Light, Heat & Water Co. v. City of Jackson

Cooper, C. J., delivered the opinion of the court. In view of the nature and character of the subject-matter of the contract which the board of mayor and aldermen of the city of Jackson was authorized to make by the third section of the act of February 29, 1888, we think the contract entered into with the appellant was within the delegation of power, so far as the time of its duration is involved. The language of the act is 1 £ that the said board of mayor and aldermen be, and they are hereby, authorized and empowered to contract with any reliable corporation, association or individual, for supplying the said city of Jackson with water and electric or gas lights, from year to year, and to levy and collect a tax necessary to discharge the debt in that behalf contracted by them.” We know that the machinery, mains and appliances required for supplying the city with water are costly to begin with, and of relatively little value if removed when once located. Permanency of the plant is essential to the realization of any profit in the enterprise, and in cities having no greater population than that of Jackson, the use of water for municipal purposes would probably be a prerequisite to secure the investment of the capital necessary to the construction of the plant. The words from £ £ year to year,5 ’ relied upon by the appellee as limiting the — 644 — power of the officers of the city to the making of the annual contracts, derive much of their significance from the subject and nature of the thing contracted for, the character of the body on which the power is conferred, the end to the attainment of which the power is to be exercised, and the extent to which such powers for such purposes are usually conferred. A few days before the passage of the act of February 29, 1888, the legislature had incorporated the water company and conferred upon it the right to lay its mains in the streets of Jackson. A few days after the act was passed, a commission was appointed by the legislature to contract for water for the state institutions, situated in and near the city, for the term of twenty-five years. In this act power was conferred upon all municipalities to enter into contracts, for a term not exceeding twenty-five years, for supplies of water, on a two-thirds affirmative vote of the qualified electors, but the act provided that it should not apply to municipalities whose charters already conferred the power of making contracts for water. The act of February 29, is, in its nature, though not in its terms, an amendment of the city charter. It deals wholly with municipal affairs, and confers powers upon the officers of the city, and a charter is but a grant of power. In view of the interests involved, counsel for the city and the water company entered into a written stipulation, by which it was agreed that certain questions not properly presented by the demurrer should be submitted to the court, and others which might be decided should be considered as withheld for decision upon final hearing of the cause. The purpose of the agreement is to have an authoritative construction of the contract, to the end that the course of the litigation may be directed unless a satisfactory adjustment of the matters in dispute can be made. Without taking up seriatim the various questions propounded, they will be found to be solvable by the following general announcement of our construction of the contract: The end and purpose of the contract was that the city and its — 645 — inhabitants were to be supplied with water, for domestic and public purposes, including ‘ ‘ first-class fire protection. ’ ’ But this protection, in case of fire, was to be such as might be afforded within the territory covered by the “eight linear miles ’ ’ of mains contracted for, by water forced by ‘ ‘ two separate and distinct pumps, with suitable boilers, and other attachments, capable of pumping two millions of gallons of water in twenty-four hours against a pressure equivalent to at least a pressure of one hundred and fifteen feet head, at a piston speed not greater than one hundred and twenty feet per minute, for domestic supply; also, able to work against one hundred and twenty-five pounds per square inch pressure, when necessary for fire protection, ’ ’ the water passing through mains of the kind and quality stipulated for, and of diameter not exceeding twelve inches. For territory not covered by the eight miles first contracted for, the machinery was to be from time to time increased in size, as the extension of the mains should' be made, in order that the same protection afforded within the first eight miles might be supplied to such additional territory. But if with smaller mains “first-class fire protection” ,could be afforded to all parts of the city, mains of greater sizes than were necessary for such purpose were not to be required. The city contracted for results, and not for the mains or appliances by which such results should be reached, except that the quantity and force of the water should not be required to exceed the quantity which could be supplied by the maximum of power exerted against the minimum of resistance, in the named territory, by the use of the named pumps and mains. If the water company put down mains of smaller size than the maximum stipulated for in the contract, acceptance thereof by the city would not relieve the company from supplying the stipulated quantity and force of water named in the contract. The city stipulated, as we have said, for results and not for mains or machinery. The mains, when put down, do not become the property of the city. They remain the property of the com — 646 — pany, whatever may be their size, so that they be not less than four inches in diameter. All the city can claim is that machinery of sufficient power shall be used to supply the quantity and power of water named in the contract. But the company stipulated to supply a certain fixed power, and mains of “ ample size to carry out the provisions of this agreement, and to afford the city, when such pipes are laid, first-class fire protection.” This clause of the contract must, of course, be read in the light of other provisions, by which it is provided that the mains shall not be required to exceed the greatest size stipulated for — • twelve inches. The contract of the company is a continuing-one, and the duty of supplying water according to its terms must be met and discharged. Its officers know, or ought to know, far better than the city authorities, what machinery and mains are requisite to the due execution of the contract, and the failure of the city authorities to take exception to the size of the mains does not relieve the company from meeting its obligation according to its agreement. The remedy of rescission, which the courts are reluctant to afford when adequate damages for breach of contract may be recovered at law, is peculiarly appropriate in cases of this character. What the city contracted for was a constant supply of water for the protection of the property of its citizens against fire. A failure to afford such supply would result in no injury if no fire occurred, but to say that, because no damage has been sustained, no right, either of an action at law, or in equity for rescission, can be maintained, would hazard the security of the inhabitants, and leave wdthout sufficient remedy the perpetuation of the very danger to avoid which large outlays of public money have been made for years. In Farmers’ Loan & Trust Co. v. Galesburg, 133 U. S., 156, the supreme court of the United States, speaking of the remedy of rescission in a case of this character, said: “ But it seems to us that, in respect to a contract of the character of the present one, the ability of the water company to continue to furnish — 647 — water according to the terms of the ordinance was a condition precedent to the continuing right of Shelton and his assigns to use the streets of the city and to furnish water for a period of thirty years, and that when, after a reasonable time, Shelton and his assigns had failed to comply with the condition as to quantity and quality of the water, the city had a right to treat the contract as terminated, and to invoke the aid of a court of équity to enforce its rescission. A suit for the specific performance of the contract, or a suit to recover damages for its nonperformance, would be a wholly inadequate remedy in a case like the present. The danger to the health and lives of the inhabitants of the city from impure water, and the continued exposure of the property in the city to destruction by fire from an inadequate supply of water, were public questions peculiarly under the care of the municipality, and it was entitled and bound to act with the highest regard for the public interests, and at the same time, as it did, with due consideration for the rights of the other parties to the contract. ’ ’ It remains but to add that the test prescribed by the fifth section of the contract was intended only to determine the time at which the rental of the fire hydrants should begin, and that the penalty prescribed by section eleyen was not in the nature of liquidated damages for the entire breach of the contract, but a penalty for the occasional and temporary neglect on the part of the company to keep all or any of the hydrants in proper repair. The question whether the company must take.notice of all fires occurring in the town, or is entitled to notice and a demand for direct pressure from its pumps, is answered by the statement that this would depend upon the circumstances and extent of the fire. The burning of a small building in a remote part of the city might be unknown to the employees of the company as well as the fire department of the town, and negligence of duty would not be predicable of the failure to put on the pressure in such case. But the company must take notice of such fires as it would be negligence not to know of, in — 648 — view of its duty, its opportunities of information and the nature of its business. It is not entitled to a formal demand for direct pressure. That must be supplied, by the terms of the contract, when and so often as the necessity therefor arises. The breach of contract for which rescission should be decreed must be one not occasional and immaterial only, but one going to the very substance of the contract. The decree is affirmed.