Memphis Electric Light, Heat & Power Co. v. City of Memphis

• Decision Date: 02 July 1917
• Docket Number: No. 19808.,19808.
• Court: Missouri Supreme Court
• Parties: MEMPHIS ELECTRIC LIGHT, HEAT & POWER CO. v. CITY OF MEMPHIS et al.

196 S.W. 1113

271 Mo. 488

MEMPHIS ELECTRIC LIGHT, HEAT & POWER CO. v. CITY OF MEMPHIS et al.

No. 19808.

Supreme Court of Missouri, Division No. 1.

July 2, 1917.

Motion for Rehearing or to Modify Opinion Denied July 14, 1917.

Appeal from Circuit Court, Marion County; William T. Ragland, Judge.

Suit by the Memphis Electric Light, Heat & Power Company against the City of Memphis and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Ben F. Glahn, of Palmyra, and E. Scofield, J. E. Luther, and J. M. Jayne, all of Memphis, for appellant. Hays, Heather & Henwood, of Hannibal, and Hudson V. Smoot, of Memphis, for respondents.

BLAIR, J.

Appellant is a corporation operating an electric light plant in respondent city, and brought this suit to enjoin the city, the mayor, city clerk, and city council from issuing and selling bonds voted in 1916 for the purpose of erecting a municipal light plant. Appellant originally acquired a franchise granted to one Craig and operated under it until its expiration in 1912. In that year a new 20-year franchise was granted appellant, and it extended its lines and replaced some poles, incurring some expense in so doing.

The 1912 franchise ordinance recited the expiration of the former franchise and that appellant sought a renewal, and provided that, "in consideration of the benefits that will accrue to the city of Memphis," the city granted appellant a franchise to operate its plant for an additional period of 20 years; granted the usual privileges as to the use of streets and alleys, but specifically provided that "this ordinance shall not be construed as being an exclusive franchise"; reserved to the city the right to purchase appellant's plant at any time it desired; and, in case it desired to purchase, provided for an appraisement of the property by disinterested persons, subject to rejection by either party and reappraisement by a like method, such second appraisement to be final. Rates of charges were specified in the ordinance, but no agreement on the city's part to patronize appellant appears in the ordinance or elsewhere in the record. It is in evidence the city continuously, from the adoption of the franchise ordinance until the filing of this suit, procured appellant to furnish lights, paying monthly for the service rendered.

Appellant's contention is that the franchise excludes the city from installing a municipal plant, and that to suffer it to do so is to permit the impairment of the franchise contract and to take appellant's property without due process of law. The argument advanced is, in substance: (1) That the exclusion of the city from competition with appellant is implied from the fact that appellant's franchise would be valueless unless the city is so excluded; and (2) that the reservation by the city of a right to purchase appellant's plant implies an obligation to do so in case the city desires to acquire a plant of its own during the life of appellant's franchise.

I. A city invested with the power to do so and having entered into a contract with a light company whereby it agrees not to erect or acquire a competing plant may be enjoined from violating such contract. Walla Walla v. Walla Walla Water Company, 172 U. S. 1, 19 Sup. Ct. 77, 43 L. Ed. 341; Vicksburg v. Waterworks Co., 202 U. S. 453, 26 Sup. Ct. 660, 50 L. Ed. 1102, 6 Ann. Cas. 253.

II. The power of respondent city to erect a light plant is one given it for the benefit of the public. The Supreme Court of the United States holds:

"That government, possessing powers that affect the public interests, and having entered into a contract involving such interests, is not, by means merely of implications or presumptions, to be disarmed of powers necessary to accomplish the objects of its existence; that any ambiguity in the terms of such a contract `must operate against the adventurers and in favor of the public, and the plaintiffs can claim nothing that is not clearly given by the act'; that `it can never be assumed that the government intended to diminish its power of accomplishing the end for which it was created'; and that those who insist that the government has surrendered any of its powers or agreed that they may be diminished must find clear warrant for such a contention before it can be heeded. `Grants of franchises and special privileges are always to be construed most strongly against the donee, and in favor of the public.'" Water Co. v. Knoxville, 200...