Case Name: John M. Henry, appellant, v. City of Lincoln, appellee
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1913-03-14
Citations: 93 Neb. 331
Docket Number: No. 17,067
Parties: John M. Henry, appellant, v. City of Lincoln, appellee.
Judges: 
Reporter: Nebraska Reports
Volume: 93
Pages: 331–350

Head Matter:
John M. Henry, appellant, v. City of Lincoln, appellee.
Filed March 14, 1913.
No. 17,067.
1. Municipal Corporations: Private Enterprises: Liability. It is no part of the duty of a municipal corporation to engage in a purely business or commercial enterprise. When it seeks and obtains from the legislature permission to engage in such an enterprise, its act in so doing is entirely voluntary on its part, and, while engaging in such business, it is acting in a purely private business capacity, outside of its functions and duties as a municipal corporation, and is bound by all of the rules of law and procedure applicable to any other corporation or person engaged in a like enterprise.
2. -: Action for Injuries: Notice. Section 126, art. I, ch. 13, Comp. St. 1911, requiring the filing of a notice with the city clerk of a municipal corporation within. 30 days from the time a right of action for an unliquidated claim accrues, as a condition precedent to an action thereon, applies to claims against such a corporation arising out of the performance of its corporate duties, but has no application to a case arising out of the conduct by it of a purely private business enterprise, voluntarily entered into, which is entirely outside of its ordinary governmental functions or corporate duties.
Appeal from the district court for Lancaster county: Albert J. Cornish, Judge.
Reversed.
Wilmer B. Comstock and J. U. Tingleyj for appellant.
Fred C. Foster and D. E. McClenahan, contra.

Opinion:
Fawcett, J.
From a judgment of the district court for Lancaster county, sustaining a general demurrer to his petition and dismissing his action, plaintiff appeals.
The petition alleges that the defendant is a city of the first class, and at the times set out owned and operated a system of waterworks by and through which it furnished water to its inhabitants for a compensation; that as a part of its water system it maintained station houses, wells, pumps, and other machinery, and employed a large number of servants and employees; that a part of the machinery and pumps used were operated and propelled by electricity; that plaintiff was a servant of defendant regularly employed at and about its pumping station known as Rice station; that through the negligence of defendant in several particulars, which for the purpose of this decision it is not necessary to enumerate, and without fault on the part of plaintiff, plaintiff received a serious injury. To this petition the defendant filed and the court sustained a general demurrer based upon the fact that the petition does not allege that plaintiff, within 30 days after his injury, filed a claim with the city clerk, as required by section 126, art. I, ch. 13, Comp. St. 1911. The section referred to provides: "In order to maintain an action for an unliquidated claim it shall be necessary, as a condition precedent, that the party file in the office of the city clerk, -within 30 days from the time such right of action accrued, a statement of the amount of the claim, giving full name of the claimant, the time, place, nature, circumstance and cause of the injury or damage complained of."
The contention of defendant is that the construction placed by the trial court upon this section of the statute is settled by numerous decisions of this court. Before entering upon a consideration of those cases, let us consider the status of a municipal corporation. As generally understood, a municipal corporation occupies a dual relation to its citizens and the public. It is bound to discharge its governmental functions. In the discharge of those functions it stands as the representative of the state and has all of the governmental powers conferred upon it by statute. It is also bound to perform its corporate duties; not alone such as are expressly imposed upon it by statute, but such also as devolve upon it by reason of the governmental powers and privileges which have been conferred upon it; such as the use of reasonable diligence to keep its streets, alleys and sidewalks in reasonably safe condition for the use of the public. In the discharge of these governmental functions and performance of these corporate duties, it is subject to the control of the legislature, must assume all the burdens imposed upon it by statute, and is entitled to all the privileges, immunities and exemptions given to it by statute. The legislature, therefore, has a right to provide that, before it can be held liable for any dereliction of duty or for negligence on the part of its officers and employees, while it is acting in either of these dual capacities, a claim, in accordance with the provisions of the section of statute above quoted, shall be filed with its clerk within such reasonable time as it may fix. It is entitled to these privileges and immunities because of the fact that the functions and duties above referred to are imposed upon it by law and it must dis charge and perforin them; bnt here the duties imposed upon it by law cease. It is no part of its duty, as a municipal corporation, to engage in a purely business or commercial enterprise. When it seeks and obtains from the legislature permission to engage in such an enterprise, its act in so doing is purely voluntary on its part, and it thereby assumes a third relation, separate and distinct from the dual relations above considered. While occupying this third relation no governmental functions or corporate duties, as a municipality, devolve upon it. It is then engaged in an ordinary business enterprise, and is bound by all the rules of law and procedure applicable to any other private corporation or person engaged in a like enterprise. It has no greater or higher privileges or immunities than are possessed by any other private corporation. It is subject to the same liabilities and entitled to the same defenses; no more and no less. We are not willing to indulge the presumption that the legislature intended, by the statute quoted, to grant any special privileges to a municipal corporation, while acting in such private business capacity, or relation, but rather that it intended the limitation to apply to claims against a municipality, arising out of the performance of its governmental functions or corporate duties.
In Kelly v. City of Faribault, 95 Minn. 293, reaffirmed in Gaughan v. City of St. Paul, 119 Minn. —, 137 N. W. 199, and in Quackenbush v. Village of Slayton, 139 N. W. (Minn.) 716, in considering a statute of that state requiring 30 days' notice to be given to a municipality of claims for injuries received from defects in its streets, sidewalks, or its public Avorks before action therefor, it is said: "We think it very clear, from the history of the law requiring notice to municipalities of injuries thereon, and its subsequent development, that it neArer was intended to' apply to the relations between master and servants AAdien the latter are injured by reason of failure of the former to provide a reasonably safe place for the servant to Avork, or as to any absolute duties which are enjoined by law upon the employer. The object of the notice, when required, is well understood to be to give the municipality an opportunity to investigate, and to protect against fictitious claims. The reason for the rule hardly applies in a case where its own servants are injured in such work by the negligence of the master, but specifically to cases where the public are interested.in using within their rights the property of the city. With reference to such injuries, when they occur, the municipality would seldom have notice or opportunity to obtain the requisite information of the cause thereof, or the evidence of the city's negligence, to enable it to defend, after long delay. This would not apply to an injury of the kind happening in this case, for it must be presumed that, with reference to its own servants, and the violation of its duties to them, it has and ought to have the same notice as other persons occupying the relation of employer over the persons who are in direct relation with it. While a very strict and technical construction of the statute might bring the case within its letter, we are very clear it was not within its spirit, and, if it is desired that it should be, the relief must be obtained from the legislature." The above language from the supreme court of Minnesota applies with great aptness to the case at bar, and in harmony with the holding of that eminent court in the case before it we hold, in the case at bar, that the statute as to notice was not intended to apply to a case arising out of the conduct by a municipality of a purely private business enterprise, voluntarily entered into, which is entirely outside of its ordinary governmental functions or corporate duties.
In Burke v. City of South Omaha, 79 Neb. 793, we said: "When the state imposes upon an incorporated city the absolute, duty of performing some act which the state may lawfully perform, and pertaining to the administration of government, the city, in the performance of that duty, may be clothed with the immunities belonging to the mere agent of the state; but, when the city is merely authorized by way of special privilege to perform such an act in part for its corporate benefit and the benefit of its inhabitants, the city is not clothed with these immunities, and is liable to be sued for injuries inflicted through its negligence in the performance of such an act." In Reed v. Village of Syracuse, 83 Neb. 713, we said: "Villages that lawfully engage in commercial enterprises are liable to the public the same as individuals."
In Esberg Cigar Co. v. City of Portland, 75 Am. St. Rep. 651 (34 Or. 282), it is held: "When a city voluntarily undertakes to construct and maintain waterworks, in pursuance of statutory authority, for its own private emolument and advantage, the works belong to it in its private, rather than in its public or governmental, capacity, though the public may derive a common benefit therefrom, and the city is, therefore, answerable to persons injured by negligence in the construction or maintenance of such works." In the opinion it is said: "But when a special power or privilege is conferred upon or granted to a municipal corporation, to be exercised for its own advantage or emolument, and not as a mere governmental agency, it is liable to the same extent as an individual or a private corporation for negligence in managing or dealing with the property rights or franchises held by it under such grant." In City of New Orleans v. Kerr, 69 Am. St. Rep. 442 (50 La. Ann. 413) it is held: "A municipal corporation, with respect to the private character of its powers and obligations, represents the pecuniary and proprietary interests of individuals, and the rules which govern the responsibility of individuals are properly applicable."
In State Journal Printing Co. v. City of Madison, 148 Wis. 396, it is said: "In furnishing water to private consumers the city is acting in a private business capacity, and not in its governmental capacity, and it is bound to exercise ordinary care, namely, that reasonable degree of care in view of the dangers involved which the great mass of ordinarily prudent persons engaged in the same or similar business would and do exercise under like circum stances. For any failure to exercise this degree of care, proximately causing injury to another, the city is liable to the same extent that a private person or a corporation operating a waterworks system is liable; no more and no less." In Relyea v. Tomahawk Paper & Pulp Co., 102 Wis. 301, it is said: "The difference between a statute requiring notice to be served, as for example section 1339, R. S. 1878, as a condition of a right to damages for an injury through failure of duty on the part of a municipality to beep its highways in a proper state of repair, and a statute requiring such a notice to be served as a condition of recovery for injuries to an employee through actionable negligence of his employer, is that the former is a condition of the right to damages and the remedy to recover the same as well, while the latter is a condition acting on the remedy alone, the right not being dependent on the statute at all. Such difference is well defined in the books and universally recognized. In Smith v. Cleveland, 17 Wis. *556, it is said, in effect, that the difference between laws that the legislature may change at will and those which the constitution protects from interference to the prejudice of vested rights is that under the former the right is dependent on the law, and under the latter .the right itself is independent of the law. The subject was recently discussed in Schaefer v. City of Fond du Lac, 99 Wis. 333, and Daniels v. City of Racine, 98 Wis. 649, where it is said that a right given by statute may be changed by adding new conditions, or wholly taken away by statute. There, as in most cases of the kind, the right of action was spoken of as synonymous with the right itself, and properly so. If the distinction be not kept in mind between statutory and common law rights, where the court speaks regarding a condition of the former as precedent to a right of action therefor, it will be taken as meaning that the' condition is in the nature of a limitation acting on the remedy alone." The right of a servant to recover damages for an injury resulting from the negligence of his master is not dependent upon the statute. It is a common law right. A right by statute to compensation for injuries can be granted upon condition. That right may be changed or taken away entirely in the' discretion of the legislature. Such rights are not the subject of constitutional protection, but depend solely upon the legislative will; but a common law right is independent of statute and is the subject of constitutional protection. Relyea v. Tomahawk Paper & Pulp Co., supra.
In the light of the above authorities, we conclude that in the installation and management of its waterworks system defendant must be treated as a private corporation engaged in a purely business enterprise, as separate and distinct from the performance of its governmental functions and corporate duties as if it were not a municipal corporation at all, and that its liability to plaintiff must be determined solely under the law and procedure applicable to a private corporation and its employee. So construing the duties and relations of the parties, we hold that defendant is answerable to plaintiff for any negligence on the part of the former which resulted, without fault of the latter, in an injury to his damage, and that plaintiff has a right to prosecute his action for such damage, if any there be, within the same time and in the same manner as any other employee similarly injured would have a right to prosecute an action for damages under like conditions.
In none of the cases cited by defendant was the municipal corporation acting in a private capacity in a purely business enterprise. In City of Lincoln v. Grant, 38 Neb. 369, the action was for damages caused by a change of grade. In Nothdurft v. City of Lincoln, 75 Neb. 76, the action was for damages by reason of a defective sidewalk. In Dayton v. City of Lincoln, 39 Neb. 74, it was a change of grade. In Dovey v. City of Plattsmoath, 52 Neb. 642, it was thje location and construction of a storm sewer. Foxworthy v. City of Hastings, 25 Neb. 133 (erroneously cited in the brief as 46 Neb. 700) was a sidewalk case. Id Reeder v. City of Omaha, 73 Neb. 845, the question was the grading of a street in such a manner as to form a pond in which the infant son of Reeder was drowned. In Reining v. City of Buffalo, 102 N. Y. 308, it was the erection of an embankment by the city — a case of street improvement. In Collins v. City of Spokane, 64 Wash. 153, 116 Pac. 663, it was negligence in maintaining a foot-bridge on the public street. In Walters v. City of Ottawa, 240 Ill. 259, it was a defective sidewalk. In Nichols v. City of Minneapolis, 30 Minn. 545, it was an injury to plaintiff's horse by a defect in the street. In Postel v. City of Seattle, 41 Wash. 432, it was a change of grade. In Condon v. City of Chicago, 249 Ill. 596, it was the falling of the bank of a ditch — a street improvement case. The discussion in that case sustains defendant's contention, but, in so far as it does so, the discussion is dictum, and a reading of the case shows a want of due consideration of the precise question here involved. It will be seen that the cases from other states above cited by defendant, like the decisions from this court above cited, all relate to the performance by a municipal corporation of its corporate duties. In the decision of this case we do not depart from the rule announced in our former decisions above cited. On the contrary, we adhere to them, and in any case that might now come before us, involving the corporate duties of a municipal corporation, we would adhere to the rule announced in those cases; but they are clearly distinguishable from the case at bar.
After a very careful consideration of the cases cited by the parties to this action, and after an exhaustive independent examination of the authorities, we have reached the conclusion above announced.
The judgment of the district court is therefore reversed and the cause remanded for further proceedings.
Reversed.