City of Joseph v. Joseph Waterworks Co.

• Decision Date: 06 December 1910
• Citation: 111 P. 864,57 Or. 586
• Parties: CITY OF JOSEPH v. JOSEPH WATERWORKS CO.
• Court: Oregon Supreme Court

111 P. 864

57 Or. 586

CITY OF JOSEPH v. JOSEPH WATERWORKS CO.

Supreme Court of Oregon

December 6, 1910

Appeal from Circuit Court, Wallowa County; J.W. Knowles, Judge.

Suit by the City of Joseph against the Joseph Waterworks Company. From a judgment for defendant, plaintiff appeals. Reversed.

The town of Joseph, afterward reincorporated as the "City of Joseph," was incorporated by act of Legislature in the year 1887 (Sp. Laws 1887, p. 181), and on March 23, 1894, the city of Joseph adopted an ordinance granting to defendant, a private corporation, the right of way through the streets of the town to lay water mains; section 1 thereof providing "That the Joseph Waterworks Company and its successors and assigns are hereby granted the exclusive right and privilege to lay water mains and all necessary service pipes in all streets and alleys of said town of Joseph, necessary to supply said town and its inhabitants with water." Section 4 thereof provides: "And further to encourage the enterprise of said water system of the said town of Joseph, we, the common council, do hereby agree to grant the exclusive right to said company for a term of fifteen years commencing January 1, 1894." The ordinance contains other provisions as to the time and manner of construction for city hydrants, water rates, etc. The defendant company constructed the water system and has continuously operated the same ever since, and, on April 12, 1910, was proceeding to extend its water mains in streets not before supplied with water, whereupon plaintiff commenced this suit to enjoin it from so doing. A preliminary injunction was granted by the judge of the circuit court. Defendant answered the complaint admitting that it is extending its water mains, as alleged and pleading the ordinance above referred to and the construction of the water plant, at great expense, viz $10,000, by authority thereof; and that the acts complained of are authorized thereby. As a second defense it alleges the same facts, and, further, that the plaintiff threatens to interfere with and stop defendant from extending its water system and to prevent it from furnishing water to the city or its inhabitants, and threatens to construct, install, and operate, at the expense of the taxpayers, a plant to supply the city and its inhabitants with water, and thereby render valueless the plant of defendant, in violation of its agreement. Plaintiff demurred to the new matter of the answer, which demurrer was overruled and decree rendered thereon dissolving the injunction and dismissing the suit, from which decree plaintiff appeals.

D.W. Sheahan, for appellant.

T.H. Crawford, for respondent.

EAKIN J. (after stating the facts as above).

It is first contended by plaintiff that the city had no power or authority to grant the franchise for the reason that a municipality can only exercise such powers as are either expressly granted or are necessarily implied by its charter. This may be conceded, but one of those powers, necessarily implied by the general welfare clauses of the charter, is to supply the city with water. The authorities are quite uniform to this effect. 30 A. & E. Ency. 406; 20 A. & E. Ency. 1147; 28 Cyc. 636, 950; City of Indianapolis v. Indianapolis Gaslight & Coke Co., 66 Ind. 396; Mayor and Council of Rome v. Cabot, 28 Ga. 50; Brenham v. Water Co., 67 Tex. 542, 4 S.W. 143. However, if there were any doubt upon that question, it is put at rest by section 2711, B. & C. Comp., being a part of the statute providing for the organization of cities and towns, enacted in 1893 (Laws 1893, p. 119), which expressly grants such power, and section 2692, B. & C. Comp., makes the provisions of the act applicable to charters theretofore granted. Warren v. Crosby, 24 Or. 558, 34 P. 661.

Neither is there merit in the contention that the contract created an indebtedness in excess of the charter limitation. A municipal corporation may contract for a future supply of water necessary for the city's needs and stipulate for the payment of an annual rental, as the water is furnished, notwithstanding the aggregate of such payments, during the life of the contract, may exceed the amount limited by the charter. "There is a distinction between a debt and a contract for a future indebtedness to be incurred, provided the contracting party perform the agreement out of which the debt may arise." Walla Walla City v. Walla Walla Walla Water Co., 172 U.S. 1, 20, 19 Sup.Ct. 77, 85, 43 L.Ed. 341. In such a case the indebtedness is not created until the consideration has been furnished.

It is further contended by plaintiff that the municipality cannot grant an exclusive franchise without special authority from the Legislature. This is conceded by defendant, it contending only that the franchise is perpetual, while plaintiff insists that section 4 of the ordinance limits its duration to 15 years, and this is the principal ground of contention between them. A municipality cannot, at least without statutory authority, grant a perpetual utility franchise. It is said in Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 241, 91 N.W. 1081, 1084, that "grants or franchises in perpetuity or for unreasonably long periods of time are generally regarded as against public policy, and, if ever valid, the authority therefor must be found in the Constitution or statutes of the state." See, also, 28 Cyc. 655, 875; Cooley's Const.L. (6th Ed.) 251; Citizens' St. Ry. v. Detroit Railway, 171 U.S. 48, 18 Sup.Ct. 732, 43 L.Ed. 67; Brenham v. Water Co., 67 Tex. 542, 4 S.W. 143; Illinois Trust &amp Savings Bank v. Arkansas City Water Co. (C.C.) 67 F. 196, Logansport Ry. Co. v. City of Logansport (C.C.) 114 F. 688. It is said in Birmingham & Pratt Mines St. Ry. Co. v. Birmingham St. Ry. Co., 79 Ala. 472, 58 Am.Rep. 615: "Judge Cooley adopts the view that a municipal corporation cannot, 'without explicit legislative consent,' permit the construction of a street...