Andrews v. National Foundry & Pipe Works

• Decision Date: 11 January 1894
• Docket Number: 92.
• Parties: ANDREWS et al. v. NATIONAL FOUNDRY & PIPE WORKS, Limited.
• Court: U.S. Court of Appeals — Seventh Circuit

61 F. 782

ANDREWS et al. v. NATIONAL FOUNDRY & PIPE WORKS, Limited.

No. 92.

United States Court of Appeals, Seventh Circuit.

January 11, 1894

This appeal is from a preliminary order of injunction granted in connection with an order appointing a receiver of the property and effects of the Oconto Water Company. By the terms of the order, the appellants, Andrews & Whitcomb, with others, were restrained 'from holding, managing, or interfering in any way with the rights, franchises, property rents, profits, bonds, and affairs of said Oconto Water Company and the said water plant in the hands of said receiver, and from asserting any right, title, or interest in the property or the rents, issues, and profits thereof, until the further order of the court. ' When this order was made, Andrews & Whitcomb were in possession of the waterworks, claiming title by purchase at a foreclosure sale under a mortgage made to them by the Oconto Water Company to secure the repayment of money loaned which was used in the construction of the plant. The appellee, at whose instance the receiver w-s appointed and the injunction granted, was a judgment creditor whose execution had been returned unsatisfied. For a detailed statement of the facts, reference is made to the opinion delivered in the circuit court reported in 52 F. 29. The mortgage under which the appellants assert title was executed in pursuance of the contract of September 13, 1890, whereby it was agreed that there should be a transfer in trust to the appellants 'of the Oconto waterworks franchise as issued to said Oconto Water Company;' but, by its own terms, the mortgage or deed of trust was of 'all the rights, privileges, immunities, franchises, and powers, of whatsoever name or nature, which were granted unto the said Oconto Water Company in and by that certain ordinance passed by the common council of said city on the ninth day of July, A.D 1890, being ordinance No. 153,' etc.; following which the mortgage proceeds to say: 'To have and to hold the said rights, privileges, immunities franchises, and powers, and each and all thereof, unto the said Andrews & Whitcomb, and unto their heirs and assigns forever; and the said Oconto Water Company, for itself and its successors, hereby covenants and agrees to and with the said Andrews & Whitcomb that it has good right and lawful authority to sell, assign, transfer, and set over in the manner aforesaid all of said rights, privileges, immunities, franchises, and powers, and that it is the owner and holder of all thereof on the date hereof. ' The first section of the ordinance contains the granting clause, and reads as follows: 'Section 1. That the Oconto Water Company, its successors and assigns, be and are hereby authorized, subject to the limitations herein or by law provided, to construct, own, maintain and operate water-works in the city of Oconto, to lay pipes for the carrying and distributing of water in any of the streets, avenues, alleys, lanes, bridges or public grounds of the city as now or may hereafter be laid out, to acquire and hold as by law authorized any and all real estate easements and water rights necessary to that end and purpose, with all necessary and proper buildings, wells, conduits or other means of obtaining water supply, with all necessary machinery and attachments thereto to supply the city and inhabitants thereof with good and wholesome water, suitable for fire and domestic purposes, and for this purpose may enter upon any street, avenue, alley, lane, stream, bridge or public ground under control of the city, to take up any pavement or sidewalk thereon, and make such excavations as may be necessary for the laying of such pipe and attachments; provided, that such use of such ground be made with the least practical inconvenience to the inhabitants of said city; that such excavations be guarded by barricades wherever necessary and lighted at night, and that such sidewalk, pavement or excavation be replaced by and at the expense of the grantee, its successors or assigns, in as good condition as before, as nearly as practicable, and with the least possible delay. Said grantee and its successors of assigns shall assume all risk of accidents arising from the construction and operation of said water works and shall save the city harmless from all damages therefor. ' The city of Oconto by its charter (chapter 56, Laws Wis. 1882) is given 'the general powers possessed by municipal corporations at common law,' and among other specified powers is authorized 'to enact, enforce, alter, amend and repeal ordinances, rules and by-laws, for the benefit of the trade, commerce and health,' and 'to provide for the erection of water-works for the supply of water to the inhabitants of the city. ' By section 930a of chapter 125 of the Acts of 1879, every city of Wisconsin was authorized 'to permit,' subject to rules and conditions of its own choice, 'the laying of pipes in the streets and alleys and the maintenance and use of such pipes for the purpose of conveying water,' etc.

The Oconto Water Company was incorporated July 8, 1890, under the general law of the state, which required the articles of incorporation to contain a statement 'of the business or purposes' of the organization; and, in compliance with that requirement, the articles stated that this company was formed 'for the purpose of constructing and operating a system of waterworks within the city of Oconto, in Wisconsin, for supplying said city and its inhabitants with water for protection against fire, and for domestic, manufacturing, and other purposes. ' Upon an analysis of the several statutes and the ordinance referred to, the court below reached the conclusion that the water company received its franchises directly from the state and not from the city under the ordinance mentioned, and that the mortgage, and the decree of foreclosure and sale thereunder, limited as they were by their terms to franchises granted by the ordinance, vested the appellants with no interest in the property or franchises of the water company. Upon this point the court said: 'At the threshold of the inquiry, the court is confronted with the question what rights Andrews & Whitcomb acquired under the agreement of September 13, 1890, the instruments executed pursuant thereto, and the foreclosure of the rights thereby acquired. The grant to them was of 'all the rights, privileges, immunities, and powers, of whatever name or nature, which were granted unto the said Oconto Water Company by the ordinance of the city of Oconto.' What rights could the city lawfully grant, and what were granted? The solution of the questions depends upon the powers conferred upon that municipality. The city by its charter is vested with the general powers possessed by municipal corporations at common law, and with certain governmental powers specifically defined in its charter, and with authority to enact and enforce ordinances under the 'general welfare' clause usual in charters of municipal corporations, and specific power is vested touching various matters of municipal concern. Laws Wis. 1882, c. 56. The general power is conferred upon cities to borrow money and to issue negotiable bonds for the purchase or erection of waterworks. Rev.St.Wis. § 942. By chapter 125, Laws 1879 (Sanb. & B.St. § 930a), the common council of every city is authorized to permit, subject to such rules and regulations as may be imposed, the laying of pipes in the streets of the city, and their maintenance and use, for the purpose of conveying water or steam under the surface of the streets. By the general statute entitled 'Of Cities (Laws 1889, c. 326; Sanb. & B.St. c. 40a), cities are authorized to own and operate waterworks, and to legislate on all matters with reference to their construction, operation, management, and protection (section 925N). In the chapter entitled 'Organization of Corporations' (Rev.St.Wis. c. 86), under which the Oconto Water Company confessedly had being, it is enacted that 'any corporation formed for the purpose of constructing and operating water-works in any city or village of this state may make and enter into any contract with such city or village to supply such city or village with water for fire and other purposes upon such terms and conditions as may be agreed upon, and may, by the consent of, and in the manner agreed upon, with the proper authority of such city or village, use any street, alley, lane, park, or public grounds for laying water pipes therein; * * * and any such city or village may, by contract duly executed by the proper authorities, acquire the right to use the water supplied by such corporation, or such portion thereof as it may desire, upon such terms and conditions as may be agreed upon by such corporation and the authorities of such city or village.' Section 1780, as amended. These are all the statutory provisions which I have been able to find touching the question of municipal authority and corporate franchise here presented.

'It may be difficult to enumerate the common-law powers of a municipal corporation. It is certain, however, that the conferring of franchises upon other corporations is not one of them. Under its charter, by a well-known principle of law it can exercise no power not expressly granted or fairly to be implied. it may be that, by virtue of its duty to care for the public health and safety, a city has the power to contract for a supply of water; but it cannot, without express legislative authority, construct, maintain, or operate waterworks. Dill.Mun.Corp. (4th Ed.) § 27. Without like authority it cannot grant exclusive right to use the streets, and a distributing plant located in the streets is essentially a monopoly. The right to use the public highways for gas pipes or...