City of Joseph v. Joseph Water Works Co.
111 P. 864
Or.
1910
Check Treatment

Lead Opinion

Mr. Justice Eakin

delivered the opinion of the court.

1. It is first сontended by plaintiff that the city had no power or authority to grant the franchise for the reason that a municipality can only exercise such powers as are either expressly granted or are necessarily implied by its charter. This may be conсeded, but one of those powers, necessarily implied by the general welfare clauses of the charter, is to supply the city with, water. The authorities are quite uniform to this effect. 30 Am. & Eng. *589Enc. Law (2 ed.) 406; 20 Am. & Eng. Enc. Law (2 ed.) 1147; 28 Cyc. 686, 950; City of Indianapolis v. Indianapolis Gaslight & Coke Co., 66 Ind. 396; Mayor and Council of Rome v. Cabot, 28 Ga. 50; Brenham v. Water Co., 67 Tex. 542 (4 S. W. 143).

2. However, if there were any doubt upon that question, it is put at rest by Sectiоn 2711, B. & C. Comp., being a part of the statute providing for the organization of cities and towns, enacted in 1893 (Laws 1893, p. 119), which expressly grants such power, and Section 2692, B. & C. Comp., makes the provisions of the act applicable ‍‌​‌​‌​‌‌​​​‌​‌​‌‌​‌​​‌‌‌​​​​​​‌​‌​​‌​​‌​​‌​​‌‌​​‍to charters theretofore grаnted: Warren v. Crosby, 24 Or. 558 (34 Pac. 661).

3. Neither is there merit in the contention that the contract created an indebtedness in excess of the charter limitatiоn. A municipal corporation may contract for a future supply of water necessary for the city’s needs and stipulate for the payment of an annual rental, as the water is furnished, notwithstanding the aggregate of such payments, during the life of the contract, may exceed the amount limited by the charter. “There is a distinction between a debt and a contract for a future indebtedness to be incurred, provided the contracting party perform the agreement out of which the debt may arise.” Walla Walla City v. Walla Walla Water Co., 172 U. S. 1, 20 (19 Sup. Ct. 77, 85: 43 L. Ed. 341). In such a cаse the indebtedness is not created until the consideration has been furnished.

4. It is further contended by plaintiff that the municipality cannot grant an exclusive franchise without special authority from the legislature. This is conceded by defendant, it contending only that the frаnchise is perpetual, while plaintiff insists that section 4 of the ordinance limits its duration to 15 years, and this is the principal ground of contention between them. A municipality cannot, at least without statutory authority, grant a per*590petual utility franchise. It is said in Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa 234, 241 (91 N. W. 1081, 1084), that “grants or franchises in perpetuity оr for unreasonably long periods of time are generally regarded as against public policy, and, if ever ‍‌​‌​‌​‌‌​​​‌​‌​‌‌​‌​​‌‌‌​​​​​​‌​‌​​‌​​‌​​‌​​‌‌​​‍valid, the authority thеrefor must be found in the constitution or statutes of the state.” See, also, 28 Cyc. 655, 875; Cooley’s Const. L. (6 ed.) 251; Citizens’ St. Ry. Co. v. Detroit Railway, 171 U. S. 48 (18 Sup. Ct. 732: 43 L. Ed. 67) ; Brenham v. Water Co., 67 Tex. 542 (4 S. W. 143) ; Illinois Trust & Savings Bank v. Arkansas City Water Co. (C. C.) 67 Fed. 196; Logansport Ry. Co. v. City of Logansport (C. C.) 114 Fed. 688. It is said in Birmingham & Pratt Mines St. Ry. Co. v. Birmingham St. Ry. Co., 79 Ala. 472 (58 Am. Rep. 615) :

“Judge Cooley adopts the view that a municipal corporation cannot, ‘without explicit legislative consent,’ permit the construction of a street rаilway in its streets, and confer on the projectors ‘privileges exclusive in their character, and designed to be perpetual in duration.’ * * No reason is perceived why this principle is not entirely sound, and in strict conformity to every rule pertaining to the true functions of municipal corporations. * * They have no implied power to barter away today, as a monopoly tо one, that which, the public necessities of a growing city may require to be reserved, in order that it may be exercised for the рublic benefit on tomorrow.”

See, also, note to Huron Waterworks Co. v. City of Huron (S. D.) 12 Am. R. R. & Corp. Rep. 398; Westminster Water Co. v. Westminster (Md.) 64 L. R. A. 630.

5. Thus we see that the town was powerless to grant a perpetual franchise, and it cannot be рresumed that it intended to do so. On the contrary, it seems, from the terms of the ordinance, that it considered that the right granted by section 1 of the ordinance might be terminated by the town at any time; hence the provision of section 4, fixing the time of its duration at 15 years. The *591effect of the limitation contained in section 4 is the same as if it had been inserted in section 1, viz., granting the exclusive right and franchise for the term of 15 years. It limits to that term whatever right or franchise is granted by section 1; otherwise section 4 is meaningless.

6. It is a rule of construction that, if the terms of the franchise are doubtful, they are to be construed strictly against the grantee and liberally in favor of the public. What is not unequivocally ‍‌​‌​‌​‌‌​​​‌​‌​‌‌​‌​​‌‌‌​​​​​​‌​‌​​‌​​‌​​‌​​‌‌​​‍granted is withheld, and nothing passes by implication, except what is necessary to carry into effect the obvious intent of the grant. 19 Cyc. 1559; Joyce, Franchise, §23; Water, Light & Gas Co. v. Hutchinson, 207 U. S. 385 (28 Sup. Ct. 135: 52 L. Ed. 257) ; Birmingham Pratt Mines St. Ry. Co. v. Birmingham St. Ry. Co., 79 Ala. 465 (58 Am. Rep. 615).

The Dartmouth College case (4 Wheat. 518: 4 L. Ed. 629), cited by defendant, is not in point for the reason that it relates to a frаnchise created by sovereign power. And we hold that section 4 fixes the duration of the franchise at fifteen years. If, as defendant contends, the duration of the franchise in terms is perpetual, then, as we have seen, it is void, and is no protection to dеfendant for the acts complained of here. This was expressly held in Westminster Water Co. v. Westminster, 98 Md. 551 (56 Atl. 990: 64 L. R. A. 630: 103 Am. St. Rep. 424), where the contract was unlimited as to time. The court held that it was a contract in perpetuity, and therefore void; and that the court cannot make a new contract between the parties for a limited period: Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa 241 (91 N. W. 1081) ; Logansport Ry. Co. v. City of Logansport (C. C.) 114 Fed. 688. A contract which is beyond the power of the city to make is void: State ex rel. v. Minnesota T. Ry. Co., 80 Minn. 108 (83 N. W. 32: 50 L. R. A. 656) ; Flynn v. Little Falls Electric & Water Co., 74 Minn. 180 (77 N. W. 38: 78 *592N. W. 106) ; Milhau v. Sharp, 27 N. Y. 611 (84 Am. Dec. 814).

The only relief sought by this suit is tо enjoin defendant from extending its water mains upon streets and alleys not before occupied by it, and the defense set up by ‍‌​‌​‌​‌‌​​​‌​‌​‌‌​‌​​‌‌‌​​​​​​‌​‌​​‌​​‌​​‌​​‌‌​​‍defendant does not establish that it has authority to do so. The demurrer to the answer should have been sustained, and the preliminary injunction made perpetual.

The decree is reversed, and a perpetual injunction will be entered here. Reversed.





Rehearing

Decided January 31, 1911.

On Petition for Rehearing.

[112 Pac. 1083.]

Opinion by

Mr. Chief Justice Eakin.

By the рetition defendant urges that section 4 of the ordinance does not limit the duration of the franchise; but, after a further consideration, we are confirmed in our first decision.

We do not hold that section 1 of the ordinance, standing alone, would create a perpetual franchise; but the answer so treats it, and seeks to enjoin the city from installing a municipal plant. However that quеstion is immaterial here.

It is urged that the purpose of the suit is to secure a decree adjudging that defendant is not entitled to any rights in any of the streets of the city, and not alone to prevent it from extending its mains into streets not before occupied, as held ‍‌​‌​‌​‌‌​​​‌​‌​‌‌​‌​​‌‌‌​​​​​​‌​‌​​‌​​‌​​‌​​‌‌​​‍in the opinion; but the answer expressly alleges that defendant is extending its water mains and service pipes and making the necessаry excavations therefor, and that these acts are the alleged wrongful acts complained of in the complaint.

*593Wе have not considered, nor attempted to decide, what defendant’s status may be after the expiration of the franchise, as that question is not presented by the issues nor discussed in the briefs, and is a matter for future determination. The denials are limited by the allegations of the answer, which, in effect, admit the facts entitling plaintiff to the reilef here granted, and the decree is properly entered.

The motion is denied.

Reversed: Rehearing Denied.