Appeal by plaintiffs from order entered 13 October 1999 by
Judge Ben F. Tennille in New Hanover County Superior Court. Heard
in the Court of Appeals 25 January 2001.
Rountree & Seagle, L.L.P., by George Rountree, III, J. Harold
Seagle, and Charles S. Baldwin, IV, for plaintiff-appellants.
Crisp, Page & Currin, L.L.P., by Cynthia M. Currin, and
Johnson & Lambeth, by Robert White Johnson, for defendant-
appellee Four County Electric Membership Corporation.
Moore & Van Allen, by Joseph W. Eason and Jonathan D. Sasser,
for defendant-appellee Four County ServicePlus, Inc.
MARTIN, Judge.
Plaintiffs, who are four independent distributors and
suppliers of propane gas in southeastern North Carolina, filed this
action seeking a declaratory judgment and injunctive relief
permanently enjoining defendants from distributing and supplying
propane gas in that geographic area and requiring defendants to
“divest themselves of their interests in” Four County Propane,
L.L.C. (“Propane”). Defendant Four County Electric MembershipCorporation (“Four County”) is a n
on-profit corporation, existing
and operating pursuant to the provisions of Chapter 117 of the
North Carolina General Statutes, which distributes electric power
to customers in Duplin, Sampson, Bladen, Pender, Columbus and
Onslow counties. Defendant Four County ServicePlus, Inc.
(“ServicePlus”) was incorporated in 1997 and is a wholly-owned
subsidiary of Four County. ServicePlus maintains a five member
board of directors, three of whom are both outside directors and
independent of Four County. It has its own officers, bylaws,
accounting books, bank account and minutes. In August 1998,
ServicePlus entered into a joint venture with Jenkins Gas and Oil
Company (“Jenkins”) forming a limited liability company, Propane,
for the purpose of propane gas distribution. Both ServicePlus and
Jenkins had a 50% interest in Propane.
Plaintiffs allege that defendants' conduct in distributing
propane gas in eastern North Carolina is unlawful. Plaintiff
Springer-Eubank Company alleges it lost twenty-two customers to
Propane; the remaining plaintiffs allege that their market value
has decreased as a result of Propane's entry into the market.
Both sides moved for summary judgment. While the motions were
pending, the North Carolina General Assembly enacted Session Law
1999, Sec. 180, which amended G.S. § 117-18.1 and clarified the
right of electric membership cooperatives to engage in activities
related to the sale of propane. In July 1999, as a response to the
amendment, ServicePlus sold its interest in Propane to Four County.
Defendants then moved to dismiss plaintiffs' claims. The trial
court entered an order dismissing plaintiffs' claims for lack ofsubject matter jurisdiction because the issue had been rendered
moot by the passage of Session Law 1999, Sec. 180. Plaintiffs
appeal this order and defendants cross-appeal earlier
determinations by the trial court.
_____________________
Plaintiffs assign error to the trial court's dismissal of
their claims against ServicePlus and Four County. Plaintiffs
contend Four County's activity in the propane gas business exceeds
both its statutory and charter powers and is therefore unlawful.
“'An act by a private . . . corporation is
ultra vires if it
is beyond the purposes or powers expressly or impliedly conferred
upon the corporation by its charter and relevant statutes and
ordinances.'"
Miesch v. Ocean Dunes Homeowners Ass'n, Inc., 120
N.C. App. 559, 563, 464 S.E.2d 64, 67 (1995),
disc. review denied,
342 N.C. 657, 467 S.E.2d 717 (1996) (quoting
Rowe v. Franklin
County, 318 N.C. 344, 348-49, 349 S.E.2d 65, 68-69 (1986)). Four
County's articles of incorporation, filed in December 1937, provide
that it was “granted permission to form an Electric Membership
Corporation” and state:
[t]he corporation shall possess and be
authorized to exercise and enjoy all of the
powers, rights, and privileges granted to or
conferred upon corporations of the character
of this corporation by the laws of the State
of North Carolina or hereinafter in force.
Four County's articles of incorporation, therefore, authorize it to
exercise the powers and fulfill the purposes provided by statute to
electric membership corporations.
The pertinent statute in this case is Chapter 117, Article 2,Section 18.1 of the North Carolina General Statutes.
G.S. § 117-
18.1(b), as amended by Session Law 1999, Sec. 180, provides:
[a]n electric membership corporation may not
form or organize a separate business entity to
engage in activities involving the
distribution, storage or sale of oil, as
defined in G.S. 143-215.77(8), specifically
including liquefied petroleum gases, but may
acquire, hold, dispose of, and operate any
interest in an existing business entity
already engaged in these activities, subject
to the other provisions of this section.
The trial court interpreted this provision as authorizing Four
County's ownership of an interest in Propane. Because the relief
sought by plaintiffs was injunctive, the trial court determined
that the claims became moot upon its enactment.
Alleged errors in statutory interpretation are reviewable
de
novo.
Armstrong v. N.C. State Bd. of Dental Examiners, 129 N.C.
App. 153, 499 S.E.2d 462,
disc. review denied, 348 N.C. 692, 511
S.E.2d 643 (1998),
cert. denied, 525 U.S. 1103, 142 L.Ed.2d 770
(1999). On appeal, plaintiffs raise two issues of statutory
interpretation: (1) whether Four County's activities constitute
“form[ing] or organiz[ing]” a separate business entity or
constitute “acquir[ing] or hold[ing]” an interest in an existing
business entity, and (2) whether the statute applies retroactively
in this instance.
Plaintiffs contend Four County's activity in the propane gas
business is unlawful because such activity constituted the forming
and organizing of a separate business entity, prohibited by the
statute. According to plaintiffs, Four County entered into Propane
as a new joint venture and therefore formed and organized aseparate business. At the root of plaintiffs' argument is the
assumption that this Court should “pierce the corporate veil” and
view ServicePlus' activity in the propane market as that of Four
County. Because we conclude that the statute authorizes Four
County's involvement in the propane industry and applies
retroactively, we need not determine whether ServicePlus' actions
are, in fact, those of Four County.
“Where the language of a statute is clear and unambiguous . .
. the courts must construe the statute using its plain meaning.”
Burgess v. Your House of Raleigh, Inc., 326 N.C. 205, 209, 388
S.E.2d 134, 136 (1990) (citation omitted). G.S. § 117-18.1(b)
provides that an electric membership corporation “may acquire,
hold, dispose of, and operate any interest in an
existing business
entity already engaged in these activities.” (emphasis added).
Propane was formed as a limited liability company in August 1998
for the purpose of distributing propane gas, and had four employees
by October 1998. Thus, applying the clear and unambiguous language
of the statute, Propane was an existing business which distributed
propane gas upon the effective date of the statutory amendment.
Plaintiffs next contend Propane was nevertheless not a
lawfully existing business at the time the amended statute took
effect. They contend Four County was not authorized under the
previous statute to engage in the distribution, storage or sale of
propane gas, and therefore Four County's activities were unlawful.
They argue the amended statute does not act retroactively to make
those prior illegal activities lawful. “It is a well established principal [sic] of law in this State
that a statute is presumed to have prospective effect only and
should not be construed to have a retroactive application unless
such an intent is clearly expressed or arises by necessary
implication from the terms of the legislation.”
Wilson Ford
Tractor, Inc. v. Massey-Ferguson, Inc., 105 N.C. App. 570, 573, 414
S.E.2d 43, 45,
affirmed, 332 N.C. 662, 422 S.E.2d 576 (1992)
(citations omitted). The statute does not expressly state that it
operates retroactively; however, retroactive application of this
statute under the facts of this case arises by implication from the
language of the provision. The statute, as amended, provides: “an
electric membership corporation . . . may acquire,
hold, dispose
of, and operate any interest in an existing business entity already
engaged in these activities. . . .” N.C. Gen. Stat. § 117-18.1(b)
(emphasis added). We believe the General Assembly's inclusion of
the word “hold” is instructive. Although not defined in the
statute, the word “hold” is defined in Black's Law Dictionary 731
(6th ed. 1990), as pertinent here, as “[t]o keep; to retain; to
maintain possession of or authority over.” Use of the word “hold”
in the statute therefore evidences an acknowledgment by the General
Assembly that electric membership corporations may already have
interests in the sale or distribution of propane gas and that it
desired to authorize their retention of such interests. We must
therefore conclude that the General Assembly intended the statute
to have retroactive application in this instance and that it
authorizes Four County's past interest, if any, in Propane. As thetrial court stated in its order, “[i]t would be illogical to hold
that Four County could not continue to hold an interest, which the
amendment now permits it to acquire, just because such interest was
acquired prior to the amendment.” Because we have held that the
statutory amendment has retroactive application under the facts of
this case, it is unnecessary for us to consider or determine
whether or not Four County's activity, if any, in the propane
industry prior to the amendment's enactment was lawful.
In this action, plaintiffs sought only declaratory and
injunctive relief. Having held that the amended statute permits
electric membership corporations to continue present and former
involvement in the sale and distribution of propane products, we
conclude the trial court was correct in determining it no longer
had subject matter jurisdiction because the issue is moot.
Whenever during the course of litigation
it develops that the relief sought has been
granted or that the questions originally in
controversy between the parties are no longer
at issue, the case should be dismissed, for
courts will not entertain an action merely to
determine abstract propositions of law. If
the issues before the court become moot at any
time during the course of the proceedings, the
usual response is to dismiss the action.
Simeon v. Hardin, 339 N.C. 358, 370, 451 S.E.2d 858, 866 (1994)
(citation omitted). In the case before us, the question originally
in controversy between the parties was answered by the General
Assembly's enactment of Session Law 1999, Sec. 180. Accordingly,
the claim against Four County is moot. Because plaintiffs' claim
against ServicePlus is derivative of their claim against Four
County, it is also moot. We therefore affirm the trial court'sdismissal of all claims and need not address defendants' cross-
assignments of error.
Affirmed.
Judges TIMMONS-GOODSON and THOMAS concur.
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