Oshkosh Waterworks Co. v. City of Oshkosh

• Decision Date: 26 February 1901
• Parties: OSHKOSH WATERWORKS CO. v. CITY OF OSHKOSH.
• Court: Wisconsin Supreme Court

109 Wis. 208

85 N.W. 376

OSHKOSH WATERWORKS CO.

v.CITY OF OSHKOSH.

Supreme Court of Wisconsin.

Feb. 26, 1901.

Appeal from circuit court, Winnebago county; George W. Burnell, Judge.

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

This is an apppeal by the plaintiff from judgment dismissing his complaint, entered on sustaining a demurrer thereto. The complaint alleged the making of a contract between the plaintiff and the defendant on June 18, 1883, for payment to the plaintiff, quarterly, of a certain sum as compensation for supplying the water to hydrants for fire and other city purposes; the construction of waterworks by the plaintiff, in compliance with that contract, on or before October 1, 1884; and the refusal of the city, on demand, to pay the hydrant rental, amounting to $4,085, earned under such contract for the quarter ending October 1, 1898; also the making of a subsequent contract on August 31st for payment of hydrant rentals on certain extensions, the performance thereof by the plaintiff, and refusal by defendant to pay the hydrant rental earned thereunder for the same quarter, amounting to $1,060. The demurrer was on three grounds: First, want of jurisdiction of the person or of the subject of the action; second, that plaintiff has not legal capacity to sue; and, third, that the complaint fails to state facts sufficient to constitute a cause of action.

Bardeen, J., dissenting.

Hooper & Hooper, for appellant.

John F. Kluwin, for respondent.

DODGE, J. (after stating the facts).

The only assignment of error argued by appellant is that the court erred in holding that the charter of the city of Oshkosh (chapter 59, Laws 1891) did not, so far as it relates to the contract of June 18, 1883, impair the obligation of the contract. It is contended that said charter does so impair, and therefore contravenes section 12, art. 1, of the constitution of Wisconsin, which provides: “No bill of attainder, ex post facto law, nor any law impairing the obligation of contracts, shall ever be passed.” At the time of making the contract of June 18, 1883, the city of Oshkosh existed and operated under a charter known as chapter 183, Laws 1883, the first section of which constituted it “a municipal corporation by the name of the city of Oshkosh, and by that name capable of suing and being sued in all courts of law and equity.” That charter (section 1, subc. 7) provided that moneys “shall be drawn out only upon the order of the mayor and city clerk, duly authorized by vote of the common council”; and by section 10, Id., “any account or demand against the city before acted upon or paid, the council may require the same to be verified by affidavit, except salaries and amounts previously fixed or determined by law.” Except for these restrictions upon the payment of money, the city of Oshkosh was subject to suits upon contract liability like any other person or corporation. In 1891 was enacted a revised charter (chapter 59, Laws 1891), continuing substantially the provisions formerly existing in the first section, and in sections 1 and 10, subc. 7. That charter, however, contained a subchapter 21. It provided:

“Sec. 4. No action shall be maintained by any person against the city upon any claim or demand until such person shall first have presented his claim or demand to the common council for allowance, and the same shall have been disallowed in whole or in part: provided, that the failure of such common council to pass upon such claim within sixty days after the presentation thereof shall be deemed a disallowance thereof.

Sec. 5. The determination by the common council disallowing in whole or in part any claim shall be final and conclusive and a bar to any action in any court founded on such claim, unless an appeal shall be taken from the decision of such common council as in this act provided.”

Section 6 provided for the appeal in case of disallowance in whole or in part, to be accomplished by serving a written notice of the appeal on the city clerk within 20 days after the disallowance of the claim, and by executing a bond to the city in the sum of $150, with two sureties to be approved by the city attorney and comptroller, conditioned for the faithful prosecution of the appeal and payment of costs; whereupon the clerk is required to transmit the decision and a brief statement of the proceedings and all papers to the clerk of the circuit court of the county, where “such case shall be entered, tried, and determined in the same manner as cases originally commenced in said court,” costs to be recovered by plaintiff in case of an increase in the recovery.

This amendment of the charter of Oshkosh was but one of many such amendments to city charters occurring at about that time, significant of a marked change of legislative policy with reference to enforcement of money demands against cities. That policy was signified by its adoption in the general city charter promulgated by the legislature of 1889 for cities thereafter to be organized. That policy has been considered by this court in a series of decisions which it is believed have fully recognized and emphasized it. We have held that the preliminary steps are jurisdictional, and that unless complied with the court fails to acquire jurisdiction of the subject-matter; that the various steps are mandatory, and cannot be waived by the officers of the city, nor can jurisdiction be conferred by such officers (Telford v. Ashland, 100 Wis. 238, 75 N. W. 1006;Oshkosh Waterworks Co. v. City of Oshkosh, 106 Wis. 83, 81 N. W. 1040); that the bond cannot be amended nor a new bond given after the expiration of the 20 days (Oshkosh Waterworks Co. v. City of Oshkosh, supra).

It is, of course, obvious that the amendment of the charter does not expressly and directly affect the obligation of any existing contracts. It is a change of the law regulating the remedy, and obviously, too, with only that purpose in view. The question, therefore, which is presented before us, is whether, as to claims which have not been allowed by the council (for there is no allegation that this has been allowed), the change in the methods open to a creditor of the city for the adjudication and recovery of such claim is such that, although acting directly only on the remedy, it necessarily impairs the obligation of the contract itself.

We here enter a field redundant of learned discussion, philosophy, and decision, in which, as remarked by Mr. Justice Shiras, the very frequency of decision would appear to have rendered it difficult to apply the result of the court's deliberations to new cases, differing somewhat in their facts from those previously considered. Barnitz v. Beverly, 163 U. S. 121, 16 Sup. Ct. 1042, 41 L. Ed. 93. Several general propositions are, however, settled so as to require in new cases merely their application. First and most primary among these is that an act which in any degree, no matter how slightly, modifies the obligation of the contract by attempting to relieve the one party from any duty by the contract assumed, is repugnant to the constitutional prohibition. This rule applies to “legislation which affects the contract directly, and not incidentally, or only by consequence.” Von Hoffman v. Quincy, 4 Wall. 553, 18 L. Ed. 403. Another general rule early established is that over mere remedial procedure the power of the legislature is absolute; that laws regulating it involve so much the consideration of public convenience and welfare that individuals cannot be conceded vested rights therein. For example, it would be intolerable that new laws regulating place or frequency of the sitting of courts could not be enacted and be effective generally, even as to pre-existing rights of individuals, although remotely they affect those rights by adding inconvenience or delay to their enforcement.

It is obvious, however, that rights, whether contractual or other, are so dependent for their value upon the means of enforcing them that for all practical purposes their extinction may be accomplished by laws which, in form, affect only the remedy. It matters little whether it be enacted that certain debts are extinguished or merely that they shall not be enforceable in any forum. In either case the legally binding obligation to pay is destroyed. One of the best actual illustrations of such a result is exhibited by Cornell v. Hichens, 11 Wis. 368, where was considered an enactment that in any suit on negotiable bonds and mortgage given to a railway company, although brought by an innocent holder for value, the defendant might answer, alleging misrepresentation in procurement or want of consideration; that such issue should then be tried by a jury; and that, if the jury found such fact to exist, judgment should be entered for the defendant. That law ostensibly regulated the remedy only, the pleadings, and procedure in the course of a suit, but its direct and obvious intention and result was to absolve the defendant from his promise, by law embodied in the negotiable bond, that he would pay the amount to any bona fide holder, even though it had been obtained from him by misrepresentation or without consideration,--a result prohibited by the constitution.

In attempted recognition both of the necessity for freedom of general legislation as to remedies and procedure and of the constitutional inviolability of the obligation of contracts, the courts early sought middle ground on which both rights might be protected. In Wisconsin, the limits of that middle ground have received definition in a multitude of cases, important among which are the following: Lightfoot v. Cole, 1 Wis. 26, 33;Von Baumbach v. Bade, 9 Wis. 559;Starkweather v. Hawes, 10 Wis. 125;Cornell v. Hichens, 11 Wis. 368;Streubel v. Railway Co., 12 Wis. 67;Oatman v. Bond, 15 Wis. 20; State v. Common Council of City of Madison, Id. 30; Paine v....