Knoxville Water Company v. Mayor and Aldermen of the City of Knoxville

• Decision Date: 23 March 1903
• Docket Number: No. 212,212
• Citation: 189 U.S. 434,47 L.Ed. 887,23 S.Ct. 531
• Parties: KNOXVILLE WATER COMPANY, Plff. in Err. , v. MAYOR AND ALDERMEN OF THE CITY OF KNOXVILLE
• Court: U.S. Supreme Court

189 U.S. 434

23 S.Ct. 531

47 L.Ed. 887

KNOXVILLE WATER COMPANY, Plff. in Err.,

v MAYOR AND ALDERMEN OF THE CITY OF KNOXVILLE.

No. 212.

Argued March 13, 1903.

Decided March 23, 1903.

Messrs. Charles T. Cates, Jr., and Heber J. May for plaintiff in error.

Messrs. G. W. Pickle, J. W. Culton, and Messrs. Pickle & Turner for defendants in error.

Mr. Justice Holmes delivered the opinion of the court:

This is a complaint for a penalty against the Knoxville Water Company for charging and collecting water rates in excess of the rates fixed by the ordinances of the city of Knoxville. The water company pleaded that the ordinances ralied on violated the obligation of contracts between the city and itself, and deprived it of its property and liberty without due process of law, and so was contrary to the Constitution of the United States. The case was tried on appeal before a single judge, who made a special finding of facts, on which the supreme court of the state entered a final judgment for the plaintiff. 107 Tenn. 647, 64 S. W. 1075. The company then brought the constitutional questions here by writ of error.

The water company was incorporated in Tennessee in 1882 to construct waterworks in or near Knoxville, with power to contract with the city and inhabitants for the supply of water, and to 'charge such prices for the same as may be agreed upon between said company and said parties.' This incorporation was under a general act which provides as follows: 'And this [act] is in no way to interfere with or impair the police or general powers of the corporate authorities of such city, town, or village, and such corporate authorities shall have power by ordinance to regulate the price of water supplied by such company.' Acts of 1877, chap. 104, § 2. In the same year, 1882, the company made a contract with the city by which it agreed to construct its works and to furnish water, the city gave the company exclusive privileges for thirty years and agreed to make certain payments, etc., and it was mutually agreed, among other things, that, after fifteen years, the city should have the right to purchase the works at a price to be fixed by appraisers if not agreed upon. The contract contained three distinct parts: first, the promises of the company; next, those of the city; and last, the mutual undertakings. In the first part the company undertook as follows: 'Said company will supply private consumers with water at a rate not to exceed 5 cents per 100 gallons,' subject to an immaterial proviso. These are the words relied on by the company. They are assumed to contain an implied undertaking on the part of the city not to interfere with the company in establishing rates within the contract limits.

After the contract was made the company built its works and furnished water. Later it took over contracts between two other concerns and neighboring towns and consolidated with one of the other concerns, which was a corporation. The towns, on their side, were made a part of Knoxville; and the whole water supply was brought under the original contract. But these facts do not alter or affect the present case, and need not be stated in detail. The company went on furnishing water and charging rates within the contract limit, to the satisfaction of the city, it may be assumed, until within a year or two, when the city passed an ordinance which cuts down the rates which the company had been charging and asserts its right to charge.

The trouble at the bottom of the company's case is that the supposed promise of the city on which it is founded does not exist. If such a promise had been intended, it was far too important to be left to implication. In form the words of this part of the instrument are the words of the company alone. They occur in the part of the contract which sets forth the company's undertakings, not in the part devoted to the promises of the city or in that which contains the still later mutual agreements. See Georgia R. & Bkg. Co. v. Smith, 128 U. S. 174, 32 L. ed. 377, 9 Sup. Ct. Rep. 47; Ragan v. Aiken, 9 Lea, 609, 42 Am. Rep. 684. They are words of a company which was notified by the act which called it into being of the power expressly conferred upon the city 'by ordinance to...