Laighton v. City of Carthage

PHILIPS, District Judge (after stating the facts as above). When the franchise contract between the water company and the. city expired by limitation, the right of the company to operate its plant and use the streets of the city therefor ceased, and with it the right of the city to demand the service. The relation between them was • contractual, so that when the contract ended either was at liberty to go its way. Neither could compel the other against its consent to do business with it. By consent the company continued to furnish water supply; [149] and tlic city continued to take it as theretofore. The law is well settled that, under such tacit arrangement, while so acting the water company was rendering a service to the public, and, therefore, during such service it became subject and amenable to the obligations growing out of such assumed quasi public service, to the extent that it was required to supply water adequate, to its reasonable capacity, and at reasonable rates.' aiid to this extent became subject to the jurisdiction and supervision of the courts to enforce such implied undertaking. The authorities are in agreement to this effect. Bridge Co. v. Prange, 35 Mich. 100, 21 Am. Rep. 585; Cin. Inc. Plane R. R. Co. v. Cincinnati, 52 Ohio St. 609, 44 N. E. 327; 4 Cook on Corp. (6th Ed.) § 913; Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 91 N. W. 1081. As this postulate is conditioned upon the implied continued contractual relation, as in the case of a mere license, either party may at will withdraw therefrom and put an end to it. Were the law otherwise, it would be in the power of a mere licensee to perpetuate indefinitely an expired franchise, and it would be in the power of the grantor to compel continued service indefinitely from one under no contractual obligation to render service. The authorities relied on by respondent’s counsel to support his contention that after the expiration of the charter contract, -where shutting off the water supply would entail great inconvenience and disastrous consequences to the public, depending, as in this case, upon the continued supply of water, a court of equity may interpose to enjoin the shutting off the supply and removing the plant, will be found to apply to the instance where the grantee, after the lapse of the franchise, continues to perform such quasi public service. So long as that relation continues, the party exercising this public function, is under obligations, as heretofore stated, and is amenable to legal compulsion to render this service at reasonable rates, and may not shut off the water supply because of any disagreement with the municipality respecting delinquencies oil its part in making payment therefor, as the courts are open to compel the recipient to do justice so long as the furnisher is willing' to continue to render such public service. In other words, where the franchise of a public service corporation expires, the relation thereafter between the parties is no otherwise than that of a corporation engaged in a quasi public business for which a franchise is necessary to confer the absolute right. So long as it continues in such business, it is subject to regulation by the state, or the municipality, a subordinate agency of the state. But it is under no obligation to continue at the pleasure of the public, and it may elect to quit. Munn v. Illinois, 94 U. S. 113-126, 24 L. Ed. 77; Gaslight Co. v. Zanesville, 47 Ohio St. 36, 23 N. E. 60; East Ohio Gas Co. v. City of Akron (Supreme Court of Ohio, not yet officially published), 90 N. E. 40. The foregoing proposition was not seriously controverted by counsel for the city at the hearing. The real contention put forth by him is that, bv reason of the injunction proceeding had in the state circuit court, exclusive jurisdiction over the subject-matter of the present hill was reserved to and resides in the said state court. To this there are [150] several complete answers. In the first place, the entire subject-matter involved in that suit concerned the right of the water company to shut off the supply of water to the city because of the claimed failure of the city to pay the arrears for hydrant rentals. The bill and answer— the whole issues tried out in that suit—pertained to the question as to the accounting between the parties, and the right of the company to shut off the water simply because of the city’s delinquency. The company tacitly recognized that in furnishing water after the expiration of the franchise it was performing a quasi public service for which it was demanding pay. It had not declared its purpose to cease operating its plant and to withdraw it from the city. The court ascertained that a large amount was in fact owing by the city to the company. To say the least of it, the court was most indulgent to the city. It did not. as is customary, require the defendant to make good its delinquencies as a condition to the injunctive relief, but only required it to pay over what money it had on hand. And after finding the fact to be that the city had diverted to other use a considerable sum of money applicable to said hydrant rentals, it required the company to proceed until such time as the city could reinstate that fund. It so held on until all payments were or should be paid. The relief given in that case could be no broader than the issues involved. When the court retained jurisdiction for further orders, its effect, in law, is that it retained it ‘only for the purpose of carrying to completion its decree. By no possible permissible construction could the court thereunder extend its jurisdiction to compel a subsequent purchaser of the plant to continue to furnish the city water at its pleasure. In the second place, the decree was not in rem. It neither fixed any lien on the res, nor was the physical property in custodia legis. The decree was wholly in personam, as fár as it went, commanding mere personal service of the corporation under the conditions therein involved. In the third place, the property was burdened with an antecedent mortgage subject to the conditions therein expressed, among which was the right of the mortgagee to foreclose in case of default in the payment of interest, etc. The company did default, becoming in fact insolvent, whereupon the trustee in the mortgage was entitled to enter into possession and foreclose. Thereupon the stockholders and directors, as they had a right to do, in convention declared such default and forfeiture, and to avoid the expense and delay of a foreclosure proceeding, by consent of all parties concerned, executed to the complainant a deed of conveyance to the property to hold in trust for the benefit of the mortgagee. The mortgagee whose rights were anterior was not made a party to the suit in the state court, and is not bound by any judgment therein. “A mortgagee of a street railway company is not concluded by decree affecting the validity to wbicb the mortgagor only was a party.” Louisville Trust Co. v. Cincinnati, 76 Fed. 293-296, 22 C. C. A. 334. ‘‘The privity of the mortgagee with the mortgagor respects only the estate as it existed at the date of the mortgage. It cannot be affected by decree against the mortgagor to which he is not a party.” Secor v. Singleton (C. C.) 41 Fed. 725, and authorities therein cited. [151] Palpably enough the complainant cannot he regarded as a purchaser pendente lite, taking the property cum onere, under the mere decree for personal service to be performed by the mortgagor, imposed after the making of the mortgage. When this purchaser so acquired the property, he immediately gave notice to the city that he would no longer supply it with water, and that lie would dismantle and remove the plant. Pie was thereafter under no contractual relation with or obligation to the city, expressed or implied, to render continual service to it. No authority has been cited, and I am unable to find any, that even squints at the principle of law that by any stretch of judicial authority the state court, under a decree which was res inter alios acta,, can reach out its hand and compel this complainant to run its plant indefinitely for the accommodation of the defendant city. The right of the complainant at the termination of the contract to enter upon the streets of tlie city to remove its plant, without let or hindrance, does not admit of debate. As expressed in the syllabus in Cleveland Electric Railway Company v. Cleveland, 204 U. S. 116, 27 Sup. Ct. 202, 51 L. Ed. 399: “In the absence of any provision to that effect in the original franchise, the city granting a franchise to a street railway company cannot, on the expiration of the franchise, take possession of the rails, poles, and operating appliances ; ilioy are property belonging to the original owner, and an ordinance granting that property to another company on payment to the owner of a sum to be adjudicated as its value is void as depriving the owner of its property without due process of law.” Tlie right to enter upon the streets of the city for the purpose of excavating and removing the water plant, pipes, hydrants, and other equipments, inheres in the very right of ownership of the property, as, otherwise, the right of ownership could not he exerted. Both parties have presented records, papers, and affidavits on this hearing, to which the court has given due consideration. Among these are the affidavits of the city officers portraying in strong colors tlie dire consequences of discontinuing the supply of water to it before the completion of its independent water system now in process of construction. For such results the city can neither rightfully nor morally blame any one but itself. The wrath of its inhabitants should he against the city authorities, or turned inward upon themselves as the authors of their own misfortune. The city had its choice either by anticipation to have built its own waterworks, and have them in readiness when the contract with the water company should expire, or to have negotiated with the company for the purchase of its plant; and, if tlie terms of the purchase could not be agreed upon, the city was empowered by the state statute, by prescribed legal procedure, to have the company’s plant condemned to its use at a price to be fixed by a local court or a jury presumably not unfriendly to it. It and its citizens saw fit to take neither course. By refusing to pay its debt to the water company, and by diverting the fund created for such purpose, it thereby rather aggravated the alleged condition of insufficient water supply, as it was thereby crippling the very means by which the operation of the plant could be rendered efficient. It could not convert [152] its- own delinquencies into an equitable right to compel, on its own terms, the company to maintain and operate its plant, furnishing it and its inhabitants water until, in its own way and time, it could complete its waterworks, and then challenge the company’s right to use its streets either in furnishing private consumers water, or to Temove its plant. This is especially intolerable when it appears from the affidavit on behalf of the complainant that it is operating its plant at an expense in excess of the income from the water rentals. Doubtless this court, by its action in the premises, will incur denunciation from the people who may suffer from the hand of the law'. But as the law is “a rule of action prescribing what is right, ami prohibiting what is wrong,” the court must follow where it leads, regardless of personal consequences to the mere minister of justice. The mayor and council of the city state in affidavits that it is not their purpose to'institute any new suit or action to prevent the proposed action of the complainant. But they were careful to refrain from saying that they or the city did not intend to take any action to prevent or obstruct the complainant in the exercise of his claimed right. And Judge Perkins, representing the city herein, with that candor characteristic of an intellectually honest man, admitted in effect that the said state court would be applied to to deal with the complainant's servants and employés if they undertook to dismantle and remove the water plant as for a contempt of said injunctive decree. In view of the former action of that court in granting a temporary injunction against this complainant, under the semblance of a supplementary proceeding in the original suit (which, from the discussion had before this court on the motion to remand, counsel for the city must have become satisfied was a clear misconception of a legal right), it is transparent what will ensue if this court should deny the injunction herein prayed for. The moment an employé of the complainant undertook to shut down the pumps, or stick a pick in the streets of the defendant for the purpose of removing the plant, water mains, hydrants, etc., the defendant would obstruct and intimidate them by applying to the state court for a contempt attachment, having such laborers arrested and brought before the court to be tried for contempt. It is no answer to this to say this court cannot by injunction stay such course or procedure, that the jurisdiction of that court to proceed can be tried out in the due course of judicial proceeding; as, for instance, by appeal, during which the laborer may lie in jail under sentence, unless the complainant, at his own expense, undertook to conduct such empíoyé’s defense, or to furnish bail for him. Such litigation might be interminably multiplied and indefinitely prolonged, during which the defendant will have completed its own water plant, compelling in the meantime the complainant to- furnish it water, with or without loss to him. J\o more effectual means could be devised, without pecuniary liability on the part of the city, for the wrong done the complainant than this proposed scheme. Short, indeed, would be the arm of tliis court, if it could not reach out its protecting hand to relieve a suitor, under such circumstances, from such gross injustice. A temporary injunction is ordered as drawn by the court. Footnotes [*] For other eases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Eep’r Indexes