Pond v. New Rochelle Water Co.

• Decision Date: 09 January 1906
• Citation: 183 N.Y. 330,76 N.E. 211
• Parties: POND v. NEW ROCHELLE WATER CO.
• Court: New York Court of Appeals Court of Appeals

183 N.Y. 330

76 N.E. 211

POND

v.NEW ROCHELLE WATER CO.

Court of Appeals of New York.

Jan. 9, 1906.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Charles H. Pond against New Rochelle Water Company. From an order of the Appellate Division (95 N. Y. Supp. 1155), affirming an interlocutory judgment of the Special Term sustaining a demurrer to the answer, defendant appeals by permission. Affirmed.

WATERS-WATER COMPANIES-CONTRACT WITH CITY-ENFORCEMENT BY RESIDENT.

A water company contracted with a village that, in consideration of the right to lay mains in the streets for a period of years, it would supply private consumers and corporations with pure water at a rate not to exceed a specified amount. Held, that the contract was valid and binding on the water company, and where its successor sent a notice to a resident of the village that no water would be supplied after certain date, except through meters and at increased rates, the resident may maintain an action for a permanent injunction restraining the collection of a rate in excess of that fixed by contract.

Henry W. Smith and Herbert D. Lent, for appellant.

Henry G. K. Heath, for respondent.

BARTLETT, J.

The Appellate Division, in allowing this appeal, certified two questions, as follows: (1) Does the complaint in this action state a cause of action? and (2) is the affirmative matter set up in the answer sufficient in law upon the face thereof to constitute a defense in this action? Neither the Special Term nor the Appellate Division handed down an opinion, and we are remitted to the record, as is frequently the case in appeals from all the departments, without the views of the Supreme Court.

The plaintiff, a resident of the village of Pelham Manor, Westchester county, and a customer of the defendant water company furnishing the village with its supply of water, seeks in this action a permanent injunction restraining the company from enforcing collection of a water rate in excess of the amount fixed by the existing contract with the village. In October, 1892, the New York & Westchester Water Company supplied private consumers under a written contract, wherein it agreed with present and prospective private consumers to supply water to them at a rate per annum not to exceed $22.50 for each private house and $5 for each private barn. This contract extended to November 1, 1897. On or about October 22, 1894, a franchise was granted to the New York City District Water Supply Company by the village, authorizing the company to lay its mains for the purpose of supplying water; that at the same time a contract under seal was entered into between the village and the company, which contained, among other provisions, a covenant that for and during the term of 10 years, from October 22, 1894, and an extension for 20 years thereafter, if voted by the village pursuant to law, it would supply private consumers and corporations in the village with pure and wholesome water at not exceeding the rates then charged by the New York & Westchester Water Company. It further appears that on May 31, 1904, the village voted to extend this contract for 30 years from its original date, October 22, 1894, to October 22, 1924, as permitted by Transportation Corporations Law, § 81 (Birdseye's Rev. St. vol. 3 [3d Ed.] p. 3763), and the contract with the New York City District Water Supply Company was thereby extended for the same period. Some time prior to February 11, 1904, the defendant, New Rochelle Water Company, became the assignee and successor of the rights of the New York City District Water Supply Company, and subject to all its obligations. On February 11, 1904, the defendant notified this plaintiff in writing that it would furnish water to him after April 1st next only upon written application for water to be taken through a meter. This notice was subsequently withdrawn, but later, on or about April 11, 1904, the defendant again sent to this plaintiff a printed notice to the effect that no water would be supplied by the company except through meters on and after October 22, 1904, and at rates largely in excess of those fixed by the contract, to which reference has already been made. On August 1, 1904, the defendant again sent to the plaintiff a printed notice repeating substantially the last above notice. The foregoing statement of facts contains the substance of the complaint.

The defendant served an answer, which was practically a general denial, and pleaded three affirmative defenses. The first defense was, in substance, that compliance with the alleged contract, as claimed by the plaintiff, would amount to a confiscation of the defendant's property and the rights of certain municipalities it was supplying with water, and would work a forfeiture of its franchise; the fixed rate being too low. The second defense alleged that the contract which the plaintiff seeks to enforce is ultra vires. The third defense alleged that the defendant is ready and willing to furnish the inhabitants of the village of Pelham Manor with pure and wholesome water at reasonable rates and cost; that, should the defendant attempt to enforce the alleged contract against the small consumers, it would lead to a multiplicity of suits which it could not successfully defend; that it would be ruinous for the defendant to furnish the large consumers an unlimited supply of water at the rates fixed by the alleged contract, and would amount to a confiscation of its property; that, if the alleged contract is valid and enforceable, it amounts to an exclusive franchise, which the village had no power to grant; that, if the contract was valid, it gave the plaintiff no cause of action.

The plaintiff interposed separate demurrers to each of these affirmative defenses, on the ground that each was insufficient in law upon the face thereof. The Appellate Division affirmed the interlocutory judgment sustaining the plaintiff's demurrers to the affirmative matter set up in the answer, and sustaining the complaint as stating a cause of action. We agree with the decision of the learned Appellate Division as above stated, and deem it necessary to discuss only one question of law presented by the pleadings. It is clear that the defendant company rests under a contract obligation extending to October 22, 1924, to furnish the consumers of water in the village of Pelham Manor at a fixed rate per annum. The defendant not only attacks the validity of this contract, but insists that, even if it is an existing and binding obligation, it cannot be enforced at the suit of an individual private consumer. The plaintiff argues that, ‘where a contract for a valuable consideration contains covenants intended to benefit a certain class not parties to the agreement, but within the contemplation of the parties at the time, who are expressed as a class, and the promissee has some duty or liability to such class, and interest that the covenant be performed, any person coming within such class may bring an action in his own name in equity to compel performance of the covenant against the promisor.’ In support of this contention the familiar case of Lawrence v. Fox, 20 N. Y. 268, and other authorities are cited.

In Lawrence v. Fox, supra, there was a money indebtedness due on a day certain from Holly to Lawrence, and in consideration of the loan from Holly to Fox the latter agreed to pay his debt to Lawrence. It is obvious that the case cited and other actions at law following it do not present the precise question raised in the case at bar, which is a suit in equity, although a kindred principle is involved. The question may be thus stated: The village of Pelham Manor, in granting privileges to a water company extending over a long period of time, made the same subject to a written contract under seal, having for its object the protection of the present and future private consumers of water. The defendant company, which has been subrogated to all rights and liabilities of the original contracting company, threatened to violate that contract by a printed notice served on a private consumer, the plaintiff, that after a certain day it would no longer abide by the contract rates, but charge a...