delivered the opinion of the court.
The principal question raised by the demurrer, and presented by the record for our consideration, is whether or not the contract sued upon is ultra vires.
The contract in question is evidenced by a certain petition of the County Commissioners and C. B. Andrews,.and a resolution of the City Council of the defendant. The petition •is dated December 2, 1901, addressed to the mayor and city council of the defendant, and so far as material, reads as follows: “The undersigned respectfully petition the City that they wish to lay a four-inch cast iron main from the present terminus of the City water works at the east end of Garfield Stret, to the road on the west side of the County poor farm, so the water service may be had at the poor farm buildings and in the event of the land adjoining the water main shall be hereafter platted and added to the city that service may be had for the consumers thereunder, and respectfully ask permission to make connection with said water main for that purpose, agreeing that water meters will be used and the takers will pay for the use of water at the schedule rates that are now or may be hereafter adopted. It is further agreed that said extension shall be made under the supervision of the Water Superintendent of the City of Fort Collins. * * * It is purposed that if permission is granted to make this connection and extension the cost thereof shall be paid by the undersigned and. whenever the service by said extension shall pay to the city-in rents an amount per annum equal to 20 per cent, of the cost thereof, then the line shall be conveyed to the City and an amount equal to the expense of constructing the same according to prices then prevailing be refunded to the under*
It is the contention of the plaintiffs in error that, the contract sued upon is not rendered ultra vires by reason of the facts thus recited in the demurrer, and in support of this contention counsel rely principally upon the case of City of Colorado Springs v. Colorada City, 42 Colo. 75, 94 Pac. 316. Whether or not that case is decisive of the instant case, it at least strongly supports the view taken by the plaintiffs in error. The contract there upheld, by this court, was one whereby the City of Colorado Springs agreed to furnish water from its mains to the city of Colorado City, and its inhabitants. There can be no doubt that the contract involved in the instant case is not ultra vires from the mere fact that it provides for furnishing of water to consumers outside of the corporate limits of the city. City of Colorado Springs v. Colorado City, supra; Pikes Peak Power Co. v. City of Colorado Springs, 44 C. C. A. 333, 105 Fed. 1; Milligan v. Miles City, 51 Mont. 374, 153 Pac. 276, L. R. A.
Under the authorities already cited, and many others, it is well settled that a city in operating a water works system acts in its proprietary or business, and not in its political or governmental capacity, and in so acting is governed largely by the same rules that apply to a private corporation. From this proposition it follows, that, as stated in 19. R. C. L. 788, sec. 95: “When, * * * as a necessary result of carrying on a legitimate, public enterprise in -a reasonably prudent manner a surplus of the material used or distributed is acquired, or a by-product created, a.municipal corporation may lawfully engage in the business of disposing of such surplus or by-product for profit, without special legislative authority.” In Milligan v. Miles City, supra, it was said: “If it has a present surplus of water, the dictates of common business prudence require that such surplus be sold, and the proceeds devoted to public use.” It was accordingly held, in the case last above cited, that a municipal corporation having express authority to operate an electric light and power plant may lawfully, as an incident thereto sell surplus steam, and, further, may at public expense lay the mains or conduits necessary to convey such surplus steam to places where there is a demand for its use. In that case the business of selling surplus steam was conducted entirely within the corporate limits, but a surplus product, like wafer or light, may, of course, be sold to consumers without the city, and, if so, mains or conduits may be laid to points without the city in order to convey the surplus produce “where there is a demand for its use.” The laying of the mains and the furnishing of the water are both a part of the same business enterprise. There is no rule that limits the disposal'of surplus products only to cases where it may be done without any expense whatever. In the City of Henderson v. Young, 119 Ky. 224, 83 S. W.
It seems clear, therefore, that a city may incur a reasonable expense as an incident to the sale of surplus water or other product to consumers without the corporate limits, and there is no reason why such expense may not be incurred as the result of taking over or acquiring a water main running beyond the corporate limits, under the circumstances existing in the instant case. The defendant city had the authority to contract, as it did, to pay for the water main involved in this action.
The complaint does not affirmatively show any facts or circumstances rendering the contract in question ultra vires. The complaint is, therefore, not demurrable upon the ground above considered. The contract is not upon its face necessarily beyond the scope of the authority of the defendant city, and will, in the absence of proof, be-presumed to be valid. 28 Cyc. 675. Brown v. Pomona Bd. of Education, 103 Calif. 531, 37 Pac. 503.
Another ground of the demurrer is that the complaint does not state facts sufficient to constitute a cause of action bécause it “does not appear from the complaint * * * that any appropriation * * * was ever provided” prior to the making of the contract sued upon. This ground is laid in reliance upon section 6633 R. S. 1908 (sec. 7352 M. A. S. 1912) which reads as follows: “No contract shall be hereafter made by the city council or board of trustees, or any committee or member thereof; and no expense shall be incurred by, any of the officers or departments of
Under the contract involved in the instant case, there was no certainty that any expense whatever would be incurred by the city under it. No indebtedness was to accrue until and unless the revenues derived by the city from the water main should for any one year equal twenty per cent of the cost thereof. Furthermore, the indebtedness or expense contemplated by the contract would not arise unless and until the (contracting, 'parties, other than the city, should perform the agreement out. of which the debt might arise. No indebtedness was created in the year in which the contract was made. Under these circumstances the statute relied on by the city is not applicable or controlling. This conclusion is supported by the reasoning of the case of Gas Company v. Leadville, 9 Colo. App. 400, 49 Pac. 268. A municipality does not create an indebtedness by obtaining property to be paid for wholly out of the income of the property. Evans v. Holman, 244 Ill. 596, 91 N. E. 723; sec. 2330, McQuillen on Municipal Corp.
The demurrer also raises the contention to the effect that the contract in question was in the nature of one for the construction of a public improvement, and that, therefore, to be valid, it would be necessary that the work be done by contract let to the lowest responsible bidder. This point may be disposed of simply by the observation that the water main involved in this case, and in the contract under consideration, was not a public improvement constructed or to be constructed by the city, nor by the aid of money provided by the city.
The judgment is reversed, and the cause remanded with directions to overrule the demurrer.
Reversed.
Chief Justice Garrigues and Mr. Justice Bailey concur.