Skaneateles Waterworks Co. v. Vill. of Skaneateles

• Decision Date: 05 December 1899
• Citation: 161 N.Y. 154,55 N.E. 562
• Parties: SKANEATELES WATERWORKS CO. v. VILLAGE OF SKANEATELES et al.
• Court: New York Court of Appeals Court of Appeals

161 N.Y. 154

55 N.E. 562

SKANEATELES WATERWORKS CO.

v.VILLAGE OF SKANEATELES et al.

Court of Appeals of New York.

Dec. 5, 1899.

Appeal from supreme court, appellate division, Fourth department.

Action by the Skaneateles Waterworks Company against the village of Skaneateles and others. From a judgment of the appellate division (54 N. Y. Supp. 1115), affirming a judgment for defendants, plaintiff appeals. Affirmed.

Bartlett, J., dissenting.

Charles A. Hawley and George Barrow, for appellant.

Wm. G. Tracy and M. F. Dillon, for respondents.

PARKER, C. J.

The plaintiff, a domestic corporation organized pursuant to the provisions of chapter 737 of the Laws of 1873, and the acts amendatory thereof and supplemental thereto, brought this action for the purpose of obtaining a permanent injunction against the village of Skaneateles, its president, trustees, and water commissioners (whom, for convenience, we shall refer to in the course of this opinion as the village), restraining them from constructing and operating in the village of Skaneateles an independent system of waterworks, for the purpose of supplying it and its inhabitants with water. Such steps were taken on or about the 5th day of April, 1887, by the village of Skaneateles, as, in conjunction with the acts of the plaintiff, operated to vest in the latter a franchise to maintain and operate within its corporate limits a system of waterworks for furnishing to the village and its inhabitants pure and wholesome water upon certain terms and conditions, which, in effect, were that the company should have its works in general operation by the 1st day of December, 1889; that it should not charge or collect at any time a greater sum than $40 per annum for each hydrant; that at such rate it should furnish all the hydrants required by the village, and should not sell or transfer to nonresidents of Skaneateles the rights acquired by the granting of the franchise. The works were not completed within the time provided for, but before the expiration of such period the trustees of the village of Skaneateles passed a resolution extending the time for the completion of the works until December 1, 1890, and declared that thereby the franchise theretofore granted to the plaintiff was renewed. Within the period of time designated by the latter resolution the works were completed,and the plaintiff commenced to supply the village and its inhabitants with water, and so continued under its contract for a period of about five years, at which time the contract with the village expired, and was not renewed. Whether the record discloses the real reason for the refusal of the village to renew the contract is open to doubt, but the evidence indicates that the plaintiff, having found that it had lost money, foolishly asked for $10 more per hydrant than it was entitled to charge under the terms of the grant by which the franchise was created. This was the first mistake, but not the only one, in the chapter of errors which led to the appointment of a board of water commissioners, in pursuance of chapter 181 of the Laws of 1875, who thereupon took the necessary steps to have a special election held for the purpose of voting upon the proposition to construct an independent system of waterworks for the village. The vote was largely in favor of an independent system, and the water commissioners proceeded at once to secure such a system. The situation presented to the water commissioners is described in the findings to the learned referee as follows: ‘The system of waterworks so constructed and completed as aforesaid by plaintiff was, and at all times since has been, and now is, a complete and adequate system. Said corporation has laid pipes in substantially every street of said village. No complaint has been made that the water furnished by said plaintiff has not been pure and wholesome, or that the sufficiency thereof has not been adequate, or that the pressure thereof has not been adequate for fire protection and all other purposes.’ They further say that the source from which the plaintiff obtained its water, namely, Skaneateles Lake, was the only source from which water could be obtained for supplying and furnishing the village and its inhabitants with pure and wholesome water. Necessarily, therefore, it was apparent that the public health could not be advantaged by an additional system of waterworks, and that there were no public interests requiring it; and, as the statute under which the village was proceeding to acquire a system of waterworks of its own permitted the acquisition of the plaintiff's waterworks, rights, and franchises by condemnation proceedings, it would seem to the average mind that common fairness, if not common honesty, should have dictated that course. It is true that the village offered to pay to the plaintiff $24,000 for its property, a property mortgaged for $50,000, but the plaintiff declined to take that sum, and instead requested the defendant to take its property by condemnation proceedings, as the statute authorized. So anxious was the plaintiff to have that course taken that it even offered to pay all the expenses of such a proceeding, except the defendant's counsel fees; but the village would not avail itself of the permission of the statute, or of the invitation of the plaintiff, and, for an excuse for such an unconscionable performance, says that it might have been compelled by a proceeding in court to pay to the plaintiff something more than the actual cost of duplicating its works. In other words, it feared that the court might hold that the franchise had some value, and that the money lost during the years required to educate the people up to the desirability of taking water should be compensated for.

It is the experience of all attempts to introduce water into villages and small cities that the number of individual patrons at the outset is very small, because their houses are not piped, and they are without bathtubs and other appliances which go with the use of water supplied under pressure. The houses erected after the construction of waterworks are, of course, made ready for connection with the pipes of the company, but the old houses are brought in very slowly. Many never come in, while a small percentage of the others are brought in each year, as the owners find themselves able to enjoy the luxury afforded by the water system, or as they may be persuaded that the necessary expense ought to be incurred for reasons of health or comfort. This means, in almost all cases, losses for the first few years, until a sufficient number of people have become patrons to put the plant on a paying basis. The theory of the defendant seems to be that the proper way to treat such a corporation as the plaintiff, promoted in this instance, as it appears, by defendant's citizens, is to let it go on and build waterworks, losing money each year while it educates the people up to the point of using the water, until years have passed away, and the plant has at last come to a paying basis, and then duplicate its plant, and take over a paying business, for the simple cost of the construction of new works, and it claims the permission of the legislature to take that very course. On the other hand, the appellant urges that the statute authorizing villages to supply themselves with water, and permitting the acquisition of the works of any private corporations that may be supplying such municipalities with water, also makes it the duty of the water commissioners to acquire the property of the existing corporation or corporations. But, after a very careful examination of the statute, it seems to us very clear that this is not so.

It is probable that the legislature mistakenly assumed that such authorities would not act unjustly or oppressively, but would recognize the property rights of others. Be that as it may, the right to determine whether the property of an existing waterworks corporation should be taken or not is clearly submitted to the determination of the local authorities. The refusal of the defendant, therefore, to acquire the plaintiff's property by proceedings in invitum does not tend to support the plaintiff's claim for an injunction. The defendant has done precisely what the statute authorizes, and all that remains for the court to determine is whether the act was within the legislative power, or void, because in contravention of the organic law.

Our first inquiry naturally is as to the nature of the rights acquired by the plaintiff under and by virtue of the franchise granted to it. The answer is readily to be found in the decisions of this court in Syracuse Water Co. v. City of Syracuse, 116 N. Y. 167, 22 N. E. 381,5 L. R. A. 546, and in Re City of Brooklyn, 143 N. Y. 596, 38 N. E. 983,26 L. R. A. 270. Indeed, the principle was settled in the Charles River Bridge Case, 11 Pet. 548, 9 L. Ed. 773, where it appeared that the legislature of Massachusetts, after passing an act incorporating the plaintiff for a term of years, with power to erect a bridge and collect the tolls, etc., subsequently incorporated the defendant, with power to erect another bridge very near the first. The act provided that, after the expense of the construction of the first bridge had been reimbursed to its promoters, it should be surrendered to the state, and become a free bridge. It was insisted that the act incorporating the defendant impaired the obligation of the contract between the state and the plaintiff, and was therefore in violation of section 10 of article 1 of the constitution of the United States, providing that no state shall pass any law impairing the obligation of contracts. While the court was divided upon the question whether there could be implied from the contract on the part of the state an agreement not to authorize, contiguous to that of the Charles river bridge, another bridge, which would ultimately become free, and thereupon render the plaintiff...