Conery v. The New Orleans Water Works Co.

• Citation: 7 So. 8,41 La.Ann. 910
• Decision Date: 22 May 1889
• Docket Number: 10334[*]
• Court: Supreme Court of Louisiana
• Parties: EDWARD CONERY, JR., ET AL., v. THE NEW ORLEANS WATER WORKS COMPANY ET ALS

7 So. 8

41 La.Ann. 910

EDWARD CONERY, JR., ET AL., v. THE NEW ORLEANS WATER WORKS COMPANY ET ALS

No. 10334^[*]

Supreme Court of Louisiana

May 22, 1889

November, 1889

APPEAL from the Civil District Court, for the Parish of Orleans. Monroe, J.

E. H Farrar, R. H. Browne, E. D. White and Chas. E. Schmidt, for Plaintiff's and Appellees.

J. R Beckwith, H. H. Hall and G. A. Breaux, for Defendants and Appellants.

Carleton Hunt, City Attorney, and W. B. Sommerville, Assistant City Attorney for the City of New Orleans, Defendant and Appellant.

MCENERY J. POCHE, J., concurs. BERMUDEZ, C.J. and FENNER, J., dissent.

OPINION

MCENERY, J.

Ed. Conery and other taxpayers, residents of the City of New Orleans, brought suit against the New Orleans Water Works Company and the City of New Orleans, to have the existing contract for the supply of water to the corporation, to be declared a nullity.

They aver they are taxpayers of New Orleans in amounts aggregating ten thousand dollars. They recite the history of the present charter, the litigation growing out of the city's attempt to subject the property of the corporation to taxation and the judgment in the case of the City of New Orleans vs. the Water Works Company, reported in 36 Ann. p. 432, and that the Supreme Court interpreted the legislative contract contained in Act. 33, of 1877, which is the charter of said company, and that the Water Works Company had no power to receive from the city any greater amount for a free supply of water than the sum of $ 11,484 87, allowed the company on its reconventional demand in that suit, as an equivalent.

They allege the city had no authority to make the contract, that the contract is ultra vires, null and void, illegal and unconstitutional.

They also aver that after the termination of the suit of New Orleans vs. Water Works Company, the company not satisfied with the judicial construction placed upon its charter, in order to obtain an unjust advantage over the city, procured the enactment of Act. 56, of 1884, and that pretending to act under this statute the City Council of New Orleans passed ordinance, No. 909, authorizing the Mayor of said city to enter into a contract with the Water Works Company, and that said ordinance 909, and the contract made in pursuance thereof were not authorized by the terms of Act 56, of 1884, and that the legislature never intended that the contract relations as interpreted by the Supreme Court should be changed or modified unless for the purpose of furnishing the city with clear and filtered water; that if said act contemplated a contract between the City of New Orleans and the Water Works Company as to the value of the water to be supplied, then said act is unconstitutional and void and conflicts with Articles 45, 57, 234 and 46 of the Constitution of the State.

The petition prays for an injunction.

The City of New Orleans filed an exception to the petition (1) that the plaintiff's petition disclosed no legal cause of action, (2) that the plaintiff's disclosed no interest or authority to institute and maintain the suit and prayed that it be dismissed. Some years after this exception was filed on a change of the city administration, the attorney of the city appeared and joined the plaintiffs in their suit. Complaint is made of this change of front on the part of the city and it is alleged that the city is estopped from filing a contrary plea. While this may be true as to the city in its corporate or political capacity, it can not operate against the plaintiffs taxpayers, who allege the nullity of the contract.

The company also filed an exception alleging several grounds for the dismissal of the suit, some of which are identical with the exception filed by the city. But they are so intimately associated with the merits of the case that we will not disturb the order of the District Judge in overruling the exceptions.

The Water Works Company filed an answer pleading a general denial, and also a supplemental answer alleging other matter, all of which, however, is summed up in maintaining the integrity of the contract, the authority of the city to make the contract, independent of Act 56, of 1884, and the constitutionality of said act, and the validity of ordinance 909, and the contract made in pursuance thereof.

There was a judgment in favor of the plaintiffs and the Water Works Company has appealed.

The City of New Orleans purchased from the Commercial Bank, the Water Works' property and franchises. The city undertook to supply the inhabitants of the city, and her own wants with water. The experiment was disastrous, and her experiment was that of all great municipal corporations which have attempted this scheme -- an insufficient supply of water, debt, through extravagant and bad management, and complaints from her citizens. To rid herself of this incumbrance the city appealed to the legislature for relief, and at her instance and in answer to her prayer the present company was organized under the direction of her officers in pursuance of Act 33 E. S., of 1877. Section 11 of that act is as follows:

"Be it further enacted, etc., That the City of New Orleans shall be allowed to use water from the pipes and plugs of said company now laid, or hereafter to be laid, free of any charge, for the extinguishment of fires, cleansing of the streets, and for the use of all public buildings, public markets and charitable institutions, and that the said company shall place, free of any charge, whatever, two hydrants of the most approved construction in front of each square, where a main pipe shall be laid at a suitable distance from each other, from which a sufficient quantity of water may be conveniently drawn for the extinguishment of fires, for watering the streets and cleansing the gutters, and for any other public purpose; that on the squares which do not front on the river the hydrants shall be placed on opposite sides of the streets, at an equal distance from each other and the corners. It shall be the duty of the said company, whenever main pipes shall be laid, to supply water for all the purposes herein mentioned at all times during the continuance of this charter; and in consideration thereof the franchises and property of said New Orleans Water Works Company, used in accordance with this act, shall be exempt from taxation -- State, municipal and parochial."

For several years the company supplied the city with water, and no tax was demanded from the company. In 1881 the city brought suit against the company for taxes assessed against the company, amounting to $ 11,484 87.

The company claimed that if it had to pay the tax the city was bound to pay for the amount of water supplied under the above section, and reconvened for the sum of $ 40,281 87.

There was judgment for the taxes due the city and in favor of the company on the reconventional demand for the exact amount of the taxes, as equivalent for the water already furnished the city. City of New Orleans vs. Water Works Company, 36 Ann. p. 432.

It is contended by plaintiffs that the decree in this case fixed and determined the respective obligations of the city of New Orleans and the Waterworks Company, and regulated the future supply of water to the city, and the amount which the city should pay annually for its supply of water, the amount of taxes assessed against the company as fixed in said suit. In this case the sole question was whether or not the property of the company was exempt from taxation, and it involved the determination whether or not section 11 of Act 33 of 1877 was void, as being in conflict with the constitution of 1868.

Under the issues presented the court could not interpret the legislative contract or charter of the company in its entirety, because the only question was as to the validity of one section of the act. It found, up to the date of the suit, an executed contract to deal with, the consideration of which was illegal. It declared the illegality of the consideration, and ordered the amount paid on account of it, to be returned to the party who had paid his part of the obligation.

The contract with the city was that for furnishing water without specifying the amount, the city would not collect taxes from the company. The company furnished the water, and the city refused to allow the tax. The judgment annulled the contract and returned to the Water Works Company the value of the water which it had furnished, and which had been fixed in the contract annulled at $ 11,484 87, as the only consideration for exemption from city taxes.

To say that the decision in that case regulated the contract of the parties in the future, as to the price of the water to be furnished by the Water Works Company, would be to maintain that this court has made a contract for the parties which they never intended, and which is not warranted by any provisions in the Water Works Company's charter.

The contract between the city and the Waterworks Company was made directly by the State at the solicitation of the city. The State withdrew the privilege of exemption from State taxation, which in amount equalled the city taxes. Thus one-half of the consideration was withdrawn by the State without giving any equivalent. To have fixed the price of the water to be furnished at the exact amount allowed the company on its reconventional demand would have been unjust. The company now pays in taxes twice the amount found to be due on the reconventional demand. If the increase has been so great in so short a time, it is reasonable to suppose that the increase will be in greater ratio in the future with the acquisition of additional property by the company, the increase in the value of its present property with the improvement and...