City of Eau Claire v. Eau Claire Water Co.

• Citation: 137 Wis. 517,119 N.W. 555
• Parties: CITY OF EAU CLAIRE v. EAU CLAIRE WATER CO. ET AL.
• Decision Date: 26 January 1909
• Court: United States State Supreme Court of Wisconsin

137 Wis. 517

119 N.W. 555

CITY OF EAU CLAIRE

v.EAU CLAIRE WATER CO. ET AL.

Supreme Court of Wisconsin.

Jan. 26, 1909.

Appeal from Circuit Court, Eau Claire County; A. J. Vinje, Judge.

Action by the City of Eau Claire against the Eau Claire Water Company and others. From the judgment, defendants appeal. Affirmed.

The city of Eau Claire, in preparation for establishing municipal waterworks, had acquired certain real estate and other property, together with easements and privileges, including a right to water power for the purpose of operating pumps delivered to it at its water wheels. In 1885 it entered into an ordinance contract with Fairbanks, Morse & Co., whereby a franchise was granted to operate waterworks and charge certain rates to private consumers, the city agreeing to pay a specified hydrant rental. The city turned over to Fairbanks, Morse & Co. its said property, easements, and rights, inclusive of the contract for power, and the latter contracted to build and maintain waterworks under various specifications. That ordinance or contract contained the following:

“This ordinance is passed upon the express condition and reservation that the city of Eau Claire reserve to itself the right to acquire of the said grantees, their heirs and assigns, the said waterworks, and all lands, machinery, pipes, mains, hydrants and appurtenances thereto belonging, and the said grantees, their heirs and assigns, in accepting this ordinance, expressly covenant and agree that they will sell and convey to the city of Eau Claire the said waterworks and all lands, machinery, pipes, mains, hydrants and appurtenances thereto belonging, or in any manner appertaining thereto, at the expiration of five years from the completion of said works and at intervals of five years thereafter at an appraised value for said works to be determined as follows:

Whenever the city shall determine or desire to purchase said works, the mayor thereof shall give written notice to said grantees, their heirs and assigns, of the intention of the city to purchase and demand of the said grantees, their heirs and assigns, to appoint and select two persons to act as arbitrators in fixing and appraising the value of such waterworks without taking into consideration the property and rights leased or hereinbefore granted by the said city to the said grantees, their heirs and assigns, by this ordinance, or any hydrants and connections which may have been located on said main pipes at the expense of the city, which said notice may be served upon any one of the said grantees, their heirs and assigns, or upon the chief officer in charge of the said waterworks at Eau Claire.

Said five persons, or their majority, at a meeting of which all said arbitrators shall have had personal notice, may and shall, as arbitrators, on examination and evidence, fix and terminate the actual value of the said waterworks, exclusive of the property and rights leased or hereinbefore granted by the said city to the said grantees, their heirs and assigns, by the second section of this ordinance, and without reference to the franchise therewith connected, but including all improvements, buildings, betterments, machinery or other appliances placed by the said grantees, their heirs and assigns, upon or connected with the property so leased or granted to them by the said city, and constituting a part of the said waterworks, excepting the hydrants which may have been located on the said main pipes at the expense of said city at the time such appraisal is made, such appraisal not to exceed what it would cost to build and construct such works at that time. And said appraisers shall make their award in writing in duplicate; and shall deliver one duplicate to the said grantees, their heirs and assigns, or to the chief officer in charge of the said waterworks at Eau Claire, and shall file the other with the city clerk of the said city within ten days after the same is made.”

The city was then to have the option to purchase at such appraisal. Waterworks were constructed by Fairbanks, Morse & Co. and assignee corporation, the Eau Claire Waterworks Company, or by its receiver appointed in certain foreclosure proceedings. In 1903, upon receiver's sale, the entire system, with all rights existing, was sold, and about July 10th of that year transferred to the defendant the Eau Claire Water Company, which, at about the same time, executed a mortgage to the defendant Farmers' Loan & Trust Company to secure a permitted issue of $350,000 of bonds, the amount of which issue is not determined by any evidence, except a statement by an officer of the defendant water company that it exceeded $300,000, and that at least $20,000 worth were held by the water company. In 1895 an appraisal was had, upon which the city elected not to purchase. In 1900, at the end of another five-year period, the subject of purchase was submitted to a referendum, and a resolution adopted to call for appraisal under the contract, and a notice of such election and appointment of appraisers was attempted to be given to all interested as assigns of Fairbanks, Morse & Co. by delivery of such notice to the secretary and superintendent of the water company, who resided at Eau Claire and was the only officer of either of the defendant companies in Wisconsin, and who was in active charge and management of the waterworks business and plant. Five arbitrators were appointed in the contract method, two by the city, two by the water company, and a fifth by the circuit judge. They filed an award in which they appraised the property at $253,000. The city made tender of that sum both to the superintendent and secretary of the water company, and to the defendant Farmers' Loan & Trust Company, and demanded conveyance and release of the mortgage, which being refused, this action was commenced to compel specific performance of that part of the ordinance contract agreeing to so convey. Upon the trial a large amount of evidence was offered with reference to the manner of procedure of the board of appraisers. The court found that they proceeded, pursuant to said ordinance and in the manner therein provided, to ascertain and determine the value of said system of waterworks; that they did fix it upon examination and evidence, acting together in all things as a board; that they did not act arbitrarily or in an unreasonable or unlawful manner, did not except or omit to take into consideration any of the items of the property which should have been considered, and fixed the value of said waterworks, as of the date when said award was made, at $253,000. The court also found the fact of demand and tender and that the city had kept a sum of the tender on hand in its treasury in a separate fund until the commencement of this action, when, on March 5, 1907, it paid the same to the clerk of the court, where it still remains; whereupon judgment was rendered requiring the defendants to make proper conveyance and release, and to accept said $253,000, except that the plaintiff should recover from the defendants the net revenues derived from the waterworks in the interval between the time of tender and the judgment, and should also recover one-half of the total fees of the fifth arbitrator paid by it, which, under the contract, were to be paid one-half by each party; from which judgment the defendants appeal.

W. F. Bailey, for appellant Eau Claire Water Co.

Winkler, Flanders, Bottum & Fawsett (F. C. Winkler, of counsel), for appellant Farmers' Loan & Trust Co.

A. C. Larson (James Wickham, of counsel), for respondent.

DODGE, J. (after stating the facts as above).

1. The submission to arbitrators in the present case was simply and solely to decide the one question, viz., what was the value of the entire waterworks plant, excepting those elements thereof derived from the city? The written award is directly responsive to this submission, and declares that the arbitrators have ascertained and fixed the value of such property, excepting only that which the contract directs shall be excepted, at the sum of $253,000. Upon its face, therefore, this award is final and conclusive between the parties as the judgment of any other tribunal having jurisdiction to decide such question, not excepting a court of law or equity. Every presumption is in its favor, and its invalidity must be shown, by any one asserting it, by clear and satisfactory evidence. Wood v. Trevelen, 74 Wis. 577, 43 N. W. 488;Consolidated Water Power Co. v. Nash, 109 Wis. 490, 503, 85 N. W. 485;McCord v. Flynn, 111 Wis. 78, 89, 86 N. W. 668;Jacobs v. Ins. Co., 123 Wis. 608, 613, 101 N. W. 1090;White Star Mining Co. v. Hultberg, 220 Ill. 578, 77 N. E. 327. All questions of judgment within the submission were concluded by the decision of the arbitrators. They were not subject to appeal or review by the court, and yet the appellants introduced before the court evidence taken by the arbitrators, and also additional evidence, tending to show a different and higher value. It was sought to have reviewed the question whether conflicting evidence before the board on various questions constituted a preponderance for or against certain decisions or opinions which one or another of the arbitrators expressed upon detail elements of value, upon which, of course, the board only passed incidentally in reaching its final decision on the one question submitted to it as above stated. While the trial court allowed such testimony to be put in, there is, of course, no necessary presumption that he gave weight to it in reaching his decision, and we comment upon it merely to indicate the apparently erroneous view of the grounds on which and the manner in which a solemn award upon arbitration can be attacked which was entertained, or at least urged, by appellants' attorneys. The question whether, in the light of all the evidence before it, the board rendered a wrong award fraudulently, arbitrarily, and by mistake, or even in...