Case Name: Cincinnati Gas Light and Coke Company v. Avondale
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1885-01
Citations: 43 Ohio St. 257
Docket Number: 
Parties: Cincinnati Gas Light and Coke Company v. Avondale.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 43
Pages: 257–269

Head Matter:
Cincinnati Gas Light and Coke Company v. Avondale.
Revised Statutes, sections 2478, 2485, 3552 — Statutory construction — “ Person" includes corporation — Term of franchise of gas company — Regulation of price.
1. The words “person or persons,” as used in Revised Statutes, section 2485, include a gas company or other private corporation.
2. Where a gas company, under the provisions of Revised Statutes, section 3552 (56 Ohio L. 92, §1), extends into a village its pipes used for conveying gas, and is vested with the right of way where such pipes are laid, and uses such pipes to convey to the village lamps, gas manufactured by such company outside the village, and uses such manufactory and pipes as one plant, such company may he regarded as established in such village, within the meaning of Revised Statutes, section 2478; and such extension of pipes may he regarded as the extension of gas-works for supplying the village with gas, within the meaning of section 2485. In such case the inhibitions of section 2478 and of section 2485 apply to the council of such village.
3. In making a contract with a gas company for supplying gas to a municipal corporation and its inhabitants, section 2478 and section 2485 do not authorize a contract that for an indefinite period leaves to other parties the regulation of the price that shall be paid, or the quantity or quality of gas that shall be furnished.
Error to the District Court of Hamilton county.
The Cincinnati Gas Light and Coke Company is a corporation of Cincinnati, and was incorporated by a special" act of April 3, 1837; and the village of Avondale is in the vicinity of Cincinnati.
The second section of the special act defines the powers of the company as follows :
“ The corporation hereby created shall have the full power and authority to manufacture and sell gas, to be made from any or all of the substances, or a combination thereof, from which inflammable gas is usualy obtained, and to be used for the purpose of lighting the city of Cincinnati, or the streets thereof, and any buildings, manufactories, public places, or houses, therein contained, and to erect necessary works and apparatus, and to lay, pipes for the purpose of conducting gas in any of the streets or avenues of the said city.”
The sixth section is as follows :
“ See. 6. Any future legislature may alter, modify, or repeal this act.”
The act of March 20, 1859, extended the privileges of the company by enacting:
“ That it shall be lawful for any gas company, in any city or incorporated village in this state, organized in pursuance of any of the laws of the same, to extend their pipes used for conveying gas to the various localities and inhabitants of such city or incorporated village to any point, place or places, in the vicinity of such city or incorporated village, outside the corporate limits thereof; provided, the right' of way be obtained from the corporate or other authorities, or of any person or persons, place or places, to be affected by such extension.” 56 Ohio L. 92, § 1.
The municipal code, which took effect July 1, 1869, enacted as follows:
“ Sec. 199. All cities and incorporated villages shall have the general powers hereinafter mentioned, and may provide by ordinance for the exercise of the same. . . .
“ 18. To provide for the laying down of gas pipes, to lay off, establish, open, widen, straighten, extend, improve, keep in order and repair, and to light streets, alleys, public grounds and buildiugs, wharves, landing • places, bridges, and market spaces, within the corporation, including any portion,of any turnpike or plank-road therein, surrendered to or condemned by the corporation.” 66 OhioL. 180,182.
On April 27, 1871, the council of the village of Avon-dale passed an ordinance to provide for lighting the village with gas; and on May 24, 1871, a contract embodying the provisions of the ordinance was entered into between the plaintiff and the village; a part of which is as follows:
“ Section 1. Be it ordained by the council of the incorporated village of Avondale, more than two-thirds of all the membrs concurring and deeming it necessary, that, for the considerations named in this ordinance, the Cincinnati Gas Light and Coke Company and its successors shall be, and they are, hereby vested with the full and exclusive privilege of extending its gas pipes and mains through the avenues, roads, streets, lanes, alleys, and public grounds of said village, for the purpose of conveying gas to said village and the citizens thereof, and shall have the full and exclusive power and authority to open and use the said avenues, roads, streets, lanes, alleys, and public grounds for the introduction of pipes and other apparatus for gas,” etc.
“ Sec. 2. That the said village, at its own expense, shall procure the right to lay gas pipes or mains in the turnpike road and avenues, under the control of incorporated companies leading thereto from Cincinnati or within said village, and shall vest the full and exclusive enjoyment of said right in said roads and avenues in said company.
“ Sec. 4. That in further consideration, of the privileges hereby granted, the said company and its successors shall furnish at said lamp posts to said village such quantity of gas as maybe required for the lighting of the public lamps, and shall clean, light and keep lighted, and in ordinary repair said lamps for the same time and price payable at the same times as said company now does for the city of Cincinnati; the .burners and other conditions being also the same as those now in use and force in said city, and the quality of gas furnished to be the same as for said city.”
“ Sec. 5. The price at which said company shall furnish gas to the public buildings of said village and to the citizens and private consumers shall be the same for each thousand cubic feet so furnished as the prices respectively for gas furnished to the public buildings and private con sumers in the city of Cincinnati, and under the same regulations and conditions.”
(The price for gas furnished to the public buildings in the city ot Cincinnati was “ two-thirds of the lowest average px’ice at which gas shall or may be furnished to private individvala in the cities of New Orleans, Baltimore, New York, Louisville, and Pittsburgh.”)
“ Sec. 9. The contract made under this ordinance shall terminate: 1st. Upon the annexation of said village to said city before January 1, 1880. 2d. On the first day of January, 1880, at the option of the gas company; but it is understood and agreed that in case annexation shall not have taken place as afox’esaid, and the said gas company shall continue after said January 1, 1880, to fnx’nish said city and its citizens with gas, the said gas company shall have the right to, and will continue to furnish gas to said village and its citizens at the same price, and upon the same terms and conditions as to the said city and its citizens after said date, excepting wherein this contract differs from that of the city, and said company to pay interest on said cost of mains as afox’esaid to said village. And should the gas company, at the termination of its contract with the city of Cincinnati, fail to furnish gas to Avondale, then it will abandon to said village its right to supply gas under this contract. Gas to be continued to be supplied at same prices to public and private consumers as the city and citizens of Cincinnati pay for the same.”
After the execution of the contract the company furnished gas-mains, pipes, and lamp posts; and up to Mai’ch 1, 1879, it furnished gas for the public lamps to burn from sunset to sunrise, and was paid therefor by the village, as agreed. On February 13, 1879, the council of Avondale passed “ an ordinance to fix the quantity of gas required to be furnished for the public lamps in the village,” and provided that the “ quantities of gas for the lighting of the public lamps, in pursuance of the contract between the village and said company,” should be, to burn from about sunset of each day until one o’clock the next mox’ning. Of the passage of this ordinance the village notified the company on February 14, 1879 ; but the company continued thereafter, down to the commencement of this suit, to light the public gas lamps in said village, and burn them from sunset to sunrise, and monthly the plaintiff rendered accounts thereof to the defendant, which the defendant refused to pay, but the defendant offered to pay for the quantity of gas furnished in accordance with the requirements of the ordinance of February 13,1879, as above set forth, and demanded accounts thereof, which the plaintiff refused to render.
The defendant having refused to pay for the gas furnished according to the all night time table, the plaintiff brought the present action to recover the amount due it on the account for supplying with gas, lighting, extinguishing and keeping in order the public lamps of the defendant, as per time table and contract, from March 1,1879, to May 1,1880.
The village denied the validity of the contract, and set up the ordinance of February 13, 1879, and offered to pay for the gas furnished during the hours specified in that ordinance whenever bills for the same should be presented.
On trial in the common pleas court plaintiff recovered for the full amount claimed in the petition; and on error-the district court reversed that judgment because it included the excess above that required by the ordinance of February 13, 1879, and remanded the case for a new trial. At the November term, 1883, the case was again tried, and judgment was rendered for the company as if the amount of gas furnished had been only that required by the last ordinance of the village (the value of which the parties agreed to), but without interest or costs. On error, the district court affirmed the judgment of the court of common pleas, and the company now seeks to reverse the judgments of the district court, and for judgment for all the gas furnished and for interest thereon and costs of suit.
F. A. Ferguson; Lincoln, Stephens &; Lincoln; Paxton Warrington and R. A. Harrison, for plaintiff in error.
The power of the village to contract-for gas as a means of lighting the public lamps is not disputed. Roth parties were competent to contract about the subject-matter.
Whether the contract of a municipal corporation is ultra vires depends upon whether the statutes relating to its powers forbid it entering into the agreement. Payne v. Mayor of Brecon, 8 Hurl. & Nor. 572.
The ordinance was not passed in the exercise of the legislative powers conferred for purposes of police regulation or municipal government, but in the exercise of the power to contract. It was a contract ordinance. Western College v. Cleveland, 12 Ohio St. 375, 377 ; Dayton v. Pease, 4 Ohio St. 80, 100. With reference to purely political or governmental powers of municipalities the legislature is omnipotent. But this is not so as to its proprietary interests. Board of Park Comm’rs v. Common Council of Detroit 28 Mich. 228.
A municipal corporation may contract in the capacity of a private corporation independently of its powers of'local sovereignty. West. Sav. Fund Soc. v. Philadelphia, 31 Pa. St. 175, 183; Gas Co. v. San Francisco, 9 Cal. 453, 468, 469; City of Quincy v. Bull, 106 Ill. 337.
The defendant can not be permitted to repudiate the obligations which the contract imposes and at the same time take the benefits which it confers. Bristow v. Whitmore, 9 Ho. Lords Cases, 404; Broom’s Leg. Max. 635.
By the construction of the contract claimed by the defendant, the plaintiff is left bound by all its stipulations; bound to six per cent, on the cost of mains, etc., to light, keep lighted, clean, extinguish, and keep in order the public lamps, and to repair the mains and connections, while the defendant is required to take only so much gas as it may choose, at such price as it may fix. Such, we submit, is not the law of the case; but, on the contrary, so long as the defendant claims the benefits of the contract, it is bound to perform its obligations.
All obnoxious features that may be held to be embraced in the contract are severable from the other portions of the. contract, or are so far executed that they can not be used to defeat a just demand based upon past services rendered in good faith. State v. Cin. Gas L. & C. Co., 18 Ohio St. 262; Hitchcock v. Galveston, 96 U. S. 341; United States v. Fort Scott, 99 U. S. 152-9; City of Quincy v. Bull, supra; City of East St. Louis v. East St. Louis Gas L. & C. Co., 98 Ill. 415; Argenti v. San Francisco, 16 Cal. 256; West v. Errol, 58 N. H. 234.
“While courts are inclined to maintain with vigor the limitations of corporate actions, whenever it is a question of restraining the corporation in advance from passing beyond the boundaries of their charters, they are equally inclined, on the other hand, to enforce against them contracts, although ultra vires, of which they have received the benefit.” Greene’s Brice’s Ultra Vires, 372, and note. And see also Larwell v. Hanover Savings Fund Soc., 40 Ohio St, 274; Bissell v. M. S. & N. I. R. Co., 22 N. Y. 259; Parish v. Wheeler, 22 N. Y. 494, 506, 507; Whitney Arms Co. v. Barlow, 63 N. Y. 62-68; Rider Life Raft Co. v. Roach, 97 N. Y. 378; Bradley v. Ballard, 55 Ill. 413 ; Darst v. Gale, 83 Ill. 136, 137; National Bank v. Stewart, 107 U. S. 676 ; National Bank v. Whitney, 103 U. S. 99; National Bank v. Matthews, 98 U. S. 621; Mining Co. v. Bank, 96 U. S. 640.
The case presented is outside of estoppel. It lies in contract. The recovery asked is upon the contract. The question .is one of construction and not of estoppel. The instrument to be construed, when stripped of its unessential and its executed parts, does not require us to ask the court to sustain an exclusive grant, or to urge that the term of the grant is perpetual, or to argue that the council had the right to barter away legislative power. Those features are totally irrelevant, because: (1) So far as they exist they are severable from the other parts of the contract, and may, with propriety, be eliminated and restricted; (2) the grant to construct the gas plant, although exclusive in form, was merged in the performance of tlie covenant of the village to purchase the plant; (3) after the merger, if the expression be allowed, a contractual relation remained between the parties, which iuvolved only the power of the village to receive and use, and of the company to convey, gas through this plant in specified quantities for an agreed price, during a period involving at least ten years from the date of the contract; and, (4) every principle of justice requires that this contract shall be treated as having continued inviolable, at least to the end of the time that the gas sued for was furnished; and, indeed, that it shall be so treated until the whole contract is renounced.
Stallo, Kittreclge § Wilby, for defendant in error.
The first section of the contract attempts to vest the plaintiff and its successors “ with the full and exclusive privilege of extending its gas pipes and mains through the avenues, roads, lanes, alleys, and public grounds of said village.” But this court held, in State v. Cincinnati Gas L. & C. Co., 18 Ohio St. 262, that the council of a municipal corporation could not grant such an exclusive right. And see also The Cincinnati Street R. Co. v. Smith, 29 Ohio St. 291.
The ordinance embodying and, it is claimed, validating the contract is, in terms, irrepealable; it can not be changed or modified without plaintiff’s consent; and it is not to terminate, except at plaintiff’s option, unless Avondale is annexed to the city of Cincinnati; but even such annexation can only take place upon conditions specified in the contract.
No principle is better settled than that neither a state legislature nor a municipal body can enact irrepealable laws or ordinances, or embarrass or restrict its continuous legislative powers and duties by contract. Cooley Const. Lim. 251; Richmond Gas L. & C. Co. v. Middletown, 59 N. Y. 228; Dillon Mun. Corp., § 97.
The contract is not impugned or questioned by reason of some irregularity or defect in its execution, but on the ground that the making of such a contract was wholly be yond the power of the village council, and, moreover, was expressly forbidden by law. Nothing is better settled than the doctrine that there is no estoppel against the defense of ultra vires. To say that municipal bodies can estop themselves by acts in pais from denying the validity of contracts, which it was beyond their power to make, is to say that thejr can do indirectly what they have no power to. do, or are forbidden to do, directly; that the powers of a municipal corporation can be enlarged by the corporation itself. The simple statement of such a claim is its own refutation.
See Bigelow on Estoppel, 466 ; Schaeffer v. Bonham, 95 Ill. 368 ; McPherson v. Foster, 43 Iowa, 48; South Ottawa v. Perkins, 94 U. S. 260, 267.
As to the construction of the contract, it is readily seen that the question of construction is closely connected with that of the validity of the contract. When a contract is susceptible of two different constructions, one of which would render it valid and the other void, the latter must be adopted. James v. Pruden, 14 Ohio St. 251; 5 West. Law Monthly, 187.

Opinion:
Eollett, J.
There is no question here as to the powers of the company, which were ample; or as to the power of the village to make a contract with the company to light its streets and public places; and the plaintiff does not complain of any thing prior to March 1,1879. The plaintiff claims that by the terms of the contract of April 27, 1871, the defendant must permit its street lamps to burn plaintiff's gas from sunset to sunrise, and must pay plaintiff for the same. The defendant claims that, under the statutes of Ohio, it may require the burning of these lamps to cease at one o'clock in the morning, and that it need not pay for the gas consumed against its wish and in violation of its ordinance.
Whatever contract the council of Avondale legally made is binding on the defendant and must be performed ; but if the council that entered into the written agreement exceeded its authority and had no power to make the con tract set out, the defendant is not bound by the illegal ' terms of the same.
Whatever may have been true of municipal corporate charters in mediaeval times as to their being treaties between feudal lords and commercial communities, in this country a municipal corporation isa public corporation created by the state for political purposes, and it has subordinate and local powers, and such powers only as are expressly granted or necessarily implied.
Its legislative powers can not be delegated or bargained away. "Such corporations may make authorized contracts, but they have no power, as a party, to make contracts or' pass by-laws (ordinances) which shall cede away, control, or embarrass their legislative or governmental powers, or which shall disable them from performing their public duties." Dill. Mun. Cor., § 97.
Of course the council of a municipal corporation has no power to bind the corporation in matters expressly prohibited by the state.
At the time this agreement was entered into, the following statutes were in force. (Rev. Stats., § 2478): " The council of any city or incorporatéd village, in which gas companies, or gas-light and coke companies, maybe established, are hereby empowered to regulate, from time to time, the price which such gas or gas-light and coke companies may charge for gas furnished by such companies to the citizens, public grounds and buildings, streets, lanes, alleys, avenues, wharves, and landing places," etc.
Section 2479 provides that the council and the company may fix and agree upon a price for a period not exceeding ten years and in such case the council can not require gas at a less price during that period.
Section 2485. " It shall not be lawful for any council to agree by ordinance, contract, or otherwise, with any person or persons, for the construction or extension of gas-vmrks, for manufacturing or supplying the corporation or its inhabitants with gas, which shall give or continue to any person or persons making such agreements with the council the exclusive privilege of using the streets, lanes, commons, or alleys, for the purpose of conveying gas to the corporation, or the citizens thereof, or which shall deprive the council of the right to designate the kind of meter to be used for the correct measurement of the gas furnished under such agreement, and to provide for inspecting or regulating the same, or which shall not specify the exact quality of the gas to be furnished, and reserve to the council the right to enforce an exact compliance with such specification, under such rules as the council may pz'escribe," etc.
The contract in this ease assumes to grant to the company the exclusive privilege of extending its gas pipes and mains through the avenues, roads, streets, lanes, alleys, and public grounds of the village for the puz'pose of conveying gas to the village lamps and to its citizens; and to grant the exclusive power and authority to introduce its pipes and other apparatus for supplying gas ; and to provide that the quality of the gas fuzmished should be the same as for the city of Cincinnati (over which Avondale had no control), and that the pi'ice should be the same as in Cincinnati and under the same regulations and conditions, and those wez'e govezmed by the lowest average prices of gas paid in New Orleans, Baltimore, New York, Louisville, and Pittsburgh.
Section 2479 does not benefit the plaintiff as to price, for the eonti'act was not limited to or within ten years, or any number of years, but was to continue indefinitely, at the option of the company; and it seems clear that, if sections 2478 and 2485 apply to this case, the contract is ultra vires.
In construing statutes so as to give them the legislative intent, intez*pi'etation may expand their meanizzg beyond the literal significance of the words. In each case regard must be had to the subject and the circumstances, as well as to the words used. Reg. v. Collingwood, 12 Ad. & E. 681, 686; Miller v. Salomons, 7 Exch. 475; Bish. Stat. Cr., § 190, 120; Tracy v. Card, 2 Ohio St. 481, 441.
The act of March 20, 1859, which authozúzed gas companies to extend pipes for conveying gas into cities and vil lages in the vicinity, was in force when, on May 7, 1869, sections 2478 and 2485 were enacted; and there is no statute prohibiting their application to companies or individuals making such extensions. Section 2485 provides that: " It shall not be lawful for any council to agree, by ordinance, contract, or otherwise, with auy person or persons, for the . . . extension of gas-works for . . . supplying the corporation or its inhabitants with gas," etc.
Here the word "person" includes this gas company; and, in terms, the section relates to contracts and ordinances for the extension of gas-works for supplying the village and its inhabitants with gas.
Extend means to draw forth or stretch, to prolong, especially in a single direction, as a line. Extension is the act of extending or stretching out. Gas-works are extended when the mains and pipes are prolonged into a village so as to supply the village and its inhabitants with the gas of such works.
If gas-works used only for manufacturing gas do not include the mains and pipes that convey the gas to the lamp posts and to the consumer (as perhaps they may not), gas works for supplying gas " at the lamp posts in the village " do include the mains and pipes through which the gas is furnished by a company that owns the whole plant, including the rights of way where the same are laid, as in this case. It is admitted that the council of the city or village, where the gas company has its whole plant established, is within the provisions of section 2478; and no principle or reason has been shown why the same provisions should not apply, and do not apply, to the council of a city or village in which the company has one-half of its plant, or any smaller part thereof, when contracting with such company to supply gas to such city or village. In each case the same principles apply, and the same rights are sought to be secured, and similar wrongs are provided against. Sections 2478 and 2485 and their pi*ovisions do apply to these parties and to this agreement. Hence we see that the council exceeded its powers in agreeing to grant to the company an exclusive privilege (The State v. The C. G. L. & G. Co., 18 Ohio St. 262), and in agreeing to place beyond the control of the village the price and the quality of gas, as well as the quantity the village would require in future; and the agreement is ultra vires and void.
The company was bound to know the law and the powers of the council, and there is shown no principle or act of estoppel that prevents the village from now setting up such want of power in that former council, or that es-topped the village from disregarding, in future, and after due notice, any part or all of that contract. The council had power to pass the ordinance of Eebruary 13, 1879, specifying the quantity of gas required by the village for the street lamps.
It is admitted that the village paid for all the gas it received up to March 1, 1879, under the contract, and now the village must pay a reasonable price for the gas received and used by it under that ordinance of February 13, 1879, not because of the contract, but because the village has used the gas.
The amount of gas so used under this ordinance has been agreed upon by the parties, and its value has been fixed by them at $6,331.29. This sum we regard as correct, but it is subject to a credit of $2,000, paid December 2, 1879.
The answer avers that at all times the defendant has been ready and willing to pay for the gas furnished the village up to one o'clock in the morning, as specified in the ordinance of February 13, 1879. But that was not a tender of what was due, and did not stop or prevent interest;" and interest should be allowed on any sum due from the time the same became due.
The plaintiff is also entitled to costs in the case (Rev. Stats., § 1319).
There was error in the judgment as to the interest and costs, and for such error the
Judgment is reversed, and the cause is remanded, with instructions.