170 P. 1078 | Cal. Ct. App. | 1917
A rehearing was granted in this case for the purpose of considering the case of City of Hanford v. HanfordGas etc. Co.,
After a full consideration of the whole case, as it is submitted here, however, the justices of this court are of the opinion that the conclusion heretofore arrived at by this court, as expressed in the former opinion filed herein, is correct, and we, therefore, approve and adopt the opinion prepared by Justice Burnett, and which was handed down and filed herein. Said opinion is as follows:
"This appeal is from a judgment for $927.84 and interest upon an agreed statement of facts submitted to the superior *382
court of Solano County pursuant to section
"The contention of defendant, as set forth in said agreed statement of facts, is that said ordinance could and did legally grant only a franchise for the purpose of transmitting electric power, and obligated the holder thereof to pay to said town two per cent only of the gross annual receipts from the sale of said power, and could not and did not legally obligate the holder thereof to pay any percentage for the sale of electricity for lighting purposes, as the franchise and privilege of using said streets and highways for the purpose of furnishing illuminating light were granted by section 19 of article XI of the state constitution. On the other hand, plaintiff contends that said ordinance could and did legally *383 grant the franchise to construct, erect, and maintain said poles and wires for both of said purposes and obligated the holder thereof to pay said percentage of the sales for power and light to said town and its inhabitants.
"Another position taken by respondent is 'that even if the lighting privilege is covered by the constitution, the Gas Company admittedly received a franchise it was not entitled to under the constitution, to wit, the power privilege, and this is ample consideration for the obligation to pay two per cent of the total receipts, as provided in the franchise, which is a contract between the parties. Furthermore, the Gas Company is now estopped from attacking the validity of this provision.' As indicating the scope and purpose of said provision, reference is made by respondent to the debate in the constitutional convention wherein there was no allusion to electricity, but the subject was treated as though the privilege of furnishing gas and water were the only consideration in the minds of the members of the convention. It is claimed, furthermore, that in consonance with a familiar rule of construction, the particular provision in the constitution — 'and of laying down pipes and conduits therein and connections therewith' — is a specific limitation upon the general words, 'have the privilege of using the streets,' and that 'laying down pipes and conduits therein' cannot reasonably be construed as authorizing the construction and maintenance of poles and wires, and to so hold is to read into the constitution something that its language does not import. In this connection, it is further asserted that 'the provisions of the constitution are mandatory and the mode prescribed is the measure of power,' and in further support of its contention, this general principle of construction is invoked, 'that grants of franchises and special privileges by the state to private persons or corporations are to be construed most strongly in favor of the public and that where the privilege claimed is doubtful, nothing is to be taken by mere implication as against public rights.'
"(1) The position of respondent is clearly stated, strongly argued, and imposingly supported by respectable authority, and there is much reason for the view that it constitutes a correct exposition of said constitutional provision, but the question has been decided otherwise by the supreme court, and we are bound by that decision. *384
"In Pereria v. Wallace,
"It is claimed by respondent that the question before us was not raised or discussed in that case, and, therefore, the decision should not be considered as controlling. It is true that appellants claimed a reversal on other grounds, and to them the opinion was specifically addressed, but whether the constitutional provision was broad enough to include the franchise in question was so fundamental and obtrusive as necessarily to challenge the attention of the court. It could hardly be overlooked, and it is altogether probable that of its own accord, and for that reason, the court could and would have reversed the cause if it had deemed the franchise not embraced within said provision of the constitution.
"In the course of said opinion it is declared: 'The legislature, therefore, cannot modify or change the provisions of said section 19, article XI, above quoted, as to the privilege or franchise of supplying the town of Etna with artificial light. The constitution intended that there should be no such restriction upon competition in supplying these prime necessities as would necessarily result if the privilege could only be granted to the highest bidder, for such bidder would necessarily secure an exclusive right to the exercise of the franchise, the only condition imposed by the constitution being the right of the municipality "to regulate the charges thereof." '
"If the franchise to erect and maintain poles and wires for the purpose of furnishing electricity for lighting purposes was conferred by said provision of the constitution, the attempted grant of said privilege by said ordinance of respondent was necessarily ineffective and void, and the only franchise thereby conveyed was for the construction and maintenance of pole and wire lines for transmitting electric *385 power, and it would follow, of course, that a charge could be made by the city only for the latter franchise and that no burden or obligation could be legally imposed upon appellant for the lighting franchise other than what is permitted by said section of the constitution, which does not include the payment of any percentage or other sum, but is limited to enacting measures relating to damages to the streets and indemnity therefor.
"In In re Johnston,
"And it was held by this court in Town of St. Helena v. Ewer,
"But it is not disputed that by said ordinance the board of trustees granted to Prior and his assigns a franchise to erect and maintain poles and wires for the purpose of furnishing *386 electric power and that the right existed to charge for this privilege as provided by the statute in force at the time of said grant, and the inquiry then is, whether any part of the receipts from the exercise of the lighting franchise may be included in the consideration for the grant of this power privilege. The statute itself provides the terms and conditions upon which said franchises may be granted, and it will not be disputed that the municipality must be guided and controlled by the provisions found therein. The first of these acts, commonly known as the 'Sale of Franchise Act,' was passed by the legislature in 1893, [Stats. 1893, p. 288]. It is entitled: 'An act providing for the sale of railroad and other franchises in municipalities, and relative to granting of franchises,' and it provided for the public advertising of the fact that an application for a franchise had been made, and that the franchise must be awarded to the highest bidder. This was followed by the enactment of 1897, [Stats. 1897, p. 135], entitled: 'An act providing for the sale of street railroad and other franchises in municipalities, and providing conditions for the granting of such franchises by the legislative or other governing bodies, and repealing conflicting acts.' This act also provided for public advertising of the fact that an application for a franchise had been made, that no bids will be received of a single sum or amount stated, but that all bids must be for the payment of a stated per cent of the gross annual receipts of the person to whom the franchise is awarded, arising from its use, operation, or possession, but such percentage shall in no case be less than three per cent per annum of such gross receipts. The statute, in so far as it provided for offering lighting franchises for sale to the highest bidder, was declared in Pereria v. Wallace, supra, to be unconstitutional, as conflicting with said section 19, article XI, of the constitution. The next act, and the one under which the sale was made in the present instance, was passed in 1901 (Stats. 1901, p. 265), and is entitled: 'An act providing for the sale of street railroad and other franchises in municipalities, and providing conditions for the granting of such franchises by legislative or other governing bodies, and repealing conflicting acts.'
"Section 1 of said act is as follows: 'Every franchise or privilege to erect or lay telegraph or telephone wires, to construct or operate street railroads upon any public street or *387 highway, to lay gas-pipes for the purpose of carrying gas for heat and power, to erect poles or wires for transmitting electric heat and power along or upon any public street or highway, or to exercise any other privilege whatever hereafter proposed to be granted by boards of supervisors, boards of trustees, or common councils, or other governing or legislative bodies of any city and county, city or town within this state, except steam railroads and except telegraph or telephone lines doing an interstate business, and renewals of franchises for piers, chutes or wharves, shall be granted upon the conditions in this act provided, and not otherwise.' It is to be seen that no mention is made therein of any franchise for laying water-pipes or laying or erecting pipes or structures for furnishing light. This, no doubt, was in consequence of the decision in the Pereria case, supra.
"Said act provides also for public advertising of the application, and in section 3 thereof is this language: 'The publication must state the character of the franchise or privilege proposed to be granted, . . . and if it be a street railroad, the routes to be traversed; that sealed bids therefor will be received up to a certain hour and day named therein, and that the successful bidder and his assigns must, during the life of said franchise, pay to the municipality two per cent (2%) of the gross annual receipts of the person, partnership or corporation to whom the franchise is awarded, arising from its use, operation or possession. No percentage shall be paid for the first five (5) years succeeding the date of the franchise, but thereafter such percentage shall be paid annually. . . .' Section 5 of said act provides: 'Said advertisement shall also contain a statement that the said franchise will be granted to the person, firm or corporation who shall make the highest cash bid therefor; provided only, that at the time of the opening of said bids any responsible firm or corporation present, or represented, may bid for said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid so made, may be raised ten per cent by any other responsible bidder present, and said franchise or privilege shall finally be struck off, sold and granted by said governing body to the highest bidder therefor, in gold coin of the United States, and said successful bidder shall be required to deposit with said governing body, or such person as it may direct, the full amount of his or its said bid, within *388 twenty-four hours thereafter; and in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor.'
"From the foregoing, it is quite apparent that the consideration for the sale, as far as it is to be determined by the action of the governing body of the municipality, is to be for a stated amount to be paid in cash immediately. In other words, in case there be competitive bids, the municipal authorities have no discretion as to whom they shall sell the franchise, or upon what basis. They must sell — if they sell at all — for cash and to the highest bidder. (Thompson v.Alameda County,
"It is quite plain, though, that by said ordinance the city board of trustees attempted to impose this percentage charge upon the applicant for the privilege of supplying electric light as well as the electric power. But the charge for the power was in excess of the allowance provided by the law, and is, therefore, void to that extent.
"The fact is the sale of the franchise was not made for cash at all. The record does not even show that any bid was received for the same. Prior was and had been for years operating the plant, and there was probably no disposition to exact of him anything more than the percentage provided by the statute.
"To recapitulate: The board of trustees attempted to grant two franchises. One of these, however, already belonged to the grantee by virtue of the provision of the constitution, and, therefore, as to it said ordinance was inoperative. The franchise which was the subject of bargaining between Prior *389 and the municipality was not sold for cash, but was transferred in consideration of the percentage provided by law. It is unimportant that said percentage was recited in the ordinance, as this added nothing to what is fixed by the statute. The case is exactly as though two separate ordinances had been passed, in one of which a franchise was granted to furnish electric light, and in the other, to supply electric power, and in each it was provided that the grantee should pay two per cent of the gross proceeds to the city. Under the authorities, as we have seen, the attempted charge for the first would fail and only the second could be collected.
"As we have already intimated, Prior and the trustees no doubt believed that the town had the legal right to grant or withhold the lighting franchise. The parties, in other words, were acting under a mutual mistake as to their legal rights in the premises, and this accounts for the charge attempted to be imposed upon the exercise and operation of the electric light franchise. The mistake, though, would not prevent appellant from taking advantage of its legal rights when they were disclosed unless the doctrine of estoppel could be successfully invoked. But we can see no room for the application of such principle. Respondent cites, in this connection, such cases asMayor etc. of Borough of Rutherford v. Hudson River TractionCo.,
"We can see no merit in the last two contentions of respondent, and as to the first, the law has been construed in this state in favor of appellant's claim.
"The judgment should be reduced to $57.98, and, as thus modified, it is affirmed, appellant to recover its costs."
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on January 21, 1918.
Angellotti, C. J., dissented from the order denying a hearing in the supreme court.