Appleton Waterworks Co. v. City of Appleton

TimxiN, J.

No question of the power of a municipal corporation to grant an exclusive franchise, no question of the right of the Wiley Construction Company to take a franchise under ch. 211, Laws of 1879, or sec. 1780», Stats. (1898), no question relative to the right or power of a city to make its consent to the use of its streets conditional upon the concession or continuance of pecuniary advantages-to it or to its citizens, and no question of the correctness of the method employed by the court below in arriving at the amount of recovery, necessarily arises in .this case; therefore neither of said questions will be considered or decided.

The city contracted with'the Wiley Construction Company and its successors and assigns to pay annually a specified hydrant rental, and the construction company, its successors and assigns, in and by the same instrument undertook to furnish the hydrants and the water, which undertaking included pipes and all other necessary appliances, and it also undertook to furnish free water for sprinkling streets, for schoolhouses, city buildings, drinking fountains, etc. These obli *570 gations are contractual and mutual. One undertaking constituted the consideration for the other.

“In dealing with this . . . contract, the parties stand purely and simply as contractors, governed by the same rules of law which govern private contractors, except so far as the known situation of each may control the interpretation of their mutual promises.” Kaukauna E. L. Co. v. Kaukauna, 114 Wis. 327 , 89 N. W. 542 .

Eespondent is the successor and grantee of the construction company, and it is quite immaterial to this part of the inquiry whether the construction company or the respondent acquired its power or capacity to carry out its part of the contract by aid of a franchise from the state, or from the city acting under the power delegated to it by the state, or from the act of the state coupled with the assent of the city. We quite agree with the court below that no new contract fixing the amount to be paid was created between the parties by the notice given on February 20, 1904, by the respondent relative to the change of its rates after March 1, 1904, and the continued use of the hydrants and water service after that date by the appellant. But if this act was ineffectual to create a new contract it was also ineffectual to disturb or discontinue existing contract relations, if any such there were. It would be going too far to say that a municipal corporation can never be liable upon implied contract; but the facts from which a-contract will be implied against a municipal corporation are quite different from those which raise an implication of contract between natural persons, and the doctrine of implied contract is subject to many limitations in the case of such municipalities, among them that no contract will be implied if such implication would conflict with a statute prescribing a mode of contracting by which alone a city could bind itself. Chippewa B. Co. v. Durand, 122 Wis. 85 , 99 N. W. 603 ; Litchfield v. Ballou, 114 U. S. 190 , 5 Sup. Ct. 820. It is pertinent to inquire into the contract *571 relations of tbe parties on February 20, 1904, and on March 1, 1904. If there was then an existing express contract, no-implied assumpsit could arise covering the same subjects Tietz v. Tietz, 90 Wis. 66 , 62 N. W. 939 , and cases in opinion. By the contract contained in the ordinance of November 4, 1881, the compensation of respondent was payable-semi-annually on the first Mondays of February and August, in ’each year. The compensation agreed upon as hydrant rental covered all the services due from respondent to appellant under the contract of November 4, 1881, with all its-modifications. But the amount of compensation agreed upom was fixed by a year’s service or rental. Whether we regard the contract of November 4, 1881, as a contract by the respondent to furnish to the appellant water for twenty years-expiring in 1901 and continued annually by mutual consent thereafter or an annual contract renewed by mutual consent, each year, the result is the same. Whether we regard it as-a rental or a contract for service, the result is the same. The • common law relating to leases as well as that relating to-contracts for service, taken with the statutes on this subject under discussion, all point to the conclusion that if no rental-year or no year of service commenced or ended on March 1, 1904, and the parties had prior to- that time entered upon* the performance for the then current year, neither party was-then at liberty to withdraw from or change the contract.

Referring to contracts for services, the cases are numerous - which hold that the beginning of a new year’s service without. change or discussion of compensation at the end of a period, of service for one year or more at a stipulated annual compensation constitutes a new hiring for a year upon the-former terms, and neither party has thereafter and during-the year the right to recede therefrom without cause. Hence-neither party alone can add new terms or conditions after-such new hiring has taken effect. Dickinson v. Norwegian P. Co. 101 Wis. 157 , 76 N. W. 1108 ; Kellogg v. Citizens' *572 Ins. Co. 94 Wis. 554 , 69 N. W. 362 ; Laughlin v. School Dist. 98 Mich. 523 , 57 N. W. 571 ; Chamberlain v. Detroit S. Works, 103 Mich. 124 , 61 N. W. 532 ; Standard Oil Co. v. Gilbert, 84 Ga. 714 , 11 S. E. 491 ; Adams v. Fitzpatrick, 125 N. Y. 124 , 26 N. E. 143 , affirming S. C. 5 N. Y. Supp. 181 . During tbe year for wbicb botb parties are tbus bound, mere announcement by one to tbe other that be would charge more for or pay less for tbe services in question would be ineffectual to create a new contract. So in case of a lease either for twenty years with tbe lessee bolding over from year to year after its expiration, or an annual lease with tbe lessee bolding over and entering upon tbe next year, tbe rental fixed by tbe preceding lease would ordinarily be binding upon botb parties during tbe lease year upon wbicb they bad entered. Tbe landlord could not, after having elected to treat tbe tenant as bolding over, and by mere notice that be would exact a different rental given without reference to, tbe expiration of tbe lease year, impose a higher rental upon tbe lessee, or change in any manner tbe contract of tbe lessee who merely continued to occupy for tbe remainder of the term, as was bis right at tbe time of such notice under existing contract relations. There are. cases bolding that by notice given before or at tbe expiration of tbe term, to tbe effect that the lessee, if be continue in possession after tbe expiration of such term, will be charged a higher rent, naming tbe sum, and silent acquiescence and continuance in possession by tbe defendant, a new lease is created on tbe terms of such notice. 2 Taylor, Landl. & T. (8th ed.) § 525, and cases; Wood, Landl. & T. sec. 13. But in such case, even where tbe notice is given at tbe end of a term and has reference to tbe next succeeding term, tbe presumed acquiescence of tbe tenant in tbe new rates is rebutted by proof of bis refusal to assent to tbe terms of the notice, or by bis making a counter proposition, notwithstanding be continues to enjoy tbe possession. Galloway v. Kerby, 9 Ill. App. 501 . There is in *573 such case a mere rebuttable inference of fact with reference to tbe lessee’s assent to the new terms stated in the notice, and in the instant case it is shown that the city did not assent to the terms of the notice, and that the notice was not given to take effect at the end of any lease year. If a tenant after the term of his lease continues to hold the thing demised, he does so subject to the terms and conditions of the expired lease. Gilman v. Milwaukee, 31 Wis. 563 . When the election of the landlord to regard him as a tenant untler the terms-of the former lease is once made, the contract is mutually binding and continues for the year. The statutes of this state regulating the subject of contracts between municipal corporations and companies engaged in furnishing water impose upon the parties to such contract similar obligations and duties. Sec. 1780a-, Stats. (1898), authorizes any corporation formed under general or special law for the purpose of constructing and operating waterworks in, any city or village to make and enter into a contract with such city or village to supply the city or village with water for fire and other purposes upon such terms and conditions as may be agreed upon, and the city or village is authorized “by contract duly executed” to acquire the right to use the water supplied by such corporation, or such portion thereof as it may desire, upon such terms and conditions as may be agreed upon by such corporation and the authorities of such city or village. Sec. 959 — 48, Stats. (1898), speaking of the contract referred to in the preceding section, provides:

“When any such contract has heretofore been made or shall hereafter be made the common council or board of trustees, as the case may be, shall cause the amount agreed to be paid annually by such contract to be levied upon the taxable property of such city or village in pursuance of the terms of such contract, and the same shall be collected with other city and village taxes, as the case may be, for such year. Such amount, when so collected, shall constitute a separate fund and be kept *574 -separate and apart from tbe other funds of said city or village, and the same shall be paid out only for the purposes mentioned in such contract and as therein provided.”

The charter of the city of Appleton — Laws of 1885, ch. 441, subeh.Y, § 2 — as well as the general laws of this state— -sec. 1081, Stats. (1898) — requires that the levy of taxes take place in November, or at least prior to December 1st, in each year. The legal effect of sec. 959 — 48, Stats. (1898), is to make the contract in existence at the time of the tax levy the basis of the tax levy for the ensuing year. This statute applies to contracts made prior to its passage and to "those contracts thereafter made. The contract in question was renewed by the parties for the years 1902, 1903, and 1904, while this statute was in force. And it is a very elementary rule of the law of contracts that existing statutes applicable thereunto enter into and become a part of the contract. Morrow v. DeLaney, 41 Wis. 149 . This statute, as well as sec. 1780®, Stats: (1898), requires the contract to be executed by the authorities of the city, to be in writing, and it~ terms and the amount to become due thereunder to be known in advance of the tax levy, and to be made the basis of the tax levy for the purpose of raising a special fund; and the statutes in effect provide that the liabilities arising upon such contract are to be paid out of the fund thus raised. In such case there can be no implied contract which presupposes a general liability. 2 Abbott, Mun. Corp. § 411, and cases. The parties having failed to agree upon any change in the terms of the written contract contained in the ordinance of November 4, 1881, and the respondent resting under legal duty to furnish the water, the terms of compensation fixed and provided by the written contract required by sec. I780a¡ must continue in force and binding upon the parties, at least for and during each annual renewal thereof by the acts of one party in furnishing and the other in receiving the service, in the instant case from November 4-th of one year to *575 November 4tb of the next year. This results in a reversal of the judgment of the court below, and might result in a dismissal of plaintiff’s consolidated action but for the fact that the city of Appleton is here contending that it is liable only for the amount stipulated in the contract of November 4, 1881.

Other contentions are made, but we consider this contention sufficient to authorize us to order judgment in the plaintiff’s favor for the several months’ service for which this action is brought, based upon and measured by the provisions and terms of the contract of November 4, 1881, less the offset of $4,942.08 for taxes.

By the Court. — The judgment of the circuit court is reversed with costs in favor of appellant, and with directions to enter judgment in favor of the plaintiff in accordance with this opinion.