Cudahy Packing Co. v. City of Omaha

• Decision Date: 29 October 1921
• Docket Number: 5730.
• Citation: 277 F. 49
• Parties: CUDAHY PACKING CO. v. CITY OF OMAHA et al. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

277 F. 49

CUDAHY PACKING CO. v. CITY OF OMAHA et al. ^[1]

No. 5730.

United States Court of Appeals, Eighth Circuit.

October 29, 1921

Yale C Holland, of Omaha, Neb. (C. W. Sears, J. A. C. Kennedy George L. De Lacy, and Charles F. McLaughlin, all of Omaha Neb., on the brief), for plaintiff in error.

John Lee Webster, of Omaha, Neb. (W. C. Lambert, of Omaha, Neb on the brief), for defendants in error.

Before SANBORN, CARLAND, and STONE, Circuit Judges.

CARLAND Circuit Judge.

This action was brought by the Cudahy Packing Company, hereafter called packing company, against the city of Omaha, hereafter called city, the water board of the city of Omaha, hereafter called water board, and the Metropolitan water district of the city of Omaha, hereafter called water district, for the purpose of recovering the sum of $47,461.49, with interest, as having been unlawfully exacted for water service. At the trial of the action counsel for both parties moved for a directed verdict. The court directed a verdict against the packing company. Alleged errors relating to the admission of evidence have been assigned; but as these alleged errors cannot, in our opinion, affect the decision which must be made, we confine our consideration to the question as to whether or not the trial court erred in directing a verdict as it did, the material facts being largely undisputed.

Before proceeding to consider the facts immediately connected with this case, we may state that the record shows beyond question that by the litigation between the city and the Omaha Water Company, hereafter called water company, some things were settled. Among these were the propositions that the city had the power to purchase the waterworks system of the water company and exercised said power by purchasing, on June 20, 1912, from said water company, the entire system of waterworks operated and owned by said water company, wherever located, together with the appurtenances thereunto belonging, for the sum of $6,392,720.17, and other considerations mentioned in the deed of conveyance; that said deed contained, as one of its clauses, after the description of the property granted and the habendum clause, the following language:

'Subject, nevertheless, to the obligations entered into by the said the Omaha Water Company with private consumers in said city of Omaha, and in the cities of South Omaha, and Florence, and in the village of Dundee and in East Omaha, and with said municipalities, under or by virtue of any of the ordinances, agreements and arrangements hereinbefore set forth, all of which obligations are to be assumed by said city of Omaha.'

No court ever decreed that the city should assume any of the obligations mentioned in said clause, but it voluntarily and of its own free will accepted as grantee said deed of conveyance without making any objections to said clause.

Coming now to the case in hand, it appears that at the time of said conveyance there was a written contract in existence between the water company and the packing company, whereby the latter was entitled to receive from the former, for a period of ten years from June 1, 1904, water at the rate of 4 1/2 cents per 1,000 gallons at its plant in the city of South Omaha. In this opinion no distinction is made between the water company existing under the laws of the state of Illinois and the water company existing under the laws of the state of Maine, as there is no question but that the former conveyed all its rights of property to the latter. The Legislature of Nebraska, by an act approved February 2, 1903 (Laws 1903, c. 12), created a water board for metropolitan cities. Omaha was the only city of that class. This board was charged with the determination of water rates, the conditions and methods of water service, and the collection of all charges for water service or the sale of water. These powers were enlarged by amendments passed in 1905 and 1911. On April 15, 1913, the Legislature of Nebraska passed an act (Laws 1913, c. 143) under which the water district was on July 23, 1913, duly organized, and took over the management of the waterworks system in the cities of Omaha and South Omaha, and thereby superseded the water board. On July 1, 1912, the city having acquired the system of waterworks from the water company, as above stated, through said water board, refused to perform the contract between the water company and the packing company for its unexpired term of two years, less one month, and compelled the packing company to pay for all water received 8 cents per 1,000 gallons. The difference between the contract price of 4 1/2 cents and 8 cents was paid by the packing company under protest, and it is this difference, with interest, that this suit is brought to recover.

We are of the opinion that this action is properly brought by the packing company, for the following reasons: The packing company was a private consumer of water in the city of South Omaha. By the sale of the waterworks system to the city the water company had rendered itself unable to perform the unexpired term of the contract between it and the packing company. The packing company was thereby compelled to look to the city for its supply of water, as the city was the only party which could perform the service. So that it may be truly said that the agreement above quoted from the deed of conveyance was entered into for the benefit of the packing company, and it is now the real party in interest. 6 R.C.L.p. 884. The demands on the part of the packing company that the city perform its contract, and the institution of this suit, was an acceptance of the contract. 6 R.C.L. 889. If the city, however, had no power to agree that it would perform, for the unexpired term of two years less one month, the contract between the water company and the packing company, then the judgment below must be affirmed, as the city was under no obligation to perform the contract unless it could lawfully agree so to do. The mere existence of the contract, conceding it to have been legal, created no obligation on the part of the city to perform it. So the whole case must be determined, one way...