Eaton v. Thayer

• Decision Date: 09 April 1925
• Citation: 128 A. 475
• Parties: EATON et al. v. THAYER et al.
• Court: Maine Supreme Court

128 A. 475

EATON et al.

v. THAYER et al.

Supreme Judicial Court of Maine.

April 9, 1925.

Report from Supreme Judicial Court, Kennebec County, in Equity.

Bill in equity by Harvey D. Eaton and others against Frederick C. Thayer and others. On report. Bill dismissed.

Argued before WILSON, C. J., and PHILBROOK, MORRILL, STURGIS, and BARNES, JJ.

Harvey D. Eaton, of Waterville, and George M. Chapman, of Fairfield, for plaintiffs.

Pattangall, Locke & Perkins, of Augusta, for defendants.

MORRILL, J. The Kennebec water district, comprising the territory and people constituting the city of Waterville and the Fairfield village corporation, was organized under chapter 200 of the Private and Special Laws of Maine of the year 1899, for the purpose of supplying the inhabitants of said district and of the towns of Benton and Winslow and all said municipalities with pure water for domestic and municipal purposes. By section 5 of said act "all the affairs of said water district shall be managed by a board of trustees composed of five members"; they were directed to organize by the election of a president and clerk, and were authorized when necessary to choose "a treasurer and all other needful officers and agents for the proper conduct and management of the affairs of said district." They were also empowered to "ordain and establish such bylaws as are necessary for their own convenience and the proper management of the district's affairs," and to "incur such expenses as may be necessary."

The district was granted very comprehensive power to take and hold for its purposes "sufficient water," and real estate "necessary for erecting dams, power, reservoirs, or for preserving purity of the water and watershed, and for laying out and maintaining aqueducts." It was granted the right of eminent domain, the right to use streets and highways for its pipe lines, and elaborate provision was made for the appraisal and acquisition of the property of the Maine Water Company.

The trustees were authorized to issue bonds to an amount sufficient to pay expenses incurred in the acquisition and purchase of the property of Maine Water Company, and to secure a new source of supply. The duty was imposed upon the trustees of establishing rates, uniform in their application within the district, and so established as to provide revenues: (1) To pay the current running expenses for maintaining the water system and provide for such extensions and renewals as might become necessary. (2) To provide for payment of interest on the indebtedness of the district. (3) To provide for a sinking fund by annual contributions. (4) Any surplus remaining at the end of the year is to be divided between the municipalities composing the district in the same proportions as each contribute to the gross earnings of the district's water system.

Although by section 10 of said act said district is "declared to be a quasi municipal corporation, within the meaning of section 55, chapter 46 of the Revised Statutes" of 1883, thereby subjecting the property of the inhabitants to liability to be taken to pay any debt due from the district, it is evident upon examination of the act that the Kennebec water district widely differs from the ordinary municipal corporation. No power of taxation exists; its revenues are raised solely by rates paid by individual consumers for water actually used by them; the water rates do not create a lien on the property supplied with water. The inhabitants do not have direct voice in the management of the affairs of the district; no meetings of the inhabitants are provided for; the trustees are chosen, two by the municipal officers of Waterville, two by the municipal officers of the Fairfield village corporation, and one is appointed by the county commissioners of Kennebec county from outside the district. The Kennebec water district is a corporate organization for the adminstration and financial management of a water supply for the inhabitants of the territory included therein, and of the towns of Benton and Winslow, said in the brief for the plaintiffs to number 20,000 people. While declared to be a quasi municipal corporation, it is a public trust, and the chief executive officers are very aptly called trustees. It is a public utility, and is subject to the jurisdiction, control, and regulation of the Public Utilities Commission (R. S. c. 55, § 15). Its accounts are subject to examination and audit by the Commission (R. S. c. 55, §§ 23, 24), and by its charter its rates are to be fixed upon a cost of service basis, as near as may be.

The present bill is filed by 14 citizens living and owning property in the district and paying water rates therein, "in behalf of themselves and all others similarly situated," against one of the present board of trustees, who has held that office since the organization of the district, a former trustee, and a former superintendent, who has deceased since the bill was filed. The district is also made a party defendant.

The bill seeks to compel the restitution to the treasury of the district of certain sums of money paid to the individual defendants severally in accordance with votes of the trustees, which plaintiffs allege are contrary to law and to the express provisions of the organic act of the district. It is alleged in the bill, and admitted by answer, "that on the 19th day of May, A. D. 1921, one of the plaintiffs made demand in writing upon the trustees to recover and return to the treasury of the district all said sums thus illegally paid out," and that the trustees declined to take such action.

The defendants at once challenge the jurisdiction of this court to grant the relief sought, upon the bill of individual ratepayers and very soundly maintain that this court has no jurisdiction of the cause under R. S. 1916, c. 82, § 6, paragraph XIII, and they urge that the authority of the court to act is limited by that statute. In 1874, however, this court was granted full equity jurisdiction, according to the usage and practice of courts of equity in all other cases where there is not a plain, adequate, and complete remedy at law. Since this enlargement of the equity powers of the court, its jurisdiction to grant preventive relief has been regarded as not limited as by paragraph 13. Blood v. Beal, 100 Me. 30, 60 A. 427.

But this bill does not seek preventive relief against anticipated or threatened unauthorized action by the trustees. It seeks remedial action only after the commission of an alleged illegal act.

We think that this court has full jurisdiction in equity over this corporation and its trustees, but that the proceeding should be instituted by the Attorney General, not by individual rate payers.

"In respect of property or funds held by municipal corporations in trust or clothed with public duties, equity, in virtue of its jurisdiction in respect of trusts and property, has always asserted its power to see that the trusts were observed and their public duties in respect of such property discharged. In England, and probably also in this country, the bill may in such cases be filed against the municipal corporation and its officers by the Attorney General on his own motion or on behalf of the corporators, taxpayers or persons interested." 4 Dillon on Mun. Corp. (5th Ed.) § 1574.

The lending English authorities are cited on brief of plaintiffs' counsel. Attorney General v. Dublin, 1 Bligh N. S. 312; Attorney General v. Liverpool, 1 Mylne & Cr. 343; 13 Eng. Ch. 343; Attorney General v. Poole, 4 Mylne & Cr. 17; Attorney General v. Wilson, 9 Simons, 30, affirmed 1 Cr. & Ph. 1.

In this country, according to Judge Dillon (section 1577), "the weight of authority seems to be that the Attorney General of a state, or its other public law officer, has by virtue of his office the right in his name, or in the name of the state, upon the relation of persons interested, to bring in cases which are properly of equitable cognizance and which affect the public, a bill in equity to prevent municipal corporations from exceeding the line of their lawful authority, or to have their illegal acts set aside or corrected." Attorney General v. Detroit, 26 Mich. 263, in which Mr. Justice Cooley (page 266) defines at length the kind and degree of abuse of corporate power which will justify action by the Attorney General. Attorney General v. Boston, 123 Mass. 460, 478; Davis v. New York, 9 N. Y. Super. Ct. 663.

The act establishing the Kennebec water district was the first of a series of acts in this state, creating organizations for the public ownership and control of the water supply of communities, which would not be obnoxious or subject to the constitutional limitation of municipal indebtedness. In that respect the act was held to be valid in Kennebec Water District v. Waterville, 96 Me. 231, 52 A. 774. During the next seven sessions of the Legislature 24 similar acts were passed, and such organizations have been successfully put into operation in many communities large and small, notably in Augusta, Portland, Gardiner, Bath, Brunswick. These later acts may differ from the Kennebec act in some details. In some the trustees are chosen by the qualified voters of the district, who otherwise have' no direct voice in the management of its affairs. The distinguishing feature of all is the creation of a corporate organization in the nature of a public trust for the acquisition, financing, and administration of the water supply of the several communities, managed by officials known as trustees, financed, not by taxation, but by the rates paid by individual consumers for the water used by them.

Some of the most prominent citizens and experienced business men of the communities have acted upon the...