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09/29/93 EMPIRE DISTRICT ELECTRIC COMPANY v.

September 29, 1993

THE EMPIRE DISTRICT ELECTRIC COMPANY, A CORPORATION, PLAINTIFF-RESPONDENT,
v.
SOUTHWEST ELECTRIC COOPERATIVE, A CORPORATION, DEFENDANT-APPELLANT.



APPEAL FROM THE CIRCUIT COURT OF POLK COUNTY. Honorable Cody A. Hanna, Special Judge

Garrison, Montgomery, Prewitt

The opinion of the court was delivered by: Garrison

This is an appeal by Southwest Electric Cooperative (Southwest) from a judgment enjoining it from providing permanent electric service to a Wal-Mart store after the property on which it was located was annexed by the city of Bolivar, Missouri.

Southwest is a rural electric cooperative organized under Chapter 394 *fn1 for the purpose of supplying electric energy in rural areas. The suit was filed by The Empire District Electric Company (Empire) which operates electrical transmission and distribution lines and holds a non-exclusive franchise from the city of Bolivar to provide electric service in that city.

The land on which the Wal-Mart store is located was originally a farm with a house and related farm improvements. The house was later used as a commercial office until the property was sold to Wal-Mart in 1989 and it was torn down. Prior to January 12, 1990 when the land was annexed by Bolivar, it qualified as a "rural area" under § 394.020(3), *fn2 and had received electric service only from Southwest.

On November 7, 1989, Wal-Mart, in anticipation of the construction of its new building on the property, entered into an Agreement For Electric Service with Southwest and became a member of the cooperative. Between November 8, 1989 and January 10, 1990, Southwest constructed all electrical facilities which would be necessary to serve the anticipated electrical demands of Wal-Mart when its building was completed. Electricity was being provided and billed to Wal-Mart through these facilities as of January 10, 1990. The building was not then complete, however, and the electric service being supplied was single-phase service which was being used during construction, rather than the anticipated three-phase permanent service.

On January 12, 1990, the Wal-Mart tract was annexed into the city of Bolivar. On the same day, Empire filed its petition seeking a permanent injunction. The petition alleged in part that prior to annexation, Southwest had established temporary electrical distribution to the construction site but had not commenced permanent service, "there being no electrical wiring or appliances within the building under construction to utilize such service"; and it sought to enjoin Southwest from providing permanent retail electric service to the building itself because, it alleged, by taking steps to provide such service, Southwest was attempting to provide electricity to a non-rural area in violation of § 394.080(4). Empire did not question the lawfulness of Southwest's service to the Wal-Mart tract prior to the annexation, nor did it seek to enjoin Southwest from continuing to provide the temporary electric service for construction purposes. The sole contention in the suit was that Southwest was not authorized to convert the temporary single-phase service to permanent three-phase service after the annexation.

The trial court held that Empire, as the franchised supplier of electricity in Bolivar, was entitled to provide the permanent electric service to the Wal-Mart store. In reaching that Conclusion, the court applied the "persons at structures" test of §§ 393.106 and 394.315 *fn3 then in force, and held that since the Wal-Mart store did not meet the definition of a structure at the time of annexation, Southwest was not entitled to provide permanent electric service. Southwest appeals that decision. In the first of Southwest's three points relied on, it argues that the trial court erred in applying the "persons at structures" test of §§ 393.106 and 394.315 rather than § 394.080 in determining whether Southwest was entitled to continue electric service to Wal-Mart after it was annexed. We agree and, accordingly, need not discuss the other points.

As in any court-tried case, we review the issuance of the injunction under the standard of Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976), and will affirm the judgment unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. Ballesteros v. Johnson, 812 S.W.2d 217, 221 (Mo.App. 1991).

Section 394.080 was first adopted in 1939. As of 1990, it provided, in part, that a rural electric cooperative had power:

The Missouri Supreme Court held that by reason of § 394.080 annexation "did not terminate the power of the cooperative to continue to furnish service to its members within the annexed areas by and through its lines and facilities previously installed . . . ." Missouri Public Service Co. v. Platte-Clay Electric Cooperative, 407 S.W.2d 883, 889 (Mo. 1966) (known as MoPub I ). The court in that case described these "grandfather" rights, saying:

The cooperative's right to continue service in a municipality served by a franchised utility, after annexation of territory in which it has been lawfully operating, is therefore limited to (1) members receiving service at the time of annexation; (2) persons accepted as members who become subsequent occupants of houses and places of business actually connected to the cooperative's lines on the date of annexation, whether the previous occupants have resigned, moved, or their memberships have been terminated or discontinued for any other reason, and (3) persons to whom memberships predating annexation may be transferred in compliance with provisions of the by-laws.

Id. at 894.

In the instant case, the trial court found that prior to the annexation, Southwest had constructed all the facilities to serve the anticipated electrical demands of the Wal-Mart store when completed and that as of that date it was providing service. Empire does not appeal that finding. It is undisputed that, at the time of annexation, Wal-Mart was a member of Southwest. Based upon these facts, Southwest would be entitled to continue to provide service to the Wal-Mart store under § 394.080(4) as construed in MoPub I. The trial court, however, reached a different result by applying §§ 393.106 and 394.315 and ...


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