The herald., 1898-06-05

|
the city and the company. Any contracts
| hereafter SO made shall be valid and
binding in law. but shall not take from the
city the right to regulate the rates for
water, nor shall any exclusive right be
granted by contract or otherwise. for a
term exceeding twenty years
| by this act 1t was declared, as will be
observed. that no contract entered into
between a city and a company incorporated
under the provisions of the act should
take from the city the right to regulate
rates for water That provision had no
application to Arnaz and his associates, for
the reason that they were not incorporated
under that or any other act" Santa Ana
Water Co. VS.. Town Of San Buenaventura,
Sc Fed. Rep. PIP. 1850.
But 1t is insisted by defendants. that,
even If the contract in question does not
violate said act of 1852. it is inconsistent
with the policy of the state as manifested
! in said act, citing l Dill. Nun. Corp, Sec.
| 319.
| Defendants, 1t seems TO me, mistake the
scope and purpose of said act of 1852 Said
act was, as shown by Its title simply IAN
act to provide for the Incorporation of
| water companies" and does not purport
! to abridge the powers of municipal cor
porations except in their dealings with the
private corporations created under said
act. The powers of municipal corporations
in their dealings with individuals are unaf-
fected by said act of 1852 Defendants
claim, therefore, that 1t was the policy of
| the state, as shown in said act, to apply
| its provisions to individuals. when, by
familiar rule Of construction, individuals
are excluded therefrom, Is untenable. This
is well illustrated by section 81, article 4, of
| the Constitution of California, of 1S49, and
the judicial Interpretation thereof. That
| section prohibits the granting of franchises.
| by special legislation. to private corpora
| lions, yet the supreme court of the state
| holds, hereinafter fully set forth, that
grants of franchises to individuals are not
| within the prohibition.
| 1t is insisted by the defendants, that the
case at bar is distinguishable from that of
Santa Ana Water company v. Town of San
Buenaventura, supra, and comes within
| the reasoning in San Francisco v. Spring
| Valley Water Works, As Cal, 493, because
Griffin and his associates procured their
contract with the intention of forming
corporation to carry out the same, and,
| that, soon thereafter, pursuant to said in
tenton, the Los Angeles City Water COM
pany, one of the compliments herein, was
| organized by them.
| Now, l do not think that the power of the
| city to enter into the contract. or the valid
| ity of the contract, can be affeced by the
| fact that the assignors of the Water COM
pany, at the time they procured the con-
tract, intended to assign 1t to a corporation
| thereafter to be formed. Suppose, that
after the making of the contract. Griffin
Beaudry and Lazard had changed their
purposes, and concluded to carry out the
contract as individuals, and had actually
| done so, could it be contended that the
| contract, If today held by them, would be
invalid because, when they procured It,
| they purposed its assignment to a contem-
plated corporation? No one, l think, would
so contend.
The case of San Francisco v. Spring VAL
| ley Water Works, supra, is widely different
from the case at bar. Here the contract
was not conditioned upon the individuals to
whom the franchise was granted Griffin
| and his associates) organizing themselves
into corporation, while in San Fran
cisco V. Spring Valley Water Works con-
dition similar to the one indicated did ex-
| list and was the essential ground of the de-
| cision, as shown by the following extract
| from the opinion of the court:
"This brings us to the consideration of
the Ensign act, so-called. The first seven
sections confer upon Ensign and his asso-
| ciates certain privileges, and impose upon
| them certain duties in respect to furnish
| ing the city and county of San Francisco
| with water for the extinguishment of fires
| and other municipal uses. Section eight.
already quoted. provides that this act
| shall not take effect unless the parties
named in section one shall, within sixty
| days after its passage, duly organize
themselves in conformity with the existing
| avs regulating corporations now in force
| in the state The grant, therefore, was
not to take effect until Ensign and his as
| sociates had become corporation under
| existing laws. 1t took effect as Il grant, not
| to Ensign and his associates as private in
| dividuals, but to the corporation when
| formed. 1t was an attempt by the legisla-
| ture to confer, by special grant, upon a
| private corporation about to be formed,
certain peculiar privileges and to subject
| it to certain duties not common to other
corporations formed under the same gen j.
eral law. For the reasons already stated,
! this was not within the constitutional
power of the legislature. When Ensign
and his associates became a corporation
| under the general law, they took only such
rights as were derived from that law, and
were subject only to such duties as 1t i'm
posed. The legislature. by special act,
could not increase or diminish either"
| (San Francisco VS.. Spring Valley Water
Works, 4S Cal. 514)
| Nor does the present case come within
the implied suggestion of the court in San
| Luis Water Co. VS.. Estrada, LIT Cal. 16S,
| that the intention of individuals to ar
ganize a corporation to carry on: the OBJ
ject of a franchise granted to them other
| circumstances concurring, might invalidate
| the grant, for the reason, that it does not
| appear, in the case at bar, that the city
| council acted with reference to such inten-
| ton, or had any knowledge of its existence,
| or that the contract was made for the pur-
pose of evading the constitution. There is
no intimation by the court in the case of
the San Luis Water company VS.. Estrada,
that mere intention, on the part of the
grantees, undisclosed to the granting party,
| could invalidate the grant. What the
| opinion in that case does suggest, and even
| that was outside the facts, Is that, If the
| individuals, to whom franchise Is grant
| ed, intend at the time of the grant, to form
a corporation to carry out their contract
| with the city. and this intention is known
to, and acted upon by the city, and the
| contract is made for the purpose of evad.
ling the constitution, then 1t Is invalid.