Water, Light & Gas Company of Hutchinson, Kansas v. Hutchinson/Opinion of the Court

The circuit court assumed that ordinance No. 402 was in terms exclusive and was intended to be made so by the city. We shall assume the same thing. Indeed, it would be impossible to decide otherwise. It recites that the Hutchinson Water, Light, & Power Company 'is the owner of certain exclusive franchises and contracts with the city of Hutchinson,' under which it has expended large sums of money, and that the city 'is desirous of modifying and changing said franchise and contracts to the advantage of said city of Hutchinson, without canceling or abridging any of the rights or privileges vested in said company,' and that, therefore, in consideration of the surrender of all existing contracts and franchises, except as therein specified, 'there is hereby given and granted' to the company, 'its successors or assigns, the exclusive right and privileges for the term of twenty years from the date of the passage and approval of this ordinance, of supplying the city of Hutchinson, Reno county, Kansas, and the inhabitants thereof, by a system of waterworks, with water. . . with electric current for electric light and power, and for all other purposes for which electric current may be used, except power for the operation of street railways.' The city, it is clear, in express terms and for consideration received, granted exclusive rights. The power of the city to do this is denied, and this makes the question in the case. The circuit court ruled against the existence of the power, applying to the statutes conferring power upon the municipalities of the state the rule of strict construction. The ruling is challenged by appellants, and it is contended that the general welfare clause and 'the municipal power to furnish light carries with it the obligation to enter into all contracts and to exercise all subsidiary powers which the circumstances of the case require.' And it is further contended that, in Kansas, statutes delegating to cities the power to furnish light and water have been liberally construed by the supreme court of the state.

That grants to municipal corporations, like grants to private corporations, are subject to the rule of strict construction, was announced by this court in Detroit Citizens' Street R. Co. v. Detroit R. Co. 171 U.S. 48, 43 L. ed. 67, 18 Sup. Ct. Rep. 732, following and applying the doctrine of previous cases. It was said that the power to grant an exclusive privilege must be expressly given, or, if inferred from other powers, must be indispensable to them, and that this principle was firmly fixed by authority. See also Dill. Mun Corp. 4th ed. § 80. The case was concerned with a grant to a street railway, and, in the argument of the cases at bar, a distinction is asserted between an exclusive privilege to occupy the surface of streets and interfere with 'a matter of common and a privilege to use the streets below the surface 'as incidental only and subsidiary to the performance of a contract pertaining to another matter;' and on this distinction, it is argued, the 'first must show an express grant of authority' to make the right exclusive, but that the second is not limited by such requirement. The distinction is only one of degree, and has not been considered as varying the application of the rule of construction announced. In Freeport Water Co. v. Freeport, 180 U.S. 598, 45 L. ed. 688, 21 Sup. Ct. Rep. 497, a statute of Illinois was considered which gave power to cities and villages to provide for the supply of water at such rates as might be fixed by ordinance and for a period not exceeding thirty years. And passing upon these provisions as constituting a contract precluding a change of rates from time to time, we said: 'The rule which governs interpretation in such cases has often been declared. We expressed it, following many prior decisions, in Detroit Citizens' Street R. Co. v. Detroit R. Co. supra, to be that the power of a municipal corporation to grant exclusive privileges must be conferred by explicit terms. If inferred from other powers, it is not enough that the power is convenient to other powers; it must be indispensable to them.' See also Rogers Park Water Co. v. Fergus, 180 U.S. 624, 45 L. ed. 702, 21 Sup. Ct. Rep. 490; Joplin v. Southwest Missouri Light Co. 191 U.S. 150, 48 L. ed. 127, 24 Sup. Ct. Rep. 43, and cases cited; Owensboro v. Owensboro Waterworks Co. 191 U.S. 358, 48 L. ed. 217, 24 Sup. Ct. Rep. 82. The doctrine was recognized as existing in Walla Walla v. Walla Walla Water Co. 172 U.S. 1, 43 L. ed. 341, 19 Sup. Ct. Rep. 77, and in Vicksburg v. Vicksburg Waterworks Co. 202 U.S. 453, 50 L. ed. 1102, 26 Sup. Ct. Rep. 660. In the two latter cases the power of the respective cities to make a contract precluding them from building waterworks and operating their own water systems was declared. In the Vicksburg case it was pointed out that the power of the city to exclude itself from building waterworks of its own was recognized to exist by the supreme court of Mississippi.

In Vicksburg v. Vicksburg Waterworks Co. 206 U.S. 496, 51 L. ed. 1155, 27 Sup. Ct. Rep. 762, a contract of the city, fixing a maximum rate, was sustained upon the authority of the decisions of the supreme court of the state, holding that, under a broad grant of power conferring, without restriction or limitation upon the city, the right to make a contract for a supply of the water, it was within the right of the city council, in the exercise of that power, to make a binding contract fixing the maximum rate at which the water should be supplied to the inhabitants of the city for a limited term of years.

This case is especially relied on by appellant as establishing a right in the city of Hutchinson to grant an exclusive franchise under the statutes of the state, both from their letter and as construed by the supreme court of the state. A consideration of the statutes and decisions, therefore, becomes necessary. Those quoted by the circuit court in its opinion are inserted in the margin. They confer power to provide for the general welfare, and enable a city to construct water and lighting plants of its own or 'to make contracts with any person or company for such purposes,' and give such person or company 'the privilege of furnishing light for the streets, lanes, or alleys of said city for any length of time not exceeding twentyone years.'

In addition to these sections, appellant cites others, which give to the city the power to make all contracts in relation to its property and affairs necessary to the exercise of its corporate or administrative powers, the power to open and improve streets, purchase or condemn land for hospital and waterworks, to make regulations to secure the general health of the city, to enact ordinances for any of the above-mentioned purposes, and 'for maintaining the peace, good government, and welfare of the city, and its trade and commerce.' Also a section which gives to gas and water companies the power to manufacture and furnish gas and water and to lay down pipes and mains in the streets 'with the consent of the municipal authorities thereof and under such regulations as may be prescribed,' and a section giving power to such authorities 'to contract with any such corporation for the lighting or supplying with water the streets, lots, lanes, squares, and public places in any such city, town, or village.'

It is from these provisions that the water company deduces the power of the city to make the privileges granted exclusive, and special stress is put upon the provision of § 65, which we have quoted. Counsel say: Language more explicitly expressing an absolute measure of power could hardly be framed. The power is given to light the streets, to make contracts for the lighting of the streets, and to confer the privilege of lighting the streets for a specific term of years.' And, further counsel say: 'It will be observed that the grant of power is to confer 'the privilege of furnishing light.' The definite article 'the' is used. Power to confer the privilege implies ex vi termini, the exclusive privilege, not a fractional or communal privilege. The privilege conferred exists as a concrete and integral whole, and therefore when conferred must pass in its entirety. The city possessed the privilege of lighting its own streets as a function of its municipal authority. It was that privilege in its integral and exclusive form which the legislature authorized the city to confer.' We cannot concur. The kind of privilege is defined, not the extent of it. It is exclusive of some persons, but not of all. It is exclusive of those who have not a grant from proper authority. There are privileges which may exist in their full entirety in more than one person, and the privilege or franchise or right to supply the inhabitants of a city with light or water is of this kind. A grant of power to confer such privilege is not necessarily a grant of power to make it exclusive. To hold otherwise would impugn the cited cases and their reasoning. It would destroy the rule of strict construction. The foundation of that rule requires the grant of such power to be explicit-explicit in the letter of the grant-or, if inferred ferred from other powers or purposes, to be not only convenient to them, but indispensable to them. And these conditions are imperative,-too firm of authority to be disregarded upon the petition of equities, however strong.

It is, however, contended that the statutes of Kansas fulfil the rule by the construction put upon them by the supreme court of the state, and the case is therefore brought, it is further contended, within the rule of Vicksburg v. Vicksburg Waterworks Co. 206 U.S. 496, 51 L. ed. 1155, 27 Sup. Ct. Rep. 762. The Kansas cases relied on are Eureka Light & Ice Co. v. Eureka, 5 Kan. App. 669, 48 Pac. 935; State v. Topeka, 68 Kan. 177, 74 Pac. 647; Cherryvale Water Co. v. Cherryvale, 65 Kan. 219, 69 Pac. 176. In those cases the court did say, in determining what duties were imposed or powers conferred upon the city, that the statute should be liberally construed to effectuate the general purpose of the legislature, but the powers under consideration were different from the powers herein involved, otherwise those cases would not be reconcilable with Paine v. Spratley, 5 Kan. 545, and Coffeyville Min. & Gas Co. v. Citizens' Natural Gas & Min. Co. 55 Kan. 178, 40 Pac. 326. In Paine v. Spratley the general principles respecting the power of municipal corporations were said to be those which we have expressed. In Coffeyville Min. & Gas Co. v. Citizens' Natural Gas & Min. Co. one of the companies, claiming an exclusive right, sought to test the validity of two city ordinances, granting the other the use of the streets, and to restrict it from using the privileges granted. For this purpose the court said the plaintiff company clearly had no standing in court, because the city authorities alone were charged with the duty of preventing encroachment on the streets, and they, alone, could test the validity of the ordinance. The court said further: 'The city did not, in terms, attempt to give the plaintiff company a right to the exclusive use of the streets and alleys for the purpose of laying its pipes. If it had attempted to do so it could not, for want of power.'

The conclusion from these cases is reinforced by a change in the statutes conferring power upon the cities of the state. Section 65, supra, was § 30 of the statutes of 1868, and as such gave to a city the power to make the contracts therein expressed, and give 'the exclusive privilege of furnishing gas to light the streets, lanes, and alleys of said city for any length of time, not exceeding twenty-one years.' This provision was repeated in § 59 of the statutes of 1872. But in 1885 that section was amended, so as to omit the words 'the exclusive privilege.' Statutes 1885, p. 147, § 7. And as thus amended it was re-enacted in 1901. Statutes 1901, § 1000.

Decrees affirmed.