Gas Light & Coke Co. v. City of New Albany

59 N.E. 176, 156 Ind. 406, 1901 Ind. LEXIS 62

• Court: Indiana Supreme Court
• Decided: January 8, 1901
• Docket: No. 18,873
• Status: Published

Opinion

Hadley, J.

On March 22, 18-70, he city of New Albany, by an ordinance, granted the Gas Light-fc'- Coke Company a franchise to'occupy the streets for-the-purpose of furnishing the- city and its inhabitants with gas, 'for -the term of twenty years from and after April 7, 1871. The ordinance provided that the gas -company should -fu’rnish good-,, pure gas for all the' public lamps of the- city, and light, extinguish, and keep the same 'in good repair for the priee of $18 per annum for each lamp — the posts-and lamps to'be furnished by the city — and that the charge for gas furnished the city and its inhabitants should not-exceed $3 for each 1,000 cubic feet. “Provided * "" * that the common council of said city shall have the right at all times' to regulate the time of lighting and extinguishing of the street lamps and of determining the quantity of gas to be- consumed by said city.” Section nine was as follows: “At the' expiration of the said term of twenty years from and' after the said 7th day of April, 1871, .the common council of said city will either purchase from the.said gas' company * *■* their gas works, pipes, meters and other property at the fair and reasonable value thereof, at that time, or grant them the same right and privileges as contained in .this ordinance for another term of not less than twenty years, but subject, however, to such other reasonable conditions, limitations, and restrictions as the interest of said city, and of her 'citizens, may at that time require.” . , . .’

The gas company accepted the terms of the ordinance, and expended a large sum of money in the purchase and construction of its plant. Both the parties proceeded to act under the ordinance contract.' On Marcia 19, 1888, ,the complaint alleges that while the contract aforesaid was in full force and yet had three years to run, the city, by its common council, by a supplemental ordinance, in consideration of the reduction of the price of gas to consumers, including the city (except as to the public lamps), and for the purpose of carrying out its agreement to extend’ said contract, in lieu of purchasing said gas plant, proposed" and agreed to and with the plaintiff (gas company) that all the rights and privileges, duties and obligations held, enjoyed, and owing by the said gas company, under and by virtue of the said ordinance, passed March 22, 1870, and under and by virtue of the said contract and agreement then subsisting between said company and the city, subject to the modifications in said ordinance of March '19, 1888, should be, and the same were, extended and continued in force for the term of twenty-three years from and after sáid' 7th day of April, 1888. The first section of the ordinance of March 19,1888, provided for the extension of the company's franchise for the term of twenty-three years from April 7, 1888, with all the rights and privileges, etc., enjoyed and owing ■by the gas company under the ordinance of 1870, as alleged in that part of the complaint above quoted. The second section provided for the price of gas to consumers to be from $2.10 to $1.50 per 1,000 cubic feet, according to amount c'onSumed and time of payment, the city to have the gas received by meter measurement at'the minimum price, and to pay $18 per annum for each public lamp. By subsequent sections it was provided that the “city agrees to keep in service all public lamps heretofore maintained” and to erect and keep 'in service, three ádditional lamps for every 260 feet of gas main extension, ■ and prescribing the times when the same should be lighted and extinguished.

The gas company accepted the terms of the ordinance of 1888, and both the company and city proceeded to act under it; and the company has expended-a large siim of money in laying mains and in extending its facilities for manufacturing and furnishing gas, and has, since March, 1888, furnished gas to the city and all other consumers for a less price than it was permitted to charge under the ordinance of 1870. Prior to January 1, 1892, the1 city had established eighty-four public lamps in the city, which weré embraced within said agreement. Since January 1, 1892, the gas company has been prepared, ready, and willing to supply all-the public lamps with gas under the terms of the ordinance and agreement, but the city has, since said-last date, wrongfully refused to use the public lamps, and prevented the company from lighting the same, and refused to receive gas and pay for the same,'to the damage of the company. To a complaint alleging the foregoing, the' court sustained a demurrer for insufficiency o'f facts, which action of the court presents the only question we are called upon to decide.

To exhibit an action ex contraciu for damages, appellant, ■ as plaintiff, must show the existence of a valid contract with appellee that has been broken; that is, a contract which not only imposes upon appellee - the obligation to receive gas from.appellant, but receive it in such: definite quantity as will make the. damages for refusal to receive ascertainable with reasonable certainty. 1 Sedgwick on Damages -(8th ed.) §170. We look in vain to the provisions of the ordinance of March 22, 1870, for any semblance of a stipulation on behalf of the city to maintain any number of public lamps, or to take any quantity of the company’s gas. The only references to the'subject in the ordinance of 1870 are as follows: The right is granted-the company to lay its pipes through the streets of the city.'“for the conveyance of gas in and through the- city for the use. of-said city and its inhabitants.” The company shall, furnish “good, pure gas for all the public lamps of the city, and- light, extinguish; and keep the same in good repair” ■ at a fixed price per annum for each lamp. “The price at which said company shall furnish the city and its inhabitants with gas shall not. exceed” a named price. “Provided the city orders shall be received at par in payment for all gas furnished the city by said company, and that the common council of said -city shall have the right at all-times to regulate the times of lighting and extinguishing the street lamps, and of determining the quantity of gas to be consumed by said city.”; It is manifest from these provisions that the city, with respect to its purchase of gas, assumed no absolute obligation, but-, reserved to' itself the rights of an inhabitant of the city to-take or not take gas as' its' common council might, from time to time, determine. ' This is made clear by the express proviso that the council shall- at all- .times determine'-the' quantity of gas to be consumed by-the city. The.right to, determine, at all times, the quantity .to be'consumed by the" city was a continuing right incident to and- coextensive -with-, the duration of the company’s franchise, and’if'in its exercise the common 'council determined to 'consume 'án infinitesimal quantity, or no gas at' all, we dó-not perceive: the principle upon which the city may be made answ.erable in damages. Surely there is no express contract by the city, under the ordinance of 1870, to take gas in any quantity, and-we are not at liberty to imply one and. arbitrarily fix a basis for measurable damages.

We.must then- look exclusively to the ordinance of March 19, 1888, for such a contract on behalf of the city as will support the- complaint. Here we find it expressly stipulated that the city shall keep in service all public lamps theretofore maintained, and to erect and keep in service three additional lamps for every 260 feet of gas main extension under the ordinance, which number of lamps so maintained and erected prior to January 1, 1892, is alleged to be eiglity-four. At this point, however, we are confronted with the contention of appellee that the city had no authority of law to pass the ordinance: of 1888. The first section of the act of March 3, 1883 (Acts 1883, p. 85), §4301 Burns 1894, in force March 19, 1888, reads as follows : “That the common council of any city in this State, incorporated either under the general act for the incorporation of cities, or under a special charter, 'and the board- of trustees of all incorporated towns of this State shall háve the. power to light the streets, alleys and other public places of such city and town with the electric light, or .other form of light, and to contract with any individual or corporation for.lighting such streets, alleys and other public places with the electric light, or other forms of light, on such terms, and for such times, not exceeding ten years, as may be agreed upon.”.

Under the view, we have taken of the case, it is not necessary that we decide (1).whether the franchise -grantéd the gas. company, under the ordinance of-1870, was for twenty-years or for a .forty years’.term with an option- engrafted upon it to be exercised at the end of twenty years, or (2) whether an exclusive franchise for gas lighting for either twenty or forty years is void on'the ground 'of public impolicy. The more immediate question, is, does the ordinance of 1888 come within the operation of the statute of 1883 ? If the ordinance of 1888 was an original, substantive, con- , tract, then the question must be answered in the affirmative. And it was such a contract unless its authorization is to be found in the ordinance of 1870. The only pretended authority is drawn frorii section nine above quoted. Its sub'stance is as follows: At the expiration óf twenty years from April 7, 18fl, the city will then either purchase the gas plant, at a reasonable value thereof at that time, or grant the' company the same rights and privileges enjoyed under the ordinance of 1870 for another term of twenty years, subject to such conditions, limitations, and restrictions as the interests of the city and her citizens may at that time require. The'contract made by the councilmen in office in 1870 was that the right and obligation of purchase or renewal should be ruled by the conditions as they should be found to exist at the end of twenty years, and at no other time. The reasonable value of the plant after twenty years of use, the ability of the city, at that time, to provide the purchase price, the cost of producing gas at that time, the will of the' inhabitants and “interests of the city”, as the experience of twenty years might formulate, were all subjects of importance'and impossible of forecast, that might well and wisely be referred to the judgment of the governing body of the city at a particular date, rather than left to the action of any council that might, from a political or social happening, be found willing to accede to a purchase of the plant or ah extension of the franchise on terms most favorable to the gas company. Anyhow, the contract reads that the city shall, at the end of twenty years, exercise its option. No other date is possible within the terms of the contract. If the option may be exercised at the end of seven-then years, it may for the same reason be exercised at the end of ten, or five, or one year for that matter. What we are here considering is not the power of a municipality to change, annul, or even to extend the term of an existing contract before it expires, but whether in this case the change . and extension sought to be accomplished were in virtue of the old contract of 1870, or a new and independent contract. But one answer seems possible. It is folly to say that the, terms and stipulations of a contract can be superseded by other terms and stipulations unauthorized by the former, and wholly inconsistent therewith, without a new contract. Here the contract of extension in 1888, at the end' of seventeen years, for a term of twenty-three years, was an affirmative departure from the contract of 1870 — not in pursuance thereof — and the agreement of the city in 1888, to keep' in service her eighty-four public lamps, was the assumption of an obligation never before resting upon it, and required by no former agreement, and was not an extension of the company’s franchise “with the same rights and privileges” enjoyed under the ordinance of 1870. We therefore hold that the ordinance of 1888, so far as the same may be considered as a contract with the appellant for the lighting of the appellee city for the term of twenty-three years, must be governed by the act of 1883, supra.

We can not agree with appellant that the act of 1883 relates exclusively to electric lighting. In the enacting clause, and in every instance occurring in the act, composed of five sections, where the kind of light under consideration is described, the language used is, “electric light or other forms of light”, except at the close of the third 'section where the words employed are, “electric or other light”. This language is repeated six times in the act and removes every doubt of legislative intent.

But it is ably argued that if gas lighting contracts are within the inhibition of the act of 1883, the contract under consideration for the term of twenty-three years is not wholly invalid, but good for the term legally authorized. The statute reads that the common council may contract for lighting of the. city for such term as may be agreed upon not exceeding ten years. We recognize the rule- Contended for by appellant, and as clearly stated in. Consumers Oil Co. v. Nunnemaker, 142 Ind. 560, 568, 51 Am. St. 193, as follows: “When, a contract is or can be- so separated in-parts as to constitute two agreements, one illegal and the other legal, -the. latter may be enforced and the transaction fro lanío sustained. But it is otherwise where the contract in its nature-is not divisible.”- But the rule is not available because not-applicable to the facts-of this case. The contract here with respect to duration involves • but a single proposition, a single and specific term- of twenty-three years, which -from its indivisible nature- must- either stand or fall' as an- entirety. - It -'is suggested that the statute, being a restriction upon the power.of city officers to contract, is in-derogation of-the common law, and must therefore be strictly construed-; and that in the absence from the statute of the' words “void”, “null and void”, “absolutely' void”, to be found in numerous other statutes relating to the power of municipal officers, should be held to indicate the legislative intent to be that contracts for a greater period than ten years should be regarded as valid for the authorized period, and voidable only as to the excess.- The answer to this is forcibly given in City of Wellston v. Morgan, 59 Ohio St. 147, 156, 52 N. E. 127, in these words: “This implies that -the purpose of the law is onlfl to prevent the enforcement of contracts made in-violation of its terms, and not to prevent the'making of such contracts. Now, the language of the statute is that the municipalities referred to shall have power to contract for light for any term not exceeding ten years. This implies, with as much force as if it had been expressly stated, that the municipality shall not have power to contract for any term longer than ten years, .and the natural inference is, we think, that the purpose is to inhibit such contracts entirely, for the only certain way. of insuring their non-enforcement is to prevent their attempted execution. This may not be effectually accomplished unless they are held to be void.” Besides, it is elementary that municipal officers have no powers beyond those expressly conferred by statute or necessarily implied to enable them to make effective the powers granted, or to protect the public welfare. Therefore, when they attempt an act that is beyond the limit of their power, the.act'.has-no .official sanction, and is -no. more effectual than if performed by non-official persons. As'a municipal act it is wholly void,, and, being void, nothing of substance may flow from it. .. A. reputable author, in reviewing the powers of municipal corporations to make contracts and in considering the particular question now before us, uses this language: “When a municipal council is authorized by statute to contract for a period not exceeding ten years, its contract for twenty years, or for an indefinite time, can not be sustained as a contract for ten years, but is ¿ntirely void.” Beach on Con. §1148. See, also, 3 Cook on Corp. (4th ed.) §927; Manhattan Trust Co. v. City of Dayton, 59 Fed. 327, 335, 8 C. C. A. 140; State v. Town of Harrison, 46 N. J. L. 79, 85; City of Somerset v. Smith (Ky.), 49 S. W. 456.

Our conclusion is that appellee’s ordinance of March 19, 1888, so far as it was attempted thereby to contract with appellant for lighting the -streets and other public places of the city for a term of twenty-three years, was in violation of the act of 1883,- and- was therefore ultra vires and vnid. This result leaves the appellant without a contract in support of its conlplaint; hence, the demurrer thereto was properly sustained.

Judgment affirmed.

Dowling, C. J., did not participate in this decision.