Municipal corporations, § 31 - doubt resolved against power.

3. Any doubt as to the existence of municipal authority, or whether any act is fairly referable to its delegated powers, is resolved against its exist

ence.

[See 19 R. C. L. 768; 3 R. C. L. Supp. 971; 4 R. C. L. Supp. 1288; 6 R. C. L. Supp. 1137.]

Municipal corporations, § 164 - acts in private capacity.

4. A municipal corporation engaged in the business of supplying light and water acts as a private corporation, and not in its sovereign capacity.

[See 19 R. C. L. 764; 4 R. C. L. 1288; 19 R. C. L. 1132; 4 R. C. L. Supp. 1311.]

Courts, § 165-authority over municipal water rates.

5. Courts have the power to determine questions relating to service and rates of a municipality in furnishing a water supply, where complaint is

APPEAL by plaintiff from a decree of the Court of Common Pleas for Clinton County (Baird, P. J.) dismissing a bill filed to enjoin defendants from discontinuing or shutting off plaintiff's water supply. Affirmed.

The facts are stated in the opinion Messrs. Henry Hipple and M. E. Haggerty, for appellant:

There is vested in the city council a reasonable discretion in determining conditions under which water will be furnished by the city. If it is demonstrated that the furnishing of water over a period of years without charge would result in the establishing of a large industry in the city, which would add materially to the number of its inhabitants and the monthly pay rolls, and thus increase substantially the general prosperity of the community as a whole, the city council, in the exercise of its discretion, may thus act for the public good.

Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24, P.U.R.1920D, 569, 109 Atl. 535; Rieker v. Lancaster, 7 Pa. Super. Ct. 149; Brass v. Rathbone, 153 N. Y. 435, 47 N. E. 905; Vreeland v. Jersey City, 37 N. J. Eq. 574; Western Sav. Fund Soc. v. Philadelphia, 31 Pa. 175.

If a municipality agreed to supply a customer under a special agreement it will be held to its obligation.

Penn Iron Co. v. Lancaster, 25 Pa. Sup. Ct. 478; Wheeler v. Philadelphia, 77 Pa. 338; Wheeler Sav. Fund Soc. v. Philadelphia, 31 Pa. 175; White v.

of the court.

Meadville, 177 Pa. 643, 34 L.R.A. 567, 35 Atl. 693; Baily v. Philadelphia, 184 Pa. 594, 39 L.R.A. 837, 63 Am. St. Rep. 812, 39 Atl. 494; Central Iron & Steel Co. v. Harrisburg, 271 Pa. 340, 114 Atl. 258.

In the business of supplying water, appellee is acting in its private capacity, and is subject to the same rules that govern any private corporation.

Palmer v. General Flooring & Mfg. Co. 62 Pa. Super. Ct. 598; Penn Iron Co. v. Lancaster, supra.

Mr. B. F. Geary, for appellee:

All public rates and levies must be uniform, reasonable, of general application, and not discriminatory.

Consolidated Ice Co. v. Pittsburgh, 274 Pa. 558, 118 Atl. 544; Central Iron & Steel Co. v. Harrisburg, 271 Pa. 340, 114 Atl. 258; Hutchinson Baking Co. v. Marvel, 270 Pa. 378, 113 Atl. 433; Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24, P.U.R.1920D, 569, 109 Atl. 535; Suburban Water Co. v. Oakmont, 268 Pa. 243, 110 Atl. 778; V. & S. Bottle Co. v. Mountain Gas Co. 261 Pa. 523, 104 Atl. 667; Leiper v. Baltimore & P. R. Co. 262 Pa. 328, P.U.R.1919C, 397, 105 Atl. 551; Central R. Co. v. Mauser, 241 Pa. 603, 49 L.R.A. (N.S.) 92, 88

(288 Pa. 420, 135 Atl. 726.)

Atl. 791; Mt. Penn v. Mt. Penn Suburban Water Co. 11 Pa. Corp. Rep. 56; Mt. Carmel v. Mt. Carmel Water Co. 12 Pa. Corp. Rep. 33; East Pittsburgh v. Pennsylvania Water Co. 8 Pa. Corp. 133; Ben Avon v. Ohio Valley Water Co. P.U.R.1917C, 390.

There was no mutual binding contract between the city and the plaintiff.

Hutchinson Baking Co. v. Marvel, 270 Pa. 378, 113 Atl. 433.

Kephart, J., delivered the opinion of the court:

The City of Lock Haven operates its own water supply, and for more than 25 years it offered, as an inducement to corporations intending to locate at that place, free water for a period of 10 years. It agreed to and did furnish, in accordance with its custom, water to the Stanley Aniline Chemical Works. This company was adjudged a bankrupt, and the property sold to appellant. Prior to the sale, appellant had been solicited to make the purchase, and its officers, with some citizens, appeared before the city council for the express purpose of reaching an understanding on the subject of water supply. It was then verbally agreed between appellant and the city council that the agreement theretofore made with the Stanley Company would be carried out. The city would continue to furnish appellant a certain quantity of water free of charge for the balance of the 10 years. Relying on this agreeement, appellant purchased the plant at the trustee's sale. It operated the works for 18 months, during which time no charge was made for water.

In 1920 the city altered its system of service, placed meters in all establishments, and fixed per thousand-gallon rate. A charge, under this schedule, was made against appellant, and, as there was an unpaid bill of over $1,000 which it refused to pay, the city, in compliance with its regulations, was about to shut off the water supply. A bill to enjoin the threatened action was filed and dismissed by the court below.

The only question necessary for

us to consider is whether the city had the power to make the agreement here set up.

A municipal corporation can function only through the powers granted by the Legisla- Municipal corture in its charter porationsof incorporation, or extent of those powers inci

powers.

dent or related thereto as essential and necessary to carry out the declared objects contained in such express powers. Beyond such grant of authority, a municipality possesses no powers by implication. If there is doubt as to the existence of authority, or whether an act is fairly referable to any of the dele

gated powers, the -doubt resolved doubt must be re- against power. solved against its

existence. See Whelen's Appeal, 108 Pa. 162, 1 Atl. 88. Further, the power which the city exercises must not contravene any constitutional limitations either state or federal.

-acts in private

Western

When a municipal corporation engages in an activity of a business, rather than of a governmental nature, such as the supply of light or water, which is generally engaged in by individuals or private corporations, it acts as such cor- capacity poration, and not in its its sovereign capacity. Sav. Fund Soc. v. Philadelphia, 31 Pa. 185. The relation to the public created by its ordinances is, in such cases, not legislative, but contractual. It was because municipalities were similar to private corporations in supplying water that the controversy arose as to whether or not the Public Service Commission could regulate that service. We held, in Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24, P.U.R.1920D, 569, 109 Atl. 535, where the question was elaborately treated, that municipalities were not included in the Public Service Act (Pa. Stat. 1920, §§ 18,057 et seq.), because the statute expressly eliminated them, and they could not, therefore, be brought in by implication.

(288 Pa. 420, 135 Atl. 726.)

give water away to a manufacturing plant is a discrimination. Appellant urges, however, that in Central Iron & Steel Co. v. Harrisburg, 271 Pa. 340, 114 Atl. 258, we decide that, "if [a city] stipulates to supply a customer [with water] under special agreement for a specified term at a fixed price, then it will be held to its obligation (Penn Iron Co. v. Lancaster, 25 Pa. Super. Ct. 478); but, as in all cases, one claiming to enforce a contract must establish the fact that there was such an understanding, express or implied, as he seeks to enforce," and the contract would be binding, assuming it was founded on a real consideration. This expression in that case must be read in connection with the express reference to discrimination mentioned in other parts of the opinion. In the Barnes Laundry Co. Case, supra, at page 43 (P.U.R. 1920D, 569, 109 Atl. 541), we said: "Neither by ordering nor using a necessity like water, from a plant which enjoys a monopoly of supply, can one be held estopped on the theory of implied contracts or otherwise (4 McQuillin, Mun. Corp. § 1725, p. 3690, id. p. 3729, note 8) from the right, in a due and proper proceeding, to question either the reasonableness of the ordained rate or the justness of its application, for rates unlawfully exacted are treated in law as though assented to under duress."

The converse of this rule, "that the city may enforce its rates as to contracts in existence," must be considered in connection with what is said in Suburban Water Co. v. Oakmont, 268 Pa. 243, 252, 253, 110 Atl. 781. It must be remembered that a city's power to regulate rates and service is as extensive as that of a public service company. We said in the latter case: "All

public service contracts are viewed
in the light of having been
made with an implied provision
that the rate named therein is
subject to change, according to
law, so as to keep it reasonable and
nondiscriminatory at all times.
The reason for this rule is simple,
as shown by the many cases which
hold that the change of a rate fixed
by contract for the performance of
service by a public utility company
does not impair the obligation of the
contract under the Constitution of
the United States [art. 1, § 10, cl.
1], and, if it did, the change would
be unlawful.
The contract
is simply modified or reformed so
as to include for the time being the
new rate fixed by law. The power
to reform contracts of this kind was
granted under the act of 1874, giv-
ing the courts jurisdiction over
rates."

So, even if we assume that the contract is legal, still it is subject to the change herein mentioned. The principle is controlled by what we said in Barnes Laundry Co. Case, 266 Pa. 24, P.U.R.1920D, 569, 109 Atl. 535, that a city operating a legalized monopoly in the nature of water cannot give undue

-municipal corporations

right of municipality to give unreasonable discriminatory preference or ad- service.

or

vantage or make unfair discrimination among customers any more than a private corporation similarly situated.

The gift of water, for purposes like the one before us, cannot be sustained where the municipality does not have power to contribute money or property donations for purposes like the one now under consideration.

After a careful consideration, the decree of the court below is affirmed at cost of appellant.

ANNOTATION.

Discrimination in the operation of a municipal utility. [Municipal Corporations, §§ 164, 181, 187; Public Utilities, § 7; Waters, § 285.]

III. Inducement to industries or institutions to locate in city, 132.

IV. Special or free rates or service to public, charitable, or religious institutions, 133.