Leadville Water Co. v. City of Leadville

• Decision Date: 02 March 1896
• Citation: 45 P. 362,22 Colo. 297
• Parties: LEADVILLE WATER CO. v. CITY OF LEADVILLE et al.
• Court: Colorado Supreme Court

45 P. 362

22 Colo. 297

LEADVILLE WATER CO. v. CITY OF LEADVILLE et al.

Supreme Court of Colorado

March 2, 1896

Error to district court, Lake county.

Action by the Leadville Water Company against the city of Leadville and others. A demurrer to the complaint was sustained, and plaintiff brings error. Affirmed.

This action was brought for the purpose of obtaining a decree declaring void an ordinance adopted by the city council of the city of Leadville on the 23d day of June, 1891, fixing the water rents to be paid to the plaintiff company by the citizens of Leadville. The complaint alleges that the plaintiff company was organized in the year 1878, for the purpose of building a system of waterworks to supply the town of Leadville and its inhabitants with water for fire domestic, and other purposes; that on the 9th day of January 1879, it entered into a contract with the town of Leadville in which the prices to be paid by the town to the plaintiff company for supplying water for fire hydrants, and for other purposes of the town in its corporate capacity, were fixed in which also was the following clause, in relation to the prices to be charged of individual citizens: 'That the said party of the second part [being the water company] will furnish to the citizens of said town water for general purposes at such rates and prices as may be fixed by said board of trustees from time to time, said rates not to be less than prices for such water supply in other towns of the state similarly situated.' There is a further allegation that on the same day, and as a part of this contract between the parties thereto, the board of trustees duly passed an ordinance in the third section of which is the following: 'And said company [meaning the plaintiff company] is hereby authorized to charge and collect, from each person supplied by it with water, such rents as may be agreed upon between said company and the town of Leadville.' It is also alleged that thereafter the town of Leadville became merged in the city of Leadville, a city of the second class, under the laws of this state, which city succeeded to all the rights and became and is subject to all contracts made by the town of Leadville; that the city council, acting as the successor of the board of trustees of the town, on the 23d of June, 1891, passed an ordinance purporting to fix, in accordance with this contract, the rates to be charged by the plaintiff company for supplying water to individual consumers in the city, which ordinance is alleged to be contrary to and in violation of the terms of the contract between this plaintiff and the defendant city, beyond the powers of the city to pass, and which provides grossly unreasonable rates for the services furnished by plaintiff; hence void. The breach of the contract and of the defendants' duty is alleged in the following words: 'That, in and by the terms of said contract, it is provided that said rates shall not be less than prices for such water supply in other towns of the state similarly situated. That it was the intention of the parties to said contract, and in making said contract, that the rates and prices to be paid this plaintiff should not be less than the rates and prices paid the other water companies in this state, taking into consideration the difference in the cost of the plant, installation, maintenance, and operation of other waterworks in said state and the waterworks of this plainiff. That the rates attempted to be fixed and established by said ordinance are less than the prices for such water supply in the following named towns in the state of Colorado, to wit, Pueblo, Pueblo county, Central City, Gilpin county, and Aspen, Pitkin county; being other towns in this state similarly situated.' There is a further allegation in the complaint: 'That the passage and adoption of said ordinance, and the attempt thereby made to fix and establish rates to be charged by this plaintiff for supplying water to the citizens and inhabitants of said city of Leadville and the customers of this plaintiff, was and is contrary to and in violation of the terms and conditions of the said ordinance of the board of town trustees of the town of Leadville, hereinbefore set forth, passed and adopted on the 9th day of January, A. D. 1879, in that this plaintiff never agreed to the rates or rents attempted to be fixed and established in and by said ordinance; but that the plaintiff, at and before the date of the pretended passage and adoption of said ordinance, strenuously and persistently protested and objected to the passage or adoption of said ordinance, or any ordinance which would be contrary to and in violation of the terms of the said contract between the plaintiff and the city of Leadville.' The complaint, although it purports to contain but one cause of action, continues with an averment that the effect of this ordinance would be to take from the plaintiff its property without due process of law, for the revenue which would be received from the collection of the said rates would be insufficient to pay its necessary operating expenses, interest on the bonded indebtedness of the company, and would give nothing by way of income upon the original investment; the claim being that the rates are grossly unjust, unreasonable, and oppressive, and would result practically in the confiscation of its property. A temporary writ of injunction upon the original complaint was issued, restraining the defendants, who are the city in its corporate capacity, the mayor, and the individual aldermen, from attempting to exercise or enforce the said ordinance. An amended complaint was afterwards filed, which is the one upon which the plaintiff now relies. A general demurrer thereto was filed by the defendants, which was sustained, the temporary writ of injunction dissolved, and the complaint dismissed. From this judgment the plaintiff is prosecuting this writ of error in this court.

Joseph W. Taylor and John M. Maxwell, for plaintiff in error.

N. Rollins, R. D. McLeod, and J. E. Havens, for defendants in error.

CAMPBELL J. (after stating the facts).

It seems to be conceded that the contract, as set out in the complaint, if it can be construed as constituting an agreement upon prices for the use of water, is within the power of the city to make. No question is raised by either party as to the reasonableness or enforceability of that part thereof which provides the test or the method the city shall employ in fixing the schedule of rates. The contention of the appellant is that this ordinance is void for the following reasons: First. There is no legislation in this state giving to a municipal corporation, in the absence of a contract to that effect, the power to prescribe rates to be charged by a water company. Under subdivision 69, § 4403, 2 Mills' Ann. St., when the right to build waterworks is granted by a municipality to a private corporation, the former may authorize the latter to charge and collect from individual consumers only such water rent as may be agreed upon between said corporation building said works and said city.

There having been no agreement made between the plaintiff and the defendant in this case for such rates, the ordinance purporting to fix this schedule of rates is ultra vires the city and therefore void. Second. Assuming, for the purposes of the argument, that the contract mentioned in the complaint is an agreement between the city and the water company which gives to the former the power to fix rates, provided only they are not less than the rates in towns and cities in this state similarly...