State v. Consumers' Water Co.

• Decision Date: 06 March 1894
• Citation: 28 A. 578,56 N.J.L. 422
• Parties: STATE (STROUD, Prosecutor) v. CONSUMERS' WATER CO. et al.
• Court: New Jersey Supreme Court

28 A. 578

56 N.J.L. 422

STATE (STROUD, Prosecutor)

v. CONSUMERS' WATER CO. et al.

Supreme Court of New Jersey.

March 6, 1894.

Certiorari at the suit of Robert Stroud against the Consumers' Water Company and the Atlantic City Waterworks Company to review ordinances of the common council of Atlantic City touching the purchase of waterworks. Judgment for prosecutor.

Argued November term, 1893, before DEPUE, VAN SYCKEL, and REED, JJ.

J. J. Crandall, for prosecutor. A. B. Endicott, for respondent Atlantic City. W. E. Potter, for respondent Consumers' Water Co. Joseph Thompson, for respondent Atlantic City Waterworks Co.

REED, J. On June 30, 1892, a special election was held in Atlantic City in respect to the acceptance of the provisions of "An act to enable cities to supply the inhabitants thereof with pure and wholesome water," and the supplements thereto. Revision, p. 720; Supp. Revision, p. 665 et seq. The provisions of the act were assented to by a majority of the legal electors voting at said election. There were at this time two water companies engaged in supplying water to the inhabitants of the city. Under color of the provisions of the act mentioned, and its supplements, the common council of Atlantic City, on October 17, 1892, passed an ordinance providing for the purchase of the property and franchise of the Consumers' Water Company for the sum of $200,000, payable in bonds of the city; and, on December 19, 1892, passed a similar ordinance for the purchase of the property and franchise of the Atlantic City Waterworks Company for the sum of $500,000, payable in bonds of the city. The terms of purchase contained in the respective ordinances were accepted by each of the re-pective companies. The ordinances mentioned are now attacked.

The legality of these ordinances is challenged upon several grounds. The first of these, in logical order, is the one which denies that the statute, under the provisions of which the municipal action was taken, was ever legally accepted by Atlantic City. The point made under this head is that the statutory notice of the special election held to obtain the sentiment of a majority of the legal electors of Atlantic City was not given,—that the notice which was given was only a five days' instead of a six days' notice. The statute (Revision, p. 725, § 52) requires notices of the special election to be set up and published at least six days previous to the day of election. The notices were given June 24th, and the election was held June 30th. By excluding one and including the other of these days in the computation, it appears that six days' notice was given. This method of computation is the mode adopted in this state, unless the requirement is that the days shall be entire days. Den v. Fen, 8 N.J.Law, 303; State v. Inhabitants of North Bergen, 39 N.J.Law, 694, 695; McCulloch v. Hopper, 47 N.J.Law, 189. Nor do the words "at least six days" imply more than that six days' notice shall be given. The justice's court act requires that all summons shall be served at least five days before the time of appearance. Under this act, the true mode is to exclude either the day of service or of appearance, and to include the other. Day v. Hall, 12 N.J.Law, 203. Whatever differences of view, In respect to the force which should be given to the words "at least," may exist elsewhere, it is settled here that they do not change the requirement of a certain number of days' notice into a requirement that the days shall be entire. The notice was sufficient.

The next objection is that the amount of the indebtedness which will be imposed on the city by these purchases is in excess of the amount to which the city indebtedness is limited by the city charter. The charter limitation is $35,000. The proposed cost of the two works is $700,000. If these purchases are within the restraining clause of the charter, the ordinances are ultra vires. But an inspection of the statutes authorizing the purchase of waterworks will display an intention that the only limitation to be put upon the amount of the cost and expense of carrying out the power conferred is the limitation contained in the act itself. By the original act (Revision, p. 723, § 43) the amount of debt which could be incurred was $80,000, and by the supplement (Supp. Revision, p. 669, § 783) this amount was changed to $1,000,000. The express power to issue bonds up to this amount, the provision for the application of the water rents to the payment of this debt, and, indeed, the whole scope of the statutory scheme, displays a clear intent that the amount of this municipal indebtedness springing out of these purchases is controlled entirely by the terms of this statute.

The next objection is that the statute did not empower the common council to buy two water plants. We think that the statute clearly confers this power. The purpose of the act is to enable cities, if they wish to do so, to take into their own hands the supply of water. It may be supplied already by private or corporate enterprise, but this act enables the municipality itself to supply the water. The power to accomplish that purpose is plenary. The city can buy or condemn land and sources of water supply, and build its own works and lay its own pipes. It can buy a fully-equipped plant. It can buy such plant, and additional land and water supply. It can buy two or more plants, and additional land and water sources. It can do all this, under the power granted, so long as the exercise of the power, in view of present and future municipal needs, is not so grossly abused as to call for the supervisory interposition of this court.

The next objection is that the ordinances are illegal because four of the members of the common council who voted for them were stockholders in the Consumers' Water Company. The point made is that the common council was the agent of Atlantic City in making these purchases, and that four of its members were adversely interested as part owners of the property of the Consumers' Water Company,—that the contract is voidable at the instance of the city, or a taxpayer of the city. "it is a fundamental rule, applicable to both sales and purchases, that an agent employed to sell cannot make himself the purchaser; nor, if employed to purchase, can he be himself the seller. The expediency and justice of this rule are too obvious to require explanation." Dunlap, Paley, Ag. marg. p. 33. Indeed, this doctrine is so entirely settled that citation of authorities would be wasted. Nor is this doctrine confined to transactions of private agents. It is applicable whenever the fiduciary relation arising out of the contract or condition of agency exists. The rule is enforced, whether the agency is public, quasi public, or private. "it is well settled," says Mr. Beach, "that directors or managers of corporations and other companies are equally within the rule which guards and restrains the dealings and transactions between trustee and cestui que trust, and agent and his principal; directors and managers being in fact trustees and agents of the bodies represented by them." 1 Beach, Priv. Corp. § 240. Again, in section 242, he says: "Directors are disqualified from acting in the right and behalf of themselves and of their companies at the same time; and transactions with themselves, or wherein they are interested, are voidable, either by the company, or by its stockholders, or by its creditors." A director...