173 Wis. 329 | Wis. | 1921
-In-these'two causes óf action counsel oh both-' sides" attack agreements' between -the city-and the' electric company as-invalid and'Unconstitutional.-' ' "In the first causé-: of action counsel for-the 'company allege that- certain portions of the ordinances involved wére wholly unauthorized. Counsel- for the city argue that "even -if this; were 'true the company '• is éstoppéd' from raising. the question. Iñ the
Although the validity of portions of the ordinances set forth in the statement of facts was ably and elaborately discussed by counsel on both sides it was.not passed upon by the trial judge, and on account of the view we take of another branch of the. case it does not seem necessary to indulge in as full discussion .of the ordinances involved as might otherwise be necessary.
Counsel on both sides are agreed that the ordinances of 1885, 1889, and 1890 were not franchises but were mere licenses, and that.there was then no statutory authority in cities to grant franchises to electric companies. Ch. 192, Lawe 1893 (sec. 1780&,-Stats. 1898), did give authority to such companies, “with the consent of, and in the manner agreed upon with the authorities of any city or village,” to use the streets; and the provisions of.the statute were made to apply to any corporation theretofore organized and then operating its plant by consent of the municipality.
In the case of La Crosse v. La Crosse G. & E. Co. 145 Wis. 408, 130 N. W. 530, this .statute was construed. SubT ject to the statute an ordinance called a franchise was given to an electric company requiring it to pay into the treasury of the city two per cent, of its gross earnings in addition to such other taxes as were provided by law. It was held' that the language of the statute contemplated no more than police regulations and.that, the requirement objected to was void. In State ex rel. Wis. Tel. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657, the city claimed the right,, in granting a so-called franchise, to impose various conditions,.Such as that the city might fix rates of charges, that, the company
It' follows from the cases above cited that the city of Milzvaukee had no power to grant a franchise to the company when any of the ordinances involved were enacted; that the provisions in the ordinances of 1885 and 1889 attempting to prevent the consolidation of the companies were beyond the police powers of the municipality and invalid; that the amendment of these ordinances by that of 1890 furnished no consideration for an agreement to furnish free current; and that the city had no power to stipulate for free service in its amended ordinance of consent.
It is claimed by counsel for the company that even if there had been a valid agreement to furnish, free current it would be superseded by the public utility act. The company has been operating under an indeterminate permit since
. Counsel for the city greatly rely on a recent case to maintain their claim that the agreement to furnish free current has not been superseded by the public utility statute. Oshkosh v. Eastern Wis. E. Co. 172 Wis. 85, 178 N. W. 308. In that case the city of Oshkosh granted to a street railway company a franchise to extend its interurban electric railroad from the city of Fond du Lac into the city of Oshkosh. There was a provision in the ordinance by which the company was to pay the city $35,000 in annual payments of $1,000 each. The ordinance was duly accepted. The complaint alleged that the consideration for the payments was partial compensation for the wear and tear of bridges and streets resulting from the operation of the interurban cars. After surrendering its franchise the company claimed that this agreement had been superseded and that it was no longer bound to make the payments. When the franchise was granted and accepted, the statute, sec. 1863, provided that the consent of the common council should be given by ordinance and upon such terms and subject to such rules and regulations and the payment of such license fees as the common council might from time to time prescribe. The distinction between the Oshkosh Case and the present case seems to us very plain. In the former case there was a franchise duly authorized by statute, and it was held that an agreement to pay the compensation stated for the .use and wear and tear of the streets and bridges was not superseded
It is our conclusion that the Oshkosh Case does not support the contention of appellant’s counsel and that it does not modify the rule settled by such cases as the La Crosse Case; Calumet S. Co. v. Chilton, 148 Wis. 334, 135 N. W. 131; and Kenosha v. Kenosha Flame Tel. Co. 149 Wis. 338, 135, N. W. 848.
Sec. 1797m — 87, Stats., provides that cities shall have power to determine by contract, ordinance, or otherwise all terms and conditions, not inconsistent with secs. 1797«- — 1 to 1797»*: — 109, inclusive, upon which such public utility may be permitted to occupy the streets. The section also provides for hearings by the connnission as to the validity of such contracts or ordinances.. Counsel for the city urge that under these provisions the common council could even now insert clauses in a franchise providing for free service, and that the company’s mode of relief was to appeal to the railroad commission. We have already held that the contract contained in the ordinance of 1890 was invalid. It was not made valid by the section referred to. Moreover, it seems clear to us that a contract giving free service to a city is inconsistent with the provisions of the public utility act and therefore not protected by the section in question. The reasons for this have been so fully stated in Kilbourn City v. Southern Wis. P. Co. 149 Wis. 168, 180, 135 N. W.
Counsel for the city also rely on sec. 1797m — 91, which provides as follows:
“. . . The furnishing by any public utility, of any product or service at the rates and upon the terms and conditions provided for in any existing contract executed prior to April 1, 1907, shall not constitute, a discrimination within the meaning specified.”
They claim that this section saves contracts executed prior to the passage of the utility act April 1, 1907, and' cite Superior v. Douglas Co. Tel. Co. 141 Wis. 363, 122 N. W 1023. The same question was raised in the Kenosha Case, above cited, in which the following language was used by Mr. Justice Vinje:
“That was a case where the city of Superior in its proprietary character entered into a contract for free telephones with an existing telephone company operating under a charter from the state. ' No attempt was made by the city to confer any franchise, or'right to operate any telephone" system, upon the telephone company. The city arid the telephone company, prior .to the passage of ch. 499, Laws 1907,... entered into a contract&wkey;not a part of any franchise-granted... or attempted, to be granted — rwhereby the !elephone,company„. for.a valuable consideration,'agreed to maintain a certain ■number of free telephones in the city'of Superior. The' city ' had paid "the consideration by permitting -alterations to -Ite made in its city hall and buildings 'as requested by the tele'-”, phone company, and it_was held that the. passage of the.public utility, law' did not affect, tire, contract, .since sec... 1797m — 91 thereof expressly provided that ‘the furnishing by any public utility, of any product or service at' the rates' and upon the terms and" conditions provided for'in any-existing, contract executed .prior -to-April-1; 1907;'shall'not con'---stitute-a-discrimination within the-meaning.specified.7 -.-It is obvious the case at bar does not come within-the ..principle, applied or .the section referred to in the Superior. Care.”.
In. the ■ same manner .the-present- case-is- .distinguishable-irom -thiQ -Douglas,:Cgunty .:<Sase-. . The ordinajices .-relied-on
It is argued by appellant that since the company accepted the ordinances relied on it cannot now be heard to claim that they were ultra vires. By its legislation the state has imposed new burdens upon companies of this character. When they became subject to the restrictions of the indeterminate permit they became entitled to its benefits. Wis. T., L., H. & P. Co. v. Menasha, 157 Wis. 1, 145 N. W. 231.
Second cause of action.
The ground upon which the trial judge decided the second cause of action is, if his conclusions were correct, sufficient for the decision in this court. His conclusions are not attacked by the appellant, and they are supported by reason and authority. Appellant’s counsel have, however, devoted their brief entirely to the claim of invalidity of the contract in its inception, and respondent’s counsel state that they desire a decision upon that question because the contract is still in operation and its validity must be determined at some time. For these reasons it seems best to pass upon the validity of the contract at this time. Although the judgment in this cause of action was for only $123.14, the questions raised are numerous and are as. perplexing as if the amount involved were a million dollars. There are four objections made by. appellant.
1. That the contract is contrary to that part of sec. 3,' art.' XI, of the constitution-which requires that any municipal corporation incurring any indebtedness shall, before or at the time of doing so, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay the principal within twenty years.
Appellant concedes that this provision does not apply to
We do not think that counsel correctly interpret the contract or the facts in their claim that the contract requires the city to pay for the system in instalments over a period of years or otherwise. An examination of the contract shows that there is no express provision to that effect. The only foundation for appellant’s interpretation seems to lie in the provision for a depreciation reserve and in an assumption that the rate prescribed for its computation is not established simply to cover depreciation as an operating expense; on the contrary, that it is so excessive as to amount to payments upon the .capital cost, upon an instalment plan, made under the evasive title of a depreciation reserve. We see no other explanation for the statement of counsel, as the cost of property retired from service is to be deducted from the reserve, and while the reserve may prove more than sufficient therefor -it may, on the other hand, prove inadequate. It may prove that the city could never acquire the system thereby, or it may. prove to be of such amount that at a certain time the city would acquire the system without further payment but would then acquire it- in a wprn-out condition.
Doubtless a contract could be drawn in which a charge purporting to be for the expense of depreciation could be made so excessive as to amount-in fact to a contract for in-stalment payments upon a capital investment with the intent
A charge for depreciation is a necessary and proper element of the cost of each year’s service; it is in the nature of an expense of operation, or a running expense, in at least as true a sense as is interest on the investment, and provision should -be made therefor out of current earnings. Miles v. People’s Tel. Co. 166 Wis. 94, 163 N. W. 652; Knoxville v. Knoxville W. Co. 212 U. S. 1, 13, 29 Sup. Ct. 148. See Hill v. Antigo W. Co. 3 Wis. R. R. Comm. Rep. 623, 641; State Journal P. Co. v. Madison G. & E. Co. 4 Wis. R. R. Comm. Rep. 501, 559; In re Jefferson M. E. L. & W. Plant, 5 Wis. R. R. Comm. Rep. 555, 560; In re Fennimore M. W. & L. Plant, 12 Wis. R. R. Comm. Rep. 194, 200: This feature of' the. contract, therefore, really falls within the concession of appellant’s counsel as to expenditures to which the provision of the constitution does not apply; an'cl the'soundness of the' concéssi'oñ is abundantly supported by authority. Stedman v. Berlin, 97 Wis. 505, 73 N. W. 57; Herman v. Oconto, 110 Wis. 660, 672, 86 N. W. 681; Vaughn v. Montreal, 124 Wis. 302, 102 N. W. 561; Connor v. Marshfield, 128 Wis. 280, 293, 107 N. W. 639.
The case of Earles v. Wells, 94 Wis. 285, 68 N. W. 964, is clearly different, as there the'city obligated itself to pay the" principal and'interest of the bonds'issued to cover the cost of ' the water'plant in the"form of só-calléd ‘Tentáis;” áíid at
Appellant’s counsel cite the fact that the contract obliges the city to pay the difference between the investment cost and the accumulated depreciation reserve upon its terminating the contract. But by this the city incurred no obligation. The termination of the contract is entirely at the option of the city. The respondent has no power to terminate it and thus obligate the city to pay anything. .No indebtedness can be incurred under this feature of the contract unless, and until the city exercises its option to terminate it. Stedman v. Berlin, 97 Wis. 505, 73 N. W. 57. The franchise in Connor v. Marshfield, 128 Wis. 280, 107 N. W. 639, contained a similar provision which was apparently considered unobjectionable. See, also, Burnham v. Milwaukee, 98 Wis. 128, 73 N. W. 1018.
Having adopted this construction of the contract it becomes unnecessary to more than allude to- the various other arguments urged by respondent on' this feature of the case, namely: that there may be included in the charges for service which may be contracted for in advance a charge for the amortization over a period of years of the investment involved; that the city is not in a position to take advantage of a violation such as is alleged, on the ground that the constitutional provision is not for the city’s protection, or that it related to an independent and collateral act which the city should have performed, but, failing therein, may be required to perform later; and that the contract creates no indebtedness within the meaning of the constitution, because the amount to be paid is not presently fixed, referring to Janes v. Racine, 155 Wis. 1, 143 N. W. 707.
2. The second objection made by appellant to the contract is that it violates sec. 22 o f ch. Via of the Milwaukee charter (1914), which prohibits the park commissioners from expending or contracting a liability for any sum in excess of the amount levied in any year for the park fund on account
3. The third objection of appellant to the contract is that it calls for an expenditure of more than $200 and that no competitive bids were asked. There are three features of the contract charge, distinguishable in character, to which this claim may be applied: first, the charges for the mere furnishing of electric current to the system; second, the charges to reimburse respondent for the cost of building and operating the special system itself; third, the payment to be made by appellant upon the termination of the contract, upon which title to the special system vests in the city. It does not clearly appear from appellant’s brief which ones or whether all of these classes of expenditures require a contract let upon bids.
The provision of the charter relied on as requiring bidding follows:
“All work and the purchase of supplies or material, chargeable to any ward fund, or to any city fund, including incidental printing, when the cost thereof shall exceed the sum of $200, except street cleaning, shall be let by contract, to the lowest bidder . . .; and no indebtedness shall be incurred in excess of the amount herein limited without a formal contract, let to the lowest bidder, and all work done or supplies and material purchased, exceeding in cost $200, shall be done and purchased, when practicable, by said commissioner, by contract, which shall be let after due notice, inviting proposals, in the manner provided for the letting of contracts for the doing of public work. . . Sec. 16, ch. V, Milwaukee Charter, (1914), under the caption “Department of Public Works.”
It is asserted that this governs expenditures of the board of park commissioners, and sec. 16, ch. Via, Milwaukee Charter (1914), is cited to this effect-.
Assuming that the park board is bound by the quoted section, the question remains whether it would forbid their
It seems clear that such provisions of charters are intended to apply to contracts where public policy requires that competition be had to obtain a reasonable charge for work performed for, or materials and the like supplied to, municipal corporations. With the passage of- the public utility act our conclusion that bids are not required for utility service is further supported, for the spirit of that act is a recognition that competition is an inadequate regulator of the rates of public utilities, wherefore public control is substituted for competition. The rates for such services and the rate established by the contract in question are filed with the railroad commission under the act and are subject to action by it. To such expenditures this provision of the charter has no application.
Appellant urges that, even though no competition were possible for the furnishing of the current itself, nevertheless many firms could have undertaken to install the equipment in the park, and that charges for such installation therefore come within the provision of the charter. In so far as appellant’s argument relates to the charge for reimbursing respondent for the cost of building and operating the special system, which we have here classed as the second feature of the contract charge, the principles we applied to the first feature of -the charge seem still to apply. As we construe the contract, this part of the charge is to cover part of the ex
By making the payment which we have classed as the third feature of the contract charge, namely, the payment upon termination of the contract, the city may get title to the special equipment and therein may more truly be considered as getting' work or purchasing supplies or material within the intent of the charter provision. There are' several ánswérs, however, to appellánt’s objection to this feáture of the contract charge. In the first place the purchase is entirely optional with the city. The city may never expend anything, nor acquire anything, under this provision of the contract. It does not now, therefore, and may never, violate the provision of the charter. Moreover, the purchase, if ever made, may or may not involve an expenditure of $200. The provision for payment on the termination of the contract may, it seems, be regarded as incidental to the service rendered, like the second feature of the charge, and as therefore falling within the cases cited. If the option be accepted, it may be'for the purpose of abandoning the entire arrangement, ’ not' to acquire' the' instillation. It may be
It may be. that in this cause of action the city should be estopped, as it claims the company is in the first- cause of action, from questioning the validity of the contract. But we shall not discuss that here.
4. The fourth objection made by appellant to the validity of the contract is that it is not countersigned by the city comptroller nor approved by the city attorney as to form and execution, as it is- alleged the city charter requires. The provision of the charter urged in appellant’s brief as so requiring is sec. 13, ch. V, Milwaukee Charter (1914), which provides:
“All contracts entered into, and all public notices required by law to be given by the commissioner of public works of the city of Milwaukee, shall be countersigned by the comptroller of the said city, and shall have no force unless so countersigned. All contracts entered into by the said commissioner, and all bonds.taken by him, shall-be entered into*348 in the name of, and shall be executed to the city of Milwaukee; and all such bonds or contracts, when executed, shall be examined and approved, as to form and execution, by the city'- attorney.”
ft will be noted that the section, in terms, applies only to contracts entered into by the commissioner of public works,' and it is in the chapter dealing with the duties of that officer. Ordinarily its operation would not be extended beyond his contracts. Superior v. Norton, 63 Fed. 357, 359. It is urged, however, that the provision applies to the park board by reason of the last clause of sec. 16, ch. Via-, of the charter, which reads as follows:
“. . . and generally in regard to'said parks and boulevards, the said board of park commissioners shall have and possess all powers and authority now by law conferred upon or possessed by the common council and board of public works of the city of Milwaukee, in respect to the public squares and places in said city.”
Assuming that restrictions and methods of procedure imposed upon the commissioner of public works are imposed upon the park board along with the grant of the equivalent of his powers, nevertheless appellant’s conclusion does not follow, for in respect to lighting the park board seems to-get its powers by the reference to the powers and authority of the common council in said sec. 16, not by the reference to those of the commissioner of public works. The’council, not the commissioner, has been given the power over lighting generally. Sub. 35, 35a, sec. 3, ch. IV, Milwaukee Charter (1914).
• An objection presenting more difficulty is that raised at the oral argument on sec. 13, ch. Ill, Milwaukee Charter (1914), which reads as follows:
“He [the comptroller] shall examine all estimates of work to be done by the board of public works pf the city'-, and countersign all contracts entered into by said board of public works, and all certificates of work given by them; and also all contracts made in behalf of the city; and no contract*349 entered into, or certificate issued against property shall be of any validity unless countersigned by the comptroller, except as otherwise expressly provided in this act.”
Superior v. Norton, 63 Fed. 357, and Lee v. Racine, 64 Wis. 231, 25 N. W. 33, may be cited as lending weight to appellant’s contention. The section comes from the chapter dealing in general with the powers and duties of. the comptroller, inter alia, and, it may be argued, is of general application and therefore a limitation upon the park board as upon other officers of the city.' The provision dates from the general revision of the charter in 1874. Sec. 13, subch. III, ch. 184, Laws 1874. The statutes creating the park board and establishing the general system under which it operates date from 1889 and 1891. Ch. 488, Laws 1889; ch. 179, Laws 1891. It is therefore evident that the legislature in passing sec. 13, subch. Ill, did not specifically have in mind contracts entered into by the park board. That section appears by its terms to have had specific reference to contracts entered into by the board of public works, and in this respect differs from the provision in Superior v. Norton, supra, but it is also made applicable to other contracts.
The comptroller appears to be primarily an accounting officer and an officer to aid the council in establishing the tax rate. He is to make a report to the council on expenses and a detailed estimate o.f revenue necessary to be raised (sec. 12, ch. Ill, of the charter) ; he is to examine estimates of work to be done by the board of public works (sec. 13) ; he is to report to the council on prospective special taxes to be levied by it (sec. 14) ; he is to report monthly to the council the amount of work done, or for which contracts have been entered into, chargeable to ward funds, general city fund, or other funds (sec. 15) ; he is to examine accounts of officers receiving moneys (sec. 16) ; and is to audit claims to be allowed by the council (sec. 17). The above are with special reference to powers granted, to him prior to the time of the establishment of the park board.
The general spirit of.ch. Via. of the charter, however, governing the park board is to make that board, in the -improvement, maintenance, and control of the parks, as independent as possible of all other officers and bodies. The board is given the full and exclusive power to govern, manage, control, and improve the parks, to appoint its employees and fix their salaries, and generally in regard to the parks to have all the powers of the council or board of public works in respect to public places in the city (secs. 16, 18, 18a) ; they are to report to the comptroller, it is true, the names of appointees and the salary allowed, and he is to audit claims against the board and they are to report to him claims allowed by them, and the board is to report to the council in each year on its transactions, expenditures, and the like (secs. 20, 22). It is significant that the board is given power to itself determine, within statutory limits, the tax to be levied for its work, which is merely certified to the council and comptroller by them, and which must thereupon be included by the council in the general tax levy for the year (sec. 21). It is made unlawful for the board to contract a liability in excess of the amount levied in any one year for
It will readily be seen that the park board of the city of Milwaukee stands on a very different footing from that of Superior as set out in Superior v. Norton, 63 Fed. 357. The Superior board had to seek its funds in the same manner and through the same channels as other-city officers, such as the board of public works, while the Milwaukee board stands on an independent and superior ground in this respect.
While the comptroller has certain important duties in connection with the Milwaukee park board they seem principally to do with the auditing of claims -and accounts. Sec. 13, ch. Ill, on the other hand, appears to bear principally upon the making up of the necessary tax levies. The' park ’ board, however, has complete power to determine its own tax levy, and in view of this fact and the other features of the charter reviewed it seems that sec. 13, ch. Ill, was not intended by the legislature to apply to’contracts of a body such as the park board which was later created.
By the Court. — Judgment affirmed.