Omaha Electric Light & Power Co. v. City of Omaha

Decision Date20 April 1910
Docket Number3,141.
Citation179 F. 455
PartiesOMAHA ELECTRIC LIGHT & POWER CO. v. CITY OF OMAHA et al. [1]
CourtU.S. Court of Appeals — Eighth Circuit

Westel W. Morsman, for appellant.

Harry E. Burnam and I. J. Dunn, for appellees.

Before SANBORN and ADAMS, Circuit Judges.

ADAMS Circuit Judge.

The electric light company had been carrying on the business which its name indicates in the city of Omaha for some 25 years, when in May, 1908, by a concurrent resolution of the city council, the electrician of the city was directed to disconnect the wires of the company so as to prevent their use for the transmission of electric current for heat or power. To enjoin that threatened action was the purpose of this suit, which was instituted by the company against the city and its electrician, Michaelson. The Circuit Court refused to issue the injunctive order, and on final hearing dismissed the bill. The company appeals.

On December 16, 1884, the city passed an ordinance known as No 826, as follows:

'Be it ordained by the City Council of the City of Omaha:
'Section 1. That the New Omaha-Thomson-Houston Electric Light Company, or assigns, is hereby granted the right of way for erection and maintenance of poles and wires, with all the appurtenances thereto, for the purpose of transacting a general electric light business through, upon and over the streets, alleys and public grounds of the city of Omaha, Nebraska, under such reasonable regulations as may be provided by ordinance. * * * Provided further, that whenever the city council shall, by ordinance, declare the necessity of removing from the public streets and alleys of the city of Omaha the telegraph, telephone or electric poles or wires thereon constructed or existing said company shall, within sixty (60) days from the passage of such ordinance remove all poles and wires from such streets and alleys by it constructed, used or operated.'

At the time this ordinance was passed, the electric light company referred to therein had not been incorporated.

It was, however, understood that it should be and it subsequently was incorporated pursuant to that understanding for a term of 20 years to expire September 26, 1905. The company, being then an incorporated body of limited life tenure, accepted the ordinance as passed, and thereby entered into contract relations with the city. These facts estop both parties from denying that there was a corporation in existence at the time the contract was formally concluded, or that such corporation was one of limited life tenure. The company afterwards proceeded to construct a plant and machinery for generating electric current with a system of poles and wires in the streets and alleys for its transmission and distribution throughout the city and maintained the same continuously until July 29, 1903, when, its corporate life being about to expire by limitation, it sold and transferred its property and franchises to the complainant Omaha Electric Light & Power Company.

The latter named company continued the business of its predecessor without interruption until May, 1908, when the following concurrent resolution was adopted:

'Resolved, by the city council of the city of Omaha, the mayor concurring, that the city electrician be, and he is hereby ordered and directed to disconnect, or cause to be disconnected, on or before July 1st, 1908, all wires leading from the conduits or poles of the Omaha Electric Light & Power Company transmitting electricity to private persons or premises to be used for heat or power; and to take such steps as may be necessary to prevent the said Omaha Electric Light & Power Company from furnishing or transmitting from the conduits or wires, electricity to private persons or premises for heat or power purposes. * * *'

The city was about to carry this resolution into effect when the bill in the case was filed. On the hearing of an application for a temporary restraining order the cause was by agreement submitted on the merits for a final decree.

The complainant claimed that because its grant from the city was absolute in form, containing no limitation upon its duration, it constituted a grant in perpetuity entitling it and its successors or assigns to use the streets forever for the distribution of its electric current. The city claimed (1) that it was without power to grant a perpetual franchise, and (2) that, if it had the power, it did not exercise it, but, at best, conferred upon the company a license to occupy its streets revocable at the will of the city at least after the expiration of the corporate life of the company.

The joint resolution of May, 1908, disclosed the intention on the part of the city to prevent the company from using its streets for transmitting electricity for heat or power purposes only. The claim was that the ordinance in terms granted the right of way for the purpose of transacting 'a general electric light business' only, and that furnishing either heat or power was not comprehended within the terms of the grant. The court below adopted the theory that the ordinance in granting the right to transact 'a general electric light business' necessarily limited the right of the company thereunder to use the streets to carry on a lighting business only, and did not confer upon it the right to use them for any other branch of business. It was argued in opposition, among other things, that the words 'general electric light business' are of such uncertain and ambiguous import as to permit elucidation by the practical construction placed upon them by the parties, and that, as so constructed, they comprehended the business of transmitting electric current for heat and power as well as light.

Many facts called to our attention by learned counsel for complainant indicate that the city allowed the company to invest large sums of money in preparing for this extended service, knew it was about to enter upon it, and that it was continuing in it, and not only did not object, but received pecuniary emoluments therefor. Such being the case, the argument at the bar was extended beyond the limited inquiry made by the trial court. It was addressed to the fundamental questions, whether the city had the power to grant a perpetual franchise, and if so whether it had in fact done so.

As these questions necessarily include the less important one actually decided below, we will confine ourselves to them.

Undoubtedly the ordinance granted to the company either (1) a franchise to use the streets of the city perpetually; (2) a franchise to use them for a reasonable time, the same to be determined in view of all the facts and circumstances; or (3) a license revocable at the will of the city at any time. Which of these is correct? The city contends it cannot be construed as a perpetual franchise because that would violate the prohibition of article 1, Sec. 16, of the Constitution of Nebraska, which ordains that 'no * * * law * * * making any irrevocable grant of special privileges or immunities * * * shall be passed. ' The company contends that the grant of a perpetual franchise which confers no exclusive right to the grantee is not the grant of a special privilege or immunity within the meaning of the Constitution and relies upon Plattsmouth v. Nebraska Telephone Co., 80 Neb. 460, 464, 114 N.W. 588, 14 L.R.A. (N.S.) 654, 127 Am.St.Rep. 779, Omaha Water Co. v. City of Omaha, 77 C.C.A. 267, 272, 147 F. 1, 12 L.R.A. (N.S.) 736, and cases there cited. This contention of the company might be conceded, and the question would not be settled. The Legislature of the state which primarily had the authority to grant the use of streets for other than the ordinary purposes of travel could have exercised its authority by direct legislation or through the instrumentality of the city in which the streets were situated.

In Wright v. Nagle, 101 U.S. 791, 25 L.Ed. 921, the question related to the grant of a franchise to maintain a toll bridge. The Supreme Court there said:...

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