Connor v. City of Marshfield
| Decision Date | 08 May 1906 |
| Citation | 128 Wis. 280,107 N.W. 639 |
| Parties | CONNOR ET AL. v. CITY OF MARSHFIELD ET AL. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Dane County; E. Ray Stevens, Judge.
Action by W. D. Connor and others against the city of Marshfield and others. From a judgment in favor of plaintiffs, defendants appeal. Reversed and remanded.
Since 1892 or 1893 the defendant Marshfield Electric Light & Power Company, hereinafter called the “Company,” has maintained in the city of Marshfield waterworks and lighting plant under an ordinance, contract, or franchise which provided, among other things, for the payment of hydrant rental in the sum of at least $4,000 per annum, which, at the date of the transactions hereinafter referred to, had been increased by additions to $5,080. The city was also buying light, although not required to do so by contract, in the sum of about $4,000. The ordinance further reserved privilege of purchase by the city by appraisal at certain stated intervals. The company had issued $100,000 of capital stock, most of which was owned by William H. Upham. It had mortgaged its plant, franchises, and all rights in the sum of $150,000 to secure bonds, of which $125,000 were outstanding and $25,000 authorized to be issued and countersigned by the trustee, but still in the corporate treasury. In this situation, about December, 1903, negotiations commenced between Mr. Upham, who controlled the company and was able to speak for it, and the city, for acquisition by the latter of either the property or the stock. He made certain proposals looking to the transfer of the stock and property to the city, which took advice of counsel as to whether or not it could make purchase, and was advised that under the provisions of section 959-51, Rev. St. 1898, it was empowered to make a purchase of the equity of redemption without submitting the question to a vote of the people. This was followed by expert examination of the property by persons employed by the city for that purpose. Whereupon, on March 1, 1904, a committee appointed on the subject reported the result of such investigation and their opinion that it would be to the best interest of the city “to own the plant and franchises now held by the [company], and would recommend the purchase at this time at $25,400 for their interest subject to $125,000 of bonds held in the east.” Thereupon a resolution was duly adopted authorizing the making of a land contract, a draft of which was before the council, and which ran from the company to the city and provided for the payment by the latter of $25,400, of which $400 was to be paid down and $5,000 at the end of each year thereafter, with 6 per cent. interest, “to apply when fully completed on the purchase money of the following tract, piece, or parcel of land and personal property situated in the county of Wood and state of Wisconsin.” Then follows a description of the entire property of the company, and “also all the $1,000 of capital stock of the said party of the first part, which said stock is to be transferred as follows: [To three designated city officials]--in trust, nevertheless, for the use and benefit of the said city of Marshfield”; said property to be transferred “free and clear of all legal liens and incumbrances, except the taxes herein agreed to be paid by the said party of the second part, and except the mortgage of $150,000.” Thereupon the possession of the works was turned over to the city, which works were operated by a commission appointed for that purpose. The stock was assigned according to said contract and the $25,000 of unissued bonds placed in escrow with the defendant Reese, to whom the company made a warranty deed of the property upon his agreement to carry out the land contract with the city. The company thereupon, at directors' meeting, passed a resolution distributing its assets among its stockholders, by virtue of which the money paid by the city was turned over to Mr. Upham, who had manual possession of all the stock at the time of the transaction, and who had delivered it to the city officials. No steps were ever taken by the city to maintain the corporate organization. After this transfer was complete the plaintiffs, as taxpayers, on behalf of themselves and others similarly situated, commenced this action seeking judgment annulling said land contract and the transfer of the stock, and enjoining the city from making any payments thereon, or from making any payment on the principal or interest of the bonds of the company, and for the return to the city by William H. Upham of the $400 cash payment which he had received, and from the company $800 which had been paid in addition for extras, and generally canceling all that had been done. The trial court found substantially the foregoing transactions; that Marshfield was a city of the fourth class having about 7,000 inhabitants and existing under the general charter; made certain findings as to the cost and that the fair value of the physical property and franchises belonging to the company at the time of the contract was $100,000; that in view of all the circumstances the purchase was not an unreasonable exercise of power on the part of the city officers. It is conceded to be a fact that the city's indebtedness other than that resulting from this contract was at least $26,000 below its constitutional debt limit. No question in connection with the transaction was submitted to a vote of the people. The court held the whole transaction void on this ground, without deciding other legal questions, and rendered judgment annulling the whole transaction and re-establishing the parties in their original status quo by the surrender of all that the city had received and payment by it of the result or an accounting pending its possession and operation of the works, of which in detail no complaint is made. From this judgment the defendants city, company, William H. Upham, and certain others appeal.C. B. Edwards and Geo. L. Williams, for appellant city of Marshfield and others.
W. A. & E. C. Pors and Geo. Lines, for appellant Upham.
Quarles, Spence & Quarles, (George L. Williams and George Lines, of counsel), for appellant company.
Goggins & Brazeau, for respondents.
DODGE, J. (after stating the facts).
1. The first field of discussion by counsel is that of the apparently overlapping provisions of various statutes dealing with the construction or purchase of waterworks and lighting plants by cities, which, it must be confessed, approximate closely to the chaotic condition of those regulating the issue of bonds, commented on in Appleton Waterworks Co. v. Appleton, 116 Wis. 363, 93 N. W. 262. One principally debated question in this connection is as to the degree in which sections 927-1 and 959-51, Rev. St. 1898, affect or control each other. Section 927-1 is substantially, with some slight modifications, a perpetuation of chapter 325, p. 1016, Laws 1882, 165, p. 129, Laws 1883, and chapter 182, p. 305, Laws 1895. After providing for process of condemnation in aid of acquiring waterworks and lighting plants, it provides that “any [such] city or village, when authorized so to do by ordinance adopted by a vote of a majority of all the members of its common council or board of trustees, after such ordinance has been submitted to a vote of the people and a majority have voted in favor thereof, may purchase or lease the waterworks or lighting works, or both, owned by any corporation in such city or village and having a contract therewith for public service, or purchase or lease the interest of such corporation in such works, or obtain the control of such works by purchasing the stock of such corporation and keeping up its organization.” Such law, in addition to any general authority that may have otherwise existed in municipalities, authorized a method of performing the municipal function to provide for protection against fire and for street lighting, and doubtless subjected that method to the prescribed restrictions and procedure. The Legislature, in Laws 1897, by chapter 361, p. 926, made certain other provisions in regulation of the obtaining of water and light for cities. The first three sections are in the way of relieving cities and villages from certain then existing limitations upon their power to raise money to pay for water and light supplied by private companies. But the fourth section, now section 959-51, provided: It will be...
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