City Water Company of Sedalia v. City of Sedalia

• Decision Date: 23 June 1921
• Citation: 231 S.W. 942,288 Mo. 411
• Parties: CITY WATER COMPANY OF SEDALIA v. CITY OF SEDALIA, Appellant
• Court: Missouri Supreme Court

231 S.W. 942

288 Mo. 411

CITY WATER COMPANY OF SEDALIA v. CITY OF SEDALIA, Appellant

Supreme Court of Missouri, Second Division

June 23, 1921

Appeal from Pettis Circuit Court. -- Hon. H. B. Shain, Judge.

Affirmed.

Wilkerson & Barnett and R. S. Robertson for appellant.

(1) The judgment upon the counts complained of is for services and water which the city had contracted to receive from the plaintiff, but the amount of recovery is based upon a rate fixed by the Public Service Commission in excess of the rate fixed by the contract. The contract rate was the consideration of the original contract, and when the rate was abrogated by the Public Service Commission in the exercise of the superior or police power of the State, not only the consideration of the contract but the contract itself was thereby abrogated. (2) The order of the Public Service Commission did not modify the original contract. Contracts can only be modified by the mutual consent of the parties to the contract. 13 C. J. 591. (3) The Public Service Commission represents the State so far as the Legislature represents the State and, therefore, the Public Service Commission, as the arm of the Legislature, can fix a public service rate, and thereby abrogate contracts inconsistent with the rates in the exercise of the police power which is in the Legislature. State ex rel. Sedalia v. Public Service Comm., 204 S.W 497. (4) The fixing of a rate for a public service does not regulate the affairs of the city, because they may purchase at the reasonable rate as fixed by the State, or they may refrain from purchasing if in the judgment of local authorities the money is needed elsewhere, or if the constitutional limit of taxation has already been reached, or if the local authorities desire to lower taxes. But the Legislature cannot itself, nor through its representative the Public Service Commission, create both a rate and a contract applicable only to the city, because the Constitution provides: "The General Assembly shall not pass any local or special law . . . (2) regulating the affairs of counties, cities, townships, wards, or school districts . . . (3) In all other cases where a general law can be made applicable no local or special law can be enacted. . . . Nor shall the General Assembly indirectly enact such special or local law by the repeal of a general law." Sec. 53, Art. IV, Mo. Constitution. (5) The Public Service Commission could not make a contract requiring the city to expend money over a period of years, nor could it modify a contract requiring the city to expend more money than the local authorities had agreed upon for a period of years, because this extra expenditure can only be paid by taxation, and the Constitution provides that the General Assembly shall not impose taxes upon counties, cities townships, or other municipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may by general laws vest in the corporate authorities thereof the power to assess and collect taxes for special purposes. Section 10, Art. X, Mo. Constitution. (6) And it also provided that the taxing power may be exercised by the General Assembly for state purposes, but shall be exercised by counties and other municipal corporations for county and other corporate purposes. Section 1, Article X, Mo. Constitution. (7) The city cannot impose taxes to meet the amount of its expenditures, however great, in excess of constitutional limitation, but must keep within the maximum provided by the Constitution. Section 11, Article X, Mo. Constitution. No city shall be allowed to become indebted in any manner, or for any purpose, to an amount exceeding in any year the income and revenue provided for that year. Section 12, Article X, Mo. Constitution. The incurring of indebtedness by a city beyond the revenue provided for that city is absolutely and unqualifiedly prohibited, no matter what the necessity or pretext may be, or the form which the indebtedness assumes. State v. Neosho, 203 Mo. 40. (8) The burden was upon plaintiff to show that the indebtedness incurred by the so-called contract did not exceed the constitutional limitation provided in Section 12 of Article X of the Constitution, in that it did not exceed the revenues provided for that year; and plaintiff having failed to prove that the indebtedness created did not so exceed the revenue provided for the years in question, the judgment should have been for defendant. Thornburg v. School District, 175 Mo. 12. (9) Even if the evidence had affirmatively shown that the old contract with the water company, if enforced upon the new rate created by the Public Service Commission, would not actually exceed the constitutional limitation upon city indebtedness, yet the Public Service Commission is prohibited by Section 12 of Article X of the Constitution from modifying contracts and increasing expenditures thereunder, because if such power were in the Public Service Commission, they could create an indebtedness in excess of the constitutional limitation. The question of constitutional power depends not upon what was done in a particular case, but upon what was authorized to be done. People v. Marquis, 291 Ill. 121.

J. H. Bothwell and Montgomery & Rucker for respondent.

(1) In earlier cases between this appellant and this respondent, the Supreme Court fully sustained and confirmed the authority of the Public Service Commission to modify the contract rate for fire hydrants maintained in the City of Sedalia by this respondent, and in the increased rate for fire-hydrant rentals has been approved by this court and sustained by the United States Supreme Court. State ex rel. Sedalia v. Public Service Comm., 275 Mo. 201, 251 U.S. 547. (2) The change of rate and increase of rentals for fire hydrants under the said contract authorized by the Public Service Commission did not abrogate or annul the contract between the city and the water company, but such change was effective in modifying the contract only to the extent of such increase of the rental rates. State ex rel. Sedalia v. Public Service Commission, 275 Mo. 201; Salt Lake City v. Utah Light & Traction Co., 3 A. L. R. Annotated, 715; Robertson v. Wilmington and P. Traction Co., 104 A. 839; Portland v. Public Service Comm., 173 P. 1178. (3) The question as to the authority and power of the Public Service Commission to charge an increase in the rental rates for fire-hydrants installed and maintained at Sedalia has become res adjudicata between the appellant and the respondent and the legality of such increase of rates cannot be again attacked in this case. (4) A constitutional question is one of such grave importance that it must be raised at the first opportunity. If it can be appropriately and naturally raised in the pleadings and thereby be a question lodged in the record proper, such is the true place to raise it. If not there raised it is waived. Pickel v. Pickel, 243 Mo. 654; Lohmeyer v. Cordridge Co., 214 Mo. 689; Hartzler v. Met. St. Ry. Co., 218 Mo. 562. The petition was upon the franchise-contract as modified by the orders of the Public Service Commission. If this theory of the legal effect of the order of the Public Service Commission changing the rates, was open to all of the grave constitutional objections now being urged by the respondent, the natural and appropriate place to raise such constitutional objection was in the defendant's answer and not in the motion for new trial or the "Assignments of Errors." (5) There was no evidence offered to show that the city ever had asked for or offered any reduction in the number of fire-hydrants to be installed and maintained by the respondent at Sedalia, and the mere statement of the city's attorney that 87 of the fire hydrants were not needed, with no action by the city council and mayor and no acquiescence of the water company or approval of the Public Service Commission, did not result in withdrawing any of the fire hydrants from use under the contract.

HIGBEE, P. J. D. E. Blair, J., not sitting.

OPINION

HIGBEE, P. J.

The petition alleges, in substance, that the plaintiff is a corporation engaged in furnishing water to the City of Sedalia, a city of the third class, and its inhabitants; that on August 6, 1906, said city adopted an ordinance by which it was provided that the Sedalia Water Company, its successors and assigns, should supply water to said city and its inhabitants and, among other things, should install and maintain all necessary machinery, apparatus, reservoirs basins, water mains, pipe lines, etc., and said city agreed to rent 198 fire hydrants as then located on the pipe system of said water company, and such additional fire hydrants as said city might order to be installed for the term of said contract, at an annual rental of $ 30 for each fire hydrant, payable in semi-annual installments on February 1st and August 1st of each year, and that said ordinance was accepted by said water company on August 29, 1906; that plaintiff became the successor of said water company, and owner and operator of the water works system thereof; that on October 29, 1914, plaintiff applied to the Public Service Commission of this State for an increase of its rates for water service; that defendant intervened, and that such proceedings were had that on April 3, 1916, said Commission made an order finding that the rates and charges aforesaid did not afford a reasonable return on plaintiff's investment, and plaintiff filed a new schedule increasing the rental of fire hydrants to $ 45 per hydrant, which was approved and became effective August 1, 1916; that thereafter, on like proceedings, the rate was increased to $ 55 per hydrant, effective January 1, 1920; that after August 29,...