Town of Southington v. Southington Water Co.

• Citation: 69 A. 1023,80 Conn. 646
• Court: Connecticut Supreme Court
• Decision Date: 02 June 1908
• Parties: TOWN OF SOUTHINGTON v. SOUTHINGTON WATER CO.

69 A. 1023

80 Conn. 646

TOWN OF SOUTHINGTON

v. SOUTHINGTON WATER CO.

Supreme Court of Errors of Connecticut.

June 2, 1908.

Reservation from Superior Court, Hartford County; William S. Case, Judge.

Application by the town of Southington against the Southington Water Company to enforce an exercise of an option to purchase the works of defendant. Facts found, and questions of law reserved for the advice of the Supreme Court of Errors. Questions answered.

The defendant corporation was chartered by the General Assembly in 1882; the franchise for the formation of the corporation being granted to R. A. Neal, Orson W. Stow, and others named, and such other persons as might become their associates. 9 Sp. Laws, pp. 609-614. The commissioners appointed to receive subscriptions to the capital stock had, on March 28, 1883, failed to obtain such subscriptions to the amount of $50,000 named in the second section of the resolution. Those received amounted to $37,700. On that day a meeting of the subscribers and corporators, called by the commissioners, was held, it being the first of such meetings. A temporary organization was then effected, by the choice of a chairman and clerk, and a list of subscribers presented. No other business appears to have been transacted. Prior to that date, to wit, on January 1, 1883, a town meeting, duly called, was held, at which it was voted to ask authority from the General Assembly at its January, 1883, session, to subscribe for 150 shares of $100 each of the projected corporation, and a committee, of which Mr. Stow was one, was appointed to procure legislation to that end. This committee caused a resolution to be prepared and presented to the General Assembly. This resolution, after a hearing in committee, was reported substantially as presented, save that two sections, numbered 5 and 6, were added, and the same, as thus changed, passed and approved; the date of approval being March 28, 1883. This resolution is found in volume 9 (pages 756, 757) of the Special Laws. Said sixth section reads as follows: "Sec. 6. If the town accepts the resolution, then it shall have the option of purchasing the entire works of the said company at any time within twenty years from the time of such acceptance, by paying to the said company the sum or sums actually expended on said works, together with the interest on such sum or sums at the rate of six per cent. per annum, less any dividend or dividends which said company may have paid." At the hearing before the committee of the General Assembly Mr. Stow appeared, and stated that the substitute resolution was satisfactory. At a town meeting prior to this hearing he had said that if the town would take the stock, he would guarantee that it should have the privilege of taking the entire stock within 20 years. April 23, 1883, a town meeting, duly called, was held, at which action was taken upon the acceptance of this resolution, and the same was accepted. May 21, 1883, the capital stock of the defendant was, by vote of the corporation, increased to $60,000.

It does not appear that there ever was any formal subscription list signed by the original subscribers, or that the plaintiff signed any such list. Beginning on May 29, 1883, the corporation made calls upon the takers of the stock, the town being among the number, for payments of a percentage of the amounts due therefor. Eight such calls were made, the last being upon July 1, 1884. The plaintiff responded to all these calls as made, until the sum of $15,000 was fully paid. October 4, 1884, certificates of stock were first issued to the stock takers, and a certificate for 150 shares was then issued to the plaintiff. This stock has continued to be owned by the plaintiff, and its first selectman has since voted it at the meetings of the corporation.

The General Assembly in 1887 passed a resolution, found in volume 10 of the Special Laws (page 551). The tenth section of this act provides that it should be void unless accepted by a majority of the legal voters of said town, present and voting therein at a legal meeting to be held for the purpose, within one year from its passage. No action was ever taken by the town upon this resolution.

January 8, 1901, pursuant to call, a town meeting was held, at which the matter of the sale by the town of its stock in the defendant was considered. Resolutions authorizing such a sale were offered, and indefinitely postponed, and a committee appointed to investigate the matter of the purchase by the town of the balance of the stock of the defendant. This committee reported at a town meeting held April 13, 1901, and called for the purpose of hearing and acting upon the report and voting to exercise the town's option to purchase the works of the defendant upon the terms and pursuant to the provisions of the resolution of 1885, and to pass all votes which might be deemed necessary or desirable to make such option and the rights of the town thereunder effective. At this meeting, pursuant to the recommendations of the committee, votes of considerable length were passed exercising said option, and that the town would purchase said works upon the terms and conditions of the act of 1883, and directing that notice thereof be given to the defendant by the town clerk; and a committee was appointed to take such measures and action as might be necessary to carry into effect the votes passed, and to procure such legislation as might be necessary or useful in the premises. April 17, 1901, a certified copy of these votes was left with the secretary of the defendant, by the town clerk of the plaintiff.

The committee appointed April 13, 1901, as aforesaid, acting under the authority given it, prepared and caused to be presented to the General Assembly, at its January session in 1901, a resolution, for which, after a hearing before the committee on incorporations, a substitute resolution, differing essentially from it, was prepared, favorably reported, passed, and on June 17, 1901, approved. This resolution, found in volume 13 of the Special Laws (page 1124), in part provided the method of procedure to be pursued by the town in enforcing whatever right it might have, and in part prescribed regulations for the management by the town of the works of the defendant when acquired.

Sections 2 and 13 read as follows:

"Sec. 2. Said application shall not be brought until a majority of the legal voters of said town, at a legal meeting held for that purpose within six months after the approval of this resolution, shall have adopted a suitable resolution authorizing such action."

"Sec. 13. This resolution shall be null and void unless the application by said town under section 1 hereof shall be brought within two years from the date of the approval of this resolution."

A town meeting was called for, and held on November 5, 1901, to vote by ballot and by use of the last completed check list of the electors of the town, upon the adoption of the following resolution: "Resolved, that the town of Southington by its selectmen shall bring its application to the superior court for Hartford county, to have determined any right the said town may now have by law to acquire by purchase the waterworks of the Southington Water Company under any resolutions passed by the General Assembly prior to June 17, 1901, as provided by act of the General Assembly approved June 17, 1901." The result of the ballot was 392 votes for the adoption of the resolution, and 16 against it, and the result was so declared. The last completed check list of the electors of the town, used at said meeting, had 1,543 names thereon as qualified to vote. This application was brought February 8, 1902.

Marcus H. Holcomb, for plaintiff. Lewis Sperry and John K. Beach, for defendant.

PRENTICE, J. (after stating the facts as above). The situation presented in this case is one which satisfies the conditions stated in Hart v. Roberts, 80 Conn. 71, 75, 66 Atl 1026, as justifying this court in giving advice to a trial court upon a reservation in respect to questions of law involved therein, in advance of the time when it is ready for final judgment. The questions presented are such as must certainly enter into the final determination of the cause, and the advantages to be derived from a preliminary adjudication of them are manifest and distinct. The charter granted to Neal, Stow, and others for the incorporation of the defendant corporation was subject to alteration, amendment, or repeal at the pleasure of the General Assembly. Gen. St. 1902, § 3313; Miller v. State, 15 Wall. (U. S.) 495, 21 L. Ed. 98. This reserved right of amendment included the right to make any alterations which did not defeat or substantially impair the object of the grant or rights vested thereunder. Holyoke v. Lyman, 15 Wall. (U. S.) 522, 21 L. Ed. 133. Amendments or alterations of charters may result from the operation of general laws, as well as from special legislation addressed to the corporation in question. New Haven & D. R. Co. v. Chapman, 38 Conn. 56, 71; Pennsylvania Railroad v. Miller, 132 U. S. 75, 83, 10 Sup. Ct. 34, 33 L. Ed. 267.

Prior to the day when the resolution of 1883 was approved and took effect, no steps had been taken in the organization of the corporation. The first meeting of the incorporators, called for any purpose, was held on that day, and their preliminary organization, provided for in section 3, was then made. No further action was then taken, and no "organization of the corporation agreeably to the charter," as provided in section 3, was attempted. That was consummated later, and after the town had exercised its rights acquired under the act of 1883 (9 Sp. Laws, p. 609). No funds had been received, and no property or assets were held. There was nothing, therefore, which could be affected by charter changes, save such contractual relations as might be claimed to have been created between the state and the corporation or corporators,...