City and County of Denver v. Denver Union Water Company Denver Union Water Company/Dissent Wendell Holmes, Jr.

by Mahlon Pitney

United States Supreme Court

246 U.S. 178

City and County of Denver  v.  Denver Union Water Company Denver Union Water Company

 Argued: Oct. 3 and 4, 1917. --- Decided: March 4, 1918

Mr. Justice HOLMES dissenting.

This is a bill to restrain the enforcement of an ordinance of the City and County of Denver, passed on March 3, 1914, fixing the rates for water permitted to be charged thereafter to the city and its inhabitants. After the coming in of the answer the case was referred to a special master, there was an investigation of the usual kind, a report and afterwards a final decree for the Water Company, vitiated by the judge's assumption that he was bound by the master's findings of fact. But I need not dwell upon this mistake, because in my opinion the decision ought to be reversed upon a more important ground. In some instances it would be proper to send back the case for further consideration, Wilson Cypress Co. v. Del Pozo, 236 U.S. 635, 657, 35 Sup. Ct. 446, 59 L. Ed. 758; Brown v. Fletcher, 237 U.S. 583, 35 Sup. Ct. 750, 59 L. Ed. 1128; Marconi Wireless Telegraph Co. v. Simon, 246 U.S. 46, 38 Sup. Ct. 275, 62 L. Ed. --, decided today; but that is unnecessary when there is disclosed a fundamental bar to the bill, and I may add that, if this be the fact, no omission to raise the point in technical form would induce this Court to enter a decree contrary to the manifest equities of the case. Rule 35 (33 Sup. Ct. xviii).

The Water Company occupied the streets of Denver with its pipes under an ordinance of April 10, 1890, and it is not denied that the franchise granted by that ordinance had expired. Denver v. Denver Union Water Co., 229 U.S. 123, 33 Sup. Ct. 657, 57 L. Ed. 1101. I am of opinion that the ordinance complained of does not grant a new term. Perhaps an instrument could be framed that granted while it said that it did not. But this ordinance qualifies all that follows by a preamble that recites that the Water Company is 'without a franchise and a mere tenant by sufferance of the streets of the City and County of Denver' and then, 'without in any manner recognizing said Denver Union Water Company's right to occupy the streets of the City and County of Denver, or to continue its service as a water carrier, for the purpose of regulating and reducing the charges made by it during the time it shall further act as a water carrier and tenant by sufferance of said streets,' goes on to fix the rates. It seems to me plain that the rates subsequently established even though purporting to be monthly or semi-annual are established subject to the preliminary declaration, and to the chance of the practically improbable earlier termination of the license or tenancy at sufferance. The ordinance does not attempt to require the Company to furnish water but simply fixes a limit to its charges while it does furnish it as such tenant at sufferance. While the service continues it is charged with a public interest and is subject to regulation by law. The question at the bottom of the case is what elements, if any, the Company has a constitutional right to have taken into account in determining whether the rates ordained are confiscatory, and, more generally, whether it has any constitutional right at all in the matter of rates.

We must assume that the Water Company may be required, within a reasonable time, to remove its pipes from the streets. Detroit United Railway v. Detroit, 229 U.S. 39, 46, 33 Sup. Ct. 697, 57 L. Ed. 1056. And, to illustrate the problem, it may be asked how a company in that situation can assert a constitutional right to a return upon the value that those pipes would have if there under a permanent right of occupation, as against a city that is legally entitled to reduce them to their value as old iron by ordering them to be removed at once. In view of that right of the city, which if exercised, would make the Company's whole plant valueless as such, the question recurs whether the fixing of any rate by the city could be said to confiscate property on the ground that the return was too low.

I understand that the Water Company has a right to stop furnishing water, corresponding to the right of the city to order out the pipes. It is hard to see how property could be confiscated by the establishment of almost any rate when whatever value it would have over above that dependent upon the use of the pipes would remain to the Company if it stopped using them and therefore was in the Company's hands to preserve. The ordinance of the city could mean no more than that the Company must accept the city's rates or stop-and as it could be stopped by the city out and out, the general principle is that it could be stopped unless a certain price should be paid. Lloyd v. Dollison, 194 U.S. 445, 449, 24 Sup. Ct. 703, 48 L. Ed. 1062; Ashley v. Ryan, 153 U.S. 436, 443, 444, 14 Sup. Ct. 865, 38 L. Ed. 773. See Denver v. New York Trust Co., 229 U.S. 123, 141, 142, 33 Sup. Ct. 657, 57 L. Ed. 1101. It is true that this principle has not been applied in cases where the condition tended to bring about a state of things that there was a predominant public interest to prevent, but I see no ground for the application here of anything to be deduced from Western Union Telegraph Co. v. Kansas, 216 U.S. 1, 30 Sup. Ct. 190, 54 L. Ed. 355; Pullman Co. v. Kansas, 216 U.S. 56, 30 Sup. Ct. 232, 54 L. Ed. 378, or Motion Picture Patents Co. v. Universal Film Manufacturing Co., 243 U.S. 502, 37 Sup. Ct. 416, 61 L. Ed. 871, L. R. A. 1917E, 1187.

It may be said that to argue from such abstract rights is to discuss the case in vacuo-that practically the Company cannot stop furnishing water without being ruined, or the city stop receiving it without being destroyed. And no doubt this is true-but it also is true and not quite as tautologous as it seems, that the law knows nothing but legal rights. Something more than the strong probability that an enjoyment will continue must be shown in order to make an otherwise lawful uncompensated interference with it a wrong. See Matter of City of Brooklyn, 143 N. Y. 596, 616, 38 N. E. 983, 26 L. R. A. 270; Id., 166 U.S. 685, 17 Sup. Ct. 718, 41 L. Ed. 1165. Or conversely if a legal title is taken it must be paid for in full notwithstanding a strong probability that the enjoyment of the property will continue long undisturbed. Howe v. Weymouth, 148 Mass. 605, 606, 607, 20 N. E. 316. So here the mutual dependence of the parties upon each other in fact does not affect the consequences of their independence of each other in law. The question before us is not what would be a fair compensation as between a necessary customer and a necessary seller, but simply whether the property of the company is taken without due process of law by the city's fixing rates for a service, while it continues, that the Company may discontinue at will and the city may order tomorrow to stop. I am of opinion that it is not. See Monongahela Navigation Co. v. United States, 148 U.S. 312, 340, 341, 13 Sup. Ct. 622, 37 L. Ed. 463; Appleton Water Works Co. v. Railroad Commission, 154 Wis. 121, 136, 137, 142 N. W. 476, 47 L. R. A. (N. S.) 770, Ann. Cas. 1915B, 1160. Whatever may be the duty of the City toward its inhabitants, that cannot enlarg its obligations to the Company or of the Company to it after the franchise of the latter has expired, or change the meaning of an ordinance that to my mind is plain upon its face. I presume that if it be necessary the City or the Legislature can take the water works by eminent domain.

The question is different from that which would arise upon a franchise having but a short time to run but still in force. It might be argued that the short life was a fact to be considered, as no doubt it would be in some connections. See Monongahela Navigation Co. v. United States, 148 U.S. 312, 344, 13 Sup. Ct. 622, 37 L. Ed. 463; West Springfield v. West Springfield Aqueduct Co., 167 Mass. 128, 135, 44 N. E. 1063; Kennebec Water District v. Waterville, 97 Me. 185, 205, 54 Atl. 6, 60 L. R. A. 856. Or it well may be that while a limited franchise is in force the very fact that the Company has to rely upon the returns during the life of the franchise to reimburse its outlay and give it whatever profit it can make, entitles it to returns during that period unaffected by the approach of the end. There is no such question here.

Mr. Justice BRANDEIS and Mr. Justice CLARKE concur with this opinion.

Notes