Lehigh Water Co v. Corporation of Borough of Easton

• Decision Date: 18 April 1887
• Parties: LEHIGH WATER CO. v. CORPORATION OF BOROUGH OF EASTON and another
• Court: U.S. Supreme Court

121 U.S. 388

7 S.Ct. 916

30 L.Ed. 1059

LEHIGH WATER CO. v. CORPORATION OF BOROUGH OF EASTON and another.

April 18, 1887.

Edward J. Fox, for plaintiff in error.

Wm. S. Kirkpatrick, Robt. I. Jones, and Wm. Beidelman, for defendants in error.

Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.

For many years prior to June 21, 1880, the Lehigh Water Company, a corporation organized under the laws of Pennsylvania, by the purchase at judicial sale of the rights, powers, privileges, and franchises of the West Ward Company, also a Pennsylvania corporation, maintained a system of waterworks whereby the inhabitants of the borough of Easton, in that commonwealth, were supplied with water for domestic and business purposes. On that day it accepted the provisions of an act of the general assembly of Pennsylvania, approved April 20, 1874, entitled 'An act to provide for the incorporation and regulation of certain corporations.' By such acceptance it acquired the privileges, immunities, franchises, and powers conferred by the act upon corporations created under it. It also became entitled to the benefit of the third clause of the thirty-fourth section of that act, relating to water and gas companies. That clas e provides: 'The right to have and enjoy the franchises and privileges of such incorporation, within the district or locality covered by its charter, shall be an exclusive one; and no other company shall be incorporated for that purpose until the said corporation shall have from its earnings realized and divided among its stockholders, during five years, a dividend equal to eight per centum per annum upon its capital stock: provided, that the said corporations shall at all times furnish pure gas and water, and any citizen using the same may make complaint of impurity or deficiency in quantity, or both, to the court of common pleas of the proper county, by bill filed; and, after hearing the parties touching the same, the said court shall have power to make such order in the premises as may seem just and equitable, and may dismiss the complaints, or compel the corporation to correct the evil complained of.' The seventh clause of the same section provides: 'It shall be lawful at any time after twenty years from the introduction of water or gas, as the case may be, into any place as aforesaid, for the town, borough, city, or district into which the said company shall be located, to become the owners of said works, and the property of said company, by paying therefor the net cost of erecting and maintaining the same, with interest thereon at the rate of ten per centum per annum, deducting from said interest all dividends theretofore declared.' Laws Pa. 1874, pp. 73, 93.

After the acceptance by the Lehigh Water Company of the provisions of the act of 1874, the constituted authorities of the borough of Easton, in conformity with a vote of its qualified electors, and under power conferred by acts of the general assembly, approved March 12, 1869, and April 15, 1867, (Pamph. Laws Pa. 1867, pp. 412, 1254,) determined to construct, and itself maintain, a system of public works for supplying its inhabitants with water. This suit was brought by the Lehigh Water Company for the purpose of enjoining the authorities of the borough from constructing or providing such works, or from appropriating money therefor. The suit proceeds upon these grounds: (1) That the acts of 1867 ceased to be valid after the adoption of the present constitution of Pennsylvania; (2) that the Lehigh Water Company acquired, by the act of 1874, the exclusive right to erect and maintain water-works for supplying water to the inhabitants of Easton; (3) that the acts of 1867, if not superseded by the constitution of Pennsylvania, impaired the obligation of the contract created between that commonwealth and the company, by the latter's acceptance of the provisions of the act of 1874; consequently they were void under the national constitution.

The supreme court of Pennsylvania, affirming the judgment of the court of original jurisdiction dismissing the suit, held that the exclusive right acquired by the Lehigh Water Company, under the act of 1874, was exclusive only against other private water companies, and that the legislation did not intend to prohibit a city, borough, or other municipal corporation from providing its inhabitants...