State ex rel. Mylrea v. Janesville Water-Power Co.

• Citation: 66 N.W. 512,92 Wis. 496
• Parties: STATE EX REL. MYLREA, ATTY. GEN., v. JANESVILLE WATER-POWER CO. ET AL.
• Decision Date: 10 March 1896
• Court: United States State Supreme Court of Wisconsin

92 Wis. 496

66 N.W. 512

STATE EX REL. MYLREA, ATTY. GEN.,

v.JANESVILLE WATER-POWER CO. ET AL.

Supreme Court of Wisconsin.

March 10, 1896.

Application, on the relation of the attorney general, for leave to bring proceedings against the Janesville Water-Power Company and others, to declare a forfeiture of the franchise of the corporation. Denied.M. G. Jeffris, John Winans, and W. H. Mylrea, Atty. Gen., for plaintiff.

William Ruger, E. M. Hyzer, and W. G. Wheeler, for defendants.

MARSHALL, J.

This is an application by the attorney general for leave to file an information in the nature of a quo warranto against the Janesville Water-Power Company and others to forfeit the corporate franchise of such company and other franchises owned by it. The petition states, in substance, that the company was incorporated July 16, 1887, for the sole purpose of constructing, acquiring, and operating a system of waterworks in the city of Janesville, and has ever since existed as such corporation; that during the year 1887 said city, pursuant to chapter 164, Priv. & Loc. Laws 1887, by ordinance, upon terms and conditions therein specified, granted to the firm of Turner, Clarke & Rawson a franchise to establish a system of waterworks, to furnish said city with fire protection, and to supply wholesome water to the inhabitants thereof, for public and domestic use; that such ordinance was duly accepted by said firm; that they thereafter conveyed their rights under the same to said water company; that such company thereafter contracted with a construction company, composed of stockholders and officers of the water company, for the building of such waterworks; that the water plant was duly constructed, satisfactorily to the city, and accepted by it on or before August 6, 1888, and that the water company has since operated the same. The grounds upon which it is claimed the corporate and other franchises should be forfeited are mainly as follows: (1) Violations of the conditions of the ordinance upon which the franchise was granted, in that the said water company has failed to furnish wholesome water as therein provided, has refused to sell water to the inhabitants of the city at meter rates, has neglected to comply with the ordinance in respect to furnishing fire protection, and has neglected to furnish water wholly from artesian wells. (2) Violations of law in respect to the organization and business management of the corporation, in that it has issued bonds in excess of the cost of constructing the waterworks, and has issued stock without the same having been fully paid in money or its equivalent. (3) Violations of the ordinance in respect to keeping accurate books of account of the cost of constructing the works and operating the same, in that it was provided by such ordinance that the city should have the right to acquire the works by purchase at the end of seven years from their acceptance by the city, at a sum sufficient to return to the owners the full cost thereof and seven per cent. annual interest thereon, the same to be ascertained from the books of such owners, together with a sworn statement of the cost of construction, with expenses and earnings, and that the grantees of the franchise, their successors and assigns, should keep accurate books showing such cost, expenses, and earnings, and that a fraudulent failure so to do should vacate and annul the franchise and all privileges granted under it; that the city gave due notice of its election to purchase the works under such reserved right, and required the sworn statement to which it was entitled; that, in response thereto, a fraudulent and false statement was rendered; that it was not taken from books of account accurately kept, as provided in the ordinance, and was known by the officers of the corporation who made it to be false and fraudulent; that there has been a total neglect to keep books of account as required by the ordinance; and that such neglect has been with fraudulent purpose, to practically annul that part of the ordinance giving the city the right to acquire the works by purchase. It is plain from an examination of the petition that the ground of complaint chiefly relied upon is the one mentioned in subdivision 3. The allegations are chiefly on information and belief. All are denied, and those in regard to violations of the ordinance in respect to the operation of the works are met by proofs to the contrary of the most positive and satisfactory character. And it is made to appear that substantially all the facts, particularly in regard to the matters referred to in subdivision 3, were fully known and taken official notice of by the city as early as November, 1894, at which time an action was brought in the circuit court to determine the cost of the water plant, and to forfeit its franchises, which action is still pending; that, since the commencement of such action, the city has recognized the existence of such franchises and the water company's obligations in the premises by requiring it to make large and expensive extensions to the water mains, and put in additional hydrants, necessitating other improvements, including an additional artesian well. And it appears that the alleged violations of the ordinance in respect to keeping accounts of the cost of construction are all denied; and that they took place, if at all, before any of the present stockholders of the corporation were interested in the company; and that they have, at considerable expense, endeavored, in good faith, to supply all the information in that regard required; and that in any event the city could not, at the present time, incur the indebtedness requisite to purchasethe works without exceeding its constitutional limit.

The foregoing contains, substantially, a correct statement of the case upon which we are to determine the question or whether the sovereign power of the state ought to interfere to forfeit the franchises of the alleged offending corporation, and to wind up its affairs. The granting or refusing this application rests in the sound discretion of the court. The legislature, in providing that an action may be brought, under section 3241, Rev. St., only by leave of this court, upon cause shown, obviously did so for a purpose. The law...