Griffith v. Vicksburg Waterworks Co.

• Decision Date: 04 June 1906
• Court: Mississippi Supreme Court
• Parties: BENJAMIN W. GRIFFITH, ET AL. v. VICKSBURG WATER WORKS COMPANY

40 So. 1011

88 Miss. 371

BENJAMIN W. GRIFFITH, ET AL. v. VICKSBURG WATER WORKS COMPANY

Supreme Court of Mississippi

June 4, 1906

FROM the chancery court of Warren county, HON. WILLIAM P. S VENTRESS, Chancellor.

Griffith and twenty-eight other persons, the appellants, were complainants in the court below; the Vicksburg Waterworks Company, the appellee, was defendant there. From a decree dissolving an injunction the complainants appealed to the supreme court.

By an amendment to its charter approved March 18, 1886, the city of Vicksburg was authorized "to provide for the erection and maintenance of a system of waterworks to supply said city with water, and to that end to contract with a party or parties who shall build and operate waterworks." Laws 1886, p. 695, ch. 358, § 5. Under this authority an ordinance was enacted by the city on November 18, 1886, which contained the following paragraph: "Section 13. The said Samuel R. Bullock & Co., their associates, successors, or assigns, shall have the right to make all needful rules and regulations governing the consumption of water, the tapping of pipes and general operation of the works, and to make such rates and charges for the use of said water as they may determine, provided that such rates and charges shall not exceed fifty cents for each thousand gallons of water." The foregoing ordinance, which was for a thirty-year term was accepted by Bullock & Co., and they organized under the general laws of the state, the Vicksburg Water Supply Company, to which they assigned the ordinance contract. The supply company erected a plant, and operated the same until August, 1900, at which time the plant and its franchises were sold under a trust deed for debt, and was purchased by one Crumpler. The purchaser assigned to the appellee, the Vicksburg Waterworks Company, which has since been in possession of the property, operating the same, under the ordinance contract aforesaid. By this ordinance the city agreed, amongst other things, to take a certain number of public hydrants, and to pay for the same at a certain rate during the entire term; but on November 7, 1900, the city claiming to proceed under the act of March 9, 1900 (Laws 1900, p. 180, ch. 138), resolved that "the mayor and aldermen deny any liability upon any contract for the use of the waterworks hydrants; that from and after August, 1900 they will pay reasonable compensation for the use of said hydrants," etc. This position of the city authorities led to the filing of a bill in equity by the water company, in the United States circuit court, Southern district of Mississippi, Western division, at Vicksburg, in February, 1901, which is hereinafter called No. 41 (because of its docket number), in which the company set up its ordinance contract of 1886, claiming that the same was impaired by the act and by the ordinance of 1900 aforesaid. The federal court dismissed the bill for want of jurisdiction, but on appeal the United States supreme court reversed that decision, in April, 1902, (Vicksburg v. Vicksburg Waterworks Co., 202 U.S. 453; 22 S.Ct. 585, 46 L.Ed. 808), holding that a federal question of contract impairment was presented, and the cause was remanded for further proceedings. Thereupon such further proceedings were had that on May 18, 1904, the United States circuit court rendered a final decree whereby the city was enjoined, in brief, from undertaking to nullify the contract for hydrant service, from erecting a system of its own, and from contaminating the company's water by the discharge of sewerage into its source of supply above the intake. This litigation and the decree did not raise or decide the question of the power of the city to regulate rates for private consumers.

On December 7, 1903, the city adopted an ordinance prohibiting water, light and gas companies from charging damages or other penalty for failure to pay bills when due "until ten days after presenting to the debtors" and affording opportunity on such presentation to pay the same. On March 19, 1904, ch. 182, p. 231, of the laws of that year was approved, whereby cities were authorized to prescribe by ordinance maximum rates of charge for supply of water or lights to private consumers; and on April 20th following (one month before the rendition of the final decree aforesaid) the city adopted two ordinances fixing such maximum charges on water, one fixing the flat rates," and the other fixing the rates by meter. Thereupon, and on the 7th of January, 1905, the water company exhibited against the city another bill in equity in the United States circuit court aforesaid, numbered 79, which set forth the preceding history, also the litigation and decree in cause 41 aforesaid, also the ordinance of December, 1903, and the two ordinances of April, 1904; alleged, in brief, that the enforcement of those ordinances was violative of the company's ordinance contract of 1886, and destructive of its business; and prayed for injunction accordingly. Three weeks later, on January 28th, the appellants, and other citizens of Vicksburg, in behalf of themselves and of all others interested who might see proper to join, filed in the state chancery court the original bill in this cause. This bill set forth the three ordinances of 1903 and 1904; alleged that in 1903 the company had unnecessarily advanced its rates; alleged the violation of the ordinance of 1903 by demands made for damages without proper presentation of bills; alleged violation of the ordinance fixing meter rates, by charges in excess of the maximum, and in themselves unreasonable, also by minimum charges made of two dollars per month on each meter, even though less than two dollars' worth of water was used, and although such meters had been put in by the customers at their own expense; alleged that the flat rates charged by the company were exorbitant; alleged a discrimination in charges, and that the company was threatening to cut off the water of complainants unless they should submit to such unlawful demands. The prayers were for the enforcement of the city ordinances of 1903 and 1904, and for appropriate injunction against cutting off of water, and against unlawful charges, etc. On the 24th of February, 1905, the United States circuit court rendered an interlocutory decree in cause No. 79, whereby the city was enjoined from enforcing the ordinance of December, 1903, and the two ordinances, fixing rates, of April, 1904, and from interfering in any manner with the company's "contract rights" under the ordinance of 1886, and from interfering with the company's regulations, or with its water rates, or with the flat rates for the citizens. The answer of the water company, filed March 6, 1905, defended all of its rates and charges; alleged that the increase was necessary to pay legitimate expenses and charges, and that they were within the maximum fixed by sec. 13 of the ordinance of 1886 and the general powers conferred by that ordinance; denied the alleged unreasonableness of its rule as to damages on unpaid bills, or any of its regulations; alleged that the ordinances of 1903 and 1904 violated the company's contract made by the ordinance of 1886; pleaded the equity causes in the federal court (causes No. 41 and No. 79), and the decree made as aforesaid on May 18, 1904, in cause 41, as estoppels; also pleaded the pending injunction in cause 79 as a restraint against the prosecution of this cause under penalty of contempt; denied any discriminations, etc. On March 24, 1905, this cause was heard in the court below on a motion to dissolve on the pleadings, exhibits and transcripts showing the history of the litigation as hereinbefore stated. The chancellor dissolved the injunction and decreed damages of $ 100 on the bond as for attorney's fees.

Judgment affirmed.

Dabney & McCabe, for appellants.

The city had no authority, under the act of 1886, to make a contract with Samuel R. Bullock & Co., and their successors, etc., which woud deprive it under legislative authority, of power to regulate rates of charges for water and prescribe rules and regulations for the conduct of the company.

That the act of 1886 did not give to the city of Vicksburg authority to make such an irrevocable contract as it is claimed it made, seems too clear to admit of controversy.

The supreme court of the United States has repeatedly held that such power must clearly appear; otherwise, it will not exist.

In Railroad Commission cases, 116 U.S. 307, that court said, speaking of this power:

"This power of regulation is a power of government continuing in its nature, and if it can be bargained away at all it can only be by words of positive grant, or something which is in law equivalent. If there is a reasonable doubt it must be resolved in favor of the existence of the power."

This excerpt is taken from that case in the case of Owensboro v. Owensboro Waterworks Co., in 191 U.S. p. 358. The court adds: "This doctrine has been affirmed numbers of times since," and cites Freeport Water Co. v. Freeport, 180 U.S. 587; Rogers Park Water Co. v. Fergus, 180 U.S. 624; Joplin v. S.W. Missouri Lt. Co., 191 U.S. 43, and other cases. Norfolk & Western R. R. Co. v. Pendleton, 156 U.S. 667; Greenville W. W. Co. v. Greenville (Miss.), 7 So. 409.

Hence, the only question presented here is, does the act of 1886 by "words of positive grant" give the city of Vicksburg, through its board, the power to take from itself the right in the future to exercise its governmental powers in respect to this company? To read the law is sufficient to give a negative answer without hesitation. It is too clear for argument.

To same effect in strong terms, as excepts from Pearsal v. Gr. No. R. R. Co., 161 U.S. 646 (664-5).

If such an irrevocable contract...