Madera Waterworks v. City of Madera

• Decision Date: 12 September 1910
• Docket Number: 170.
• Citation: 185 F. 281
• Court: U.S. District Court — Southern District of California
• Parties: MADERA WATERWORKS v. CITY OF MADERA et al.

185 F. 281

MADERA WATERWORKS v. CITY OF MADERA et al.

No. 170.

United States Circuit Court, S.D. California, Northern Division. ^[1]

September 12, 1910

Frank H. Short, F. E. Cook, and E. J. McCutchen, for complainant.

Raleigh E. Rhodes and N. C. Coldwell, for defendant.

Percy V. Long, City Atty., and Thomas E. Haven and John T. Nourse Asst. City Attys, amici curiae.

WELLBORN District Judge.

Circumstances which I could not well control have prevented me from giving to this case the prompt consideration which it otherwise would have received.

At the oral argument, Mr. McCutchen submitted, and his printed brief subsequently filed contains, the following abstract:

'The question, however, is a simple one. It is whether, after private capital has, in a city where there are no public works, occupied the streets and thoroughfares for the purposes of supplying the city and its inhabitants with water under the section of the Constitution to which your honor's attention has been directed, the city itself may, while the privately owned plant is engaged in the business of supplying the municipality and its inhabitants with water, install a plant and operate it in competition with the privately owned plant.'

This paragraph, although brief, is comprehensive, and dispenses with a statement of the case. To the facts, which it implies however may be added, quoting from page 19 of defendants' brief filed August 19, 1909, the following:

'That the General Assembly of this state has, by statute, conferred upon the city of Madera the power of installing this contemplated system of municipal waterworks, is not denied by the complainant, and the case presented in the amended bill of complaint, and all of the argument so far made in support of that case, proceeds upon the admitted fact that the Legislature has given, or attempted to give, such authority. It is alleged and argued that the acts of the Legislature purporting to give to the city this authority are null and void because unconstitutional. That they are an infraction of the Constitution as they were passed in an attempted exercise of a legislative power not vested in the General Assembly, but taken from it. It is alleged and argued that this limitation upon the legislative power of the General Assembly is found in section 19 of article 11 and article 14 of the state Constitution. It is not asserted or claimed that those sections contain any express limitation of the legislative power. The contention is that this limitation upon the power of the General Assembly arises by implication.'

Complainant, in its reply brief filed September 10, 1909, at page 18, seems to accept this as a correct statement of the matter to which it refers, and I shall, accordingly, do the same.

Section 19 of article 11, above referred to, is as follows:

'In any city where there are no public works owned and controlled by the municipality for supplying the same with water or artificial light, any individual, or any company duly incorporated for such purpose, under and by authority of the laws of this state, shall, under and by authority of the superintendent of streets, or other officer in control thereof, and under such general regulations as the municipality may prescribe, for damages and indemnity for damages, have the privilege of using the public streets and thoroughfares thereof, and of laying down pipes and conduits therein, and connections therewith, so far as may be necessary for introducing into and supplying such city and its inhabitants either with gaslight, or other illuminating light, or with fresh water for domestic and all other purposes, upon the condition that the municipal government shall have the right to regulate the charges thereof.'

The other parts of the Constitution, which it is claimed bear on the subject, stated in the order in which Mr. McCutchen's brief arranges them, are article 14, article 12, Sec. 10, and article 13, Sec. 1.

Complainant's franchise to occupy and use the streets of the city of Madera must necessarily rest in a grant from the state. There is no other conceivable source from which it could emanate, and it follows, as the simplest of corollaries, that the nature and extent of the franchise is determinable from the grant, and that no action by the state, unless it entrenches upon the franchise so determined, can be justly characterized as 'contrary to natural rights,' 'subversive of fundamental principles,' or 'violative of constitutional provisions.' All efforts, therefore, to pitch the controversy on any other than a contractual plane, must be unavailing. Nor does the claim that section 19 of article 11 should be treated as a provision fixing a state policy help at all to a decision of the case. Indeed, this contention, instead of clarifying, only removes a step further from view, and thus tends to obscure, the point at issue. If it be conceded that said section embodies the declaration of a public policy, still it is, both in form and substance, the offer of a special privilege, which, when duly accepted, becomes a binding agreement, and hence, whether or not complainant's franchise so acquired is exclusive as against the city of Madera is purely a matter of contract, to be determined by applying to the section appropriate rules of construction.

With this understanding of the controversy, there is little need to do more than quote the following authoritative utterances from the Circuit Court of Appeals of this Circuit, speaking through Judge Ross:

'The plain and complete answer to the appellant's contention is that, by the contract upon which it relies, the city did not agree not to establish a water system of its own for the supplying of the city and its inhabitants with water. Not only is there no express agreement to that effect, but there is not a word or a syllable in the contract even tending in that direction; and, even if there was, the law is that a municipality cannot exclude itself from competition in such a matter by mere implication, for 'we are to remember,' said the Supreme Court, in the very recent case of Vicksburg v. Vicksburg Water Co. (202 U.S. 453) 26 Sup.Ct. 660 (50 L.Ed. 1102), 'the well-established rule in this court which requires grants of franchises and special privileges to be most strongly construed in favor of the public, and that, where the privilege claimed is doubtful, nothing is to be taken by mere implication as against public rights. This rule has been applied to a series of contracts in waterworks and land cases, and we have no disposition to detract from its force and effect, and, unless the city has excluded itself in plain and explicit terms from competition with the waterworks company during the period of its contract, it cannot be held to have done so by mere implication.' There is not in the contract here in question any exclusive privilege granted to the predecessor in interest of the complainant, even as against any other individual company, or corporation. The case above cited, and those of Helena Waterworks v. Helena, 195 U.S. 383 (25 Sup.Ct. 40, 49 L.Ed. 245); Joplin v. Light Co., 191 U.S. 150 (24 Sup.Ct. 43, 48 L.Ed. 127); Skaneateles Water Company v. Skaneateles, 184 U.S. 354 (22 Sup.Ct. 400, 46 L.Ed. 585); Bienville Water Supply Co. v. Mobile, 175 U.S. 109 (20 Sup.Ct. 40, 44 L.Ed. 92); and Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685 (17 Sup.Ct. 718, 41 L.Ed. 1165)-- are conclusive against the appellant, and leave nothing more to be said. ' Tillamook Water Co. v. Tillamook City, 150 F. 117, 119, 80 C.C.A. 71, 73.

The opinion of Judge Gilbert, on the hearing of this case in the Circuit Court, is also a clear statement of the law, and I quote therefrom as follows:

'The question presented by the demurrer is whether the city of Tillamook, by proceeding to construct and maintain a system of waterworks for the purpose of furnishing water to the city and its inhabitants, will impair the obligation of its contract with the complainant. It is not disputed that the municipality is given by the law the authority to create, own, and maintain a system of waterworks. The whole question depends upon the nature of its contract with the complainant. There can be no doubt that the grant of an exclusive privilege to a water company to lay water pipes and furnish the inhabitants of a city with water for a stated period of time, accepted and acted upon by the company, is the grant of a franchise given in consideration of the performance of a public service, and is protected against hostile legislation by the state and by the municipality. New Orleans Gas Co. v. Louisiana Light Co., 115 U.S. 650 (6 Sup.Ct. 252, 29 L.Ed. 516); New Orleans Water Co. v. Rivers, 115 U.S. 674 (6 Sup.Ct. 273, 29 L.Ed. 525); St. Tammany Waterworks v. New Orleans Waterworks, 120 U.S. 64 (7 Sup.Ct. 405, 30 L.Ed. 563). Nor can there be any doubt that, if a municipality has covenanted that during the life of the privilege it will not institute works of its own, it would be an impairment of the obligation of its contract to institute, before the expiration of that period, a waterworks system, to be owned and operated by the municipality. Walla Walla v. Walla Walla Water Co., 172 U.S. 1 (19 Sup.Ct. 77, 43 L.Ed. 341). But the city of Tillamook gave to the complainant's grantor no exclusive privilege or franchise, nor did it consent, as in the Walla Walla Water Case, that it would not erect, maintain, or become interested in any other waterworks.

The principles which must control the decision of the present case are to be found in Charles River Bridge Co. v Warren Bridge Co., 11 Pet. 420 (9 L.Ed. 773); Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685 (17 Sup.Ct. 718, 41 L.Ed. 1165); Bienville Water Supply Co. v....