Ottaquechee Woolen Co. v. Newton

The opinion of the court was delivered by Royce, Ch. J. The grounds stated in the bill upon which the orators predicate their claim for relief are, that the defendants are about to erect a dam across the Connecticut river at a place known as Sumner's Falls, about two miles below the mouth of Ottaquechee river, upon which the mill of the orators is situate, and that the dam so to be erected will throw the water back upon the wheel which propels the machinery in their mill, thus impeding its motion and lessening its power. The prayer is for an injunction against the erection of said dam. The defendants base their right to build and maintain the dam upon several distinct grounds. The first which we [466] shall consider, is the right claimed under the charters granted by the States of Vermont and New Hampshire.' The legislature of Vermont, in 1794, granted a charter to Perez Gallup and his associates giving them the exclusive privilege of locking and continuing locks on Water Quechee Falls (now Sumner’s Falls) on Connecticut river through his, the said Gallup’s, own land, in Hartland, Vermont, The charter specified the tolls to be paid for carrying-property through said lock, and provided, if the company should find it necessary, to erect a dam on Connecticut river and thereby flow or otherwise injure any property lying within this State, how the amount of such injury should be ascertained and the manner of its payment. In 1796 the legislature of New Hampshire granted a like charter to Joseph Kimball, Perez Gallup, and their associates and successors. No right of legislative control over said charters was reserved, except the right to fix and regulate the tolls to be charged. A company was organized under said charters; a dam was erected across Connecticut river; a canal and locks were constructed, and for about fifty years a large and lucrative business was done in carrying- property through said locks. The manner of doing business was so changed by the building of the Passumpsic Railroad that after its completion there was not enough business on the river to warrant the expense of keeping up said canal and locks. In 1857 the dam, and a large lumber mill that stood between the canal and river, and which drew its water from the dam, and had been in operation ever since said dam was built, were swept away by a flood. No attempt has since been made to rebuild the dam, unless it be what the defendants have done in the purchase of certain rights which will be hereafter considered, and of material, and in causing surveys and plans to be made. The company organized under said charters kept and maintained a corporate existence as long as there was a [467] necessity for maintaining the canal and locks, and until all hut one of the shares of stock, which represented the entire property of the company, had become vested in David Sumner. The defendants had purchased all of said shares of stock and all the rights and privileges belonging to said corporation, before the commencement of this suit. No question is made but that the charters, in their inception, were legal, and such as the legislatures had constitutional power to grant; but it is claimed that the franchise is lost; first because the necessity for the maintenance of the canal and locks has ceased to exist; and secondly by non-user. The grant of a franchise by a State, when accepted and acted upon, is regarded as a contract between the State and the parties and their successors claiming rights under it; and unless provision is made in the act conferring the franchise for its termination, its validity and existence cannot be questioned except in a proceeding in a court of law brought in the name of the State for the purpose of enforcing a forfeiture. King v. Amory & Monk, 2 Term, 515; King v. Pasmore, 3 Term, 199; King v. Saverton, Yelv. 190. The reason for the rule is apparent when we consider who the parties to the contract are; the State is under no obligation to insist upon a forfeiture, and may waive any right it has to claim one. The State is not a party to this suit, and would not he bound by any judgment that might be rendered involving the question of the existence of the franchise. A court of equity never decrees a forfeiture; and granting the injunction prayed for would be doing by indirection what it is not competent to do directly. Enjoining the erection and maintenance of a dam is equivalent to decreeing the franchise lost; for the only manner in which it can be rendered valuable is by the erection and maintenance of the proposed dam. The rights of the parties cannot be influenced by the [468] question of the further necessity for maintaining the canal and locks. It may be remarked, however, that it does not appear that the parties claiming said franchise have been in any way responsible for the state of things which has obviated such necessity. Their whole duty to the State was performed while they held themselves in readiness to do what the charters required; and if a necessity should again arise for the use of a canal and locks, and the parties claiming the franchise neglect to provide them, a claim that it should be adjudged forfeited could properly be made. Soo, too, a franchise may be adjudged forfeited upon proof of long continued and intentional non-user; but such evidence can only be available in a court of law and in a proceeding instituted to test the right. Mere non-user of its franchise by a corporation is not a surrender; nor are courts warranted in inferring a surrender from an abandonment in intention only. Angelí & Ames on Corp. s. 743; Slee v. Bloom, 5. Johns. Ch. 366. The franchise granted by the charters under which the defendants claim not having been lost or adjudged forfeited, they, having succeeded to all the rights of the corporation acquired under them, are entitled to possess and enjoy all the rights and privileges originally granted in as full and perfect a manner as the grantees or any of their successors might have done. This view is decisive against the right of the orators to the injunction prayed for; but there is, in our judgment, another reason that is equally conclusive; the writ of injunction is a discretionary writ, and it is the duty of courts, in passing upon the question whether they should be granted or denied, to take a broad and comprehensive view of the situation and ascertain if it will be equitable to grant them. As the wheel that propelled the machinery in the orators’ mill at the time they purchased was located, it would be troubled but little if at all by back-water with a dam across [469] the Connecticut river of the height intended and at the point where the defendants propose to erect one. Some time subsequent to their purchase, for the purpose of increasing their power, they lowered said wheel so that, in its present position, at certain stages, of the water, there would be more or less back-water upon it with such a dam across the Connecticut. We are satisfied that the anticipated trouble from back-water can be nearly, if not quite obviated by the substitution of a different wheel from the one now in use, and that such substitution can be made at small expense compared to the loss the defendants will sustain by being deprived of the right to utilize their water power. The defendants have been at large expense in the purchase of the franchise, and of lands adjacent to said falls, and in making preparations to build up a manufacturing business which, if carried out, can hardly fail to be a great public benefit. To prevent them, by injunction, from going on with their enterprise would, in our judgment, be inequitable. We have not thought it necessary to refer particularly to the numerous authorities cited by the learned counsel. We have examined them carefully, and are confident that they sustain the conclusions to which we have arrived. No question is made by the bill as to the right of the defendants to use the water which they may secure by the maintenance of said dam for the purposes indicated by the evidence, so we are not called upon to consider or define their rights to its use. The decree of the Court of Chancery dismissing the bill is affirmed and cause remanded.