251 F. 492 | 6th Cir. | 1918
(after stating the facts as above).
We must think that the ordinance of 1890 did more than give the city an option to buy at the end of the stated period; it imposed an absolute duty and liability to do at that, time one of two things — buy the plant or extend the franchise. The language is:
“In case the city of Ashland shall fail or decline to exercise its option to purchase said works, the rights and privileges hereby granted to the said grantees or assigns shall be extended to said grantees or assigns for a further period of 20 years,”
This contemplates that the city will then be presented with the alternatives between which it must choose. One may be burdensome, one beneficial; but which character either will have cannot be foretold. The city will select the one it deems more beneficial; but select one or the other it must. There is no escape. The option to buy, considered alone, is not a contract; the option to extend is not a contract; but the two together, presented as alternatives, one of which must be accepted, make a perfected obligation. The city agrees that after 20 years it will do one of two acts as it may then prefer; this is not an option, it is a promise.
It makes no difference which branch of the alternative is first considered. The right to extend for 20 years was taken away by the Constitution of 1891 just as much as the right to buy, for section 164 forbids the granting of any franchise, except to the highest bidder. Hence we find that, if the Constitution of 1891 applies in full force to the mutual rights existing under this ordinance, it is destructive of all of them-. Unless acting in a manner not contemplated by the contract, the city cannot buy, however good a bargain it may get; it cannot demand an extension of the franchise, however favorable the existing rates may be; and the company cannot get either the sale or the extension,.upon the faith of having one or the other of which it invested its money and
We cannot see how it is material that the extension of the franchise will be automatic if ilic purchase is not made. It cannot make any difference in che mature of the obligation — -optional or contractual— whether the selection of one alternative or the other is to be by express words or by the agreed result of conduct. If the city let the time go by for exercising its right to buy, it thereby made its election to extend, just as perfectly as if made in express words. The character of the choice is the same, whether made by words or by implication, by action or by inaction.
What we consider the precise question involved has been decided by the Kentucky Court of Appeals, and it is needless to say that, in determining whether the ordinance of a Kentucky municipality constituted a contract protected by the federal Constitution, we should differ fropn that court with great reluctance, even in cases where the matter was not so wholly one of construction that we would be bound to follow. In Benjamin v. Mayfield, 170 Ky. 446, 186 S. W. 169, the ordinance, granted before the Constitution of 1891, provided that at the end of the franchise period the city would re-rent the fire hydrants, at the stated price, or would buy the plant, at a price to be agreed on or be fixed by arbitration. At the end of the period and after the new Constitution, the city elected to buy the plant pursuant to its contract. In a careful opinion, the Kentucky Court of Appeals held that the contract-obligation to re-rent the hydrants, though contingent, could not be impaired, and that the alternative option to buy-was indissoluble from the contract to re-rent and stood upon the same basis, and hence concluded that the city’s later election and promise to buy were valid. It is sought to distinguish this case from the present one because of the affirmative form in which the obligation to re-rent was put. We think there is no distinction, cither in form or substance. In the present case, the ordinance, as it had developed, imposed upon the city an obligation to pay fire hydrant rentals of about $6,000 per year, and the right of the company to receive the rental was one of the most important, if not the chief, of the “rights and privileges” which the city agreed to extend for 20 years, if it did not buy. Certainly an extension of “rights and privileges” must extend the correlative duties, and the city would not have intended to deprive itself during the extended term of the right to have fire hydrant protection. It is equally sure that the city must pay for what the company must furnish. We can sec no substantial difference between that form of words which says that the city shall re-rent the fire hydrants or buy the plant, and that other form of words which says that if the city does not buy the plant the hydrant rentals shall be extended.
3. It is assumed by appellant’s counsel that all 20-year periods fixed by the ordinance of 1890 began to run from the completion of the installation, which, in the last amended bill, is said to have been shortly after December 30, 1891. We have considered the case on the assumption stated. Obviously, if the 20 years had expired before July 3, 1911, so that the 20-year extension had already taken effect and so that the action of July 3 could be interpreted only as the exercise of an option given by the ordinance of 1900, a different question would be presented. We do not see that the annually recurring option during each of the second 10 years of the term (if this recurrence survived the ordinance of 1900) affects the character of the city’s duty, as we have discussed it.
The decree of dismissal must be vacated, and the case remanded to the District Court for further proceedings.