Rogers Park Water Co. v. City of Chicago

131 Ill. App. 35, 1907 Ill. App. LEXIS 3

• Court: Appellate Court of Illinois
• Decided: January 7, 1907
• Docket: Gen. No. 12,914
• Status: Published

Opinion

Mr. Presiding Justice Brown

delivered the opinion of the court.

Three years ago the appellant was before this court as appellee in a cause in which the Circuit Court of Cook county had perpetually enjoined the city of Chicago from enforcing an ordinance fixing the maximum rates which the Bogers Park Water Company should charge the inhabitants of that part of the city of Chicago for water furnished. The ordinance had been passed under authority of an Act of the General Assembly approved June 6, 1891, to enable cities to fix rates and charges for the supply of water furnished by any water corporation to the inhabitants of such cities. This court held that the city had power to pass a proper ordinance, but that the ordinance passed was admitted by the pleadings to have been passed without investigation, and was unreasonable and unfair, and consequently invalid. It affirmed the action of the Circuit Court in enjoining its enforcement. Chicago v. Rogers Park Water Co., 116 Ill. App. 200. This decision of the Appellate Court was afterwards affirmed by the Supreme Court, Chicago v. Rogers Park Water Co., 214 Ill. 212, on substantially the same grounds on which the decision was placed by this court.

Before the aforesaid suit for an injunction was brought, an inhabitant of the territory in question had secured from the Circuit Court of Cook county a peremptory writ of mandamus on the Rogers Park Water Company to furnish him water at rates in accordance with the ordinance of the city. Against the contention of the company that the schedule rates fixed by the ordinance of the village of Eogers Park of November 12, 1888, constituted a binding cohtract in favor of the company, allowing it for thirty years to charge its customers within the given territory those rates, the Supreme Court of Illinois (Rogers Park Water Company v. Fergus, 178 Ill. 571) and afterward the Supreme Court of the United States (Rogers Park Water Company v. Fergus, 180 U. S. 624), affirmed the judgment awarding the writ. The reasonableness of the city ordinance was not passed on in this case, but the contractual right of the water company to maintain the original village ordinance rates was denied. The company is now seeking to enjoin the city of Chicago from extending its own water plant into the territory involved in these former suits, and having been denied such injunction by the court below, has appealed to this court.

In the opinion in Chicago v. Rogers Park Water Company, 116 Ill. App. 200, this court, speaking through Mr. Justice Adams, said: “If the city desires to supply water at city rates to the inhabitants of the territory in question, which would be commendable, there is no legal obstacle to its so doing.”

It is true that the question was not in that case directly presented whether the city could legally extend its own system into the territory involved, and the remark was incidental, but we see no sufficient reason now to modify it or to limit its reference to a possible purchase of the appellant’s plant.

The appellant claims an express or implied contract by the village of Rogers Park, that it would not itself undertake to fnrnish water to its inhabitants for the space of thirty years, and that this contract is binding on the city of Chicago by virtue of the annexation. The case seems to us to be governed by the very general principle thus stated in the opinion of the Supreme Court of the United States in Rogers Park Water Co. v. Fergus {supra): “A strict construction must be exercised. The contract claimed concerned governmental functions, and such functions cannot be held to have been stipulated away by doubtful or ambiguous provisions,” and by the more special doctrine suggested as applicable to Illinois in the opinion of the same court in Freeport Water Company v. Freeport City, 180 U. S. 587, that if it be the declared policy of a State that the power of alienation of a governmental function does not exist, a subsequently asserted contract will be controlled by such policy.

The minority of the. Supreme Court of the United States, 'consisting of four judges, held in the case of the Rogers Park Water Co. v. Fergus, and in the similar cases decided at the same time, of Freeport Water Company v. Freeport City, supra, and Danville Water Company v. Danville City, 180 U. S. 619, that the theory of the Supreme Court of Illinois in relation to the subject-matter of a water supply was untenable. In their dissenting opinion in the Free-port eases, they attributed to the Supreme Court of Illinois the doctrine that fixing of rates for a water supply for a municipality was a governmental function or public attribute, incapable of being alienated or restrained by the obligations of a contract, even although express authority to do so was conferred by the legislature on the municipality. This proposition for themselves they distinctly repudiated. They asserted that the contrary was the doctrine of the Supreme Court of the United States, and that as the question before the Court was concerning an alleged impairment of a contract by subsequent State legislation, it was bound to form an independent judgment as to the existenée of the contract and its terms, without reference to the construction placed by the Supreme Court of the State on its laws.

The majority opinion in the Freeport case also declared that it could not concur in the view of the Supreme Court of Illinois (if such were its view) that municipal corporations could not be invested with the power to bind themselves by an irrevocable contract not to regulate water rates. But the opinion proceeds, “We do not mean to say that if it was the declared policy of the State that the power of alienation of a governmental function did not exist, a subsequently asserted contract would not be controlled by such policy. In Stevenson v. School Directors, 87 Ill. 225, 255, and in Davis v. School Directors, 92 Ill. 293, it was held that a school board could not make a contract for the employment of teachers to extend beyond the current year, and this was put upon the ground of the inability of one board to control the exercise of the functions of its successor. In East St. Louis v. East St. Louis Gas Light & Coke Company, 98 Ill. 415, decided in May, 1881, the doctrine of those cases was not adopted as applicable to a contract for gas rates, nor was it rejected. One Justice asserted it with great emphasis, quoting those cases. The court, however, left it disputable, placing the decision on other grounds. There was at least admonition in those cases to persons entering into contracts with municipalities. If there was anything more, we need not decide, as there are other grounds for judgment.”

In the case of the Rogers Park Water Company v. Fergus, as in the Freeport case, the Supreme Court of the United States found it unnecessary to pass on the right of the municipality to bind its hands for thirty years in the regulation of water rates, because it could hold that it had not attempted to do so. But its language in the Fergus case, which we first quoted, to the effect that the contract claimed concerned governmental functions, and that such functions could not be held to have been stipulated away by doubtful or ambiguous provisions, is significant. It is made doubly so by the implication plainly made, that if this ground for the decision had not been found, the acts of the legislature would not have been found sufficient to establish the power in the village of Bogers Park to grant to the Rogers Park Water Company the right to collect for thirty years the rates prescribed by the ordinance of November, 1888.

The question was not the same as in the case at bar, it is true, but the policy of the State of Illinois, which is plainly recognized, and the doctrines which by both the majority and minority of the court are imputed to the Supreme Court of Illinois, apply certainly with as much force to an asserted contract on the part of a municipality not to furnish a public service of water for thirty years, as they do to an asserted contract on its part not to diminish the rates established by the original ordinance. .If the latter would be the abdication of a public and governmental function, a fortiori so would the former.

Therefore, as the Supreme Court of the United States has said, no doubtful or ambiguous provisions can be held to have expressed it. But more than that, the Supreme Court of Illinois, by whose decisions we are bound in a matter involving the construction of the statutes and constitution and policy of the. State, holds, if the expression and implications of the Supreme Court of the United States to which we have called attention are accurate, to doctrine more unfavorable to the contention of the appellant than does the Federal tribunal.

Despite the strong dissent by the minority of the court in the Freeport case from the proposition that the Illinois decisions should control the determination of the cause, the opinion of the court, beyond question, recognizes and expresses a disposition to agree with the State court.

Appellant has pressed strongly on our attention as decisive of this appeal Vicksburg v. Vicksburg Water Works Company, 202 U. S. 453, and if we leave out the peculiar factor in the case at bar arising from the subsequent annexation of the originally contracting municipality with a larger and neighboring one having its own system of water works, it must be conceded that as applied to a case arising in Mississippi, the opinion of the court bears out the contention of the appellant, but the considerations which we have shown are recognized by the entire court in the Freeport case concerning the policy of Illinois and the decisions of its highest tribunal, make it' probable, to our mind, that if the Vicksburg case had come from Ulinois, the language of Judge Harlan in his dissenting opinion would have met the concurrence of the majority, and that they would have held for Illinois what he desired to hold even for Mississippi: First, that the municipality in question had no authority to give an ex-elusive right to any person or corporation to maintain a system of water works for the benefit of that city and its people; and, second, that even if this be not .the law, it ought not to be held from the terms of the present ordinance that the municipality had precluded itself from establishing and maintaining at its 'own expense a system of water works for. the benefit of its people.

We agree with his conclusion that “the contrary cannot be maintained unless we hold that a municipal corporation may by mere implication bargain away its duty to protect the public health and the public safety as they are involved in supplying the people with sufficient water,” .and that as “nothing can be more important or vital to any people than that they should be supplied with pure, wholesome water, it should not be held that a municipality by mere implication can so tie its hands that it cannot perform the duty which it owes in that regard to the people.”

We moreover think the Supreme Court of the United States, if it should so decide a cause coming from Illinois, and involving the questions at issue here, would be following the natural and logical trend of its opinions in such cases earlier, it is true, than the Vicksburg case, but of equal authority as to the principles defined as Hamilton Gas Co. v. Hamilton, 146 U. S. 258; Bienville Water Supply Co. v. Mobile, 175 U. S. 109; Bienville Water Supply Co. v. Mobile, 186 U. S. 212, 223; Skaneateles Water Works Co. v. Skaneateles, 184 U. S. 354; Helena Water Works Co. v. Helena, 195 U. S. 383, and especially Knoxville Water Co. v Knoxville, 200 U. S. 22, in which Mr. Justice Harlan voiced the opinion of the court, in much the same terms that he employed in his dissenting opinion in the later Vicksburg case.

But after all, the actual question involved is not what the Supreme Court of the United States has decided, or might in the future decide, on the question involved here, but what the Supreme Court of this State has decided as to it, and what the principles and doctrines it has laid down which should govern us in our disposition of it. For we must follow .the Supreme Court of Illinois in our decisions on the construction of the laws of Illinois, unless or until they overrule the same, even if the Supreme Court of the United States holds contrary doctrine. This is most emphatically declared, for example, in the separate opinion of Judge Walker in E. St. Louis v. E. St. Louis Gaslight Co., 98 Ill. 415.

We think that both the majority and minority of the Supreme Court of the United States, as that court has heretofore divided on these water company cases, have in effect imputed to the Supreme Court of Illinois the doctrine that such governmental functions as relate to the municipal supply of water cannot be alienated ,or abdicated. We think too, that they were right in their view of that which was involved in the holdings of our Court of last resort..

In the opinion in the City of Danville v. Danville Water Co., in the Supreme Court of Illinois, 178 Ill. 299, which decided that the city of Danville had no power to make a contract to pay fixed and unalterable water rates for thirty years to the Danville Company, but might by ordinance from time to time regulate those rates, the court uses this language:

“It is well settled that municipal bodies can only exercise such powers as are conferred upon them by their charters, and all persons dealing with them must see that the body has power to perform the proposed act.” To this is cited Law v. The People, 87 Ill. 385, and then the opinion proceeds to quote with approbation this language from Beach in his work on Public Corporations (sec. 554), speaking with reference to a contract between a water company and a city for the furnishing of water by the former to the latter: “The city could bind itself by such contracts only as it was authorized by statute to make. It has no power to grant exclusive privileges to put mains, pipes and hydrants in its streets, nor can it lawfully, by contract, denying to itself the right to exercise the legislative powers vested in its council;” and also this language from the Court of Appeals in New York & Syracuse Water Company v. City of Syracuse, 116 N. Y. 167: “The municipal corporation as such could bind itself by such contract only as it was authorized by statute to make. It could not grant exclusive privileges especially to put mains, pipes and hydrants in its streets, nor could it lawfully by contract deny to itself the right to exercise the legislative powers vested in its common council. * * * In dealing with municipal corporations parties are chargeable with knowledge of their powers as they are furnished only by statute.” The opinion further on contains this language: “No question is made by either party to this litigation as to the validity of this act, so far as it gave the right to contract for thirty years. Therefore "we pass no. opinion upon this question.* * * The business of furnishing water to a city and its inhabitants by means of water works .which require the use of the public streets of the city for the laying of water pipes, is a business public in its nature and upon which a public interest is impressed. * * * If, however, it be doubtful whether the language of the Act of April 9, 1872, does or does not confer the power upon cities to contract for a supply of water at a fixed rate for the whole period of thirty years, such doubt must be resolved in favor of the public. In Seeger v. Mueller, 133 Ill. 86, we said, p. 94: ‘Any ambiguity or doubt arising out of the terms used by the legislature in conferring their powers must be resolved im favor of the public. * * * No estoppel can ordinarily arise from the act of a municipal corporation or officer done in violation of or without authority of law. Every person is presumed to know the nature and extent of the powers of municipal officers, and therefore cannot be deemed to have been deceived or misled by acts done without legal authority.’ * * * A legislative body cannot part with its powers by any proceeding so as not to be able to continue the exercise of such powers. It has no authority even by contract to control and embarrass its legislative powers and duties. What might be proper for a city this year might not be proper the next year. * * * No contract is reasonable by which the governing authority abdicates any of its legislative powers and precludes itself from meeting in a proper way emergencies or occasions that may arise.”

While it is true that the question in the case on which the learned judge was speaking was not the right of the city council to estop the municipality from furnishing water in after years from its own plant, but its right to estop itself from regulating the rates which the private company could charge, the reasoning applies with no greater force to the one case than to the other. We can have little doubt that had the question been involved, as in this case, whether a city authorized by its charter itself to erect, construct and maintain a system of water works in its streets, and also authorized in its discretion “to contract with any person or incorporated company for a sirpply of water for public use for a period not exceeding thirty years,” could by the action of its governing authority under the latter power estop itself and all succeeding councils and governing authority from taking advantage of the former power, for the period of thirty years, the decision on precisely the same reasoning would have been adverse to such power of estoppel.

This also is, in our opinion, implied in the language of all the opinions in the case of East St. Louis v. E. St. Louis Gas Light Co., supra, and is certainly expressly laid down with great force and elaboration by Judge Walker’s separate opinion in that case.

Whatever contract was made by the village of Rogers Park with the Rogers Park Water Company was made by the ordinance of November 12, 1888. That ordinance was passed under the authority of an Act of the Legislature approved April 9, 1872, and amended June 26, 1885, and an Act approved April 10, 1872. In the first of these Acts authority is given to cities, incorporated towns and villages to contract with an individual or incorporated company which has constructed water works “for a supply of water for public use for a period not exceeding thirty years;” and, by the second, the city council or board of trustees is given the power “to authorize any person or private corporation to construct and maintain the same” (i e., a water supply and water works), “at such rates as may be fixed by ordinance, and for a period not to exceed thirty years.”

There is no attempt here made to give legislative authority to grant exclusive privileges or- make exclusive contracts of any sort. It is to be doubted whether even if such an attempt had been made, it would have been effective to give the power. It might well have been claimed to be unconstitutional under section 14 of article 2 of the constitution of Illinois. But as no such attempt was made, it is plain that the ordinance in attempting to grant an exclusive right is liable to the animadversion which the Supreme Court has since the constitution of 1870 passed on such claims or attempted grants.

In Chicago Telephone Company v. N. W. Telephone Company, 199 Ill. 324, for example, the Supreme Court said, p. 348: “The city of Aurora had no power under the laws of the State to grant the exclusive use of its streets to one company alone for telephone purposes. * * * A city council has no power under the City and Village Act of this State to grant an exclusive franchise to a private corporation to use its streets for the purpose of conducting and maintaining a telephone system in the city. Such an exclusive grant cannot prevent a city from granting to another corporation the privilege to occupy its streets for the same purpose.” And then the court cites as authority and with approval the case of Clarksburg Electric Light Company v. City of Clarksburg, 47 W. Va. 739, where in an elaborate opinion the Supreme Court of Appeals of West Virginia declares that the proposition is “sustained by authorities in all quarters that to authorize such exclusive franchise the statute must admit of no other reasonable construction.” Certainly that cannot be said of the statutes of 1872, in question here.

We can see little force in the argument that even if the attempt to grant an exclusive privilege is void and invalid as far as it affects the power of the municipality to make another licensee or grantee of the same rights, it is nevertheless effective and valid to prevent its exercising those rights itself. The whole contention of the water company practically rests on the use of the word “exclusive” in two places in section 1 of the ordinance of November 12, 3888.-“The village grants the exclusive right and privilege for the period of thirty years, etc., for erecting, maintaining and operating a system of water works,” and “grants the exclusive right of using the streets, alleys and public squares and all other public places within the limits of the village for the purpose of laying pipes, mains and other conduits, erecting hydrants,” etc., etc.

If this “exclusive’.’ privilege and "right could not be legally granted by the municipality, the grant and the vested rights are simply those which would exist without the use of the word “exclusive” in the ordinance, as the court held' was the case in the Clarksburg Electric Light Co. v. Clarksburg, supra. But without that word in the ordinance plainly there would be no basis for the appellant’s contention. Even in. the opinion of the court in Vicksburg Water Co. case, insisted on by the appellant, it is said: “Unless the city has excluded itself in plain and ex-plicit terms from competition with the Water Works Company during the period of this contract, it cannot be held to have done so by mere implication.” See also City of Joplin v. Southwest Missouri Light Co., 191 U. S. 150.

But even with the word “exclusive” in the ordinance given full force and effect as a legal and valid provision, we think still that it would be by “mere implication” that it could be held that the village of Bogers Park by its use had shut out itself and the city of Chicago, by annexation its successor in public duties to the inhabitants of its territory, .from the exercise of one of the most necessary and ordinary of municipal functions. To our mind the granting of an “exclusive” right and privilege to one person means that the grantor will not grant the same right and privilege to another person—not that he binds his own hands otherwise.

The kind of construction that would make the ordinance of 1882 effective to sustain the water company’s present claim is not the kind that can be properly used on governmental grants. The government, possessing powers that affect the public interests and having entered into a contract involving said interests, is not by means of implications or presumptions to be disarmed of powers necessary to accomplish the objects of its existence. Any ambiguity in the terms of such a contract must'operate against the adventurers and in favor of the public, and the contractors can claim nothing that is not clearly given by the act; it can never be assumed that the government intended to diminish its power of accomplishing the end for which it was created. Those who insist that the government has surrendered any of its powers or agreed that they may be diminished, must find clear warrant for such a contention before it can be heeded. Charles River Bridge Co. v. Warren Bridge, 11 Peters, 420.

Grants of franchises and special privileges are always to be construed most strongly against the donee and in favor of the public. Turnpike Co. v. Illinois, 96 U. S. 63.

The universal rule in doubtful cases is that the construction shall be against the grantee and in favor of the government. Oregon Railway Co. v. Oregonian Ry. Co., 130 U. S. 1.

The doctrine is firmly established that only that which is granted in clear and special terms passes by a grant of property, franchises or privileges in which the government or the public has an interest. Statutory grants of that character are to be construed strictly in favor of the public, and whatever is not unequivocally granted is withheld. Nothing passes by mere implication. Coosaw Mining Co. v. South Carolina, 144 U. S. 550.

All grants by the public such as are given by cities or villages in their ordinances, are to be construed most strongly against the grantee. Blocki v. People, 220 Ill. 444.

The argument that the city is equitably estopped from extending its mains into the territory involved because of its conduct in heretofore requiring the expenditure of money by the appellant under, the ordinance of 1888, and by its negotiations for a purchase of appellant’s plant under the ordinance, at an appraised value, is an extension of the proposition that an alienation of public rights and duties may be inferred and implied. If what we have said concerning the invalidity of the appellant’s claim under its alleged contract is sound, it is a fortiori the law that the matters alluded to do not effect an equitable estoppel.

Thus far we have considered the cause as though the element of a subsequent annexation of the village of Rogers Park to the city of Chicago did not enter into the question at issue, and we do not think that it is necessary to take account of that element to arrive at a proper conclusion. But "certainly the facts that the life of the municipal corporation, which is alleged to have made the exclusive and estopping contract has ceased, that the territory involved has become a part of the city of Chicago, that in consequence the taxing power of the city of Chicago has extended itself over the inhabitants thereof, and that their property must be taxed equally with that of all other citizens of Chicago to make up a deficit in the water revenue of the city—if there should be one— does not detract from the force of the argument against the contention of the appellant. Is it not possible, on the contrary, that the citizens of the territory formerly composing the village of Rogers Park, and now a part of the city of Chicago, have a legal, equitable and moral right under these circumstances to demand that the city of Chicago should give them their water supply on the same terms it gives such supply to other citizens 1

Whether a grant by a town or village for the use of streets, not purporting to be exclusive, for a term of years, would, by virtue of such expressed term, be effective at all after annexation of the town or village to Chicago, was left an open question by the Supreme Court in The People v. Chicago Telephone Co., 220 Ill. 238, p. 248, the court saying that there might be ground in such a ease for so claiming, but could be none when the grants were not for a definite term.

But it is not necessary to go farther in the case at bar in this view, than to call attention to the light which the possibility of future annexation (which, though it actually took place under the law of 1889, was possible under a preceding Act in existence in 1888) throws on the intention of the village council in the use in the ordinance of the word uexclusive.” It does not seem probable to ns that they meant by any such expression not only to forbid themselves to give a third party a similar right and to estop themselves from maintaining their own water supply, but also to make it possible for the action of a subsequent council, ratified by a majority of the voters, to impose on every inhabitant of the territory all,the burdens, but not all the rights or advantages, of a citizen of Chicago.

The decree of the Circuit Court is affirmed.

Affirmed.