Esberg-Gunst Cigar Co. v. City of Portland

• Decision Date: 16 January 1899
• Parties: ESBERG-GUNST CIGAR CO. v. CITY OF PORTLAND. [1]
• Court: Oregon Supreme Court

55 P. 961

34 Or. 282

ESBERG-GUNST CIGAR CO. v. CITY OF PORTLAND. ^[1]

Supreme Court of Oregon

January 16, 1899

Appeal from circuit court, Multnomah county; Alfred F. Sears, Jr. Judge.

Action by the Esberg-Gunst Cigar Company against the city of Portland. Judgment for defendant. Plaintiff appeals. Reversed.

This is an action to recover damages for an injury to plaintiff's goods, caused by the bursting of an alleged negligently defective water main belonging to the defendant city, and the consequent flooding of the cellar in which such goods were stored. In 1885 the charter of the city of Portland was amended by adding thereto an additional chapter (Laws 1885 p. 97), by which the city was authorized and empowered to construct or purchase, keep, conduct, and maintain waterworks therein of a character and capacity sufficient to furnish the city and its inhabitants with water for all uses and purposes necessary for the comfort, convenience, and well-being of the same, and to issue and dispose of its bonds for that purpose. Sections 142, 153. The powers thus given to the city were to be exercised by 15 resident taxpayers thereof, named in the act, styled collectively "the water committee," 9 of whom should constitute a quorum, and who were authorized to fill by appointment all vacancies which may occur in their number. Sections 143, 145. This committee was required to organize within a certain time by the election of a chairman and clerk, whose duties were prescribed by the act (sections 144, 146-148); to appoint a treasurer, who shall have the care and custody of all moneys received by the committee from the sale of bonds or otherwise for the construction or purchase of waterworks, and shall pay out the same on the order of the chairman, counter signed by the clerk of the committee, and not otherwise (section 149); to employ and discharge, from time to time, such other agents, workmen laborers, and servants at such compensation or wages as it may deem necessary and convenient to the accomplishment of the purposes of the act (section 151). It is further provided that whenever and as soon as the works provided for in the act are, in the judgment of the committee, ready for use, it shall select from its members, if a sufficient number will consent to serve, and, if not, from the resident taxpayers of the city, five persons for the several terms of two, four six, eight, and ten years, who shall be styled individually "water commissioners," and collectively "the water commission," to which it is required to turn over the waterworks, and all property appurtenant thereto, together with all books, papers, and accounts relating to the construction or purchase thereof; and thereafter the power and authority given by the act to the city to keep, conduct, and maintain waterworks shall be exercised by such commission. Sections 154, 155, 157. After the water commission has been selected by the committee, as provided in the act, the members of such commission shall thereafter be appointed by the governor of the state from among the resident taxpayers of the city, as vacancies may occur from time to time. The commission is given power (1) to employ, hire, and discharge all such agents, workmen, laborers, and servants as it may deem necessary or convenient in the conduct and management of the waterworks; (2) to make all needful rules and regulations in reference thereto; (3) to establish rates for the use and consumption of water by the city and inhabitants thereof, including the people living along the line or in the vicinity of the works without the city; (4) to provide for the payment of water rates monthly in advance, and to shut off the water from any house, tenement, or place for which the water rate is not duly paid, or when any rule or regulation is disregarded or disobeyed; (5) to do any other act or make any other regulations necessary and convenient for the conduct of its business and the due execution of the power and authority given it by the act, and not contrary to law. Section 159. All money collected or received by the commission for the use and consumption of water or otherwise is required to be deposited with the treasurer of the city, who shall keep the same separate and apart from other funds, and pay it out on the order of the chairman of the commission, countersigned by the clerk, and to the holder of any overdue interest coupons of the bonds issued under the provisions of the act, on the presentation and surrender thereof. Section 158. It is made the duty of the commission annually, before the 1st day of January, to make a written estimate of the probable expense of maintaining and conducting the waterworks during the ensuing year, and also the cost of any contemplated alteration, improvement, or extension, and thereupon ascertain and prescribe, as nearly as it conveniently can, a water rate for such year that will insure a sufficient income from the sale of water to pay such expense and costs, together with one year's interest on the bonds then issued and outstanding. Section 160. And, after the expiration of five years, in fixing the water rates it is authorized to include in its estimate therefor a sum equal to 1 per centum on the par value of the bonds then issued and outstanding, which sum shall be collected and invested under the direction of the commission as a sinking fund for the payment or redemption of such bonds. Section 161. Immediately after the act of 1885 became a law, the persons named therein as the water committee proceeded to organize as directed, and to issue and dispose of city bonds, from the proceeds of which they purchased, in December, 1886, the plant of the Portland Water Company, a private corporation then engaged in supplying the city and its inhabitants with water for hire, and subsequently commenced to enlarge the works so purchased by the construction of a gravity system, by which water should be taken from Bull Run creek at a point some miles distant from the city. The act of 1885 was, in substance, incorporated in the later act (Laws 1891, p. 796), providing for the consolidation of the cities of Portland, East Portland, and Albina, which went into effect in July, 1891, after having been accepted by a majority of the legal voters of the several cities interested, at an election held for the purpose in June, 1891, and is also contained in the subsequent charter of 1893 (Laws 1893, p. 810). During the process of enlarging the works, the water committee, during the year 1892, laid a 24-inch main on Fourth street, and connected it with the other mains comprising the water system. On January 13, 1896, this main burst, and the waters escaping therefrom flooded the streets, and the cellars of the adjoining buildings, including the premises occupied by the plaintiff, and used as a tobacco and cigar store, to its damage in the alleged sum of $2,667.87. Its claim therefor having been rejected by the city, this action was brought, resulting in a judgment of nonsuit, from which the appeal is taken.

Wirt Minor, for appellant.

J.M. Long and R.R. Duniway, for respondent.

BEAN J. (after stating the facts).

In support of the judgment it is contended: First, that the waterworks belong to the city in its public or governmental capacity, and it is therefore not liable to a common-law action for negligence in constructing or maintaining the same; second, the water committee, under whose direction and control they were constructed, and were being maintained at the time of the accident, is an independent body, appointed by the state for public governmental purposes, over which the city has no control, and for whose negligence it is not liable under the common-law doctrine of respondeat superior and, third, there was not sufficient evidence of negligence given on the trial to carry the case to the jury as a question of fact. There is a well-established distinction made by the authorities between the liability of a municipal corporation for the acts of its servants, agents, officers, or employés done in the exercise of powers and duties granted to or imposed upon it as a mere agency of the state, and performed exclusively for public governmental purposes, and acts done in the exercise of powers granted to or privileges conferred for its own profit, advantage, and emolument, although inuring incidentally to the public. This distinction, though a very shadowy one at times, and though much difficulty has been experienced by the courts in determining within which class a particular case should be placed, nevertheless is well settled, and has governed the decision in many cases. It is alluded to by Mr. Justice Strahan in Caspary v. City of Portland, 19 Or. 496, 24 P. 1036, and is very clearly stated by Folger, J., in Maxmilian v. Mayor, etc., 62 N.Y. 160, 164. "There are two kinds of duties which are imposed upon a municipal corporation," he says. "One is of that kind which arises from a grant of a special power, in the exercise of which the municipality is as a legal individual; the other is of that kind which arises, or is implied, from the use of political rights under the general law, in the exercise of which it is as a sovereign. The former power is private, and is used for private purposes; the latter is public, and is used for public purposes. The former is not held by the municipality as one of the political divisions of the state; the latter is. In the exercise of the former power, and under the duty to the public which the acceptance and use of the power involves, a municipality is like a private corporation, and is liable for a failure to use its power well, or for an injury caused by using it badly. But where the power is intrusted to it as one of the political divisions of the state, and is...