City of Valparaiso v. Valparaiso City Water Co.

• Court: Indiana Appellate Court
• Writing for the Court: BLACK
• Citation: City of Valparaiso v. Valparaiso City Water Co., 30 Ind. App. 316, 65 N. E. 1063 (Ind. App. 1903)
• Decision Date: 14 January 1903
• Parties: CITY OF VALPARAISO v. VALPARAISO CITY WATER CO.

30 Ind.App. 316

65 N.E. 1063

CITY OF VALPARAISO

v.VALPARAISO CITY WATER CO.

Appellate Court of Indiana, Division No. 1.

Jan. 14, 1903.

Appeal from circuit court, Lake county; T. E. Howard, Special Judge.

Action by the Valparaiso City Water Company against the city of Valparaiso. Judgment for plaintiff. Defendant appeals. Affirmed.A. D. Bartholomew, H. A. Gillett, and H. H. Loring, for appellant. N. L. Agnew, for appellee.

BLACK, J.

The complaint of the appellee against the appellant, a demurrer to which for want of sufficient facts was overruled, showed that the assignors of the appellee in the year 1885 entered into a contract with the appellant, by an ordinance then passed by the common council of the city and accepted by the assignors of the appellee, for the construction and maintenance of a system of waterworks in the city of Valparaiso. In the first section of the ordinance, exhibited with the complaint, authority was given to the assignors of the appellee, their successors or assigns, to establish, construct, and maintain a system of waterworks in that city, and for such purpose they were authorized to locate and maintain a system of piping in and through the streets, alleys, squares, and public grounds of the city, and to make necessary excavations therefor. In the second section it was provided that the privileges and franchises granted in the first section “shall continue for a period of fifty years, during which term the city shall not grant to any other person, association, or corporation any of the rights, privileges, and franchises in this ordinance granted, nor authorize or permit the establishment or maintenance of a system of waterworks in said city by any other person, association, or corporation. Such rights, privileges, and franchises, however, are subject to the conditions hereinafter provided.” There were in the ordinance provisions that the system of piping should consist of not less than 10 miles of main pipes, and that from time to time, as the common council should by ordinance direct, the assignors of the appellee, their successors or assigns, should lay such other pipes and establish such additional hydrants as the welfare and safety of the city and its inhabitants might require, and that at least one hydrant should be established and maintained for each 500 feet of main pipe so ordered; that they should locate and establish along and upon the main pipes 50 fire hydrants, described, and the city should pay them as “rental” for the use thereof $80 each year, payable in semiannual installments, as the use thereof should be afforded to the city, on the 1st days of January and July of each year. “Additional hydrants,” it was provided, “shall be furnished from time to time, as the common council may order, at a rental of not more than fifty dollars each per annum, payable in semiannual installments as aforesaid. All such additional hydrants shall be put in in the same manner and distance apart, and be of the same character, as the fifty specified in this ordinance.” It was provided in the ordinance that at any time after the expiration of 15 years from the completion of the waterworks the city should have the right to purchase the same by giving the owners thereof one year's notice in writing, and that, in case of such purchase, the city should pay a reasonable value for the same; and a method of ascertaining the value by appraisement was provided for, there being a proviso that nothing should be paid by the city for the unexpired franchise of the owners. It was also provided that at any time, in the event of failure of the grantees, their successors or assigns, to furnish water as required by the ordinance, or to keep the waterworks in a reasonably good state of repair, or to comply with the substantial provisions of the ordinance, the common council should have the right to take charge of, repair, and operate the waterworks, and to receive and collect the rental and income thereof; but that any surplus remaining from the income of the waterworks, including hydrant rental, after deducting the expense of putting in repair and operating the same, should be paid to the grantees, their successors or assigns. Also, that whenever the waterworks should come into the possession of the city under the above provisions, they should be surrendered to the grantees, their successors or assigns, upon their furnishing the city a reasonable guaranty of their ability and willingness to keep in repair and operate the waterworks, and upon reimbursement to the city of any and all money expended by it upon the waterworks in excess of the receipts therefrom; provided that, if the waterworks should be allowed to remain in the possession and charge of the city for one year, all the rights, privileges, and franchises granted by the ordinance should be forfeited. Also, that the city should from time to time provide by ordinance for the due protection of the waterworks, regulate and control the use of fire hydrants, and have general supervision of the water pipes and fixtures, as far as the health and necessities of the city and its inhabitants might require.

The complaint showed that the system of waterworks, with the 50 hydrants aforesaid, was located, established, and constructed prior to January 1, 1886, and the waterworks plant, with all the privileges, franchises, and appurtenances thereto belonging, was thereupon transferred to the appellee, and the appellee became the owner and went into possession thereof, and has continued to own, manage, and operate said plant, and it and its assignors have complied in all respectswith all the requirements and covenants on their part of said contract, franchise, ordinance, and acceptance. It was alleged that after that date, and after the location of the first 50 hydrants, the common council from time to time, by ordinance, ordered the location and construction of new lines of pipe and additional hydrants, and the appellee, in accordance with such directions, located and constructed the same; so that there were 48 additional hydrants in the use of the city, so constructed and located by the appellee, and accepted and used by the appellant, prior to the 1st day of January, 1900; that “the use, occupation, and rental of each of said forty-eight additional hydrants for the half year ending June 30, 1900, was and is reasonably worth the sum of twenty-five dollars for each of said forty-eight additional hydrants,-in all the sum of twelve hundred dollars”; that the first of these additional hydrants was located about the year 1890, and the appellant from that time to the 1st of January, 1900, paid the appellee, under said contract, for each of the additional hydrants, in installments of $25 on the 1st day of January and July in each year; that during all the period from the 1st of January to the 1st of July, 1900, the appellee maintained, and continued to maintain and keep in good order and repair and capable of efficient service in the extinguishment of fires, said 48 additional hydrants, and also said 50 hydrants; and the appellant, by reason of the premises and said contract, became and was bound to pay the appellee on the 1st of July, 1900, the sum of $1,200 for the use of said 48 additional hydrants from the 1st of January to the 1st of July, 1900. The complaint showed a demand and refusal of payment for the use or rental of the additional hydrants for the period of six months from January 1 to July 1, 1900, at the rate of $25 for each, and that the amount of the account therefor was due and unpaid.

By way of objections to the complaint it is suggested that the contract provided for a monopoly by granting the exclusive use of the streets and the exclusive right to furnish the city and its inhabitants with water for a period of 50 years upon the conditions expressed in the ordinance; that hence the city exceeded its powers by agreeing to forego and postpone the exercise of legislative and discretionary powers, and therefore the contract is void; also the contract to pay a fixed and determinate sum for hydrant rental for so long a period was against public policy, and void. It may be observed, preliminarily, that as to the additional hydrants, for the use of which the action was brought, there was not a contract to pay a fixed and determinate sum as rental therefor, as stated in the objections so urged by counsel, but the agreement was that these hydrants should be furnished at a rental of not more than a specific sum each per annum. This left opportunity for the parties, consistently with their contract, to agree upon any rental not exceeding such maximum sum; and, in the absence of any agreement specially regulating this rental, the amount which could be recovered by suit, if any, would be the value of the use of these hydrants,-that is, a reasonable rental. It may be premised further that, in view of the stipulations of the ordinance above recited, besides the provision that the franchises might be forfeited, and the waterworks might be taken over by the city for inefficient performance on the part of the grantees, the privileges and franchises were not granted absolutely for 50 years, the city reserving the privilege of purchasing the waterworks at any time after the expiration of 15 years from the date of the completion of the waterworks by giving the owners one year's notice. It was alleged that the waterworks were completed before the 1st of January, 1886, and the period of 15 years, it seems, had but a short time to run, -how long it is not definitely shown by the complaint,-when the rental sued for accrued. In Fergus Falls Water Co. v. City of Fergus Falls (C. C.) 65 Fed. 586, an action to recover for water supplied to the city under...