Monroe Waterworks Co. v. City of Monroe

• Decision Date: 09 April 1901
• Citation: 85 N.W. 685,110 Wis. 11
• Parties: MONROE WATERWORKS CO. v. CITY OF MONROE.
• Court: Wisconsin Supreme Court

110 Wis. 11

85 N.W. 685

MONROE WATERWORKS CO.

v.CITY OF MONROE.

Supreme Court of Wisconsin.

April 9, 1901.

Appeal from circuit court, Green county; B. F. Dunwiddie, Judge.

Action by the Monroe Waterworks Company against the city of Monroe. From a judgment in favor of defendant, plaintiff appeals. Reversed.

In the year 1889 the common council of the city of Monroe granted a franchise to construct and operate a system of waterworks in said city to one W. H. Wheeler, granting an exclusive right for a period of 20 years. The ordinance granting the franchise prescribed at length and with particularity the kind of plant that should be erected, the kind, size, and number of miles of pipe that should be used, the manner in which it should be laid, the number of hydrants for fire protection, and how they were to be located, with many other conditions deemed necessary for its installation. The grantee agreed to keep the hydrants supplied with water for fire service day and night, and keep them in good order. The city agreed to pay for such fire protection $4,500 in semiannual installments on the 1st days of February and August of each year. The city was also to have the free use of hydrants for flushing gutters and sewers, and free water for public schools and other city buildings, for certain drinking fountains, and for sprinkling purposes. In consideration for such service the city also agreed “to pay each year to said grantee, in addition to the hydrant rentals herein specified, a sum equal to the amount of state, county, and city taxes which may be levied upon such portions of said waterworks plant as is located on the streets and public grounds.” Certain rates of charges were fixed for private consumers. Tests for a water supply were to be made and approved by the city, and before the works were accepted the plant was required to meet certain conditions prescribed. The ordinance contained other details of no importance in this litigation. The ordinance was accepted by Wheeler, and afterwards the plaintiff corporation was organized, which succeeded to his rights. The system was duly built, tested, and accepted. The pumping station was located on certain lots owned by the company. The standpipe was located in the city park, and the pipes, hydrants, and fountains were distributed in the streets and public grounds. From year to year down to the time of the commencement of this action, the city has paid the semiannual installments for hydrant rentals as they became due without protest. During the years 1890 to 1895, inclusive, the city levied taxes only on the real estate upon which the pumping station was located, the annual valuation being $4,000, except in the year 1894 the value was increased to $4,500, and in 1895 to $6,000. In 1898 the city assessed the entire system, including franchises, rights, privileges, real estate, pipes, hydrants, etc., at the gross sum of $30,000, against which a tax was levied amounting to $642.08, which sum the water company was required to, and did, pay. Thereafter, basing its right upon that portion of the ordinance above quoted, the plaintiff presented a claim to the city council, claiming that its real estate was about one-sixth of the whole value of the system of waterworks, and that the portion in the streets and public grounds was five-sixths, and demanding that the city pay in the sum of $535.05, as being the proper portion of the taxes levied as aforesaid. The claim was disallowed, and an appeal was taken to the circuit court. That court directed an issue to be made by complaint and answer. The plaintiff filed a complaint, setting out the facts substantially as stated. The answer contained sundry admissions and denials, with allegations that the stipulations in the ordinance regarding the payment of a sum by the city equivalent to the taxes on that part of its plant on the streets and public grounds was tantamount to and was an agreement to exempt said property from taxation, and therefore void; that it was impossible to determine or apportion the values of the different portions of said plant, but, on the contrary, the plant was entire and inseparable and must be treated as an entirety for the purpose of taxation; that the attempt to grant an exclusive franchise was contrary to public policy and void. It then set up a counterclaim, claiming, among other things, that during the six years last past the plaintiff had neglected to provide modern appliances and to adopt proper means to secure direct fire pressure in case of fires, and had so mismanaged its works and neglected to keep its hydrants in order that at a number of fires mentioned the fire pressure was wholly inadequate, and the said system afforded no protection to the property of the city, and in consequence thereof property of the citizens of the city had been destroyed of the value of $20,000, for which they had no remedy under the laws of this state; that the standpipe was of inadequate capacity and not properly equipped or kept in repair, direct pressure was not secured until after great delay, and generally the plant was carelessly and negligently handled. There being no other system in the city, rents had been paid, although the value of the service rendered did not exceed $2,000 per year. Damages to the amount of $15,000 were demanded. A motion to strike out the counterclaim was denied. A reply was served, consisting of denials and an allegation of voluntary payment of rentals with full knowledge of the facts. A bill of particulars was filed by defendant, which set out in detail its grievances. The jury rendered the following special verdict: “(1) What is the relative value of that portion of the waterworks plant of the plaintiff located in the streets and public grounds of the defendant, as compared with the value of the whole of said waterworks plant? Answer. 83 per cent. (2) Did the plaintiff, during the six years prior to February 7, 1900, furnish to the city of Monroe such a supply of water and such pressure as were reasonably adequate for the extinguishment of fires, if properly used by the city? Answer. No. (3) In case your answer to the last question is ‘No,’ you may state what the difference is between the value of the supply of water and pressure actually furnished to the city by the plaintiff, and that which should have been furnished on the basis of the contract price, in order to afford reasonably adequate protection from fire. Answer. $326.40 yearly for six years,--$1,958.40.” Plaintiff's motion for a new trial was denied, and defendant's motion for judgment was granted. Judgment was accordingly entered on defendant's counterclaim for $1,958.40 damages, besides costs, and the plaintiff's cause of action was dismissed. Plaintiff appeals.

Jackson & Jackson, P. J. Clawson, and M. G. Jeffries, for appellant.

Colin W. Wright and Jones & Stevens, for respondent.

BARDEEN, J. (after stating the facts).

As regards the plaintiff's right of recovery, the record furnished no information as to the grounds upon which it was denied. The argument by the defendant in this court is that the ordinance is void (1) because it purports to create an exclusive franchise for 20 years; (2) because it is in effect an agreement to exempt plaintiff's property from taxation; (3) because that part of it sued on is so indefinite and uncertain as to furnish no basis for a recovery.

1. The ordinance in question gives the plaintiff an exclusive right to erect, maintain, and operate a system of waterworks in the defendant city for a period of 20 years. We may concede, without so deciding, that as a general rule the legislature alone has the power to make exclusive grants of this character, and that this power does not exist in the city unless expressly granted to it by its charter or some law of the state. Our attention has not been called to any such grant of power, and we may assume that it does not exist. The city had authority from the legislature to grant a franchise to a person or corporation to furnish it and its inhabitants with water. If it had no right to make the grant exclusive, it was at most ultra vires. The plaintiff has accepted the grant. It has constructed an expensive system of waterworks. For over 8 years the city has been the recipient of substantial benefits thereunder, and from year to year has paid its rental dues. The exclusiveness of the right to use the streets was granted for the sole benefit of the water company. If it does not receive this benefit, the city loses nothing. Quoting from the opinion of Judge Sanborn in a similar case (Illinois Trust & Sav. Bank v. City of Arkansas City, 76 Fed. 271, 22 C. C. A. 171, 34 L. R. A. 518): “The grant of this exclusive right was neither immoral nor illegal. It was merely ultra vires. We know of no rule of law or morals which relieves the recipient of the substantial benefits of a partially executed contract from the obligation to perform or pay that part of the consideration which he can perform or pay, because the performance of an insignificant portion of it is beyond its powers. On the other hand, the true rule is, and ought to be, the converse of that proposition. It is that when a part of a divisible contract is ultra vires, but neither malum in se nor malum prohibitum, the remainder may be enforced, unless it appears from a consideration of the whole contract that it would not have been made independently of the part which is void,”--citing Navigation Co. v. Winsor, 87 U. S. 64, 22 L. Ed. 315;Reagan v. Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014;Western Union Tel. Co. v. Burlington & S. W. R. Co. (C. C.) 11 Fed. 1;Saginaw Gaslight Co. v. City of Saginaw (C. C.) 28 Fed. 529. The supreme court of Iowa carry the rule so far as to say that the validity of an ordinance giving the exclusive privilege for a term of years of laying water pipes in the streets, etc., can be contested only by some other company or individual...