Mayor and Aldermen of the City of Vicksburg v. Henson

• Decision Date: 01 December 1913
• Docket Number: No. 546,546
• Citation: 231 U.S. 259,58 L.Ed. 209,34 S.Ct. 95
• Parties: MAYOR AND ALDERMEN OF THE CITY OF VICKSBURG, Appts., v. W. A. HENSON, Receiver of the Vicksburg Waterworks Company, and Lelia Boykin
• Court: U.S. Supreme Court

231 U.S. 259

34 S.Ct. 95

58 L.Ed. 209

MAYOR AND ALDERMEN OF THE CITY OF VICKSBURG, Appts.,

v W. A. HENSON, Receiver of the Vicksburg Waterworks Company, and Lelia Boykin.

No. 546.

Argued and submitted October 28, 1913.

Decided December 1, 1913.

Messrs. T. C. Catchings, O. W. Catchings, George Anderson, and John Brunini for appellants.

Messrs. Edgar H. Farrar, J. C. Bryson, Joseph Hirsh, Richard F. Goldsborough, and Hannis Taylor for appellees.

Mr. Justice Day delivered the opinion of the court:

This suit originated in the district court of the United States for the southern district of Mississippi, where an injunction restraining the appellants from constructing a waterworks system during the term of a certain franchise previously granted by the city of Vicksburg was allowed upon the complaint of W. A. Henson, receiver of the Vicksburg Waterworks Company, one of the appellees herein (whom we will hereafter call 'the receiver'), and the decree upon appeal was affirmed by the circuit court of appeals for the fifth circuit (121 C. C. A. 664, 203 Fed. 1023), from which affirmance this appeal is taken.

The case, as made out in the district court and shown by the record, appears to be:

The receiver alleged that in 1886 the city, under authority of an act of the legislature, by ordinance granted to Samuel R. Bullock & Company a franchise to furnish the city with water for a term of thirty years; that he had succeeded to the rights and interests of Bullock & Company; that he was paying taxes upon the property of the Vicksburg Waterworks Company, and was entitled to the rights and privileges of a taxpayer; that in 1900 the city of Vicksburg attempted to abandon the contract, and to build and operate a waterworks system of its own, and that in a suit instituted in the circuit court of the United States for the southern district of Mississippi, such action had been enjoined; that by the final decree therein it was, among other things, ordered 'that the defendant refrain from constructing waterworks of its own until the expiration' of the franchise, and that, upon appeal to this court, such decree was affirmed. The pleadings, final decree, and opinion of this court in the former case and the franchise of 1886 were introduced into the record in this case as exhibits, and, to save repetition, reference is made to the franchise as quoted in 185 U. S. 65, 46 L. ed. 808, 22 Sup. Ct. Rep. 585, to the opinion in 202 U. S. 453, 50 L. ed. 1102, 26 Sup. Ct. Rep. 660, 6 Ann. Cas. 253, and the outline of the pleadings in that case as set forth in those reports.

The receiver alleged further that the city had since made efforts to free itself from the franchise, and specified various suits and negotiations to that end; that early in 1912 the appellants, by resolution and election, undertook to authorize the sale of bonds for the construction of a waterworks plant, which was not to be operated until after the expiration of the franchise; that he would be compelled to pay taxes upon such bonds, and that the issuance and sale of the bonds and construction of the plant would depreciate the value of the Waterworks Company's property; that the city was commencing the construction of a plant too long before the expiration of the franchise; that the purpose of the city was really to depreciate the value of the Waterworks Company's plant so that the city might buy it at a price materially less than its actual value; and that the bond election, for several reasons, which the receiver stated, under the statutes and Constitution of Mississippi, and because of fraud, was of no effect, and the receiver offered to sell the plant at any time upon appraisement. The receiver prayed that the appellants be enjoined from issuing bonds for the construction of a waterworks system, and from taking any further steps toward the building of such plant during the term of the franchise, for the reason that the matter of construction of the plant during such time was res judicata, and that such construction would violate the franchise, and, further, that the bond election was void. The receiver also prayed for an injunction restraining the appellants from letting contracts for the laying of certain water mains, in violation of the franchise and of the decree in the former suit.

The appellants denied that the decree in the former case precluded the question raised here, and that the construction by the city of its own waterworks system would violate the terms of the franchise; that the receiver was, or was entitled to the rights and privileges of, a taxpayer, and alleged that the statement by the receiver of the dealings and negotiations between the city and the Waterworks Company was irrelevant and false. They also denied that the receiver or the Waterworks Company, as a taxpayer, would be affected by the bond issue; and alleged that, if the issuance of the bonds and construc- tion of the plant should depreciate the property of the Waterworks Company, it would be something for which it would not be responsible. They further denied that the steps taken by the city were premature, in view of the long time that must elapse before the expiration of the franchise, and that the city did not intend to build a plant; and alleged that the purpose of the Waterworks Company was to compel the city to buy its plant at an exorbitant price; and they denied that the bond election was void. The appellants further alleged that if the decree should be construed as contended for by the receiver, the court below, as a court of equity, would not at that time give the decree that effect, for the reason that the situation of the parties was so changed as to make it inequitable to prohibit the appellants from taking the action sought to be enjoined; that the receiver, by permitting the city to lay certain mains, had conceded the appellants' right to construct a waterworks plant, and was estopped from contesting such right; that the receiver and the Waterworks Company actively participated in the election, conceding appellants' right to build its own waterworks system, and therefore were estopped from asserting the contrary; that the receiver, by conceding appellants' right to construct its plant, itself construed the decree as only enjoining competition, and that the court should give effect to the decree as construed by the parties, and that the decree did not attempt to enjoin the sale of bonds, and that that is all that is sought to be restrained by this suit. The appellants also denied that the letting of contracts for laying mains would violate either the decree or the franchise.

Upon petition, Lelia Boykin, a taxpayer of the city of Vicksburg, the other appellee herein, was, upon order, admitted as a party to the suit, and by proper pleadings issues were made with reference to her as such taxpayer.

Upon final decree the court held that the receiver was entitled to the relief prayed for, and ordered that the appellants be enjoined from constructing a system of waterworks and from disposing of the bonds covered by the suit during the term of the franchise, and in its opinion the court based its decision upon the decree made by it and its affirmance in 202 U. S., and decided that the matter was res judicata. Upon appeal to the circuit court of appeals the decree of the district court was affirmed upon the ground that the decree and affirmance in the case in 202 U. S. constituted an estoppel. The case was thereupon brought here upon appeal, the assignments of error asserting that the circuit court of appeals erred in affirming the decree of the district court, in holding that the decree affirmed in 202 U. S. was an estoppel, and that the appellants had no right to build a waterworks system before the expiration of the franchise, and in not deciding that the receiver was estopped to assert that appellants did not have such right.

A motion was made to dismiss the appeal, first, upon the ground that the decree was not final in the district court, and hence was not appealable to the circuit court of appeals, because it left undisposed of one of the substantial issues in the case. That contention arises from this alleged situation: The pleadings of the receiver, as well as the petition filed by the intervener, Lelia Boykin, attacked the right to issue the bonds in question upon a ground independent of the former adjudication; namely, because the election at which the bonds were authorized to be issued was illegal for the reason that the city failed to make the statutory publication of the election, and that the curative act was unconstitutional, for the reason that the city had exceeded the limit of indebtedness allowed under chapter 142 of the Laws of Mississippi for 1910, the exception in such act being unconstitutional, and for the reason that the bond election was held under an ordinance purporting to amend the charter of the city, which ordi- nance was itself void, and for fraudulent and corrupt practices and for unlawful registration. This ground of attack, the appellees say, went to the right to issue the bonds to build a waterworks system at any time, and rendered them invalid, whether undertaken to be issued before or after the expiration of the Bullock franchise, and that such is the case is said to appear from reference to the final decree which was entered in the suit. The decree enjoined the appellants from building or constructing a system of waterworks or any part thereof within the city until after the 18th day of November, 1916,—the date of the termination of the Bullock franchise,—and it further provided:

'It is further ordered and decreed that the defendant, the Mayor and Aldermen of the City of Vicksburg, be and is hereby enjoined from disposing of the issue of four hundred thousand dollars ($400,000) of bonds mentioned and described in the pleadings with a view of constructing a waterworks system, or any part thereof, in said city during the life of...