Long v. City of Duluth

49 Minn. 280 | Minn. | 1892

DicKinson, J.

In the year 1883 the village of Duluth was a municipal corporation, having the powers conferred upon it by Sp. Laws 1881, ch. 11, and the more specific powers (as respects the subject here to be considered) conferred by Sp. Laws 1883, ch. 80. It will only be necessary to direct attention to subdivisions one (1) and four (4) of section three (3) of the latter act.

• In the year 1883 the village, by ordinance, entered into a contract with a corporation named the Duluth Gas & Water Company, — but which for brevity we will designate as the “Water Company,” — by the terms of which there was granted to the water company the privilege of establishing, maintaining, and operating waterworks, laying pipes and placing hydrants in the streets and public grounds for the supply of water for domestic and other purposes, for the term of thirty (30) years. The village on its part thereby agreed to abstain for that period from granting to any other party the right or privilege to lay water pipes in the streets or public grounds, or to furnish water to the village or its inhabitants. Then, in the same sentence, after making a similar provision with respect to the laying of gas pipes and the supply of gas, (except that a different period of time is named,) it is added: “And the said village will likewise abstain from so doing for and on its own behalf.” It is contended by the appellant that the clause last recited relates, not only to the subject of gas supply, which immediately precedes it, but also to that of the water supply referred to in the earlier part of the sentence; so that the agreement of the village is, in effect, that it will not, for the period of thirty (30) years, either grant to any other party than this water company the privilege of supplying water and maintaining a system of waterworks, nor itself exercise the right of establishing waterworks or supplying water. We may assume that this is the proper construction of the ordinance; for, if it is not, the plaintiff (appellant) has no reason for this intervention to prevent the municipal corporation from taking steps to establish and maintain a system of waterworks for itself; and, if this is the proper^ construction of the ordinance, the plaintiff has no cause of action, for reasons which will presently be stated.

The purpose of this action, prosecuted by a taxpayer, is to restrain the present city of Duluth, and its officers, from proceedings already instituted, on the part of the city, for the purpose of establishing, on its own account, a public system of waterworks. The city is the legal successor of the village, and no question is raised as to its being legally bound by the contract made by the village with the water company, and we shall assume that it is so bound. Nor is any question raised as to the right of the plaintiff to prosecute such an action. We have not referred particularly to some features of the complaint relating to the subject of gas, for the reason that it appears that the bonds proposed to be issued are merely for the purpose of raising funds to establish waterworks, and it is not apparent that our inquiry need to be extended beyond that subject. The simple question, then, is whether the municipality became disabled from establishing waterworks for the use of the city and its people by reason of the contract made with the water company, and which, as we assume, in terms provided that the municipal corporation would abstain from doing so for the period of thirty (30) years. In simpler form, the question is whether the village had power to grant an exclusive franchise, and thus to disable itself.

The adjudications upon the subject show it to be no longer a matter of doubt that the legislature, acting presumably for the public good and with due regard for the future as well as present interests of the state, may grant exclusive franchises like that which are claimed to have been bestowed upon this water company; and when that has been done, and the grant accepted and actedi upon,> it becomes a contract by'which the state is effectually, bound, and its future governmental power is thereby impaired. It may be admitted, too, that the legislature may delegate to a municipal corporation the authority, by contract, to confer such exclusive privileges concerning matters properly pertaining to municipal affairs. But it is a well-settled principle of construction, applicable both to direct legislative grants and to those indirectly made through the action of municipal corporations, that exclusive rights of this nature are not favored, and a statute which thus has the effect.to impair the power of the legislature for future action should be construed, most strongly in favor of the state. If there is any ambiguity or reasonable doubt, arising from the terms used by the legislative or granting body, as to whether an exclusive franchise has been conferred, or authorized to be conferred, the doubt is to be resolved against the corporation or individual claiming such a grant. Public policy does not permit an unnecessary inference of authority to make a contract inconsistent with the continuance of the sovereign power and duty to make such laws- as the public welfare may require. Nash v. Lowry, 37 Minn. 261, 263, (33 N. W. Rep. 787;) Charles River Bridge v. Warren Bridge, 11 Pet. 420, 543, 544; Minturn v. Larue, 23 How. 435; Wright v. Nagle, 101 U. S. 791, 796; and see authorities to be hereafter cited. ’It is hardly necessary.to advert in this connection to the fact that municipal corporations have only such powers as are conferred by the legislature, and.the same principle of strict construction which forbids that a direct grant of a franchise by the legislature be construed as exclusive is applicable in the construction of powers delegated to municipal corporations with respect to such matters. The authority conferred upon such governmental agencies of the state to grant exclusive franchises or privileges must be as explicit and free from doubt as would be required if the franchise were created directly by the legislature.

Reference to a few of the numerous decisions in which this principle of strict construction has been recognized and applied may properly precede the application which we make of the law -to the facts of this case. It may be that in some of these cases the rule of strict construction was carried too far.

In Minturn v. Larue, supra, it was consideréd that a city charter, conferring the power to make such by-laws and ordinances as might be deemed proper for making (establishing) ferries, did not authorize the granting of an exclusive privilege.

Fanning v. Gregoire, 16 How. 524, was the case of a legislative grant of the right to the plaintiff to operate a ferry for twenty (20) years, and it was also declared that “no court or board of county commissioners shall authorize any person, unless as herein provided, to keep a ferry within the limits of the town of Dubuque.” The city of Dubuque was subsequently created, and the city, in the exercise of its charter powers, granted to the defendant the privilege of operating a ferry. It was held that the earlier grant was not exclusive, and, although “no court or board of county commissioners” could subsequently grant another franchise, the- legislature could do it, or empower the city of Dubuque to do so.

Richmond Co. Gas-Light Co. v. Town of Middletown, 59 N.Y. 228. A legislative act authorizing a town to cause its streets to be lighted with gas, and to enter into a contract with the plaintiff for that purpose, was held not to confer power to make an absolute contract for a term of years. The legislature could not thus be deprived of its power to subsequently legislate upon the subject; and its repeal of the authority to light with gas was effectual to terminate the contract so made. See, also, Syracuse Water Co. v. City of Syracuse, 116 N.Y. 167, (22 N. E. Rep. 381.)

City of Brenham v. Brenham Water Co., 67 Tex. 542, (4 S. W. Rep. 143,) may be thus stated: A city was empowered by its charter to provide itself with water, and was deemed to be authorized to do so by contract. The defendant company was expressly authorized to contract with the city for that purpose. The city entered into a contract with the defendant which the court deemed to have been intended to confer an exclusive right upon the company for the period of twenty-five (25) years. It was held that the city had no such power.

Lehigh Water Company’s Appeal, 102 Pa. St. 515, presented these facts: The water company was incorporated in' 1860 to supply the borough of Easton with water. In 1867 the borough was authorized to construct waterworks, and to'purchase the works-of any existing company. This authority, however, did not become effectual until 1881, when it was approved by popular vote. In the.mean time the water company, as it was authorized to do, had availed itself, by acceptance, of the benefits of an act of 1874 providing for the incorporation of water companies, and which declared that “the right to have and enjoy the franchises and privileges of such incorporation within the district or locality covered by its charter shall be an exclusive one, and no other company shall be incorporated.for that purpose” until the corporation should have realized profits to’ a specified amount. It was held that the franchise was exclusive only as respects other companies, and that the borough was' not prohibited from supplying water by works constructed by itself, even though that might impair the value of the franchise of the water company.

In Stein v. Bienville Water-Supply Co., 34 Fed. Rep. 145, it was held that the granting of the exclusive privilege of supplying a city with water “from the Three Mile Creek” did not prevent a subsequent grant of a right to supply water from another source.

It was considered in Saginaw Gaslight Co. v. City of Saginaw, 28 Fed. Rep. 529, that under authority to a municipal corporation to cause its streets to be lighted, and to make reasonable regulations with reference thereto, the city was empowered to enter into a contract for the accomplishment of that end, but that it had not authority to thus confer an exclusive right to furnish gas for the period of thirty (30) years.

See, also, State v. Cincinnati Gaslight & Coke Co., 18 Ohio St. 262; Parkersburg Gas Co. v. City of Parkersburg, 30 W. Va. 435, (4 S. E. Rep. 650;) Birmingham & Pratt Mines St. Ry. Co. v. Birmingham St. Ry. Co., 79 Ala. 465; Cooley, Const. Lim. p. 250, (6th Ed.;) 2 Dill. Mun. Corp. 692, 695.

An examination of the authorities here cited, and of others of like import, readily leads to the conclusion that the charter powers of the village of Duluth were not such as to enable it to confer upon the water company the exclusive right to supply the municipality with water for the period of thirty (30) years. Such power was certainly not expressly conferred. Nor was it necessarily involved in the authority given to contract for a water supply, and to confer the right upon one or more private corporations to establish waterworks and a supply system. Such general language falls short of expressing an intention to confer the power to grant an exclusive franchise which shall, in effect, bind and restrict, not only the village, but the state, in the exercise of its governmental functions, for thirty, (30,) sixty, (60,) or one hundred (100) years, or forever. It may be said that the power to contract would be useless unless the privilege conferred may be made exclusive; for otherwise private corporations or persons would not engage in an undertaking involving the necessity for very large expenditures of capital in works which might be rendered unprofitable, if not valueless, by the subsequent action of the municipal or state government. The argument is not without force. The cases cited above, and others, show-that it has often been advanced in support of claims of exclusive privileges, but it has rarely, if ever, prevailed. It suggests considerations of policy which may influence the legislature to grant, or to authorize the granting of, exclusive privileges ; but the principles in accordance with which legislative grants of this kind are to be construed seem to be so clearly established that, generally, not much weight can be given to such an argument in determining the effect of particular legislative action.

The proviso in subdivision four, (4,) requiring that in any grant of authority by the village there should be a provision for the sale of the works to the village at any time after fifteen (15) years, has no bearing upon the question under consideration. The proviso requires that the right to purchase shall be a condition of the grant. It imposes no requirement or duty to purchase, and does not justify the inference that the village could only provide itself with waterworks by purchasing from the company. Syracuse Water Co. v. City of Syracuse, 116 N. Y. 167, 187, (22 N. E. Rep. 381.) The conclusion is thus reached that the charter powers of the village of Duluth did not permit it to grant an exclusive franchise, binding itself for the period of thirty (30) years not to establish a system of waterworks on its own account, and that it did not become flisabled to thus act in its own behalf. This is in accordance with the.decision of the district court, although we have assigned different reasons from those which influenced the decision of the learned judge of that court. It is unnecessary to now consider the point upon which his conclusion was based.

(Opinion published 51 N. W. Rep. 913.)

Order affirmed.