Ludington Water-Supply Co. v. City of Ludington
| Decision Date | 06 March 1899 |
| Citation | 119 Mich. 480,78 N.W. 558 |
| Court | Michigan Supreme Court |
| Parties | LUDINGTON WATER-SUPPLY CO. v. CITY OF LUDINGTON. |
Case-made from circuit court, Mason county; James B. McMahon, Judge.
Assumpsit by the Ludington Water-Supply Company against the city of Ludington. There was a judgment for plaintiff, and defendant brings up the case for review on a case-made. Affirmed.
Henry C. Hutton (Fitch & Reek, of counsel), for appellant.
C. G Wing, for appellee.
The plaintiff is a corporation organized in 1881, under the provisions of chapter 84 of Howell's Annotated Statutes of the State of Michigan. It has maintained its organization since that time, has built and continuously operated a system of waterworks since its organization in the defendant city. The defendant city was first incorporated in the year 1873 under a special charter, received a new charter in 1893, and passed under the general law of 1895, by taking no action after that act went into operation. On the 10th of August, 1882, the plaintiff had constructed a system of waterworks in the defendant city, and on that day a contract was entered into between the parties. The contract provided that the plaintiff company should have the right to construct and maintain a system of waterworks in the streets and alleys of the city, and contained the following recital "Whereas, the common council of said city hath, by resolution, declared that it is expedient to have constructed in said city waterworks for the purpose of supplying said city and the inhabitants thereof with water, but that it is inexpedient for said city, under the power granted in its charter, to build such waterworks; and whereas, the said water-supply company, under the authority granted to them by the common council of said city, hath gone on and erected such works, and now has the same in operation in said city: Therefore, the said party of the first part," etc. The contract, by its terms, was to remain in force for a period of 32 years from the 1st day of July, 1882. The city was to use 35 hydrants for fire protection, and to pay the company for them $80 per hydrant, and also to pay at the rate of $80 each for such watering troughs as the city might establish and maintain. The company agreed to complete its works within a certain time, to obtain sufficient water to supply the city and inhabitants, to maintain sufficient pressure on its mains for fire protection, etc. Under this contract, the company was permitted to obtain the water which it furnished from the channel of the harbor where the river flowed into Lake Michigan; and, as a matter of fact, it did obtain the water it furnished at that point until after the year 1892. The parties went on under this contract until July 29, 1885, when a new agreement was made between them. The new agreement recited that it was intended to supersede the former agreement between the parties. This last agreement was, by its terms, to be and remain in force until the year 1901. By it the city agreed to pay the company the sum of $80 per hydrant for each of the 40 hydrants then in use, and a like sum for each watering trough in use, to be paid quarterly. It was provided that the company was to furnish, place, and maintain 24 additional hydrants, and 1 additional watering trough, to be placed as provided in the contract, and the city was to pay for them at the same rate as for the hydrants and watering troughs then already in use. The water furnished by the company was very impure. The people were dissatisfied with the quality of the water furnished, and from 1890 to 1892-a period of two years-there were almost continuous negotiations between the city and the company looking to a large extension of the system, and to the furnishing by the company of pure water.
The main point of serious difference between the parties was the matter of hydrant rentals. They had great difficulty in agreeing on the price. Finally, in 1892, the parties made a new contract which recited the existence of the contract of 1885, and the time it had to run, the length of pipes then laid, and the number of hydrants and watering troughs in use and then provided that the company, by the new contract, agreed to lay five miles standard iron mains, to furnish 14 hydrants to the mile, to be placed as directed by the city, and to keep the whole 138 hydrants provided for in good repair and condition. The company agreed to keep up an ordinary water pressure of 40 pounds to the inch, to be increased to 80 pounds within 10 minutes after notice of a fire. The company further agreed that, as early in the season of 1892 as possible, it would extend its works into Lake Michigan, and furnish wholesome water, suitable for drinking, culinary purposes, and family use, and that any failure thereafter on the part of the company to furnish an abundant supply of water suited to the health of the city should work a forfeiture of the contract. The company agreed to furnish a free supply of water for the city hall, for fire department displays, for watering troughs then in use, for drinking fountains and flushing sewers, etc., and then follows: Article 60 of the contract provides as follows: "For a period of thirty years from January 1st, 1892, unless this contract should sooner terminate by purchase, under article eight, or otherwise, said first party agrees to protect said second party in the exercise of all street rights necessary for the proper conduct of its business, to pass and keep in force an ordinance prohibiting waste of water and meddling with fire hydrants, to pay all taxes levied against the property of said second party in excess of those mentioned in article five above, to pay quarterly $1,250 on the fifteenth of Feb., May, August, and Nov. of each year, with interest at six per cent. after due, for the fire protection afforded by the twelve miles of main and one hundred and thirty-eight hydrants above provided for, and further agrees to pay forty dollars per hydrant, with not less than fourteen hydrants to the mile, for all extensions hereafter ordered, and further agrees to enter into a new contract or purchase the works at the end of thirty years." The contract contains various other provisions, and, among others, a provision giving the city the right to buy the plant, exercisable at periods of five years, on six months' notice, and provides that, if the parties do not agree as to price, the price shall be determined by three disinterested persons, not residents or property owners in the city; and the contract fixes the rate to be charged for water to private takers. This contract was duly executed by the mayor and recorder on the part of the city, the common council having authorized them to execute it. Under this contract, the water-supply company went on, and made the extensions called for by the contract, and fulfilled its part thereof in every substantial particular. The city also carried out its part of the contract substantially, with these exceptions: There is $1,000 due on the payment for hydrant rentals, due August 15, 1896; $1,560 was due November 15, 1896, which has not been paid; and a balance of $1,040.40 due February 15, 1897. For these items, with interest, the plaintiff brings this suit. Also in the year 1897 the plaintiff was assessed on its property for taxes at a valuation of $50,000. Notice was served on the city, asking it to take steps to pay or take care of this tax so far as it was levied upon a valuation in excess of $15,000; but the city neglected and refused so to do. The city treasurer insisted upon collecting the whole amount. This tax amounted to the sum of $2,034.49, and it is sought to recover that amount in this suit. The city treasurer levied upon and advertised certain personal property of the company for sale under levy for said tax. The company finally, on February 28, 1898, paid this tax under protest, filing with the treasurer a written protest setting up the contract aforesaid between the city and company as a reason why the company should not pay said tax. These claims were filed with the city in writing, and presented to the common council for audit and allowance. The claims were not verified by affidavit, nor certified to by any officer of the city; but they were received by the city without objection on that ground, referred to the proper committee, and acted upon. On March 7, 1898, the committee reported on the matter of the claim for taxes to the council, and the council rejected the claim upon its merits. The council did not act upon the claim for rentals until after this suit had been commenced, when the claim was allowed, but has not been paid. The suit was commenced March 12, 1898. The circuit judge found as a fact that the want of verification of the claims was waived by the council by accepting the claims without objection, and acting upon them on their merits. This, so far as waiver, is a question of fact. Until 1897 the property of the company had always been assessed within the contract amount, as a matter of fact, so that there was no claim for the city to pay. Under the contract of 1892, the company expended about $80,000 in extending its works, and procuring water from Lake Michigan. The property of the company, when it was assessed in the year 1897, was...
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