The herald., 1898-06-05

|
was five years prior to said contract, and
it is reasonable to presume that the par
| ties to said contract accepted that decision
: as correct and final, and therefore there
was no occasion for any purpose or effort
to evade the constitution.
Defendants further contend that since
the Los Angeles City Water company was
| incorporated subsequent to the act of
April the 22d, 1858 Statutes of California,
1858, p. 21S), providing, among other things,
| that water rates should be fixed by COM
missioners, of whom two were to be ap-
pointed by the water company and two by
the city, and. If they could not agree, a
fifth to be selected by the sheriff, and since
the constitutional provision hereinbefore
quoted, prescribing a different mode of
| establishing water rates from that con-
tanned in the act of 1858 was in effect an
amendment OF said act Spring Valley
Water Works VS.. Schottler, ITO U. s., 1922,
binding upon corporations previously or
ganized, said company can have no right
| to collect rates other than those estab-
lished in the mode prescribed by the con-
| stitution, and that the fact of said COM
pany being the assignee of a contract
which gave the grantees and their assigns
case, as the company had no power to
acquire such d right. quoting the following
| from People VS.. Stanford, II Cal, 1888:
1.-The defendant, the Potrero and Bay
View Railroad company, claims the right
| to maintain railroad and to run cars
! thereon upon the streets described in the
| answer to collect fares ETC., under and
| by virtue of the act Of April 2, 1866, pur-
| <N fotv fol
legged to be assignors Of the Potrero and
Bay View company the right to lay down
and maintain an iron railroad along and
| upon certain streets; and upon acts amend
atory thereof and supplemental thereto.
| The act of 1866 was not grant of mere
| proprietary interest in lands. but was, If
valid grant of franchise. The consti-
tuition of 1S49 provided: Corporations may
| be formed under general laws, but shall
not be created by special act etc. Cart.
| 4. Sec. 3D. The true construction Of that
constitutional provision is that private
corporations must derive their power from
general laws and not from special statutes.
| (San Francisco VS.. Spring Valley Water
Works. As Cal, 513.) 1t follows that if the
grant of the franchise of laying down and
maintaining a railroad within the limits
| in named was valid and operative grant,
yet the defendant corporation acquired
no right to the franchise by assignment
from such persons. To uphold such as
| sgnment would be to give to the particu-
| lar corporation through it a franchise
which other corporations of the same
class could acquire only by grant from the
| supervisors. as provided in the general
lou Co H.,
Water Works. supra. People VS.. Stanford
| II CAL, 1882
Defendants counsel. in their examtna-
| ton of the case last cited, evidently failed
10 observe the fact that the clause quoted
| by them and on which they rely was from
| the opinion of a department, and that said
clause was expressly overruled. on rehear-
| ing, by the court in bank, as follows:
LAS to other questions arising upon the
| answer, they relate 10 the special answer
| to the second count of the complaint,
which count of the complaint was held in
| the former opinion to be bad. We adhere
| to that opinion so far as 1t relates to these
questions, except SO far as it holds that
| u duly organized corporation cannot take
| an assignment from its lawful owners of
| Il franchise to lay down and maintain a
street railroad. This is based upon the
constitutional provision that corpora
tons may be formed under general laws
but shall not be created by speciaN act .
Cart. 4, sec. 80 This provision applies to
the formation or creation Of corporations
and to the powers directly conferred upon
them by legislative enactment, and cannot
| in our judgment be construed as prohibit
| ing the assignment of a franchise to le-
gally created corporation by persons having
the lawful right to exercise and transfer
the same" (People VS.. Stanford, II Cal
| 371)
| The other case cited by defendants in this
| connection, Spring Valley Waited Works
| v. Schottler, supra, is directly against their
| contention, that the Los Angeles City Wa
| ter company could not acquire from ind-
viduals a contractual right to collect water
rates other than those fixed in the mode
prescribed by itS charter. This is shown so
clearly by Judge Ross in Santa Ana Water
company v. Town of Sanbuenaventura sc
Fed. Rep. Bats, already mentioned, that l
quote from his opinion as follows:
| I'm the case entitled Spring Valley Water
Works v. Schottler, 40 u. S. 347, Sup.
Ct. Rep. As, the question arose whether the
right conferred upon water companies or
ganiZed under that act to participate in the
fixing of the rates to be charged for water
furnished by them constituted contract
protected by the constitution of the United
States against impairment by subsequent
action Of the state. The court held that the
provision in the statute of 1858 in respect to
the fixing of water rates was but one of the
corporate privileges granted by the state;
that 1t was part and parcel of the charter
of the corporation, and nothing else. and
therefore fell within the power conferred
by section 81 of articla of the constitution
of the state, in existence when the act was
passed to alter or repeal it. Chief Justice
Waite, in delivering the opinion of the
court said
The organization of the Spring Valley
company was not a business arrangement
between the city and the company, a con-
tracing parties, but the creation of new
corporal ton to do business within the state
and to be governed as natural person OF
other corporations were or might be. Meth
er are the charter rights acquired by the
company under the law to be looked upon
as contracts with the city and county of
San Francisco. The corporation was Gre
ated by the state. All its powers came from
the state, and none from the city and coun-
ty. AS a corporation 1t can contract with
the city and county in any way allowed by
law, but its powers and obligations except
those which grew out of contracts lawfully
made, depend alone on the statute under
which it was organized, and such atera-
lions and amendments thereof as may from
time to time be made by proper authority.