174 U.S. 739 (1899), 25, San Diego Land and Town Company v. National City

Docket Nº:No. 25
Citation:174 U.S. 739, 19 S.Ct. 804, 43 L.Ed. 1154
Party Name:San Diego Land and Town Company v. National City
Case Date:May 22, 1899
Court:United States Supreme Court
 
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Page 739

174 U.S. 739 (1899)

19 S.Ct. 804, 43 L.Ed. 1154

San Diego Land and Town Company

v.

National City

No. 25

United States Supreme Court

May 22, 1899

Submitted October 11, 1898

APPEAL FROM THE CIRCUIT COURT OF THE UNITED

STATES FOR THE SOUTHERN DISTRICT OF CALIFORNIA

Syllabus

Under the provisions of the Act of the Legislature of California of March 7, 1881, c. 52, making it the official duty of the board of supervisors, town council, board of aldermen or other legislative body of any city

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and county, city or town in the state to annually fix the rates that shall be charged and collected for water furnished, one who furnishes water is not entitled to formal notice as to the precise day upon which the water rates will be fixed, as provision for hearing is made by statute in an appropriate way.

There is no ground in the facts in this case for saying that the appellant did not have or was denied an opportunity to be heard upon the question of rates.

It was competent for the State of California to declare that the use of all water appropriated for sale, rental, or distribution should be a public use, subject to public regulation and control; but this power could not be exercised arbitrarily and without reference to what was just and reasonable between the public and those who appropriated water and supplied it for general use.

The judiciary ought not to interfere with the collection of such rates, established under legislative sanction, unless they are so plainly and palpably unreasonable as to make their enforcement equivalent to the taking of property for public use without such compensation as, under the circumstances, is just both to the owner and the public.

In this case, it is not necessary to decide whether the city ordinance should have expressly allowed the appellant to charge for what is called a water right.

On careful scrutiny of the testimony, this Court is of opinion that no case is made which will authorize a decree declaring that the rates fixed by the defendant's ordinance are such as amount to a taking of property without just compensation, and that the case is not one for judicial interference with the action of the local authorities.

[19 S.Ct. 805] This appeal brings up for review a decree of the Circuit Court of the United States for the Southern district of California dismissing a bill filed in that court by the San Diego Land & Town Company, a Kansas corporation, against the City of National City, a municipal corporation of California, and John G. Routsan and others, trustees of that city and citizens of California. 74 F. 79.

The nature of the cause of action set out in the bill is indicated by the following statement:

The Constitution of California declares:

That

no corporation organized outside the limits of the state shall be allowed to transact business within this state on more favorable conditions than are prescribed by law to similar corporations organized under the laws of this state.

Art. 12, § 15.

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That

the use of all water now appropriated, or that may hereafter be appropriated, for sale, rental or distribution is hereby declared to be a public use, and subject to the regulation and control of the state in the manner to be prescribed by law; provided that the rates or compensation to be collected by any person, company or corporation in this state for the use of water supplied to any city and county, or city or town, or the inhabitants thereof, shall be fixed annually, by the board of supervisors, or city and county, or city or town council, or other governing body of such city and county, or city or town, by ordinance or otherwise, in the manner that other ordinances or legislative acts or resolutions are passed by such body, and shall continue in force for one year, and no longer. Such ordinances or resolutions shall be passed in the month of February of each year, and take effect on the first day of July thereafter. Any board or body failing to pass the necessary ordinances or resolutions fixing water rates, where necessary, within such time, shall be subject to peremptory process to compel such action at the suit of any party interested, and shall be liable to such further processes and penalties as the legislature may prescribe. Any person, company, or corporation collecting water rates in any city and county, or city or town in this state otherwise than as so established shall forfeit the franchises and waterworks of such person, company, or corporation to the city and county or city or town where the same are collected, for the public use.

Art. 14, § 1. And that

the right to collect rates or compensation for the use of water supplied to any county, city and county, or town, or the inhabitants thereof, is a franchise, and cannot be exercised except by authority and in the manner prescribed by law.

Art. 14, § 2.

By an act of the Legislature of California passed March 7, 1881, it was provided:

§ 1. The board of supervisors, town council, board of aldermen, or other legislative body of any city and county, city or town, are hereby authorized and empowered, and it is made their official duty, to annually fix the rates that shall be charged and collected by any person, company, association or

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corporation, for water furnished to any such city and county, or city or town, or the inhabitants thereof. Such rates shall be fixed at a regular or special session of such board or other legislative body held during the month of February of each year, and shall take effect on the first day of July thereafter, and shall continue in force and effect for the term of one year and no longer.

§ 2. The board of supervisors, town council, board of trustees or other legislative body of any county, city or town, are hereby authorized, and it is made their duty at least thirty days prior to the 15th day of January of each year, to require, by ordinance or otherwise, any corporation, company or persons supplying water to such county, city or town, or to the inhabitants thereof, to furnish to such board or other governing body in the month of January of each year, a detailed statement, verified by the oath of the president and secretary of such corporation or company or of such person, as the case may be, showing the name of each water rate payer, his or her place of residence, and the amount paid for water by each of such water payers during the year preceding the date of such statement, and also showing all revenue derived from all sources, and an itemized statement of expenditures made for supplying water during said time.

Stats. of Cal. 1881, p. 54.

By an ordinance of the board of trustees of the defendant city approved February 21, 1895, certain rates of compensation to be collected by persons, companies, or corporations for the use of water supplied to that city or its inhabitants, or to corporations, companies, or persons doing business or using water therein, were fixed for the year beginning July 1, 1895.

For the purposes of that ordinance, the uses of water were divided into four classes -- namely, domestic purposes, public purposes, mechanical and manufacturing purposes, and purposes of irrigation, the rates for each class were prescribed, and it was provided that no person, company, or corporation should charge, collect, or receive water rates in the city, except as thus established.

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[19 S.Ct. 806] The bill in this case questioned the validity of the above ordinance upon the following grounds:

That no notice of the fixing of the water rates was given, nor opportunity presented for a hearing upon the matter of rates; that no provision in the constitution or laws of California, under and by virtue of which the board of trustees assumed to act, required or authorized such notice; that water rates were fixed by the board arbitrarily, without notice or evidence, and were unreasonable and unjust, in that, under them the plaintiff could not realize therefrom, and from all other sources within and outside of the limits of the defendant city, a sufficient sum to pay its ordinary and necessary operating expenses, or any dividends whatever to stockholders, or any interest or profit on its investment; that, so long as the ordinance remained in force the plaintiff would be required by the laws of California to supply water to all consumers within the city at the rates so fixed, which could only be done at a loss to the plaintiff, and that to compel the plaintiff to furnish water at those rates would be a practical confiscation and a taking of its property without due process of law;

The bill also alleged that the defendant city was composed in large part of a territory of farming lands devoted to the raising of fruits and other products, only a small part thereof being occupied by residences or business houses;

That, prior to the adoption of the ordinance above set forth, the plaintiff, in order to meet in part the large outlay it had been compelled to make in and about its water system, had established a rate of one hundred dollars per acre for a perpetual water right for the purposes of irrigation, and required the purchase and payment for such water right before extending its distributing system to lands not yet supplied with water or furnishing such lands with water, which rate was made uniform and applicable alike to all lands to be furnished with water within and outside of the city, and such payment for a water right had ever since been charged as a condition upon which alone water would be supplied to consumers for the purposes of irrigation, and many consumers prior to the

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adoption of the ordinance had purchased such water right and paid therefor;

That the rate...

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