Case Name: OWENSBORO, KENTUCKY, v. OWENSBORO WATER WORKS COMPANY OF OWENSBORO, KENTUCKY
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1917-03-06
Citations: 243 U.S. 166
Docket Number: No. 79
Parties: OWENSBORO, KENTUCKY, v. OWENSBORO WATER WORKS COMPANY OF OWENSBORO, KENTUCKY.
Judges: Me. Justice Beandeis concurs in this opinion.
Reporter: United States Reports
Volume: 243
Pages: 166–187

Head Matter:
OWENSBORO, KENTUCKY, v. OWENSBORO WATER WORKS COMPANY OF OWENSBORO, KENTUCKY.
APPEAL PROM THE DISTRICT COURT OP THE UNITED STATES POR THE WESTERN -DISTRICT OP KENTUCKY.
No. 79.
Argued November 8, 1916. —
Decided March 6, 1917.
A city granted to a water company a franchise to construct and operate water works, using the streets. The ordinance defined the grant as made “for the duration of the said Company” (the grantee), but elsewhere limited the term expressly to twenty-five years from the passage of the ordinance; which also contained a contract for the same period providing that, if, at the city’s request-, the company should extend its pipes “during the said.term of twenty-five years,” the city would rent hydrants thereon “for the uneXpired term of said franchise.” Some years later, the city granted a similar, substitute franchise to a second company, successor to the first with the city’s consent, by an ordinance defining the franchise term as “for and during the existence” of the second company, and recognizing the latter as the successor of the first company in respect of the contract for hydrant rental “as fully as if such existing contract had been originally made” with the second company “without .the inter-, vention” of the first. By the law of its creation, the life of the second company was twenty-five • years primarily, with the right (reserved in its articles) to prolong the term by twenty-five year extensions.
Held: (1) That the life of the second franchise was not limited to twenty-five years, but was intended to endure while the corporate life of the grantee endured by extension beyond that period.
(2) The fact that the first franchise was expressly limited to twenty-five years while the second was granted for' “the existence of the corporation” was evidence confirming this construction.
(3) Respecting the contract concerning hydrants, the second company became successor of the first only for the unexpired, term of that contract.
(4) That later ordinances of the city requesting pipe fine extensions and declaring that the city thereby rented the hydrants along such extensions “for the unexpired term of the franchises of the said Water Company,” and compliance by the second company with the requests so made upon it, did not import a recognition by the parties that the franchise of that company was for a definite, known term not to be enlarged by extension of its corporate existence, but were-referable only to the hydrant contract and its unexpired term — a conclusion which was corroborated by the action of the parties in ceasing to collect and pay rent for such hydrants When that term expired.
The question being whether a franchise granted by a city was limited to twenty-five years, the period for which' the corporate grantee was primarily organized, or was meant to accompany an extension of the . grantee’s corporate life, the fact that the grantee, in former litigation in which that question was neither material nor adjudicated, the primary period having then some years to run, described the franchise as a franchise for twenty-five years, affords no basis for an estoppel by conduct or by judgment; and the more, clearly, so where the grantee, in the same litigation, also described the franchise as granted for the whole period of its corporate existence.
While in the computation of time beginning “from and after” a day named it is usual to exclude that day and begin with the next, this ■ is not done where it will obviously defeat the purpose of those whose words are being construed or applied.
The case is stated in the opinion.
Mr. George W. Jolly and Mr. Ben D. Ringo, with whom Mr. John A. Dean, Jr., and Mr. La Vega Clements were on the briefs, for appellant.
Mr. William T. Ellis, with whom Mr. James J. Sweeney was on the brief, for appellee.

Opinion:
Mr. Justice Van Devanter
delivered the opinion of the court.
This is a suit to enjoin the City of Owensboro, in the State of Kentucky, from obstructing and preventing the maintenance and operation of an existing water works plant in that city. The plaintiff relies upon a franchise from the city which the latter insists has expired. In the -District Court the franchise was held to be still in force and the city was enjoined from giving effect to an ordinance and a resolution impairing the same.
By an ordinance of September 10,1878, the city granted to the Owensboro Water Company, its successors and assigns, the privilege of constructing and operating water works within the city and of using its public highways for that purpose. In its first section the ordinance described this grant as made "for the duration of the said Company" and in another section expressly limited it to "twenty-five years from the passage of this ordinance." Other provisions required the water company to lay and maintain pipe lines in certain streets with a'fire hydrant at each street intersection and obligated the city to rent and pay for the hydrants "for and during the term of twenty-five years from the passage of this ordinance." Availing itself erf the privilege so granted the water company constructed a water works plant in the city and operated the'same until June 3, 1889, when it sold the plant to the Owensboro Water Works Company, the plaintiff in this suit. This company is a Kentucky corporation whose original articles of association stated that its existence was to begin on June 1, 1889, and terminate at the end of twenty-five years, "subject to such extensions of its term of existence as by law provided." Op June 3, 1889, shortly before the plaintiff's purchase, the city adopted an ordinance containing the following provision, among others:
"Sec. 1. That in consideration of the purchase by the Owensboro Water Works Company, of Owensboro, Kentucky, of the water works of the Owensboro Water Company, the franchise and license are hereby granted to the Owensboro Water Works Company, of Owensboro, Kentucky, and to its successors and assigns, for and during the existence of the said corporation, to maintain, complete and operate water works in the city of Owensboro for supplying the city of Owensboro and the inhabitants of said city and its vicinity with water for public and private purposes, and to use within the present and future limits of the city of Owensboro, the streets, alleys and other public highways thereof for the purpose of laying, repairing and -taking up. mains, service pipes, hydrants, and other apparatus for the supply of water."
By the second section the city accepted the plaintiff "as the successor " of the other company in respect of "the contract for hydrant rental" then existing between the city and the other company "as fully as if such existing contract had been originally made" by the city with the plaintiff "without the intervention" of the other company; and by the third section the city gave its consent to "the consummation of the said purchase of thé said water works."
The plaintiff accepted the provisions of this ordinance, relied upon them in consummating the purchase, and ever since has maintained and operated the water works and used the public highways of the city in that connection.
On May 6, 1914, the plaintiff's articles of .association were amended, conformably to the state law (Ky. Gen. Stats. 1883, c. 56, § 7; Ky. Stats; 1903, § 540, 559, 574), by adding a provision the declared purpose of which was to extend the plaintiff's corporate existence for the period of twenty-five years.
Whether the plaintiff now has a franchise from the city turns chiefly upon the construction and effect of the ordinance of June 3, 1889. By it the city then said that "the franchise and license" to maintain, complete and operate water works in the city and to use its public highways for that purpose "are hereby granted to the Owensboro Water Works Company, of' Owensboro, Kentucky, and to its successors and assigns, for and during the existence of. the said corporation." Now the city claims, first, that by the ordinan.ce it merely assented to the purchase by the plaintiff of the rights of the other company under the ordinance of 1878; second, that if a franchise was granted to the plaintiff, it was only for the life of the other company, and, third, that even if a franchise was granted to the plaintiff for the period of its own existence, it was not to endure beyond the primary term of twenty-five years named in the plaintiff's articles of association. But none of these claims has any support in the ordinance. Its terms are direct and its meaning plain. In apt words its first section not only grants a franchise to the plaintiff, but makes the life of the franchise co-extensive /with the plaintiff's existence; and we find nothing in the ordinance which suggests that the words fixing the duration of the franchise are to be taken as comprehending anything less than, the full corporate existence of the plaintiff. The right to extend its existence beyond the primary term was given by statute and expressly reseryed in the articles of association, and so it is reasonable to believe that had there been a purpose to limit the franchise to that term it would have been plainly expressed, as was done in the ordinance of 1878. The reasonable implication from the inclusion of such a limitation in the earlier ordinance and its omission from the later one is that the franchise granted by the latter was not to be thus limited.
Of the suggestion that under this view the franchise may be made perpetual by repeated extensions of the plaintiff's corporate life, it is enough to say that we are here concerned with but a single extension already effected. The statute permitting such extensions may not be in force when the present twenty-five year period expires, and, if it be in force, nothing may be done under it.
Because the primary term — the first twenty-five years —expired May 31, 1914, and the amendment to the articles of association stated that the extension for another twenty-five years would begin "from and after" June 1, 1914, the city insists there Was a hiatus of one day between the two periods and that in consequence the extension never became effective. We are not impressed with this contention. While in the computation of time that begins to run "from and after" a day named it is usual to exclude that day and begin with the next (Sheets v. Selden's Lessee, 2 Wall. 177, 190), this is not done where it will obviously defeat the purpose of those whose words are being construed or applied. The purpose of the amendment was to extend or prolong the plaintiff's cprporate existence for another twenty-five years. It was adopted almost a month in advance of the expiration of the first twenty-five years, and, notwithstanding the use • of the words "from and after," it shows very plainly that the second period was to begin where the first ended. Of course those words were.not happily chosen, but as the amendment otherwise makes it certain that the extension was to be effective on and after June 1, 1914, we think the amendment accomplished its purpose and that there was no hiatus.
By the ordinance of 1878, as before shown, the other company and the city entered into a contract respecting fire hydrants which was to be in force for twenty-five years from the date of the ordinance. One provision of that contract was to the effect that, if the company should make any extensions of its pipe lines at the city's request "during the said term of twenty-five years," the city would rent and pay for one hydrant at each street intersection along such extensions "for the unexpired term of said franchise." By a special provision in the ordinance of Í889, as we have seen, the plaintiff succeeded to the rights and duties of the other company under that contract as if it "had been originally made" by the city with the plaintiff; and this meant that the succession was only for the unexpired term of the contract. Acting under the contract the city from 1890 to 1895 adopted seven ordinances wherein it requested that particular extensions of the pipe lines be made by the plaintiff and declared that .it (the city) thereby rented'the hydrants along such extensions "for the unexpired term of the franchises of the said Water Company." The plaintiff accepted these, ordinances and. complied with the requests made in them. The city now claims that in what was thus done both parties plainly recognized that the franchise granted to the plaintiff was for a definite and. known term of years, and was not to be affected by any extension of the plaintiff's corporate existence. But we think this claim disregards what was intended by thé word "franchise" in the seven ordinances. They not only related to the same subject as did the contract of 1878, which was the maintenance and renting of fire hydrants, but they closely followed its words. That contract was made for a definite term, twenty-five years, and twelve of these had expired when the seven ordinances were adopted. In adopting and accepting them the parties were not making a new hydrant contract, but acting under the one already in existence. It and the plaintiff's franchise were not co-terminous and should not be confused. The contract covered the old hydrants, of which there were many, as well as the new ones, and was to expire as to all at the same time, that is, on September 10, 1903, twenty-five years after the contract was made. That the city so understood — indeed, that both parties so understood — is affirmatively and clearly alleged in the city's answer, from which we excerpt the following:
"Defendant City says that after the passage of said [seven] ordinances the complainant Water Company did lay the mains required therein and attached the fire hydrants as provided in said ordinance and the defendant City paid it rentals in pursuance to said contract until September 10,1903, at which time the complainant ceased ,to collect and the City ceased to pay rentals for said hydrants as provided in said ordinance and contracts, and said ordinances and contracts were construed to and did expire on September 10,1903, and since that date the City has not paid to the complainant any hydrant rental under any of said rental contracts, or at all."
The plaintiff's franchise, as before shown, was granted June 3, 1889, and, of course, did not expire September 10, 1903. What did expire on that day was the contract made September 10, 1878, whereby the city agreed to rent and pay for the hydrants for the term of twenty-five years from that date. It is plain, therefore, that what was intended by the word "franchise" in the seven ordinances was that contract. There was nothing else to which it reasonably could refer.
The city further contends that the plaintiff is estopped from claiming a franchise extending beyond May 31, 1914, because in 1903 and 1904 in two suits against the city it described its franchise as granted- for a term of twenty-five years beginning June 1, 1889. But in neither suit was it material whether the life of the franchise was strictly limited to that period or was subject to prolongation by an extension of the plaintiff's corporate existence; and it is not claimed that this question was adjudicated in either suit. At that time niné or ten years of the primary period still remained and there was as yet no occasion to elect or determine whether the privilege of effecting an extension would be exercised. Besides, in both suits the franchise was also described by the plaintiff as granted for "the whole period of its corporate existence." Thus no basis is shown for an estoppel by conduct or by judgment.
Other objections are made to the decree, but they are of less merit and do not require special mention.
Decree affirmed.