34
·
j
.:-t·
vol. 52. _
"'bent upresslyauthorized. ,by the :auprime legislative power of the,state. in epactment, of the· ordinanCe in :<!J1lestion,Ellltettained a broadand generouS' 'riew:ofits own pGwers, It was pleased to confer! or attempt to eohfer; upon 'this 'water compliLDYPthe power to !'construct, own, maintain, andoperate'waterworkadnthe cbity of.Oconto, * * * to acquire asbr lawauthorize:d, all real estate,easements, and water rights'necessary to> that end,and p\lrpose,withall necessary and of obtaining water supproper ,btiUding.$, :with ply, with 'all[ :machinery, and ,attaChmerits, thereto'!' in addition to ' the. .tight'to"Q8El the:.streets·and,pul:¥ic; grounds of't he citY'for its water m8.ins 'Q.udi piJ}!les) anduDdmtook,to.regulafeoontlracts,and dealings between ,thtY,water company of the city, using water" and ,fe> bestbw upon the ,dtiri1panythe right of access to the homes of coni311mers(ofwater, and.t<> regulate its exercisa,',!f the right to conprivileges' ana fmnohises,andto"exercise inquisitorial powers, is effective to signed'. 'No· 'ordiuauce1howeltet,cah enlarge, '.vary, or diminish the p'()Werll cof'a D1unicipaU1iy_; " , .. , ;Whenoe: CM)G thatp(iwer?: J\find no warrant for it." The charter 'ofthe oity" does not ,confer ,it.· No general law, applicable to oity df'Oconi,0 grants it." q The chapter entitled, " Of Cities" {Snub. &: B.S·· , in r1889, (Laws 1889, c.326.) It providea' thatmo I city! then incorporated,sha1.l be affected by 'the pro\1isions oUheaot,. unless it shall adopt the same for 'its government in the manI ner 'provided; ,I (6mb. & B.St.:§ 925d.) The present charter of the city of,Ocontowas There is no suggestionin -the l'ecordthatithera,i.'ty. of Oconto has ever adopted the provisions of tM general law"and'weare notat liberty to assume that it :has. Failing such oity is not affeCted by, and derives I DQ fforo,: that generld, ;law,; assuming that the, chapter has relation towateTworksownec1'iuidioperated by a corporation other than the · The city is therefore only auof pipes in the streets, and their mainthorized to permit the tenanoe and \l8e'i( (SeotioD:98Qa.) That is: not 'll grant of power.to bestow a franchise) but permission:tosuffer an easement. The law of its incorporatic:m4onifersupon the Ocdnto Water Company ita franchise (1) to own and'operate th\! waterworks; an4 (2) touse,the streets of the city. S.nb.& rThEf,'fomter power is without condition; the latter is subJeetto of themnuidpality.' The practical. effi· caey of theft'ancliise may, depend'upon ,thediscl'tltionary act, of the city. Tne franchised' derived from that discretion, but from the will of'thEHegitllatur6i'FbeJlaw: authorizes the aity to assent'to the exercise of a: granted.thy! Jthec statute. The grant of power to the watercompany...-..aB to the! 'UlJe ,Of ·the streets-becomes operative only upon the happening of that contingenoy of munidpal,assent. That is , nota grant-of pawer' to a .city to confer lifranchise. Sims v; Railway Co., 37 The matter is' somewhat analogous to the case 1
It cannot bedoubtedi 'tbat,the'common council 'of the cityoCqconto,
NATIONAL FOUNDRY & PIPE WORKS V.O'CONTO WATER CO.
of an act of the legislatui'e taking effect only upon the' assent of the people expressed at, the: polls, which is now generally held to be valid·, upon the ground thllt the law derives its potency from legislative will, and not from the assent'df the poll. So; here, the right to ,use the streets was p.onferred upon the Oconto WaterC6illpany by the law of its incor'; poration, subject to the contingency of the assent of the city. The frahchise emanates from the legislature, not from the municipality. The ordinance is not an exereise of legislative power, but of the right to con... tract. Indianapolis v.Gaslight Co., 396. The case of State v. Madison St. Ry. (]o., 72 Wis. 612, 40 N. W. Rep: 487, is not in conflict. The ruling there was tothe' effect only that, considering the terms of Rev. St. Wis. § 1862, the provisions of the ordinancethere under review, by force of the'statute, became part of the law of the incorporation ofthe railway company, and for violation of such provision an action could be maintained by the attorney general to vacate the charter or annul the existence of the railway company, under the provisions of Rev. St. Wis. § 3241. Applying the doctrine of that case to the one in hand, the most that can be said is that the condition!? of the assent of the city to the use of its streets inhere in and I.Irepart of the law of incorporation of the defendant water company. None the less, howt'ver, are its.franchises derived'from the legislature. and not from the municipality. It is also to be noticed that there is a marked difference in the statute under consideration in that case-and those in question here. Sectio01862; there considered, provides that" any municipal corporation * *' may grant to any such corporation "-a street railway corpotion-" such use, and upon such terms as, the proper authorities shall determine, of any streets or bridges. ... ., .... * Every such road shall be subject to· such reasonable rules and regulations '" * '" as the proper municipal authorities may by ordinance from time to time termine." There the legislation does not directly grant to the railway corporation any power tonse the streets, but delegates to the municipality the right to grant the power. Here the power is in terms conferred by the legislature upon the water company, subject to the assent of the municipality. There the street railway is subject to constant municipal control. Here the water company is independent of municipal direction except in the use of its streets. It is, I think, clear that the powerpossessed by the city of Oconto was only to yield its'assent to a legislative grant of the use of its streets, and to contract for a supply of water. The franchises of the water company were conferred by the legislature of the state, and not by the ordinance of the city. The question then recurs, what rights passed to Andrews & Whitcomb under the instruments of transfer and their foreclosure? By their terms they conveyor assign only such rights and privileges as were granted to the water company by the ordinance of the city. No other franchise or rights are attempted to be conveyed. If the right to the use of the streets may be said to have proceeded from the municipality, it was, standing alone, a mere easement. The transfer of such naked right could carry with it thtl ownership of the mains, nor the title to the plant as an
86
FEDERAL REPORTER,
vol. 52.
the franchise to operate the plant, nor to the land upon 'Y',biQl) tlte .plant was situated. So that if it be true, as is here claimed, t1).atanalted franchise is transmissible; that the franchise is the main Ij;md tpeplant the incipent; a.nd that a of the former carries with it. the title to th", t/lugible property essential to its use and beneel\ioyment,-it still remains that here· there was no transfer of the franchi,se to operate the. ,plant, and consequently no transfer of tangible property.: It therefore results that the claim of Andrews & Whitcomb to the plant is unfounded in hiw, and its possession by them wrongful as against'th4il' cOm plainant. 2. The water company, in fulfillment of its agreement, issued to Andrews &;, Whitcomb $100,OQO of its bonds as collateral to loans made and to beQ1ade, to the amount of $40,000. These bouds had not previously beep issued. The law of Wisconsin provides (Rev. St. Wis. § 1753) .that uno corporation ,shall issue . * * * any bonds * * * except, for Q10ney * * actually received by it, equal to seventyfive per cant,. of the par value thereof, and all * * * bonds issued contrary t9. the provisions of this section * * * shall be void." were iss1,ledin defiance of the statute. That they were These sold, cannqt ayail to give them validity in, the,hands of the ple4gee, . ffhe terp) "issue" is here used in the sense of"deliver" or They were deUvered and put forth, by the act of pledginKl' obligations:(jlfthe Comp,aijy. If the pledge were valid, ...,....ifbonc;ls·ngti;ssued Play be usqd as collateral for. a debtless than, 75 per value,-;ithe pledgee could, upon default of the compal1Y iQ:p4\ym.aJl.tof the loan,l,awfully dispose of them for any price ob-. /itljl.d,tPtly would become, in;the hands of a bona fide holder for, value, lawful 'obligllitiops, of the company for the Jull amount expressed; thlls<lefeating &tatute,whioh, forbids their issue at less than 71) .per·ce,nt·. of tlll:'lir pari ..;,The statute is its own interpreter. These ,They 'S.l'El10f; 110 binding force for any purpose in the bonds are. }p.anda ,of An<lreW!l&. Wbi,tcqOl b!. Wh,ether a bema fide purchaser for va;lue &Whltcornb assert the bonds against the be It is the province, of a court of equity W preveJ;it/ilp9Q, for !Heoe.iyer and injunction is allowed; the injunbtion to provide fQr:thij depos,\t ()f the, bonds. wHh .the clerk of this court for safe keeping pending this suit, or until further order of the oourt.
BRUSH SWA1'l ELECTRIC LIGHT CO. 11. BRUSH ELECTRIC CO.
37
BRUSH SWAN ELECTRIC LIGHT
Co. TRIC
OF NEW ENGLAND V. BRUSH ELEC-
Co.
(01h'cutt OO'Urt o.f .Appeals, Second Ol.rcutt. Oct. 4,1892.) 1. CONTRACT-MoDIFICATION-EvIDENCE.
Defendant corporation, engaged in manufacturing certain patented machines, constituted plaintiff corporation its exclusive "agent" for a certain territory, the latter to receive a specified commission, and to pay for each machine ordered by it in 75 days. Thereafter plaintiff became insolvent, and, being in default for payments, an interview was had between the presidents of the two companies, which resulted, as claimed by plaintiff, in an oral agreement that it should not be required to pay until it had received payment from its customers. Plaintiff's bookkeeper testified that this was the agreement as reported to him by the two president,s at the time. Defendant claimed that the agreement was only for a modification of the regular terms in special cases, each to be determined as it arose; and it appeareu that defendant continued, by letter, to urge payment according to the original contract. Afterwards another meeting was had between the presidents, and in a letter from defendant to plaintiff the result was stated in substance to be that when any variation from the old contract was necessary in order to make a sale the terms thereof should be reported to defendant with the order, and defendant would then promptly determine whether 'it would accept the same. The letter also urged paYment of existing debts. To this plaintiff replied that the matter as thus expressed was "quite satisfactory." Held, that there was never any modification of the contract, except as last stated.
J.
BAlIIE,,--SPECIFIC PERFORlIIA!'lCE.
The original contract provided that if at any time plaintiff's pecuniary responsibility became impaired so as to render it unsafe for defendant to transact its business through plaintiff. defendant might ,abrogate the contract, the questiou of finamiial responsibility being first determined by arbitration. Afterwards plaintiff became'insolvent, and, being largely in arrears to defendant, the latter refusM'to fill further orders unless, security was given in each case. The demand for secul'ity not being complied with, defendant requested an arbitration, but no ans;wver was made thereto, and later it declared the contract abrogated, and refused to .fill further orders. Beld, that as plaintiff had, itself violated the modified contract in the matter of payments, and was apparently unable to comply therewith in,the future, it was not entitled to speoifio performance of defendant's agreement to furnishmachines. ' , not being in a position to demand specific performance, it was iml!taterial, ina suit therefor, that defendant had based its request for an arbitratidn the ground that plaintiff had retused to :furnish security, whereas the contract did not require any security.
3. Same-ARBITRATIO!'l.
on
In EqUity. Bill by the Brush Swan Electric Light Company of New England against the Brush Electric Company for specific performance of a contract., This relief was denied by the circuit court on the ground that the contracts were of such a nature as to render specific performance impracticable, but the bill was retained for the purposes of injunctiort and ana<:lcounting, which were accordingly decreed. 41 Fed. Rep. 163. A rehearing was subsequently denied. 43 Fed. Rep. 225. Afterwards leave was given to file across bill, (ld. 701,) and, a hearing having been had thereon, it was held that the same could not be maintained, and that the original decree should not he disturbed. 49 Fed. Rep. 8. Defendant appealed. Reversed. Albert Stickney and Gilbert H. Crawford, for appellant. James C. Carter and If'm. G. Wilson, for appellee. Before LACOMBE and SHIPMAN, Circuit Judges. SHIPMAN, Circuit Judge. This is an appeal from a final decree ren-dered by the circuit court for the southern district of New York, which
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