263 U.S. 125 (1923), 57, Superior Water, Light & Power Co. v. City of Superior

Docket Nº:No. 57
Citation:263 U.S. 125, 44 S.Ct. 82, 68 L.Ed. 204
Party Name:Superior Water, Light & Power Co. v. City of Superior
Case Date:November 12, 1923
Court:United States Supreme Court
 
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Page 125

263 U.S. 125 (1923)

44 S.Ct. 82, 68 L.Ed. 204

Superior Water, Light & Power Co.

v.

City of Superior

No. 57

United States Supreme Court

Nov. 12, 1923

Argued October 9, 1923

ERROR TO THE SUPREME COURT

OF THE STATE OF WISCONSIN

Syllabus

1. Where a municipality, with express power from the legislature, enters into a contract whereby, in consideration of the construction, maintenance, and operation of a water system by a water company, it grants the company the exclusive right to maintain and operate for a specified period and agrees to extend the term when it expires or to purchase the entire plant at a price to be determined by capitalizing the net earnings of the year preceding the purchase, the rights acquired by the company are rights of property which are not subject, under the Constitution, to be impaired by subsequent legislation attempting to substitute for the company's franchises an "indeterminate permit" to continue in force until the municipality shall elect to purchase upon terms to be fixed by a state commission. P. 135.

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2. A power to alter or repeal incorporation acts, reserved by state constitution, will not be held applicable to property rights of a corporation acquired by contract with a city when not clearly so construed by state decision antedating the contract. Id.

174 Wis. 257; 176 id. 626, reversed.

Error to a judgment of the Supreme Court of Wisconsin for the city in a suit by the Water Company to restrain the city from condemning the company's plant, and praying specific performance of the city's contract to purchase it or extend the company's franchise.

MCREYNOLDS, J., lead opinion

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

Since 1848 the Constitution of Wisconsin has contained the following clause:

Article XI, § 1: Corporations without banking powers or privileges may be formed under general laws, but shall not be created by special act, except for municipal purposes and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws or special acts enacted under the provisions of this section may be altered or repealed by the legislature at any time after their passage.

Chapter 359, Private and Local Laws of Wisconsin of 1866, incorporated plaintiff in error's predecessor, the Superior Water Works Company, and empowered it to make

any agreements, contracts, grants, and leases for the sale, use, and distribution of water as may be agreed upon between said company and any person or persons, associations and

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corporations, and with the Town of Superior, or neighboring towns, or the said company itself may take and use the surplus water for manufacturing or other purposes, which said agreements, contracts, grants, and leases shall be valid and effectual in law.

On October 15, 1887, in order to provide fire protection and secure pure and wholesome water and in consideration of benefits to accrue therefrom, the Village of Superior, a municipal corporation, by ordinance, granted to Superior Water Works Company, its successors and assigns, for a period of 30 years, the privilege of establishing, maintaining, and operating a complete system of waterworks. The ordinance specified the duties and obligations of the parties, and, among other things, provided that the village would abstain for 30 years from granting the right to lay water pipes in its streets to any other party, and that the main source of water should be Superior Bay; but if the village, at its expense, should secure an indefeasible right to lay pipes across Minnesota Point in the state of Minnesota, etc., the company would take water from Lake Superior, and further that,

at the expiration of the said thirty years, should the said village refuse to grant to the said Superior Waterworks Company, its successors or assigns, the right to continue and maintain said system of water works for another term of thirty years upon the said terms and conditions as may exist between the said village or city and the said Superior Waterworks Company at the expiration of the first thirty years in and upon the public grounds and streets of the said village, and to supply the said village and the inhabitants thereof with water on reasonable terms, then and in such case the village shall purchase from said Superior Waterworks Company, its successors or assigns, said system of water works and the property connected therewith at a fair valuation as provided for in § XIII.

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Section XIII provided for arbitrators to determine the actual value of the plant, exclusive of privileges granted by the village, not to exceed what it would cost to construct the same, etc. Section XIV:

Within thirty days after the passage of this ordinance, said Superior Waterworks Company may file with the village clerk its acceptance thereof, duly acknowledged before some authorized officer, and, from and after the filing of said acceptance, this ordinance shall have the effect of and be a contract between the Village of Superior and the Superior Waterworks Company, [44 S.Ct. 83] and shall be the measure of the rights and liabilities of said village as well as of said company, and, in case such acceptance is not so made and filed within thirty days after the passage of this ordinance, the village board shall have the right to repeal the same.

The corporation accepted the ordinance, constructed the plant, and many extensions, spent large sums in connection therewith, and long continued to operate it.

In March, 1889, the territory constituting the Village of Superior was incorporated as the City of Superior. The charter declared that

all franchises heretofore granted, or contracts entered into, by the Village of Superior shall continue and remain in force in accordance with the terms thereof as if the same had been granted or entered into by said City of Superior.

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