Vicksburg v. Vicksburg Waterworks Co.,
202 U.S. 453 (1906)

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U.S. Supreme Court

Vicksburg v. Vicksburg Waterworks Co., 202 U.S. 453 (1906)

Vicksburg v. Vicksburg Waterworks Company

No. 133

Submitted December 13, 1905

Decided May 21, 1906

202 U.S. 453


Where complainant's bill discloses an intention by the municipality to deprive complainant -- a water supply company -- of rights under an existing contract by subsequent legislation, and the city cannot show any inherent want of legal validity in the contract, or any such disregard of its obligations by complainant as would absolve the city therefrom, the case is one arising under the Constitution of the United States, the Circuit Court has jurisdiction, and a direct appeal lies to this Court.

It is a valuable feature of equity jurisdiction to anticipate and prevent threatened injury, and in this case an injunction was properly issued to restrain a municipality from erecting its own water system during the continuance of an exclusive franchise owned by complainant.

As a general rule, and so held in this case, it is discretionary with, and under the control of, the trial court to permit the withdrawal by an intervenor of its original bill and to strike out testimony taken concerning the same.

The power given under the state law to a corporation to mortgage its franchises and privileges necessarily includes the power to bring them to sale and make the mortgage effectual, and the purchaser acquires title thereto although the corporate right to exist may not be sold.

The laws of Mississippi, as construed by its highest court, do not prevent a municipality from granting an exclusive water supply franchise for a limited period during which it cannot erect and operate its own water system, and under the constitutional limitation that the legislative power to alter, amend and repeal charters of corporations must be exercised so that no injustice shall be done to stockholders, an act of the legislature authorizing the municipality to erect its own water system would not amount to repealing the exclusive features of an existing legal franchise.

While grants of franchises are to be strictly construed in favor of the public and nothing is to be taken by implication, where the city has, as in this case, by the terms of the contract given the grantee the exclusive right to erect, maintain and operate waterworks for a definite period it cannot, under the impairment clause of the Constitution, erect and operate, under ordinances subsequently enacted, its own water system during the life of the franchise and subject the company to that competition.

Courts have no power to issue a mandatory injunction requiring a municipality

Page 202 U. S. 454

to construct a sewer in a particular manner irrespective of the exercise of discretion vested in the municipal authorities to determine the practicability of the sewer, the availability of taxation for the purpose, and like matters.

The facts are stated in the opinion.

Page 202 U. S. 458

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