Capital City Gaslight Co. v. City of Des Moines

• Decision Date: 08 January 1896
• Citation: 72 F. 829
• Parties: CAPITAL CITY GASLIGHT CO. v. CITY OF DES MOINES.
• Court: U.S. District Court — Southern District of Iowa

72 F. 829

CAPITAL CITY GASLIGHT CO. v. CITY OF DES MOINES.

United States Circuit Court, S.D. Iowa, Central Division.

January 8, 1896

Cummins & Wright, for plaintiff.

J. K Macomber and William Connor, for defendant.

WOOLSON District Judge.

The plaintiff above named, a citizen of the state of Iowa, is a corporation organized September 10, 1875, under the general statutes of that state, with a corporate term of 50 years providing for the incorporation of 'corporations for pecuniary benefit.' The defendant, a citizen of the said state of Iowa, is a municipal corporation incorporated under the general statutes of that state providing for the incorporation of cities. Under the classification established by said statutes, the defendant is a city of the first class. On March 20, 1876, the defendant city, by its municipal council, duly passed an ordinance whose details need not be set out in full. The second section of such ordinance declared the above-named plaintiff to be 'hereby vested with the right of building and operating gasworks in the city of Des Moines, and of using the streets and alleys of said city as now or hereafter to be laid out, for the purpose of laying gas mains and service pipes to provide said city and its inhabitants with illuminating gas,' etc. In section 4 of said ordinance it is provided that, 'in consideration of the privileges herein granted to said company, said company agrees to bind itself to and with the said city to furnish said city with all the gas the city may use in its public lamps, buildings and offices,' etc., for the term of 10 years. The price is fixed to be charged to the city for said gas for the said term of 10 years. Section 6 provides that the 'privilege and license hereby granted is upon the condition that said company shall,' on or before December 1, 1876, have their works 'in condition to supply gas,' etc. This ordinance also fixes the price of gas to the individual consumers. It further provides for the lessening of price of gas, if, by subsequent discoveries in the process, etc., of manufacturing gas, the cost of such manufacture shall be materially reduced, etc. The gas company duly accepted the provisions of said ordinance, and proceeded to perfect its gas plant, extend its mains, etc. On January 9, 1885, said city, by its said council duly passed an ordinance repealing the ordinance above described, and substituting another in its stead. The latter ordinance, in its general terms, except as to price to be charged for gas, is similar to that which is repealed. Some of its details slightly differ, but, so far as pertains to the matter now on hearing, the ordinances, except as to price of gas, are substantially the same. Price of gas to the city and to the consumer is fixed for 10 years thereafter. Section 7 provides that the privilege and license thereby granted are upon the condition that the company shall at all times, unless temporarily prevented by unavoidable accident, have its works in condition to supply all the gas which may be required by the city, or citizens thereof, etc. The gas company duly accepted the provisions of this ordinance, according to the manner prescribed therein. On February 22, 1892, said city, by the said council, passed another ordinance, by whose terms it was provided that 'every person, firm, or corporation furnishing to the inhabitants of Des Moines illuminating gas * * * shall be entitled to charge and receive therefor ' prices therein named, which prices were much lower than those named in the ordinance of January, 1885. Litigation followed the attempted enforcement of the ordinance of February, 1892; resulting in a decree of the district court in and for Polk county, Iowa, which declared said 1892 ordinance invalid, and enjoined the said city from enforcing the same. On May 16, 1895, the said city, by its council, passed another ordinance (being the ordinance in controversy herein), which was approved by the mayor, and has been duly published. The scope of such ordinance is well stated in its title:

'To fix the price of illuminating gas, and to prescribe the conditions under which persons and corporations dealing in illuminating gas can occupy and use the streets and alleys of the city of Des Moines.'

Section 1 provides--

'That every person, firm, or corporation furnishing to the inhabitants of the city of Des Moines illuminating gas shall be entitled to charge and receive therefor the following prices, and no more, viz.: For illuminating purposes, $1.40; for fuel purposes, $1.10,-- per thousand cubic feet, with a discount of ten cents per thousand cubic feet, if paid on or before the 15th day of the month following that in which the gas is furnished. The above prices are for illuminating gas being an illuminating power of not less than twenty-four candle power; gas having less candle power shall be furnished at a proportionate less rate per candle power.' Other sections fix the price of gas furnished to the city; provide for filing reports of all gas furnished, the furnishing and placing of meters, of service pipes, etc. Section 4 provides:

'Any person, firm, or corporation which shall accept the rights and privileges provided for in this ordinance, and which now has its service pipes in the streets and alleys of the city of Des Moines, may, when necessary, continue to lay its gas pipes and service pipes in the streets and alleys of the city: provided, that they are so laid that they do not obstruct the water and other pipes and sewers laid on the streets and alleys, and other necessary pipes which may be laid: provided, that nothing contained in this ordinance shall be construed to grant any rights or franchises other than the right to continue to furnish the city and its inhabitants with illuminating gas so long as the city may consent thereto: and provided, nothing herein shall abridge the right of the city of Des Moines to make such further additional regulations as it may deem to be necessary to fully protect its citizens.'

Section 5 provides:

'In the event that any person, firm, or corporation shall refuse to furnish gas at the rate herein prescribed, the city reserves the right to declare a forfeiture of all rights granted and exercised by such person, firm, or corporation, and to compel said person, firm, or corporation to vacate the streets and alleys of said city within a reasonable time after the passage of a resolution directing the same.'

The bill herein filed by plaintiff is to restrain the defendant city from enforcing said ordinance of May, 1895, and the present hearing thereon is on plaintiff's application for a temporary injunction. A demurrer to the jurisdiction of this court was presented by the city, and, after extended hearing, was overruled. Thereupon a large mass of testimony was introduced in support of and in opposition to the application for preliminary injunction; such testimony including a large part of the evidence introduced on the trial above referred to, before the district court of Polk county, Iowa, as well as affidavits and testimony here originally presented. Plaintiff's claim is that the ordinance of May, 1895, is invalid because it is in violation of the constitution of the United States, in the following respects: (1) Impairs the obligation of the contract held by said company; (2) takes the private property of said company for public use without just compensation: (3) deprives said company of its property without due process of law; and (4) denies to said company the equal protection of the laws. Counsel upon either side have favored the court with elaborate briefs, and have pressed for decision the questions involved herein with the ability and energy their importance merits. These questions have largely come into public importance in the later years. 'The lamps of precedent,' as has been aptly stated, 'afford us but a dim and glimmering light' in our endeavors to ascertain much of the true way in this investigation. But the general legal questions involved present far less of difficulty in their solution than in their application. Counsel do not so much disagree on what the law is, as to what part of it is applicable herein, and the manner of its application.

That the charter of an incorporation is a contract, was placed beyond controversy in the celebrated Dartmouth College Case, 4 Wheat. 518. Whether a charter is given directly, by act of the legislative body, or whether articles of incorporation or association are adopted under general statutes theretofore enacted by such legislative body, is not material on this point. In Miller v. State, 15 Wall. 478, when speaking of a railway company which was organized under the general statutes of the state of New York providing for incorporation of railroad companies, the supreme court say:

'Undoubtedly, the powers and privileges of the railroad company in this case are the same as they would have been if the company had been incorporated by a special act; and it may be conceded that the charter, when the articles of association were filed in the office of the secretary of the state, became an executed contract,' etc.

So, in Chicago, B. & Q.R. Co. v. Iowa, 94 U.S. 155, Waite, C.J., says:

'The Burlington & Missouri River Railroad Company, the benefit of whose charter the Chicago, Burlington & Quincy Railroad Company now claims, was organized under the general corporation law of Iowa, with power to contract, in reference to its business, the same as private individuals, etc. This is, in substance, its charter, and to that extent it is protected as a contract; for it is now too late to contend that the charter of a corporation is not a contract, within the meaning of the clause of the constitution of the United States which

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