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Trico Electric Cooperative, Inc. v. Ralston

Supreme Court of Arizona

July 12, 1948


Appeal from Superior Court, Pinal County; Frank E. Thomas, Judge.


John F. Connor, of Phoenix, for appellant.

Tom Fulbright, of Florence, and Whitney, Ironside & Whitney, of Phoenix (Walter Roche, of Phoenix, of counsel), for appellees.

Gibbons, Superior Judge. LaPrade and Udall, JJ., concur. Chief Justice Stanford having disqualified himself, the Honorable J. Smith Gibbons, Judge of the Superior Court of Apache County, was called to sit in his stead.


Gibbons, Superior Judge.

Page 471

[67 Ariz. 360] The Eloy Light, Power and Utility Company, a defendant below, herein called "Eloy Company", is an Arizona public service corporation and owns water and electric plants, lines, and systems in the unincorporated town of Eloy, Pinal County, Arizona, and in the vicinity thereof, by which it serves the public generally with electrical energy for general purposes and for pumping of water for irrigation of farm lands and supplying water in the town of Eloy for domestic and commercial use. Plaintiffs (appellees) are customers of the Eloy Company and each receive one or more of the services above named. The appellant, Trico Electric Cooperative, Inc., herein called defendant, is a nonprofit nonstock [67 Ariz. 361] membership corporation organized under the provisions of article 4, chapter 53, A.C.A.1939, formed to take advantage of the grant of loans to nonprofit cooperatives for rural electrification, pursuant to the provisions of the Rural Electrification Act of 1936, title 7, U.S.C.A., chapter 31, sections 901-914.

On October 29, 1946, the Eloy Company, for a nominal consideration of $ 5, granted defendant for a period of sixty days the option to purchase for the sum of $ 200,000 all its electric transmission and distribution lines and facilities and all water distribution properties. Within said sixty-day period defendant Trico exercised said option and announced its election to purchase said properties.

On December 5, 1946, plaintiffs commenced this class action against defendant and the Eloy Company in the superior court of Pinal county, Arizona, for themselves and on behalf of all the consumers of water and electric energy furnished by Eloy Company, asking for declaratory relief adjudicating said option agreement and contemplated sale and transfer of properties thereunder to be unlawful, illegal and void, and for injunctive relief enjoining defendants from consummating said sale and transfer of possession, control, or ownership of said properties.

Defendant filed a motion to dismiss plaintiffs' amended complaint on the grounds: (a) that the court lacked jurisdiction of the subject matter of the action; and (b) that the said complaint failed to state a claim upon which the relief prayed for could be granted. This motion was denied by the trial court; both defendants thereupon answered separately on the merits, each admitting that a controversy existed

Page 472

between plaintiffs and defendant Trico. Eloy Company further asked that the court grant declaratory relief adjudicating the validity and legality of said option and the proposed sale thereunder.

Thereupon, plaintiffs moved for judgment on the pleadings, which motion was granted by the court, and in said judgment it was decreed that said option and the contemplated sale thereunder were unlawful, illegal and void and of no force and effect. No injunctive relief was granted. Defendant Trico appeals from said judgment, but Eloy Company, though served with copies of notice and designated record on appeal, did not join therein and is not before this court either as an appellant or appellee.

There are six assignments of error and an equal number of propositions of law, some of which are fused and intermingled, and not entirely clear as to their application to the issues involved. In the interest of clarity and brevity, we shall consider only those which are necessary in this appeal.

One of the basic questions is whether the courts or the corporation commission has the jurisdiction and power to determine the validity of said option agreement.

[67 Ariz. 362] In the instant case the record discloses that plaintiffs brought this suit before the matter of the sale therein contemplated could be presented to the corporation commission for approval or disallowance. Counsel for defendant Trico is contending that the court in entertaining this suit testing the ...

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