Owensboro v. Owensboro Water Works Co., 243 U.S. 166 (1917)

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Owensboro v. Owensboro Water Works Company

No. 79

Argued November 8, 1916
Decided March 6, 1917
243 U.S. 166

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE WESTERN DISTRICT OF KENTUCKY

Syllabus

A city granted to a water company a franchise to construct and operate water works, using the streets. The ordinance defined the grant as made "for the duration of the said Company" (the grantee), but elsewhere limited the term expressly to twenty-five years from the passage of the ordinance, which also contained a contract for the same period providing that, if at the city’s request, the company should extend its pipes "during the said term of twenty-five years," the city would rent hydrants thereon "for the unexpired term of said franchise." Some years later, the city granted a similar, substitute franchise to a second company, successor to the first with the city’s consent, by an ordinance defining the franchise term as "for and during the existence" of the second company, and recognizing the latter as the successor of the first company in respect of the contract for hydrant rental "as fully as if such existing contract had been originally made" with the second company "without the intervention" of the first. By the law of its creation, the life of the second company was twenty-five years primarily, with the right (reserved in its articles) to prolong the term by twenty-five year extensions.

Held:

(1) That the life of the second franchise was not limited to twenty-five years, but was intended to endure while the corporate life of the grantee endured by extension beyond that period.

(2) The fact that the first franchise was expressly limited to twenty-five years, while the second was granted for "the existence of the corporation," was evidence confirming this construction.

(3) Respecting the contract concerning hydrants, the second company became successor of the first only for the unexpired term of that contract.

(4) That later ordinances of the city requesting pipeline extensions and declaring that the city thereby rented the hydrants along such extensions "for the unexpired term of the franchises of the said Water Company," and compliance by the second company with the requests so made upon it, did not import a recognition by the parties that the franchise of that company was for a definite known term not to be enlarged by extension of its corporate existence, but were referable only to the hydrant contract and its unexpired term -- a conclusion which was corroborated by the action of the parties in ceasing to collect and pay rent for such hydrants when that term expired.

The question being whether a franchise granted by a city was limited to twenty-five years, the period for which the corporate grantee was primarily organized, or was meant to accompany an extension of the grantee’s corporate life, the fact that the grantee, in former litigation in which that question was neither material nor adjudicated, the primary period having then some years to run, described the franchise as a franchise for twenty-five years, affords no basis for an estoppel by conduct or by judgment, and the more clearly so where the grantee, in the same litigation, also described the franchise as granted for the whole period of its corporate existence.

While, in the computation of time beginning "from and after" a day named it is usual to exclude that day and begin with the next, this is not done where it will obviously defeat the purpose of those whose words are being construed or applied.

The case is stated in the opinion.