Court Opinion

ID: 6968471
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:58:06.255834+00
Date Added: 2024-06-11T16:08:42.197519
License: Public Domain

Mr. Justice Magruder delivered the opinion of the court: First—The first question presented is this: Was ordinance No. 517, passed on January 17, 1895, a valid enactment? If this question be answered in the affirmative, then the first and second special pleas of the city presented a defense as to all of the cause of action of the water company except $1930.00; and it was error to sustain a demurrer to such pleas. To determine the question whether the ordinance of January 17, 1895, was a valid ordinance or not, it is necessary to determine whether or not the act of June 6, 1891, referred to in the statement preceding" this opinion, and under and in pursuance of which said ordinance was passed, was a valid and constitutional law, so far as it applied to city ordinances passed before its enactment, which fixed particular rates or charg'es for water supplies. The ordinance of November 9,1882, provided that the defendant in error should have the right to charge $75.00 each per annum for one hundred fire hydrants for the term of thirty years, and $62.50 each per annum for the next forty hydrants, and for all hydrants thereafter furnished in excess of one hundred and forty the rate should be $50.00 each per annum. The ordinance of January 17, 1895, provided that the rates fixed by the ordinance of November 9, 1882, were unreasonable and excessive, and should be reduced to $50.00 each per annum for the first one hundred and forty hydrants and $40.00 each per annum for all others. It is claimed by the defendant in error, that the ordinance of November 9, 1882, fixing the larger rates or charges for a period of thirty years, vas a contract between the city of Danville and the defendant in error; and that the ordinance of January 17, 1895, which provided for the reduction of these charges, was a violation of the contract, and, therefore, was invalid. The city justifies its act in passing the ordinance of January 17, 1895, by reference to the act of the legislature, approved June 6, 1891, which has already been referred to. That act consists of one section and provides as follows: “That the corporate authorities of any city * * * now or hereafter incorporated under any general or special law of this State, in which any individual, company or corporation has been, or hereafter may be authorized by such city * * to supply water to such city * * * and the inhabitants thereof, be and are hereby empowered to prescribe by ordinance maximum rates and charges for the supply of water furnished by such individual, company or corporation to such city * * * and the inhabitants thereof, such rates and charges to be just and reasonable. And in case the corporate authorities of any such city * * * shall fix unjust and unreasonable rates and charges, the same may be reviewed and determined by the circuit court of the county in which such city * * * may be.” It is contended by the water company, that the act of June 6, 1891, in so far as it applies to the ordinance of November 9, 1882, is an invalid and unconstitutional law. Did the city of Danville, by the passage of the ordinance of November 9,1882, and its acceptance by defendant in error, so bind itself to pay the annual charges for water supply as therein fixed for thirty years, that the legislature was thereafter without power to pass such an act as that of June 6, 1891? In order to answer this question, it will be necessary to examine the provisions of the charter of the water company, and the provisions of the statutes authorizing cities in the State to contract with reference to water-works and water supplies. The Danville Water Company was organized under the general Incorporation act of this State, approved April 18, 1872, in force July 1, 1872. The charter of a corporation, formed under the general Incorporation act, does not consist of its articles of association alone, but of such articles taken in connection with the law under which the organization takes place. The provisions of the law enter into and form a part of the charter. (People ex rel. v. Chicago Gas Trust Co. 130 Ill. 268). Therefore, the provisions of the general Incorporation act must be regarded as entering into, and forming a part of, the charter of the defendant in error. Section 9 of the general Incorporation act provides that: “The General Assembly shall at all times have power to prescribe such regulations and provisions as it may deem advisable, which regulations and provisions 'shall be binding on any and all corporations formed under the provisions of this act.” (1 Starr & Curt. Ann. Stat.—2d ed.—p. 1006). By organizing under the general Incorporation act, the defendant in error agreed to submit itself to and to be bound by such regulations and provisions as the legislature should deem it advisable to make. The object of its creation was to furnish water to the city of Dan-ville and the inhabitants thereof. The right of the legislature to regulate and provide for the rates, at which such water should be supplied, was a right reserved by section 9. The language of section 9 is different from, and broader in its scope than, the language contained in many charters, which reserve to the State the power to repeal, alter, amend or modify the charter itself. We apprehend, therefore, that the decisions, restricting the power of the State as to charters which are given subject to the right of the State to repeal, alter, amend or modify them, do not apply to such broad language as is used in section 9. By the terms of section 9 it is something- more than the mere right to change the charter of the corporation, which is reserved to the legislature. The authority is thereby reserved to provide the regulations and provisions, under which the corporation may proceed in the transaction of its business. We have held, that the legislature may impose duties on corporations the same as on individuals in the absence of special enactments. We have also held, that the constitution of 1848 by implication reserved to the legislature the right to change or increase the liability of a shareholder in a corporation. (Illinois Central Railroad Co. v. City of Bloomington, 76 Ill. 447; Weidenger v. Spruance, 101 id. 278; Diversey v. Smith, 103 id. 378; Arena v. Weir, 89 id. 25; Butler v. Walker, 80 id. 345). It is not claimed, that the defendant in error was given the privilege, by the terms of its charter, of charging any particular fixed rate for the supply of water to the city of Danville and its inhabitants. Consequently, there is nothing in the terms of the charter itself, which conflicts with the power of the legislature to regulate the rates of such charges, provided such rates should be reasonable and fair. The contention, however, is made that the ordinance of November 9,1882, was a contract between the city and the water company, and that the water company, having proceeded to construct its water-works and supply water to the city in accordance with the terms of that contract, the legislature had no power, even under section 9, to change the rates already fixed. The force of this contention must depend upon the question, whether or not the city itself bad the power, under the statutes of the State, to make a contract to pay for water at a fixed and unalterable rate for the term of thirty years. It is well settled, that municipal bodies can only exercise such powers as are conferred upon them by their charters, and all persons dealing" with them must see that the body has power to perform the proposed act. (Law v. People, 87 Ill. 385). Beach, in his work on Public Corporations, (sec. 554,) speaking with reference to a contract between a water company and a city for the furnishing of water by the former to the latter, says: “The city could bind itself by such contracts only as it was authorized by statute to make. It has no power to grant exclusive privileges to put mains, pipes and hydrants in its streets, nor can it lawfully, by contract, deny to itself the right to exercise the legislative powers vested in its council.” In Syracuse Water Co. v. City of Syracuse, 116 N.Y. 167, it is said: “The municipal corporation, as such, could bind itself by such contract only as it was authorized by statute to make. It could not grant exclusive privileges especially to put mains, pipes and hydrants in its streets, nor could it lawfully by contract deny to itself the right to exercise the legislative powers vested in its common council. * * * In dealing with municipal corporations, parties are chargeable with knowledge of their powers, as they are furnished only by statute.” By an act, approved April 9,1872, in force July 1,1872, entitled “An act to enable cities * * * to contract for a supply of water for public use and to levy and collect a tax to pay for water so supplied,” it was provided in sections 1 and 2 as follows: (1) “That in all cities * * * where water-works may hereafter be constructed by an incorporated company, the city * * * authorities in such cities * * * may contract with such incorporated company for a supply of water for public use for a period not exceeding thirty years.” (2) “Any such city * * * so contracting may levy and collect a tax on all taxable property within such city * * * to pay for the water so supplied.” (1 Starr & Cur. Stat. p. 545). This act of April 9,1872, conferred upon cities the power to contract with an incorporated company for a supply of water for public use for a period not exceeding'thirty years. No question is made by either party to this litigation as to the validity of this act, so far as it gave the right to contract for thirty years. Counsel for the city disclaim any intention of questioning the validity of a contract to supply water for thirty years. Therefore, we pass no opinion upon this question. The contention is, that the city had no power to make a contract to pay fixed and unalterable rates for thirty years, and not that the city did not have power to make a contract with the water company that the latter should supply water for thirty years. It is claimed, however, by the defendant in error, that, when the power to contract was given, the power to contract for the rate, at which the water should be furnished, was also given. The language of the statute does not necessarily imply the power to make a fixed rate. The authority “to contract for a supply of water for public use for a period not exceeding thirty years” does not necessarily imply, that the price of the supply should be fixed for the entire period. The supply could be made for the entire term, but the price is to be determined from time to time, and the rates to be settled by the rules of the common law. (City of Carlyle v. Carlyle Water, Light and Power Co. 52 Ill. App. 577). The business of furnishing -water to a city and its inhabitants by means of water-works, which require the use of the public streets of the city for the laying of water pipes, is a business public in its nature, and upon which a public interest is impressed. It is well settled that parties, who carry on a business which is public iu its nature, or which is impressed with a public interest, must serve all who apply on equal terms and at reasonable rates. (Wagner v. City of Rock Island, 146 Ill. 139; 29 Am. & Eng. Ency. of Law, p. 12; Munn v. People, 69 Ill. 80; Munn v. Illinois, 94 U. S. 113). A business, which is thus impressed with a public interest, is subject to legislative control to the extent that it may be compelled by legislative action to furnish the supply, which it is authorized to furnish, on equal terms and at reasonable rates. (Munn v. People, supra; City of Carlyle v. Carlyle Water, Light and Power Co. supra). “Water companies, when actually engaged in the performance of their corporate functions, are necessarily the beneficiaries of valuable privileges from the State and subserve a public purpose. They are to be classed as quasi public corporations, and are subject in their operation to the limitations and regulations, which the law imposes upon such bodies, in order that the public interest may not suffer.” (29 Am. & Eng. Ency. of Law, pp. 11-13). Where a business is impressed with a public interest, the legislature has the right to fix the maximum charges. (Budd v. New York, 143 U. S. 517; Chicago, Burlington and Quincy Railroad Co. v. Jones, 149 Ill. 361). In State ex rel. v. Gas Co. 34 Ohio St. 572, where a gas company was under a special charter empowered to manufacture and sell gas for the purpose of lighting the city of Columbus, and its grant was exclusive for a term of twenty years, but the charter contained no provision as to the price to be charged for gas, nor on the subject of meters, it was held, that the terms, upon which the corporation might be required to discharge its duties to the public, were subject to legislative supervision and control, unless it clearly appeared from the terms of its charter that it was the intention to exempt it from such interference; and the court there said: “The charter in the present instance grants to the defendant the exclusive right of supplying" the city and its inhabitants with gas for a term of twenty years. * * * It is unreasonable, therefore, to infer that it was the intention of the legislature to exempt the defendant from all public control in respect to the terms, upon which it should be required to discharge its duties to the public, unless such intention is found clearly expressed in the charter. The charter expresses no such intention.” In Munn v. Illinois, supra, it was held that: “Where tlie owner of property devotes it to a use in which the public have an interest, he in effect grants to the public an interest in such use, and must, to the extent of that interest, submit to be controlled by the public for the common good, as long as he maintains such use.” (See, also, Zanesville v. Gas Light Co. 47 Ohio St. 1), The act of April 9,1872, is silent as to the rates to be charged for the supplying of water, and as to the mode of fixing the rates. Where the charter of a gas or water company in a city does not expressly confer on the company the right to fix its own prices, such silence cannot be construed into a grant of the franchise to fix its own rates. (Zanesville v. Gas Light Co. supra). So, here, the silence of the act of April 9, 1872, as to the rates to be charged for the supply of water does not necessarily confer upon the municipality the power to fix one established rate for the whole period during which the contract is to run. If, however, it be doubtful whether the language of the act of April 9, 1872, does or does not confer the power upon cities to contract for a supply of water at a fixed rate for the whole period of thirty years, such doubt must be resolved in favor of the public. In Seeger v. Mueller, 133 Ill. 86, we said (p. 94): “Any ambiguity or doubt arising out of the terms used by the legislature in conferring their powers must be resolved in favor of the public. No estoppel can ordinarily arise from the act of a municipal corporation or officer done in violation of or without authority of law. Every person is presumed to know the nature and extent of the powers of municipal officers, and, therefore, cannot be deemed to have been deceived or misled by acts done without legal authority.” (29 Am. & Eng. Ency. of Law, p. 13; 1 Dillon on Mun. Corp. sec. 91, note). But, even if it be admitted that the language of the act of April 9, 1872, is doubtful in the. respect thus indicated, this doubt ceases to exist, when that act is construed in connection with the act of the legislature upon the same subject, passed on the next day, to-wit: April 10,1872. In section 1 of article 10 of the City and Village act, approved April 10, 1872, in force July 1, 1872, it is provided as follows: “The city council * * * shall have the power to provide for a supply of water * * * by the construction and regulation of * * waterworks, and to borrow money therefor, and to authorize any person or private corporation to construct and maintain the same at such rates as may be fixed by ordinance, and for a period not exceeding thirty years.” (1 Starr & Curtis’ Stat. p. 508). The acts of April 9, 1872, and the City and Village act of April 10, 1872, both passed at the same session of the legislature, and relating to the same matter, so far as section 1 of article 10 above quoted is concerned, are in pari materia and should be construed together. (South Park Comrs. v. First Nat. Bank of Chicago, 177 Ill. 234). Said section 1 authorizes the city council to empower a private corporation to construct and maintain water-works at such rates as may be fixed by ordinance. The meaning of this language is, not that the water-works are to be maintained at such established rate as may. be fixed by one ordinance for a period not exceeding thirty years. The clause, “for a period not exceeding thirty years,” qualifies the words, “construct and maintain the same,” but does not qualify the words, “at such rates as may be fixed by ordinance.” In other words, the city council may authorize a private corporation to construct and maintain water-works for a period not exceeding thirty years, and they may authorize a private corporation to construct and maintain the water-works at such rates as may from time to time be fixed by ordinance. The evident meaning of section 1 is, that there was to be reserved to the city council the power to fix the rates by ordinance at such figures as should be fair and reasonable. If the rates were to be fixed by ordinance, they could only be fixed by such ordinance, as was legal and whose passag'e was within the power of the council. A legislative body cannot part with its powers by any proceeding, so as not to be able to continue the exercise of such powers. It has no authority even by contract to control and embarrass its legislative powers and duties. (Greenhood on Public Policy, p. 317; Cooley’s Const. Lim. p. 206; 15 Am. & Eng. Ency. of Law, p. 1045; 1 Dillon on Mun. Corp. sec. 443). What might be proper for a city this year might not be proper the next year. It is impossible to determine with absolute or even tolerable certainty what changes a few years might work in the character and reasonableness of rates to be charged for water supply. No contract is reasonable, by which the governing authority abdicates any of its legislative powers, and precludes itself from meeting, in a proper way, emergencies or occasions that may arise. “These powers are conferred in order to be exercised again and again, as may be found needful or politic, and those who hold them in trust to-day are vested with no discretion to circumscribe their limits or diminish their efficiency, but must transmit them unimpaired to their successors. This is one of the fundamental maxims of governments; and it is impossible that free government with restrictions for the protection of individual or municipal rights could long exist without its recognition.” (Gale v. Kalamazoo, 23 Mich. 354; Millikin v. County of Edgar, 142 Ill. 528). The acts of April 9 and April 10, 1872, above referred to, cannot be construed as authorizing the city of Dan-ville to make a contract to pay a fixed rate for a supply of water to the city for a period of thirty years without violating the principle, that a legislative body, like a common council, whose members are elected for only two years, cannot restrict and curtail the legislative powers of succeeding common councils, and without violating the further principle, that the legislature has the right to regulate and control the rates of charges made by a corporation, whose business is impressed with a public use. In City of East St. Louis v. East St. Louis Gas Light and Coke Co. 98 Ill. 415, a doubt was expressed as to whether such a contract, as the defendant in error here seeks to sustain, was not invalid as unnecessarily tying up the hands of the city council for too great a length of time. In DesMoines v. Water-Works Co. 95 Iowa, 357, where an ordinance in relation to the furnishing of water to the city by a private corporation was under consideration, it was intimated that a contract with the city for rates to be charged for water according to one unalterable standard for forty years would be invalid. The price to be paid for water should be left to be determined from time to time, inasmuch as the growth of the city will enable the company to furnish water at much less cost than when the water-works were first established. . In Spring Valley Water-Works v. Schottler, 110 U. S. 347, it appeared that a general law was enacted by the legislature of California for the formation of corporations for supplying cities, counties and towns with water, which provided that the rates to be charged for water should be fixed by a board of commissioners to be appointed, in part by the corporations, and in part by the municipal authorities; and that the constitution and laws of the State were subsequently changed, so as to take away from corporations, which had been organized and put into operation under the old constitution and laws, the power to name members of the boards of commissioners, and so as to place in municipal authorities the sole power of fixing rates for water; and it was there held, that these chang'es violated no provision of the Federal constitution, objection having been made, not to any improper prices fixed by the officers, but to their power to fix prices at all, the court saying: “That it is within the power of the government to regulate the prices at which water should be sold by one who enjoys a virtual monopoly of the sale, we do not doubt.” In view of the considerations thus presented, we are of the opinion that the act of June 6, 1891, was not an invalid and unconstitutional law, and that the legislature had the right to confer the power to fix maximum rates upon cities, in which private corporations had already been authorized to supply water, as well as cities which were to be so authorized after the passage of the act. It follows, that the ordinance of January 17, 1895, was a valid ordinance. It is to be remembered, that the amount, which the company seeks to recover in this suit, is for water furnished after the ordinance of January 17, 1895, was passed, and after the company received the notice provided for in that ordinance. Second—As to the point, that the demurrer should have been carried back to the declaration, we think that the motion to carry the demurrer back was properly overruled by the court below. We do not deem it necessary to discuss the question, whether the contract here under consideration amounted to an indebtedness or not; nor, whether the declaration should have averred, that provision was made for the collection of a direct annual tax to meet that indebtedness, as it fell due. We pass no opinion upon these questions. The city in its pleas admitted, that it owed $1930.00 of the $2620.62, claimed by the water company. The defense set up in these pleas is a defense, made only to the excess of the amount claimed over the sum of $1930.00. But the whole amount claimed was one indebtedness. If the declaration was defective in not averring that there had been, before or at the time of making the contract, a provision for the collection of a direct annual tax, it was defective in not making such averment as to the $1930.00 as well as to the rest of the amount claimed. The defendant is es-topped by its pleas from denying the validity of the indebtedness to the extent of $1930.00. It could not admit an indebtedness to that amount, and in the same breath insist upon an objection to the declaration, which attacked the validity of the indebtedness so admitted. For this reason, we do not regard it necessary to consider the points raised with reference to the action of the court in overruling the motion to carry the demurrer back to the declaration. What has already been said sustains the objection of the city to so much of the indebtedness, as it complains of. It is, therefore, unnecessary to consider the other points made. We are of the opinion, that the court below erred in sustaining the demurrers to the first and second special pleas of the city, the plaintiff in error here, and in rendering judgment for the whole amount claimed against the city. Accordingly, the judgment of the circuit court is reversed, and the cause is remanded to that court for further proceedings in accordance with the views herein expressed. Reversed and remanded.