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258 (Ind.)

St. Rep. 1078, was an action by appellant for damages caused by water flowing into the basement of his store from a defective water tower of the city, and damaging the stock of goods therein. In holding the city liable, the court said:

"The function of a city in selling and distributing water to its citizens is of a private nature, voluntarily assumed by it for the advantage of the people of the city. Responsibility for the acts of persons representing it in such a business falls upon the city through the relation of master and servant, and the maxim of respondeat superior applies. Whenever this relation is established, the city is liable in damages for the negligence of its agents and servants in the conduct of such business. The following adjudications uphold this liability upon the ground that the city, in conducting such a business, is acting in its proprietary capacity: Lynch v. Springfield, 174 Mass. 430, 54 N. E. 871; Hourigan v. Norwich, 77 Conn. 358, 59 A. 487; Chicago v. Selz, S. & Co., 202 Ill. 545, 67 N. E. 386; Bullmaster v. St. Joseph, 70 Mo. App. 60; Philadelphia v. Gilmartin, 71 Pa. 140. The fact that the city may also use the waterworks for protection against fire does not relieve it from liability for negligent acts of its servants or agents in the conduct of this business, except for such acts as are performed by them in the actual work incident to extinguishing fires."

Woodward v. Livermore Falls Water District, 116 Me. 86, 100 A. 317, L. R. A. 1917D, 678, was an action to recover damages for the failure of the defendant to furnish the plaintiff with a sufficient and regular supply of water. The shortage of water occurred during the time when the defendant was engaged in pumping water through its street mains into its reservoir. This pumping reduced the pressure, and caused a shortage of water. Plaintiff refused to pay the regular and usual rates, but offered to pay for what water he had received. This offer was refused, and defendant shut off plaintiff's water for nonpayment of rates. In answer to defendant's claim that it was performing a governmental function, for which it was not liable for its negligence, the court said:

"The federal courts have universally held that the power of a city to construct waterworks is not a political or governmental power, but a private and corporate one, granted and exercised, not to enable it to control its people, but to authorize it to furnish, to itself and to its inhabitants, water for their private advantage. Illinois Trust & Sav. Bank v. Arkansas City, 22 C. C. A. 171, 40 U. S. App. 257, 76 F. 271, 34 L. R. A. 518; Pikes Peak Power Co. v. Colorado Springs, 44 C. C. A. 333, 105 F. 1; Omaha Water Co. v. Omaha, 77 C. C. A. 267, 147 F. 1, 12 L. R. A. (N. S.) 736, 8 Ann. Cas. 61[4]. By what we regard the better reasoning, and consequently the greater weight of authority, a large majority of the state courts follow the rule laid down in the federal jurisdiction; namely, that a municipal corporation engaged in the business of supplying water to its inhabitants is engaged in an undertaking of a private nature. As to the liability of municipal

*

corporations when engaged in a corporate, as
distinguished from a governmental, exercise of
functions, we must hold that the rules of lia-
plicable to municipal ones also."
bility applicable to private corporations are ap-

In summarizing its conclusions, the court
said:

"To summarize, therefore, we hold that the defendant is not acting in a purely governmental capacity, but in a private and corporate one; that its powers, duties, and liabilities must be measured by the standards used in determining the powers, duties, and liabilities of private corporations doing the same business; that an implied contract existed between it and the plaintiff, for the breach of which, through its own fault, the defendant is liable."

In McEntee v. Kingston Water Co., 165 N. Y. 27, 58 N. E. 785, McEntee applied for an injunction to restrain the water company from cutting off the water theretofore furnished by the defendant. Prior to the beginning of this action, the supply of water furnished by the defendant to the plaintiff had lessened in quantity and pressure, and Plaintiff rehad at times wholly failed. fused to pay a bill rendered to him, and, when defendant threatened to shut off the water supply from plaintiff's premises, this action was commenced. In. holding an implied contract existed between the two parties, the court said:

"The defendant is a quasi public corporation, owing certain duties to the general public, and when it connected the plaintiff's house with its street mains in 1883, and furnished him water with more or less regularity for 10 years and more, an implied contract existed to the effect that if the defendant performed, the plaintiff would pay its rates. The duties imposed upon a corporation raise an implied promise of perThe law supposes that the formance. corporation promises or undertakes to do its duty, and subjects it to answer in a proper acmisfeasance." tion for its defaults whether of nonfeasance or

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Watson v. Inhabitants of Needham, 161 Mass. 404, 37 N. E. 204, 24 L. R. A. 287, was an action to recover damages to a growing crop situated in a greenhouse by reason of the defendant's breach of contract to supply plaintiff with water for the boilers which generated steam to heat the greenhouse. In holding the city liable, the court said:

"The town was acting in the performance of a public duty in supplying water for public use, and incidentally was making contracts with inIt would not be expected to dividuals adapted to the circumstances of each particular case. guarantee a supply of water against all contingencies, but only to guarantee proper effort to insure a constant supply. In the regulations which were made part of the contract the right to shut off the water in all cases when it becomes necessary to make extensions or repairs, and whenever the commissioners deem it expedient, was expressly reserved; subject only to that reserved right, the town was bound to use reasonable care and diligence to have ready

(162 N.E.)

for delivery a sufficient supply of water for the plaintiff's use, so long as the contract remained in force."

And the same court, in Stock v. City of Boston, 149 Mass. 410, 21 N. E. 871, 14 Am. St. Rep. 430, held that where a city, in constructing a sewer, negligently uncovers a waterpipe, and leaves it exposed so that the water in it is allowed to freeze, thus cutting off the supply of a party with whom the city is under contract to furnish water, so that he cannot by the use of reasonable diligence obtain a supply from that or other sources, and is thereby injured, he may maintain an action of tort against the city for damages, and need not rely on his action on his contract, as the exposure of the supply pipe is the próximate cause of the injury.

In Stanley v. Inhabitants of Town of Sangerville, 119 Me. 28, 109 A. 190, 9 A. L. R. 348, the court said:

"In its corporate capacity as the owner of property held for its profit and advantage, the rights and liabilities of the town are measured strictly by the laws which determine all private rights and liabilities, and under the same conditions as a private corporation."

Springfield Fire & Marine Insurance Co. v. Village of Keeseville, 148 N. Y. 48, 42 N. E. 405, 30 L. R. A. 660, 51 Am. St. Rep. 667, was a case apparently holding a municipality not liable in any case for the failure to furnish proper water. However, the same court, in Oakes Mfg. Co. v. City of New York, 206 N. Y. 221, 99 N. E. 540, 42 L. R. A. (N. S.) 286, held the city liable, and in discussing the former case said:

"The complaint in that case in substance was that the defendant having availed itself of the right to maintain a municipal waterworks system operated the latter so negligently and inefficiently that proper fire protection was not af forded, whereby the plaintiff suffered damages. It was held, Judge Gray writing for a unanimous court, that the defendant was acting in a governmental capacity and was not liable. But of course that decision and opinion are to be read in the light of the facts which were involved. The village maintained a fire department and concededly in so doing it was discharging a governmental function. As a necessary element in the maintenance of the fire department it undertook to supply water for fire purposes and in so doing its character and the nature of the acts which it was performing were not different than they were when it supplied engines or men. It was no more liable because the pipes for supplying water were clogged up or broken than it would have been if one of the engines had become out of repair or an insufficient force of men had been maintained for operating the engine and the water. But in the present case, when in accordance with the powers conferred on it, the city undertook to maintain a municipal water system and to supply water to private consumers at a fixed compensation, it was not acting in such capacity as above stated. It entered on an enterprise which involved the ordinary incidents of a busi

ness wherein was sold that which people desired to buy and which might become a source of profit, and under these circumstances it became liable for breach of contract or for negligence as the proprietor of a private business might become." (Our italics.)

Humphreys v. Central Kentucky Natural Gas. Co., 190 Ky. 733, 229 S. W. 117, 21 A. L. R. 664, was an action by appellant, a florist, to recover damages for the loss of plants caused by the failure of the company to furnish an adequate quantity of gas and pressure to protect his plants in cold weather. The company failed to supply him an adequate quantity of gas for a period of 10 days. The defense of the gas company was that, in the absence of an express contract with either the city with whom it had a franchise contract or with appellant, requiring it to furnish any specific quantity, or to furnish such quantity as would maintain any degree of temperature, it was not liable for a failure to supply the amount necessary to maintain the quantity required to maintain the necessary degree of temperature in appellant's greenhouses. In holding the gas company liable, the court said:

"It cannot be doubted that when this gas company applied for and was granted the right to use the streets and public ways of the city for the purpose of supplying the people in their homes, factories, offices and places of business with natural gas for heating purposes and began the performance of this service it engaged and undertook to continue the service in such a manner as would reasonably and naturally fulfill the expectations in the minds of the contracting parties when the franchise was granted and accepted, and perform this service in such a man ner as was reasonably intended by it and the city when the contract was entered into. Accordingly we think that when this gas company obtained a franchise from the city to use the streets and public ways for the purpose of supplying the people of the city with natural gas and entered upon the performance of this service it thereby assumed an obligation to exercise reasonable and practicable care and diligence, considering all the existing circumstances and conditions, to supply its customers with such quantity and pressure of gas as their needs, when known to it, might require, and this without discrimination or favor.

"To require a less measure of duty than we have defined would be unjust to the city and its people and enable a gas company to defeat the very purpose that induced the city to grant the privilege of using and occupying its streets for the purpose of furnishing gas for heating purposes. It would also subject to great inconvenience, discomfort and expense the inhabitants of the city, who acting on the reasonable belief that the company would render the contemplated service, had removed other means of providing heat and installed in their homes, factories and places of business the fixtures and appliances necessary to secure heat from the new source of supply. To secure for itself and its people means of obtaining heat was the only reason why the franchise was granted by the city, and there would be many times a gross fail

ure to render the service contemplated if the gas company might use its own convenience or pleasure in determining the quality of its service. We do not of course mean to say that a gas company is under an absolute duty to furnish each or any of its customers the precise quantity of gas or the exact pressure needed by them, because it might not be reasonable or practicable for it to do this without discrimination, but if it knows the needs of a particular customer and the quantity and pressure of gas he requires in his business it should furnish this quantity and pressure if by reasonable and practicable diligence and care under all the existing circumstances and conditions it can do so without discrimination against other customers."

And in City of Chicago v. Selz, Schwab & Co., 202 Ill. 545, 67 N. E. 386, it was held that, where the water system of a city was installed for the purpose of protection against fire and to supply the inhabitants with water, and water from a certain

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In Ross v. City of Madison, 1 Ind. 281, 48 Am. Dec. 361, the court said:

"It may also be considered as settled that municipal corporations are responsible to the same extent and in the same manner as natural persons, for injuries occasioned by the negligence or unskillfulness of their agents in the construction of works for the benefit of the cities or towns under their government."

And in Stackhouse v. City of Lafayette, 26 Ind. 17, 89 Am. Dec. 450, the court, in speaking of the powers and liabilities of the city, said:

"Many of the powers and duties of such cor

hydrant was sold to contractors for street-porations are in their nature legislative, and sprinkling purposes, the maintenance of the water system was not solely an exercise of the police power, so as to render the city exempt from liability for damage caused by the negligence of its servants in causing the hydrant in question to burst while they were attempting to repair it.

In Brinkmeyer v. City of Evansville, 29 Ind. 187, the court, in discussing a city's, liability, said:

"A municipal corporation is, for the purposes of its creation, a government possessing to a limited extent sovereign powers, which, in their nature, are either legislative or judicial, and may be denominated governmental or public. The extent to which it may be proper to exercise such powers, as well as the mode of their exercise, by the corporation, within the limits prescribed by the law creating them, are, of necessity, intrusted to the judgment, discretion and will of the properly constituted authorities, to whom they are delegated. And being public and sovereign in their nature, the corporation is not liable to be sued, either for a failure to exercise them, or for errors committed in their exercise. But when duties of a purely ministerial character are expressly enjoined by law, on such corporations, or arise by necessary implication, they are responsible for any damages resulting to individuals from a neglect to perform them, or from their performance in an improper manner."

And in Aschoff v. City of Evansville, 34 Ind. App. 25, 72 N. E. 279, the court quoted the above statement from the Brinkmeyer Case, and said that this rule "seems to be firmly established." And in making its own observations the court at page 32 (72 N. E. 282) said:

"Where the water system is conducted by the municipality in part for profit, even if principally for public purposes, the municipality is liable for damages caused by its negligent management. City of Chicago v. Selz, Schwab & Co. (1902), 104 Ill. App. 376. And where it supplies water to its citizens and charges there

some are judicial, while others are purely ministerial. Where the duties imposed are of a legislative or judicial nature, and the proper exercise of them depends upon the judgment of those of whom they are required, the corporation is not responsible in damages, either for a failure to perform them, or for errors in their performance. But, where duties of a purely ministerial nature are positively enjoined on them by law, or arise by necessary implication, they are responsible for the damages resulting to individuals, either from a neglect to perform them, or from their performance in an improper manner."

In an action to recover damages caused by the flooding of the plaintiff's basement caused by the city's act in diverting surface water into the same sewer used by plaintiff, which sewer was too small to carry such waters, the court in Roll v. City of Indianapolis, 52 Ind. 559, in speaking of the liability of cities, said:

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In City of Greencastle v. Martin, 74 Ind. 449, 39 Am. Rep. 93, where the city maintained a pound for certain animals, the court said:

"For any negligence of its agents in the construction of the pound, or in any purely ministerial duty under the pound ordinance, the city is liable, just as a private person would be for the acts of his agents."

In upholding the plaintiff's right to sue in tort, even though there was a breach of a contract, the court in Stock v. City of Boston, supra, said the fact the city had a contract with the plaintiff to supply him with water does not take away his right to sue in tort. "A mere breach of contract," said the court, "cannot be sued on as a tort, but for tortious acts, independent of the contract,

(162 N.E.)

a man may be sued in tort, though one of the consequences is a breach of his contract."

Coy v. Indianapolis Gas Co., 146 Ind. 655, 46 N. E. 17, 36 L. R. A. 535, held the breach of the contract to supply gas was a tort. In Wood v. City of Auburn, 87 Me. 287, 32 A. 906, 29 L. R. A. 376, the court said:

"The city, as a water company, cannot do as it will with its water. It owes a duty to each consumer. The consumer once taken on to the system, becomes dependent on that system for a prime necessity of business, comfort, health and even life. He must have the pure water daily and hourly. * The water must be supplied to the complainant, so long as he will promptly pay current installments and otherwise conform to the reasonable rules governing the supply of water."

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In Freeman v. Macon Gas, Light & Water Co., 126 Ga. 843, 56 S. E. 61, 7 L. R. A. (N. S.) 917, the court, after discussing a statute which did not change the common-law duty to supply the citizens of the city with water, said:

"For a breach of this statutory duty the company could be held liable in tort by the aggrieved member of the public, though he was no party to the contract between the city and the water company. A private person may not only sue a public-service corporation for a breach of duty owing to him, but he may by mandamus even enforce the performance by the corporation of its public duty as to matters in which he has a special interest."

"The liability or nonliability of a municipality for its torts does not depend upon the nature of the tort, or the relation existing between the city and the person injured, or whether the city was engaged in the management of tangible property, but depends upon the capacity in which the city was acting at the time." City of Kokomo v. Loy, 185 Ind. 18, 112 N. E. 994.

Appellant's contention that it was not liable to appellee at common law cannot be sustained. This contention of appellant is based upon the theory that, in furnishing water to private customers for private use, it was acting in the same capacity that it would have been acting in if it had been furnishing water to the public for fire prevention. All of the authorities cited by appellant in support of its contention are cases involving the liability of a city or public utility for damages for failure to provide proper fire protection, and are not in point. There is nothing in the Public Utility Act, Acts 1913, p. 167, that destroys or lessens the common-law liability of a municipality in an action of this character. The court did not err in overruling appellant's demurrer to the complaint.

[4] The contention that the verdict is not sustained by sufficient evidence and that it is contrary to law raises the same questions, and will be considered together.

Appellee has owned and operated a number of greenhouses in the city of Huntingburg for number of years. Appellant has for

many years owned and maintained a system of waterworks for fire protection and for furnishing water to the inhabitants of the city for domestic and other purposes. In 1911 appellant extended a 2-inch service pipe from a 4-inch main in the street to appellee's greenhouses, and continuously thereafter furnished appellee with a sufficient supply of water and at a pressure sufficient to meet the demands and requirements of his business; the pressure furnished appellee being the same as was furnished all the other private consumers. Appellee's plant covered 16 acres of ground on which were located nine greenhouses covering 22 acres. He had three steam boilers used for heating purposes. He had a refrigerator in which he kept cut flowers preparatory to marketing them. It was necessary for him to have water to heat his greenhouses in winter, to operate the refrigerator, and for sprinkling purposes. Among the insect pests with which appellee had to contend was a small red spider, and the only practical way of controlling it was by sprinkling with water two or three times a week. These spiders were kept under control by chilling, killing, and washing them off the plants by forceful spraying with water, and, in order to do this, it was necessary for appellee to have a water pressure of about 60 pounds to the square inch. It was also necessary for him to have this pressure in order to force the water into the boilers used in heating the greenhouses. From the time in 1911, when appellant connected appellee's greenhouses with its water system, to March 14, 1924, it furnished appellee all the water required him in connection with his business, and with a pressure of about 60 pounds to the square inch. In March, 1924, appellant extended the 4-inch main, which had theretofore furnished appellee with water, several hundred

feet, and, on March 14, 1924, connected to

same with a new water tank which had been constructed by the Southern Railway Company for the purpose of storing water to supply its locomotives. This tank held about 100,000 gallons of water, and, when first connected with the water main, it took 8 or 10 hours to fill it. This tank was lower than appellee's greenhouses, and was connected with the 4-inch main by a 6-inch opening controlled automatically by a 6-inch valve. The opening and pipe from the tank through which the water ran when locomotives were being filled was 12 inches in diameter, and controlled by a 12-inch valve. From 20 to 40 locomotives were watered from this tank each day. While it took less than 2 minutes to furnish water for a locomotive, it took from 10 to 15 minutes to fill the tank from the 4-inch main, after a locomotive took water.

In controlling the insect pest it was necessary that the plants be sprinkled early.

262

(Ohio) enough in the day so that the plants would Appellant had become dry before night. knowledge of the requirements of appellee, and, without any notice or warning to appellee, connected the water main in question with the water tank at the railroad. After that connection was so made, March 14, there was a period of 16 days during which appellee was not able to get any water for heating or sprinkling purposes, except when the railroad was not taking water. As soon as the connection with the railroad tank was made, appellee notified appellant that he was getting no water, and informed appellant of the pending danger and the necessity of him having water with a sufficient pressure to get water into the boilers and for sprinkling purposes. Sixteen days, however, passed before appellant remedied the situation so as to provide appellee with water, as required in his business. During this time, as the result of appellant's acts and failure to furnish appellee water, the red spiders got beyond appellee's control, and damaged appellee, according to the verdict of the jury, in the sum of $9,000.

When appellant connected the 4-inch water main to the water tank through a 6-inch opening, it was bound to know that, when water was being taken into the tank through the 6-inch opening, no other person depending on that main for water would be able to It secure water for their requirements. was bound to know that appellee would not during that time have any water for heating or sprinkling purposes. Appellant later connected the railroad tank with an 8-inch water main, located in another street, after which appellee secured a sufficient amount of water and with sufficient pressure, but this was not until he had been greatly damaged. Without extending this opinion by going into the details further, or reviewing the evidence, we hold that the verdict is sustained by ample evidence and that it is not contrary

to law.

The contention that the damages assessed are excessive cannot prevail. No good purpose will be served by reviewing the evidence bearing on this question. The amount of the recovery is well within the evidence.

The court gave to the jury 28 instructions,
6 on its own motion, 11 at request of plain-
tiff, and 11 at request of defendant. Appel-
lant complains of each instruction so given,
except those given at its request. We have
given careful consideration to these com-
plaints, and find no substantial merit in any
of them.

No reversible error is shown in the admis-
No question is presented
sion of evidence.
concerning the refusal to give instructions.
Judgment affirmed.

DAUSMAN, J., absent.

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HARDIN-WYANDOT

(118 Ohio St. 592)
V.
LIGHTING CO.
·

PUBLIC UTILITIES COMMISSION OF
OHIO. (No. 18456.)

Supreme Court of Ohio. May 9, 1928.

Rehearing Denied June 14, 1928.

(Syllabus by the Court.)

1. Electricity 11-Electric company, agree-
ing to appraisal in prior case involving five-
year trend rule, cannot complain of failure to
value property as of date certain.

Where, in a proceeding for valuation of the Utilities Commission, counsel for the utility property of a public utility before the Public orally stipulates with the Public Utilities Commission that an appraisal already made in an earlier case should be used in a pending proceeding, that the two cases should be consolidated and the same valuation be found in both earlier case involves the employment of a fivecases, and, when the use of the appraisal in the cost of reproducing the property of the utility, year trend rule for ascertaining the average counsel for the utility cannot later complain that the valuation employed is not the value of the property as of a date certain.

2. Electricity I-Valuation of electric company on five-year trend rule, resulting in greater valuation than price on date certain, held not reversible for omitting Item less than increase.

Where the use by the commission as a basis for its valuation of trend prices for a period of five years, instead of prices as of a date certain, has resulted in a substantial addition to the valuation of the property, over that claimed by the utility, from the use of prices as of such date certain, the fact that one item amounting

to less than such addition has been omitted in the valuation does not justify a reversal of the order of the commission.

used in serving municipality involved in rate 3. Electricity 11-Only property of utility controversy should be valued.

When a rate controversy involves rates charged in a particular municipality, only property used and useful in furnishing service to such municipality should be valued. 4. Electricity

I-Valuation of electric com

pany, including allowance for organization, etc., held not erroneous for omitting allowance for going concern, unless valuation was less than value as going concern; items of organization, general expenses, etc., give added value to physical property of electric company.

Where the commission in its valuation of the property of a public utility makes a substantial allowance for organization, interest, engineering, law expenditures, taxes, and general expenses during construction, and contingencies and omissions, without making a specific allowance for going concern, a reversal of the order of the Public Utilities Commission is not required unless the total valuation appears to be less than its actual value as a going concern. All of these items enter into the development of the utility's property and give it an added

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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