Rogers Park Water Company v. Fergus/Opinion of the Court

At the time of the passage of the ordinance of November, 1888, by the village of Rogers Park, counsel for plaintiff in error says 'two general acts were in force in Illinois, which related to the power of municipalities to pass ordinances for waterworks to be built and operated by private enterprise.' The first is as follows:

'An Act Entitled 'An Act to Enable Cities, Incorporated Towns and Villages to Contract for a Supply of Water for Public Use, and to Levy and Collect a Tax to Pay for the Water so Supplied.' (Approved April 9, 1872. In Force July 1, 1872. L. 1871-2, p. 271. This title is as Amended by Act Approved June 26, 1885, in Force July 1, 1885, p. 64.)

'Sec. 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly, That in all cities, incorporated towns and villages where waterworks have been or may hereafter be constructed by any person or incorporated comapny, the city, town, or village authorities in such cities, incorporated towns and villages may contract with such person or incorporated company for a supply of water for public use for a period not exceeding thirty years.' (As amended by act approved June 30, 1885. In force July 1, 1885, L. 1885, p. 64.)

'Sec. 2. Any such city or village so contracting may levy and collect a tax on all taxable property within such city or village for the water so supplied.'

The second, passed one day later and taking effect on the same day as the first, was the cities, villages, and towns act. The title to that act and the article and section bearing upon this case are as follows:

'An Act Entitled 'An Act to Provide for the Incorporation of Cities and Villages.' (Approved April 10, 1872. In force July 1, 1872. Laws of 1871-2, p. 218.)

'Article X. section 1. The city council or board of trustees shall have the power to provide for a supply of water by the boring and sinking of artesian wells, or by the construction and regulation of wells, pumps, cisterns, reservoirs, or waterworks, and to borrow money therefor, and to authorize any person or private corporation to construct and maintain the same at such rates as may be fixed by ordinance, and for a period not exceeding thirty years; also to prevent the unnecessary waste of water; to prevent the pollution of the water, and injuries to such wells, pumps, cisterns, reservoirs, or waterworks.'

These acts are urged to establish the power in the village of Rogers Park to grant to the plaintiff in error the right to charge and collect for thirty years the rates prescribed by the ordinance of November, 1888. We have passed on a similar contention in Freeport Water Co. v. Freeport, 180 U.S. 587, 21 Sup. Ct. Rep. 493, and in Danville Water Co. v. Danville, 180 U.S. 619, 21 Sup. Ct. Rep. 505; and we need not repeat the reasoning. Besides, it is disputable if the ordinance of 1888 justifies the claim of plaintiff in error. The supreme court of the state held that it did not. 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.

Section 1 of the ordinance recites 'that, in consideration of the public benefit to be derived therefrom, the village of Rogers Park, Illinois, hereby grants the exclusive right and privilege, for a period of thirty years. . . unto H. E. Keeler, his successor or assigns,' of erecting and maintaining a system of waterworks. The use of the streets was also granted for such purpose.

Section 3 recites, 'in consideration of the public benefits and the protection of property resulting from the construction of said system of waterworks,' the village agrees to pay a certain annual rental proportional to the length of the mains.

The grnatee, on his part to pay 'all municipal and village taxes' (§ 3), 'in consideration of the rentals herein agreed to be paid and in consideration of the rights and privileges granted' (§ 4), agreed to furnish the village and the residents thereof an adequate supply of water. Failing to supply water for a year in quantity or quality stipulated, the 'franchise and all their rights and privileges granted under this ordinance, and the contract entered into, shall be null and void.'

If the ordinance contained any other provisions it could not be claimed that the company's charges to consumers of the water furnished them were free from regulation by the municipality if it otherwise had power of regulation. These are other provisions, and especial stress is laid upon them. Section 12 provides as follows:

'The said grantee or assigns shall charge the following annual water rates to consumers of water during the existence of this franchise, and they shall have the right at any time to insert a water meter into the service pipe of any consumer, and to charge and collect from him at meter rates, provided that in such case the minimum annual rate paid by any one consumer shall be $5.'

Then follows an enumeration of uses and the rates for such uses. There is a schedule for meter rates, and also the following provision:

'Rates for all other purposes that may be applied for, not named in the foregoing schedule of maximum rates, will be fixed by estimation or meter, at the option of the grantee or assigns.'

This, it will be observed, is the language of command, not of contract; of limitation on power, not a bargain giving power. The right to charge the inhabitants of the village for the water supplied to them resulted from the right to construct and maintain the system. Section 12 was a regulation of the right. There is no stipulation that it will be the only instance of regulation; that the power to do so is bartered away; and that the conditions which determined and justified it in 1888 would remain standing, and continue to justify it through the changes of thirty years. It would require clearer language to authorize us in so holding. The predecessor of the plaintiff in error was given the monopoly of the supply of water. That might be necessary to induce the investment of capital, and for its security the obligation of a contract might be sought and given. There was no such inducement for an unalterable rate. A reasonable rate the law assured, and assured even against governmental regulation. And the statute of 1891, which is especially complained of, assures it. By § 1 of that statute municipalities are 'empowered to prescribe by ordinance maximum rates and charges,' and if unreasonable rates and charges be fixed they may be reviewed and determined by the circuit court of the county in which the municipality may be. There is no complaint in this case that the rates fixed by the ordinance of 1897, passed by the city council of Chicago, were unreasonable. Plaintiff in error relies strictly on a contractual right. We think it has no such right, and the judgment of the Supreme Court is affirmed.

Mr. Justice White, with whom concurs Mr. Justice Brewer, Mr. Justice Brown and Mr. Justice Peckham, dissenting: