A city granted to a water company a franchise to construct and
operate water works, using the streets. The ordinance defined the
grant as made "for the duration of the said Company" (the grantee),
but elsewhere limited the term expressly to twenty-five years from
the passage of the ordinance, which also contained a contract for
the same period providing that, if at the city's request, the
company
Page 243 U. S. 167
should extend its pipes "during the said term of twenty-five
years," the city would rent hydrants thereon "for the unexpired
term of said franchise." Some years later, the city granted a
similar, substitute franchise to a second company, successor to the
first with the city's consent, by an ordinance defining the
franchise term as "for and during the existence" of the second
company, and recognizing the latter as the successor of the first
company in respect of the contract for hydrant rental "as fully as
if such existing contract had been originally made" with the second
company "without the intervention" of the first. By the law of its
creation, the life of the second company was twenty-five years
primarily, with the right (reserved in its articles) to prolong the
term by twenty-five year extensions.
Held:
(1) That the life of the second franchise was not limited to
twenty-five years, but was intended to endure while the corporate
life of the grantee endured by extension beyond that period.
(2) The fact that the first franchise was expressly limited to
twenty-five years, while the second was granted for "the existence
of the corporation," was evidence confirming this construction.
(3) Respecting the contract concerning hydrants, the second
company became successor of the first only for the unexpired term
of that contract.
(4) That later ordinances of the city requesting pipeline
extensions and declaring that the city thereby rented the hydrants
along such extensions "for the unexpired term of the franchises of
the said Water Company," and compliance by the second company with
the requests so made upon it, did not import a recognition by the
parties that the franchise of that company was for a definite known
term not to be enlarged by extension of its corporate existence,
but were referable only to the hydrant contract and its unexpired
term -- a conclusion which was corroborated by the action of the
parties in ceasing to collect and pay rent for such hydrants when
that term expired.
The question being whether a franchise granted by a city was
limited to twenty-five years, the period for which the corporate
grantee was primarily organized, or was meant to accompany an
extension of the grantee's corporate life, the fact that the
grantee, in former litigation in which that question was neither
material nor adjudicated, the primary period having then some years
to run, described the franchise as a franchise for twenty-five
years, affords no basis for an estoppel by conduct or by judgment,
and the more clearly so where the grantee, in the same litigation,
also described the franchise as granted for the whole period of its
corporate existence.
Page 243 U. S. 168
While, in the computation of time beginning "from and after" a
day named it is usual to exclude that day and begin with the next,
this is not done where it will obviously defeat the purpose of
those whose words are being construed or applied.
The case is stated in the opinion.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This is a suit to enjoin the City of Owensboro, in the State of
Kentucky, from obstructing and preventing the maintenance and
operation of an existing waterworks plant in that city. The
plaintiff relies upon a franchise from the city which the latter
insists has expired. In the district court, the franchise was held
to be still in force, and the city was enjoined from giving effect
to an ordinance and a resolution impairing the same.
By an ordinance of September 10, 1878, the city granted to the
Owensboro Water Company, its successors and assigns, the privilege
of constructing and operating waterworks within the city, and of
using its public highways for that purpose. In its first section,
the ordinance described this grant as made "for the duration of the
said company," and in another section, expressly limited it to
"twenty-five years
Page 243 U. S. 169
from the passage of this ordinance." Other provisions required
the water company to lay and maintain pipelines in certain streets
with a fire hydrant at each street intersection, and obligated the
city to rent and pay for the hydrants "for the term of twenty-five
years from the passage of this ordinance." Availing itself of the
privilege so granted, the water company constructed a waterworks
plant in the city, and operated the same until June 3, 1889, when
it sold the plant to the Owensboro Water Works Company, the
plaintiff in this suit. This company is a Kentucky corporation
whose original articles of association stated that its existence
was to begin on June 1, 1889, and terminate at the end of
twenty-five years, "subject to such extensions of its term of
existence as by law provided." On June 3, 1889, shortly before the
plaintiff's purchase, the city adopted an ordinance containing the
following provision, among others:
"Sec. 1. That, in consideration of the purchase by the Owensboro
Water Works Company, of Owensboro, Kentucky, of the waterworks of
the Owensboro Water Company, the franchise and license are hereby
granted to the Owensboro Water Works Company, of Owensboro,
Kentucky, and its successors and assigns, for and during the
existence of the said corporation, to maintain, complete, and
operate waterworks in the City of Owensboro for supplying the City
of Owensboro and the inhabitants of said city and its vicinity with
water for public and private purposes, and to use within the
present and future limits of the City of Owensboro, the streets,
alleys and other public highways thereof for the purpose of laying,
repairing and taking up mains, service pipes, hydrants, and other
apparatus for the supply of water."
By the second section, the city accepted the plaintiff "as the
successor" of the other company in respect of "the contract for
hydrant rental" then existing between the city and the other
company "as fully as if such existing contract had been originally
made" by the city with the plaintiff "without the intervention" of
the other company, and by the third section, the city gave its
consent to "the consummation of the said purchase of the said
waterworks."
Page 243 U. S. 170
The plaintiff accepted the provisions of this ordinance, relied
upon them in consummating the purchase, and ever since has
maintained and operated the waterworks and used the public highways
of the city in that connection.
On May 6, 1914, the plaintiff's articles of association were
amended, conformably to the state law (Ky.Gem.Stats. 1883, c. 56, §
7; Ky.Stats. 1903, §§ 540, 559, 574), by adding a provision the
declared purpose of which was to extend the plaintiff's corporate
existence for the period of twenty-five years.
Whether the plaintiff now has a franchise from the city turns
chiefly upon the construction and effect of the Ordinance of June
3, 1889. By it. the city then said that "the franchise and license"
to maintain, complete, and operate waterworks in the city and to
use its public highways for that purpose
"are hereby granted to the Owensboro Water Works Company, of
Owensboro, Kentucky, and to its successors and assigns, for and
during the existence of the said corporation."
Now the city claims, first, that by the ordinance it merely
assented to the purchase by the plaintiff of the rights of the
other company under the Ordinance of 1878; second, that if a
franchise was granted to the plaintiff, it was only for the life of
the other company; and third, that even if a franchise was granted
to the plaintiff for the period of its own existence, it was not to
endure beyond the primary term of twenty-five years named in the
plaintiff's articles of association. But none of these claims has
any support in the ordinance. Its terms are direct and its meaning
plain. In apt words, its first section not only grants a franchise
to the plaintiff, but makes the life of the franchise coextensive
with the plaintiff's existence, and we find nothing in the
ordinance which suggests that the words fixing the duration of the
franchise are to be taken as comprehending anything less than the
full corporate existence of the plaintiff. The right to extend its
existence beyond the primary term was
Page 243 U. S. 171
given by statute and expressly reserved in the articles of
association, and so it is reasonable to believe that, had there
been a purpose to limit the franchise to that term, it would have
been plainly expressed, as was done in the ordinance of 1878. The
reasonable implication from the inclusion of such a limitation in
the earlier ordinance and its omission from the later one is that
the franchise granted by the latter was not to be thus limited.
Of the suggestion that, under this view, the franchise may be
made perpetual by repeated extensions of the plaintiff's corporate
life, it is enough to say that we are here concerned with but a
single extension already effected. The statute permitting such
extensions may not be in force when the present twenty-five-year
period expires, and, if it be in force, nothing may be done under
it.
Because the primary term -- the first twenty-five years --
expired May 31, 1914, and the amendment to the articles of
association stated that the extension for another twenty-five years
would begin "from and after" June 1, 1914, the city insists there
was a hiatus of one day between the two periods, and that, in
consequence, the extension never became effective. We are not
impressed with this contention. While in the computation of time
that begins to run "from and after" a day named, it is usual to
exclude that day and begin with the next (
Sheets v.
Selden, 2 Wall. 177,
69 U. S. 190),
this is not done where it will obviously defeat the purpose of
those whose words are being construed or applied. The purpose of
the amendment was to extend or prolong the plaintiff's corporate
existence for another twenty-five years. It was adopted almost a
month in advance of the expiration of the first twenty-five years,
and, notwithstanding the use of the words "from and after," it
shows very plainly that the second period was to begin where the
first ended. Of course, those words were not happily chosen, but,
as the amendment otherwise makes it certain that the extension was
to be
Page 243 U. S. 172
effective on and after June 1, 1914, we think the amendment
accomplished its purpose, and that there was no hiatus.
By the Ordinance of 1878, as before shown, the other company and
the city entered into a contract respecting fire hydrants which was
to be in force for twenty-five years from the date of the
ordinance. One provision of that contract was to the effect that,
if the company should make any extensions of its pipelines at the
city's request "during the said term of twenty-five years," the
city would rent and pay for one hydrant at each street intersection
along such extensions "for the unexpired term of said franchise."
By a special provision in the ordinance of 1889, as we have seen,
the plaintiff succeeded to the rights and duties of the other
company under that contract as if it "had been originally made" by
the city with the plaintiff, and this meant that the succession was
only for the unexpired term of the contract. Acting under the
contract, the city, from 1890 to 1895, adopted seven ordinances
wherein it requested that particular extensions of the pipelines be
made by the plaintiff, and declared that it (the city) thereby
rented the hydrants along such extensions "for the unexpired term
of the franchise of the said Water Company." The plaintiff accepted
these ordinances and complied with the requests made in them. The
city now claims that, in what was thus done, both parties plainly
recognized that the franchise granted to the plaintiff was for a
definite and known term of years, and was not to be affected by any
extension of the plaintiff's corporate existence. But we think this
claim disregards what was intended by the word "franchise" in the
seven ordinances. They not only related to the same subject as did
the contract of 1878, which was the maintenance and renting of fire
hydrants, but they closely followed its words. That contract was
made for a definite term, twenty-five years, and twelve of these
had expired when
Page 243 U. S. 173
the seven ordinances were adopted. In adopting and accepting
them, the parties were not making a new hydrant contract, but
acting under the one already in existence. It and the plaintiff's
franchise were not coterminous, and should not be confused. The
contract covered the old hydrants, of which there were many, as
well as the new ones, and was to expire as to all at the same time
-- that is, on September 10, 1903, twenty-five years after the
contract was made. That the city so understood -- indeed, that both
parties so understood -- is affirmatively and clearly alleged in
the city's answer, from which we excerpt the following:
"Defendant City says that, after the passage of said [seven]
ordinances the complainant Water Company did lay the mains required
therein and attach the fire hydrants as provided in said ordinance
and the defendant City paid it rentals in pursuance to said
contract until September 10, 1903. at which time the complainant
ceased to collect and the City ceased to pay rentals for said
hydrants as provided in said ordinance and contracts, and said
ordinances and contracts were construed to and did expire on
September 10, 1903, and since that date, the City has not paid to
the complainant any hydrant rental under any of said rental
contracts, or at all."
The plaintiff's franchise, as before shown, was granted June 3,
1889, and, of course, did not expire September 10, 1903. What did
expire on that day was the contract made September 10, 1878,
whereby the city agreed to rent and pay for the hydrants for the
term of twenty-five years from that date. It is plain, therefore,
that what was intended by the word "franchise" in the seven
ordinances was that contract. There was nothing else to which it
reasonably could refer.
The city further contends that the plaintiff is estopped from
claiming a franchise extending beyond May 31, 1914, because in 1903
and 1904, in two suits against the
Page 243 U. S. 174
city, it described its franchise as granted for a term of
twenty-five years, beginning June 1, 1889. But in neither suit was
it material whether the life of the franchise was strictly limited
to that period or was subject to prolongation by an extension of
the plaintiff's corporate existence, and it is not claimed that
this question was adjudicated in either suit. At that time, nine or
ten years of the primary period still remained, and there was as
yet no occasion to elect or determine whether the privilege of
effecting an extension would be exercised. Besides, in both suits,
the franchise was also described by the plaintiff as granted for
"the whole period of its corporate existence." Thus, no basis is
shown for an estoppel by conduct or by judgment.
Other objections are made to the decree, but they are of less
merit, and do not require special mention.
Decree affirmed.
MR. JUSTICE CLARKE, dissenting:
This case presents for decision the single but very important
question whether the City of Owensboro, Kentucky, by ordinance
passed on June 3, 1889, granted to the Owensboro Water Works
Company a franchise renewable indefinitely, and therefore in effect
perpetual, or only a franchise for twenty-five years, "to maintain,
complete, and operate" waterworks in that city.
A perpetual right to the use of the streets of a city is such a
serious burden upon a community that, though very reluctant to do
so, I am impelled by an imperative sense of duty to place on record
my reasons for concluding that the construction given by a majority
of the court to the grant involved in this case is a mistaken one
which can be reached only by violating two rules of construction
which this Court has repeatedly declared to express "sound doctrine
which should be vigilantly observed and enforced."
Page 243 U. S. 175
The facts essential to an understanding and to a determination
of the claim made in the record are as follows:
On the ninth day of September, 1878, a corporation named the
"Owensboro Water Company" was incorporated under the laws of the
State of Kentucky, and, on the next day, the City of Owensboro
granted to that corporation the right and franchise to construct
and operate in that city a waterworks plant, using the streets and
alleys in the customary manner.
Section 1 of this ordinance grants to the Water Company the
right to construct and operate waterworks within the city "
for
the duration of the said company."
After many details as to construction, service, and rentals of
hydrants by the city, § 13 provides:
"The rights, privileges, and franchises hereby granted to and
vested in said company shall remain in force and effect for
twenty-five years from the passage of this ordinance."
Thus, it is too clear for discussion that the expression "for
the duration of the said company" in § 1 of this ordinance of
September 10, 1878, was deemed, both by the city granting it and by
the company accepting it, as meaning a term of twenty-five
years.
The Water Company constructed a waterworks plant and operated it
until the year 1889, when, for the purpose of making larger capital
available, a new corporation, bearing the name "Owensboro Water
Works Company," was organized, with a charter which contained in
paragraph 6 this provision:
"The time of commencement of the said corporation is the first
day of June, in the year one thousand eight hundred and
eighty-nine,
and it shall terminate twenty-five years
thereafter, subject to such extensions of its term of existence as
by law provided."
On June 3d 1889, the Council of the City of Owensboro passed an
ordinance, which was accepted by the new corporation, which, after
reciting that the new corporation desired to purchase the
waterworks of the old one, together
Page 243 U. S. 176
with its existing contracts for supplying the city and its
inhabitants with water; that the new company desired a grant of a
franchise and license "to maintain, complete, and operate
waterworks in the city," and that the city should accept the new
company as the successor of the old to the contracts for hydrant
rentals, proceeds to ordain:
Section 1. That the franchise and license to maintain, complete,
and operate waterworks in the City of Owensboro
"are hereby granted to the Owensboro Water Works Company, and to
its successors and assigns
for and during the existence of said
corporation;"
Section 2. That the new company shall be accepted by the
city
"as the successor to the contract for hydrant rental now
existing between the City of Owensboro and the Owensboro Water
Company as fully as if such existing contracts had been originally
made by the City of Owensboro with the said Owensboro Water Works
Company, without the intervention of the said Owensboro Water
Company."
The Kentucky General Statutes of 1883, c. 56, § 7, p. 548, under
which the Water Works Company was organized in 1889, contained this
provision:
"Corporations for the construction of any work of internal
improvement may be formed to endure for fifty years;
those
formed for other purposes shall not exceed twenty-five years in
duration; but in either case they may be renewed from time to
time for periods not greater than was at first permissible
if
three fourths of the votes cast at any regular election held for
that purpose shall be in favor of such renewal."
While the plaintiff in error disputes it, we conclude that it is
clear that, by appropriate action taken on the 6th of May, 1914,
the Water Works Company amended its articles of incorporation by
amending article 6 thereof (hereinbefore quoted) so that, as
amended, this section
Page 243 U. S. 177
became:
"
The time of the commencement of said corporation is the
first day of June, 1889, and it shall terminate twenty-five years
thereafter, subject to such extension of its terms as by law
provided, and same is now, by these amended articles of
incorporation,
extended for the period of twenty-five years
from and after the first day of June, 1914."
Since confessedly the Water Works Company is not a corporation
organized for the construction of "any work of internal
improvement," if we read together the charter of the Water Company
dated May 30, 1889, the ordinance of the City of Owensboro dated
June 3, 1889, and the statute of Kentucky, which we have quoted,
limiting the duration of corporations to twenty-five years, we see
that the question for decision is narrowed to this,
viz.:
Does the grant to the Water Works Company of the franchise and
license "to maintain, complete, and operate" waterworks
"for
and during the existence of said corporation" confer on the
company a franchise in effect perpetual to use the streets of the
city for waterworks purposes, or is it limited to twenty-five
years?
The limitation of the grant to the twenty-five years "duration"
of the corporation would be beyond question were it not for the
provision of the charter that the termination of the life of the
company after twenty-five years shall be subject to such extensions
as are provided for by law, and for the provision, of the statute
quoted "that they [such corporations] may be renewed from time to
time for periods not greater than was at first permissible" -- in
this case, for an additional twenty-five years. The conclusion of
the majority of the Court is that this authority given to the
stockholders to renew "the duration" of the corporation (a
discretionary power which is found in the charter, not in the
grant, and which might or might not be exercised) expanded and
extended the expression of the grant "during the existence of the
corporation" so as to make it as if it read, "
during the
existence of the said corporation,"
Page 243 U. S. 178
and also for such "renewals" of such existence as the
stockholders of the company may, by appropriate action, favor some
time in the future -- thereby making the grant in effect a
perpetual one.
The two rules for the construction of such grants which have
been referred to have been firmly established by decisions of many
courts, but no court has been more definite and resolute than this
Court has been in the emphasis with which it has announced and
applied them. These rules are:
(1) As announced by this Court most clearly, and with full
consideration of the authorities, in
Blair v. Chicago,
201 U. S. 400,
201 U. S.
463:
"It is a firmly established rule . . . that one who asserts
private rights in public property under grants of the character of
those under consideration [city ordinances] must, if he would
establish them, come prepared to show that they have been conferred
in plain terms, for nothing passes by the grant except it be
clearly stated or necessarily implied."
And the Court gives as the sound reason for this rule that
"it is matter of common knowledge that grants of this character
are usually prepared by those interested in them, and submitted to
the legislature with a view to obtain from such bodies the most
liberal grant of privileges which they are willing to give. This is
one among many reasons why they are to be strictly construed."
And from Cooley on Constitutional Limitations is quoted with
approval this statement:
"The just presumption in every such case is that the state has
granted in express terms all that it designed to grant at all. . .
. This is sound doctrine, and should be vigilantly observed and
enforced."
Continuing to give to the rule the emphasis which it so richly
deserves, the opinion continues and quotes from earlier decisions
of this Court declaring that
"any ambiguity in the terms of the grant must operate against
the corporation and in favor of the public, and the corporation
can
Page 243 U. S. 179
claim nothing that is not clearly given by the law. . . . The
principle is this, that all rights which are asserted against the
state must be clearly defined, and not raised by inference or
presumption."
The discussion concludes with the statement, quoted from
Slidell v. Grandjean, 111 U. S. 412,
that it is a wise doctrine because
"it serves to defeat any purpose, concealed by the skillful use
of terms, to accomplish something not apparent on the face of the
act, and thus sanctions only open dealing with legislative
bodies."
(2) The second rule to which we have referred finds clear
expression in
Chicago v.
Sheldon, 9 Wall. 50, as follows:
"In cases where the language used by the parties to the contract
is indefinite or ambiguous, and hence of doubtful construction, the
practical interpretation by the parties themselves is entitled to
great, if not controlling, influence. The interest of each
generally leads him to a construction most favorable to himself,
and when the difference has become serious, and beyond amicable
adjustment, it can be settled only by the arbitrament of the law.
But in an executory contract, and where its execution necessarily
involves a practical construction, if the minds of both parties
concur, there can be no great danger in the adoption of it by the
court as the true one."
This rule was approved in terms in
Topliff v. Topliff,
122 U. S. 121, and
it has been repeatedly announced as the settled doctrine of this
Court.
Applying these rules in the reverse order of their statement, I
shall now give my reasons for concluding that the interpretation by
the parties to it of the grant under consideration limits it to a
life of twenty-five years.
The Ordinance of 1878, in the part of it assumed by the Water
Works Company by its acceptance of the Ordinance of 1889, provided
that, "if extensions of pipe shall be made by said company during
the said term of twenty-five
Page 243 U. S. 180
years
at the instance or request of said city," the
city should be bound to rent and pay $50 a year for one hydrant at
each street intersection. Under this provision, beginning on
October 6, 1890 (a little more than a year after the grant was
made), and continuing, certainly as the record shows, until
September 16, 1895, the city, by ordinance, made
seven distinct
demands upon the Water Works Company to lay additional pipes
in the streets, and in each ordinance provided:
"The City of Owensboro hereby rents of the said Water Company
the above named hydrants
for the unexpired term of the
franchises of the said Water Company,"
and promises to pay, etc. Here is a plain declaration, seven
times repeated, by the city, the first made, as we have stated,
very shortly after the grant was made, that the city understood
that the grant was not an unlimited or perpetual one, for it
promises to pay only "
for the unexpired term of the
franchises of the said Water Company." By the acceptance of each
one of these seven ordinances, the Water Company just as plainly
assented to this construction of the grant. This is highly
persuasive against the Water Company because such construction was
so distinctly against its interest. The record shows that these
ordinances bear dates as follows: (1) September 6, 1890; (2)
February 2, 1891; (3) November 7, 1892; (4) December 5, 1892; (5)
October first, 1894; (6) May 7, 1894, and (7) September 16,
1895.
The most persuasive comment, I think, that can be made upon this
construction of this grant by both of the parties to it is
contained in the last sentence of the quotation we made from
Chicago v. Sheldon, supra:
"But in an executory contract, and where its execution
necessarily involves a practical construction, if the minds of both
parties concur, there can be no great danger in the adoption of it
by the court as the true one."
But much more is to be found in the record as to what the
parties -- particularly as to what the
Page 243 U. S. 181
Water Works Company -- thought was the term of this grant.
On the first day of September, 1903, the Water Works Company
instituted a suit in the Circuit Court of the United States for the
Eastern District of Kentucky in an effort to enjoin the city from
issuing bonds and spending money for the purpose of constructing a
municipal water plant, and, in the bill filed in the case, it
alleges that it is a corporation, with power conferred upon it to
supply the defendant city and its inhabitants with water "
for
the fixed period of twenty-five years from the date of its
incorporation;" it alleges that the grant to it was
"
extended during the period of its corporate existence, a
period of twenty-five years from the first of June, 1889;" and
that, by the contract created by the ordinance of June 3d 1889, as
well as by the contracts existing between the city and the earlier
company, the Water Works Company
"acquired and now has conferred upon it and vested in it the
sole and exclusive right, franchise, and privilege
during the
period of twenty-five years from and after June first, 1889,
to maintain, complete, and operate waterworks in the City of
Owensboro,"
etc. Again it alleges in this bill that the said contract
conferred upon it the exclusive privilege of furnishing water
through the hydrants to the said city
for twenty-five years
from the first of June, 1889; that it has in all things
complied with the requirements of the Ordinance of 1889, and
"that it is ready, willing, and able
to continue to carry
out its said contract and to continue to perform and do all the
things of it required therein until the expiration of the said
contract on June first, 1914."
Yet again it alleges that the city did, by the ordinance
aforesaid (of 1889) make and enter into a valid and binding
contract with this complainant, wherein and whereby an obligation
was created on the part of this complaint to lay pipes, conduits,
and hydrants in and along the streets and
to furnish for the
period of twenty-five years from the first of
Page 243 U. S. 182
June, 1889, water for public and private purposes,
etc., and it solemnly avers that the purpose of the city to
establish a municipal waterworks would result in a violation of
this contract, which is within the protection of § 10, Article I of
the Constitution of the United States, which prohibits the passage
of any "law impairing the obligation of contracts."
This elaborate bill, filed by the Water Company, concludes with
the prayer for an injunction, restraining the city
"from
constructing, equipping, operating, or maintaining a system of
waterworks in said city at any time until after the first day of
June, 1914."
This bill is sworn to by the president of the Water Works
Company and, significantly enough, is signed by the same counsel
who sign the bill in the pending case.
But the Water Company, continuing of the same mind as to the
meaning of the grant under consideration, in a petition filed in
the Circuit Court of Daviess County, Kentucky, almost a year later,
on the 27th day of May, 1904, in a case in which the company was
seeking to collect rentals for hydrants, again alleged that, by the
grant of 1889, the franchise of the company was "extended during
the whole period of its corporate existence,
a period of
twenty-five years from and after the first of June, 1889," and
that this same ordinance
"conferred upon and vested in it the sole and exclusive right,
franchise, and privilege during
the period of twenty-five years
from and after June first, 1889, to maintain, complete, and
operate waterworks in the City of Owensboro,"
etc.
In this petition plaintiff specifically sets up the ordinances
to which we have referred, calling upon the Water Company to
construct extensions, and which were accepted by the company, and
adds two others of the same purport, one dated May 15, 1899, and
one July 25, 1900; alleges that in each of these the city requested
the company to extend the lines and place hydrants
"for
the
Page 243 U. S. 183
unexpired term of the franchise of this petition," and
that, within sixty days from the passage of said ordinances, it
filed its acceptance of them with the clerk of the city.
It is difficult to imagine an interpretation of a contract by
the parties to it more specific or controlling than is to be found
in the declarations in these court proceedings, made deliberately
and under the advice of counsel.
In the presence of this record, I cannot doubt that it was
understood and intended in the beginning by the untechnical men of
affairs who composed the city council and by the company that this
grant was a limited one extending for not to exceed twenty-five
years from June first, 1889, and that this conviction continued in
the minds of all the parties concerned in it, finding frequent
expression in the conduct of business between them for full fifteen
years, certainly until 1904, when the company is found claiming in
the courts that the grant expired on June 1, 1914, and therefore I
cannot assent to the conclusion that it is in effect a perpetual
grant of the right to use the streets of the city, convinced as I
am that such result cannot be reached without doing violence to the
rule referred to, so firmly established by this Court, which has
been penetratingly condensed into the expression, "show me what men
have done under a contract and I will tell you what it means." And,
I may add, without running also counter to the decision of this
Court in
Tennessee v. Whitworth, 117 U.
S. 129, in which it is declared that, in construing
contracts springing from statutes, the words employed are, if
possible, to be given the same meaning they had in the minds of the
parties to the contract when the statute was enacted.
But, turning now from the interpretation placed upon this
ordinance by the parties to it, and confining our attention
strictly to the language used in making the grant, let us ask
ourselves whether it can reasonably be said, upon the facts
presented by this record, that a franchise
Page 243 U. S. 184
in effect perpetual was granted in the streets of the city "in
plain terms," "in express terms," without "ambiguity," as is
required by the first of the rules for the construction of such
grants, which we have seen is so fully approved by this Court.
If the pertinent parts of the grant, of the charter of the
company, and of the Kentucky statute be written together, we shall
have this paragraph:
The City of Owensboro grants to the company the right to
maintain and operate a waterworks plant during the existence of
that corporation, which existence is declared in its charter to
commence on June first, 1889, and to terminate twenty-five years
thereafter, subject to such extensions as the law provides, and is
also limited by the state statute, under which it was created, to a
duration of twenty-five years, with the privilege of renewal for a
like period if a three-quarters vote of its stockholders "shall be
in favor of such renewal."
I cannot doubt that others than skilled lawyers (and we cannot
assume that all of the members of the city council were skilled
lawyers), reading such a paragraph as this, would understand that
the existence of the life of the Water Works Company, and so of the
grant, was for the declared twenty-five year period between the
"commencement of the life" of the corporation and the time when it
must "terminate." To give it any other meaning is to magnify the
subordinate provision for a possible extension of the life of the
corporation so as to make that control the definite, specific,
clearly expressed limitation of the charter. But specific should
always control general provisions in a contract where they conflict
-- definite and clearly expressed limitations should dominate
indefinite and discretionary privileges. To declare this grant
perpetually renewable is to make its duration dependent upon the
discretion of the grantee corporation, to be exercised twenty-five
years after the grant was made, and
Page 243 U. S. 185
it is not difficult to conceive of circumstances under which the
required three-fourths of the stockholders of the company would not
favor an extension of its corporate life -- if, for instance, its
business were a failing one because of competition with a
city-owned plant, or if the stockholders differed in opinion as to
the wisdom of making a possible sale of its property. This is a
result which the court should accept only under sheer coercion -- I
can designate it by no milder term -- of the "plain," "express,"
and "unambiguous" provision in the grant, and very certainly it is
a result which should not be derived from ingenious construction of
a narrow and optional clause in the charter of the grantee (not in
the grant), which was probably inserted for the purpose of
providing for the contingency of a new grant to the company, to be
made at the expiration of the one for twenty-five years, rather
than in an attempt to automatically make an extension of that
grant.
When to this it is added that the provision for
extending the life of the corporation is not to be found anywhere
in the ordinance making the grant, which the councilmen had before
them, but only in the charter of the corporation and in the statute
of the state, which they probably never saw, I not only cannot
bring myself to assent to the conclusion that, resolving, as we
must, every doubt in favor of the public, a franchise in effect
perpetual in the streets of the city was given to the Water Works
company "in plain," "in express," and in "unambiguous" terms, but,
on the contrary, I am very clear that the language used in making
this grant limits it, as we have seen that all of the parties
thought that it limited it, to the term of twenty-five years.
This conclusion has been arrived at without the application of
narrow distinctions to the words used in the charter of the Water
Company and in the statute of Kentucky. But sufficient to turn the
case, if it be thought a close one, might very well be found in
significant distinctions with
Page 243 U. S. 186
respect to the words used in the provision of the charter of the
company, on which the opinion of the majority of the court turns,
viz.: that the twenty-five-year limitation so clearly
expressed is "subject to such extensions of its terms of existence
as by law provided."
These distinctions are first, that the state law did not provide
for "extensions" of the corporate existence. The most that can be
said of the law is that it provided a method by which the
stockholders of the company -- not the law -- might, in their
discretion, "renew" the charter for an additional term after the
expiration of the twenty-five-year period which the law provided
for. The second distinction is that the authority to "renew" the
corporate existence of the company, given by the statute, becomes
in the charter, as written by the company, "extensions . . . by law
provided," which gives to the corporation the advantage which many
courts and writers have found in the distinction between the right
of "extension" and the right of "renewal" of a contract, the latter
indicating an intention to resort to a new grant for the future,
while the former contemplates "a prolongation, a lengthening out,"
of a grant previously made. This distinction is perhaps too subtle
to serve the ends of substantial justice in practical affairs, but
apparently the authors of the charter which we are considering
thought it a refinement which it was worth their while to lay hold
upon.
Whalen v. Manley, 68 W.Va. 328;
Leavitt v.
Maykel, 203 Mass. 506, and authorities cited.
The district court finds its conclusive authority for holding
the grant to be, in effect, a perpetual one in
Owensboro v.
Cumberland Telephone & Telegraph Co., 230 U. S.
58. An inspection of the ordinance there considered
shows that there was no attempt whatever in terms to limit the
duration of the grant, that no reference was made in the ordinance
to the life of the corporation to which the grant was made, and
that, by express terms the grant
Page 243 U. S. 187
is declared not to be exclusive, and to be subject to alteration
and amendment. While it is true that the members of this Court
differed as to the effect of the provision for alteration and
amendment of the ordinance, yet the effect of these distinctions,
when grouped together, is such, it seems to me, as to render the
decision in that case wholly inapplicable to an ordinance such as
we are considering here.
It may be that the settled conviction which I have that no
legislator, congressman, or councilman would knowingly consent to
grant perpetual rights in public streets to a private corporation
has so darkened my understanding that I cannot properly appreciate
the point of view of my associates and the reasons advanced in
support of it; but, however this may be, the reasons stated in this
opinion convince me that the grant under discussion was not in
effect a perpetual grant, but was for the period of twenty-five
years, which expired on the first day of June, 1914.
MR. JUSTICE BRANDEIS concurs in this opinion.
MR. JUSTICE DAY concurs in this dissent upon the ground that,
applying the well settled rule that grants of the character here in
question are to be given strict construction, and doubts as to
their meaning resolved in favor of the public, and ambiguities are
to be resolved in like manner, it is by no means clear that the
city intended to grant to the Water Company a franchise for its
then corporate life of twenty-five years and for subsequent
renewals thereof, as the stockholders might determine, and he is of
the opinion that the franchise expired at the end of the
twenty-five-year period for which its charter provided when the
grant was made.