Walla Walla City v. Walla Walla Water Co.
172 U.S. 1 (1898)

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U.S. Supreme Court

Walla Walla City v. Walla Walla Water Co., 172 U.S. 1 (1898)

Walla Walla City v. Walla Walla Water Company

No. 28

Argued October 12-13, 1898

Decided November 14, 1898

172 U.S. 1

Syllabus

By an Act of November 28, 1883, the Legislature of Washington Territory incorporated the City of Walla Walla, conferring upon it, among other powers, the power to provide a sufficient supply of water for the city, and the right to permit the use of the city streets for the purpose of laying pipes for furnishing such supply for a term not exceeding twenty-five years. The act contained a further provision fixing the limit of indebtedness of the city at fifty thousand dollars. The city, under this authority, by contract granted to the Walla Walla Water Company the right to lay and maintain water mains, etc., for twenty-five years, reserving to itself the right to maintain fire hydrants and to flush sewers during this term, each without charge. The contract further provided that it was voidable by the city, so far as it required the payment of money, upon the judgment of a court of competent jurisdiction whenever there should be a substantial failure of such supply, or a like failure on the part of the company to perform its agreements, and that, until the contract should have been so avoided, the city should not erect, or maintain, or become interested in other water works. These provisions were accepted by the Water Company, and were complied with by it, and the contract was in force when this bill was filed. In 1893, the city authorities

Page 172 U. S. 2

passed an ordinance to provide for the construction of a system of water works to supply the city with water, and to issue bonds for that purpose to the amount of one hundred and sixty thousand dollars, which ordinance was accepted by the necessary majority of legal voters. The Water Company then filed its bill to enjoin the city from creating the proposed water works or from expending city moneys for that purpose, or from issuing city securities therefor. To this bill, the city demurred, resting its demurrer upon a want of jurisdiction, all parties on both sides being citizens of the Washington.

Held:

(1) That the allegations in the bill raise a question of the constitutional power of the city to impair the obligations of its contract with the plaintiffs by adopting the ordinance.

(2) That the grant of a right to supply water to a municipality and its inhabitants through pipes and mains laid in the streets of a city, upon condition of the performance of its service by the grantee, is the grant of a franchise vested in the state (which may be made by municipal authorities when the right to do so is given by their charters) in consideration of the performance of a public service, and, after performance by the grantee, is a contract, protected by the Constitution of the United States against state legislation to impair it.

(3) That the plaintiff has no adequate and complete remedy at law, and the Court has jurisdiction in equity.

(4) That, as the contract was limited to twenty-five years, and as no attempt was made to grant an exclusive privilege, the city acted within the strictest limitation of its charter.

(6) That if the contract for the water supply was innocuous in itself, and was carried out with due regard to the good order of the city and the health of its inhabitants, the aid of the police power could not be invoked to abrogate or impair it.

(6) That the stipulation that the city would not erect water works of its own during the life of the contract did not render it objectionable.

(7) That the objection that the indebtedness created by the contract exceeded the amount authorized by the charter was without merit under the circumstances.

(8) That the act of 1883, being subsequent to the general statute of 1881, authorizing cities to provide for a supply of water, was not

in violation of that act.

(9) That the city was bound to procure the nullity of the contract before the courts before it could treat it as void.

This was a bill in equity filed by the Water Company to enjoin the City of Walla Walla and its officers from erecting water works in pursuance of an ordinance of the city to that effect, or from acquiring any property for the purpose of carrying out such enterprise, or from expending the moneys

Page 172 U. S. 3

of the city or selling its bonds or other securities for the purpose of enabling the city to erect such water works.

The facts are substantially as follows: by an Act of the Territory of Washington, November 28, 1883 (Laws of 1883, 270), incorporating the City of Walla Walla, it was enacted (section 11) that the city should have "power . . . to provide . . . a sufficient supply of water," and by section 10,

"to grant the right to use the streets of said city for the purpose of laying gas and other pipes intended to furnish the inhabitants of said city with light or water, to any persons or association of persons for a term not exceeding twenty-five years, . . . provided always that none of the rights or privileges herein granted shall be exclusive, nor prevent the council from granting the same rights to others."

Other sections are as follows:

"SEC. 11. The City of Walla Walla shall have power to erect and maintain water works within or without the city limits, or to authorize the erection of the same, for the purpose of furnishing the city or the inhabitants thereof with a sufficient supply of water, . . . and to enact all ordinances and regulations necessary to carry the power herein conferred into effect; but no water works shall be erected by the city until a majority of the voters, who shall be those only who are freeholders in the city, or pay a property tax therein, on not less than five hundred dollars' worth of property, shall at a general or special election vote for the same."

"SEC. 12. Said city is hereby authorized and empowered to condemn and appropriate so much private property as shall be necessary for the construction and operation of such water works, and shall have power to purchase or condemn water works already erected or which may be erected, and may mortgage or hypothecate the same to secure to the persons from whom the same may be purchased the payment of the purchase price thereof."

"* * * *"

"SEC. 22. The City of Walla Walla shall have power to adopt proper ordinances for the government of the city, and to carry into effect the powers given by this act. "

Page 172 U. S. 4

"* * * *"

"SEC. 23. The City of Walla Walla shall have power to establish and regulate the fees and compensation of all its officers, except when otherwise provided, and have such other power and privileges not here specifically enumerated as are incident to municipal corporations."

"* * * *"

"SEC. 24. The power and authority hereby given to the City of Walla Walla by this act shall be vested in a mayor and council, together with such other officers as are in this act mentioned, or may be created under its authority."

"* * * *"

"SEC. 43. The city council shall possess all the legislative power granted by this act."

"* * * *"

"SEC. 103. The rights, powers and duties and liabilities of the City of Walla Walla and of its several officers shall be those prescribed in this act, and none others, and this is hereby declared a public act."

"* * * *"

"SEC. 105. The limit of indebtedness of the City of Walla Walla is hereby fixed at fifty thousand dollars."

Pursuant to these sections of the charter, the city council, on March 15, 1887, passed "An ordinance to secure a supply of water for the City of Walla Walla," by which it granted, under certain restrictions, to the water company, for the period of twenty-five years from the date of the ordinance,

"the right to lay, place and maintain all necessary water mains, pipes, connections and fitting in all the highways, streets and alleys of said city, for the purpose of furnishing the inhabitants thereof with water."

By section 4, the city reserved the right to erect and maintain as many fire hydrants as it should see fit, and, in case of fire, that the city should have all reasonable and necessary control of the water for the extinguishment thereof.

The ordinance also contained the following further provisions:

"SEC. 5. The City of Walla Walla shall pay to said Walla

Page 172 U. S. 5

Walla Water Company for the matters and things above enumerated, quarter-yearly, on the first days of July, October, January and April of each year at the rate of fifteen hundred dollars ($1,500) per annum, for the period of twenty-five (25) years from and after the date of the passage of this ordinance, the first quarterly payment to be made on the first day of October next (October 1, 1887)."

"SEC. 6. The City of Walla Walla shall during said period, without expense for water, be allowed to flush any sewer or sewers it may hereafter construct at such time during the day or night as the water company may determine, and under the direction and supervision of such officers as the city may from time to time designate, not oftener than once each week."

"SEC. 7. For all the purposes above enumerated, said Walla Walla Water Company shall furnish an ample supply of water, and for domestic purposes, including sprinkling lawns, shall furnish an ample supply of good wholesome water at reasonable rates, to consumers at all times during the said period of twenty-five (25) years, and this contract shall be voidable by the City of Walla Walla, so far as it requires the payment of money, upon the judgment of a court of competent jurisdiction, whenever there shall be a substantial failure of such supply, or a substantial failure on the part of said company to keep or perform any agreement or contract on its part, herein specified or in said contract contained. But accident or reasonable delay shall not be deemed such failure. And until such contract shall have been so avoided, the City of Walla Walla shall not erect, maintain or become interested in any water works except the ones herein referred to, save as hereinafter specified."

"SEC. 8. Neither the existence of said contract nor the passage of this ordinance shall be construed to be or be a waiver of or relinquishment of any right of the city to take, condemn, and pay for the water rights and works of said or any company at any time, and in case of such condemnation, the existence of this contract shall not be taken into consideration in estimating or determining the value of the said water works of the said Walla Walla Water Company. "

Page 172 U. S. 6

The water company accepted this ordinance, entered into a formal contract with the city, and substantially complied with the terms and conditions of such contract, which has never been avoided by the city or by the courts, and was still in force at the time the bill was filed.

After this contract had been in force and the stipulated rentals paid for about six years, on June 20, 1893, an ordinance was passed "to provide for the construction of a system of water works" for the purpose of supplying the city and its inhabitants with water; to authorize the purchase and condemnation of land for that purpose, and the issue of bonds to the amount of $160,000 to provide the necessary funds. Pursuant to the provisions of such ordinance, an election was held whereby the proposition submitted by the ordinance was carried by a sufficient majority of the legal voters.

The answer of the defendants insisted that the contract of the city with the plaintiff was not a valid and binding contract so far as concerned the stipulation binding the city not to erect or maintain, or become interested in, any system of water works other than that of the plaintiff.

A demurrer to the bill having been overruled, and a preliminary injunction having been granted pursuant to the prayer of the bill, the case subsequently went to a hearing upon the pleadings and proofs, and resulted in a decree perpetuating the injunction. From this decree defendants appealed directly to this Court, pursuant to section 5 of the Circuit Court of Appeals Act, allowing such appeal in any case that involves the construction or application of the Constitution of the United States.

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