207 U.S.

Argument for Appellant.

one years," power was given to make an exclusive contract, such as Ordinance No. 402, for a limited and reasonable period to light the streets. General Statutes of Kansas, 1889, §§ 759, 787, 816, 817, 824, 1401 and 1402; Manley v. Emlen, 46 Kansas, 655; Wood v. Waterworks Co., 33 Kansas, 590, 597; Waterworks Co. v. City of Burlington, 43 Kansas, 725, 728; The Columbus Waterworks Co. v. The City of Columbus, 46 Kansas, 666; The Columbus Waterworks Co. v. The City of Columbus, 48 Kansas, 99; Vicksburg v. Vicksburg Waterworks Co., 202 U. S. 453; City of Walla Walla v. Walla Walla Water Co., 172 U. S. 1; State v. City of Topeka, 68 Kansas, 177; City of Cleveland v. Cleveland City Ry. Co., 194 U. S. 517; Omaha Waterworks Co. v. City of Omaha, 147 Fed. Rep. 1; California Reduction Co. v. Sanitary Reduction Works, 199 U. S. 306.

Under the general power "to make all contracts and to do all other acts in relation to the property and affairs of the city necessary to the exercise of its corporate or administrative powers," and under the general welfare clauses and cognate provisions of the statutes of Kansas governing cities of the second class, such cities have power to make an exclusive contract for twenty years, such as Ordinance No. 402, subject to police control, to furnish the city and its inhabitants with light. Eureka Light & Ice Co. v. City of Eureka, 5 Kans. App. 669, 676; S. C., 48 Pac. Rep. 935; Cherryvale Water Co. v. City of Cherryvale, 65 Kansas, 219, 228; Crawfordsville v. Braden, 130 Indiana, 149; Manley v. Emlen, 46 Kansas, 655; Wood v. Waterworks Co., 33 Kansas, 590, 597; Waterworks Co. v. City of Burlington, 43 Kansas, 725, 728; The Columbus Waterworks Co. v. The City of Columbus, 46 Kansas, 666; S. C., 48 Kansas, 99; Ellinwood v. Reedsbury, 91 Wisconsin, 131; Greenville v. Greenville Waterworks Co., 125 Alabama, 625; Grace v. Hawkinsville, 101 Georgia, 553; Webb City Waterworks Co. v. Webb City, 78 Mo. App. 422; Aurora Water Co. v. Aurora, 129 Missouri, 540; Rome v. Cabot, 28 Georgia, 50; Heilbron v. Cuthbert, 96 Georgia, 312. See also City of Newport v. Newport Light Co., 84 Kentucky, 166.

Mr. Max Pam, Mr. C. M. Williams and Mr. A. C. Malloy, with whom Mr. F. F. Prigg was on the brief, for appellees:

The city of Hutchinson in the State of Kansas, being a city of the second class in said State, had no power to grant an exclusive privilege or franchise to the complainant. Citizens' Street Ry. v. Detroit Railway, 171 U. S. 48, and cases cited; Jackson County Horse R. Co. v. Interstate Rapid Transit Ry. Co., 24 Fed. Rep. 307; Illinois Trust & Savings Bank v. City of Arkansas City, 22 C. C. A. 179; Saginaw Gas Light Co. v. City of Saginaw, 28 Fed. Rep. 529; Vicksburg v. Vicksburg Water Co., 202 U. S. 453, discussed and distinguished.

Even admitting that under the constitution of Kansas the legislature of the State had power to grant exclusive franchises, yet it did not have the right to delegate such power. See Constitution of Kansas, § 2 of the Bill of Rights; In re Lowe, 54 Kansas, 57.

MR. JUSTICE MCKENNA, after making the foregoing statement, delivered the opinion of the court.

The Circuit Court assumed that Ordinance No. 402 was in terms exclusive and was intended to be made so by the city. We shall assume the same thing. Indeed, it would be impossible to decide otherwise. It recites that the Hutchinson Water, Light and Power Company "is the owner of certain exclusive franchises and contracts with the city of Hutchinson," under which it has expended large sums of money, and that the city "is desirous of modifying and changing said franchise and contracts to the advantage of said city of Hutchinson, without cancelling or abridging any of the rights or privileges vested in said company," and that, therefore, in consideration of the surrender of all existing contracts and franchises, except as therein specified, "there is hereby given and granted" to the company, "its successors or assigns, the exclusive rights and privileges for the term of twenty years from the date of the passage and approval of this ordinance, of

supplying the city of Hutchinson, Reno County, Kansas, and the inhabitants thereof, by a system of waterworks with water. with electric current for electric light and power,

.

and for all other purposes for which electric current may be used, except power for the operation of street railways. The city, it is clear, in express terms and for consideration received granted exclusive rights. The power of the city to do this is denied, and this makes the question in the case. The Circuit Court ruled against the existence of the power applying to the statutes conferring power upon the municipalities of the State the rule of strict construction. The ruling is challenged by appellants, and it is contended, that the general welfare clause and "the municipal power to furnish light carries with it the obligation to enter into all contracts and to exercise all subsidiary powers which the circumstances of the case require." And it is further contended that in Kansas statutes delegating to cities the power to furnish light and water have been liberally construed by the Supreme Court of the State.

That grants to municipal corporations, like grants to private corporations, are subject to the rule of strict construction was announced by this court in Citizens' Street Railway v. Detroit Railway, 171 U. S. 48, following and applying the doctrine of previous cases. It was said that the power to grant an exclusive privilege must be expressly given, or, if inferred from other powers, must be indispensable to them, and that this principle was firmly fixed by authority. See also Dillon on Municipal Corporations, § 80, fourth edition. The case was concerned with a grant to a street railway, and in the argument of the cases at bar a distinction is asserted between an exclusive privilege to occupy the surface of streets and interfere with "a matter of common right," and a privilege to use the streets below the surface "as incidental only and subsidiary to the performance of a contract pertaining to another matter," and on this distinction, it is argued, the "first must show an express grant of authority" to make the right exclusive,

but that the second is not limited by such requirement. The distinction is only one of degree and has not been considered as varying the application of the rule of construction announced. In Freeport Water Co. v. Freeport City, 180 U. S. 587, a statute of Illinois was considered which gave power to cities and villages to provide for the supply of water at such rates as might be fixed by ordinance and for a period not exceeding thirty years. And passing upon these provisions as constituting a contract precluding a change of rates from time to time, we said (page 598): "The rule which governs interprctation in such cases has often been declared. We expressed it, following many prior decisions, in Citizens' Street Railway v. Detroit Railway, 171 U. S. 48, to be that the power of a municipal corporation to grant exclusive privileges must be conferred by explicit terms. If inferred from other powers, it is not enough that the power is convenient to other powers; it must be indispensable to them." See also Rogers Park Water Company v. Fergus, 180 U. S. 624; Joplin v. Light Co., 191 U. S. 150, and cases cited; Owensboro v. Owensboro Waterworks Co., 191 U. S. 358. The doctrine was recognized as existing in Walla Walla v. Walla Walla Water Co., 172 U. S. 1, and in Vicksburg v. Waterworks Co., 202 U. S. 453. In the two latter cases the power of the respective cities to make a contract, precluding them from building waterworks and operating their own water systems, was declared. In the Vicksburg case it was pointed out that the power of the city to exclude itself from building waterworks of its own was recognized to exist by the Supreme Court of Mississippi.

In Vicksburg v. Vicksburg Waterworks Co., 206 U. S. 496, a contract of the city, fixing a maximum rate, was sustained upon the authority of the decisions of the Supreme Court of the State, holding that under a broad grant of power conferring without restriction or limitation upon the city, the right to make a contract for a supply of the water, it was within the right of the city council, in the exercise of that power, to make a binding contract fixing the maximum rate at which the water

should be supplied to the inhabitants of the city for a limited term of years.

This case is especially relied on by appellant as establishing a right in the city of Hutchinson to grant an exclusive franchise under the statutes of the State, both from their letter and as construed by the Supreme Court of the State. A consideration of the statutes and decisions, therefore, becomes necessary. Those quoted by the Circuit Court in its opinion are inserted in the margin.' They confer power to provide for the general welfare and enable a city to construct water and lighting plants of its own or "to make contracts with any person or company for such purposes," and give such person or company "the privilege of furnishing light for the streets, lanes or alleys of said city for any length of time not exceeding twenty-one years."

In addition to these sections, appellant cites others, which give to the city the power to make all contracts in relation to its property and affairs necessary to the exercise of its corporate

1 SEC. 35. The mayor and council of each city governed by this act shall have the care, management and control of the city and its finances, and shall have power to enact, ordain, alter or repeal any and all ordinances not repugnant to the constitution and laws of this State, and such as it shall deem expedient for the good government of the city, the preservation of the peace and good order, the suppression of vice and immorality, the benefit of trade and commerce, and the health of the inhabitants thereof, and such other ordinances, rules and regulations as may be necessary to carry such power into effect. General Laws of 1901, § 971, p. 225.

SEC. 65. The council may provide for and regulate the lighting of the streets and the erection of lamp posts, and the numbering of the buildings in the city, and the construction of sewers; and the council shall have power to make contracts with any person, company or association for such purposes, and give such person, company or association the privilege of furnishing light for the streets, lanes or alleys of said city for any length of time not exceeding twenty-one years. General Laws of 1901, § 1000, p. 232.

SEC. 83. That cities of the second class of the State of Kansas are hereby granted full power and authority on behalf of said cities, to purchase, procure, provide and contract for the construction of and construct waterworks, electric light and gas plants for the purpose of supplying such cities and the inhabitants thereof with water, light and gas for domestic use and any and all other purposes. General Laws of 1901, § 1017, p. 237.