UNITED STATES SUPREME COURT DECISIONS ON-LINE

A decree must be read in the light of the issues involved in the pleadings and the relief sought, and a decree in a suit brought by a water company against a municipality to enjoin it from regulating rates does not finally dispose of the right of the city to regulate rates under a law passed after the contract went into effect and after the bill was filed.

A state may, in matters of proprietary rights, exclude itself and authorize its municipal corporations to exclude themselves from the right of regulation of such matters as water rates.

In view of the decisions of the highest court of Mississippi, a municipality of that state may, under a broad grant of legislative authority conferred without restriction or conditions, make a contract with a corporation fixing a maximum rate at which water should be supplied to the inhabitants clubjuris

Page 206 U. S. 497

of the city for a limited period, which, in the absence of fraud or convention, will be beyond legislative or municipal power to alter to the prejudice of the other contracting party under the impairment of obligation clause of the federal Constitution.

Cases involving the rights of the Vicksburg Waterworks Company, under the contract made between the City of Vicksburg and the company, for furnishing the water supply of the city, have been before this Court in two preceding actions, viz., Vicksburg Waterworks Co. v. Vicksburg, 185 U. S. 65, and Same v. Same, 202 U. S. 453.

Owing to the previous statements of the case, it is only necessary to set out enough of the facts involved in the controversy now before us to make plain the conclusions at which we arrive.

The City of Vicksburg, by act of the Legislature of Mississippi (Laws of 1886, c. 358, § 5, p. 695), was authorized

"to provide for the erection and maintenance of a system of waterworks to supply said city with water, and to that end to contract with a party or parties, who shall build and operate waterworks."

Acting under this authority conferred by the legislature, the City of Vicksburg made a contract with Samuel R. Bullock & Company, their associates and assigns, for the supply of water to the city and its inhabitants, which was contained in the ordinance of November 18, 1886, § 13 thereof providing that --

"The said Samuel R. Bullock & Company, their associates, successors, or assigns, shall have the right to make all needful rules and regulations governing the consumption of water, the tapping of pipes, and general operation of the works, and to make such rates and charges for the use of said water as they may determine, provided that such rates and charges shall not exceed 50 cents for each thousand gallons of water."

The ordinance, by its terms, ran for thirty years, and Bullock & Company, as provided in section 5 of the ordinance, assigned the contract to the Vicksburg Water Supply Company, clubjuris

Page 206 U. S. 498

and it was duly accepted by that company. The supply company put in the works and operated until August, 1900, when the mortgage upon the property, including all the franchises and contract rights, was foreclosed and purchased by a Mr. Crumpler, who assigned all his rights and title to the Vicksburg Waterworks Company, the appellee herein, which company has operated the works since.

The contract contained an agreement to pay a stipulated rental for certain hydrants for public use.

The Legislature of Mississippi, on March 18, 1900, passed an act authorizing the city to issue bonds and build a waterworks system of its own for the supply of the city and its inhabitants, and on the third of July, 1900, an election was held in the city under the statute, which resulted in a vote to build or buy a waterworks plant of its own.

The city repudiated any contract relations with the company. Thereupon the company filed its bill in the United States Circuit Court for the District of Mississippi on the fourteenth day of February, 1901, the objects of which were thus stated by Mr. Justice Shiras, in delivering the opinion of the Court (185 U.S. 65):

"The bill prays for an injunction to restrain the defendant from assuming to abrogate and take away the franchises and contract rights of the complainant, and from attempting to coerce the company to sell its works to the defendant for an inadequate price, and that said act of the Legislature of Mississippi, adopted on March 9, 1900, and said resolution and ordinance adopted and passed by said city on the seventh day of November, 1900, be declared to impair the obligations of said contract between said city and said Bullock & Company and their assigns, and to cast a cloud upon the title, franchises, and rights of complainant, and said act, ordinance, and resolution, and each of them, are alleged to be in contravention of the Constitution of the United States in this: that they impair the obligations of said contract between said city and said Bullick & Company and their assigns. "

Page 206 U. S. 499

In the court of original jurisdiction, the bill was dismissed for want of jurisdiction. On appeal, 185 U. S. 185 U.S. 65, the judgment was reversed, and this Court held that there was jurisdiction, and the cause was remanded. The case went to trial upon its merits, and on May 18, 1904, a final decree was rendered, which was affirmed on appeal to this Court in the case reported in 202 U. S. 202 U.S. 453. The decree in that case, known in the record as No. 41, is given in the margin. [Footnote 1] clubjuris

Page 206 U. S. 500

During the pendency of the original action, the Legislature of Mississippi passed an act authorizing the cities and villages of the state to prescribe, by ordinance, maximum rates and charges for the supply of water, electric light, and gas furnished to cities and the inhabitants thereof. Laws of Mississippi 1904, p. 231. Section 1 of this act is inserted in the margin. [Footnote 2] clubjuris

Page 206 U. S. 501

On April 20, 1904, about one month before the rendition of the final decree in the original case, the city adopted two ordinances fixing the maximum charge for the use of water, one by what is known as the "flat rate" and the other for water measured by meters.

On December 7, 1903, the city passed an ordinance prohibiting the water company and gas company from charging damages and other penalties for failure to pay bills, until ten days after presenting the same, and giving an opportunity for the payment thereof.

On the seventh of January, 1905, the water company, in view of this action by the city, filed another bill, which is the original bill in this case, and was numbered 79, in which it set forth the preceding history of the litigation, the decree of May 18, 1904, the city ordinance of December 7, 1903, and the two of April 20, 1904, and in that bill alleged its contract under the ordinance of 1886 and the former decree, and that the enforcement of the ordinances was in violation of that decree and the company's contract of 1886, and would be destructive of its business, and they prayed for an injunction. A temporary injunction was allowed, and afterwards, the case standing on the bill, answer, and exhibits attached thereto, a final decree was rendered in the case, which final decree is set forth in the margin. [Footnote 3]

From this decree the present appeal has been prosecuted. clubjuris

Page 206 U. S. 506