City of Winchester v. Winchester Waterworks Co

• Decision Date: 05 January 1920
• Docket Number: No. 51,51
• Parties: CITY OF WINCHESTER et al. v. WINCHESTER WATERWORKS CO
• Court: U.S. Supreme Court

251 U.S. 192

40 S.Ct. 123

64 L.Ed. 221

CITY OF WINCHESTER et al.

v WINCHESTER WATERWORKS CO.

No. 51.

Argued Oct. 24, 1919.

Decided Jan. 5, 1920.

Messrs. J. Smith Hays, of Winchester, Ky., and T. L. Edelen, of Frankfort, Ky., for appellants.

Mr. Beverly R. Jouett, of Winchester, Ky., for appellee.

Mr. Justice DAY delivered the opinion of the Court.

The Winchester Waterworks Company filed its bill in the United States District Court for the Eastern District of Kentucky, seeking to enjoin the enforcement of an ordinance establishing maximum rates for water to be furnished the city for public use and to the people thereof for private use. By the bill and amended bill it was charged that the city had no authority to pass or enforce an ordinance fixing such rates, because (1) no power had been granted to the city so to do by the Legislature of Kentucky; (2) because the rates established were so low as to be confiscatory in their character, and, consequently, the ordinance was violative of rights secured to the company by the Fourteenth Amendment to the federal Constitution. An answer was filed, and the court decided the case and made a final decree in favor of the company upon the ground that under the laws of Kentucky the city had no authority to pass or enforce an ordinance fixing rates. The court found it unnecessary to pass upon the question of the confiscatory character of the rates. The bill invoked jurisdiction upon a constitutional ground, and the case was brought here by direct appeal.

It appears that the company had a contract with the city, which expired in 1916, and thereafter the ordinance in controversy was passed. That a city has no power to regulate rates of this character unless it has legislative authority so to do is established, and does not seem to be disputed by the appellant. 'Independently of a right to regulate and control the rates to be charged for public service reserved in a grant of a franchise or right to use the city streets, a city or other municipality has no power to regulate the rates to be charged by water, lighting or other public service corporations in the absence of express or plain legislative authority to do so.' 3 Dillon on Municipal Corporations (5th Ed.) § 1325. Nor does such authority arise from the power to regulate the opening and use of streets, nor a grant of the general right to control and regulate the right to erect works and lay pipes in the streets of the city. State v. Missouri & K. Telephone Co., 189 Mo. 83, 88 S. W. 41; Jacksonville v. Southern Bell & Tel. Co., 57 Fla. 374, 49 South. 509; Lewisville Natural Gas Co. v. State, 135 Ind. 49, 34 N. E. 702, 21 L. R. A. 734; Mills v. Chicago (C. C.) 127 Fed. 731; State v. Sheboygan, 111 Wis. 23, 86 N. W. 657.

Bearing this general principle in mind, we come to examine the sections of the laws of Kentucky which, it is insisted, give the authority to fix water rates. The appellant insists that this power is expressly conferred in subsection 25 of section 3490 of the Kentucky Statutes, which reads as follows:

'The board of council may grant the right of way over the public streets or public grounds of the city to any railroad company or street railroad company, on such conditions as to them may seem proper, and shall have a supervising control over the use of same, and regulate the speed of cars and signals and fare on street cars; and under like condition and supervision may grant the right of way that may be necessary to gas companies, water companies, electric light companies, telephone companies, or any like companies; and may compel any railroad company to erect and maintain gates at any or all street crossings, and to prevent railways from blocking or obstructing the streets or public ways of the city, and to fix penalties for the violation of these provisions: Provided,' etc.

Other subsections claimed to be applicable are given in the margin.¹

Examining subsection 25, we are unable to discover any grant of authority to fix the rates for water consumption. It is therein first provided that the council may grant the right of way over the public streets to any railroad or street railroad company on such conditions as to the council may seem proper, and shall have a supervising control over the use of the same, and the council is given the right to regulate the speed of cars and signals and fare no street cars, and under like conditions and supervision, the council may grant the right of way to water companies among others. This language is certainly very far from that express authority to regulate rates, which is essential in order to enable municipalities so to do. The power to grant a right of way to water companies is specifically granted, and this under like conditions and supervision already provided as to railroad and street railroad companies. This is the full measure of the grant of authority to deal with water companies. The right to regulate...