Andrews v. National Foundry & Pipe Works, Ltd.

61 F. 782 | 7th Cir. | 1894

Lead Opinion

WOODS, Circuit Judge

(after stating the facts). Without regard to the question whether the Oconto Water Company received its franchises directly from the state, or indirectly through the city of Oconto, by force of the ordinance which purported to grant them, we are'of opinion that the mortgage in question may be upheld. The appellants, it is not disputed, advanced large sums of money to the water company in the belief that they were receiving a valid security; and, while they are presumed to have known the law, it is not to be presumed, if there' is reasonable escape from it, that either party to the transaction intended a vain thing. “Interpretatio facienda est ut res magis valeat quam pereat;” and other familiar maxims lend support to the requirement that a contract or deed shall be so construed as to have effect rather than so as to be made void. By the literal terms of the mortgage and of the decree of foreclosure, upon which the title of the appellants depends, there was a conveyance , or assignment of “all the rights, privileges, immunities, franchises, and powers, of whatever name or nature, which were granted in and by that certain ordinance,” etc., and if, upon a proper interpretation of the statutes touching the question, no mortgagable right, privilege, or franchise was granted in or by the ordinance, as distinguished from a direct grant by the state, then by a strict construction the mortgage was, as it was held to be, ineffective and meaningless. But not by the words alone should a writing be interpreted. “The rule is to regard the intention, rather than the words;” and here the evident intention, deducible from the whole instrument, was to mortgage the rights and franchises which the ordinance granted in terms, or which it purported to convey. The resolution whereby the water company declared its acceptance of the ordinance, and “of the'franchise thereby granted,” shows that both parties entertained an equally broad aud generous view of the powers of the common council of the city in the premises; and, when the deed of trust came to be drawn, it: was only natural that for certainty of description reference should be made to the ordinance by which the rights of the company were defined, and, as the parties supposed, were granted. And even if this supposition was mistaken, must it he held that the entire purpose of the parties failed and that notwithstanding the covenant of the water company that it was “the owner- and holder,” and had “good right and lawful authority” to make transfer and sale “of said rights, privileges, immunities, franchises, and powers,” “in ilie manner aforesaid,” yet the instrument is a total nullity? Indeed, why should it not be beld that by that covenant the water company is estopped to deny that its franchises were granted by the ordinance? Or must it be said that the covenant covers only rights and franchises which were granted by ■the ordinance, and, like the; granting clause, is itself void because no franchise came to the company in that way? It would seem more reasonable, the ordinance having been made a part of the deed by reference, as if copied into it, to treat the covenant as covering the rights and privileges named in the ordinance, whether derived from one source or another. To say the least, upon the whole instrument, it is only reasonable .and in accord with the canons of construction to read the expression, “which were granted,” etc., as if it were, “which in terms were granted unto the said Oconto Water Company in and by that certain ordinance,” etc. The added words are fairly implied, and the addition, without doing violence to any part: of the writing, gives effect alike to the words of grant and covenant, and accomplishes the evident purpose for which the deed was executed.

But, if compelled to put upon its terms a strict and literal construction, we should still consider the mortgage valid, because we are not able to agree that the Oconto Water Company, by force of the ordinance, received no right, privilege;, or franchise which, was capable of being mortgaged, and which could be properly described as granted in or by the ordinance. While “it is essential to the character of a franchise,” as was held in Bank v. Earle, 13 Pet. 595, “that it should be a grant from the sovereign authority, and in this country no franchise can be held which is not derived from a law of the state,” and while the right to the use; of the public streets of a city by a gas company or water company, for the purpose of laying down its pipes, is generally considered to be such a franchise, it is well settled that the legislature of a state may confer the power to grant such franchises upon municipal corporations; though, when so granted, they are, nevertheless, to be regarded as derived from the state. The question here, therefore, is not whether the franchises of the Oconto Water Company were obtained from the state; they necessarily came, directly or indirectly, from that source. It is whether or not the common council of Oconto had been given the power to grant such franchises, and in this instance did grant those named in its ordinance. Without that ordinance, it is clear the water company could not lawfully have laid its pipes in the streets of the city, nor have put into practical effect its “franchise to operate the plant,”—if it can be said to have had such franchise, by reason merely of its act of incorporation, and before the ordinance was passed. The city of Oconto, by its own charter, had the power, and therefore was under the duty, of caring for the public health. That power it could employ in any reasonable way; if it chose, for instance, by contracting for a water supply through pipes laid in the streets. The making of such a contract would, of necessity, carry with it the right, on the part of the contractor, to- lay the pipes and to operate the plant. Such right is a franchise, and, the making of the contract operating by necessary implication as. a grant of the privilege or franchise, the power given to make the contract was power to grant the franchise. But, besides the power to provide for the health of its inhabitants, the city of Oconto had the express power, apparently not brought to the attention of the court below, “to provide for the erection of waterworks for the supply of water to the inhabitants of the city.” We do not agree with the suggestion of counsel that by this provision the city had no right to contract for a supply of water, and was authorized only to construct and operate a plant of its own. The authority extended to any reasonable method; . and it follows that, before the Oconto Water Company was incorporated, the city of Oconto', by its own charter, had power, from the state, to grant franchises like those in question to any person or body capable of receiving them. By its act of incorporation the Oconto Water Company came into being, endowed, not with the right to establish and operate waterworks in Oconto, but with capacity to receive and exercise that right or privilege upon such terms as the city, should consent to grant-. But, though capable of receiving, it could acquire no complete or effective right or franchise without the consent, and there is no impropriety, legal or verbal, in saying without the grant, of the city. The ultimate source of such franchises in all cases being the state, the difference between a municipal power to grant them and authority to contract for or to consent to the exercise .of them is a difference of words rather than of substance. The language of the court of appeals of New York in the case of People v. O’Brien, 111 N. Y. 1, 18 N. E. 692, is pertinent. Speaking of the Broadway Surface Railroad Company, the court said:

“On May 13, 1881, that company filed articles of association and became incorporated as a street railroad company under the provisions of chapter 252 of the Laws of 1881, a general act passed to authorize the formation of such corporations, pursuant to the mode introduced by the amendment to the constitution of 1871. By such incorporation the company became an artificial being, endowed with capacity to acquire and hold such rights and property, both real and personal, as were necessary to enable it to transact the business for which it was created, and allowed to mortgage its franchises as security for loans made to it, but haying no present authority to construct or operate a railroad upon the streets of any municipality. This right, under the constitution, could be acquired only from the city authorities, and they could grant or refuse it at their pleasure. The constitution not only made the consent of the municipal authorities indispensable to the creation of such a right, but, by implication, conferred authority upon them to grant the consent, npon such terms and conditions as they chose to impose, and npon the corporation the right to acquire it by purchase.”

So, here, not by reason of a constitutional provision, hut by statute, the ultimate efficient right could be acquired only by act and consent of the city authorities, which they could grant or refuse at their pleasure. •

Whether or not, and to what extent, the mortgage of the franchises covers the plant of the company, need not now be considered.

The objection is made that, the statute authorizes an appeal only from an “interlocutory order” of injunction granted “upon a hearing in equity;” that the order in this case was a preliminary one, made npon a prima facie showing, and is not appealable; hut we concur in the opinion of the court of appeals for (he first circuit that the statute was intruded to extend the right of appeal “to all that class of interlocutory orders or decrees [of injunction] which interfere with the possession of property or operate in the restraint of trade.” Richmond v. Atwood, 5 U. S. App. 151, 2 C. C. A. 596, and 52 Fed. 10. The order granting an injunction should be set aside, and it is so ordered.

---

Rehearing

On Rehearing.

(.lime 11, 1S!>4.)

Before HABLAN, Circuit Justice, WOODS, Circuit Judge, and BUNN, District Judge.

WOODS, Circuit Judge.

"A rehearing is asked for the purpose,” says the petition, “of ascertaining definitely whether the following material questions are involved in the appeal, and, if so, whether they ha,ve been in whole or in part determined by the opinion filed or the decision rendered upon the hearing: First:. Does the so-called 'mortgage of the franchise’ cover the plant and other tangible property of the Oconto Water Company now in the hands of the receiver, and, if so, to what extent? Second. Should the order granting the injunction he wholly set aside, or only modified so far as it affects the rights or interest of Andrews and Whitcomb in the franchise? Third. Should the one hundred thousand dollars of bonds ordered delivered over to the clerk of the court as void be returned to Andrews and Whitcomb? Fourth. Was the so-called 'mortgage of the franchise’ a valid instrument? Fifth. If such instrument was valid, was the same so foreclosed, and the franchise covered thereby so sold, as to give to Andrews and Whitcomb the title to, and right of possession of, any property held by the receiver?”

We do not deem it necessary, or perhaps proper, to speak more definitely in respect to any of these questions. The granting or refusal of an injunction or restraining order pendente lite has always been a matter of judicial discretion on the part of the court or judge'whose order was sought. If refused in the first instance, it might be granted at a later stage of the case or at the final hearing, and, if granted when asked, it might afterwards be revoked’ or modified, and at the final hearing be denied or made perpetual; and we are of opinion that it was not intended by the recent statute, which for the first time gave a right of appeal from interlocutory orders of injunction, that a decision upon the appeal from such an order should be conclusive upon the court in the further progress or in the final determination of the case. All that should be conclusively determined by such an appeal, we think, is that the order appealed from was a proper one when made, and therefore should be affirmed, subject to the discretion of the court thereafter to modify or annul it; or that, when made, the order was an improper one, and should be reversed or modified, subject likewise to the discretion of the court, upon a new or further showing, invoking the application of different rules or principles, to reinstate the order in the original or modified form, and at the final hearing to consider or reconsider all questions involved, whether of law or of fact, and give such judgment or decree as should seem right. From that judgment the aggrieved party would of course have the right to appeal and to obtain thereon a decision in all respects final. Notwithstanding the rule in respect to final judgments that, on a mándate from the supreme court affirming a decree, the circuit court must execute its decree as affirmed (Durant v. Essex Co., 101 U. S. 555), it has been decided that the affirmance of an interlocutory order of injunction does not operate to deprive the circuit court, of its inherent power to suspend the injunction, whenever the ends of justice call for the exercise of such power (Edison Electric Light Co. v. U. S. Electric Lighting Co., 59 Fed. 501, 8 C. C. A. 200); and by the same principle, we think, a decision on appeal reversing or modifying such an order should be deemed conclusive only in respect to the particular order reviewed, and that in the further progress and upon final hearing of the case in the circuit court the opinion and ruling on the appeal should be regarded as. advisory only,—more or less controlling, according to the circumstances. In this case the circuit court looked upon the mortgage of the appellants as a nullity. For the reasons given in the opinion, this court reached the opposite conclusion. But if, instead of the positive conviction declared, we had entertained grave doubt upon the point on which the question turned, it would have been our duty to rule just as we did, because an injunction before final hearing should be allowed only when the right to it is clear. Standard Elevator Co. v. Crane Elevator Co., 6 C. C. A. 100, 56 Fed. 718. It is plain, therefore, that our decision did not involve, and should not be regarded as, a technical and final adjudication, for the purposes of the case, of the points which we considered in reaching our conclusion that the order of the circuit court was wrong, or of the questions propounded in the petition for rehearing.

The question remains, what should be the scope of the mandate? It is not necessary to consider whether or not under the statute an appeal may be had from an order appointing a receiver. On that question, see Construction Co. v. Young, 59 Fed. 721, 8 C. C. A. 231; Dudley E. Jones Co. v. Munger, etc.. Co., 2 U. S. App. 188, 1 C. C. A. 668, 50 Fed. 785; Richmond v. Atwood, 2 C. C. A. 596, 52 Fed. 10; Pennsylvania Co. v. Jacksonville, etc., Ry. Co., 55 Fed. 131, 5 C. C. A. 53; American Const. Co. v. Pennsylvania Co., 148 U. S. 372, 13 Sup. Ct. 758. The appointment in this case was of a receiver of the property of the Oconto Waterworks Company, and of that the appellants cannot complain. The wrong done them was in ordering them to surrender to the receiver the possession of the waterworks plant of which they were in possession, claiming title under the foreclosure sale, in directing the receiver to take possession thereof, and in enjoining them against asserting title or claim to the property. These features of the order are prohibitory or mandatory in character, and subject to review upon appeal. The order whereby certain bonds were required to be delivered to the clerk involves no present harm to either party, and need not be disturbed. The mandate therefore will he that those portions of the order of the circuit court whereby the receiver was directed to take and the appellants to surrender possession of property, excepting the bonds aforesaid, and the appellants enjoined from asserting’ title, be set aside, and that the possession be restored to the appellants, unless for some cause, not apparent in the record before us, the possession of the receiver should be continued. The petition for a rehearing is overruled.

BAKER, District Judge, who participated in the original decision, concurs.