American Aniline Products, Inc. v. City of Lock Haven

Decision Date10 January 1927
Docket Number232
Citation135 A. 726,288 Pa. 420
PartiesAmerican Aniline Products, Inc., Appellant, v. Lock Haven
CourtPennsylvania Supreme Court

Argued November 23, 1926

Appeal, No. 232, Jan. T., 1926, by plaintiff, from decree of C.P. Clinton Co., in equity, Sept. T., 1925, No. 1 dismissing bill in equity, in case of American Aniline Products, Inc., v. City of Lock Haven. Affirmed.

Bill for injunction. Before BAIRD, P.J.

The opinion of the Supreme Court states the facts.

Bill dismissed. Plaintiff appealed.

Error assigned was, inter alia, decree, quoting record.

After a careful consideration, the decree of the court below is affirmed at cost of appellant.

Henry Hipple, with him M. E. Haggerty, for appellant, cited, as to validity of the agreement in question and whether or not it is discriminatory: Barnes Laundry v. Pittsburgh, 266 Pa. 24; Western S. Fund v. Phila., 31 Pa. 175; Central I. & S. Co. v. Harrisburg, 271 Pa. 340; Penn Iron Co. v. Lancaster, 25 Pa.Super. 478; Wheeler v. Phila., 77 Pa. 338; White v Meadville, 177 Pa. 643; Baily v. Phila., 184 Pa. 594.

As to validity of oral agreement with municipality, acted upon and ratified by municipality for a period of eighteen months subsequent thereto: Palmer v. Mfg. Co., 62 Pa.Super. 598; Penn Iron Co. v. Lancaster, 25 Pa.Super. 478.

B. F. Geary, for appellee. -- The principle that all public rates and levies must be uniform, reasonable, of general application and not discriminatory has been established by long lines of decisions, which have been followed down to the present time: Consolidated Ice Co. v. Pittsburgh, 274 Pa. 558; Central I. & S. Co. v. Harrisburg, 271 Pa. 340; Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24; Suburban Water Co. v. Boro., 268 Pa. 243.

A mere fact that water was furnished under the ordinance, and was accepted and paid for by plaintiff, is not sufficient from which to imply an agreement by so furnishing from year to year: Hutchinson Baking Co. v. Marvel, 270 Pa. 378.

The entire want of consideration and lack of mutuality should be sufficient to base a finding that the contract itself is void and of no effect: Hutchinson Baking Co. v. Marvel, 270 Pa. 378.




The City of Lock Haven operates its own water supply and for more than twenty-five years it offered, as an inducement to corporations intending to locate at that place, free water for a period of ten years. It agreed to and did furnish, in accordance with its custom, water to the Stanley Aniline Chemical Works. This company was adjudged a bankrupt, and the property sold to appellant. Prior to the sale, appellant had been solicited to make the purchase, and its officers, with some citizens, appeared before city council for the express purpose of reaching an understanding on the subject of water supply. It was then verbally agreed between appellant and the city council that the agreement theretofore made with the Stanley Company would be carried out and the city would continue to furnish appellant a certain quantity of water free of charge for the balance of the ten years. Relying on this agreement, appellant purchased the plant at the trustee's sale. It operated the works for eighteen months during which time no charge was made for water.

In 1920 the city altered its system of service, placed meters in all establishments and fixed a per thousand gallon rate. A charge, under this schedule, was made against appellant, and as there was an unpaid bill of over $1,000 which it refused to pay, the city, in compliance with its regulations, was about to shut off the water supply. A bill to enjoin the threatened action was filed and dismissed by the court below.

The only question necessary for us to consider is whether the city had the power to make the agreement here set up.

A municipal corporation can function only through the powers granted by the legislature in its charter of incorporation, or those powers incident or related thereto as essential and necessary to carry out the declared objects contained in such express powers. Beyond such grant of authority, a municipality possesses no powers by implication. If there is doubt as to the existence of authority, or whether an act is fairly referable to any of the delegated powers, the doubt must be resolved against its existence. (See Appeal of Whelen, 108 Pa. 162.) Further, the power which the city exercises must not contravene any constitutional limitations, either state or federal.

When a municipal corporation engages in an activity of a business, rather than one of a governmental nature, such as the supply of light or water, which is generally engaged in by individuals or private corporations, it acts as such corporation, and not in its sovereign capacity: Western Saving Society v. Phila., 31 Pa. 185. The relation to the public created by its ordinances are, in such cases, not legislative, but contractual. It was because municipalities were similar to private corporations in supplying water that the controversy arose as to whether or not the Public Service Commission could regulate that service. We held in Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24, where the question was elaborately treated, that municipalities were not included in the Public Service Act because the statute expressly eliminated them, and they could not, therefore, be brought in by implication.

This does not mean that cities engaged in the business of supplying water are not subject to any control. Courts have the power to determine questions relating to service and rates where a complaint is based on "reasonableness of the ordained rate or the justness of their application," or discrimination amounting to confiscation. "It is not competent for the State to enact that the rates [for public utilities] fixed either by the legislature or by a commission or municipality, . . . are conclusive . . .; for such an act would be unconstitutional because it denies to the party affected due process of law, and, by depriving it of the lawful use of its property, it in substance and effect deprives it of the property itself, and of the equal protection of the laws contrary to the express provisions of the 14th Amendment. . . ." Barnes Laundry Case, supra, p. 42. The proper practice (apart from legislative procedure) is by bill in equity to restrain acts contrary to law or to compel the performance of acts required by law.

Lock Haven, under the Act of June 27, 1913, P.L. 568, is a city of the third class. Prior thereto, it was governed by the special Act of March 28, 1870, P.L. 619, and, while a borough, by the Act of May 25, 1840, P.L. 529. By the Act of March 26, 1867, P.L. 577, 578, the municipality was authorized to...

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    ...or private corporations, it acts as such corporation and not in its sovereign capacity, American Aniline Products, Inc., v. Lock Haven (1927) 288 Pa. 420, 135 A. 726, 50 A. L. R. 121; P. U. R. 1927D, 112; N. Y., etc., Power Co. v. City of New York (1927) 221 App. Div. 544, 224 N. Y. S. 564,......
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