers of said city recites said act of assembly and contract of sale; also chapter 455 of the Acts of 1894, whereby the inhabitants of Snow Hill were made a body corporate by the name of the “Mayor and Oouncil of Snow Hill,” and section ⁶⁷³ 2 of which act provides: “And by that name shall have perpetual succession, may sue and be sued, use a common seal, and possess such powers and privileges and incidents as may attach, by law, to a municipal corporation, may purchase and hold real, personal and mixed property, and dispose of the same for the benefit of the said town.” The bill alleges “that, besides the acts above referred to, no other acts or parts of acts have been passed by the General Assembly of the State of Maryland in any manner affecting the rights of the Mayor and Council of Snow Hill to acquire, operate, maintain, or dispose of the said electric light plant in Snow Hill”; that the said contract was approved by the Public Service Commission by its Order Ho. 8361, and also the exercise by the city of the rights and privileges granted by said chapter 179 of the Acts of 1924; that in pursuance of said contract and order, the Mayor and Council of Snow Hill has taken over from the Snow Hill Electric Light and Power Company the said electric light plant at Snow Hill as of the first day of duly, 1924, and has operated the same as the Municipal Power Company, and is still operating the said plant, and has agreed to pay said company the purchase price named in said contract, although the city has not actually paid the' company said purchase price, and has not sold said bonds or received a deed for said plant; that by memorandum of agreement dated April 17th, 1925, said company and city have sold to the Worcester Electric Company said plant at and for the sum of $16,000, reserving, however, to the city all cash on hand and all bills, notos, and accounts receivable; that thereafter joint application was made to the Public Service Commission by the city and said companies for an order rescinding Order Ho. 8361, and permitting and approving the said sale and transfer to the new company, and the abandonment and discontinuance by the city and the old company of all tho rights, privileges, and franchises heretofore exercised by them or either of them, and for a certificate of authority to the said new company to conduct, operate, and maintain a system for the generation ⁶⁷⁴ and supplying of electricity ; that a protest was filed by many citizens and taxpayers of said city, but the commission after a hearing passed order No. 9096 granting said application; that plaintiffs are informed and therefore charge that the attempted sale by the Mayor and Council of Snow Hill of its plant to said new company is ultra vires, illegal, and null and void, and likewise said Order No: 9096 of the commission; that said plant is a valuable asset to plaintiffs and to all other 'citizens and taxpayers of said city, and that the sale thereof by the city will cause said citizens and taxpayers irreparable loss and injury, for which no adequate compensation could be made to them at law. The prayer of the bill is for an injunction restraining Harold E. West, J. Frank Harper and Ezra B. Whitman, constituting the Public Service Commission of Maryland, from putting into effect said Order No. 9096, and the Snow Hill Electric Light and Power Company, the Mayor and Council of Snow Hill, and the Worcester Electric Company, from consummating the sales and purchase of said plant as contemplated by said memorandum of agreement, and from abandoning and discontinuing the operation of said plant as now operated by the Mayor and Council of Snow Hill; and for general relief. ■ . To the bill demurrers were filed by the Public Service Commission, the Snow Hill Electric Light and Power Company, and the Worcester Electric Company, and an answer was filed by the Mayor and Council of Snow Hill.

The answer admits that, in pursuance of its contract with the Snow Hill Electric Light and Power Company, and the order of the commission, the city has taken over the said plant as of July 1st, 1924, and has operated the same as the Municipal Power Company, and is still operating said plant and has agreed to pay said company the purchase price named in said contract; but avers that there has never been any consummation of the contract of purchase of said plant by the city; that no part of the purchase price has been paid, nor will payment by the city be required if the agreement of April 17th, 1925, be consummated; that by a true construe ⁶⁷⁵ tion. of the said two contracts there has never been a consummated purchase of said plant by the city and no sale of said plant by the city, but the second contract is in legal effect merely a substitution, by consent of all parties and subject te the approval of the Public Service Commission, of the Worcester Electric Company as purchaser in the place of the city; it denies that the sale by the city of said plant to the Worcester Electric Company, under Order No. 9096 of the commission, is ultra viras or illegal; it denies that said plant is a valuable asset to the citizens and taxpayers of said city, but alleges that it is an expensive liability and that the substitution of the Worcester Electric Company as purchaser would be to the great benefit and advantage of all taxpayers of the city. It then proceeds to give the history of the plant; of the dissatisfaction of the people with the inadequate service, and of efforts to sell to the Eastern Shore Gas and Electric Company; and alleges that the city took over the plant only after the