Freeport Water Works Co. v. Prager

WATER WORKS CO.’S APPEAL. Opinion, Mr. Chief Justice Paxson: The Freeport Water Works Company, appellant in this case, was duly incorporated on January 12, 1883, under and by virtue of the provisions of the act of assembly approved April 29, 1874, for the purpose of supplying the borough of Freeport with water. An organization was had under its charter, works were erected, and the company is now furnishing water to those of the inhabitants who desire to take it. This bill was filed in the court below against John Prager, the appellee, for the purpose of restraining him from supplying water to the inhabitants of Freeport, the company alleging that it has the exclusive privilege of doing so. The appellant bases this claim of right on the third clause of the thirty-fourth section of the act of April 29,1874, P. L. 93, providing for the incorporation of water and gas companies. The said clause of said section is as follows : The right to have and enjoy the franchises and privileges of [617] such incorporation within the district or locality covered by its charter shall be an exclusive one'; and no other company shall be incorporated for that purpose until the said corporation shall have from its earnings realized and divided among its stockholders, during five .years, a dividend equal to eight per centum per annum upon its capital stock,” etc. The appellee is the owner of a spring of water situate near the borough, the water from which is conveyed through pipes on his own land to the borough. With the consent of the borough authorities, he has laid his pipes through a portion of the streets, and is supplying those of the inhabitants with water who desire it. His introduction of the water into the borough was prior in point of time to the charter of the water company. , The act of April 29, 1874, was before this court for consideration in Lehigh Water Co.’s Appeal, 102 Pa. 515. In that case a bill in equity had been filed by the Lehigh Water Company to restrain the borough of Easton from constructing water works to supply the inhabitants of said borough with water; the allegation there being, as it is here, that by the act referred to an exclusive right was vested in the water company to supply the water, not only as against other water companies, but also as against the borough itself. The contention of the water company was not sustained, this court saying: “ While the language from the act of 1874, above quoted, would seem to favor the exclusive right claimed by the water company, a careful examination of clause 3 of section 34 shows that the legislature intended that the right should be exclusive only as against other water companies ; for, immediately in this connection occur the words, ‘ and no other company shall be incorporated for that purpose until the said corporation shall have from its earnings realized and divided among its stockholders, during five years, a dividend equal to eight per centum per annum upon its capital stock.’ The provision that another company shall not be incorporated was not intended to .prohibit a city or borough from providing its citizens with pure water, by means of works constructed by itself from money in its own treasury.” A grant of exclusive privileges is not favored by the law, and must be construed strictly. It should not be carried by construction beyond the plain language of the grant. In the act of 1874 the exclusive character of the grant is qualified [618] and limited by the clause above quoted, by which the formation of other water companies is prohibited until the company first in the field shall have realized an eight per cent dividend for five years; and the prohibition of other water companies negatives the idea that it was intended to apply to other than those companies. If we were to give the act of 1874 the construction claimed for it, the consequences might be serious to private rights. The defendant below was engaged in this business before the Free-port Water Works Company was chartered. He had laid his pipes, and was actually supplying a number of persons with water; and, with the consent of the borough, had laid down in the street some 3,500 feet of main, and several hundred feet of service pipe. He had expended some $1,200 in the work. The amount is not material. The principle is the same as though he had expended a million. This company then was organized, and says to him, in substance : “ You must stop this work. We have the exclusive right to supply this borough with water; and, although you have established this business and expended your capital upon it, we claim to take it from you, and practically destroy your investment.” Is it possible for corporate greed to go further than this ? It would require the most unequivocal language on the part of the legislature to confer such a right; and, when it is so conferred, we may perhaps examine into the constitutionality of an act which, without compensation, ruthlessly confiscates private property for the benefit of a corporation, without any pretence that the business so confiscated is injurious to the public welfare, or that such act was in the exercise of the police power of the state. The evident object of the act of 1874 was to encourage the formation of water companies to supply the inhabitants of small towns with water, and to that end prohibited the formation of rival companies until they should have become profitable ; but it was never intended that said companies should interfere with rights vested prior to their formation, nor to place municipal corporations at their mercy for a supply of water. In this view, the law is wholesome, and can do no harm. In the view contended for, it might become an engine of oppression. The decree is affirmed, and tins appeal dismissed, at the costs of the appellant. [619] prager’s appeal. Opinion, Mb. Chief Justice Paxson : This was an appeal by the defendant below from the same decree as that of the water works company, just decided. While the court below sustained the defendant in the main, yet the injunction was allowed to stand, so as to restrain him from extending his line of water pipe through the streets or alleys of the borough of Freeport, beyond the point of its present terminus. We have said all that was necessary in the appeal of the water company. The doctrine of that opinion is fatal to this injunction. We are of opinion that the defendant has the right to lay his pipes through any of the streets of the borough, when authorized by the municipal authorities, and to supply its inhabitants with water. The borough is not hero complaining. Upon this appeal The decree below is reversed to the extent that it continues the injunction, and the bill dismissed ; the costs here and below to be paid by the complainants in the bill.