Source: https://m.openjurist.org/218/us/645
Timestamp: 2020-02-18 02:12:42
Document Index: 37163428

Matched Legal Cases: ['§ 3', '§ 12', '§ 5', '§ 1', '§ 4', '§ 27', '§ 9', '§ 10', '§ 13']

218 U.S. 645 - City of Columbus v. Mercantile Trust & Deposit Company of Baltimore W S
218 US 645 City of Columbus v. Mercantile Trust & Deposit Company of Baltimore W S
CITY OF COLUMBUS, Appt.,
MERCANTILE TRUST & DEPOSIT COMPANY OF BALTIMORE, Trustee, and the Columbus Water Works Company and W. S. Greene, as Receiver thereof.
'That from 1889 to May, 1900, there was dissatisfaction and complaints on the part of the city because of insufficiency of water supply, and especially with the unsupplied needs of the city for water in its newly acquired territory; that the company had notice of this, and recognized the necessity of increased water supply; that during this period the city, through its council, twice made an effort to repudiate the contract, but were not sustained by the requisite popular vote on submission of the question to the people; that the company in good faith endeavored to adjust the differences by offer to arbitrate, and the city declined the offer; and that finally the city accepted the existing conditions, and concluded a supplemental agreement by which the company was given an opportunity to test its ability to carry out the requirements of the contract; that the company failed in this, and that in 1902 both the council and the people determined to no longer depend upon the water company.
'That the water company has at no time complied with § 3, requiring a reservoir of 125 million gallons available supply, and from 1884 it has failed to comply with the requirements of § 12 as to the construction and maintenance of the reservoir.
'That the company has failed to comply with § 5 of the contract as to distribution in not connecting together the ends of its system, and placing mains sufficiently large to at all times give full supply of water.
'With reference to the supply of water, I have found that the company has failed to comply with §§ 1 and 10, in that sufficient supply of wholesome, constant, and ample water has not and cannot be furnished from the source of supply as selected, nor is the same sufficient to meet the wants of the city and private consumers for present and future requirements.
'I have found that the company has not complied with § 4 as to supply main.
'That as to pressure from 1893 to 1902, the pressure was varible and uncertain; that the gravity plan could not sustain it to the requirements of the contract, and that the standpipe and pumping devices adopted to assist it, while practically beneficial, were not at all times satisfactory; that the company has not met the requirements of § 27 in maintaining pressure at 32 pounds, nor supplemental contract requirement of 40 pounds, and that in fires of any magnitude the pressure and water supply is insufficient, and that the supply is not ample for fire protection, as required by § 9, and that the receiver, by improvement of the pumping station, has greatly bettered conditions.
'With reference to the wholesomeness of the water, as required by § 10, I have found that the reservoir water, when available, is, under normal conditions, a wholesome water, but when the water is low it is not wholesome; that prior to July, 1902, the water furnished by the company was, with few exceptions, within the requirements of the contract, and in these exceptions the city has not availed itself of the provisions of § 13 of the contract to correct impurities; that since July, 1902, the company has not furnished a constant supply of wholesome water, nor has the receiver been able to do so; that the Chattahoochee river cannot be relied on as a constant source of supply for wholesome water, but only so when, on a normal flow of the river, water is taken from points above all possibility of contamination, and properly filtered.
Upon a final hearing, the court, while not fully agreeing with the master as to the effect of the original acceptance of the works as constructed, and as to the effect of subsequent acceptance of enlargements, repairs, and improvements made by the company, from time to time, to meet complaints as to quantity and quality of water, concurred fully in the master's report that the company had not complied with its obligation to construct and maintain adequate means for continuously furnishing an ample and wholesome supply of water for public and domestic purposes. Among other things, upon this vital aspect of the case, Judge Newman said:
Although there was a concensus of finding by master and court that there was an obligation upon the water works company to furnish an adequate and continuous supply of pure water, and that the waterworks company had therefore broken this vital part of its agreement, yet the court ruled that the city should be denied rescission under its cross bill, and affirmatively restrained from establishing its own system, unless it 'should do equity to the bondholders,' by whose money the plant had been constructed, by purchasing 'so much of the waterworks plant as may be hereafter determined, at a fair valuation, as a condition of and before entering a decree in its favor finally denying an injunction in the case against the issuance by the city of its waterworks bonds.' Time was given the city to determine whether it would accept the conditions imposed by purchasing at a fair valuation such parts of the system as the court should determine were usable by the city, at a price to be fixed by a subsequent decree. The city declining to assent to such a condition, an injunction was granted permanently restraining the city from the construction of its own plant, and dismissing the cross bill, and taxing all of the costs to the city.
The primary and vital obligation of the company was to furnish an adequate and constant supply of water for both public and private use, which should be pure and wholesome. By the first and second clauses of the contract the company obligated itself to provide 'all the real estate, rights of way, water rights, and water that shall be found requisite for the successful prosecution and operation of the waterworks,' and to supply 'dams and embankements of ample size and strength, good and durable quality, that may be required for the works.' By the third clause it bound itself to construct 'a storage reservoir having an available capacity for the storage and supply of not less than 125 million gallons.' This, in passing, we may observe, was never done, and the insufficiency of the reservoir capacity was one of the factors in the subsequent failure to furnish at all times an adequate supply of water. By the tenth clause of the contract it was provided that 'the source of water supply shall be determined by Thos. R. White (who assigned to the Columbus Water Works Company), he guaranteeing, however, that the supply of water, both in quality and amount, shall be wholesome, constant, and amply sufficient to meet the wants of the city and private consumers for future and present requirements.' The eleventh and twelfth clauses related to the construction and maintenance of a filter, and to the maintenance of wholesome conditions at the storage reservoir.
No higher police duty rests upon municipal authority than that of furnishing an ample supply of pure and wholesome water for public and domestic uses. The preservation of the health of the community is best obtained by the discharge of this duty, to say nothing of the preservation of property from fire, so constant an attendant upon crowded conditions of municipal life. If a municipality elect to contract with another for the discharge of this function, it is under the greatest obligation to require that the contractor shall engage to construct and maintain adequate means and furnish an adequate supply, in quality and quantity, to at all times meet the public necessity. So, too, the contractor must satisfy himself as to the sufficiency and qualify of the source of supply, and maintain adequate storage and distributing instrumentalities to meet conditions. That his source of supply is at times adequate and wholesome is not enough. The wants of the public must, under all conditions, be supplied. We do not take account of temporary and unusual conditions which cannot be reasonably foreseen. But that which can be and should be foreseen must be taken into account by a private contractor who undertakes so vital a function as that of supplying water to a growing community.
The continuing character of the obligation to furnish an adequate supply of wholesome water, as we have before suggested, is not met by showing that such a supply has been furnished at times, nor is the nonperformance of the agreement excused by the occurrence of conditions which are likely to occur in a climate of long, dry summers. Nor is such a contract fulfilled by showing that, at the time of completion of the works, the company was able to carry out the contract. Ability to carry out the agreement must be maintained. From time to time during the operation of the works, specific complaints were made by the city in consequence of the failure of the water company to furnish an adequate supply of water, or on account of the quality of the water or insufficient pressure. These complaints generally resulted in an effort to remedy the matter, and more than one change and improvement made seemed to produce good results, leading the municipality to accept for the time the repair, or enlargement, or change as meeting the necessities of the particular exigency, and giving promises of ability to carry out the contract. In consequence of such efforts to improve the service in quantity and quality of water supplied, the electorate of the municipality twice voted against a bond issue to construct a municipal plant, manifesting thereby a willingness that further opportunity should be given the company to show its ability to bring its plant up to the requirements of the contract. Indeed, the attitude of the city and its people toward the water company, as shown by the record, seems to have been forbearing and generous. This acceptance of improved conditions resulting from complaints has been relied upon as estopping the city. But no such result may rightfully follow, unless such improved conditions resulted in the maintenance thereafter of a continuous, adequate supply of wholesome water. This was not the case. Want of capital may have been the cause for adoption by the company of expedients to meet a particular exigency which were inadequate to permanently overcome a radically insufficient source of supply, as well as insufficient storage and filtration instrumentalities. The relief resulting from all that was done by the company or its receiver was not abiding nor the character of the water permanently improved. That the works were not able to come up to the requirements of the contract, and not able to meet the reasonable necessities of the city, was a question of fact, upon which the master and the court have agreed. The contract to furnish an adequate supply of water of good, usable quality was, as we have already said, a continuing and vital part of the contract. Touching a similar contract, this court, in Farmers' Loan & T. Co. v. Galesburg, 133 U. S. 156, 170, 33 L. ed. 573, 579, 10 Sup. Ct. Rep. 316, 321, said:
'Whether or not the water company was able to furnish the required quantity of water every twenty-four hours, and whether or not its quality as to purity and goodness for domestic and other uses was in compliance with the ordinance, must rest upon facts as proved to exist. Moreover, the estoppel, so far as it did exist, was not a continuing one. The obligation of the water company to furnish the quantity and quality of water required by the contract was a continuing obligation, and was not met once for all by a compliance with the fire test of December 6, 1883. The right of the company to enjoy the consideration of the contract was thereafter to depend upon its continuing to perform it. There was not and could not be a final and absolute acceptance of the waterworks by the city, without regard to a future compliance on the part of the water company with the requirements of the contract. The case was not one of works constructed for the city, and to become its property upon acceptance; and the acceptance related merely to the sufficiency of the structures for fire service at the time.'
However serious the result to the water company or its creditors, the plain law of the case was with the city. The bondholders had neither legal nor equitable rights superior to the contract between the city and the water company. If the latter had not complied with the contract after repeated experiments and much indulgence by the city, what is the equitable foundation for the enforcement of a broken and continuing obligation by enjoining the city from doing what it had a plain legal right to do if the water company was unable to carry out the contract upon its part? Nevertheless, the learned judge, after reaching and announcing the conclusions already stated as to the facts of the case, granted to the complainant the full equitable relief sought, because the city declined to agree to conditions imposed. The court justified the imposition of conditions under the maxim that he who seeks equity must do equity. But this maxim is one which applies to him who affirmatively seeks equitable relief.
Manifestly the maxim cannot vest in the chancellor the power which has been exercised. It is true that the city by a cross bill asked to have the contract declared at an end for nonperformance. But this was defensive relief. If the complainant had shown a valid contract which was impaired by the legislation providing for a construction of rival waterworks, it was clearly entitled to a decree enjoining the city from proceeding with the construction of a municipal system. In that event the cross bill would be dismissed as a necessary result of such decree upon the original bill. But if complainant failed to show a state of facts which entitled it to restrain the city from doing anything in impairment of the contract between it and the mortgagor water company, the only logical result was a decree dismissing the original bill because the city had not kept its contract, and a decree under the cross bill, declaring the contract abrogated rightfully by the city as a consequence of its breach in vital particulars.
A consideration of the consequence to creditors of the contracting company is not an answer to the legal rights of the city. Considerations of hardship cannot prevail to set up and enforce a broken agreement, which in law results in giving to the opposite party a right to treat the agreement as ended. Hamilton Gaslight & Coke Co. v. Hamilton, 146 U. S. 258, 36 L. ed. 963, 13 Sup. Ct. Rep. 90; Atty. Gen. v. Birmingham, 4 Kay & J. 539; Kneeland v. American Loan & T. Co. 136 U. S. 89, 34 L. ed. 379, 10 Sup. Ct. Rep. 950. In the case of Atty. Gen. v. Birmingham, the vice chancellor said: 'I am not sitting here as a committee of public safety, armed with arbitrary power to prevent what it is said will be a great injury not to Birmingham only, but to the whole of England; that is not my function.'
The remedy by an action for damages was wholly inadequate to the city. The city had a right to treat the contract as terminated, and to invoke the aid of a court of equity to enforce its rescission. 133 U. S. 156, 179.