City and County of Denver v. New York Trust Company No 642 City and County of Denver v. Denver Union Water Company No 643

• Decision Date: 26 May 1913
• Docket Number: Nos. 642 and 643,s. 642 and 643
• Citation: 229 U.S. 123,33 S.Ct. 657,57 L.Ed. 1101
• Parties: CITY AND COUNTY OF DENVER et al., Petitioners, v. NEW YORK TRUST COMPANY et al. NO 642. CITY AND COUNTY OF DENVER et al., Petitioners, v. DENVER UNION WATER COMPANY et al. NO 643
• Court: U.S. Supreme Court

229 U.S. 123

33 S.Ct. 657

57 L.Ed. 1101

CITY AND COUNTY OF DENVER et al., Petitioners,

v NEW YORK TRUST COMPANY et al.

NO 642.

CITY AND COUNTY OF DENVER et al., Petitioners,

v. DENVER UNION WATER COMPANY et al.

NO 643.

Nos. 642 and 643.

Argued October 28 and 29, 1912.

Decided May 26, 1913.

Messrs. William H. Bryant, Charles W. Waterman, William P. Malburn, and

[Argument of Counsel from page 124 intentionally omitted] William A. Jackson for petitioners.

Messrs. Henry McAllister, Jr., Joel F. Vaile, William N. Vaile, and J. Markham Marshall for respondents the New York Trust company.

Messrs. Clayton C. Dorsey and Gerald Hughes for respondents the Denver Union Water Company.

Mr. Justice Van Devanter delivered the opinion of the court:

This suit presents a threefold controversy, to which the New York Trust Company (a New York corporation), the city and county of Denver (a municipal corporation in Colorado), and the Denver Union Water Company (a Colorado corporation), are the principal parties. They are respectively the successors of similar corporations whose acts, together with their own, created the situation out of which the controversy arose, but it will be convenient to treat them as if they were the original participants in all those acts. Although formerly controlled by a charter enacted by the legislature of the state, the city, in pursuance of an amendment of the state Constitution, came in 1904 to be governed by a charter framed and adopted by the people of the city, and over which they possessed an exclusive power of alteration and amendment. Laws 1889, p. 124; Laws 1893, p. 131; Const. art. 20, Rev. Stat. 1908, p. 55.

By the charter from the state legislature (Laws 1889) the city was given power (§ 9) 'to construct or purchase waterworks for the use of the city,' and generally to do whatever was 'needful . . . in order to supply the city with water for fire, irrigating, domestic, and other purposes,' subject to the qualification (§ 12) that 'all franchises or privileges' granted by the city should 'be limited to twenty years from the granting of the same.' April 10, 1890, while that charter was in force, the city, by an ordinance designated as No. 44, and duly accepted by the water company, granted to the latter, its successors and assigns, the right and privilege of laying down, continuing, and maintaining pipes and other apparatus for the conveyance and distribution of water along and through designated streets, alleys, and public places of the city, 'to such extent as the city may lawfully grant the same,' and subject to termination as therein provided. The ordinance contained various provisions regulatory of the right and privilege so granted, the duty of the water company to supply water for private use and for fire and other public purposes, the rates to be charged private users, and the hydrant rentals to be paid by the city. There were also the following sections:

'Sec. 11. At the expiration of the period of twenty years from and after the date of the passage and approval of the ordinance, in case the city shall then elect so to do, the said works may be purchased by the said city, and in case the parties cannot agree, after such election, upon the price to be paid by the city for the waterworks of the said company, its successors and assigns, then their fair cash value shall be determined by arbitration, by five disinterested persons, none of whom shall be residents of Denver, two of them to be chosen by the city, two by the company, and the fifth by the four first chosen, and in case of failure on the part of the company to name arbitrators for the period of thirty days after the city shall have named arbitrators and notified the company so to do, the city may apply to any court having equity jurisdiction in the county in which the city of Denver shall then be situated for the appointment of two persons of the qualifications aforesaid as such arbitrators, and the court may thereupon appoint two persons, who shall act with the same force and effect as if appointed by the company, and the decision of a majority of said board shall be final and binding upon both parties, and upon the payment, or tender of payment, by said city, the said company shall convey to said city all of its property, real or personal, easements, rights and privileges, and thereafter all franchises, rights, and privileges which have been at any time theretofore granted said company its successors, or assigns, and which it may then possess, shall cease and be at an end.

'Sec. 12. At the expiration of the said period of twenty years the said city may, at its election, renew the contract hereby made, by ordinance to that effect, for a like period of twenty years, but at a price for hydrant rental 10 per cent less than mentioned in § 10 hereof, for the period remaining after the ten years after May 1st, 1891 and for successive periods of twenty years, at the price last aforesaid, as often and as long as the city may choose. This section is conditioned, however, upon the full performance by the city of the provisions of § 2 hereof.

'Sec. 19. This ordinance, when the same shall be in writing accepted by the Denver Water Company, becomes a contract between the city of Denver and the said the Denver Water Company, its successors and assigns, and the same shall, as to every provision herein contained, as fully bind and inure to the benefit of the successors and assigns of the said the Denver Water Company as to the said company. And it is expressly understood that by the acceptance of this ordinance the said the Denver Water Company loses no rights in regard to the occupation of the streets, alleys, and public places, or as to the rights of any other person or persons thereto which it now possesses, but the same are hereby recognized and confirmed, and are to be deemed independent of and not merged in any grant in this ordinance elsewhere contained.

'Sec. 20. All mains, pipes, valves, and other apparatus now owned by said the Denver Water Company, and composing its plant, and all such mains, pipes, valves, hydrants, and other apparatus as said the Denver Water Company, its successors or assigns, shall hereafter lay down or set in or upon any of the streets, alleys, or other public places within said city, shall be and remain the sole and absolute property of said the Denver Water Company, its successors and assigns, and the said the Denver Water Company, its successors or assigns, shall forever be considered and entitled to be in possession thereof, except in case of purchase by said city under the terms of this ordinance, or some agreement between said city and said company, its successors or assigns, when all rights of whatsoever nature of said company, its successors or assigns, in and to the subject-matter hereof, shall vest in said city.

'Sec. 21. While the consideration for the respective agreements of the city and the company are upon each side the several agreements of the other, all of the several grants, contracts, and agreements in this ordinance contained are to deemed independent agreements, with the same force and effect as if each section of this ordinance was contained in a separate ordinance by itself.'

By a written contract made in 1870 the city had granted to the water company a sole and exclusive right to lay pipes withing the city, for use in the distribution and sale of water, but that contract had been expressly annulled by another, made in 1874, whereby the city granted to the company a right of like character, expressly limited to a period of seventeen years from May 1 of that year. What was said in §§ 19 and 20 of the ordinance of 1890 about rights and a water plant already possessed by the water company had reference to the rights than held and the plant then operated under the seventeen-year contract, which was within a year of expiration, and to some other rights mentioned in the record and equally without material bearing here.

By an amendment of the state Constitution in 1902,—it being the amendment under which the home-rule charter was framed and adopted two years later,—the city was empowered to construct, purchase, maintain, and operate waterworks, for the use of itself and its inhabitants, and to issue bonds, after an approving vote of the taxpaying electors, in any amount necessary to carry out that power; and this amendment declared that 'no franchise relating to any street, alley, or public place of the said city and county shall be granted except upon the vote of the qualified taxpaying electors.' Article 20, §§ 1 and 4.

October 2, 1907, about two and one-half years before the expiration of the twenty-year period specified in the ordinance of 1890, the city adopted and the water company accepted an ordinance designated as No. 163, providing, first, for an immediate appraisement, by appraisers selected conformably to § 11 of the ordinance of 1890, of the fair cash value of all the property of the water company and its auxiliary companies, then used in supplying the city and its inhabitants with water; second, for the immediate fixing by the appraisers of a schedule of reasonable rates for water for private and public purposes for a further period of twenty years; third, that the decision of any three of the appraisers should be binding as to the questions submitted to them for determination; fourth, for the submission to the electors of the city, at a single special election, of the questions (a) whether the city should purchase the property at the value fixed by such appraisement, and (b) whether a new contract or franchise should be granted to the water company for a further period of twenty years on the basis of the rates fixed by the appraisers; fifth, for carrying into effect either of said propositions if approved by the electors; and, sixth, that if the electors should 'refuse to accept either proposition,' no prejudice should result to the rights of either party...