Town of Woodward v. Iowa Ry. & Light Co.

• Citation: 189 Iowa 518,178 N.W. 549
• Decision Date: 06 July 1920
• Docket Number: No. 33441.,33441.
• Parties: TOWN OF WOODWARD, DALLAS COUNTY, ET AL. v. IOWA RY. & LIGHT CO.
• Court: United States State Supreme Court of Iowa

189 Iowa 518

178 N.W. 549

TOWN OF WOODWARD, DALLAS COUNTY, ET AL.

v.IOWA RY. & LIGHT CO.

No. 33441.

Supreme Court of Iowa.

July 6, 1920.

Appeal from District Court, Dallas County; J. H. Appelgate, Judge.

This is an appeal by the plaintiff from certain orders of the district court: First, dissolving a temporary injunction, and, second, refusing upon final hearing to order a permanent injunction. The defendant is a public utility corporation, holding a franchise from the town of Woodward, plaintiff, for the maintenance and operation of its electric light plant in such town. It furnished the service for many years at rates provided by ordinance. In 1918, it declared its inability to further furnish such service at ordinance rate on the ground that such rate had become unreasonable and confiscatory. The town of Woodward through its city council brought this action to enjoin it from breaching the alleged contract, and in effect to compel specific performance. Trial being had, the district court refused the relief prayed, and the plaintiff has appealed. Affirmed.S. Trevarthen, of Perry, and C. A. Robbins, of Winterset, for appellant.

Wm. Chamberlain, John A. Reed and Ralph Maclean, all of Cedar Rapids, for appellee.

EVANS, J.

The defendant's franchise in the town of Woodward was granted in June, 1912, by ordinance duly enacted by the city council and duly approved by vote of the electors, as required by section 720 of the Code. Section 6 of the ordinance which granted the franchise specified the rates to be charged by the defendant to consumers. The term of the franchise was 25 years. The essence of plaintiff's contention is that the enactment of this ordinance (including the franchise, and the rates and the approval of the same by the electors), and the practical acceptance of the same by the utility corporation, constituted a contract binding as such both upon the town and upon the utility corporation. The defendant resists this contention and likewise denies that there is any power conferred by statute upon the city council to enter into contract on the subject of rates. The issue at this point is the controlling one in the case. The question thus at issue is answered by section 725 of the Code of 1897, which provides as follows:

“Sec. 725. Regulation of Rates and Service.--They shall have power to require every individual or private corporation operating such works or plant, subject to reasonable rules and regulations, to furnish any person applying therefor, along the line of its pipes, mains, wires, or other conduits, with gas, water, light or power, and to supply said city or town with water for fire protection, and with gas, water, light or power for other necessary public purposes, * * * and these powers shall not be abridged by ordinance, resolution or contract.”

[1] It will be noted from the foregoing that the legislative power to fix rates is conferred by this section upon the city council. The legislative power thus conferred is a continuing one, and may not be abridged or bartered away by contract or otherwise. The same legislative power to enact rates by ordinance is a continuing power to repeal or amend in the same manner. The power thus conferred is subject only to the constitutional limitation that the rates thus enacted shall not be confiscatory or unreasonable, but shall be reasonably compensatory. There was a time in the history of our legislation when the right of contract as to rates was conferred by statute upon the city council. A comparison of certain sections in the Code of 1873 with our present section 725 is instructive on that question. Section 473 of the Code of 1873 was as follows:

“When the right to build and operate such works is granted to private individuals or incorporated companies by said cities and towns, they may make such grant to inure for a term of not more than twenty-five years, and authorize such individual or company to charge and collect from each person supplied by them with water, such water rent as may be agreed upon between said person or corporation so building said works, and said city or town; and such cities or towns are authorized and empowered to enter into a contract with the individual or company constructing said works, to supply said city or town with water for fire purposes, and for such other purposes as may be necessary for the health and safety thereof, and to pay therefor such sum or sums as may be agreed upon between said contracting parties.”

By chapter 16, Acts 22d G. A., this right of contract by the city council was taken away from cities having a population of 7,000 or more, but was still permitted to cities of lesser population. By the revision and codification of 1897, the right...