City of Dawson v. Columbia Ave. Saving-Fund, Safe-Deposit, Title & Trust Co.

• Decision Date: 01 May 1900
• Docket Number: 879.
• Citation: 102 F. 200
• Parties: CITY OF DAWSON et al. v. COLUMBIA AVE. SAVING-FUND, SAFE-DEPOSIT, TITLE & TRUST CO.
• Court: U.S. Court of Appeals — Fifth Circuit

102 F. 200

CITY OF DAWSON et al. v. COLUMBIA AVE. SAVING-FUND, SAFE-DEPOSIT, TITLE & TRUST CO.

No. 879.

United States Court of Appeals, Fifth Circuit.

May 1, 1900

The bill in this case was filed by the appellee, a corporation organized under the laws of Pennsylvania, as trustee for the holders of 80 first mortgage bonds, of $500 each, issued by the Dawson Waterworks Company, a Georgia corporation, against the city of Dawson, Ga., and the said Dawson Waterworks Company. The mayor, aldermen, and marshal, all citizens of Georgia, are formally made defendants. It is shown by the record that the city council of the city of Dawson on the 21st day of February, 1890, passed an ordinance by which it granted to R. L. Bennett, of Philadelphia, Pa and his associates, their successors and assigns, who were required to organize a company to be styled the Dawson Waterworks Company, the exclusive right and privilege, for the period of 99 years, of constructing, maintaining, and operating a system of waterworks. In compliance with the requirement of the ordinance, Bennett organized, under the laws of Georgia, a corporation known and designated as the Dawson Waterworks Company. The ordinance of February 21 1890, or so much thereof as it is deemed necessary here to insert, provided as follows:

'Waterworks Contract.

'Sec. 231. The city council of the city of Dawson, Georgia, do hereby grant to R. L. Bennett, of Philadelphia, Pennsylvania, and his associates, their successors and assigns, who are to organize a company to be styled 'The Dawson Waterworks Company,' the exclusive right and privilege for a period of ninety-nine years, of constructing, maintaining and operating a system of waterworks for the purpose of supplying said city and its inhabitants with water for protection against fire, and domestic, sanitary, and other purposes.

'Sec. 232. The said company, for the purpose of constructing, maintaining, operating, extending, and repairing said system of waterworks, shall have the sole and exclusive privilege, and full power, right and authority to lay water pipes and mains along any or all streets and avenues of said city, as the same are now open, or may hereafter be extended, and to that end shall have full right to dig ditches or trenches in the streets of said city of such depth and of such width as may be necessary: provided, that the city shall not be responsible for any damage occasioned thereby, and that the streets shall not be unreasonably obstructed by such work.

'Sec. 233. The said company shall have the right to erect buildings and tanks, lay pipes and erect any other structures, or make any other improvement which may be necessary for its purpose on any or all lands owned or controlled by said city except its public squares.

'Sec. 234. The said company and their successors and assigns shall complete and have in operation within eighteen months from the date of the passage of this ordinance, a complete and thorough system of waterworks, laying four and eight-tenths (4 and 8/10) miles of pipe, size eight, six and four inches in diameter, with a reservoir of not less than forty thousand gallons capacity, and of sufficient height to produce a pressure on the mains such that from any hydrant located on principal streets a stream of water will be projected fifty feet vertically, in still air, through one hundred feet of fire hose with a one-inch nozzle attached. The said company, and their successors and assigns, shall be, and are required, from the completion of their system of waterworks till their charter shall cease, to furnish a sufficient supply of water for the purposes before and hereafter mentioned, unless prevented by unavoidable and providential causes. In such event they shall be allowed a reasonable time to make repairs, and if, after such reasonable time has been allowed, they should still fail to furnish said supply of water, their franchise from that fact be forfeited.

'Sec. 235. The said company shall extend its mains and pipes, enlarge its plant, and generally enlarge its system from time to time to meet increasing demands consequent upon the growth of the city.

'Sec. 236. The city of Dawson, in consideration of said company guarantying to it, for the period of twenty years, and as long thereafter as the said company, its successors and assigns, shall continue to operate waterworks, a free and unrestricted use of its water, in case of fire and for protection against conflagration, and agreeing to establish at convenient places along the line of its mains, fire plugs of approved pattern, not to exceed fifty in all, until the corporate limits of said city are extended and the population of said city increased so that there are five hundred persons living in said extension, after which they shall be increased proportionately if required, and, as an additional fire protection, also furnish water to fill the present public cisterns if needed, the said water to be used exclusively for fire purposes only, and the said water to remain the property of the said company except in case of fire, hereby obligates itself to pay to the said company or to such trust company as the Dawson Waterworks may elect or decide upon as their trustee for their bonds, the sum of two thousand dollars annually for twenty years, in semiannual payments of one thousand dollars each, on the first day of January and July of each year. The first payment to be made on such of said days as occur after the completion of said works as provided in section 234 of this ordinance; and, in case said city shall not have sufficient funds at any of such times to make said payments, or for any cause does not pay said money at time fixed as aforesaid, then in that case warrants shall be issued on the city treasurer, in favor of said company, for the amount due.

'Sec. 237. The council shall, and they are hereby required to, make provision each year for the payment of two thousand dollars as provided in the foregoing section, by levying a tax, sufficient for that purpose, on the taxable property of the city.

'Sec. 238. Said company, its successors and assigns, shall have the right to make reasonable rates and regulations for the government of private consumers in the use of its water; and to charge such rates for its use, as it may from time to time establish: provided, the rate charged per annum shall not exceed those named in the following schedule. * * *

'Sec. 239. That in consideration of the said company agreeing to furnish water to the public municipal buildings, and further agreeing to furnish water to two public fountains of 1/8-inch nozzle each, the city of Dawson hereby obligates itself to remit to said company, its successors and assigns, any and all license fees, taxes, dues and charges which may at any time hereafter be levied or assessed by said city against said company or upon the plant to be used in said waterworks system.

'Sec. 240. That full assent is hereby given to a charter to be granted by the legislature of the state of Georgia, to said R. L. Bennett and associates, their successors and assigns, or to be obtained by them under the general incorporation laws of said state, incorporating them into a body corporate under the title of the Dawson Waterworks Co., and granting to said company the exclusive right to construct, maintain and operate a system of waterworks in said city of Dawson, for the purpose of supplying said city, its inhabitants, citizens, residents, with water for protection against fire and for domestic, sanitary and other useful purposes, and to make such reasonable rates and regulations for the government of private consumers in the price of water, and to charge such rates therefor as the said company may determine upon: provided, the rates do not exceed those established by this ordinance.

'Sec. 241. The provisions of this ordinance shall be mutually binding upon the city of Dawson and R. L. Bennett and associates, and the company to be organized by them in pursuance of the provisions thereof, and it shall have the force and effect of a contract between the respective parties as fully and completely as if it were drawn in that form and signed by the contracting parties.'

For the purpose of obtaining money to construct the waterworks, the waterworks company thereafter issued 80 first mortgage bonds of $500 each, aggregating $40,000, and, to secure their payment, executed to the appellee, as trustee for the holders of the bonds, a mortgage on all its property, franchises, and privileges, and authorized the trustee to collect all amounts to become due by the city of Dawson for water rentals. The city of Dawson, by a resolution of its council duly passed, recognized the right of the appellee, as trustee, 'to demand, receive, and collect from the city of Dawson any and all sums of money that may be now due or that may hereafter become due under the aforesaid contract. ' It also appears that, pursuant to its contract with the city, the waterworks company constructed a system of waterworks, and has up to the present time supplied the city and the inhabitants with water. For the water thus supplied the city has paid the waterworks company the amount due under the contract, to wit, $2,000 per annum, up to the 1st day of January, 1895, when it refused to make further payments upon the ground that the contract was void, and upon the further ground that the waterworks company had failed to supply the quantity of water required of it by the terms of its contract. The city based its claim on the invalidity of the contract upon the decision of the supreme court of Georgia rendered in the case of City of Dawson v. Dawson Waterworks Co., 106 Ga. 696, 32 S.E. 907. Although the city paid, as before stated, the...