Arkansas Light & Power Co. v. Cooley

HART, J., (after stating the facts). The chancellor was right in holding that the ordinances of August 5, 1918, providing for a raise in water and light rates were void because upon their passage the yeas and nays were not called and recorded. A grant by a city council to a public service company of a franchise to supply water and light to a municipality and the inhabitants thereof at certain stipulated rates when accepted becomes a contract between the municipality and the grantee, and the conditions therein are binding, the same as the terms of any other contract, both on the municipality and the company. Lackey v. Fayetteville Water Co., 80 Ark. 108; Little Rock Ry. & Elec. Co. v. Dowell, 101 Ark. 223, and McQuillin on Municipal Corporations, vol. 4, par. 1672. Section 5473 of Kirby’s Digest provides that on the passage of every law or ordinance, resolution or order, to enter into a contract by any council of any municipal corporation, the yeas and nays shall be called and recorded. This section has been held to be mandatory and its purpose has been stated to be to make the members of the council feel the responsibility of their action when important measures are before them, and to compel each memher to bear his share in the responsibility by a record of his action which should not afterwards be open to dispute. Cutter v. Town of Russellville, 40 Ark. 105, and Oglesby v. Fort Smith, 105 Ark. 506. The record in the present case fails to show that the yeas and nays were called and recorded upon the passage of the two ordinances on August 5, 1918, and both ordinances are, therefore, void. It is also contended by counsel that the water and light rates could not be raised during the life of the franchise already granted to the company by the passage of an ordinance to that effect by the city council when accepted by the defendant company. In this conclusion we think the chancellor was wrong. As we have already seen the grant to the defendant company in the first instance, of the right to furnish water and electric lights to the city of Arkadelphia and its inhabitants when accepted became a contract between the municipality and the defendant company. In making the contract the municipality was acting’ for the private benefit of itself and its inhabitants and its contracts of that character are governed by the same rules that govern contracts of private individuals. Therefore, like other contracts, a contract between a municipality and a public service company may be modified by mutual consent. McQuillin on Municipal Corporations, vol. 4, par. 1717 and 1723. This is the effect of our holding in Little Rock Ry. & Elec. Co. v. Dowell, 101 Ark. 223. In that case it was held that where a city, in granting a franchise to a street car company, stipulated for free transportation of the mail carriers, the latter have no such interest in the contract as will entitle them to enjoin the city from releasing the street car company from its obligations to carry them free. The court further held that a city council in the exercise of its legislative power, as in granting or modifying a street railway franchise, is vested with a discretion which can be controlled by the courts only after abuse. The court said that when the exercise of the power and discretion of the council is attacked in the courts, a presumption must be indulged that the council has not abused its discretion, but has acted with reason and in good faith for the benefit of the public. The reason is that any other theory would be to substitute the judgment and discretion of the courts for the judgment of the members of the council with whom the Legislature has lodged this power. The same principle was announced in Asher et al. v. Hutchinson Water, Light & Power Co. (Kan), 61 L. R. A. 52. In that case the court held that a contract by ordinance between a city and a water company, that the latter will lay water mains and supply the inhabitants with water on certain streets of the city, may, after such mains are laid, be so modified and changed by the city and water company as to require the water company to remove'its mains from certain streets, where, in the judgment of the council, public necessity no longer requires their continuance, to other portions of the city where public necessity requires that mains should be laid, and that injunction will not lie at the suit of an individual to prohibit the city and water company from making such change, notwithstanding it may greatly decrease the value of his property. In discussing the question the ‘court said: “In such cases there is no contractual relation between the city and the individual upon which the principle contended for by plaintiff can rest. It is true that by some of the conditions of the contract the individual is collaterally interested, but as to such the contractual relation is not between the city and the individual, but between the defendants and the individual. An individual can acquire no vested right as against the public in the continued service of a public utility. Such a doctrine, once admitted, would destroy the convenience as a public utility. It would then become hampered, and subject to the control of the individual, and made to subserve such interests, to the detriment of the public welfare. It follows that there was no error in refusing the injunction.” The ordinances which have for their purposes the raising of the water and light rates were introduced ini the city council upon the application of the defendant company and their terms and conditions were fully accepted by the company after they had been passed by the council and on this account such ordinances, if they had been properly passed, would have become valid and binding upon the parties to them. •. The property owners had no vested right in the contracts between the city and the public service company and it is not claimed that an unconscionable, extortionate, or unreasonable rate was provided in the ordinances. It follows from the views expressed in the opinion that the decree must be affirmed,