So far as the contentions in this case are the same as those
passed upon in
Freeport Water Co. v. Freeport City, ante,
180 U. S. 587, and
in
Danville Water Company v. Danville City, ante,
180 U. S. 619,
they are governed by those cases.
A governmental function in a statute granting powers to a
municipal corporation cannot be held to have been granted away by
statutory provisions which are doubtful or ambiguous.
There is no complaint in this case that the rates fixed by the
ordinance of 1897, passed by the City Council of Chicago, were
unreasonable, and as
the plaintiff in error relies strictly on a contractual right,
and as it has
no such right, the judgment below is affirmed.
This is a petition for a writ of mandamus which was brought by
the defendant in error on the 13th of December, 1897, in the
Circuit Court of Cook County, State of Illinois, against the
plaintiff in error, to compel it to furnish him water at rates
fixed by an ordinance enacted by the City of Chicago.
The defense is that such ordinance impairs the obligation of the
contract which plaintiff in error claims to have with the village
of Rogers Park before its annexation to the City of Chicago, as
hereinafter mentioned.
The Village of Rogers Park was from November 12, 1888, and until
April 4, 1893, a municipal corporation organized under
Page 180 U. S. 625
the laws of Illinois. At the latter date, it was annexed to the
City of Chicago.
The Rogers Park Water Company, plaintiff in error, was a
corporation, incorporated about the 24th of January, 1889, under
the laws of Illinois, to construct and operate a system of
waterworks in the village of Rogers Park, and to acquire such
property and exercise the powers necessary thereto.
The company constructed and operated a system of waterworks in
said village, and the premises of the defendant in error were
connected thereto and supplied with water therefrom. The rates for
such water under the ordinance of the City of Chicago were $8.72,
payable in advance, for the current half-year from November 1,
1897, to May 1, 1898. Those rates were tendered to the company, and
a supply of water demanded of it. The company refused to comply,
demanding $13.50 for such supply, claiming that sum under section
12 of an ordinance of the Village of Rogers Park before its
annexation to Chicago, and which ordinance empowered the
construction of the waterworks system.
The contract which plaintiff in error claims is based on that
ordinance. It was passed November 12, 1888, and was entitled
"An Ordinance to Provide for a Supply of Water to the Village of
Rogers Park, Illinois, and Its Inhabitants, Contracting with H. E.
Keeler, his Successors and Assigns, for a Supply of Water for
Public Use, and Giving the Said Village of Rogers Park, Illinois,
an Option to Purchase the Said Works."
It was provided that, in consideration of the public benefit to
be derived therefrom, the Village of Rogers Park, Illinois, granted
the exclusive right and privilege, for a period of thirty years
from the time the ordinance should take effect,
"unto H. E. Keeler, his successor and assigns, of erecting,
maintaining, and operating a system of waterworks in accordance
with the terms and provisions"
of the ordinance. There was a grant of the use of the streets
and alleys for mains and conduits, and power given to extend the
system to new territory, if any should be acquired by the village.
There were provisions prescribing the character of the system to be
constructed, and that the village should pay
"an annual rental for fire protection, for
Page 180 U. S. 626
less than five miles of mains within the corporate limits of
said village, for the aforesaid period of thirty years at the
rental rate of five hundred and seventy-five ($575) dollars for
each mile of main, to be payable semiannually."
There were also provisions for payment of taxes by the company,
the flushing of sewers, and the maintenance of fountains for the
supply of water to the inhabitants, the quality of water, and the
manner of the supply before prescribed, and for the acceptance in
writing by the company of the terms of the ordinance. Provision was
also made for the purchase of the system by the village.
Section 12 was as follows:
"The said grantee or assigns shall charge the following annual
water rates to consumers of water during the existence of this
franchise, and they shall have the right at any time to insert a
water meter into the service pipe of any consumer, and to charge
and collect from him at meter rates, provided that in such case the
minimum annual rate paid by any one consumer shall be five
dollars."
Then follow the rates for the particular purpose for which the
water might be used.
Section 13 provided for the levy of a tax to meet the payments
stipulated by the ordinance, which should be irrepealable.
Section 14 was as follows:
"Within sixty days after the passage of this ordinance, said H.
E. Keeler, his successors and assigns, shall file with the village
an acceptance of the same, which acceptance, duly acknowledged
before some officer duly authorized to administer oaths, shall have
the effect of a contract between the village and said H. E. Keeler,
his successors or assigns."
The plaintiff in error is the assignee of Keeler.
The plaintiff in error claimed in its answer that said ordinance
of the Village of Rogers Park constituted a contract with plaintiff
in error by which it had the right to charge the rates contained in
section 12, and that the ordinance of the City of Chicago reducing
their rates impaired such contract, and violated not only the
Constitution of the State of Illinois, but also
Page 180 U. S. 627
violated Section 10, Article I, of the Constitution of the
United States, as well as the Fourteenth Amendment.
One of the defenses of the plaintiff in error was that the
premises of defendant in error were connected with the system by
reason of his written application, which application was accepted
and became a contract. The defense, however, is not made in this
Court, and further reference to it is omitted.
There was a demurrer filed to the answer of the plaintiff in
error, which set up its defenses under the Constitution of the
United States. The demurrer was sustained. Certain issues of fact
were made on other pleadings, upon which there was a trial by jury,
resulting in a verdict for petitioner and judgment on the verdict.
The judgment was affirmed by the supreme court of the state, 178
Ill. 571, and this writ of error was sued out. The assignments of
error present constitutional questions only.
MR. JUSTICE McKENNA, after making the above statement, delivered
the opinion of the Court.
At the time of the passage of the ordinance of November, 1888,
by the Village of Rogers Park, counsel for plaintiff in error
says,
"two general acts were in force in Illinois, which related to
the power of municipalities to pass ordinances for waterworks to be
built and operated by private enterprise."
The first is as follows:
"An Act Entitled 'An Act to Enable Cities, Incorporated Towns
and Villages to Contract for a Supply of Water for Public Use, and
to Levy and Collect a Tax to Pay for the Water so Supplied.'
Approved April 9, 1872. In Force July 1, 1872. L. 1871-2, p. 271.
This title is as Amended by Act Approved June 26, 1885, in Force
July 1, 1885, p. 64."
"SEC. 1. Be it enacted by the People of the State of
Illinois,
Page 180 U. S. 628
represented in the General Assembly, That in all cities,
incorporated towns and villages where waterworks have been or may
hereafter be constructed by any person or incorporated company, the
city, town, or village authorities in such cities, incorporated
towns and villages may contract with such person or incorporated
company for a supply of water for public use for a period not
exceeding thirty years."
As amended by act approved June 30, 1885. In force July 1, 1885,
L. 1885, p. 64.
"SEC. 2. Any such city or village so contracting may levy and
collect a tax on all taxable property within such city or village
for the water so supplied."
The second, passed one day later and taking effect on the same
day as the first, was the Cities, Villages, and Towns Act. The
title to that act and the article and section bearing upon this
case are as follows:
"An Act Entitled
An Act to Provide for the Incorporation of
Cities and Villages.'" Approved April 10, 1872. In force July 1,
1872. Laws of 1871-1872, p. 218.
"Article X, Section 1. The city council or board of trustees
shall have the power to provide for a supply of water by the boring
and sinking of artesian wells, or by the construction and
regulation of wells, pumps, cisterns, reservoirs, or 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; also to prevent the unnecessary waste of water; to
prevent the pollution of the water, and injuries to such wells,
pumps, cisterns, reservoirs, or waterworks."
These acts are urged to establish the power in the Village of
Rogers Park to grant to the plaintiff in error the right to charge
and collect for thirty years the rates prescribed by the ordinance
of November, 1888. We have passed on a similar contention in
Freeport Water Co. v. Freeport and in
Danville Water
Co. v. Danville, and we need not repeat the reasoning.
Besides, it is disputable if the ordinance of 1888 justifies the
claim of plaintiff in error. The supreme court of the state held
that it did not. A strict construction must be exercised. The
contract claimed concerned governmental functions, and
Page 180 U. S. 629
such functions cannot be held to have been stipulated away by
doubtful or ambiguous provisions.
Section 1 of the ordinance recites
"that, in consideration of the public benefit to be derived
therefrom, the Village of Rogers Park, Illinois, hereby grants the
exclusive right and privilege, for a period of thirty years . . .
unto H. E. Keeler, his successor or assigns,"
of erecting and maintaining a system of waterworks. The use of
the streets was also granted for such purpose.
Section 3 recites, "in consideration of the public benefits and
the protection of property resulting from the construction of said
system of waterworks," the village agrees to pay a certain annual
rental proportional to the length of the mains.
The grantee, on his part, to pay "all municipal and village
taxes" (section 3), "in consideration of the rentals herein agreed
to be paid and in consideration of the rights and privileges
granted" (section 4), agreed to furnish the village and the
residents thereof an adequate supply of water. Failing to supply
water for a year in quantity or quality stipulated, the "franchise
and all their rights and privileges granted under this ordinance,
and the contract entered into, shall be null and void."
If the ordinance contained any other provisions, it could not be
claimed that the company's charges to consumers of the water
furnished them were free from regulation by the municipality if it
otherwise had power of regulation. These are other provisions, and
especial stress is laid upon them. Section 12 provides as
follows:
"The said grantee or assigns shall charge the following annual
water rates to consumers of water during the existence of this
franchise, and they shall have the right at any time to insert a
water meter into the service pipe of any consumer, and to charge
and collect from him at meter rates, provided that in such case the
minimum annual rate paid by any one consumer shall be five
dollars."
Then follows an enumeration of uses and the rates for such uses.
There is a schedule for meter rates, and also the following
provision:
"Rates for all other purposes that may be applied for, not
Page 180 U. S. 630
named in the foregoing schedule of maximum rates, will be fixed
by estimation or meter at the option of the grantee or
assigns."
This, it will be observed, is the language of command, not of
contract; of limitation on power, not a bargain giving power. The
right to charge the inhabitants of the village for the water
supplied to them resulted from the right to construct and maintain
the system. Section 12 was a regulation of the right. There is no
stipulation that it will be the only instance of regulation; that
the power to do so is bartered away, and that the conditions which
determined and justified it in 1888 would remain standing, and
continue to justify it through the changes of thirty years. It
would require clearer language to authorize us in so holding. The
predecessor of the plaintiff in error was given the monopoly of the
supply of water. That might be necessary to induce the investment
of capital, and for its security the obligation of a contract might
be sought and given. There was no such inducement for an
unalterable rate. A reasonable rate the law assured, and assured
even against governmental regulation. And the statute of 1891,
which is especially complained of, assures it. By section 1 of that
statute, municipalities are "empowered to prescribe by ordinance
maximum rates and charges," and if unreasonable rates and charges
be fixed they may be reviewed and determined by the circuit court
of the county in which the municipality may be. There is no
complaint in this case that the rates fixed by the ordinance of
1897, passed by the City Council of Chicago, were unreasonable.
Plaintiff in error relies strictly on a contractual right. We think
it has no such right, and the judgment of the Supreme Court is
Affirmed.
MR. JUSTICE WHITE, with whom concurs MR. JUSTICE BREWER, MR.
JUSTICE BROWN and MR. JUSTICE PECKHAM, dissenting:
This case, in my opinion, should be controlled by the same
principles which, it seemed to me, should have been applied in
Page 180 U. S. 631
the case of the
Freeport Water Company v. Freeport City,
ante, 180 U. S. 587,
just decided. The only difference of fact between that and the
present one is this: in the
Freeport case, the matter
involved was the power of the city to contract and to fix the rates
to be paid for a supply of water for public use during the
designated period. Here, the question is whether the City of Rogers
Park had power to contract for the construction and maintenance of
waterworks, and in such contract to fix the rates to be charged for
the water to be supplied to private consumers during the contract
period.
The authority under which the contract in question was made was
the two acts of the Legislature of the State of Illinois considered
in the
Freeport case -- that is to say, the Acts of April
9, 1872, and April 10, 1872. There is this difference, however: the
Act of April 9, 1872, was amended on June 26, 1885 (Public Laws of
Illinois, 1885, p. 64), so as to authorize contracts for a supply
of water as therein stated to be made with private individuals as
well as private corporations. Thus, authority existed to contract
with individuals under both acts. The ordinance passed by the City
of Rogers Park and the contract made, as fully recited in the
opinion of the Court, was for the erection, maintenance, and
operation of waterworks, the extension of the system as might be
required, the payment of an annual rental by the city for public
hydrants, and the establishment of the rates to be paid by private
consumers during the contract period.
The language of the legislative act conferring authority to fix
the rates, it seems to me, clearly sanctions the establishment by
contract of the rates for private use, as it did those to be paid
for the public supply. The fixing of rates is plainly generic, and
of necessity embraced those rates which were to be paid for the
supply of water which the statute authorized the city to contract
for. So far as the power of the legislature to authorize a contract
for designated rates for a stipulated time is concerned, I can see
no difference between fixing the rates for the public and those for
the private supply during the authorized time. This, in my
judgment, is conclusively settled by the authorities to which
reference was made in my dissent in the
Page 180 U. S. 632
Freeport case. Especially is this shown by the ruling
of the Court in
Los Angeles v. Los Angeles City Water Co.,
177 U. S. 569,
where it was, in effect, decided that a contract, made by a
municipality with a water company that existing rates to private
consumers should not be reduced during the life of the contract was
a valid stipulation, provided that the action of the city was
previously sanctioned or was subsequently ratified by legislative
authority.
The only question, then, remaining to be examined seems to me to
be whether the particular contract made by the City of Rogers Park,
considered in this case, fixed the rates for private consumers for
the period of the contract. And this only involves an examination
of the contract for the purpose of determining its import. Of
course, it is conceded, under the rule of construction stated by me
in my dissent in the
Freeport case, that if doubt arises
from an analysis of the provisions of the contract, that doubt must
be solved against the water company and in favor of the
municipality. But it is submitted that there can be no doubt, from
a consideration of the text of the contract, that it fixed the
rates to be paid by private consumers during the life of the
contract. The ordinance established in detail a tariff of specific
water rates for private purposes, embracing an enumeration which
would seem to include every variety of use. It conferred upon the
contractor the right, if he did not choose to charge these rates,
to insert in the connection a water meter, and to charge for the
water supplied at meter rates instead of at the aggregate sum
otherwise fixed. The opening clause of section 12 read as
follows:
"The said grantee or assigns shall charge the following annual
water rates to consumers of water during the existence of this
franchise, and they shall have the right at any time to insert a
water meter into the service pipe of any consumer, and to charge
and to collect from them at meter rates, provided that in such case
the minimum annual rate paid by any one consumer shall be five
dollars."
As I understand this language, it without doubt embodies the
rates, whether fixed by the purpose for which the water was taken
or by the meter measurement, and explicitly stipulates that these
rates may be charged during the life of the contract. Indeed it
seems to me
Page 180 U. S. 633
impossible to conceive that the contract for the construction,
maintenance, and supply would have been entered into without such
agreement. Can it in reason be said, in view of the terms of the
contract, that if the water company had wished to charge more than
the contract price on the ground that an unreasonably low sum had
been fixed in the contract, that it would have had a right at once
to ignore the contract stipulation and exact higher rates? If it
cannot be, how can it be held that the city had the right at its
pleasure to disregard the rates fixed in the contract? Was not the
obligation of one the correlative of the right of the other? To say
that the provisions of the contract constitute the language of
command, and not the language of contract, does not weaken or
obliterate the unambiguous provisions of the agreement into which
the parties entered. They were indeed, in my judgment, commands,
arising from the express authority conferred upon the municipality
by the Legislature of the State of Illinois, sanctioned by the
agreement of the parties, and protected from impairment by the
Constitution of the United States.
