Syracuse Water Co. v. City of Syracuse

These actions rest upon the charge, made by the plaintiff, that the defendants were proceeding to invade its rights. And the plaintiff alleges that such would be the effect of the exercise of the privilege, which the city of Syracuse sought to grant to the Central City Water Works Company, of providing the means contemplated to supply the city with water^ and in performing the contract made between the defendants for that purpose. This charge is founded upon the claim, asserted by the plaintiff, of the exclusive right or franchise to furnish the city with water.

The leading inquiry, therefore, is whether such claim is supported.

The plaintiff was incorporated by Laws of 1849, Ch., 224, and ever since then it has furnished water to the city and its inhabitants. To do that was the purpose of its creation, and it was-fully provided by its charter with the powers essential to that service, amongst which was that of eminent domain. The franchise granted to the plaintiff embraced all the powers, privileges and immunities within the charter, and constituted a contract between the state and the plaintiff, and in the exercise of the powers so granted the latter was entitled to protection. It follows that if within the franchise, granted by the state to the plaintiff, was the exclusive right to supply the city of Syracuse with water, the defendants should be enjoined from proceeding, as they are attempting to proceed, to interfere with or impair such right. St Tam many Water Works v. New Orleans Water Works, 120 U. S., 64 .

By reference to its charter, it appears to have been provided, that the plaintiff should, when requested, furnish water to the common council of the city'for the extinguishment of fires and other purposes, upon such terms as might be agreed upon between them, and in case they could not agree, either the common council or the plaintiff might apply to the supreme court for the appointment of' three commissioners, who should prescribe the terms upon which the water should be furnished for the term of three years, and at the expiration of that time, and once in three years thereafter, application in like manner might be made-for anew commission for such purpose. § 16.

In case the plaintiff, should not furnish a sufficient supply of good and wholesome water for the use of the city and the people thereof within two years from the passage of the act, and continue to do so, the common council might give six months’ written notice to the company to furnish the same, or that application «would be made to the supreme court for the appointment of five commissioners, and in case the company should continue to neglect to furnish such supply until the expiration of the notice, then the property of the company should be appraised, etc., and upon payment by the common council to the company of the sum so determined, they should become the owners of the property so appraised and paid for, and be possessed of all the powers given by the act to the company. § 26. And at any time after the expiration of twenty years the common council should have the right to resume all the property, rights, powers and privileges of the company on paying to it the amount of capital stock actually paid in and expended in the works, with fifteen per cent annually thereon, deducting therefrom the actual profits annually received by the _ company; and thereupon it should convey such property to the common council. § 29.

The provisions of those three sections are thus specifically referred to because they are relied upon to support the construction and effect claimed for the statute on the part of the plaintiff, and for a like purpose reference is made to § 19, which provides that nothing in the act should be deemed to affect, impair or interfere with the rights, privileges and obligations of the city “ derived or imposed by or under the act of the legislature entitled an act to .siqpply the village of Syracuse with wholesome water, passed March 27, 1821, or any act subsequently passed amending or altering ” it. And this takes the inquiry back to the act of March 27, 1821, which provided that the freeholders and inhabitants of the village of Syracuse, in the town of Salina, were authorized to take water for the use of the village from any springs on the lands of the people of the state in that town lying eastward of the village, and to carry the same under ground across such lands to the village, subject to the right of the canal commissioners to take the water from such springs to supply the Erie canal, if their elevation was sufficient to carry water from

This was the situation until in 1825, when the village was incorporated by an act which provided that all the rights, property and powers of the trustees of the Syracuse Water Works should be vested in the corporation, subject to the obligations .of such trustees; and that the duties enjoined on them by the act of 1821 should thereafter be exercised by the trustees of the village. Chap. 124, § 11. And by an amendatory act, passed iii 1834, the trustees of the village were given power to convey to Oliver Teall, his heirs or assigns all the rights, property and powers of the trustees of the Syracuse Water Works, as vested in the village, for the term of thirty-five years, and it was provided that Teall, his hems or assigns, should be possessed of all the powers, rights and privileges which were granted by the act of 1821, before referred to, and all the powers of the village on the subject; and if he should neglect to exercise them, the trustees of the village, after two years’ notice, should have the right to resume all such rights, powers and privileges. And it was further provided that on the expiration of the thirty-five years they should have the power to reinvest themselves, and take possession of the water works by paying the estimated cost of erecting the works, less the decrease in value occasioned by waste, decay and use, to be determined by appraisers, to be appointed by the supreme court, in case the parties were unable to agree upon the amount. Chap. 151.

In June, 1841, pursuant to that act, and subject to its provisions, such conveyance wás made by the trustees of the village of Syracuse to Oliver Teall.

In 1847, the village was converted into a city by charter, passed in December of that year, by which it was provided that the common council should have power to make, modify and repeal ordinances, rules, regulations and by-laws for the following among other purposes: “ To exercise all other powers conferred on them by the act in relation to highways, the prevention of fires, the levying of taxes, the supplying the village with good and wholesome water and other subjects of municipal regulation.” Chap. 475, title 3, § 7, subd. 31. And further that all former acts relative to the incorporation of the village of Syracuse were repealed, but that such repeal should not affect any act done, privilege granted, right accrued or established previous to the time when such city charter should take effect. And that the same rights, duties, obligations and requirements “ held by the trustees of the village of Syracuse, or imposed upon them, in relation to Oliver Teall, as to supplying the said village with pure and wholesome water, shall be conferred and imposed upon the said common council.” Id., title 10, § 12.

Upon the incorporation and organization of the plaintiff, and in 1849, Teall and his associates in interest conveyed the water

The company evidently was created solely for the purpose of supplying water to the city for the use of it and its inhabitants; and so far as appears the city then had no means for such supply other than such as had been possessed by Teall and his associates, and such as it may have been contemplated the plaintiff would provide. It must be assumed that the legislature was advised of the situation, and that the franchise was granted for all the purposes within the provisions of the charter.

The question now under consideration is the legislative intent. And for the purpose of ascertaining the powers and privileges which were granted to the plaintiff other than those incidental to the powers expressly given and necessary to carry them into effect, reference can be had only to the terms of the grant. 2 Kent’s Com., 298; 1 R. S., 600, § 3; Halstead v. The Mayor, etc., 3 N. Y., 433 .

The construction and effect to be given to the contract between the state and the grantee of a franchise have been the subject of much discussion, and the view of Chancellor Kent at one time was, that, although “ the creation of the franchise be not declared exclusive, yet it is necessarily implied in the grant, as in the case of the grant of a ferry, bridge or turnpike or railroad, that the government will not either directly or indirectly interfere with it so as to destroy or materially impair its value. * * * All grants or franchises ought to be so construed as to give them due effect by excluding all contiguous competition which would be injurious and operate fraudulently upon the grant.” 3 Kent’s Com., 459; Newburgh Turnpike Co. v. Miller, 5 Johns. Ch., 101 .

Whatever support that rule of the interpretation and effect may have in reason or propriety, it is not now available to that extent for the beneficial protection of the grantee in the exercise of his franchise, but, on the contrary, public grants are to be so strictly construed as to operate as a surrender by them of the sovereignty no farther than is expressly declared by the language employed for the purpose of their creation, The grantee takes nothing in that respect by inference. Such is deemed the legal intent of the state in imparting to its citizens or corporations powers and privileges of public character. And, therefore, except so far as they are by the terms of the grant made exclusive, the power is reserved to grant and permit the exercise of competing and rival

The important leading case to that effect in this country, was Charles River Bridge v. Warren Bridge, 11 Peters, 420, where was sustained the grant of the right to erect a bridge over the Charles river near one which had been constructed over the same river pursuant to pnor grant from the state of Massachusetts, although it produced a competition practically destructive of the value to the grantee of such prior franchise. And this was put upon the ground, resulting from the declared rule of construction of such grants, that they should be strictly construed as against the grantee, and that nothing should be taken by inference or presumption to enlarge their import. The court held that the state had relinquished its sovereignty so far only as the purpose to do so was expressed in the prior grant, and, therefore, as it had not by it made the franchise exclusive in that locality or denied to itself the power to grant similar privileges to others, there was no violation of the legal rights of the prior grantee produced by the subsequent one complained of. Although that case was determined by a divided court, and it does not very clearly appear, by the report of it, upon precisely what ground all the members of the majority placed their concurrence in the result, the doctrine there announced by Mr. Chief Justice Taney has since then been treated by that court as established. Lehigh Water Co. v. Easton, 121 U. S., 391 . It has also been adopted and is the settled rule in this state. Mohawk Bridge Co. v. Utica & S. R. R. Co., 6 Paige, 554; Oswego Falls Bridge Co. v. Fish, 1 Barb. Ch.. 547 ; Thompson v. N. Y. & H. R. R. Co., 3 Sandf. Ch., 625 ; Auburn etc., Plank Road Co. v. Douglass, 9 N. Y., 444 , 452; Fort Plain Bridge Co. v. Smith, 30 id., 44, 61; Power v. Village of Athens, 99 id., 592; Dermott v. The State, id., 107.

The plaintiff’s charter does not, in terms, expressly declare that the contemplated powers and privileges to supply water to the •city were exclusively with the plaintiff, nor does it in that manner deny to the state the right to make other similar grants for that purpose. And the same may be said of the acts of 1821, 1825 and 1834, through which the plaintiff, by the conveyance to it, claims to have derived some rights in that respect. The plaintiff undoubtedly took, by such conveyance, all the privileges and property which Teall possessed for the purpose of furnishing such supply, with the power added by its charter of taking water from any suitable sources, and to enable it to do so it was vested with the right of eminent domain. These several statutes must be treated in pari materia with a view to their purpose and effect, and to ascertain the rights taken by the plaintiff through them.

When the trustees representing the unincorporated and the incorporated village of Syracuse, and subsequently when Teall assumed the power pursuant to the statute to furnish water, there was no other means of supply in contemplation, and such evidently was the situation when the plaintiff took its charter and became vested, by the conveyance, with all the rights and property then

This provision was made available by request pursuant to it in April, 1851, and afterwards contracts to supply water for certain-periods were made between the plaintiff and the common council. The request was an acceptance of the obligation imposed so far as the statute rendered it essential to the exercise by the plaintiff of the franchise granted to it. It is contended that the request, in view of the duty imposed upon the plaintiff, was productive of a contract between it and the city, perpetual and interminable, while the plaintiff retained its franchise and other property having relation to its exercise. While the request may have made the grant to the plaintiff effectual for the purpose provided by the statute, we think the plaintiff is not entitled upon any contract between it and the city to the equitable relief sought, but it must depend upon the contract between it and the state furnished by the grant, aided, so far as it legitimately may be, by the consideration to which such request may be entitled as bearing upon the operation and effect of the grant. 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. It cannot well be claimed that any express power was delegated to the municipality to grant any exclusive franchises; and public policy will not permit the inference of authority to make a contract inconsistent with the continuously operative duty to make such bylaws, rules and regulations as the public interest or welfare of the city may require. Milhau v. Sharp, 27 N. Y., 611 ; New York v. Second Ave. R. R. Co., 32 id., 261; Richmond Co. Gas Light Co. v. Middletown, 59 id., 228; Gale v. Village of Kalamazoo, 23 Mich., 344 ; 9 Am. R., 80; Logan v. Pyne, 43 Iowa, 524 ; 22 Am. R., 261; Des Moines Gas Co. v. City of Des Moines, 44 Iowa., 505 ; 24 Am. R., 756; Norwich Gas Light Co. v. Norwich City Gas Co., 25 Conn., 19 .

Reference has already been made to the provision of the city charter conferring upon it power to make by-laws, rules and regulations in relation to certain matters, including those of prevention

The inquiry which presents more important considerations has relation to the franchise granted to the plaintiff, and represented by its charter. By it the plaintiff was given corporate existence, and vested with powers and privileges to enable it to exercise its functions. This incorporeal hereditament was its property, and whatever other or corporeal property it had or acquired, having relation to its legitimate powers, and for the purposes of their exercise, became, and while applicable to such purpose, was inseparably united with the franchise. The corporate rights and the corporeal means of their exercise, therefore, constitute, as it were, a single body, consisting of property corporeal and incorporeal Both the power and the means of exercising it are essentially united, ana upon, such union is dependent the enjoyment as well as the practicable value of the franchise. Gue v. Tide Water Canal Co., 24 How. U. S., 257; People v. O'Brien, 111 N. Y., 2 ; 19 N. Y. State Rep., 173.

When its charter was granted it was in contemplation that the plaintiff would be called upon to assume its corporate duties and exercise its powers in furnishing water to the city of Syracuse, and that for such purpose it would take and acquire the means of doing so. And in that belief the company did take by conveyance certain property, then in use for that service, and thereafter acquired and applied other property to such use, and for nearly forty years has continued to furnish water for the city and its inhabitants. So far as appears, until the year 1885, no means of supply have been sought for otherwise than through the pla.int.i-ff

Shortly thereafter the common council of the city adopted a resolution to the effect that the Central City Water works Company, subject to the conditions therein mentioned, were authorized to construct, maintain, own and operate water works in the city of Syracuse for the purpose of supplying it with pure and wholesome water, etc., specifying the sources from which the water should be taken, how its quality should be approved, the pressure which it should have at the hydrants, the number, character and generally the distribution of the hydrants to be furnished; and that on the completion of the works (which was to be accomplished within three years after acceptance by it of the proposition) the city agreed to rent from the company, for the period of twenty years, the right to use the water to be supplied by it at 520 hydrants, and such additional number as might be ordered, and to pay therefor at the rate of fifty dollars per hydrant annually. The right was reserved to rescind the grant on failure of the company to comply with its terms. Also the right, after five years, to acquire the works and property of the company in the manner there mentioned. This agreement and proposition and all their terms, expressed in the resolution, were formally accepted by the defendant company in April, 1885. The purpose of these actions was to prevent the contemplated agreement between the defendants, and as made between them, from being carried into effect, upon the ground, and for the alleged reason, that the plaintiff had the exclusive right or franchise to supply the city and its inhabitants with water. And although the charter of the plaintiff does not, in terms, declare such power to be exclusive or deny to the state the right to create a rival franchise in another, it is contended that the grant to the plaintiff, in its nature, necessarily gave to the plaintiff the exclusive right to supply the city with water because a franchise to do so can embrace no less than the whole city and the entire supply of water within its boundaries. And, therefore, the proposed grant to the defendant is an invasion of the plaintiff’s franchise.

It may be assumed that what is embraced within the terms of the grant to the plaintiff is exclusive in such sense that it cannot be covered by grant to another. That is to say a grant from the state to a company to construct and operate a bridge, ferry or telegraph gives to it the exclusive right to operate such ferry, bridge or telegraph, and no right can be given or taken to occupy the same space as the one so constructed or operated under the grant. The property in the company to that extent and for such purpose exclusively belongs to it, but a similar franchise may not

After a careful consideration of the able and forcible argument of the plaintiff’s counsel on this subject we are unable, in view of the governing rule of construction in such cases, to adopt its reasoning to the effect that the language or nature of the grant is. such as to cut off all competition in furnishing water to the city and its inhabitants, and to vest in the plaintiff the exclusive franchise in that respect.

The effect of rival means for the supply of water to the city upon the value of the plaintiff’s franchise is not properly the subject of consideration upon this enquiry, unless it bear upon the question of construction of its charter, for which purpose it does not seem .important The plaintiff’s structures belong to it exclusively, and it is its exclusive right to take water from its reservoirs, convey it through its mains and pipes, and to use its apparatus for the distribution and supply of water to the city and its inhabitants. The franchise of the plaintiff and all its property remain subject to its control and management By force of the grant to it, the plaintiff took and has the right to maintain its structures, the privilege of supplying all the water the city or its-inhabitants may take from it, but not the right to supply them with all the water they may be permitted to use. It may be that the demand upon it for supply will be lessened by the addition of other means which may be provided to bring water into the city.

The supply embraced within the franchise of the plaintiff did not, by the terms of the grant or by necessary implication, shutout all other means of obtaining supply there. And in view of the demand of the rule of construction before referred to, such exclusive right in the grant of a public franchise cannot rest upon inference, presumption or doubtful construction. Chenango Bridge Co. v. Binghamton Bridge Co., 27 N. Y., 93 ; S. C., 3 Wall.,. 75. It would hardly be claimed that a grant to a ferry company-of the franchise to supply the means of travel and transportation; across the East river between Hew York and Brooklyn would confer the exclusive right to such company to control such transportation by ferry on that river between the two cities, although it would have the exclusive right to operate its boats and to enter its slips. Such exclusive right would necessarily result from the nature of the grant as vested by it, because the property and means provided for the exercise of the franchise belong to the grantee, and can be occupied or used by no other party.

There all ferry companies are lessees of the city of New York, in which the control of them is exclusively vested. The Union Ferry Company in behalf of the city, as well as for its own beneficial use as lessee, instituted the proceedings for the additional slip at the pier held by it as such. The right to appropriate this addition, thus acquired under the statute, was exclusively that of the city or of its lessee, as such, of that ferry, nobody else could take it in that manner, and, therefore, the learned judge remarked that “ where from the nature of the case it is impossible that the right or power should be possessed or employed by more that one party, and it is important to the public interest that it should oxist and be exercised by some one, the state must necessarily have authority to select the grantee.” The inherent nature of the franchise to furnish water to a. city and its inhabitants does not Come within that proposition. That service is not necessarily confined to one, nor is the supply necessarily dependent upon any single source or means of furnishing it.

The franchise to be exclusive must therefore be given by the terms of the grant, otherwise it is not a resultance Lorn its nature; .and thus we are taken back to the enquiry which has already received consideration as to what was granted by the plaintiff’s charter. Nothing appears in the prior franchise to supply water to the village, and in the authorized conveyance to Teall, to modify the views above given upon the subject. It is, however, urged that the city can avail itself of no means, other than through the plaintiff, to obtain any water supply except by resuming and taking its property and powers in the manner prescribed in one of the sections, 26 and 29, of the plaintiff’s charter, to which reference has already been made.

It appears that those provisions were inserted in the charter at the suggestion or request of the common council of the city. And that was evidently done to enable it, in the event referred to in the one, and on the expiration of the time mentioned in the other section, if the interest of the city should require it, to take the matter of its water supply into its own management and control. It is not seen that this right, reserved to the city, has any

These views lead to the conclusion that the 'obligation of the contract between the state and the plaintiff, represented by the franchise granted to the latter, is not and will not be impaired by the exercise by, the defendant company of the privileges granted to it in the performance of the proposed contract between the two defendants.

And that the judgment should be affirmed.

All coucur, except Follett, Ch. J., and Vann, J., not sitting, and Haight, J., not voting.