Nothing is to be taken against the public by implication; under
the constitution and laws of Montana a grant by a municipality to a
water works company of the right to erect and maintain water works,
which expressly declares that it is not exclusive, does not raise
an implied contract that the grantor will not provide its own water
supply during the term of the franchise even though by accepting
the terms of the franchise the grantee expressly agrees to furnish
water to all the inhabitants of the city who may desire to contract
for the same during that period, and the erection of its own plant
by the city does not, by reason of the depreciation in value which
would result therefrom to the grantee's property, violate a
contract obligation or amount to a taking of property without just
compensation or due process of law within the meaning of the
federal Constitution.
This case was begun by a bill filed in the circuit court of the
United States by the Helena Waterworks Company, successor to the
Helena Consolidated Water Company, to restrain the City of Helena
from erecting purchasing, or acquiring a waterworks system for said
city and from acquiring water for such purpose except it purchase
the plant of the complainant company, and from incurring any
indebtedness or expenditure of money for such purpose.
The rights in controversy are alleged to result from a contract
made by the passage, and acceptance by the company, of a certain
ordinance, number 248, passed and approved in January, 1890.
It is also alleged that the Helena Consolidated Water Company,
predecessor of the complainant company, complied with all the terms
of the ordinance, and expended large sums of money in erecting and
maintaining the plant for supplying water to the inhabitants of the
said City of Helena.
It is averred that the said city has adopted certain ordinances
and taken certain proceedings to acquire and build a water
Page 195 U. S. 384
system of its own, and that said ordinances and proceedings are
in violation of the contract rights of the complainant company,
guaranteed by section 11 of Article 3 of the Constitution of the
State of Montana, and section 10 of Article I of the Constitution
of the United States, and that the proceedings of the city in this
behalf will amount to taking the property of the complainant
company without just compensation, in violation of section 14 of
article 3 of the Constitution of the State of Montana, and that its
rights and property will be taken without due process of law, in
violation of the Fourteenth Amendment to the Constitution of the
United States.
It is further averred that the taxation necessary for the
construction of the city plant is in excess of any that can be
lawfully levied for such purpose.
The case was tried upon an agreed statement of facts. In the
circuit court, a decision was rendered in favor of the waterworks
company. Upon appeal to the circuit court of appeals, that court
reversed the decision of the circuit court, and remanded the case,
with instructions to dismiss the bill. 122 F. 1.
The terms of the ordinance relied upon, and so much of the
agreed statement of facts as is necessary to a determination of the
case, sufficiently appear in the opinion.
Page 195 U. S. 387
MR. JUSTICE DAY delivered the opinion of the Court.
As the ordinance under consideration contains no express
Page 195 U. S. 388
stipulation that the city shall not build a plant of its own to
supply water for public and private purposes, and the grant is
expressly declared not to be exclusive of the right to contract
with another company, this case, unless it can be distinguished, is
ruled by recent decisions of this Court.
Long Island Water
Supply Company v. Brooklyn, 166 U. S. 685,
166 U. S. 696;
Joplin v. Southwestern Missouri Light Co., 191 U.
S. 150;
Skaneateles Water Works Co. v.
Skaneateles, 184 U. S. 354.
These cases hold that the grant of the franchise does not, of
itself, raise an implied contract that the grantor will not do any
act to interfere with the rights granted to the waterworks company,
and that, in the absence of the grant of an exclusive privilege,
none will be implied against the public, but must arise, if at all,
from some specific contract, binding upon the municipality.
As stated by appellant's counsel:
"The position taken by appellants is, that, by Ordinance 248,
the city has precluded itself from engaging in the commercial
business of furnishing water to its inhabitants. We maintain that,
by the contract contained in this ordinance, the Helena
Consolidated Water Company [predecessor of appellant] for itself,
its successors, and assigns, expressly agreed to furnish water to
all of the inhabitants of the city during the term of twenty years,
and that, by reason of the contractual obligation thus assumed by
the company, there is the implied promise or undertaking on the
part of the city that it will not, during such period, become a
competitor of appellant."
A consideration of this contention requires an examination of
the sections of the ordinance pertinent to a determination of the
question:
"SEC. 1. There is hereby granted to the Helena Consolidated
Water Company, and its successors and assigns, for the full term of
twenty years from the passage hereof, the license and franchise of
laying and maintaining water mains and pipes in and through all of
the streets, alleys, avenues, and public grounds of the City of
Helena for the purpose of conveying and distributing water
throughout the said city, and for the
Page 195 U. S. 389
purpose of selling the same to all persons, bodies, or
corporations within the said city desiring to purchase the same,
and to said city for fire, sewerage, and other purposes, in case
said city desires to purchase the same, subject, however, to the
provisions of this ordinance, hereinafter contained, establishing
maximum rates, and generally to have and exercise all the rights,
privileges, and franchises necessary to the proper and successful
furnishing of water to the inhabitants of said city if required;
provided, however, that nothing herein contained shall be so
construed as to give to the said Helena Consolidated Water Company,
or its successors or assigns, the exclusive right of occupying the
streets, avenues, alleys, and public grounds of said city with
water mains and pipes, or the exclusive right of conveying,
distributing, or selling the same throughout the said city, or of
furnishing the same to said city, except as hereinafter set
forth."
"SEC. 3. All pipes and mains, including service pipes connected
therewith, shall be laid at the depth of five feet below the
established grade, and shall be laid under the supervision of the
street commissioner of said city as to grade and location in
streets, and all repairs and extensions of such pipes and mains
shall be done under the supervision of said street commissioner as
to grade and location in streets. Nothing contained herein shall
preclude said City of Helena from regrading or changing the grade
of any street or streets within said city, or from the construction
or maintenance of sewer work, or other works or plants of a public
nature, or from letting, giving, or granting any franchises,
rights, or easements to any person or persons, corporation or
corporations, whomsoever, so long as such franchises, rights, and
easements do not interfere with the franchises, rights, and
easements hereby granted. And that said Helena Consolidated Water
Company must and shall look solely and exclusively to the person or
persons, corporation or corporations, to whom such franchises,
rights, and easements have been given by said city for any and all
damages the said Helena Consolidated Water Company may
Page 195 U. S. 390
sustain by reason of any interference with any of its pipes,
mains, or hydrants, or any exposure of the same caused by such
person or persons, corporation or corporations."
"SEC. 6. The said Helena Consolidated Water Company shall
furnish and provide a full, ample, and sufficient supply of good,
pure, wholesome, and clear water for the use and wants of the
inhabitants of said city, and to provide said city with water for
fire, sewerage (maintenance and construction), and for other
purposes, and such supply shall be full, ample, and sufficient for
the present population of said city, and for the future population
of the said city, as the same may be from time to time during the
full term of five years, and said water shall be pure, wholesome,
and free from animal, vegetable, or mineral substances such as
would render it unhealthy or unfit for domestic use."
"SEC. 26. It is hereby declared and understood to be of the
essence of the agreement and the acceptance hereof that the said
Helena Consolidated Water Company shall at all times during the
term of such agreement, provide all the inhabitants of the city,
whatever their number may be, with a full, ample, and sufficient
supply of good, pure, and wholesome and clear water, and shall
convey, distribute, and sell to them upon the terms and conditions
herein provided and expressed."
By section 8, the company was required to provide twenty miles
of mains within the limits of the city, and by section 10, the
company was required to lay and maintain additional mains, of such
sizes at such times, and upon such streets as the city council
might, from time to time, direct. Section 17 provided that the
company shall not refuse to permit connections to be made by, or to
sell water to, persons offering to pay for the same.
Section 16 of the ordinance fixes maximum rates for water to be
furnished to the inhabitants of the city. Section 21 makes
appropriation for the term of five years from and after January 1,
1890, of certain sums for hydrants and the use of water for the
benefit of the city. By the first section
Page 195 U. S. 391
of the ordinance, the company is granted the use of the streets,
alleys, and avenues and public grounds of the city for the laying
and maintenance of its pipes and mains for the purpose of conveying
water and selling it to those "desiring" to purchase the same, and
to the city for fire and other purposes in case the city "desires
to purchase the same."
Certainly there is nothing in this section that savors of a
contract beyond the obligation imposed upon the company, in
consideration of the franchise and privileges granted, to furnish
water at certain maximum rates to private persons or to the city,
when such persons or the municipality desire to purchase the same.
When we come to consider section 6, we find an engagement whereby
the obligation of the company to furnish water to the city is
limited to the term of five years, and in section 21 we find an
appropriation made to cover the compensation to be paid by the city
for the term of five years for the use of water for public
purposes. If these sections can be construed to amount to a
contract between the city and the company, binding the city to take
its entire supply of water from this company for five years, which
would be broken by the erection or building of a plant by the city
to supply itself with water, it had expired before the beginning of
this suit, and the contract, if it existed after the expiration of
the term named in section 6, must be found in other sections of the
ordinance. The contention is that, as by section 26 the water
company was bound during the term of the agreement, which, it is
claimed, is twenty years, to provide all the inhabitants of the
city, whatever their number, with a water supply, this contract
will be impaired, and its benefits to the company destroyed, if the
city should erect an independent plant of its own. But, in our
view, this section must be read with section 1, which requires the
company to furnish water to such inhabitants of the city as desire
to purchase the same, and there is nothing in this agreement which
binds the city to take water from the company beyond the term of
five years, expressly provided in section 6, and for which, upon
specific
Page 195 U. S. 392
terms as to prices, an appropriation was made in section 21.
There is nothing in section 26 nor in section 1 undertaking to bind
the inhabitants of the city to take water from the company. The
city has not and, of course, could not undertake to make any
contract upon the subject for the private supply of individuals in
the city beyond securing a maximum rate of charge for water
supplied. The engagement for their benefit requires the company,
during the term of the franchise, to supply water at not exceeding
certain maximum prices, which were fixed by the ordinance. Properly
construed, we think this ordinance shows an agreement upon the part
of the company to furnish water to the inhabitants of the city at
not exceeding certain maximum rates, and to the city itself, upon
terms to be agreed upon, made definite, as far as the city was
concerned, for the term of five years. As thus interpreted, we do
not find anything in this contract that prevents the city,
certainly after the expiration of five years, from constructing its
own plant. It has not specifically bound itself not so to do, and,
as has been frequently held in this Court, nothing is to be taken
against the public by implication.
Hamilton Gas Light &
Coke Co. v. Hamilton, 146 U. S. 258;
Long Island Water Supply Co. v. Brooklyn, 166 U.
S. 685, and cases cited in the opinion. Had it been
intended to exclude the city from exercising the privilege of
establishing its own plant, such purpose could have been expressed
by apt words, as was the case in
Walla Walla v. Walla Walla
Water Company, 172 U. S. 1. It is
doubtless true that the erection of such a plant by the city will
render the property of the water company less valuable, and
perhaps, unprofitable; but if it was intended to prevent such
competition, a right to do so should not have been left to argument
or implication, but made certain by the terms of the contract. The
right to tax within certain limits to procure a supply of water for
the municipality, which shall be owned and controlled by the city,
is authorized by the Constitution of Montana, article 13, ยง 6.
Paragraph 4800 of the Political Code of Montana provides for the
carrying into
Page 195 U. S. 393
effect of this constitutional power to tax for a system of
waterworks to be owned and controlled by the municipality. The
feature of the law requiring the purchase of existing waterworks
instead of building an independent plant by the city was held
unconstitutional by the Supreme Court of Montana in
Helena
Consolidated Water Company v. Steele, 20 Mont. 1.
The privilege of building other works was, in the absence of
some binding contract forbidding the exercise of the power, clearly
within the city's constitutional and statutory rights. We cannot
find that the city has precluded itself from exercising this right
by anything shown in this case. This conclusion renders it
unnecessary to decide whether the city's right to construct a plant
of its own was expressly saved in section 3 of the ordinance
reserving the right to construct and maintain "sewer work, of other
works of a public nature."
This action is also brought by the water company as a taxpayer,
and it is claimed that the city had no right to acquire a water
supply and build its waterworks except by acquiring the plant of
the company.
In the findings of fact it was expressly stipulated:
"That the City of Helena contemplates and intends to do all acts
and things necessary to secure a water supply and system to be
owned and controlled by the said City of Helena, and that it
contemplates and intends to raise funds and revenue therefor in the
manner provided by law, and to use the same for said purpose, and
to furnish and supply the City of Helena and the inhabitants
thereof with water from its said plant, and that it contemplates
and intends to purchase and secure a sufficient quantity of water
for said purpose, and that complainant does not obtain any of its
water supply from either Beaver, McClellen, or Prickly Pear
Creeks."
"That the ordinances Nos. 467 and 483, mentioned in paragraph 27
of the complainant's bill of complaint, were duly passed and
adopted and approved, and that, unless said defendant, the City of
Helena, in enjoined and restrained from acquiring a water supply,
plant, and system, it will proceed
Page 195 U. S. 394
to acquire the same under said ordinances or such others as are
necessary for said purpose, as hereinbefore stated, and will engage
in furnishing the said defendant, the City of Helena, and its
inhabitants, with water, suitable and proper for its use, and that
to do so will depreciate the value of complainant's franchise and
property, as stated in paragraph 28 of the complaint, but that no
injury of which complainant can complain will result therefrom if
defendant city has the rights claimed by it. . . . That the revenue
for said purpose will be created and raised by borrowing money or
raising funds within the limit of indebtedness, as heretofore or
hereafter to be extended, in accordance with the requirements of
the Constitution and provisions of the statutes of the State of
Montana in that behalf, unless it shall be adjudged that it has no
legal or equitable right to do so, on account of the facts and
admission hereinbefore stated and made."
We agree with the circuit court of appeals that, by this
stipulation, the controversy was narrowed to the question of the
right of the city to erect and maintain an independent plant of its
own, in view of the alleged contract rights of the complainant. For
that purpose, if it has the right so to do, it is conceded "it
contemplates to raise funds and revenues therefor in the manner
provided by law," and will raise revenues within the limits of
indebtedness authorized by the Constitution and laws of Montana.
This concession renders it unnecessary to notice the allegations of
the complaint as to the right to tax for the purpose of erecting
such works, or the alleged invalidity of any method of acquiring
waterworks for the city except by purchase from the
complainant.
Judgment affirmed.