Dodge v. City of Council Bluffs

Adams, Ch. J.

1. COBPOBAeigtffpowers of‘ It is not claimed that the defendant city lias no power to provide by ordinance for the construction of water-works. It would be conceded that it has the lower to do so, and even to provide for tlieir construction by a corporation. The claim is that it has no power to provide for their construction by a foreign corporation, and especially by a foreign corporation like the American Construction Company, which is not expressly authorized by the laws of the State in which it is incorporated to extend its operations outside of the State. In our opinion this claim cannot be sustained. It is true a corporation can exercise no powers except such as are expressly granted and such as are reasonably incident thereto. But the power possessed by the American Construction-Company to construct water-works appears to be ample. The articles of incorporation are set out, and they expressly provide for supplying water for’municipal purposes. But it is said that by fair construction they must be held to mean only, for supplying water *563 for municipal purposes in the State of New York. We are asked to engraft upon the articles, by judicial construction, this restriction. Now, we might, perhaps, feel jus.ified in doing this if we could see anything in the nature of the business to lead us to think that the incorporators contemplated such restriction, but we do uot. We think that they designed to make their field of operation as extensive as the cities needing their works. This appears to us lo be tbe fair construction. Having reached this conclusion it only remains to be said upon this point, that the articles of incorporation must be taken to be the measure of tbe company’s riglitful power in the absence of any showing that the articles themselves are illegal. They are not, with the construction which we put upon them, in the nature of things, illegal, nor can they be Held to be so merely by want of a statute in New York authorizing the company to do business or acquire interests beyond tlie limits of tbe State. It bas never been held, so far as we are aware, that the right of a corporation to do business, or acquire interests beyond tbe limits of the State in which it is created, exists only by an express grant from the legislature of such State.

It is true it has been said that “a corporation must dwell in the place of its creation.”

Bank of Augusta v. Earle, 13 Peters, 519 . Being an artificial person, a mere creature of law, it cannot go where the law by which it exists cannot go. An extra territorial corporate meeting, for ins'anee, would be illegal. But a corporation is not for this reason prevented from sending its agents abroad for tlie transaction of business.

Bank of Augusta v. Earle, above cited.

2. muotcipau foTCjjsj?cor-' poworTo' condemn property.

But is said that conceding that the American Construction Co. might make contracts, and do many kinds of business in Iowa yet, being a foreign corporation, it cannot acquire such rights as the ordinance in question purports to confer. The argument is that it is onl y by inter-state comity that tlie right of a corporation *564 to make and enforce any contracts elsewhere than in the State where it is created is recognized; that the rights granted by the ordinance in question are in the nature of a public prerogative franchise, and that inter-state comity cannot properly be held to extend to such rights.

The ordinance confers upon the company the right to condemn’and appropriate private property necessary for the construction and operation of the water works. This right, it is said, cannot properly be granted to a foreign corporation. The plaintiff’s rely upon the following authorities:

Runyon v. Coster’s Lessee, 14 Peters, 128 ;

Nashville Railway v. Cowardin, 11 Humph., 348 ;

State v. Railroad Co , 25 Vt., 435 ;

Ohio & M. R. Co. v. Wheeler, 1 Black. 397 ;

Newbury Petroleum Co. v. Weare, 27 Ohio St., 353 ;

Arm v. Conant, 36 Vt., 749 ;

Thompson v. Waters, 25 Mich., 221 ;

Aspenwall v. O. & M. R. Co., 2 Ind., 492 ;

Holbert v. St. Louis, K. C. & N. R. Co., 45 Iowa, 26 . In the last case it was held that a railroad company incorporated in another State has no power in this State to condemn land for a right of way. Under that decision, and others above cited, we are not prepared to say that the American Construction Co. could, by reason of considerations of mere inter-state comity, be allowed under any ordinance which the defendant city could pass, to condemn and appropriate private property for the construction and operation of its water-works, but it is certainly competent for the legislature to grant such power, and in our opinion, the legislature has granted it. Section 474 of the Code provides that cities and towns are authorized to condemn and appropriate so much private property as shall be necessary for the construction and operation of water-works, and when they shall authorize the construction and operation thereof by individuals or corjwrations they may confer by ordinance upon such person or corporation the power to take and appropriate private property for said purpose.” Now, while in form, the power is not grauted directly by the legislature to the proprietor of the water-works, *565 where the proprietor is other than the city or town, yet no point of that kind is raised by the plaintiffs’ counsel, and none, we think, could be properly. The legislative intent to conler the power is abundantly manifest. This, we think, would not be questioned where individuals or a domestic corporation is proprietor. But it is said that we are not justified in supposing that the legislature contemplated a case where a foreign corporation is proprietor. In our opinion the statute will not justify the narrow construction which the plaintiff's would put upon it. The power given'to cities and towns to contract with corporations for the construction and operation of waterworks is general. If the intention had been to restrict them to domestic corporations it would have been easy to expressly so provide. But we cannot think that any such restriction was contemplated or deemed desirable. "Where works are to be constructed for municipal purposes, requiring no inconsiderable capital, manufacturing facilities, experience, and skill, it is of great importance to cities and towns to be allowed to contract wherever and with whomsoever they can do so to the best advantage. Begarding this statute as conferring upon cities and towns the right to contract for water-works with foreign as well as domestic corporations, it follows, we think, that where a city or town does contract with a, foreign corporation, such corporation may, under the statute, and a proper ordinance, have the right to condemn and appropriate private property necessary for the works.

____. stauTio controL At this point it is proper that we should consider one other objection urged to this view. It is said that it is contrary to the legislative policy of Iowa, as evinced by a pro"vision of statute, whereby corporate powers are granted with a reservation, by which the legislature has the right to control articles of incorporation, bylaws, rules, and regulations of corporations. Code, § 1090. Now, the plaintiffs’ argument is that as the legislature of Iowa cannot control the articles of incorporation, by-laws, *566 rules, and regulations of foreign corporations, the legislature did not intend that cities and towns should be allowed to contract with foreign corporations for water-works. But this reasoning, it appears to us, would carry us too far. Corporations sustain no practical relation to the State or the inhabitants thereof except so far as they do business. The objection, then, is to corporations doing business in this State without their articles of incorporation, by-laws, rules, and regulations being subject to the control of the legislature of this State. But we cannot hold that the legislature intended to prevent foreign corporations from doing business here. Tlie true idea appears to us to be this: Every State has the power to reserve control over its own corporations. Iowa has done so to a limited extent, but this does not prevent the transaction here by foreign corporations of all ordinary business, nor does it indicate that the statute in question should be so construed as to prevent them, under a proper ordinance, from condemning and appropriating priva e property.

_. exoHis’iverks: risllt' , But it is said that conceding that the defendant city had the power to pass an ordinance, providing for the construction and operation of water-works by a foreign corporation, the ordinance passed is objectionable and a court of equity ought to declare it void.

The ordinance purports to grant an exclusive right. Whether it was competent for the city to grant such right we need not determine. If we should conclude that it was not, it is manifest that the ordinance would not be void. It would result merely that the right granted is not exclusive, and the plaintiffs as mere tax-payers cannot properly raise that question. Such question cannot properly be raised until a conflict arises between the American Construction Co. and some person or persons, or corporation, claiming also a right from the defendant city to construct and operate water-works.

Grant v. The City of Davenport, 30 Iowa, 406 .

*567 r> _. ord._ si^uneiíróf ngllt' *566 The next objection urged is that the ordinance permits an.

*567 improper assignment by the American Construction Co. The provision objected to is in these words: “The American .Construction Co. shall have the right to make an assignment of all its rights and privileges under this ordinance to a water-works company which it may form under the laws of Iowa.” Now, it is said that the American Construction Co. assumed certain obligations, and that the contract must have been entered into by the city in reliance upon its responsibility and character; that the city should not be allowed to provide in advance that the company might shift its obligations to another corporation which might lack the requisite responsibility and character. But we do not feel called upon to determine this question Possibly the provision is void, but if so it would not give plaintiff's the right, to the injunction prayed for. It would not affect the right of the company to proceed with its works.

Several other objections are urged to this ordinance, which, do not, in our opinion, go to the validity of the ordinance itself, but which raise some merely incidental questions as to what can be done under the ordinance, and which it will be time enough to consider when the things provided for are attempted, and when we have before us as plaintiffs persons aggrieved thereby. Some other objections are urged, but they go. merely to the wisdom of the ordinance, and they are not such that we should be justified in declaring it void.

tmgeut injur'e:"

One objection, however, deserves a separate consideration. The ordinance provides, in substance, that if the special tax authorized by law to be levied by the city for. the payment of water rentals shall prove inadequate for that purp se, the city shall pay the deficit out of its current annual revenues.

Section 475 of the Code provides for the levy of a special five mill tax for the payment of water rentals. There is certainly some reason for thinking that that was designed to be the limit. Now it is said that the company was proceeding to con *568 struct its works in reliance in part upon the general revenues of the city, and it behooved the plaintiffs to interpose their objection in the outset to any payments therefrom; for they would be estopped from doing so after tlie company had expended money under the provisions of the ordinance. It has certainly been held that tax-payers may by delay and apparent acquiescence estop themselves from applying to a court of equity for an injunction to prevent the improper use of public funds.

Tash v. Adams, 10 Cush., 253 . On the other hand it has been held that such estoppel does not arise where the complainant’s rights are clear, and the party setting up the estoppel must be deemed to have acted at his peril.

Borden v. Stein, 47 Ala., 104 . The defendants, in the case at bar, claim that whatever rights the plaintiffs have, if any, must be determined by a construction of thestatuieof which the defendants were bound to take notice. Whether this is a sufficient answer to the plaintiffs’ position we need not determine. It is not certain there will be any deficit to be made good ont of the general revenue. This ac ion, so far as this point is concerned, is brought upon a mere contingency. Courts of equity lend themselves to prevent injuries which are imminent, not merely possible. The plaintiffs, it is true, aver that there will be a deficit; but we cannot hold that the demurrer admits the truth of this averment, because it is impossible,in the nature of things, to know that there will be a deficit.

7 IXJUN0. mince: °pubtication.

Finally, it is said that the ordinance is invalid for want of due publication. The plaintiffs rely upon a provision of the original charter requiring ordinances to be published ten days, and the petition avers that this ordinance was not published that long. But an action of this kind cannot be maintained merely on the ground that at the time the action was brought publication of the ordinance was incomplete.

In our opinion the judgment of the District Court must be Affirmed.