geles City Waterworks, entered into and Appellants assert that the act violates the "Corporations may be formed under gen eral laws, but shall not be created by special act, except for municipal purposes. All general laws and special acts passed pursuant to this section may be altered from time to time, or repealed." [art. 4, § 31.] At the time of the passage of the act of 1870 the contract of 1868 had been assigned to the water company, and the facts show that it was applied for and procured on be [672]half of Griffin, Beaudry, and Lazard, and other persons, with the intention of forming a corporation to execute its provisions, and for such purpose they and other persons organized under the laws of the state the Los Angeles City Water Company, the appellee. It is hence argued that the act of 1870 confers franchises on the company by a special act, instead of by a general law, and thereby infringes the constitutional provision, and against the existence of such power in the legislature the following cases are cited; Low v. Marysville, 5 Cal. 214; San Francisco v. Spring Valley Waterworks, 48 Cal. 493; Oroville & V. R. Co. v. Plumas County Supers. 37 Cal. 354; Spring Valley Waterworks v. Bryant, 52 Cal. 132; San Francisco v. Spring Valley Waterworks, 53 Cal. 608. was held that the legislature could grant ex- Both propositions were answered in the the legislature from 'creating corporations "It is clear that the Constitution prohibits by special act, except for municipal purpos es; and it is equally clear that this prohibition extends only to their 'creation.' There Of these cases, only Low v. Marysville and directly or impliedly prohibits the legislais nothing in the language used which either Oroville & V. R. Co. v. Plumas County Suture from directly granting to a corporation pers. were decided before the passage of act of 1870. for It was held in Low v. Marysville that the legislature was prohibited from conferring upon a municipal corporation powers other than governmental by a special act. Chief Justice Murray said: ". as it would have been a violation of the Constitution to create an incorporation by special act, for any other than municipal purposes, it follows that it would be equally unconstitutional to confer special power on a corporation already created. In other words, it would be doing, by two acts, that which the legislature could not do by one; and corporations for almost every purpose might be created by special act by first incorporating the stockholders as a municipal body." But in California State Teleg. Co. v. Alta Teleg. Co. 22 Cal. 398, decided at July term, 1863, a contrary doctrine was announced. It 177 U. S. already in existence and created under the of a franchise, by a special act, or prohibitgeneral laws, special privileges in the nature ing a corporation froin purchasing or hold ing such franchises which may have been granted to others. To give the Constitution any such effect we would be compelled to inbe implied without a perversion of the lanterpolate terms not used, and which cannot tion we would have to make it read thus: guage employed. To give it such a construcCorporations may be formed, and other franchises and special privileges granted, under[574] general laws, but shall not be created or granted by special act, except for municipal purposes.' tended by the framers of the Constitution, If such had been the meaning inwords. The language used by them is clear, they could have easily expressed it in apt and they well knew that it included but one of a numerous class of franchises. the auh jects of legislative grant, and that a regula- | Ct. Rep. 134. Nor by the new Constitution And the learned justice who delivered the opinion of the court concluded the discussion by saying: "I hold, then, that the plaintiffs, as a corporation, were capable of receiving a grant of these special privileges directly from the legislature, and of purchasing them from the grantees." There was an implied recognition of the same doctrine in Spring Valley Waterworks v. San Francisco, 22 Cal. 434. But it is urged by appellants that Oroville & V. R. Co. v. Plumas County Supers. (decided in April, 1869) held "that the legislature could not authorize the county to grant special privileges to a private corporation, and this was confirmed in Waterloo Turnp. Road Co. v. Cole, 51 Cal. 384 (decided in 1876)." The latter case we may disregard, as it was decided subsequently to the act of 1870. The former case did not decide as contended, nor was the point involved in it. The action was mandamus to compel the county to subscribe to the capital stock of the railroad company under an act of the legislature directing the supervisors of the county to meet at a designated day and take and subscribe to the capital stock of the railroad company. The defense was not want of power in the legislature to direct the subscription, not want of power in the company to receive it because it was a corporation, but want of power to receive because it was not a corporation. Against this it was urged that the act of the legislature recognized the company as a corporation. To the contention the court replied: "But it is claimed that the existence of the corporation is recognized by the act requiring the county to subscribe to the stock of the company. Admitting such to be the case, that will not overcome the difficulty, for a corporation of this char[575]acter cannot be created by legislative recog, nition; the Constitution (art. 4, § 31) prohibiting the creation of corporations, except for municipal purposes, otherwise than by general laws." of 1879. New Orleans Gaslight Co. v. Louis- The subsequent decisions of the supreme court of the state have not been uniform. San Francisco v. Spring Valley Waterworks unqualifiedly overruled California State Teleg. Co. v. Alta Teleg. Co. but People ex rel. Atty. Gen. v. Stanford, 77 Cal. 360, 2 L. R. A. 92, 18 Pac. 85, 19 Pac. 693, restored its doctrine to the extent, at least, of holding that the constitutional provision that "corporations may be formed by general laws, but shall not be created by special act," only prohibits the creation of corporations and conferring powers upon them by legislative enactment, and does not prohibit "the assignment of a franchise to a legally organized corporation by persons having the lawful right to exercise and transfer the same." See also San Luis Water Co. v. Estrada, 117 Cal. 168, 48 Pac. 1075. There are expressions in the latter case which, it is urged, that notwithstanding the modification by it and by People ex rel. Atty. Gen. v. Stanford of the doctrine of San Francisco v. Spring Valley Waterworks, make that doctrine applicable to the case at bar. The San Luis Water Company was a corporation, and was formed for the purpose of furnishing the town of San Luis Obispo and the inhabitants thereof with pure fresh water. *By an act of the legislature entitled "An[576] Act to Provide for the Introduction of Good and Pure Water into the Town of San Luis Obispo," approved March 28, 1872, a franchise was granted for that purpose to M. A. Benrimo, C. W. Dana, and W. W. Hays. The San Luis Water Company claimed to be the assignee of the franchise. The assignment was attacked on the ground that it was invalid under the Constitution of the state. The court said: "The precise point made is, that the power to supply a city with water cannot be conferred, directly or indirectly, upon a private corporation by special act. It follows, therefore, that at the time of the contract of 1868 and of the passage of the ratifying act of 1870 it was established And further: "The grant to Benrimo and by the decision of the highest court of the his associates was also to their assigns. state that the Constitution of the state per- by the terms of the grant, sell or assign the There can be no doubt but that they might, mitted a grant of special franchises to per- franchise. It seems to me too plain to re sons and corporations, and permitted the latter to receive assignments of them from quire argument, that the purchase by the such persons, or grants of them directly from plaintiff was strictly and directly within its the legislature. This law was part of the powers, and contributed necessarily and dicontract of 1868, as confirmed by the act of learned commissioner who delivered the opinBut the rectly to its objects and purposes.' 1870, and could not be affected by subsequent ion also said: "If any connection could be decisions. Rowan v. Runnels, 5 How. 134, traced between the plaintiff and the passage 12 L. ed. 85; Ohio L. Ins. & T. Co. v. Debolt, of the special act of 1872, or it appeared that 16 How. 416, 14 L. ed. 997; Havemeyer v. the act was obtained for the purpose of evadIowa County, 3 Wall. 294, 18 L. ed. 38; Chi- ing the constitutional inhibition, I could see cago v. Sheldon, 9 Wall. 50, 19 L. ed. 594; how the case of San Francisco v. Spring Olcott v. Fond du Lac County Supers. 16 Valley Waterworks, 48 Cal. 493, might apWall. 678, 21 L. ed. 382; McCullough v. Vir-ply. But, in view of the facts in this case, ginia, 172 U. S. 102, 43 L. ed. 382, 19 Sup. I cannot regard the article of the Constitu tion mentioned or the case last cited as having any application here." But this is not a decision that the case would apply. And if it is a concession of strength in the argument it is not a concession of conclusive strength. We are not concerned, however, to reconcile the cases decided since 1870, and we have only mentioned them to present fully the contention of appellants. The cases prior to that time, as we have seen, made the obligation of the contract of 1868, and determined the power of the legislature to ratify it. And there seems to have been no question of this power. Besides legislative recognition, besides recognition by many acts of the city, the contract has received judicial recognition. Taxation upon the property acquired to execute it has been sustained. 49 Cal. 638. It was interpreted, and under its pro[577]visions the company denied compensation *for water used in sprinkling the streets of the city. 55 Cal. 176. An ordinance was declared void imposing a license upon the company for doing business in the city. 61 Cal. 65. Its right to take more than 10 inches of water from the river was sustained in 124 Cal. 368, 57 Pac. 210, 571. The case in 61 Cal. was heard in department and in banc, and the contract received careful consideration. The judgment of the trial court was for the water company, and department 2 of the supreme court, affirming it, said: "The court was correct in its judgment. The plaintiff had already reserved a sum to be paid by defendant for the privilege of vending water for domestic purposes, and it could not change its contract in the manner proposed. The privileges granted by the lease and the ordinance of 1868 were already vested in the defendant as strongly as they could be by a license under the ordinance of 1879. A license is a grant of permission or authority. The defendant already had permission and authority granted by ordinance and ratified by the legislature. The city cannot, during the term of the lease, of its own motion, increase the amount to be paid for the privileges granted. "It is hardly necessary to say that the point made by the appellant, that neither the city nor the legislature can grant or alienate any of the rights of sovereignty, has no application to this case." The court in banc, through its chief justice, approved this language, and, after quoting *. said: cas "The authorities of the city of Los Angeles, by a contract (the validity of which has not been challenged by either party) and for certain valuable considerations therein expressed, granted to the defendant's assignors the privilege of supplying the city of Los Angeles and the inhabitants thereof with fresh water for domestic purposes, with the right to receive the rents and profits thereof to their own use;"-and after citing cases to show that the exaction of the license would impair the obligation of the contract, concluded as follows: "The principles enunciated in the foregoing cases are eminently *sound and just, and[578] are directly applicable to the case we are now considering. The city of Los Angeles, by its solemn contract and for various considerations therein stated, gave to the party under whom defendant claims the privilege of introducing, distributing, and selling water to the inhabitants of that city on certain terms and conditions which defendant has complied with; and it was not within the power of the city authorities, by ordinance or otherwise, afterward to impose additional burdens as a condition to the exercise of the rights and privileges granted." 3. The provision of the contract, restraining the city from granting any other franchise, if it created an exclusive franchise, in4. The act of validated the whole contract. 1870, purporting to ratify the contract of 1868, is unconstitutional and void. 5. The water company has no power under its charter to collect water rates, except as prescribed by the Constitution and statutes of the state. These contentions are dependent upon the same reasoning as the preceding one, and do not require a separate discussion. 6. By acquiescing in the regulations of rates ever since 1880 the company is estopped from claiming equitable relief and is guilty of laches. There was no such acquiescence as estopped the water company from contesting the ordinance of the city. The facts are that in 1880 the city passed an ordinance to be in effect one year, establishing water rates, and passed one every year thereafter, including 1897, when the one in controversy was passed. The rates established by the ordinances were less than those adopted in 1870, and the latter are claimed to have been not higher than the rates charged in 1868. The company collected the rates established by the ordinances, except those established in 1896 and 1897. A suit was brought by the company to set aside the ordinance of 1896, and that of 1897 is assailed in the case at bar. These ordinances fixed the rates at less than they had been fixed before. The company has also every year since 1882 filed a statement with the city council, showing the names of the consumers of water, the rates paid, and the expenditures made for supplying water for the preceding year. The company always protested against the right[579] of the city to demand statements, and claimed to make them solely for its information. The company also in 1882 protested against the power of the city to fix rates on any other basis than that of the contract of 1888. The city therefore cannot claim to have been deceived by the action of the company in collecting the rates established prior to 1896. They were less, it is stipulated, than those of 1870, but how much less we are not informed. It is true we are not informed how much less those fixed in 1896 and 1897 are than those of the prior years. They are pany yearly, have passed ordinances yearly, and provoked and endured an expensive litigation to establish rates higher than or the same as those which already existed. If statements and ordinances were necessary in fulfilment of the duty of the city under the Constitution of the state, neither controversy nor litigation was necessary, nor would either have ensued. It is urged under this head that it is not shown that the income of the water company is less under the rates fixed by the city than under those of 1868. The showing would be irrelevant. The contract concerns rates, not income, and the power of the city over them under the contract. 8. If the ordinance is invalid, it is void on its face, and there is, therefore, no cloud on the company's title. less, "less than they had ever been fixed before," is the stipulation; and they will, according to the stipulation, produce more than $50,000 less revenue than those of 1870. Acquiescence in a regulation which, all things considered, may not have been injurious, does not preclude a contest of that which is injurious. It must be remembered that the contract did not forbid all regulation, but only regulation beyond a certain limit. There was no concession of a power to go beyond that limit, but constant protest against it; and when its exercise did go beyond that limit, producing injury not balanced by other considerations, the right to restrain it would naturally be, and we think could legally be, exerted. As we have said, there was no concealment, no misleading, no injury, no change of condition, no circumstance which could invoke the doctrine of The contention is that "if the contract of estoppel or of laches. Appellants, however, 1868 is valid, and the ordinance of 1897 reassert there was, and claim that the acquies-duces the income of the company below *that[581] cence of the water company was induced by the fear that the city would prevent the unlimited use of the river water, a use beyond the 10 inches claimed to be allowed by the contract, and a use against other and proprietary rights of the city. Of the latter the record does not enable us to form a judgment. Of the former the supreme court of the state (124 Cal. 368, 57 Pac. 210, 571) has decided against the contention of the city. We approve the decision and hereafter quote its language. The appellants' inference, therefore, is without the support of anything in the record. 7. The water rates established by the ordinance are not shown to be lower than those charged in 1868, or, if lower, that the revenue of the company is reduced. [580] *To sustain this contention it is claimed by appellants that there is no testimony in the record to show that the rates established in 1897 were lower than those charged in 1868. Appellants say: "The only thing which complainants rely on to establish this fact is the recital in the report of a committee of the council appointed in 1870 for the purpose of agreeing with the water company upon a schedule of water rates to be charged, in which it stated (by the joint committee) 'that they have established water rates and charges for domestie purposes, taking as a guide, as near as can be, the charges and rates for domestic purposes charged in July, 1868. That your committee have also fixed the rates and charges for other reasonable objects and purposes, and report as follows.' It is urged this is not a statement that the rates fixed in 1870 were equal to those of 1868; indeed, that they may have been higher. And it is also urged there is a distinction made between rates for domestic purposes and rates for "other reasonable objects and purposes," which may mean not domestic purposes, and as to these it does not appear upon what they were based. We are not disposed to dwell long on these claims. It is incredible that the city should re demanded statements from the con which it should receive, the ordinance is void on its face as being in conflict with the Federal Constitution, and is no cloud on complainants' title." It is hence deduced that the water company has adequate legal remedies, and cannot resort to an equitable one. We concur with the learned trial judge that the ordinance is not void on its face. As said by him: "In the case at bar, however, the ordinance upon its face is valid, and its invalidity ap pears only when considered in connection with the contract of July the 22d, 1868, and evidence showing what the water rates were at that date. While the court takes judicial notice of the ratifying act of April 2, 1870, still, since the provisions of the contract of July the 22d, 1868, are not embodied in said act, I am not sure that said provisions are matters of judicial knowledge, although such seems to be the ruling of the court (one of the justices dissenting) in Brady v. Page, 59 Cal. 52. Conceding, however, that the court will take judicial notice of all the provisions of said contract, still the one in question simply provides that water rates shall not be reduced below the rates then charged, without indicating what those rates were, and therefore the invalidity of the ordinance appears, not upon its face, but only in connection with extraneous evidence of what the rates were in July, 1868, and for this reason complainants have adduced that evidence in the present case." And further: "The complainants must either submit to the terms of the ordinance or incur unusually onerous expenditures. It is reasonably certain that if, with the ordinance standing, they were to undertake the collection of rates in excess of those prescribed in the ordinance, they would be resisted at every point by the consumers of water, and thus be driven to innumerable actions at law. Besides, should they, in any instance, succeed in collecting. without an action, a higher rate than the ordinance prescribes, it is equally certain that they would thereby until 1896, when an ordinance was passed by the city government undertaking to with draw the city's consent to the taking of more than 10 inches from the river. It is difficult to imagine how this ordinance was passed seriously; for if the water company had been prevented from taking from the river at that time more than 10 inches of water under a 4-inch pressure, there certainly would have been a water famine in the city, for the city had no works of its own and no means whatever for supplying water for either domestic or municipal purposes. But the city, having allowed the water company for nearly thirty years to divert the quantity of water above mentioned, and to expend vast sums of money upon the faith of a continuance of the right to take said water, could not withdraw its consent within the period of the con tract." The learned justice then quoted and approved the following remarks of the circuit court in the case at bar: "Before considering the main questions in "If it be conceded, as claimed by defendthe case, it is proper here to notice a prelim- ants (which, however, I do not decide) that inary point made by the city, and somewhat the provision of the contract, limiting the insisted on; to wit: That the only quantity quantity of the water to be taken from the of the water of the Los Angeles river to river without previous consent of the city, which the water company is entitled under is sufficiently certain for enforcement, or, the contract is 10 inches under a 4-inch pres- more specially, that said quantity is 10 sure. This contention cannot be maintained. inches measured under a 4-inch pressure, The words of the contract on this subject are still, the consent of the city to the taking of simply that the company shall not take from a larger quantity, once given, cannot be the river 'more than 10 inches of water with- withdrawn during the life of the contract, out the previous consent' of the city; there for the reason that large expenditures have is nothing in the contract about '4-inch pres- been made by complainants in reliance upon sure,' nor is there any intimation as to what such consent.' The court cites as authorithe parties meant by '10 inches' of water. ties to the point: Rhodes v. Otis, 33 Ala. But, looking at the context and the subject- 600, 73 Am. Dec. 439; Woodbury v. Parshmatter of the contract, it is quite evidentley, 7 N. H. 237, 26 Am. Dec. 739; Lacy v. that the parties did not mean only 10 inches Arnett, 33 Pa. 169; *Russell v. Hubbard, 59[584] under a 4-inch pressure. If that had been Ill. 339; Beall v. Marietta Paper Mill Co. 45 the meaning, there would have been no sense Ga. 33; Veghte v. Raritan Water Power Co.. in the other important covenants. At the 19 N. J. Eq. 153; Williamston & T. R. Co. v. time of the contract it would have taken Battle, 66 N. C. 546; Flickinger v. Shaw, 87 many times 10 inches under a 4-inch pres- Cal 126, 11 L. R. A. 134, 25 Pac. 268; Grimsure to furnish water for domestic purposes shaw v. Belcher, 88 Cal. 217, 26 Pac. 84; to even the few thousand people who were Smith v. Green, 109 Cal. 228, 41 Pac. 1022, then inhabitants of the city; and much more all of which sustain the point." than that amount was necessary to supply Decree affirmed. free water under the contract; and a solemn covenant to supply a growing city with sufficient water for domestic and municipal purposes for thirty years from a flow of 10 inches under a 4-inch pressure would have been absurd. The company, immediately after the date of the contract, commenced to use an amount of water greatly in excess of 10 inches under a 4-inch pressure; soon aft[583]er the execution of the contract the company was using 300 inches under a 4-inch pressure, NEWMAN ERB, as Receiver of the Kansas City, Wyandotte, & Northwestern Railroad Company, Plff. in Err., v. OTTO J. MORASCH and Eliza Morasch, as the Next of Kin of Irene Morasch, Deceased. (See S. C. Reporter's ed. 584-587.) Receivers duties of liability to suit-regulation of speed of trains by city-effect on interstate trains-exception of dummy engines or electric railroad. |