Muscatine Lighting Co. v. City of Muscatine

• Decision Date: 24 March 1919
• Citation: 256 F. 929
• Parties: MUSCATINE LIGHTING CO. v. CITY OF MUSCATINE.
• Court: U.S. District Court — Southern District of Iowa

256 F. 929

MUSCATINE LIGHTING CO. v. CITY OF MUSCATINE.

United States District Court, S.D. Iowa.

March 24, 1919

Lane &amp Waterman, of Davenport, Iowa, and E. M. Warner, of Muscatine Iowa, for plaintiff.

Ralph U. Thompson, of Muscatine, Iowa, for defendant.

WADE District Judge.

1. I cannot do more at this time than to briefly record the conclusions which I have reached after the extensive and helpful arguments presented in these cases. Any attempt to review the wilderness of authorities cited, or to distinguish between apparently conflicting opinions of the courts, would be fruitless, even if I had the time.

Most of the cases at bar involve the question as to whether a specific provision in a franchise ordinance, fixing the price which shall be charged by the grantee of the franchise, is binding upon such grantee. It is not disputed that such provision is subject to modification by the city under its general power to 'regulate and fix' rates.

It is earnestly contended that the power to 'regulate and fix,' excludes the power of the city to contract. This may be granted, so far as a contract binding on a city is concerned; but I cannot agree that there is any limitation upon the power of the city to 'regulate and fix' by contract, as well as by ordinance or resolution.

It is a general rule, with relation to the exercise of power by a city, that--

'If the mode of exercise is not prescribed in the act or charter conferring the power, or in some other statute, the corporation may exercise the power in any usual and appropriate manner, according to its own discretion.' 28 Cyc. 275, and authorities cited.

'This statute expressly confers on cities and towns the power to provide for the measuring or weighing of hay, coal, or any other article. The manner in which the power conferred shall be exercised is left to the discretion of the corporation subject, however, to the general rule that the ordinance must be reasonable. The power given, in substance, is to regulate, and this implies that the corporation is empowered to do all things essential to the proper exercise of the power expressly conferred. ' Davis v. Town of Anita, 73 Iowa, 325, 35 N.W. 244.

In the state of Iowa a city is given the power to grant franchises without any limitation, except that such franchise shall not extend more than 25 years and that no exclusive franchise shall be granted. When this law was passed, it was, and still is, the well-settled rule that--

'When a municipal corporation has the power to grant or refuse, in its discretion, permission to a public service company to occupy the streets with its structures, whether such permission be called a franchise, a license, a permit, or a mere designation of the streets to be occupied, it may grant such permission, subject to such conditions as it sees fit to impose.' 19 R.C.L.P. 1153, par. 427.

Of course, such conditions must not be against law or public policy. The city having the power to grant a franchise, the right to impose conditions is limited only by the terms of the grant of the power. Therefore it is self-evident that unless other legislation, and especially section 725 of the Code of Iowa, limits the power with reference to conditions to be imposed in granting franchise, a provision as to maximum rates would be binding.

Section 725 confers the power to 'regulate and fix,' but it does not specify how such power shall be exercised, and under the rule above stated it has the power to use its own discretion as to how such power shall be exercised. In Miller v. City of Webster City, 94 Iowa, 162, 62 N.W. 648, Judge Deemer says: 'As the statute expressly confers upon the city the authority to establish markets and to provide for the weighing of commodities, and contains no limitations upon the powers granted, the time, manner, and expediency of its exercise are left to the discretion of the corporation; and the judgment of its officers upon such matters cannot be controlled by the courts, so long as they act within the scope of their authority. The discretion of a municipal corporation, within the sphere of its powers, is as wide as that possessed by the government of the state, subject, however, to the general rule that the ordinances must be reasonable. The action of the city council in the exercise of expressly delegated powers cannot be questioned upon the ground that it is in conflict with public interests.'

The term 'regulation' is very broad. It is said that an ordinance 'is not so comprehensive as a 'regulation,' and is more solemn and formal than a 'resolution."""' 28 Cyc. 348. Judge Shiras, in Kimball v. City of Cedar Rapids (C.C.) 100 F. 802, uses the words: 'A contract regulating the rates to be charged by the company.'

It ought to be a fair inference that, if the Legislature intended to limit the exercise of the power to 'regulate and fix' to conditions expressed by ordinance, it would have so stated. We must always bear in mind, in dealing with municipal problems, that the powers of a municipality are not always exercised with formality, and I feel that this fact is kept in mind in the enactment of legislation for cities and towns.

Of course, any contract regulating rates must be in the nature of things 'one-sided,' so far as the rate is concerned. This is true because the city reserves to itself the power to change the rate at any time, subject only to the general rule that the new rate fixed must be reasonable. But I see no objections to a contract understandingly made which provides that the city shall charge a maximum rate, which shall continue until such period as the same becomes unreasonable, and that at such time the city reserves the right to modify the same.

Opposed to the foregoing views, counsel present strong reasons in public policy why the law should not be so construed. Of course, the matter of public policy can only be considered here, in an effort to construe the legislation. There are sound reasons in public policy why the city should not be allowed to bind the corporation by a contract for a rate which does not bind itself; but there are other opposing reasons in public policy, which to my mind overcome every suggestion in support of the contention of the utilities companies. It is a matter of common knowledge that franchises are frequently granted--sometimes after spirited competition, and often after bitter controversy, which franchises contain a definite provision that, during the term of the franchise, no more than a certain sum named shall be charged for public service. There can be no question that heretofore the people, voting upon franchises, have believed such conditions to be valid, and I must assume that utility companies, acquiring franchises containing such conditions, also assumed that such conditions were valid.

It is of the highest importance that the confidence of the people in the law, and especially in the sacredness of contracts shall not be weakened. Every franchise and every power, under legislation, is construed most strongly against the grantee of a franchise. It is self-evident that to now hold that conditions relating to rates solemnly agreed to are without force would have a strong tendency to undermine ...