§ 458. Extra territorial authority. Since public corporations are limited in the exercise of their powers in all respects to the territory within their jurisdiction, it follows as elementary and self-evident that they cannot control persons or property without their jurisdiction or grant rights or franchises capable of enforcement or exercise their own granted excludes everything in the nature of a profit. It is true that actual cost excludes everything of the nature of a profit; but what is actual cost to the company includes a profit to the contractor, just as what is actual cost to the contractor included a profit to the merchants of whom he buys his material. The company had to pay a profit to the contractor as the contractor had to pay a profit to the material men. The legislature no more intended to open up a speculative question of the reasonableness of the profit made by the contractor in his contract with the company, than that of the reasonableness of the profit made by the material men in their contract with the contractor. What it intended to do, was to provide that the price to be paid by the town should not depend upon opinions as to the market value of the property when taken, but should be restricted to what it had cost the company, with interest at five per cent. That did not forbid the company in the first instance fixing the price, which it was to pay for the construction of its works, at the market value on completion, if it thought it to be for the best interests of those interested in the corporation to make a contract for its plant on that basis." In re Water Com'rs of White Plains, 71 App. Div. 544, 76 N. Y. Supp. 11, where the court said: "When the proceedings were begun Abb. Corp. Vol. II - 13. the commission had before it a corporation which had the right or privilege to furnish water to the village of White Plains and the inhabitants thereof. The right did not afford a monopoly, because the company was open to competition from other corporations which might legally be formed, or from the village itself. The company had a contract with the village, which expired by legal limitation in a few months. It is to be inferred that it had contracts with individuals, but the legal duration thereof does not appear. There was a possibility of an extension of the contract with the village, but every probability against it, for the reason that the village had exercised the right of notice under the purchase clause, which provided for a purchase at the close of the con-tract. There was not the slightest. legal obligation upon the village or upon individuals to take a drop of water from the corporation beyond their respective contracts. (Skaneateles Waterworks Co. v. Village of Skaneateles, 161 N. Y. 154). Aside from the right of acquiring the franchise and the plant of the water company, the village had the right to go into the business of supplying water to itself and to its inhabitants. I conclude that there were no data whatever for any forecast that the corporation would have the assurance of any future business dealings. even with the individual inhabitants,, * and that any award of substantial able franchises,' to operate them, damages, based upon the deprivation which, being inseparable, necessarily of such business, would have no followed the waterworks and the foundation on their facts or on proba- system (People v. O'Brien, 111 N. bilities. The contract with Y. 1), there still remained that other the village would have expired in right or privilege, within the term 1897. These proceedings were begun 'franchises,' which may be described in September, 1896. The water com- as the right of this corporation to be. pany was entitled to retain its prop- And assume still more that such erty until the compensation deter- franchise emanating from the state mined on was paid, in as much as the (Skaneateles Waterworks Co. V. court had not awarded prior posses- Village of Skaneateles, supra) was sion thereof. The report was not still potential, and must also be conconfirmed until 1898. While the sidered under the term 'franchise,' company retained its property, it was when the commissioners come to the unable to fulfill its contracts and to question of compensation for the collect its water rentals. I think franchise, how could the commission that the compensation to be made determine upon any substantial sum was to be determined in view of the that must be paid for wiping out the time of the award, and that, there- mere right of corporate existence? fore, the commissioners would not What was its value? It was not an have erred if they had entirely dis- exclusive right, but it was similar to regarded the possible profits to be rights which might be vested in realized under the contract which other proposed incorporators, and in expired within a few months after the village itself. It had no assured the condemnation proceedings were field for any business enterprise, for begun. But, as I have said, they re- there was no obligation upon any one port that they did allow $3,000 in to deal with it. The value of corpopart payment for the nominal and rate being is the profits anticipated practically valueless rights which from the exercise of corporate powthe company possessed at the time ers. The exercise in this case would of the commencement of the pro- require a new construction of an enceedings.' It is said that the notice tire system. There is not the slightof purchase under the contract was est proof that such a venture would :served too late. I take it that the result in any return whatever. learned counsel means that less than The question to be answered is what a year intervened the date of service was the market value of the propof the notice and the expiration of erty, including its franchises, not its the contract. But even so, there was value to the petitioners nor the reno consequent obligation upon the spondent, but its value in view of all village to renew the contract, and as the purposes to which it was naturthe franchise was not exclusive, ally adapted (Moulton v. Newburythere is no presumption that the vil- port Water Co., 137 Mass. 163). This lage would have been compelled to would include the value of any busido so. But let us assume that ness under existing contracts which though the commission intended to might accrue to a purchaser at the make an award for the waterworks time the compensation was paid and and its system and for the 'insepar- the property taken over. As I have powers except within their geographical limits.1120 But this principle does not prevent a municipality from selling water outside. its jurisdiction; if this is done, it possesses, without question, the legal right to enforce any contract it may have made in respect to the price to be paid by the consumer.1121 And it is also true Inhabitants of Quincy v. City of of Boston, 148 Mass. 389. An island three miles from shore though within the city limits cannot be supplied with water from the main wa said before the purchaser would in the text will include additions or take the plant, the inseparable fran- extensions to the city limits as they chise, the existing contract rights may be made from time to time. and the benefits of the going concern, but at the same time there was no exclusive franchise and no assurance of the continuance of a profit returning business. In Newburyport Water Co. v. City of Newburyport ter system without special legisla(168 Mass. 541, 555) the court, per Holmes, J., say: 'If capitalizing profits would give a much greater excess over the value of the land, water easements and plant of the company than the commissioners allowed, the reasons are to be found in the franchise and monopoly of the company, in its right to lay pipes in the streets, and partly, perhaps, in the personal skill of the management, none of which are things for which the city is to pay.' It is true that in the case at bar the village is to pay for the franchise, but it is not to pay, nor would any purchaser be compelled to pay, for any right to lay pipes, for the reason, also given by Holmes, J., in the case last cited that water pipes are not an additional burden to the street, and as soon as any one was authorized to furnish water, that right would imply the further right to lay pipes for that purpose. I see no reason why the award should be disturbed, either on account of the amount thereof or for any erroneous basis of compensation adopted by the commissioners." 1120 Donahue v. Morgan, 24 Colo. 389. But the authority of a municipality in respect to the statement tive authority. Borough of Preston v. Fullwood Local Board, 53 Law T. (N. S.) 718; Inhabitants of Quincy v. City of Boston, 148 Mass. 389; Cooper v. City of Brooklyn, 11 App. Div. 71, 42 N. Y. Supp. 762; Wil liamsport Water Co. v. Lycoming Gas & Water Co., 95 Pa. 35; Gilchrist's Appeal, 109 Pa. 600; Bly v. White Deer Mountain Water Co., 197 Pa. 80. But see Town of West Hartford v. Hartford Water Com'rs, 68 Conn. 323. See, also, as holding the same, Inhabitants of Bloomfield v. Borough of Glen Ridge, 54 N. J. Eq. 284. 1121 Town of West Hartford V. Hartford Water Com'rs, 68 Conn. 323; City of Lawrence v. Inhabitants of Methuen, 166 Mass. 206; Cooper v. City of Brooklyn, 11 App. Div. 71, 42 N. Y. Supp. 762; Halifax Corp. v. Soothill Upper Local Board, 31 Law T. (N. S.) 6; City of Pittsburgh v. Brace Bros., 158 Pa. 174. If a private consumer outside the city lim its uses city water, it may recover the usual rentals. "The general proposition on which the appellants seek to rest their defense, that the powers of a municipal corporation are confined to its own territorial lim that where a public corporation is vested by the legislature with power sufficiently ample, it may acquire property or rights outside of its geographical limits for the purpose of constructing or maintaining a water supply system and exercise thereover such its, is too plain for controversy. It can exercise no extra-territorial jurisdiction without some special provision authorizing it. But when such special provision exists, the act authorized by it may be lawfully done. Within its boundaries a municipal government may undertake to supply its citizens with water or light. When it does so, it may enforce the collection of the water rents by the entry of a lien therefor against the real estate upon whica the water was furnished; and this lien may be proceeded upon, and the property bound by it brought to sale in the same manner that is practiced in the case of other municipal liens. By the Act of March 7th, 1843, § 4, it is provided that 'the mayor, aldermen and citizens of Pittsburgh may from and after the passage of this act proceed to recover water rents due and unpaid beyond the limits of the city, as well as within the same, in the same way as city taxes are now recoverable.' Since the passage of this act the city of Pittsburgh may furnish water to persons residing beyond the city limits, upon the same terms and conditions that it furnishes to its own citizens, and collect the water rents due from such persons in the same way as city taxes are now recoverable.' In 1882 the appellants were residing and doing business outside the city limits. In that year they applied in writing to the city authorities for a supply of water for use in their laundry, agreeing to take it in accordance with the provisions of the several ordinances relating to the supply of water and the assessment of water rents or taxes in force in said city. The city accepted their application and the water was fur nished. For several years it was paid for without objection and at the rate or price fixed by the city ordinances. In 1889 an increase in the water rent was made. Because of its nonpayment, a lien was entered in favor of the city, and a scire facias issued thereon. The defendants interposed by way of defense the facts that they are not residents of the city and that the real estate which it is sought to charge is not within the city limits or subject to municipal taxes or liens. This defense would be good but for the act of 1843. The defendants were competent to contract for the water supply needed with any person or municipality that was able to supply them. The city was invested with power to contract with them by the act of 1843; and to employ the same methods to compel the payment of the water rents that it was authorized to employ within its own borders. The parties were therefore competent to contract upon this subject. They did actually contract upon the same terms and conditions in use in contracts between the city and its citizens. The water has been furnished by the city, and used by the defendants. A lien for the unpaid rents has been entered under the authority of the act of 1843 and the contract between the parties. The defendants stand on the same ground 1122 authority as would necessarily accompany the protection of its interests. A public corporation may also acquire in its capacity as a private corporation, property outside of its jurisdiction. to be used in connection with such an enterprise. § 459. Sale or lease of municipal plant. Since legislative authority is necessary in the first instance to authorize the acquirement by purchase, lease or construction of a water supply plant, it follows that after one has acquired that, legislative authority is also necessary in order to make a legal sale or lease of the same however desirable or expedient such action may be.1123 The purchaser or lessee under such circumstances is usually held to be substituted for the public corporation in its obligations. In the transaction the public corporation may make arrangement for a regulation by it of the services rendered and the rates to be charged as well as other provisions which may be considered of advantage to it.1124 As usual with other contracts or conveyances of such a nature, a failure on the part of one of the parties to comply with its agreements and promises will give the right to the other party, if it so elects to compel a rescission of the contract and a placing of the parties statu quo,1125 they would occupy if their laundry were inside the city and can make no defense that would not be open to them in that case. If the price charged for the water had been properly fixed under general ordinances and the proceedings have been regular in form, the city has the same right to recover against the defendants that it would have if their establishment was upon the other side of the city line." Lake County Water & Light Co. v. Walsh, 160 Ind. 32, 65 N. E. 530; Arnold v. City of Pawtucket, 21 R. I. 15. Right to lease denied. Hu ron Waterworks Co. v. City of Huron, 7 S. D. 9, 30 L. R. A. 848; Texas Water & Gas Co. v. City of Cleburne, 1 Tex. Civ. App. 580, 21 S. W. 393. A municipality cannot legally surrender its control over its waterworks to a private individual or corporation. Ogden City v. Bear Lake & River Water-Works 1122 Vernon Irr. Co. v. City of Los Angeles, 106 Cal. 237; Dona- & Irr. Co., 16 Utah, 440, 41 L. R. A. hue v. Morgan, 24 Colo. 389; Peo- 305. The power to dispose of a ple v. Briggs, 50 N. Y. 553; People water-works system denied. v. Sisson, 75 App. Div. 138, 77 N. Y. 1124 City of Los Angeles v. Los Supp. 376; City of Pittsburgh V. Angeles City Water Co., 177 U. S. Brace Bros., 158 Pa. 174. 1123 Los Angeles City Water Co. 558. 1125 Farmers' Loan & Trust Co. v. v. City of Los Angeles, 88 Fed. 720; City of Galesburg, 133 U. S. 156. |