Court Opinion

ID: 6546009
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:19:36.821674+00
Date Added: 2024-06-11T15:55:58.129695
License: Public Domain

Wood, J., (after stating the facts.) First. The passage of the ordinances in question was within the -express powers of the. city council. Secs. 5442, 5448, Kirby’s Digest. The ordinances, when passed and accepted by the water company, became contracts, and binding on the parties thereto. Smith, Mun. Corp. § § 532> 1396. While the members of the council are trustees for the people of the municipality they represent, and as public agents are held to a stricter account than a mere private agent, yet when they act within the scope of their authority, and make contracts which they are expressly authorized to malee, these contracts must be governed by the same rules as other contracts. They can not be set aside upon other and different principles than those that control other contracts. Huidekoper's Lessee v. Douglass, 3 Cranch, 1-70; 1 Rose, notes and authorities cited; Illinois Trust & Savings Bank v. City of Arkansas City, 76 Fed. 271, 34 L. R. A. 518, and many authorities there cited; Little Falls Electric & Water Company v. City of Little Falls, 102 Fed. 663; Jewitt v. Town of Alton, 7 N. H. 257; Western Sav. Society v. Philadelphia, 31 Pa. St. 175; Prather v. New Orleans, 24 La. Ann. 41; Davenport Gas Co. v. Davenport, 13 Iowa, 233. In the passing of an ordinance contracting for the supply of water to the city, the council must have in mind the interest of the public it-represents; and if the ordinance upon its face is so unreasonable and oppressive as to indicate that it was passed solely in the interest of the grantee of the franchise, it will be set aside. In fixing the terms of such an ordinance the council is acting in a proprietary and ministerial or business capacity, rather than legislative; and while the courts will not interfere to control its discretion to determine whether waterworks are necessary, and its discretion as to whether or not it will grant the franchise to private individuals to furnish same, which is a legislative discretion, they will interfere to inquire whether the contract by its terms is so unreasonable and oppressive'.as to indicate that the council has transcended its authority and abused its powers in ignoring the rights of the people of- the municipality affected by the contract. Valparaiso v. Gardner, 49 Am. Rep. 416. Such a contract would be a fraud upon the taxpayers affected thereby, whether the council were guilty of any intentional fraud or not. The courts will also inquire as to whether there has been actual or intentional fraud in the making of such contracts. The proof does not show any actual or intentional fraud upon the part of the city council, or any member thereof, in making this contract with the appellee. Nor was there any fraud, or undue influence which would be equivalent to it, upon the part of Mcllroy in relation to the passage of the ordinances. The various things which appellant alleges that Mcllroy said and did, conceding that they are established by the proof, fall far short of constituting fraud or undue influence. Appellants make the mistake all the way in treating Mcllroy as if he occupied some superior and controlling position over the aldermen ofj the city that would enable him to impose upon them, or to exert some undue influence upon them. Nothing is brought forward to establish this, except frequent interviews “on the curb stone, in the streets, behind the corners of buildings and in stairways.” But these do not constitute that undue influence that will avoid a contract. Mcllroy was not the guardian of the aldermen. They were trusted public servants, and are presumed to be fitted, morally and intellectually, for their responsible duties. Surely they were not mere puppets to be moved bnly by the will of Mcllroy. They were dealing at arms’ length with him. Mcllroy had the right to talk with them as much as he pleased about the passage of the ordinances in which he was so vitally interested, and to make the best contract with them he could. They were supposed to be able to take care of the city’s side of the case. The law must so treat them. No charge of corruption on the part of the aldermen or Mcllroy is made, and none is shown. On the contrary, the testimony of the aldermen shows that Mcllroy did not attempt to improperly influence them to vote in favor of the ordinances. Mcllroy had the right to employ counsel for himself, and he had the right to say to the other side that he did not think it needed any counsel. He was not responsible for the failure of the city council to get all the help it could and all the information it wanted. Appellants can not say that Mcllroy made misrepresentations, and was guilty of concealments that induced them to pass the ordinances. Mcllroy is not to be censured, nor to lose any of his legal rights, because he had prepared a draft of the ordinances and submitted it to the council. It was for the council to adopt or reject them as they saw proper. When they passed them, they adopted them, and it was the work of their hands, not of Mcllroy’s. The burden of proof was upon the appellants to sustain the charge of fraud and undue influence, and this is not done by fragmentary acts and desultory conversations that might as well be attributed to innocent as evil motive. But to review in detail the evidence upon which appellants rely to show fraud and undue influence would unnecessarily lengthen this opinion. It is all of a kind. It shows acts upon the part of the council, its attorney, its members, committees or citizens, for which Mcllroy is in nowise responsible. And it shows acts upon the part of Mcllroy that- do not offend legitimate business methods. We are therefore of the opinion that the charge of fraud and undue influence is not sustained. Second. Are the ordinances contrary to the Constitution,' the laws, and policy of the State? Section 12 of ordinance 135 provides that the city “shall have the right to purchase said water works at the expiration of ten, fourteen, and eighteen years at the fair and reasonable price thereof, subject to any bona ñde indebtedness that may exist thereon.” By section 13 authority is given the water company to incumber “the works by a mortgage or otherwise, and it is provided that the money due from the city to the water company for hydrant rental shall be retained by the city treasurer as net earnings of the water company, and shall be held by him in trust for the payment of the rental of the indebtedness of the water company.” It is also stipulated in this section that, should the city fail to pay its water rentals when due, the deferred payments shall bear eight per cent, annual interest. It is contended that these provisions are in violation of the Constitution prohibiting cities from issuing interest-bearing evidences of indebtedness, etc. Const., art. 16, § 1. But the provisions named are susceptible of no such construction. The city is not compelled to purchase the water plant. It may do so, if it desires. In case it should, inasmuch as its purchase would be subject to any bona ñde existing indebtedness to a limited amount, it has provided that such indebtedness should not be unnecessarily increased by accumulations of unpaid interest. In other words, it has provided a method of requiring the water company to pay its interest. The ordinances, as construed by the chancellor, limit the bona ñde indebtedness which the water company may incur at an amount not exceeding $1,250 for each hydrant erected and such additional ones as the city might order. Were the city compelled to purchase at an amount limited by the ordinance, but bearing interest, there would be more plausibility in appellant’s contention, but such is not the case. The contract on the part of the city to pay interest on the amount for hydrant rentals, in case same was not paid when due, is not issuing interest-bearing evidences of indebtedness. See Smith, Mun. Corp. § 738; City of Valparaiso v. Gardner, supra. It is not to be presumed or assumed that the city will not meet its obligations when due. It is contended that the ordinances contravened sections 5445-5447 of Kirby’s Digest, “in that they attempted to tie the hands of future councils by fixing the rates to be paid by the city and a minimum rate to be paid by the consumers for twenty years in the future, and contracts for a renewal in the event the city did not buy.” The ordinances fix the rate of hydrant rentals to the city for twenty years and the minimum charge to consumers, but we find nothing in the ordinances fixing the minimum charge to consumers for any specified time. Sections 5445 to 5447 of Kirby’s Digest authorize the city council, upon the complaint of five or more citizens of the town that the water company “is charging an exorbitant rate for the supply of water,” to make investigation ; and if they find that "the citizens, or any number thereof, are being charged an unreasonable price for water,” it shall be theii duty to fix a reasonable price, and the water company is required “to adopt such rates.” These sections embody the provisions of an act passed April 21, 1903. Ordinance 135 was passed October 26, 1903, and ordinance 137 was passed after that. If there were any conflicts between the provisions of the ordinances and the statute, of course the statute would prevail, as the requirements of the statute must be read into every contract entered into after its enactment. Western Sav. Society v. Philadelphia, supra. But we fail to see any conflicts. There is no inhibition on fixing a rate that the city shall pay for its hydrants. There is no proof'-in the record that the rates fixed by the ordinances are. exorbitant; but if they were, the matter is entirely within the control of the council, under the plain provisions of the statute. See City of Carlyle v. Carlyle Water, L. & P. Co., 31 Ill. App. 325. In Danville v. Danville Water Company, 178 Illinois, 299, in which is a statute similar to the one under consideration, it was held that although a city has been empowered by statute to authorize a private corporation to construct waterworks and to contract for a supply of water for a period not to exceed thirty years, a subsequent statute empowering any city in which a private corporation has been or may be authorized to supply water for public use, to fix reasonable water rates, is .constitutional, and an ordinance passed under a later statute reducing existing water rates, and fixing them at a reasonable price, is valid, although the city enacting it has, under the earlier statute, attempted by ordinance to fix water rates at certain figures for the unexpired term of thirty years. See also Rogers Park Water Co. v. Pergus, 178 Ill. 571. The contention that the ordinances “appropriated all of the revenue of the city for years to come in advance of its levy and collection” is not sustained by the proof. ■ True, the proof tends to show that the amount contracted to be paid for hydrant rentals, in connection with the other expenses which the city had incurred, would absorb all the revenues at the time the contract was made. But there was no proof, and could be none, of what the revenues of the city would be in the future. No one could tell, of course, with certainty what its wealth and population would be, and what would be its sources of revenue. It had grown rapidly in the past; and might continue to do so. We see nothing in the ordinance in conflict with art. 16, § § 10, 11, 12 of the Constitution. A contract by the city with the water company to pay a stipulated amount for hydrant rentals is not an appropriation of the revenue by the city, in advance of that levied and collected. It is simply a contract to pay, and not an appropriation of specific funds to the purpose. Moreover, the amount agreed to be paid for hydrant rentals was not an amount equal to all the revenues of the city, , Third. In assignments numbered from three to nineteen, inclusive, learned counsel, in their able and exhaustive brief, urge that the ordinances are unjust, unreasonable and oppressive, and that for these and various other reasons they are void. We will treat these as numbered, and in the order named in appellant’s brief: 3. The appellee had about eleven years of unexpired term to operate its system under the Rees contract when ordinance 135 was passed. That ordinance granted a franchise for twenty years, beginning from the day of its passage. So in reality it was an extension of the franchise for only about nine years. But the'power to determine how long such privileges shall be exercised is discretion lodged in the city council, or governing boards, which some courts have been unwilling to disturb under grants of thirty or even fifty years. Little Falls Electric Co. v. City, 102 Fed. 665; California Reduction Co. v. Sanitary Works, 199 U. S. 317. 4. There is nothing in the face of the ordinances, or in the extraneous proof, to show that the amount agreed to be paid as rental per annum for hydrants was unreasonable. We could not determine, without some evidence upon the subject, what hydrants should rent for in a city of the population of Fayetteville, under a system of waterworks such as has been installed there. The presumption is that the council did its duty, and investigated to determine what would be the reasonable value of such rental before fixing the amount. The length of time, as we have shown, was in the discretion of the council primarily, and no abuse of such discretion has been proved. 5. Appellants contend that the condition for the extension of the mains under the ordinances in controversy is unreasonable, and say that under the old (Rees) ordinance extensions could have been compelled without expense to the city. The proof showed that it cost about $50 to put in a fire hydrant. Prior to Mcllroy’s purchase, a proposition had been made to the city by Rees for certain extensions, upon condition that the city locate a hydrant every 450 feet and pay not exceeding $75 each for putting in the hydrants. This proposition had been accepted by the city. Under the Rees contract extensions could have been compelled, but only where there was “an average of one consumer to every 100 feet of pipes.” While the hydrants were only to be put in when ordered by resolution of the city council, they were to cost not exceeding $75 each, and the city was to pay an annual rent therefor °of $35: Had the extension been made under the Reqs ordinance and the proposition for extension which Rees had made and the city had accepted, the additional hydrants might have cost the city $75 each, and the hydrant rental would have been the same as it is under the ordinances in controversy. It is clear from this that the city council either did not consider that extensions could be compelled under the Rees contract without expense to the city, or else they concluded that it would be unjust to have extensions made without ordering and paying for hydrants. There is no complaint or showing that this contract with Rees was unreasonable or oppressive. A priori, would the contract with appellee for the extension of mains not be unreasonable and oppressive, for, under it, the city was to secure eighteen additional hydrants, without any charge for furnishing or placing same, thus saving the city in this particular $1,350. The extension could have been compelled under the contract with appellee, as well as under the contract with Rees. The purpose of both was to supply “with water the streets, lanes, alleys, squares and public places” in the City of Fayetteville. But the extension could only be compelled upon the terms of the contracts, which were the same in the particular of requiring an extension only where there was “an average of at least one consumer to every 100 feet of pipes.” This was not an unreasonable requirement. It was expensive to extend the water system, and the water company could not be expected or required to do so where there was no prospect for reasonable remuneration. If the amount the consumers had to pay was found to be unreasonable, they have their remedy under the statute, as we have shown. But the court held this part of the ordinance void, and we need not consider it further. The council under the Rees ordinance thought it proper to require the city to locate a hydrant for every 450 feet of main and to pay therefor not exceeding $75 per hydrant. The contract with appellee for the extension of mains is more favorable than that. Since the hydrants cost $50 each, we do not consider that a profit of $25 each to appellee for furnishing and placing same would be exorbitant ;■ at least not so much so as to avoid the contract. 6 and 7. The contract for main extension was not unreasonable. The city is amply protected under the various provisions of the ordinances for its water supply, both as to quantity and quality. Appellee contracted on his part, in consideration of the “rights, privileges and franchises” granted it by the city, to supply “with water the streets, lanes, alleys, squares and public places in the city of Fayetteville,” and to “enlarge the capacity of the waterworks plant to such an extent” as “is necessary to meet the growing demands of said city for such water supply.” Appellee has the exclusive right to supply water for “extinguishing fires in said city,” and “for domestic, manufacturing' or industrial uses.” These are the uses named; others would be implied if necessary to give the city water, for that was the evident and expressed purpose of the contract. The “water shall be supplied from West Fork of White River, and be of the purest quality obtainable, either directly from the stream or from wells adjacent thereto, or from any source from which the said company may desire to procure same, except from below the mouth of the town branch.” The terms of the ordinances carefully and specifically provide that the pipes shall be large enough and the pressure great enough" to supply water for “all domestic, manufacturing and industrial uses in every part of the city” where appellee under the terms of the ordinance could be compelled to extend its pipes. Said ordinances provided in the way of fire protection the following: “Sec. 17. The said water company, its successors and assigns, are to supply and maintain sufficient pressure to discharge through fifty feet of two and a half (2^2) inch hose, one (1) inch smooth-bore nozzle, four streams simultaneously to a height of sixty-five (65) feet on the public square from the four hydrants located thereon; and sufficient,to discharge through a like hose and nozzle from a hydrant to be located by the city council on Dickson Street, at a point south of the University, a stream to the height of sixty-five (65) feet. Said watei; company further agrees, after receiving forty-five minutes’ notice given by the chief of the fire department of said city to its engineer at its pumping station, and upon the opening and closing by said fire department, or by the agents of said water company of the necessary valves at the reservoir, to give direct pressure from the pumping station (provided the opening and closing of said valves be required to furnish sufficient 'pressure to throw three streams simultaneously on the public square through such hose and nozzle to a height of seventy (70) feet, or two streams to a height of eighty (80) feet, or one stream at said hydrant south of the University to a height of seventy-five (75) feet.” Section 11 is as follows: “Sec. 11. For the full term of twenty (20) years provided for in this contract, the said Fayetteville Water Company, its successors and assigns, shall continue and furnish without default a constant and uninterrupted supply of water to said city for the various uses as hereinbefore set forth, provided if at any time the supply of water shall cease or make default from any cause of neglect on the part of said Fayetteville Water Company, its successors and assigns, for five days at any time, then the city may take charge temporarily of said works, machinery and appliances, and operate the same until by sureties or otherwise said works will be efficiently operated and the expense incurred by said city in operating the same shall be a lien upon the earnings of said works until paid. In case the water company fails to supply water, then all hydrant rentals shall cease until such time as the same is supplied.” Under these provisions, the apprehension that the city will be “at the mercy of the water company for all time as to the amount of water to be supplied” is groundless. Likewise the fear that the contract does not require “pure, clear or wholesome water to be furnished.” The contract calls for the “purest water obtainable,” and for a bountiful supply; and if the water company neglects co comply with its contract for five days, its property under section 11 is practically confiscated to the city'during the time of such neglect. This is the remedy provided by the contract itself for its enforcement, and it is cogent. But if there were a substantial and continued breach of contract in this or any other respect, the city would have the usual remedy in a court of chancery. 8. The proof tends strongly to show that better protection of the University Buildings from fire than had obtained under the Rees ordinance was one of the objects in contemplation of both parties in the passage of the ordinances in controversy. If it shall be demonstrated that the contract fails to carry out one of the purposes that the parties had in view, to givé protection from fire to the University buildings, it will be time enough then to seek to set aside the contract on that ground. There is no proof in this record showing that the waterworks system when fully installed, as contemplated by the contract with appellee, will not afford ample protection to the University buildings. No tests have been made, and no proof offered, showing to what height water can be thrown under the improvements to be made by appellee. 9. The ninth assignment has been disposed of under another head. 10. The chancery court held with appellants on the objection raised in this assignment, and the water company has not appealed. 11. The chancery court enjoined the water company from mortgaging or bonding its plant for more than $1,250 per hydrant. The appellee has not appealed from this. So, under the decree of the court, the bona fide bonded indebtedness of the water company can not exceed $1,250 for each hydrant. It may be less. Learned counsel for appellants argue that the contract is unjust and oppressive, and that, unless it is declared void, the only way the city can secure relief is to purchase for the full value of the property, subject to any indebtedness that the water company may have bonded the plant for. If the city were required absolutely to purchase the waterworks, after a stated period, for its full value, and subject to an unlimited indebtedness, or even to an indebtedness equal to $1,250 for each hydrant the city might order, the contract would probably be unreasonable, as showing a disposition upon the part of the city council to allow the waterworks an exorbitant profit, and thus to ignore the rights of the city. But such is not the case. As we have shown, the city is not required to purchase at all, but has the option to do so, in ten, fourteen and eighteen years. If the city should not desire or be in condition to purchase, it is but just to the company that its franchise be extended for a reasonable time, for otherwise its property would be valueless and confiscate. We do not agree with the counsel that the contract giving the city the option to purchase, or else binding it to extend the franchise, places an unreasonable burden upon the city which it can only remove by purchase of the property. The contract is comprehensive enough in its general scope, and yet specific enough in details, to assure the city an excellent water supply. But, if it is found by actual experience that the contract was an improvident one, the city is not “left at the mercy” of the appellee “for all time,” as counsel assert, for its water supply. In case the city does not exercise its option to purchase, it is only required to extend the franchise “on fair and reasonable terms.” Again, while the language of the contract to the effect that the appellee “shall have the exclusive right to maintain and operate waterworks,” etc., is doubtless sufficient to inhibit the city from granting the privilege to any other corporation, company or individual, we doubt whether it is sufficient to prevent the city from maintaining its own water plant. “It is,” says the Supreme Court of the United States, “important that the court should adhere firmly to the salutary doctrine underlying the whole law of municipal corporations and the doctrine of the adjudged cases, that grants of special privileges affecting the general interest are to be liberally construed in favor of the public, and that no public body, charged with public duties, be held upon mere implication or presumption to have divested itself of its powers.” See also Joplin v. S. M. Light Co., 191 U. S. 150; Stein v. B. Water Co., 141 U.. S. 67. These authorities at least leave it an open question, and we need not, and do not, decide it, for we are of the opinion that the ordinances are valid, regardless of whether or not the city could own and maintain its own water plant. 12, 13 and 14 have been disposed of in what we have already said. 15. The court held that those provisions of the ordinances allowing arbitrators, in case of disagreement by the parties, to fix the value of the waterworks plant, and to stipulate the terms of extension, were void. Therefore appellants can not complain. 16. The contention that the ordinances are void on account of ambiguities of expression in certain sections of the contract is not well taken. The meaning of these terms and sections is easily discoverable from the context, and can readily be made certain when considered in connection with other parts of the contract and the subject-matter thereof. The rule of “id certum est quod certum reddi potest,” would apply to the uncertainties of which appellants complain, and the contract should not be avoided on account of these. 17. The contract requires the appellee “to construct and maintain a dam four or five feet high at the river near pumping station for impounding water.” It is contended that no right of way had been obtained, and that this provision would result in flooding farms for which the city would be liable. The securing territory for the dam, and the damages that might result to property owners by reason of its construction, are matters that do not concern the city under the contract. The city could not be held responsible in any way for the failure of the appellee to carry cut its contract in this respect with the city, nor could the city be held liable for any damages to .third parties caused by the performance of the contract by appellee. These are questions for the appellee to settle, not the city. Not until appellee fails or refuses to comply with its contract in these particulars can the contract be avoided for that reason. It suffices that the question is not for decision now. 18. It is contended that ordinance 137/ which is brought in question by the supplemental complaint, is void for the reason “that it was not signed by the presiding officer.” The .record of the passing of this ordinance is as follows: “Regular meeting of the city council, November 9, 1903; present J. T. Eason, Mayor, Fred Jones, Recorder. 'Aldermen, Atha, Chapman, Hansard, Hight, Phillips, Conner. After which said ordinance was by Fred Jones, acting mayor, (J. T. Eason, Mayor, having been excused on account of sickness) declared adopted and finally passed. Said ordinance as amended and finally passed and adopted is as follows:” (Here follows ordinance.) “There being no furrher business, on motion of Chapman, seconded by Hansard, council adjourned. “Fred Jones, Acting Mayor; C. O. Hansard, Acting Recorder.” The statute provides: “All by-laws or ordinances shall, as soon as may be after their passage, be .recorded in a book kept for that purpose, and be authorized by the signature of the presiding officer of the council and the clerk.” Sec. 5473, Kirby’s Digest. The record shows a compliance with the statute as to authentication. Jones was the presiding officer at the time of the passage of the ordinance, and Hansard was the acting clerk or recorder. They signed the record containing the ordinances. But the proof shows that ordinance 137 was passed because it was feared that 135 had not been passed, and 137 was intended as a substitute for 135, in the event 135 had not been legally passed. The proof shows that ordinance 135 was legally passed. Indeed, the complaint and the contention of appellants all the way are bottomed on the fact that the ordinances were passed. Assuming and alleging that they were passed, appellants seek to set them aside for the various reasons set up in the complaint. 19. It is not the law that “if the ordinance was void in part, it was void in toto.” 'Judge Dillon says: “If part of a by-law be void, another essential and connected part of the same by-law is also void. But it must be essential and connected to have this effect.” 1 Dillon, Mun. Corp. § 421; 1 Smith, Mun. Corp. § 542. This is the well-settled doctrine, and has been more than once announced by this court. Rau v. Little Rock, 34 Ark. 303; Eureka Springs v. O'Neal, 56 Ark. 350. See also State v. Marsh, 37 Ark. 356; Little Rock & F. S. Ry. Co. v. Worthen, 46 Ark. 312; State v. Deschamp, 53 Ark. 490; Leep v. Ry., 58 Ark. 407; Ex parte Deeds, 75 Ark. 542. It should be remarked that in the cases in our own court recognizing the principle, the ordinance.or act under review was an expression of the will of the State or municipality in its govermental, rather than proprietary or business, capacity. But we do not see why there should be any distinction as to the parts of acts or ordinances that are prejudicial to the interest of the State or city, and that were no part of the consideration or inducement for the contract, so far as the State or municipality is concerned, but were engrafted solely for the benefit of the other party to the contract. So long as the party for whose benefit these provisions were made is not complaining, the other side should not be -heard to complain if such provisions are removed. The parts of the ordinance which the lower court declared void were easily severable and made independent of the other portions, declared valid, and there can be no doubt that the city council would have passed the ordinance with these portions omitted, for they conserved the interest of the appellee, and not the city and its inhabitants and taxpayers. Appellee does not complain of the ruling of the court in canceling these provisions, and appellants should not. 20. The adjustment of costs was largely in the discretion of the lower court. The chancellor doubtless concluded that appellants obtained no substantial relief, inasmuch as the avowed object of the litigation, the cancellation of the contract, was decided in appellee’s favor; and, as we find no error in this ruling, the judgment of the court will be in all things affirmed.