Earles v. Wells

• Decision Date: 04 November 1896
• Citation: 68 N.W. 964,94 Wis. 285
• Parties: EARLES v. WELLS ET AL.
• Court: Wisconsin Supreme Court

94 Wis. 285

68 N.W. 964

EARLES

v.WELLS ET AL.

Supreme Court of Wisconsin.

Nov. 4, 1896.

Appeal from circuit court, Outagamie county; John Goodland, Judge.

Action by Thomas R. Earles against Carlton H. Wells and others to declare a city ordinance void, and to restrain proceedings thereunder. From a judgment dismissing the complaint, plaintiff appeals. Reversed.

It appears from the record: That the defendant, the city of Kaukauna, was incorporated and organized under and by virtue of chapter 135, Laws 1891. That on May 4, 1895, the defendant city adopted an ordinance granting to the other defendants, constituting the firm of Wells, Reichert & Co., the right to construct waterworks therein for the purpose of supplying the city and its inhabitants with water for private and corporate purposes, and for making and entering into a lease and leasing from the firm said waterworks as therein prescribed, and upon the terms and conditions therein mentioned; which ordinance contained, among other things, the following, in effect: (9) That upon the completion of the works the firm shall notify the mayor and council that the works are ready for test and acceptance, and the city shall forthwith subject the same in a thorough manner to the test herein prescribed, and, if satisfactorily performed, the works shall be accepted according to the terms herein provided, and the hydrant rental shall commence from the date of notification of the completion of the works. (11) That the firm shall furnish water free for personal use in public schools and other public buildings, and for city construction, and for the purpose of flushing any sewers in public buildings, streets, or alleys when necessary, and for a drinking basin for animals in each ward, to be operated for the benefit of the public from May 1st to November 1st every year during the term of the ordinance. (12) That until such time as the city shall assume the management and operation of the system of waterworks, the rules and rates therein prescribed shall govern; that the firm shall build and construct the waterworks in the manner herein set forth, and upon the terms and conditions herein contained, and shall commence on the same within 60 days from the granting of the ordinance, and complete the work and have the same ready for acceptance by the city within 7 months from the time of the filing and acceptance of the bond therein specified. (13) That the firm shall, within 15 days, file with the clerk of the city a written acceptance of the ordinance and a bond in the penal sum of $10,000 for the faithful performance of all the stipulations of the ordinance, and upon such filing the ordinance shall be in full force and effect, and shall be considered a contract between the city and the firm. (14) That the city reserves the right at all times to place upon the work a competent engineer for the purpose of fully inspecting the nature of the work done and materials furnished, and shall have access at all reasonable times to all books and papers of the firm to enable him to ascertain the exact cost of the same. (15) That the firm shall have the right at any time before the making of the lease herein mentioned to pledge the works, or so much as shall be necessary for the purpose of raising a sum thereon, not to exceed $80,000, and may execute and deliver to a trustee its mortgage or trust deed thereof, and, in addition thereto, issue bonds in denomination of $500, not to exceed $100,000, at interest not to exceed 6 per cent. per annum, payable semiannually, and the bonds payable at such times and in such manner that, in case the city shall lease from the firm such plant, then that all sums paid by the city as rentals in excess of interest upon the original cost of such plant may, at the time of payment, be at once applied to the payment of the bonds, and shall cancel them to the amount so paid; that the firm shall have the right to assign the lease to the trustee for the purpose of effecting a sale of the bonds; that all surplus, if any, which shall be realized upon the sale of the bonds, after paying to the firm the $80,000 and accrued interest, shall be applied upon the payment of any or all of said bonds. (16) That the franchise, license, and authority, and all the rights and privileges hereby and herein granted and conferred, shall remain in full force and effect, commencing with the acceptance of this ordinance, and ending January 1, 1915. (17) That the city agrees, so long as this franchise or grant shall exist under and by force of the rights and grants herein contained, that it will pay to the firm or assigns, as rental for 90 hydrants so to be constructed, for and during the continuance of this franchise, the sum of $6,000 per annum, and for each and every additional hydrant, when constructed, the sum of $50 per hydrant, as hydrant rental, and the city shall at no time employ and have in use less than 90 hydrants; that the city agrees to and with the firm that, upon the completion of the waterworks in accordance with the agreements and conditions named herein, then, and in that case, the city will at once enter into a contract of lease with the firm, leasing from it said waterworks in the form and upon the conditions stated in the blank lease therein set forth, containing provisions to the effect that the city should hold for the term of 20 years from the completion of the waterworks, yielding and paying as rental therefor $7,000 per annum for the first four years, $9,000 per annum for the next succeeding six years, and $10,000 per annum for the remaining ten years of the lease, provided, however, that in case the full amount of $100,000 of bonds are not sold to raise the $80,000, or, if any surplus remains from the sale of the bonds, then, in that case, there shall only be such sums paid each year for the last ten years of the lease as shall be necessary to pay the interest and principal on the remaining unpaid bonds,--it being the intention that the city shall only pay such sums as rental as will be sufficient to pay the interest and principal of the bonds actually used; that the city promises to pay the rental at the times and in the manner aforesaid, and to keep the premises in good repair, and to observe all the conditions agreed to be performed; that the city will, during the continuance of the lease, pay all taxes and assessments of every kind and nature which may be assessed or levied upon the premises, and at its own cost maintain in perfect repair the works and all machinery in connection therewith, during the lease, and pay any and all damage which may result to any one by reason of its so operating or maintaining the works; that upon the payment of the sums of money at the times and in the manner aforesaid, without delay, then, in that case, said property shall at once pass to and become the property of the city without further conveyance or contract whatever. (18) That the city shall annually, during the term, levy and collect a tax sufficient to pay the said hydrant and lease rental accruing during each year, and said tax, when collected, shall be kept separate, and known as the “Water Rental Fund,” and shall be held inviolate for, and is hereby irrevocably pledged and appropriated for, the payment of said rental in the manner herein provided. Provisions to meet the requirements of this section shall be made in the annual appropriation bill. (19) That in case the firm shall convey by trust deed or mortgage, as provided, then, in that case, the city shall pay, and is hereby authorized to pay, all rentals to the trustee or mortgagee, and take receipts therefor, which shall be binding upon the firm, and the rentals shall be applied upon the payment of the bonds and the interest thereon.

May 20, 1895, the plaintiff, as a resident and owner in fee simple of real and personal property in the city, subject to taxation, to the value of over $2,000, commenced this action to have the ordinance described adjudged to be null and void, and that the defendants and all persons acting for them or under their authority be restrained and enjoined from further proceedings thereunder. The complaint set forth the ordinance, the substance of which has been stated, and alleged the facts stated, and also alleged, in effect, that the cost of the waterworks, as provided for in the ordinance, together with the other indebtedness of the city, would exceed 5 per cent. of the assessed valuation of the city at the assessment for 1894; that the ordinance had been approved by the city and accepted by Wells, Reichert & Co., who had given their bond to the city, as required, which bond had been approved by the city May 7, 1895; that Wells, Reichert & Co. were about to enter upon the execution of the contract at great expense to be incurred to the city, and an irreparable damage and injury to the residents and taxpayers thereof; that the ordinance was void, and contrary to law and the charter of the...