Combs v. Prestonsburg Water Co.

• Decision Date: 18 June 1935
• Citation: 260 Ky. 169
• Parties: Combs et al. v. Prestonsburg Water Co.
• Court: United States State Supreme Court — District of Kentucky

260 Ky. 169

Combs et al. v. Prestonsburg Water Co.

Court of Appeals of Kentucky.

Decided June 18, 1935.

1. Judgment. — Declaratory judgment, sustaining water company's right to charge certain minimum rate under its franchise, held res judicata as to validity of franchise in subsequent action to forfeit it, where petition in former litigation alleged granting of franchise and taking of necessary steps by city council to validate it, though defendants therein did not urge invalidity thereof as defense (Civil Code of Practice, sec. 639a-1 et seq.).

2. Judgment. — Res judicata doctrine not only embraces matters technically involved in former litigation between same parties, but compels them to bring forward and present to court every fact then existing in support of their claim or defense.

3. Judgment. — Parties to action cannot assert anything incident to, and necessarily connected with, subject-matter of former litigation between them, which might properly have been interposed as defense therein.

4. Waters and Water Courses. — Evidence, in action to forfeit water company's franchise and recover fire plug rentals paid by city, held to show defendant's compliance with franchise provisions for use of modern, improved machinery and equipment and maintenance of prescribed water pressure.

5. Waters and Water Courses. — Public service corporations, such as water companies, have right to make and enforce reasonable rules and regulations for conduct of their business.

6. Waters and Water Courses. — Water company should permit its customers to read their meters at their reasonable request and may be compelled to do so on proper showing, but are not required to furnish customers keys to caps over tiles or cylinders inclosing meters.

7. Evidence. — It is matter of common knowledge that public service corporations generally require small deposits or guaranties of payment of bills by customers.

8. Waters and Water Courses. — Water company's rule, requiring payment of one dollar by consumer when water is cut off or turned on because of nonpayment of bills or at consumer's request held not unreasonable.

9. Appeal and Error. — Chancellor's finding will not be disturbed on appeal, where evidence is sufficient to sustain it or leaves mind in doubt as to correctness thereof.

Appeal from Floyd Circuit Court.

HILL & HOBSON and COMBS & COMBS for appellants.

A.J. MAY, W.F. GRIGSBY and S.S. WILLIS for appellee.

OPINION OF THE COURT BY CREAL, COMMISSIONER.

Affirming.

B.F. Combs and Edward P. Hill instituted this action for and on behalf of themselves and all other citizens and taxpayers of Prestonsburg, Ky., and for and on behalf of the city, against the Prestonsburg Water Company, a corporation, seeking (1) to have the franchise under which the water company was operating a water system in the city adjudged to be void and to oust it from the occupation of the streets and thoroughfares of the city with its mains and lines; (2) to recover damages for the wrongful occupation of the streets; (3) to recover back sums paid by the city to the water company as rentals for hydrants and fireplugs; (4) to recover excessive water rents collected by the water company from its consumers, and (5) that, if it should be held that the water company had a valid franchise, then to enjoin its enforcement of its rules and regulations on the ground that they are unreasonable.

In addition to a general denial, the water company challenged the right of plaintiffs to maintain the action and also interposed a plea of res judicata. Thereafter the water company instituted an action against the city seekng to recover hydrant or fireplug rentals due under the provisions of its charter, and the two actions were consolidated.

On final hearing the chancellor dismissed the taxpayer's petition in the first action, and in the second adjudged that the water company recover of the city the amount alleged to be due. The plaintiffs in the taxpayer's suit and the city are appealing.

In 1921 the city council of Prestonsburg authorized the sale of a franchise for the installation and operation of a water system for the purpose of supplying water to the city and its citizens, and G.C. Davis purchased, and was granted the franchise, and a certified copy thereof as spread on the records of the city was delivered to him. Pursuant thereto he installed a system of waterworks which he operated until his death. Thereafter it was operated by his widow and son, who were his only heirs at law, until 1929, when it was sold by them to the Prestonsburg Water Company. The sale was evidenced by a written assignment of the copy of the franchise delivered to Mr. Davis. Appellants alleged and now assert that the franchise under which appellee claims to be operating and which the records of the city show was sold to Davis and a copy of which was delivered to him was not the franchise which the council directed to be sold, and that it was not adopted and sold in conformity with the requirements of the law. The franchise which it is alleged was actually ordered to be sold and the one which was granted and under which appellee is operating are set forth at length in the petition. It is pointed out that these are materially different with reference to the time within which the work of installation was to be begun and with respect to the rates to be charged the city and the citizens for water consumed; that the first provided that the purchaser should place in the thoroughfares of the city all stopcocks, hydrants, and fireplugs at such points as might later be determined and agreed upon by the council, and as a consideration of the granting of the franchise the purchaser should furnish the city unlimited use of the water in case of fire, but that the city's use of water for other purposes should be at the same rate as water furnished individuals; that rates for the use of water where no meter was installed should be a flat rate of not less than $1 per month, and, where meters were installed, a rate of 50 cents per thousand gallons, with the right to make reductions or special rates to those who used large quantities of water; that under the franchise purported to be granted it was provided that the city should pay for each fireplug installed the sum of $20 per annum, to be paid quarterly; that a minimum of $2 per month be charged the users of water whether the meters were installed or not, and, where meters were installed, the rate should be 75 cents per thousand gallons if more than 2,000 gallons were used in any month, with the right to make special rates where unusual quantities were used. It was alleged that these provisions in the franchise purported to be granted were inserted by fraud of G.C. Davis or mistake of G.C. Davis and the city council. Much of the evidence for appellants relates to the records and proceedings of the city council in an effort to show that the franchise under which appellee is claiming to operate was not the one sold and granted by the city, but on the whole, and in view of the evidence concerning the state of the records, a number of pages being missing from the minute book, a finding that the franchise as claimed by appellee is valid might be sustained; however, as will presently appear, it is unnecessary to determine that question.

On March 12, 1930, appellee instituted an action under the Declaratory Judgment Act (Civ. Code Prac. sec. 639a-1 et seq.) against the city of Prestonsburg and O.H. Stumbo, a citizen thereof and a patron consuming water furnished by plaintiff, and alleged that on June 20, 1921, the city council in pursuance and in conformity with the provisions of the statute, directed the sale of the franchise for the upkeep, maintenance, and operation of a water system in the city of Prestonsburg, that such franchise was duly advertised as required by law, and that at a sale thereof G.C. Davis became purchaser, and thereafter plaintiffs became and were the owners and holders of the franchise and the rights and privileges therein set out. A copy of the franchise was filed with, and made a part of, the petition. The petition sets out section 8 of the franchise which the record shows was sold to Davis, and alleged that defendant O.H. Stumbo and a large number of persons who were patrons and using and consuming water furnished by plaintiff had raised an actual controversy with plaintiff respecting the construction of the franchise and particularly clause 8 thereof; that plaintiff claimed the right to charge each consumer a minimum of $2 per month whether meters were installed or not, regardless of the amount of water consumed up to 2,000 gallons and 75 cents per thousand gallons consumed in excess of 2,000 gallons; that the defendant Stumbo had paid the rate charged by plaintiff but same was paid under protest; and that same was true as to a large number of others. In a second paragraph it was alleged that there was a controversy between it and the city as to whether the fireplugs furnished by it complied with the terms of the franchise. In a third paragraph it alleged that it had adopted rules and regulations covering and defining the rights of plaintiff and those consuming...