Source: https://openjurist.org/191/us/358
Timestamp: 2019-04-25 16:41:32+00:00

Document:
Argued November 4, 5, 1903.
This is a bill in equity to enjoin the city of Owensboro, Kentucky, from regulating the rates of the appellee, the Owensboro Waterworks Company.
Lawson Reno, police judge of the city, was made a party. The circuit court granted a temporary injunction. Before final hearing, a motion was made before Circuit Judge Lurton to dissolve the injunction, the motion was denied on the ground of the seriousness of the questions involved, and the propriety of following the previous ruling. On final hearing, the injunction was made perpetual against the city, and the bill dismissed as to Lawson Reno. The city then took an appeal to circuit court of appeals. The appeal was dismissed on the ground that the jurisdiction of the circuit court having been invoked on a constitutional question, the appeal should have been taken directly to this court. 53 C. C. A. 146, 115 Fed. 318. The city then brought the case here from the circuit court.
On the 10th of June, 1889, relying upon the ordinance of the 3d, the appellee consummated the purchase from the water company of its works, franchises, and contracts, and received them from that company, and it 'has ever since then under the orders and direction' of the city, maintained and extended its system, on account of which it has expended large sums of money, and its plant is now reasonably worth not less than $250,000, and could not be constructed for less than that sum.
Then followed a statement of the rates fixed, graduated according to the amount of water consumed or kind or purpose of use. And it was provided (§ 8), 'that if any person, firm, company, or corporation engaged in the business of furnishing water to consumers thereof in said city of Owensboro shall demand, charge, exact, or receive, directly or indirectly, of or from any consumer or consumers of water in said city, as consideration or compensation for water furnished or supplied to such consumer, any money, property, or other thing of value over and above or in excess of the rates and prices for water herein named and prescribed, or shall fail or refuse for ten days, without reasonable excuse, to supply water as prescribed and required in and by section seven (7) of this ordinance; or shall fail or refuse to keep the accounts or the books required to be kept at Owensboro, or make the reports in writing to the common council, as required by section sixth (6th) of this ordinance, such person, firm, company, or corporation so offending shall be fined, upon conviction, in a sum not less than ten, and not exceeding fifty, dollars for each offense.' The ordinance in full is inserted in the margin.
It is alleged that the enforcement of the ordinance will cause appellee irreparable injury, and in what manner that will be done is detailed, and that, appellee 'could not, under the most prudent management, earn any per cent upon its investment, but would be compelled to operate its plant at an actual loss.' For the reasons alleged the ordinance of March 19 violates the Constitution of the state of Kentucky, and the 5th and 14th Amendments of the Constitution of the United States. It is also alleged, with much amplification, that the passage of the ordinance was 'ex parte and partisan,' without deliberation or investigation or knowledge, and, besides, the city had no power to pass the ordinance, and that the latter violates the contract existing between appellee and the city. It is also alleged that financial injury will result to appellee from the enforcement of the ordinance in regard to meters (§ 2), and from the prohibition to collect rates in advance, 'except by voluntary consent of the consumer.' (§ 3.) Prosecutions are threatened under the ordinance, which will result, it is alleged, in irreparable injury to appellee, and an injunction is hence prayed against the city.
A demurrer to the bill was overruled. An answer was then filed, which denied the allegations of the bill, and justified the action of the city.
Mr. George W. Jolly for appellant.
Messrs. Robert W. Bingham, William T. Ellis, W. W. Davies, and Messrs, Sweeney, Ellis, & Sweeney for appellee.
'If the city of Owensboro had no lawful power or authority to pass the ordinance at all, then the enforcement of it would clearly be a taking from the complainant of its right to certain property. First, without compensation; sation; second, without due process of law; third, without giving to it the equal protection of the law.
Interpreting the section, the court held that the word 'thereof' in the last sentence of the section had for its antecedent the words 'works of its own.' Substituting these words for the word 'thereof,' the sentence would read, and the city's power would be, 'to make regulations for the management of its own works, and to fix and regulate the prices to consumers and customers.' But another ambiguity appears, viz., Of what is the city to fix and regulate the prices? Certainly of something, and it would seem from the context, the same thing, of which it was to regulate the management. But this leads to an absurdity, and we must find a purpose (antecedent) to which both powers can refer. The city might, indeed, make regulations for the management of its works, but it could not fix and regulate the prices of them to consumers and customers. Besides, we cannot conceive that an explicit grant of power was necessary to enable the city to manage its own works. The power to construct would have implied the power to manage and operate. It must not be overlooked that the section was intended to apply to not only to the appellant city but to all cities of the third class, and confer power not only to provide water, but other services, and it might have seemed necessary by the legislature, or at any rate prudent, to reserve to the cities the power over the management of works constructed by private persons, and as prudent to reserve a power to fix and regulate the prices to consumers of the services afforded. It is certainly not difficult to conceive the necessity of the exercise of those powers, and if attempted to be exercised without a reservation, the cities might be met (and there are examples of this) with the contention that the power had been bartered away and was precluded by the obligation of a contract. The construction urged by appellee must, therefore, be rejected. There is a more natural one. The purpose of § 3290 was to provide the inhabitants of cities of the third class with the services mentioned,—water, light, power, heat, and telephone. They could be provided by the cities directly or they could be provided by private persons; but whatever way provided, the power was given to regulate the management and fix the rates of the services, and this was but the endowment of a common governmental power.
It is, however, contended that the ordinance is in violation of the contracts between the city and appellee, constituted by the resolutions and ordinance of the 3d of June, 1889. The argument is that the city had entered into contracts with the Owensboro Water Company, the predecessor of appellee, to which contracts and their obligations and rights, it is contended, the appellee succeeded by assignment from the water company, with the consent and approval of the city, as expressed in the resolutions and ordinance of June 3, 1889. To determine their legal effect, however, it will be necessary to consider the law which authorized them.
But counsel go farther. They deny the right of the city to fix rates, and yet assert its power to enter into an irrevocable contract with the water company giving it such power, that is, giving it power to fix rates free from any regulation by the city, not only under any authority the city then possessed, but under any authority the city might be given by the legislature.
In this contention there are several elements, but we pass their consideration, and determine what contract, if any, the city entered into with the water company. Of course, it is implied in the grant to the company that it might charge some rates to consumers, but the question is, Were those rates exempt from regulation by the city under any power it then had or might be given? An affirmative answer is contended for by the appellee under §§ 9, 10, and 14 of the granting ordinance. Section 9 is the pivotal section. The others are complementary. By it the company was given 'power and authority to make and enforce as a part of the condition (italics ours) upon which it will supply water to its consumers, all needful rules and regulations, (italics ours) not inconsistent with the law or provisions of this ordinance.' The section is concerned with the rules between the company and consumers alone. The company may enforce all needful rules and regulations as part of the condition upon which it will supply water. What is the other part of the condition? It must be the payment of rates, but to that part of the condition the power to make regulations does not apply. It would ignore the distinctions made by the section, and give, besides, the words 'rules and regulations' too large a meaning to make them include the power of fixing rates to consumers. They have adequate and useful signification without that. There were many things in the supply of water to consumers and in the orderly and prudent conduct of the business of the company which might need rules and regulations.
This doctrine has been affirmed numbers of times since. Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. ed. 679, 21 Sup. Ct. Rep. 493; Rogers Park Water Co. v. Fergus, 180 U. S. 624, 45 L. ed. 702, 21 Sup. Ct. Rep. 490; Joplin v. Southwest Missouri Light Co. 191 U. S. 43, ante, 43, 24 Sup. Ct. Rep. 43. And the same doctrine prevails in Kentucky. Winchester & L. Turnp. Road Co. v. Croxton, 98 Ky. 738, 33 L. R. A. 177, 34 S. W. 518.
From these views it follows that if the city had no power under the charters of 1836 and 1882 to fix rates, and we only assume this, not decide it, such power was conferred by § 3290 of the act of June 14, 1893, and the city is not precluded from the exercise of that power by §§ 9, 10, and 14 of the original ordinance granting the Owensboro Water Company the right to construct waterworks, nor by the ordinance of June 3, 1889, approving the transfer of the rights and contracts of that company to the Owensboro Water Works Company, the appellee herein. Nor is the city, by said ordinance, precluded from regulating the business of the appellee in the manner provided in the ordinance of March 19, 1900, which is the subject of the present controversy. It is true that it is contended that § 3 of the ordinance forbids the appellee from collecting rates in advance from all consumers. But the city does not contend for that construction. It claims only that the provision in regard to the collection of rates in advance applies only to consumers using meters, and even as to those consumers appellee can make reasonable regulations to secure the payment of rates. The ordinance is not absolutely clear, and we may resolve its ambiguities in accordance with the concession of the city. It may be presumed that there was no intention to enact unreasonable and oppressive regulations.
Two other contentions remain to be considered,—one made by appellant, and the other made by the appellee. It is difficult to assign a place or purpose in the discussion of the issues to that made by the appellant. The contention is that the Owensboro Water Company had no power to transfer its property and rights and franchises to the appellee. To what consequence is the contention directed? Surely the city wants an object for its regulation. The appellee is in possession of the waterworks, and is supplying the inhabitants of the city with water. It is that service which the city desires to regulate, and it is to 'every person, firm, company, and corporation' engaged in that service the ordinance of March 21, 1900, is addressed. No other person, firm, or corporation than the appellee is so engaged in Owensboro, or has been so engaged for some years. We do not think that the legality of the ordinance can be questioned or measured by either the company or the city by the defects or perfections of the title of the company to its franchises or property. It may be, however, that it is not intended to press the contention so far, but to confine it to the denial of the exemption claimed by appellee as successor of the Owensboro Water Company. But, as we hold that the Owensboro Water Company had no such exemption, the contention becomes unimportant.
The other contention made by appellee is that the rates fixed by the city are unreasonable. Upon this contention we shall not pass. It depends upon many questions of fact and of values to which the circuit court gave no attention, and on which it expressed no judgment. It is better for a trial court to determine such questions in the first instance. Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 179, 44 L. ed. 417, 422, 20 Sup. Ct. Rep. 336.
Decree of the Circuit Court is reversed, and the case remanded for further proceedings in accordance with this opinion.
An Ordinance to Fix and Regulate Rates Prices, and Charges for Water Furnished Consumers in the City of Owensboro, and for Other Purposes.
(1) In all cases where the amount of water consumed averages 2,000 gallons per day, or less, estimated by the month, $.10 per thousand gallons; (2) where the daily consumption of water averages 2,000 gallons, or more, and less than 4,000 gallons, estimated by the month, $.09 per thousand gallons; (3) where the daily consumption of water averages 4,000 gallons, or more, and less than 10,000 gallons, estimated by the month, $.08 per thousand gallons; (4) where the daily consumption of water averages 10,000 gallons, or more, and less than 15,000 gallons, estimated by the month, $.07 per thousand gallons; (5) where the daily consumption of water averages 15,000 gallons, or more, and less than 25,000 gallons, estimated by the month, $.05 per thousand gallons; (6) where the daily consumption of water averages 25,000 gallons, or more, and less than 40,000 gallons, estimated by the month, $.04 per thousand gallons; (7) where the daily consumption of water averages 40,000 gallons, or more, estimated by the month, $.03 1/2 per thousand gallons.
That for the purpose of ascertaining and estimating accurately the quantity of water consumed by consumers in the classification of this section, and the compensation to be paid therefor, it is hereby made the duty of the persons, firms, companies, and corporations, and they shall, on request made in writing, and within thirty days after such request is made, place a water meter, in good condition and repair, in connection with the pipe or main leading into and supplying water to such consumers, and the said meter shall be kept in good repair by the person, firms, company, and corporation furnishing or supplying the water to such consumers, and the said meters shall be examined and read monthly, for the purpose of ascertaining its condition and the quantity of water consumed.
Provided, that the minimum annual rate to be paid by all consumers of water described in the classifications thereof in this section, per annum, shall be twenty-four (24) dollars; and in no case shall the consumer of water who uses or consumes, annually, 240,000 gallons of water, or less, be charged or pay more or less than twenty-four (24) dollars per annum.
(1) for each wash stand, wherein warm and cold water, or either, is used, $2; (2) for each kitchen sink, wherein warm and cold water, or either, is used, $2; (3) for each bath tub, wherein warm and cold water, or either, is used, $2; (4) for each water closet and urinal, $2; for sprinkling premises, lawn, pavement, and street in front of or adjacent to the premises, per annum, $2.50 for the first 200 square yards or less, $.01 for each additional square yard; (6) for private dwelling per annum where only one tap or faucet is used, containing four rooms or less, excluding hallways, garrets, bath rooms, water closets, $2, and for each additional room, $.50; (7) for each cow, $1, for each horse, $1; and for each carriage, buggy, and spring wagon, $1; (8) for filling cisterns, $.20 each thousand gallons.
For each wash stand, wherein warm and cold water, or either, is used, $3; (2) for each water closet and urinal, $3; (3) for hydrant, $3; (4) for barber shops, for first chair, $3, for each additional chair, $1; (5) for blacksmiths, for first forge, $2, and for each additional forge, $1; (6) for plasterers, 1/4 of 1 cent per square yard; (7) for bricklayers, $.06 per one thousand brick, sprinkling and laying.
pay for the water furnished at the minimum rate of $12 per annum, and for all water consumed in excess of 120,000 gallons per annum there shall be paid $.10 for each thousand gallons; but such meters shall not be attached except by the written request of the consumer.
And, provided further, that before meters are attached to or connected with the pipes or mains leading into the premises of any consumer described in the classification of this section, by the person, firm, company, or corporation supplying the water, consent of such consumer shall be first obtained, and if objection shall be made by the consumer, the mayor of the city, upon complaint by the person, firm, company, or corporation furnishing the water, shall summon the consumer to appear before him, and shall hear and determine the matter, and decide whether the meter shall be attached, and his decision shall be final.
If said persons, firms, companies, or corporations furnishing water shall attach a meter in any case to the pipe leading into any consumer's premises, without his consent, or against his objection, and the water annually consumed shall not be as much as 120 gallons, the consumer shall pay for the water actually consumed at the rate of $.10 per thousand gallons, and no more.
Sec. 3. That water rates may be collected by said persons, firms, companies, and corporations from all consumers falling within the provisions of §§ 1 and 2 of this ordinance who have water meters attached, monthly, quarterly, or semiannually, at the election of said persons, firms, companies, or corporations furnishing the water, but water rates shall not be collected in advance except by voluntary consent of the consumer.
Water may be shut off from any consumer for nonpayment of water rates, or other sufficient reason, only after ten days' written notice served upon said consumer or his wife, in his absence from home, or in case of absence from premises of both husband and wife, then the said notice shall be delivered by depositing same in the Owensboro post office, addressed to said water consumer.
Sec. 4. That if any person, firm, company, or corporation shall be or become a consumer of water, and shall not be included in the classification made and contained in the 2d section of this ordinance, the quantity of water used or consumed by such consumer shall be ascertained by meter, and compensation made therefor at the rates and charges specified in the 1st section of this ordinance.
November in each year, cause all water mains of said persons, firms, companies, and corporations to be washed and cleaned, and for this purpose shall cause all fire hydrants to be open to their full capacity and water discharged from each for at least five minutes once in every two weeks; and during the months of December, January, February, and March shall, for said purpose, cause all fire hydrants to be open to their full capacity for at least five minutes once in each and every of said months last mentioned.
Sec. 6. That hereafter all persons, firms, companies, and corporations engaged in the business of furnishing water to consumers shall keep an exact, complete, and true account of all its incomes, gains, and receipts from all and every source whatever, in detail, giving all the items thereof, and date of receipt of the same, and an exact, complete, and true account of all expenditures, showing date and amount of each and every item of expense, costs and expenditure and the whole thereof; and the books containing said accounts shall be kept at Owensboro, and shall be open at any time to inspection and examination by the common council or a committee thereof appointed for that purpose, and shall make and return to the common council, at the end of each six months hereafter, on the first day of January and July of each year, a true and complete summary of the same, which shall be verified by the oath of the president, secretary, or treasurer of said persons, firms, companies, or corporations furnishing water, and the said report shall be spread on the journal and filed and preserved by the city clerk in his office.
Sec. 7. That it shall be the duty of any person, firm, company, or corporation engaged in the business of furnishing water to consumers thereof, in the city of Owensboro, through pipes, mains, or conduits laid in the streets, alleys, and ways of said city, to furnish water to all persons who may make application therefor in writing, and within ten days after the date fixed in such written application, and who desire the same furnished in houses or places situated on any of the streets, alleys, or ways or places in the city, wherein any of the said mains, pipes, or conduits are located or laid, and the said person, firm, company, or corporation shall put down all necessary pipes therefor, at the expense of the person, firm, company, or corporation furnishing the water to the boundary line of the lot or premises of the applicant for water or consumer, and the remainder of the pipes, machinery, or appliances necessary for conveying the water into the houses or upon the premises shall be borne by the said applicant or consumer of water.
or other thing of value over and above, or in excess of the rates and prices for water herein named and prescribed; or shall fail or refuse for ten days, without reasonable excuse, to supply water as prescribed and required, in and by section seven (7) of this ordinance, or shall fail or refuse to keep the accounts, or the books required to be kept at Owensboro, or make the reports in writing to the common council, as required by section six (6) of this ordinance, such person, firm, company, or corporation so offending shall be fined, upon conviction, in a sum not less than $10 and not exceeding $50, for each offense.
Sec. 9. This ordinance shall go into full force and effect on and after the 1st day of April, in the year of our Lord nineteen hundred.

References: § 3290
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 § 3290
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