City of Des Moines v. Des Moines Waterworks Co.

• Decision Date: 01 October 1895
• Citation: 64 N.W. 269,95 Iowa 348
• Parties: CITY OF DES MOINES v. DES MOINES WATERWORKS CO. DES MOINES WATERWORKS CO. v. CITY OF DES MOINES (TWO CASES).
• Court: Iowa Supreme Court

95 Iowa 348

64 N.W. 269

CITY OF DES MOINES

v.DES MOINES WATERWORKS CO.

DES MOINES WATERWORKS CO.

v.CITY OF DES MOINES (TWO CASES).

Supreme Court of Iowa.

Oct. 1, 1895.

Appeal from district court, Polk county; S. F. Balliet and C. P. Holmes, Judges.

The first of the above-entitled causes is a suit in equity, by which the plaintiff city seeks to enjoin the defendant water company from demanding or receiving from the city a greater sum for furnishing water to the city and its inhabitants than the rate established by a certain ordinance passed by the city council on the 23d day of January, 1893, and to enjoin the said company from ceasing to supply water to the city. The last two of the above-named suits are actions at law to recover of the city for water furnished under an adjustment of water rates made by the city and the water company in the year 1883. All of the actions, when considered together, involve substantially the same questions. The contention of the water company is that, under the ordinances and resolutions of the city, the city council has no power to prescribe by ordinance the rates to be paid for water furnished by the water company. The city maintains that it has such authority, and that the ordinance passed in the month of January, 1893, is a valid exercise of that power. The court, upon a hearing for a temporary injunction in the equity cause, refused to grant the same. A jury was waived in the law actions, and, upon a trial to the court, judgments were rendered for the water company for such sums as would have been due if the controverted ordinance had not been passed. The city appeals in all the cases. Reversed.Hugh Brennen, J. E. Mershon, I. M. Earle, J. K. Macomber, and Wm. H. Baily, for appellant.

Cummins & Wright, for appellee.

ROTHROCK, J.

1. We think it proper to determine the several cases in one opinion. It appears to us that such a consideration of the questions will enable us to give a clearer and more satisfactory understanding of the questions decided than we could attain by a separate consideration of each case. The validity of the ordinance of 1893 is the ultimate question in all the cases. Back of that, all of the powers of cities and towns pertaining to the establishment and maintenance of waterworks have been elaborately discussed, from a statutory and constitutional standpoint, and hundreds of authorities have been cited in hundreds of pages of printed arguments. In addition to these arguments, the causes were ably and elaborately presented orally, so that it will be no fault of counsel if this court should reach a wrong conclusion as to the rights of the parties. It is proper to say at the outset that there are really no controverted facts in any of the cases which we think are at all material. It is true, some oral evidence was introduced, but nothing which raises any conflict upon any question of fact. There were certain rulings on demurrers in the law actions which will receive no separate consideration. In all such controversies as this, a plain statement of the material and conceded facts is necessary to an intelligent solution of the questions of law required to be determined.

2. In the year 1871 a corporation known as the Des Moines Water Company was organized for the purpose of building and operating waterworks in the city of Des Moines. On the 1st day of May of that year, the city council passed an ordinance by which the said company was authorized to build, maintain, and operate waterworks in the city, to supply the said city and its inhabitants with pure and wholesome filtered water, and to use the streets, alleys, and avenues of the city for the purpose of laying the water pipes necessary to convey the water throughout the city. This ordinance provided that said water company should have the exclusive right to construct and operate their works for the term of 40 years. It is not necessary to set out the ordinance at length in this opinion. It is sufficient to say that, in its general provisions, it is similar to ordinances usually adopted in such cases, where an exclusive right has been granted, such as authority to use the streets, alleys, and avenues for the proper purposes, and there is the usual provision for the purchase of the waterworks by the city, at its option. Sections 6 and 7 of said ordinance are as follows:

“Sec. 6. The company shall furnish to the city authorities and to the citizens upon the several streets, avenues and public grounds along which the pipes and water courses may be laid, such quantity of water as they may desire, and the water company shall have the right to charge the citizens therefor for such water as may be supplied them as much and no more than the average price paid therefor in other cities of the United States having efficient waterworks; provided that in case the city council and the water company disagree upon a schedule of prices to be paid by the citizens thereof. then such rates and charges shall be ascertained and determined by five disinterested persons, two of whom shall be chosen by the city council, two by the water company, and the fifth by the four thus chosen, and the rates thus fixed shall remain in force until altered by agreement or arbitration, as aforesaid, and either the city authorities, through the city council, or the water company by its president and directors, may demand an adjustment of said rates at any time after the expiration of one year from the last preceding adjustment; provided, however, that pending any such disagreement or adjustment of rates, the company shall continue to furnish water to the city and citizens thereof, and shall be entitled to receive pay therefor at the rates that may be agreed upon as above provided.

Sec. 7. That the city shall pay to said company for the use of the hydrants and water therefrom as herein before mentioned and specified, the yearly rent of $2,000 per mile for the first five miles of water mains laid, and the sum of $1,500 per mile for the second five miles of water mains so laid, and for such additional mile thereafter laid by the order of the city council, the city shall pay such annual rent per mile as the city and company can agree upon, and in case of disagreement, the same to be fixed by arbitration as provided in section six (6) of this ordinance, the same not to exceed in cost the sum of $1,400 per mile, said rent to be paid semi-annually; that after the expiration of twenty years from this date, at the option of the city, the rates above specified shall cease, and thereafter said city shall pay to said company for all water furnished the average rates paid by other cities of the United States having efficient waterworks operated by private companies; the amount, in case of disagreement, to be settled as provided in section six (6) of this ordinance.”

Soon after this ordinance was passed it was amended by making a correction in the name of the company, and by providing that the compensation for furnishing water to the citizens should be the average price paid in other cities of the United States having efficient waterworks operated by private companies. The only change effected by this amendment was to apply the same rule or method of fixing the price to be paid by the city, for public uses, and to the inhabitants, for private use. These ordinances were accepted by the water company, and the construction of the works was immediately commenced, and soon thereafter they were put in operation. Negotiations were opened with the city for the purpose of fixing rates for private consumers, and on the 5th day of December, 1871, a resolution was passed by the city council prescribing the rates agreed upon between the city and the company. This schedule of rates was accepted in writing by the company, and the water company furnished water, and was paid therefor according to the schedule of rates thus agreed upon, until the year 1880, when the company was reorganized, with a larger capital, and its entire property was sold and conveyed to the new organization, known as the Des Moines Waterworks Company; and the plant has ever since been operated under that name, and has at all times been recognized by the city and by the company as the lawful successor of the original company, in law, in obligation, and in right; and at about that time there was complaint as to the proper performance of its obligations by the water company, and on the 5th day of June, 1883, there was a readjustment of the public rates by the enactment of an ordinance amending the original contract and ordinance. This amendatory ordinance is in these words: “Sec. 7. That the city shall pay to the Des Moines Waterworks Company for the pipes now laid the annual rental of $15,000 payable semi-annually, and in addition thereto, a sum of money annually equal to the amount of all taxes and assessments levied annually, for all purposes, upon all the property of said Des Moines Waterworks Company during the continuance of this contract. Said taxes to be paid annually on the first day of February in each year by the city to the county treasurer, and for the first five miles of extension of mains made from and after the first day of January, 1883, the city shall pay to said Des Moines Waterworks Company the sum of $750 per mile per annum, the rentals payable to the said waterworks company, under this section, shall be paid on the first of January and July of each year, and if there shall be water funds in the city treasury, said payments shall be made monthly. That after the expiration of ten years from January 1, 1883, at the option of either party, the rates above specified shall cease if either party shall so elect; from and after said election said city shall pay to said company for fire protection and all water furnished the average rates paid by other cities in the United States having efficient waterworks operated by private companies, the amount, in case of disagreement,...