Southwest Missouri Light Co. v. City of Joplin, Mo.

• Decision Date: 31 March 1900
• Parties: SOUTHWEST MISSOURI LIGHT CO. v. CITY OF JOPLIN, MO.
• Court: U.S. District Court — Western District of Missouri

101 F. 23

SOUTHWEST MISSOURI LIGHT CO. v. CITY OF JOPLIN, MO.

United States Circuit Court, W.D. Missouri, Western Division.

March 31, 1900

Edwin Silver, for complainant.

C. H Montgomery, for defendant.

PHILIPS District Judge.

This is a bill in equity to enjoin the defendant, a municipal corporation under the laws of the state of Missouri, from proceeding further in the operation of works construed by it for the purpose of furnishing electric lights in so far as it is furnishing and proposes to continue to furnish private consumers for commercial purposes. In 1891 the legislature of the state passed an act (Laws Mo. 1891, p. 60) the fourth section of which is as follows:

'Sec 1519. The council shall have the right to erect, maintain and operate gas-works, electric light works or light works of any other kind or name, and to erect lamp posts electric light poles or any other machinery or appliances necessary to light the streets, avenues, alleys and other public places, and to supply private lights for the use of the inhabitants of the city and its suburbs, and regulate the same and to prescribe and regulate the rates to be paid by the consumers thereof, and to acquire by purchase, donation, or condemnation, suitable ground within or without the city upon which to erect such works, and the right of way to and from said works, and also the right of way for laying gas pipes, electric wires under or above ground, and erecting posts and poles and such other machinery and appliances as may be necessary for the efficient operation of such works; all of which shall be done in the manner prescribed by ordinance: provided, that the council may, in their discretion, grant the right to any person or persons or corporation to erect such works and lay the pipes, wires, and erect the posts, poles and other necessary appliances and machinery therefor, upon such terms as may be prescribed by ordinance: provided, further, that such right to such persons or corporation shall not extend for a longer period than twenty years, and shall not be renewed unless by the consent of a majority of the qualified voters of said city voting at an election held for such purposes.'

The succeeding section makes a like provision for erecting waterworks, either by the city of by contract with some person or corporation. Afterwards, on the 7th day of October, 1891, the defendant city adopted an ordinance by which, 'in consideration of benefits to be derived therefrom,' it granted to certain designated persons the right, power, privilege, and authority within said city, and any additions thereto, to build, erect, operate, and maintain all necessary and convenient electric light and electric motor plants, appliances, machinery, and appurtenances for the generation of electricity, with proper means for maintaining conduits for the distribution of such electricity, for the purpose of furnishing light, heat, motor power, and other purposes, for a period of 20 years from the granting of the franchise; giving authority to use the streets, avenues, alleys, and public grounds in the city for laying pipes and erecting poles and other proper supports, and to suspend wires thereon, for the purpose aforesaid. After imposing certain conditions under which the privilege should be exercised, the ordinance fixed the limitation for charges to be allowed for furnishing such lights. This grant inured to the benefit of the assignees of the grantees, which right passed by assignment to the complainant corporation. The ordinance was accepted, and the grantees thereunder proceeded, at an outlay of $15,000, to erect said works and appliances for furnishing to the city and the people thereof electric lights. The complainant thereafter continued to operate said plant, furnishing lights to the city and residents thereof and its vicinity, up to the date of the filing of the bill herein, in full compliance with the requirements of the ordinance. On the 7th day of February, 1899, the defendant city passed an ordinance authorizing and calling a special election for the purpose of voting on the proposition to increase the indebtedness of the city of Joplin for the purpose of building an electric light plant to be owned, controlled, and operated by the city, authorizing the council to issue bonds therefor, and providing for a sinking fund. An election thereunder was held, and the proposition submitted was carried. On the 1st day of March, 1899, the city, by its council, adopted an ordinance declaring the result of the election, and authorizing the issue of $70,000 in bonds for the purpose of erecting its own electric light works, which have been constructed and put into operation. The bill does not seek to enjoin the city from furnishing such lights for public uses, but alleges that by the erection of such works and doing a commercial business in furnishing lights to private consumers it is entering into competition with the franchise granted to the complainant, the practical effect of which is to threaten to destroy the value of its plant by driving it out of business. The bill alleges that the complainant is the owner of a large amount of property in said city (presumably its electric plant), which will be subjected to the payment of taxes thereon to aid in supporting the works constructed and operated by the city, and that it will thereby be compelled to contribute to the destruction of its own business. The claim is that such act of the city impairs the obligation of its contract with the complainant, and is, therefore, prohibited by section 10 of article 1 of the federal constitution, which declares that no state shall pass any law impairing the obligation of contracts.

It is to be conceded to the contention of complainant that the subsequent adoption of the ordinance by the city under an assumed authority from the state has the same effect upon the pre-existing contract as a subsequent enactment by the legislature of the state. City of Walla Walla v. Walla Walla Water Co., 172 U.S. 1, 19 Sup.Ct. 77, 43 L.Ed. 341. The principal contention of defendant is that the ordinance of October 7, 1891, merely granted the right or privilege to the use of its streets, avenues, alleys, etc., for laying conduits, erecting poles, and stringing wires thereon necessary for the operation of the complainant's works in the distribution of electricity; that it left the city perfectly free either to concede a like right to any other private person or corporation, or immediately to erect its own plant, and furnish lights, either for public or private use, within the city limits. If the grant under the ordinance was merely a unilateral contract, imposing no mutual obligations and undertakings between the parties, to be kept and observed by them during the life of the franchise, it might well be maintained that it was the mere grant of the privilege to erect and maintain, as best it might, within the city, such works, with no express or implied undertaking on the part of the city not to become such competitor. There is no better rule for the construction of grants and contracts than 'to place ourselves as nearly as possible in the seats which were occupied by the parties at the time the instrument was executed; then, taking it by the four corners, read it. ' Walsh v. Hill, 38 Cal. 481. Accordingly, it was said by the court of appeals for this circuit in Speed v. Railroad Co., 30 C.C.A. 3, 86 F. 237:

'It may be regarded as the recognized rule that in the exposition of grants and contracts the construction should be upon the view of the attitude of the persons making them, and upon a comparison of every part of the entire instrument; so that, while endeavoring to give every substantive part operative when the intention is apparent, without repugnance to the settled rules of law, it will control the technical terms; for the intention, and not the words, is the sense of any agreement. And this will prevail regardless of inapt expressions or careless recitations.'

It is a well-known public fact that in this state in 1890-91 there existed in cities of the third class the ambition and desire to enjoy the advantages and conveniences of modern civilization in having waterworks, gas, and electric lights both for public and private use. Many of these municipalities were already burdened with public debt to the full extent of the constitutional limit of taxation. In others such cities to embark in the experiment of building and operating such works. To meet these conditions, the act of 1891, supra, was passed by the state legislature, the fourth section of which provided for gas and electric light works, and the fifth section provided for waterworks for the city. The first part of said fourth section authorized the city to erect, maintain, and operate electric light works 'necessary to light the streets, avenues, alleys and other public places, and to supply private lights for the use of the inhabitants of the city and suburbs, and regulate the same,' and it prescribed and regulated the rates to be paid by consumers thereof, etc.; and to provide for the condition above adverted to, where the city might not be able to erect and maintain its own works, follows the proviso authorizing the council, in the exercise of their discretion, to 'grant the right to any person or persons or corporation to erect such works. ' The right to erect such works was for the purpose of giving the city and its inhabitants the facilities for obtaining such lights. When it, by such contract, obtained these advantages for the given period of 20 years, the city had accomplished through this legislation the desired object. The opening words of section 1 of the ordinance indicate this: 'In consideration of the benefits to be derived...