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From this decree the present appeal has right of competition; and it was further been prosecuted.
held, as incidental to that controversy, in Messrs. Hannis Taylor and George Ander- passing upon an issue made in the suit, son for appellant.
that the Vicksburg Waterworks Company Messrs. J. Hirsh and Murray F. Smith for had succeeded to all the right, title, and in
terest of the original contracting party, and appellee.
that the contract, having been made prior to Mr. Justice Day delivered the opinion of the Constitution of 1890, was not controlled the court:
by its provisions. The right to recover for It is contended on behalf of the appellee rentals was also directly involved, as the that the original decree of May 18, 1904, city had denied its liability therefor, and finally disposed of all the issues between the an accounting was prayed in the original parties, including the right of the city to | bill, and the decree specifically disposed of make rates for water consumption to pri- | that issue. It is true that in the answer vate consumers under the authority of the it was averred that the alleged contract imact of March 19, 1904, and that the present posed upon the inhabitants of Vicksburg an controversy is foreclosed by the decree in onerous and extortionate burden; “that no the former case.
such contract would now be made with the While it is true that the decree is very Vicksburg Waterworks Company or any broad, we cannot agree to the contention of other company; that the rates authorized the appellee that it finally disposed of the in said ordinance far exceeded the rates matter now in controversy. When the case charged in other cities under like circumwas first here, reported in 185 U. S. 65, 46 stances, and, in general terms,” the city deL. ed. 808, 22 Sup. Ct. Rep. 585, while there nied that it was bound to the complainant are expressions in the opinion affirming the by contract; "that, for the many reasons validity of the contract and the authority therein set forth, no liability existed on the of the city to make it, the issue really de- part of the city by reason of the contract.” cided was as to the jurisdiction of the court An examination of the record in the foras a Federal court, which was sustained, mer case shows that the only testimony and the cause remanded for further proceed taken in the case, as to the reasonableness ings. Upon the second hearing of the case, of the rates charged to private consumers, and the appeal here, the opinion shows that was on behalf of the company, and tended the adjudication was regarded as settling to show that the rates charged were reasonthe right of the Vicksburg Waterworks able, and if it could be said that the pleadCompany, under the contract, to carry on ings put in issue the reasonableness of the its business without the competition of rates then charged, was the right of the city works to be built by the city itself, as the to regulate rates under a subsequent law city had lawfully excluded itself from the of the state necessarily involved and confrom enforcing the ordinances passed by Third. That the restraining order heretothem fixing the water rates and prescribing fore granted in this cause on the 11th day rules and regulations of the Vicksburg Wa- of January, 1905, be and the same is hereterworks Company, and that the Vicksburg | by made permanent. Waterworks Company shall not be permit- Fourth. That the said defendant be, and ted to cut off patrons' water, providing pa- is hereby, enjoined from in any manner introns pay the rates fixed in said ordinances. terfering with the complainant's contract
Second. That said defendant be, and is rights under its said contract with the city hereby, enjoined from enforcing the said of Vicksburg, entered into between Samuel three ordinances described in said bill, to R. Bullock & Company and said city, under wit: An ordinance entitled "An Ordinance the ordinance of November 19th, 1886. to Fix and Prescribe Maximum Rates and Fifth. That the defendant be, and is hereCharges for Water Supplied to the Inhabit- by, enjoined from interfering with the rules ants of the City of Vicksburg, Whether and regulations of complainant, the VicksMeasured by Meters, and for Other Pur- burg Waterworks Company, and the water poses,” approved the 20th of April, 1904, an rates for the inhabitants of the city of ordinance entitled “An Ordinance to Fix and Vicksburg, now in force, established by the Prescribe the Maximum Flat Rates and Vicksburg Waterworks Company. Charges for the Supply of Water to Con- Sixt'). That said defendant be, and is sumers in the City of Vicksburg, and for hereby, enjoined from interfering with the Other Purposes," approved the 20th day of water rates known as the flat rates, now April, 1904; and an ordinance entitled “An in force, established by the Vicksburg WaOrdinance to Require Waterworks, Gas, and terworks Company. Electric Companies to Present Bills before It is further ordered, adjudged, and deCharging Damages for a Failure to Pay creed that the defendant pay all costs of Them When Due," approved the 8th day of this cause. December, 1903, so far as the latter relates
Finally ordered, adjudged, and decreed to complainant.
this, the 3d day of Jan. A. D. 1906.
cluded? The determination of issues as to Ct. Rep. 77; New Orleans Waterworks Co. the right of injunction against the city v. Rivers, 115 U. S. 674, 29 L. ed. 525, 6 building its own works, or denying liability Sup. Ct. Rep. 273; Freeport Water Co. v. or refusing to pay the rentals contracted Freeport, 180 U. S. 587–593, 45 L. ed. 679– for, and a finding that existing rates were 686, 21 Sup. Ct. Rep. 493. reasonable, did not necessarily conclude a In the latter case this court, following the controversy which might thereafter arise, construction of the supreme court of Illinois, as to the right of the city to fix rates when held that where a city council was authorthe legislature of Mississippi should pass ized to contract with any person or corpoa law for that purpose, giving the city the ration to construct and maintain waterworks right to regulate the same. It is to be re- at such a rate as may be fixed by ordinance membered that when the bill was filed in for a period not exceeding thirty years, the the original case no such law had been words "fixed by ordinance” being capable passed; that when the act of March, 1904, of application so as to make one ordinance went into effect the case was nearly ready endure for the period of thirty years, for for final decree, and the city passed its or- which the contract was made, or to give the dinances long after the beginning of the right to pass ordinances from time to time suit, and shortly before that decree. No regulating rates, the latter construction was supplemental bill was filed, but after the adopted. decree, in January, 1905, the present inde- In the cases generally in this court it will pendent suit was brought, with a view to be found that, in determining the matter of enjoining the proposed action of the city contract, the local decisions have been given in enforcing ordinances regulating the rates much weight and, ordinarily, followed. As by charges other than those contained in this is a Mississippi contract, and the the contract.
power was exercised under the authority of Upon the appeal, the question seems to an act of the legislature of that state, we have been argued by the city as though naturally look to the decisions of the courts made in the case, though the brief on be- of that state, particularly to such as had half of the appellee contends that the act given construction to similar charters at the of 1904 was not involved. But a decree time the contract was made, with a view to must be read in the light of the issues in determining the extent of the power convolved in the pleadings and the relief ferred. sought, and we are of opinion that the While the case now before us was pending, matters now litigated were not involved in Griffith and others, citizens of Vicksburg, or disposed of in the former case, and that, filed a bill, setting forth the city ordinances when properly construed, the decree does of 1903 and 1904, and asking to have them not finally dispose of the right of the city established and maintained and an injuncto regulate rates under a law passed after tion granted against enforcing charges for the contract went into effect, and long after higher rates, and, upon appeal, the case the bill was filed in the case.
went to the supreme court of Mississippi, Holding, then, that the plea of res and is reported in 40 So. 1011. In that judicata must be denied, had the city au- the supreme court of Mississippi thority, under the charter of Vicksburg, held that the municipal corporation reppassed in 1886, to make a binding contract, resented the citizens and taxpayers of fixing maximum rates for water supply to the city, and that, where a right had been private consumers for a definite period, adjudged as between the company and the thirty years in the present case? The city, it would conclude private citizens; and grant of legislative power upon its face is while the court declined to pass directly unrestricted, and authorizes the city "to upon the question here involved, because provide for the erection and maintenance of of its pendency in the Federal courts, it a system of waterworks to supply said city used this pertinent and suggestive language: with water, and to that end to contract "We decline to follow the decision in with a party or parties who shall build and Griffin v. Goldsboro Water Co. 122 N. C. 206, operate waterworks."
41 L.R.A. 240, 30 S. E. 319, in holding that That a state may, in matters of proprie- while a water company which accepts an tary rights, exclude itself from the right to ordinance by which a maximum rate is fixed make regulations of this kind, or authorize is bound, and cannot exceed the same bemunicipal corporations to do so, when the cause of its contract, yet such rates are not power is clearly conferred, has been too fre-binding upon consumers, who have a right quently declared to admit of doubt. Los to litigate against unreasonable charges. Angeles v. Los Angeles City Water Co. 177 This holding, it seems to us, practically U. S. 558, 44 L. ed. 886, 20 Sup. Ct. Rep. denies the power of a company, under a con736; Walla Walla v. Walla Walla Water tract embodied in its charter giving the Co. 172 U. S. 1-7, 43 L. ed. 341-344, 19 Sup.'power, so to fix a rate as to bind a private
consumer at all. It opens a never-ending "The power to contract is an essential atand limitless field of litigation. It is well tribute of sovereignty and is of prime imsettled that the courts cannot fix a rate; portance. Its exercise has been productive and if, proceeding duly under statutes en- of incalculable benefits to society, however acted for that purpose, the municipality great may be the evils incident to its injucannot do so, or authorize the company by dicious employment. It cannot be denied contract to do so, and thereby bind the merely because of its liability to abuse. citizens, then there is no authority by which The power to contract implies the power to it can be done.
make a valid contract.
The right "It is not a matter open to serious dis- to grant charters includes the right to grant cussion in this state, since the decision by such as will be upheld. Conferring power on this court in the case of Stone v. Yazoo & the grantee of the franchise to fix rates of M. Valley R. Co. 62 Miss. 607, 52 Am. Rep. compensation at discretion, or within pre193, decided at the April term, 1885, and scribed limits fixed by the charter, has been before the act of 1886 (Laws 1886, p. 694, the common practice of the legislatures of chap. 358), amending the charter of Vicks- the states of the United States from an burg, was enacted, that a quasi-public cor- early period of their history. The right of poration may have a contract right to fix the corporators to exercise the powers conrates within a certain designated maximum, ferred by the act of incorporation, whether and that the rates so fixed are matter of to fix rates themselves or to take those fixed contract, guaranteed by the contract clauses by their charter, and to rest securely on its of the United States Constitution. In that provisions in this respect, has hitherto been decision the court was manifestly directing generally regarded as indisputable. it observations to the binding character of "A grant in general terms of authority the rates as between the company and the to fix rates is not a renunciation of the shippers; otherwise, the decision was prac- right of legislative control so as to secure tically meaningless and without point. The reasonable rates. Such a grant evinces mere. philosophy of the situation is simple. Grant- | ly a purpose to confer power to exact coming that the company is lawfully invested pensation which shall be just and reasonable. with authority to fix its rate, then such rate being so fixed by it within the maximum "If the grant can be interpreted without limit allowed by the charter, or allowed by ascribing to the legislature an intent to the duly authorized ordinance, is by the part with any power, it will be done. Only courts presumed to be reasonable; and it is what is plainly parted with is gone. Fixing not permissible for each individual citizen, rates in a charter is a specification of what in every controversy that may arise, to have is reasonable,--an exclusion of tacit or imthat question, once passed upon by the law- plied conditions on the subject. It is an esfully constituted public authorities charged sential part of the contract of incorporation, with power in the premises, reopened and the most important condition of its existlitigated anew.”
ence, the inducing cause of its acceptance." The case to which the court refers in the We are referred to other cases in Missispreceding extract, Stone v. Yazoo & M. Val- sippi which deal directly with the extent of ley R. Co. supra, as having been decided the power conferred upon municipal corpoprior to the enactment of the charter of rations in charters in general terms, some Vicksburg under which the contract in ques- of which we may notice. tion was made, did not directly involve the In Light, Heat, & Water Co. v. Jackson, question of authorizing municipal corpora- 73 Miss. 598, 19 So. 771, the city of Jacktions to make such contracts, but did main- son had filed its bill, undertaking to annul tain, after an exhaustive consideration of a contract binding the city to pay for water the subject, that a grant to a railroad com- for a period of twenty years at a price and pany, in the charter, of a right to fix rates rate fixed in a certain ordinance, on the within maximum limits named, was a con- ground that it was ultra vires and without tract, within the meaning of the Federal authority from the legislature. In that and state Constitutions, which could not be case the authority conferred was in general violated by a subsequent attempt to pre- terms, authorizing the city to contract with scribe different rates, and held that the rail- any reliable corporation, association, or inroad company's grant was not a renunci dividual for supplying the city of Jackson ation of the legislative power to secure rea- with water and electric or gas lights from sonable rates, but rather an exercise of that 1 year to year. Under authority of this genpower, and, when rights were thus con- eral power the city undertook to make a ferred, to that extent there was a renuncia-contract with the Light, Heat, & Power tion of the right of the state to control the Company of Jackson, contracting for the subject. In the course of the discussion the furnishing of water to the public at certain learned judge, speaking for the court, said: 'annual rentals for a period of twenty years,
and fixing a certain rate for annual rentals ances, the profit of which was dependent to private consumers. The supreme court upon the permanency of the enterprise, and of Mississippi dealt directly with the ques- the cotemporaneous legislation, from which tion: Was the contract made between the the intent to authorize a contract of as city and company, and set forth in the bill, great duration as twenty-five years is deinvalid for want of power in the city to ducible.” contract for a series of years? And the Again, in the case of Reid v. Trowbridge, court said:
78 Miss. 542, 29 So. 167, the mayor and al"In view of the nature and character of dermen of the city of Vicksburg had been
" the subject matter of the contract which the authorized, in general terms, to provide for
board of mayor and aldermen of the city the lighting of said city by electric light or of Jackson was authorized to make by the other method. Under this general power the 3d section of the act of February 29th, 1888, city made a contract with the Vicksburg we think the contract entered into with the Railroad, Power, & Manufacturing Company appellant was within the delegation of pow. for lighting the streets by electricity, at a er, so far as the time of its duration is in- given rental per annum, for 125 lights, for volved. . . . We know that the ma- a period of ten years. The taxpayers of chinery, mains, and appliances required for the city of Vicksburg filed a bill to enjoin supplying the city with water are costly to the carrying out of the contract, alleging begin with, and are relatively of little value that the city had no authority to make such if removed when once located. Permanency a contract without submitting it to a vote of the plant is essential to the realization of the people, under the act of March, 1888, of any profit in the enterprise, and in cities passed subsequent to the charter, requiring having no greater population than that of submission to a vote of the people, that the Jackson the use of water for municipal pur contract was unreasonable and oppressive, poses would probably be a prerequisite to and that the council had acted arbitrarily secure the investment of the capital neces- and without exercising discretion in awardsary to the construction of the plant. The ing it. The court held that the act of 1888 words from 'year to year relied upon by had no application to the case, and, speaking the appellee as limiting the power of the of the general terms of the charter authorofficers of the city to the making of the izing a contract for lighting purposes, said: annual contracts, derived much of their sig- "The intent of the legislature to confer nificance from the subject and nature of the power without restriction appears to us the thing contracted for, the character of to be too plain, from the collocation and orthe body on which the power is conferred, der and sequence of the sections and article the end to the attainment of which the of the charter act, to admit of obscuration power is to be exercised, and the extent to by learned argument about original power. which such powers for such purposes are The very last legislative action on the subusually conferred.
ject, that in the municipal charter of the "A few days after the act was passed, a Code of 1892, shows that the lawmakers commission was appointed by the legislature thought the power to be one to be conferred to contract for water for the state institu- or prohibited, because it expressly confers tions, situated in and near the city, for the it on cities and towns and prohibits its exterm of twenty-five years. In this act pow. ercise by villages. er was conferred upon all municipalities to enter into contracts for a term not exceeding "It is claimed now that the last clause of twenty-five years, for supplies of water, on § 1 of the first quoted of the above acts (that a two-thirds affirmative vote of the qualified approved March 10, 1888) applied to and electors, but the act provided that it should modified the charter of the city of Vicksnot apply to municipalities whose charters burg so as to make the contract here in already conferred the power of making con controversy void because not submitted to tracts for water."
vote. In order to this result it is claimed “A contract made by the authorities of that, in the charter of Vicksburg, it is not a municipality with a water company for otherwise provided,' .. because the supplying the city with water for a period charter expressly confers the power, without of twenty years is within the power con- restriction, on the municipal board at any ferred on them by an act of the legislature 'regular or special meeting.' Besides, in conauthorizing them to contract with any re- struing the section of the act secondly above liable corporation for supplying the city quoted, this court expressly so held in the with water from year to year, in view of case of Light, Heat, & Water Co. v. Jackson, the purpose of the delegation of power, the 73 Miss. 644, 19 So. 771. If the precise point nature of the body on which it was con- was not made, the omission is quite signififerred, the subject matter of the contract, cant of the opinion of the eminent counsel the large outlay for machinery and appli- ' for appellee in that case that there was
nothing in it. Aside from this, the question pany to charge the rates fixed thereby, in was at the very root of the cause, and was view of the allegations of the answer, that considered and decided, and it is the exact the rates charged by the company exceeded question in the case at bar, except that this those named in § 13 of the ordinance of case is somewhat stronger in favor of the 1886. . power than the case decided.
The decree should be modified, so as to “By § 3 of the act of February 29, 1888, enjoin interference on the part of the city the Jackson board was 'hereby authorized during the term of this contract, with the and empowered to contract, etc., while, by right of the company to charge rates not in the Vicksburg charter act, the board was excess of 50 cents a thousand gallons to priauthorized to so contract ‘at any regular vate consumers, as set forth in the ordior special meeting. We presume that no nance. charter then existent 'otherwise provided' With this modification, the decree will b3 by an express prohibition of electric lighting affirmed. without vote. The grant of the power without restriction is to 'otherwise provide.'”
And the court held that, under this power, IOWA RAILROAD LAND COMPANY, Piff. the municipal authorities had the right to
in Err., make the contract for electric lights without advertising for bids, and without sub
CLAUDE F. BLUMER. mitting the matter to a popular vote, and the power was not taken away by the act of Adverse possession-lands within congres
sional land grant. March, 1888. In this case the learned judge, speaking
1. A railway company which has com
plied with all the terms and conditions of for the court, further said:
a congressional land grant, as fixed by Con"Within its charter powers, the board has gress and by the act of the state legislature a discretion independent of courts, and no after the acceptance of the grant by the exercise of it will be held void for unreason- state, has such a title to lands within the ableness, unless so gross as to strongly sug- place limits of the grant that the statute of gest fraud or corruption. The people elect limitations will run against it in favor of their council, and the courts are not chosen one who occupies the premises by adverse members of it."
possession under color of title, notwithIn the light of these decisions, and others standing the want of final certification and might be cited, we reach the conclusion that, Adverse possession-color of title-good
under a broad grant of power, conferring, faith. without restriction or limitation, upon the 2. Knowledge of the rejection of his city of Vicksburg, the right to make a con- first timber culture entry of land within the tract for a supply of water, it was within place limits of a railway land grant does the right of the city council, in the exercise not require the imputation of bad faith to of this power, to make a binding contract, the entryman in going into possession on fixing a maximum rate at which water the advice of counsel under a second entry, should be supplied to the inhabitants of the knowledge, so as to prevent his open, no
afterwards summarily canceled without his city for a limited term of years; and, in the torious, and continuous possession from absence of a showing of unreasonableness ripening into full title as against the rail"so gross," as the court of Mississippi has way company if the latter fails to assert its said, “as to strongly suggest fraud or corrup- rights within the period prescribed by the tion,” this action of the council is binding, statute of limitations. and for the time limited puts the right beyond legislative or municipal alteration to
[No. 207.] the prejudice of the other contracting party. Argued and submitted February 26, 27, While we, therefore, reach the conclusion
1907. Decided May 27, 1907. that the former case did not adjudicate the matter, we think the contract in this re
INSLERROR to the Supreme Court of the spect was within the power of the council, State of to and cannot be violated consistently with the which affirmed a decree of the District contract rights of the company by the sub- Court of Woodbury County, in that, state, sequent ordinances of the city.
quieting title as against a railroad comIn this case the circuit court rendered a pany to land within the place limits of a final decree practically upon the bill and congressional land grant. Affirmed.
No testimony was taken, and all See same case below, 129 Iowa, 32, 105 that was before the court was the bill, an- N. W. 342. swer, and exhibits. We think the decree gües too far in enjoining the city from inter- Statement by Mr. Justice Day: fering with the contract right of the com- This is a writ of error to the supreme
27 S. C.-49.