Garrison v. Chicago

| U.S. Circuit Court for the Northern District of Illnois | Jul 15, 1877

DRUMMOND, Circuit Judge.

In May, 1S59, the city of Chicago entered into a contract with the Chicago Gas Light and Coke Company to furnish the city with gas for ten years, viz., till May, 1869.

In February, 1855, the People’s Gas Light and Coke Company was incorporated, and was authorized to manufacture and sell gas to the city of Chicago, and to erect all neces■sary works for that purpose.

In April, 1862, with the consent of the city, the Chicago Gas Light and Coke Company assigned all its interest in the contract of 1859, as to the west division of the city, to the People’s Gas Light and Coke Company, and from that time the latter company, until May, 1869, when the contract of 1S59 expired, performed the obligations of the Chicago Gas Light and Coke Company under that contract. In 1869, then, the People’s Company had the means of manufacturing gas, and was selling it to the city as the assignee of the Chicago ■ Company.

By an amendment made in 1865 to the charter of 1855, the People’s Company was ■authorized, with the consent of the city, to lay down all necessary gas pipes along the streets and public squares. This power seems to have been exercised by the company from 1869 to 1876, and until the controversy which has given rise to this litigation.

By its charter the city had authority to light the public streets — and, it is to be inferred, the public buildings and offices — and to levy and collect a tax for that purpose. The power to provide the necessary means for lighting the streets, buildings and offices, either by the construction of a gas manu-factory or by contract, would seem to follow as of course. But it can hardly be presumed, in the absence of any restrictive legislation on the subject, that it was intended to confine the city of Chicago, as its source of supply for gas, or for light, to the People’s Company or to the Chicago Company. These means were furnished, but they were not exclusive.

In 1869 the charter of the city contained a provision that no contract should be made by the city involving any expense, unless an appropriation was pi’eviously made concerning such expense. And the comptroller was required in May of each year to submit an estimate of the amount necessary to defray the expenses of the city for the current fiscal year.

This provision of the charter does not seem to have been construed as a prohibition to the execution of contracts extending over one year,. even where the appropriation did not meet fully the expense of the contracts, and it would be difficult to maintain that this construction is unsound. The language must obviously be applied to the subject matter of the contract, as understood by the legislature, viz.: to those matters where the terms of the contract and the time of Its execution were practically within the reach of an appropriation once made.

The construction of tunnels, of water works, of public buildings, including gas works, of deepening summit levels, and many other matters within the general scope of the powers of the city, may require more than a year to complete, and must necessarily involve more than one appropriation. And yet, in view of the manifest intention of the legislature, it may be doubted whether the city would be authorized to execute any of these general powers within an estimate first made of the expense to be incurred.

But if it be admitted that this is the true meaning of the prohibition, it is clear that the purpose of the legislature was to limit the city council to the actual necessities of the particular case, and the question to be determined is whether there was a reasonable necessity on the part of the city council to extend the contract in controversy here, and which will now be mentioned, for ten years from its date, there being no appropriation made commensurate with the obligations of the contract

We will waive the question connected with the right of the plaintiff, a stockholder of the People’s Gas Light and Goke Company, to come into this court for equitable relief, and also the other question, whether there is not a complete remedy at law for a breach of the contract if valid, against the city, questions not free from difficulty, and come to what is the principal controversy between the parties — the contract between the city and the People’s Company.

*52On the 5th of October, 1869, in pursuance of authority given to that effect by the city council, the mayor and comptroller entered into a contract with the People’s Gas Light and Coke Company, by which the gas company agreed to supply the streets and public buildings and offices of the west division with gas for $3 for 1,000 cubic feet, and the city agreed to take and use the same for the streets, buildings, and offices, and pay the price named. The contract was to continue in force till the 1st of April, 1879.

The contract contains other stipulations not material to this controversy. But it must be stated that the contract assumes that the gas company had the means of complying with its obligations. It is not the case of a contract made by the city with the company, by which the company as a consideration for making the contract with the city, was to construct and maintain gas works where there were none before. On the contrary, it is to be fairly inferred that the company had, as authorized by its charter of 1855, and Its amendment of 1865, constructed gas works before October, 1869, and had the necessary appliances to execute the contract on its part. It is true, the bill alleges, and we may presume that, in consequence of the making of the contract, the company enlarged its works and made considerable expenditures; but it nowhere appears that this was a condition precedent to the execution of the contract, as that the city declared, if this shall be done, the contract shall be executed, or that- the company said, if not done, then it would not be a party to the contract. This, then, being the condition of the parties as to the subject-matter -of the contract had the city the capacity to make it? I think it had not.

It is not necessary to refer to the numerous cases cited in the argument. In my judgment, they establish by a preponderance of authority, that a municipal corporation, under the powers conferred on the city of Chicago by the legislature, and under the circumstances existing here, had no right to make a contract with the People’s Gas Light and Coke Company to pay for the use of gas for so long a time. And I think on principle the same conclusion must be reached.

The officers of the city — the members of the council — are trustees of the public. They are clothed with authority to legislate upon public interests. There can be do doubt that the right to regulate the lighting of the streets and to furnish means for the same by taxation, is in its nature legislative power. It concerns the whole public of the city. The effect of the contract in question by the city authorities in October, 1869, if valid, was to bind their successors for ten years as to those matters of legislation. If it be conceded that the power existed, as claimed, then it practically follows that at the end of the term in 1S79, a contract may be made by their successors without limit, and which may bind the public indefinitely. I am unwilling to sanction a principle which, in a case like this, would lead to such results. The safer rule is to hold the officers of a municipality to a rigid accountability in the discharge of their trust. In ail cases of contracts to run for years, the authority to make them should be clear; because they involve pecuniary liability, and it is a tax upon future property owners of the city.

To sustain the contract between the city and gas company in this case would encourage the making of such contracts in the future. It would place it in the power of companies, whose interests were to be affected by them, to multiply them, and to continue them when the public interest demanded they should cease. To condemn it is to prevent, so far as it may tend to produce that result, the use of influences which look to private rather than to puftlic profit. It is better that all parties should understand there is a limit to the power of municipal bodies in such cases. I hold, therefore, as matter of strict legal right, that the contract of October'5th, 1869, was unauthorized, and the motion for an injunction against the city to prevent interferences with lamp posts, service pipes, etc., will be denied.

But the opinion of the court, even on this application, would be incomplete without considering the case in another aspect.

It must be admitted that the claims of the gas company against the city seem, in some respects, to be founded in a strong equity. The city assumed to treat with the company on the basis of right to make the contract The latter may, therefore, be pardoned for recognizing the authority claimed. For several years the city conceded the validity qf the contract by paying for the gas the stipulated price. It is only within the last few years, and after the cost of producing gas had been reduced, that any active efforts were made by the city to deny the obligations of the contract If the cost of its production had been increased, we should probably never have been troubled with this litigation.

The company has made large expenditures for additional works. Many miles of mains and many service pipes have been put down. These have been much extended in parts of the city where there has been, up to the present time, no adequate return, owing to the sparseness of population there. It is alleged this has been done by the company at the request of the city, and that in consequence the company has been subjected to great loss caused by condensation and leakage of gas from the pipes not in use and not required for use when they were put down.

The contract, by its own limitation, expires in less than two years from the present time. In view of these circumstances it was suggested at the hearing of the motion for an injunction, that some satisfactory arrangement should be made between the parties, or by reference to others. The gas company has the means of supplying gas. The city needs it. *53It would seem as though they could deal with each other better thau with any one else. If the purpose of the city was to do nothing until the validity of the contract was ascertained, that is now accomplished so far as the opinion of this court can determine it. And, therefore, as we are now only deciding a preliminary motion in the case, it does not seem improper to renew the suggestion that was made on the hearing of the motion; — for the equity of the plaintiff appears so strong, the acquiescence of the city in the contract so long continued, that, if I could hold it binding on the city because of this acquiescence, I should feel inclined to do so, but the fact that tl)e rights of the public cannot in any way be affected, prevents this, and nothing remains to be done in the present stage of the case but to express the wish that the suggestion of the court may be adopted by the parties.