Court Opinion

ID: 5440811
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:02:51.067762+00
Date Added: 2024-06-11T08:31:59.889538
License: Public Domain

Ross, J., dissenting:
I dissent. In the recent case of Stone v. Mississippi, reported in 101 U. S., at page 814, Mr. Chief Justice Waite, delivering the unanimous opinion of the Supreme Court of the United States, declared, that “ it is now too late to contend that any contract which a State actually enters into when granting, a charter to a private corporation, is not within the protection of the clause in the Constitution of the United States that prohibits States from passing laws impairing the obligation of contracts. * * * In this connection, however (proceeds the Chief Justice), it is to be kept in mind that it is not the charter which is protected, but only any contract the charter may contain. If there is no contract, there is nothing in the grant on which the Constitution can act. Consequently, the first inquiry in this class of cases always is, whether a contract has in fact been entered into, and if so, what its obligations are. * * * The contracts which the Constitution protects are those that relate to property rights, not governmental. It is not always easy to tell on which side of the line which separates governmental from property rights a particular case is to be put; but in respect to lotteries (which was the case there under consideration) there can be no difficulty.”
*11The language thus employed by the Court presents the principles which must govern the case before us in a clear light. The first inquiry for us, therefore, is, was there ever any contract between the Spring Valley Water Works and the State, and if so, what was its nature ? To determine this question we must look to the law under which the company was incorporated. It was organized on the nineteenth of June, 1858—its certificate of incorporation reciting that it was formed “ under and in conformity with an Act of the Legislature of the State of California, entitled An Act to authorize George H. Ensign and other owners of the Spring Valley Water Works to lay down water pipes in the City and County of San Francisco,’ passed April 23, 1858, and by virtue of an Act of the Legislature aforesaid, entitled An Act for the incorporation of water companies,’ passed April 22, 1858, and in conformity with such other laws, or parts of laws, relating to the formation of corporations, as are now in force in said State of California.” The certificate' of incorporation further recites that “ the object for which said company is formed, is the introduction of pure, fresh water into the. City and County of San Francisco, and into any part thereof, from any point or points, place or places, for the purpose of supplying the inhabitants of said city and county with the same, and to do and transact all such business relating thereto as may be necessary and proper; not, however, to be inconsistent with the laws and Constitution of the State of California.”
It is not necessary to make further mention of the Ensign Act, for the reason that it was void, as was held in San Francisco v. S. V. W. W., 48 Cal. 493.
The Act of April 22, 1858, although entitled “An Act for the incorporation of water companies,” in reality contained within itself no provisions for the incorporation of any company. Its first section provided that the provisions of the Act of April 14, 1853, for the formation of corporations for certain purposes, and the provisions of the amendatory Act of April 30, 1855, “ shall extend to all corporations already formed, or hereafter to be formed, under said acts (that is the Acts of 1853 and 1855), for the purpose of supplying any city and county, or any cities or towns in this State, or the *12inhabitants thereof, with pure, fresh water.” The remaining sections of the Act of April 22, 1858, except the last, relate to certain rights and privileges conferred, and to certain obligations imposed on any company incorporated for the purposes specified in the first section; and the last section of the Act is in these words: “Any incorporation heretofore formed for the purposes specified in this Act, shall have the right to reincorporate under the provisions of this Act, without losing, forfeiting, or diminishing any of the rights, privileges, franchises, or immunities which they have heretofore lawfully acquired.”
While the section of the Act of April 22, 1858, just quoted, as well as its title, indicates that it was supposed by the Legislature that provisions were therein made for incorporations under it, it will appear from the Act itself, the substance of which I have already stated, that there are no such provisions. Nevertheless this Act must be read in connection with those to which it refers, namely, that of April 14, 1853, and the amendatory Act of April 30, 1855, and as a part of the law for the formation of water companies; and while the Spring Valley Water Works had to look to the Act of 1853 for the machinery by which to incorporate, it was subject to the burdens imposed, and entitled to the rights and privileges granted by the Act of April 22, 1858.
Through and by means of that Act the Legislature of the State said to all of its people, that all corporations formed under its laws for the purpose of supplying any city and county, or any cities or towns in the State, or the inhabitants thereof, with pure, fresh water, should be entitled to all of the rights and privileges, and be subject to all of the duties and obligations therein prescribed. Among those rights and privileges was given the power to acquire by condemnation property necessary for the use of such corpora-rations, and the right, subject to the reasonable direction of the Board of Supervisors or city or town authorities, as to the mode and manner of exercising such right, to use so much of the streets, ways, and alloys in any town, city, or city and county, or on any public road therein, as should be necessary for laying pipes for conducting water, etc.
The fourth section, which is the one most material to be *13considered in this case, provided: “All corporations formed under the provisions of this Act, or claiming any of the privileges of the same, shall furnish pure, fresh water to the inhabitants of such city and county, or city and town, for family uses so long as the supply permits, at reasonable rates and without distinction of persons, upon proper demand therefor, and shall furnish water to the extent of their means, to such city and county, or city or town, in case of fire or other great necessity, free of charge. And the rates to be charged for water shall be determined by a Board of Commissioners, to be selected as follows: Two by such city and county or city or town authorities, and two by the Water Company; and in case that four can not agree to the valuation, then, in that case, the four shall choose a fifth person, and he shall become a member of said Board; if the four Commissioners can not agree upon a fifth, then the Sheriff of the county shall appoint such fifth person. The decision of a majority of said Board shall determine the rates to be charged for water for one year, and until new rates shall be established. The Board of Supervisors, or the proper city or town authorities, may prescribe such other proper rules relating to the delivery of water not inconsistent with this Act and the laws and Constitution of this State.”
By incorporating and availing itself of the privileges of this Act, the Spring Valley Water Company became bound, among other things, to furnish water, to the extent of its means, to the City and County of San Francisco, in case of fire or other great necessity, free of charge, and it has already been determined by this Court that the words “other great necessity” include all water necessary for sprinkling streets, watering public squares and parks, for flushing sewers, and for all like purposes beneficial to the public. But why was the company bound to. furnish its water for such purposes free of charge? Simply because by accepting the offer held out by the Act of 1858, and incorporating and availing itself of its privileges, it agreed—contracted—to do so, and was bound by the terms of the contract. By the exercise of no governmental power of which I am aware could the Spring Valley Water Works be compelled to furnish the City and County of San Francisco with water, free of charge, for any purpose. That obligation *14could, and did, only arise out of the contract. But the col - tract did not end there; for by it the company also bound itself, and became entitled, to furnish pure, fresh water to such of the inhabitants of the city and county as should wish to take it, so long as the supply should permit, for family uses, at reasonable rates and without distinction of persons, upon proper demand therefor—the rates to be charged for water so furnished to be fixed, however, in the manner specified in the Act. This right was a part, and the principal part, of the consideration the company received for its agreement to furnish the city and county with water for the purposes mentioned, free of charge.
The manner of fixing the rates was as much a part of the agreement between the company and the State as was the agreement to furnish the public water for certain purposes free of charge. Both, as I understand it, rested upon contract, and upon contract alone—the one as much as the other, and both relating to property rights—to the terms upon which the company should sell and dispose of the water it owned.
But it is said that the manner of fixing the rates to be charged by the company for water furnished the inhabitants of the city and county, prescribed by the Act of 1858, has been changed by Section 1 of Article xiv., of the new Constitution, which is in these words:
“ The use of all water now appropriated, or that may be hereafter appropriated, for sale, rental, or distribution, is hereby declared to be a public, use, and subject to the control of the State, in the manner prescribed by law; provided, that the rates or compensation to be collected by any person, company or corporation in this State for the use of water supplied to any city apd county, or city or town, or the inhabitants thereof, shall be fixed annually by the Board of Supervisors, or City and County, or City or Town Council, or other governing body of such city and county, or city or town, by ordinance or otherwise, in the manner that other ordinances or legislative acts or resolutions are passed by such body, and shall continue in force for one year, and no longer. Such ordinances or resolutions shall be passed in the month of February of each year, and shall take effect on the first day of July thereafter. Any Board or body failing to *15pass the necessary ordinances or resolutions fixing water rates where necessary, within such time, shall be subject to peremptory process to compel action at the suit of any party interested, and shall be liable to such other processes and penalties as the Legislature may prescribe. Any person, company or corporation collecting water rates in any city and county or city or town in this State, or otherwise than as so established, shall forfeit the franchise and water works of such person, company, or corporation to the city and county, or city or town, where the same are collected for public use.”
If, as is said in the prevailing opinion, the provisions of this section of the new Constitution have struck null the provisions of the Act of 1858, relating to the fixing of the rates to be charged for water furnished the inhabitants of the city and county, I am unable to see why it has not also struck null those provisions of that Act requiring the company to furnish the city and county with water, for the purposes therein mentioned, free of charge. The one is as much a part of the contract between the State and the company as the other. If there was a contract between the State and the company at all (and I understood the prevailing opinion to proceed upon the theory that there was), I know of no ground for saying that the clause relating to the fixing of rates to be charged for the water furnished by the company to the inhabitants of the city and county was not a part of that contract. In my opinion it was a most material part of it, prpviding as it did for fixing the amount of money the company should receive for its water.
If the above cited provision of the new Constitution affects this contract at all, I see no escape from the conclusion that the Spring Valley Company is thereby relieved from the necessity of furnishing the city and county with any water, for any purpose, free of charge; because if the contract relating to the furnishing of water .by the company is vitiated in part, it is vitiated altogether, and because the Constitution declares, “ that the rates or compensation to be collected by any person, company, or corporation in this State for the use of water supplied to any city and county, or city or town, or to the inhabitants thereof, shall be fixed, annually, by the Board of *16Supervisors, or city and county, or city and town council, or other governing body of such city and county, or city or town, by ordinance or otherwise, in the manner that other ordinances, or legislative acts, or resolutions are passed by such body, and shall continue in force for one year and no longer.” There is in this provision no exception of any character, but its language is general and sweeping. In my opinion, however, this provision of the Constitution does not in any way affect the contract by which the Spring Valley Water Works bound itself to furnish the City and County of San Francisco with water for certain purposes, free of charge, and by which it became entitled to have the rates to be charged for water furnished the inhabitants- of the city and county fixed as prescribed in the Act of 1858, for the reason that it is one of those relating to property rights—to the amount the company should be paid for the property it owned—and therefore comes within the protection of that clause of the Constitution of the United States that prohibits States from passing laws impairing the obligation of contracts. The ground upon which it is sought to make the provisions of the present Constitution apply to, and consequently control, the provisions of the Act of 1858 in the particular mentioned, is, that at the time that Act was adopted, and at the time the Spring Valley Water Works incorporated, there was a provision in the then existing Constitution providing that: “Corporations may be formed under general laws, but shall not he created by special act, except for municipal purposes. All general laws and special acts passed pursuant to this section may be altered from time to time, or repealed,” and that by reason of the power thus reserved to the State, it was competent for the law-making power to alter, amend, or repeal the provision in question here.
No one, I presume, will dispute the general proposition, that the charter of a corporation is subject to the reserved power in the State to alter, or amend, or repeal at any time any of its provisions, subject to the limitation, however, that such alteration or amendment must be reasonable, and consistent with the scope and object of the Act of incorporation (Shields v. Ohio, 95 U. S. 325; Sinking Fund Cases, 99 U. S., 720), nor the proposition that any one Legislature can not irrev*17ocably bargain away any of its governmental powers, such, for example, as the right1 of eminent domain provided for in the second section of the Act of 1858. On the other hand, it is just as clear that the Legislature may contract with a private corporation concerning the property of such corporation, and that such a contract may be contained in the charter of the corporation, and when made becomes a vested right and beyond the reach of subsequent legislation. (Stone v. Mississippi, 101 U. S. 817, 820; Cooley’s Const. Lim., 4th ed., p. 347; Commonwealth v. Essex Co., 13 Gray, 253; Sage v. Dillard, 15 B. Mon. (Ky.) 349.) Of this latter character, in my opinion, was the contract before us in the present case. Therefore, in my view, it becomes unnecessary to inquire whether a charge in the provision of the Act of 1850, securing to the water company reasonable rates for water furnished the inhabitants of the city and county, to be fixed by a commission, in the appointment of which the company should have a voice, to" such rates as the “Board of Supervisors, * # * or other governing body of such city and county,” • should fix (without limitation or qualification), and coupled with the condition, that if the company should collect any water rates otherwise than as so established, it should forfeit its franchise and water works—its reservoirs, and pipes, and water—to the city and county, for the use of the public, would be a reasonable amendment to the law, and so permissible under the reserved power of the State. It seems to me it would be stretching the reserved power almost, if not quite, beyond limit, if this can be done. However, it is not necessary, in my view of the case, to express any opinion upon that question. For the reasons already stated, I am constrained to dissent from the judgment of my associates.
I think the petitioner entitled to the writ prayed for, anthat it ought to be granted.