State ex rel. City of St. Louis v. Laclede Gaslight Co.

102 Mo. 472

• Court: Supreme Court of Missouri
• Decided: October 15, 1890
• Status: Published

Opinion

Sherwood, J.

This, an original proceeding, has been instituted in this court, to compel by our mandate the respondent to comply with the provisions of city ordinance 15482, which went into effect March 31, 1890, by supplying gas to consumers at a sum not exceeding ninety or ninety-five cents per one thousand cubic feet.

The respondent has made return to the alternative writ, and a general statutory demurrer has been filed thereto, to the effect that it contains no facts to constitute a defense to the relief sought.

As the pleadings and the various statutes and ordinances relating to the subject-matter of this litigation are contained in the statement of the relator which will in substance preface this opinion, they will only be briefly referred to as occasion may require.

By virtue of, and in compliance with, ordinance 13494, approved January 30, 1886, and within.ten days prescribed therein,, the St. Louis Gaslight Company filed with the city register of the city of St. Louis its written acceptance of the ordinance mentioned, and bond as in section 12 of said ordinance is prescribed, and proceeded to do all that said ordinance required by reducing the price of gas to consumers, and by reducing the, price of supplying, cleaning, lighting and ■extinguishing the public lamps of the city to the extent of $7 each per annum. This waiver and rebate by the company in the time between the acceptance of the ordinance, to-wit, in 1886, up to the time of the expiration of the ■ corporate life of the original company, to-wit, January 1, 1890, amounted to the sum $1,574,244, etc., which otherwise that company would have been entitled to, and would have received. The ordinance thus accepted by the St. Louis Gaslight Company embraced in its terms not only that company but its successors and assigns, and was made in behalf of said company, and its successors and assigns, and extended the time for lighting the city, etc., from the expiration of the original period, to-wit, January 1, 1890, to the corresponding period thirty years thereafter.

By sections 2 and 3 of that ordinance it was provided that:

‘ ‘ Sec. 2. The price of gas to consumers in said district until January 1, 1890, shall not exceed $1.50 for each one thousand cubic feet of gas sold to them, and from January 1, 1890, to January 1, 1920, it shall not exceed $1.25 for each one thousand cubic feet of gas sold to them.

“ Sec. 3. The said St. Louis Gaslight Company and its successors aud assigns will grant to consumers a reduction of five per cent, on each one thousand cubic feet of gas sold to them after January 1, 1890, from the price above named on all bills paid within five days after presentation, or the net price of $l,18f cents per thousand cubic feet of gas paid for within said time.”

Section 13 of the ordinance confers power upon the St. Louis Gaslight Company, after its acceptance as aforesaid to transfer, all its rights, privileges, property, franchises, etc., etc., conferred upon it by this ordinance to any other gaslight company organized under the laws of this state, and provided that such corporation receiving said transfer shall be subject to all conditions and perform all agreements required of the original company by the ordinance, and that such transferee should within twenty days after receiving such transfer file the written acceptance and give the bond required by section 12 aforesaid. On the twenty-fourth of December, 1889, the St. Louis Gaslight Company, for value received, sold to the respondent company all its rights, property, privileges, franchises, etc., and, within twenty days thereafter, the latter company filed its written acceptance of the provisions of the ordinance as required by section 12, and gave bond, etc.

After these things had occurred, the ordinance first aforesaid was passed, whereby the price of gas was cut down from $1.25, or the net price of $1.18f per thousand cubic feet as by section 3 provided, to ninety cents for said quantity of gas.

There can be no doubt that the foregoing facts and transactions, which the demurrer admits took place, constituted contractual relations between the city and the St. Louis Gaslight Company, and between the two gaslight companies, as well as between the city and the respondent. Nor, speaking in a general way, can there be any more doubt of the capacity of the respective parties thus to contract. Such power the city certainly possessed, and the gaslight companies possessed the like powers given by their respective charters, as has been heretofore affirmed by this court in two instances. City of St. Louis v. Gaslight Co., 70 Mo. 69; St. Louis Gaslight Co. v. City of St. Louis, 86 Mo. 495.

The points at issue, however, between the contestants in the present litigation are four in number: First. That the St. Louis Gaslight Company had no power to contract with the city as to matters necessarily extending beyond the limit of its chartered existence; second, that ordinance 13494 does not exempt the respondent company from regulations by the city of the price of gas ; third, that there is nothing in the charter of the respondent company which forbids the reduction by the city of the price of gas after the first day of January, 1890; and, fourth, that, even if that ordinance and the acceptance thereof may be regarded as constituting a contract, yet that such contract, if it has the effect claimed for it by the respondent, was beyond the power of the city to make, being nothing less than a futile attempt to barter away a police governmental power, affecting the health and welfare of the people of St. Louis. Of these points in the order indicated.

I. As to the first:

The capacity of a corporation to take and its power to convey property, real, personal or mixed, differs in no essential particular from the capacity and power of natural persons in like circumstances. Morawetz, Priv. Corp., secs. 330, 1031, and cases cited; Angelí & Ames on Corp. [11 Ed.] sec. 195, and cases cited. To deny this proposition would be to deny to an individual the capacity to take title in fee, because life’s narrow span would not admit of his perpetual enjoyment of the title thus taken.

But this is not the only answer to this objection; the contract in question was entered into not only with the St. Louis Gaslight Company, but with its '■'successors and assigns,” whoever they might be, and the ordinance under consideration clearly contemplates that all rights granted to the original company would be by that company granted to another company whose longer lease of corporate life would enable it to perform the contract and fulfill its various conditions.

That a contract may be enforced when entered into for the benefit of a third party though not named, is well settled. Meyer v. Lowell, 44 Mo. 328, and cases cited; Rogers v. Gosnell, 58 Mo. 589; Cress v. Blodgett, 64 Mo. 449. But, aside from the foregoing considerations, the respondent company having purchased all the rights, property, etc., of the original company, and having, in compliance with section 13 of the ordinance, filed its written acceptance and given bond to the city, thenceforth the contract became a contract with the transferee.

II. The second point for discussion presents no greater obstacle to a ready determination than the one just considered. Sections 2 and 3 of the ordinance, when considered together, show that while the price of gas was not to exceed $1.25, from January 1, 1890, to January 1,1920, yet that up to that sum was a perfectly legitimate price to charge for the production of gas. If the contention of relator is to prevail, then it would have been but an idle ceremony to have inserted in the ordinance any maximum price at all, since, according to that contention, the city had carte blanche to insert at her pleasure any figure beneath the maximum, and to compel the respondent to accept it. But this would have been tantamount to making a contract, where one party dictates the price, something which certainly seems at variance with all of our preconceived ideas as to the fundamentals of a contract.

With equal propriety a payee in a promissory note, payable on or before a period of six months after its date, might contend that this was only the maximum of time in which the payor had to pay, and that as there was nothing in the note “ 'prohibiting ” payment before the ultimate date, that therefore it would be in the “ discretion ” of the payee to demand payment at an earlier period. We are not of the opinion that the ordinance will bear any such unwarrantable construction as relator desires us to place upon it. This is a case where “affirmative specification excludes implication.” Maguire v. State Savings Ass’n, 62 Mo. 346, and cases cited; Broom, Leg. Max. [ 8 Ed. ] 652, 667.

Counsel for relator claims that on this point the rights of the city and of the respondent company “under the ordinance, are reciprocal.” If so, then, manifestly, the respondent would have as much right to charge above the price mentioned as would the city to compel the acceptance of a sum below it; otherwise there could be no reciprocity. But, in addition to the views just expressed on this point: Section 3 fixes an absolute or net price of $1.18f for the gas, provided prompt payment be made therefor. The literal meaning of the word “net” forbids all thought or theory of deductions.t ex. gr. “net profit,” “net weight,” “net income.”

III. The third point at issue, as already stated, presents the question whether the charter of the respondent company, granted by the state, contains such features of a contractual nature as forbid and prevent any interference therewith either by the state government or by any municipality representing the authority of that government. The respondent company exists by virtue of a special charter granted March 2, 1857, as amended by an act approved March 26, 1868.

.By the provisions of section .1 of the act of 1857, the respondent has power to contract and be contracted with, without condition or limitation.

By the provisions of section 5 of said act of 1857, the respondent has power, throughout a certain portion of the corporate limits of the city of St. Louis, to lay its pipes and fixtures, and to make and vend gas, with no condition or limitation as to price to be charged 'therefor, and to have and exercise all other powers necessary to execute and carry out the privileges and powers granted to respondent by the act.

By the provisions of section 7 of the act of 1857, any interference with the respondent, in the exercise of the privileges granted to it by that act, subjects the offender to a liability to the respondent of $1,000.

By the provisions of section 8 of said act of 1857, the respondent and its charter are expressly exempted from the operation of sections 6 and 7, of article 1, of the act entitled, “An act concerning corporations,” approved November 23, 1855.

Said section 6 is as follows: “If any corporation hereafter created by the legislature shall not organize and commence the transaction of its business within one year from the date of its incorporation, its corporate powers shall cease.” R. S. 1855, ch. 34, art. 1, sec. 6.

Said section 7 is as follows : “ The charter of every corporation that shall hereafter be granted by the legislature shall be subject to alteration, suspension and repeal in the discretion of the legislature.” R. S. 1855, ch. 34, art,. 1, sec. 7.

By the first section of the said act, approved March 26, 1868, the rights, privileges and franchises, granted to respondent in a portion of the city of St. Louis by section 5 of the act of 1857, were extended throughout the entire corporate limits of the city.

The fifth section of the original act incorporating the respondent gave it ample powers of contracting with the city for making, and vending gas, etc., etc., and the amendatory act made its franchises coextensive with the boundaries of the city. This point was inferentially thus ruled in City of St. Louis v. St. Louis Gaslight Co., 70 Mo. 69, and thus ruled directly in a later case. St. Louis Gaslight Co. v. City of St. Louis, 86 Mo. 495.

It is not open to doubt or dispute that this power to make and vend gas carries with it as an inevitable incident the right to fix the price of the gas thus made and sold. No other conclusion can be drawn from the premises. A sale implies a price. It would be but the granting of a barren right indeed, which would confer power to incur expense and perform labor, and yet deny the power to fix and to reap the fruit of that labor, to-wit, the price. Whatsoever the law necessarily implies in a statute or in a contract is as much part and parcel thereof as if expressly stated therein. So that, by the terms of the charter of the respondent company its right to fix the price of its product was as much a part of its charter as if it had been in terms set forth in section 5 of the original act of incorporation.

But, if a price had thus been set forth, no one familiar with constitutional principles but would at once deny that the right to contract for the sale of gas at such price could anywise be impaired. For reasons already given, the result of the contract between the state and the respondent company was the same as if the state in granting the charter had set a price at which the respondent might make and vend gas, and then declared that the powers thus granted should be exempt from subsequent “alteration, suspension or repeal” by the legislature.

The authorities, cited both from our own reports as well as elsewhere by respondent’s counsel, abundantly exemplify this familiar, doctrine. It is quite unnecessary to cite or to quote them.

IY. But it is claimed by relator that the power to regulate the price of gas, having been granted by the state to the city in 1870, was a police governmental power which could not be bartered away by the government, state or local. If this position be correct, then, of course, the charter of the respondent company was valueless when it came from the hands of its grantor, the state, because it possessed none of the elements of a contract about it. In short it was ultra vires the state to make such a grant.

It is not to be doubted that there is a limit to the power of the legislature to tie the hands of subsequent legislatures in respect to the exercise of what is termed the “police power.” Thus it is said : “No legislature can bargain away the public health or the public morals.” Stone v. Mississippi, 101 U. S. 814.

But certainly there is a limit in this regard over which legislatures and municipalities cannot pass ; they cannot, in the exercise of assumed police powers, violate charter contracts and overthrow vested righs. On this subject Judge Cooley aptly says: “The limit to the exercise of the police power in these cases must be this : The regulations must have reference to the comfort, safety or welfare of society ; they must not be in conflict with any of the provisions of the charter; and they must not, under pretense of regulation, take from the corporation any of the essential rights and privileges which the charter confers. In short, they must be police regulations in fact, and not amendments of the charter in curtailment of the corporate franchise.” Cooley, Const. Lim. [5 Ed.] 712.

In a recent case in the supreme court of the United States, a case presenting many features in common with the one at bar, it was laid down that charters granted at different times to two gas companies, with exclusive ;privileges, were contracts which could not be impaired by subsequent state legislation, nor by an after-adopted clause in the constitution of Louisiana, forbidding monopolies. In that case a similar objection was made as now taken here as to the legislature having transcended its powers in granting such charters, but the objection was overruled. New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650.

As a summary of our views herein, we consequently hold, first, that the charter of the respondent company was a contract between it and the state which authorized it to fix the price of gas which it should manufacture, and which price could not be diminished by subsequent legislative action, whether state or'municipal; second, that ordinance 13494, when accepted as therein provided by the St. Louis Gaslight Company, constituted a valid contract between that company and the city of St. Louis ; third, that by the subsequent transfer by the original company of its property rights, franchise, etc., etc., to the respondent company, and by written acceptance, etc., of ordinance 13494, by that company, a like valid contract was formed between the city and that company; fourth, which contract was beyond the power of the state to impair or in any manner affect by ordinance 15482.

We therefore deny the peremptory writ,

All concur, except Barclay, J., who will express his views hereafter.

separate opinion.

Barclay, J.

As to the proper construction and effect of ordinance 13494, my concurrence is given to what is said in the foregoing opinion in the first and second paragraphs therein indicated.

On the other points discussed it seems to me unnecessary at this time to express an opinion.