Levis v. City of Newton

• Decision Date: 18 August 1896
• Docket Number: 2,342.
• Citation: 75 F. 884
• Parties: LEVIS v. CITY OF NEWTON et al.
• Court: U.S. District Court — Southern District of Iowa

75 F. 884

LEVIS v. CITY OF NEWTON et al.

No. 2,342.

United States Circuit Court, S.D. Iowa, Central Division.

August 18, 1896

Gatch Connor & Weaver and James S. Cummins, for plaintiff.

Guernsey & Bailey and O. C. Meredith, for defendants.

WOOLSON District Judge.

As the hearing for injunction was had upon the bill, with affidavit of plaintiff sustaining the averments of facts therein, the substance of the bill should here be stated:

The defendant city of Newton is a municipal corporation (city of the second class) organized under the General Statutes of Iowa. In January, 1887, the city council of said city duly enacted an ordinance (No. 129) providing that:

H. M Vaughn and his assigns are hereby granted the right and privilege of place in the streets and alleys of the city of Newton poles for the purpose of supporting wires, and to place upon such poles such wires as may be necessary to transmit electric power and incandescent electric light; the placing of said notes to be subject to the advice and control of a committee to be appointed for that purpose by the city council: provided, that such poles and wires shall be placed in such a way as not to obstruct the free use of or travel over said streets and alleys in which the same shall be placed.

Sections 2 and 3 provide that, if any such poles or wires are so placed as to interfere with such free travel and use, Vaughn must, on written notice, change location of same, so same shall not so interfere, etc.; and if, being thus notified, he shall not immediately so change place of location, the city council shall so change same at his expense.

Sec. 4. The right and privileges hereby granted by this ordinance shall be permanent and perpetual.

That forthwith, and relying on said ordinance, said Vaughn proceeded to erect and build an electric light plant, set poles, string wires, etc., and on August 1, 1887, had such plant in operation, and was engaged in supplying light and power to the inhabitants of said city, the expenditure therefore and therein amounting at that date to $12,500. On October 21, 1887, said Vaughn assigned, transferred, and set over to the Thomson-Houston Electric Company all his rights and privileges and franchises derived under said ordinance and said grantee took possession of said plant, and operated same until March, 1896, when said company sold and transferred said electric light plant, and property, rights, franchises, and privileges, to the defendant Newton Electric Company, a corporation duly incorporated under the General Statutes of Iowa. As part of the consideration of said sale, said Newton Electric Company executed its promissory notes for $10,000, and, to secure same, executed a trust deed upon all its plant, property, etc., plaintiff being named therein as trustee, which said notes are wholly unpaid. At the date of the enactment of above-named Ordinance No. 129, an electric plant was being operated in said city of Newton by a company known as the Newton Electric Light Company, with whom said city had previously contracted for furnishing electric lights for street purposes,--said contract, by its terms, to continue until January, 1890; and said last-named company did furnish electric light thereunder until April, 1888, when said company became insolvent, and assigned its said contract to said Thomson-Houston Company, which last-named company connected its plant and wires with the wires of said Newton Electric Light Company, and proceeded to fill the said contract of street lighting. On April 16, 1888, the city council of defendant city of Newton ratified said assignment of said contract, and authorized said Thomson-Houston Electric Company to carry out said street-lighting contract; and the last-named company furnished such street lighting thereunder until in January, 1890, using the plant, poles, and wires erected by said Vaughn under said ordinance, but expending in completing, etc., its plant for fully carrying out said contract, an additional sum of $4,000. About January, 1890, said city of Newton constructed a city electrical plant, for furnishing electric light and power to its streets, and also to the inhabitants of said city, in active competition with said electric company, and has since continued so to do. Said city has a population of about 3,500, and electric lighting for the streets of said city is supplied by the city plant, while the private lighting by electricity is about evenly divided between said city plant and that of said Newton Electric Company. On March 30, 1896, the city council of Newton passed an ordinance (No. 211) entitled.

An ordinance to repeal Ordinance No. 129, and to require the removal of the poles and wires placed in the streets and alleys of the city of Newton thereunder, and to prohibit the further erection of poles and wires in said streets and alleys.

By the first section of this ordinance, Ordinance No. 129, above given, is 'hereby, in all respects, repealed.' Section 2 provides: That it shall be the duty of every person or corporation now maintaining poles in the streets and alleys of the city of Newton, and claiming to have erected the same under the said Ordinance No. 129, to remove the same from the said streets and alleys within ninety days after this ordinance shall take effect.

Section 3 provides that the ordinance shall take effect five days after its passage and publication, etc., and the bill avers due publication thereof.

The bill further alleges that the construction and operation of the electric plant now owned by said Newton Electric Company, and the occupation, under the provisions of said Ordinance 129, of the streets, etc., of the city with its poles and wires, were not for private use, but-- Only for public use, and for the supply of light and power to said city and all its inhabitants, equally, whenever requested by them, and at just and reasonable rates; that said Newton Electric Company and its assigns have been at all times, and are now, able, ready, and willing to perform such public service upon just and reasonable terms of compensation; and that the sole design and purpose of said city of Newton in attempting to repeal said Ordinance No. 129 was and is to prevent competition with its own electric plant, to drive said Newton Electric Company out of the electric lighting business in said city, and to practically destroy, or render worthless, its plant, machinery, and appliances.

It is further alleged that said Newton Electric Company has no other assets or property than that included in the trust deed to plaintiff, and that the removal of said poles and wires from the streets and alleys of said city would destroy the only security held or attainable by plaintiff for the notes secured by his trust deed, and that said repealing ordinance is void, as (1) impairing the obligation of a valid contract between the city and said Newton Electric Company, and between said city, said company, and plaintiff; as (2) depriving said company and plaintiff, of their property without due process of law; as (3) denying said company and plaintiff the equal protection of the laws; and (4) taking said property for public use without compensation.

The issues presented on the hearing relate almost entirely to the right or legal power of the city of Newton to grant the franchise in said Ordinance No. 129 attempted. On the one hand, plaintiff contends that said ordinance granted to Vaughn and his assigns a valid, irrevocable franchise to use the streets of said city in the operation of the electric plant which was erected and put in operation under said ordinance. This, of course, involves the further assertion that the municipality of Newton had been authorized, by legislative delegation of power, to grant such a franchise. On the other hand, the defendants contend that no such legislative delegation of power existed at the date of the passage of said Ordinance No. 129, and therefore, of necessity, no grant of franchise passed under or by virtue of such ordinance. Defendants concede that, if said ordinance conferred a valid franchise on Vaughn and his assigns, the city could not repeal the same in the manner attempted by subsequent Ordinance No. 211. Stated more specifically, defendants' contention is: (1) The grant attempted in said Ordinance No. 129 is absolutely void. (2) In no event could said grant, if of any validity, be considered as more than a license revocable at the election of the city. (3) The city could not by ratification make valid a grant which was originally invalid.

Judge Dillon, in his valuable treatise on the Law of Municipal Corporations (4th Ed. Sec. 89), defines the powers of a municipal corporation as follows:

It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: First, those granted in express words; second, those necessarily or fairly implied in, or incident to, the powers expressly granted; third, those essential to the declared objects and purposes of the corporation,-- not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of the power is resolved by the courts against the corporation, and the power is denied. Or every municipal corporation, the charter or statute by which it is created is its organic act. Neither the corporation nor its officers can do any act, make any contract, incur any liabilities, not authorized thereby, or by some legislative act applicable thereto. All acts beyond the scope of the powers granted are void.

And this rule of construction is affirmed by the supreme court of Iowa in Henke v. McCord, 55 Iowa, 381, 7 N.W. 623; Becker v. Waterworks, 79 Iowa, 419, 44 N.W. 694. The principle of construction,...