Atl. City Water-Works Co. v. Consumers' Water Co.

• Decision Date: 16 October 1888
• Citation: 15 A. 581,44 N.J.E. 427
• Parties: ATLANTIC CITY WATER-WORKS CO. v. CONSUMERS' WATER CO.
• Court: New Jersey Court of Chancery

15 A. 581

44 N.J.E. 427

ATLANTIC CITY WATER-WORKS CO.

v. CONSUMERS' WATER CO.

Court of Chancery of New Jersey.

October 16, 1888.

(Syllabus by the Court.)

On application for an injunction, heard on bill and affidavits and answer and affidavits.

Samuel H. Grey and Theodore Runyon, for complainant. William E. Potter and John P. Stockton, for defendant.

VAN FLEET, V. C. This is an application for a preliminary injunction. The complainant claims an exclusive franchise in the streets of Atlantic City, and asks to be protected against a threatened violation of such right. The defendant admits that it intends to do the acts which the complainant claims will constitute a violation of its right, but denies that the complainant possesses the exclusive franchise which it claims. Whether the court should grant or deny the writ asked, must depend entirely on whether the legal right on which the complainant founds its claim is, as a matter of law, settled or not. For, in the language of Chief Justice BEASLEY, in Coach Co. v. Railroad Co., 29 N. J. Eq. 299, "No rule of equity is better settled than the doctrine that a complainant is not in a position to ask for a preliminary injunction when the right on which he founds his claim is, as a matter of law, unsettled." That case, in its most essential feature, was the exact counterpart of this, for in that, as in this, the complainant rested its right to the protection it asked on a claim that it had an exclusive right in the streets of a city, but, such claim being then without the support of a single judicial decision in its favor in this state, it was held that a preliminary injunction could not be granted without violating one of the cardinal rules regulating the allowance of such writs. The parties are rival water companies. They were both formed under the statute of 1876, and for the purpose of supplying water to the same locality. The certificate of incorporation of each states that it was formed for the purpose of supplying the city of Atlantic City, and the inhabitants thereof, with water. The complainant acquired corporate existence in October, 1880, and the defendant in April, 1888. The statute under which both were organized declares by its first section that any number of persons not less than seven, a majority of whom shall reside in this state, may form a company for the purpose of constructing, maintaining, and operating waterworks in any city, town, or village in this state having a population of not more than 15,000 nor less than 2,000 inhabitants, for the purpose of supplying such city, town, or village, and the inhabitants thereof, with water. The second section prescribes how a corporation may be formed. A certificate is to be made, stating the name adopted by the corporation, the amount of its capital, and certain other facts, and this certificate, "together with the consent in writing of the corporate authorities, if any, of the town or city proposed to be supplied with water," must be filed in the office of the secretary of state. The third section declares that when such certificate and consent shall have been filed, the persons who shall have signed and acknowledged the certificate, and their successors, shall be a body politic and corporate. Corporations formed under this statute are given power to take land by the exercise of the right of eminent domain, and also the right to use the public highways for the purpose of laying their pipes therein. Revision, p. 1365. The complainant and the defendant were both formed in strict accordance with the requirements of this statute. The common council of Atlantic City consented by ordinance to the formation of each. Unless, therefore, it be true, as the complainant contends, that this statute was intended to be private and special in its operation, and to authorize the formation of but a single corporation in any one of the cities, towns, and villages to which it applies, it would seem to be beyond question that both exist by authority of law. Each having been created by the same power, and each having derived its rights from the same source, they must, if they both exist by force of law, each stand as the peer of the other, both in legal right and power. The complainant completed its works in June, 1882, since which time, the defendant admits, the complainant has furnished to Atlantic City and its inhabitants a continuous and sufficient supply of water for all purposes. The complainant has expended in the erection of its works about $400,000. The defendant, when the bill in this case was filed, was not engaged in supplying water, but was making preparation to do so, by putting down pipes, some of which were laid in the same streets where the complainant had laid its pipes. The defendant at the time it filed its answer had expended, in the purchase of an artesian well and making preparation to distribute water, about $60,000. The complainant's certificate of incorporation, together with the consent of the proper authority of Atlantic City, was filed in the office of the secretary of state on the 25th of October, 1880. The next day the city entered into a contract with the complainant, whereby the city covenanted that it would not grant to any other person or corporation the right to lay water-pipes beneath any of the ways of the city for the purpose of supplying water to Atlantic City or the inhabitants thereof. The means by which the complainant acquired the exclusive franchise which it asks to have protected, are set forth in its bill, as follows: "And your orator further shows and charges that your orator has, by express legislative sanction, under the act of the legislature approved April 21, 1876, and the supplements thereto, and by virtue of the consent of the corporate authorities of Atlantic City to the formation of your orator as a corporation for the purpose of supplying water to said city and the inhabitants thereof, and by your orator's acceptance of such consent, and creation of your orator's corporation predicated thereon, and by your orator's establishment of a plant for the purpose of supplying water under said acts of the legislature and said ordinance, and by the supply of water furnished by your orator, pursuant to and in reliance upon said legislative and municipal action, acquired and is invested with an exclusive franchise to supply water to Atlantic City and the inhabitants thereof, and an exclusive right to the streets of said city for its water-mains and conduits for the transmission and distribution of water for the purposes aforesaid." This statement, it will be noticed, does not mention as one of the sources of the complainant's right the city's covenant not to grant to any other person a right to make a like use of the streets with that which the complainant had acquired. This omission is undoubtedly clue to the fact that prior to the filing of the bill in this case the agreement containing that covenant, together with the ordinances authorizing its execution, had been declared by the supreme court to be void, on the ground that the agreement created a debt against the city in excess of the amount limited by law. Read v. Atlantic City, 49 N. J. Law, 558, 9 Atl. Rep. 759. The complainant was a party defendant to that proceeding, and is consequently concluded by the judgment pronounced in it. Since the argument of the application now under consideration the judgment of the supreme court has been affirmed by the court of errors and appeals. Water- Works Co. v. Reed, 50 N. J. Law, —, ante, 10.

The covenant is now a nullity, and must for that reason be laid out of view in the further consideration of the case. But were it still in force, or, rather, was the question as to its validity still undetermined, it would not help the complainant, for it is entirely clear, as I think, that unless the statute of 1876 is private and special, authorizing the formation of but a single corporation in any one of the places to which it applies, it is not within the power of the governing body of any municipality embraced by the statute to prevent or defeat the formation of a second corporation by attempting to grant an exclusive right in the streets to the first, or by covenanting with the first that no like right shall be subsequently granted. A corporation formed under this act does not derive its right to lay its pipes in the public ways from the municipality where it is located, but that right is given by the statute itself. The twelfth section declares that any corporation formed under this statute shall be authorized and empowered to lay its pipes in the public highways, free from all charge to be made by any person "provided that the consent shall be obtained of the corporate authorities, if any there be, of any town through which the same may be laid." Revision p. 1367. If this proviso was intended to apply to cities as well as towns, though it will be observed that it mentions towns only, it is...