The Topeka state journal., 1900-03-10
BIRD is BEATEN.
City Attorney Loses His Suit
Against Water Company.
Does Not Affect Right of City
to Own the Plant.
MIR. DOSTER DISSENTS.
Agrees on One Point But Not
the Other.
Opinion Written by Associate
Justice Smith.
MR. DOSTER DISSENTS.

brought on the relation of the attorney
general by W. A. S. Bird. city attorney,
to oust the Topeka Water company
from doing business in this city.
The opinion was written by Justice
William r. Smith and concurred in by
Justice Johnston. those two members
constituting a majority of the court.
Chief Justice Doster while not agree
ing with the majority of the court as to
the right of the Topeka Water COM
pany. the New Jersey corporation, to
do business under it's charter in Kan
sas, holds that the contract between the
city and the water company is valid,
and that at least the stockholders of
the New Jersey company can operate
the plant.
1t should be understood that this de-
cision will have no effect upon the own
ership of the water system by the city.
The franchise of the company expires
in 1901 and many have regarded this
suit in the light of useless litigation.
The people of Topeka will not be
swerved from their purpose to own the
water plant.
The city contended that the water
company had no legal right to mort
gage its secondary franchises. The
court holds that it can and that the
company has a right to operate in the
city. This being true it is the opinion
of the attorneys that now the city un-
der the law can avail itself of the power
to compel the company to extend its
mains where such extension is neces-
sary and it is also believed that the es-
tabliShment of the right of the COM
pany also makes it amenable to the
powers of the city which will be ap-
piled to a reduction of the water rates.
Proceedings along these lines are
likely to be established at once should
the company further refuse to comply
with city ordinances.
In his opinion which was accepted by
a majority of the court, Associate JUS
tice Smith, emitting the citations of
records in the manuscript, says:
There are two questions to be set
tied essential to a disposition of this
case.
'First-Did the Topeka Water COM
papy (the Kansas corporation) by its
trust deed to The Atlantic Trust com
pany convey to it, by way of mortgage,
the franchises granted to the former by
the city of Topeka?
FSecond-Has the Topeka Water
company (the New Jersey cOrpOratiOn)
under its charter a right to own and op-
crate a system of waterworks in Shaw
nee county, Kansas, and to transact
business in this state, to the extent
claimed by it. under the rules of coTu-
ity or otherwise?
1T is earnestly claimed by counsel
for plaintiff that the Topeka Water
company had no power to mortgage or
convey its franchises granted by the
state or the city of Topeka. AS to the
franchises received from the state We
agree; but as to those privileges and
rights conferred by the city, the law is
well settled against the contention Of
counsel for plaintiff. There is a marked
distinction between franchise which
is essential to the creation and con-
tinued existence of a cOrpOratiOn,a right
to exist as an artificial being, a right
conferred by the sovereignty of the
state, and those rights subsidiary in
their nature by which the corporation
to the enjoyment of which corporate ex-
istence is not prerequisite. A cor
poration exists by the will of a SOW
ereign power. To this superior author
ity it owes an allegiance which it can
not abjure. It can not, by bargain,
sale or mortgage, ALLEVIATE or incumber
its birthright, nor in any manner part
with those accompanying powers granG-
ed by its creator which are essential
to its existence and vitality. A cor
pOratiOn may exist without property.
Therefore when it sells or mortgages
property owned by it, it does not impair
it's right to live-a privilege conferred
by the state and called franchise The
statutes above quoted expressly
authorize a corporation to mortgage its
property.
company pledged all the property of the
water company, including all rights,
franchises, tolls income, right of way
grants, etc, then owned or to be there-
express reference was made in the
mortgage to the contract between the
city and the water company, but we
think the rights obtained under the city
ordinances passed to the mortgagee.
The ordinances accepted by the water
company were in the nature of con-
tracts and were property within the
meaning of the law. Under our sta
tute the words personal property in
clude money, goods, chattels. evidences
of debt and things in action; and the
word property includes both personal
and real property.
denced by ordinances the city was not
exercising legislative or governmental
powers, but quasi private power con-
ferred by law, and in such matters it
could exercise it's business affairs gov
erned by the same rules as apply to an
individual or private corporation.
1--WE think, therefore, that it was not
beyond the power of the Topeka Water
company to mortgage its plant and ap-
purtenanceS and its property rights un-
der the ordinances mentioned. The
mortgage having created a valid lien on
the property, sale of the same under
a decree of foreclosure was authorized
and lawful"
on the second proposition regarding
the right of the Topeka Water company
to transact business in the state of
Kansas, the court also decides against
City Attorney Birds contention.
Concluding, Justice Smith says.
TT has been the policy to permit for
eign corporations, chartered under the
laws of other states, to transact bust
ness here. In 1898 an act was passed by
the legislature providing for the regu-
lation of foreign corporations and pre-
scribing the method by which they
might be permitted to do business in
this state (Ch. 10 of Laws of Kansas,
special session 1889 The defendant
corporation has complied with all the
conditions of the act mentioned. We
do not hold, however, that such rec
ognftion gives it power beyond that
conferred by the laws Of the state of
its creation"
Chief Justice Doster dissented on the