Washington County Water Co. v. Mayor of Hagerstown

Pattison, J., delivered the opinion of the Court. This is an appeal from an order of the Circuit Court for Washington County, sitting as a Court of Equity, overruling the demurrer to an amended hill of complaint filed by the appellee, The Mayor and Council of Hagerstown, hereinafter called “The City,” against the appellant, The Washington County Water Company, hereinafter called “The Water Company,” asking for an injunction upon the allegations therein contained and for the purposes therein mentioned. The facts alleged in the hill and as disclosed by the contracts or agreements made by the parties hereto and filed as ⁴⁹⁹ a part of the bill, are substantially as follows: That on the 31st day of May, 1881, pursuant to an Act of the General Assembly of Maryland passed at its January Session, 1880, Chapter 457, an ordinance, entitled “An ordinance authorizing the Mayor and Council of Hagerstown to make a contract with a joint stock water company,” was passed by the Mayor and Council of Hagerstown, and that by virtue of this ordinance a contract or agreement was entered into on the 31st day of May, 1881, by and between the City and the Water Company by which the Water Company was to supply the city with water. For the purpose of discharging its obligations created by the contract or agreement aforesaid, the water company, about the. year 1880 or 1881, installed a reservoir near Cavetown, Washington County, Md., and by gravity pressure the water of a stream in South Mountain was conducted by use of pipes into this reservoir, and from the reservoir, through pipes in and along the streets of Hagerstown, the water was distributed to the inhabitants thereof for domestic and other purposes.

It was found, however, that the amount of water from this source was inadequate to supply the needs of the people of Hagerstown, as provided for in the contract or agreement, and recourse was had by the water company to certain springs near the city and to Antietam Creek. The water obtained from these springs and creek was found to be unwholesome and unfit for use, and the company finding that it could not supply the city with water, in compliance with the terms of its original agreement from the source or stream therein mentioned, it proposed to the' city that an additional supply of water be obtained from certain other streams, known as the Haven Hock stream and Warner Gulch stream, claiming that with this additional supply of water an adequate amount would be obtained for the city uses, unless improvidently used and wasted. Thereupon, on the 29th day of May, 1896, the city passed another ordinance, entitled “An ordinance authorizing and requiring the Mayor and' Council of Hagerstown to enter into a supplementary agreement with the Washing ⁵⁰⁰ ton County Water Company,” and pursuant to the terms of said last named ordinance another agreement was made and entered into on the 14th day of August, 1896, by and between the parties to the original agreement. This agreement contained the following provisions: “(1) The said Mayor and Council doth promise, covenant 'and agree, in consideration of the matter and things to be done and performed by the Washington County Water Company as herein stated, that from and after the period of twelve months from the time the said Raven Rock and Warner Gulch streams shall have been fully and entirely connected with the present water supply in the South Mountain, operated by the said Washington County Water Company as aforesaid, and incorporated therewith and made a part thereof, if the supply of water from the sources aforesaid at any time after the said period of twelve months shall be inadequate to supply the needs of the people of Hagerstown for fire and all other purposes, then the said Washington County Water Company may, in its discretion, introduce and use meters for the purpose of measuring the consumption of water by all persons using water supplied by said company for purposes other than purely domestic purposes, and charge therefor at a rate not exceeding thirty cents per one thousand gallons, etc.” (2) The said Mayor and Council further covenanted and agreed therein that from and after a period of twenty-four months from the time the aforesaid connections had been fully and entirely made, if the supply from said combined sources, at any time after the said period of twenty-four months, be inadequate to supply the needs of the people of Hagerstown for fire and all other purposes, “and the said inadequacy be not due to negligence or the imperfections of the mains and pipes of said Water Company, then the said Washington County Water Company may, in its» discretion, introduce and use meters for the purposes of measuring the consumption of water by all persons using water supplied by the Washington County Water Company for any purpose ⁵⁰¹ whatsoever, and charge therefor at a rate not exceeding thirty cents per one thousand gallons of water, or, in its discretion, charge a schedule of rates not exceeding the schedule according to rental value now in force.” The right to use the meters, however, under the above provisions, was upon the condition that “The said Water Company at the time of said inadequacy of said supply shall have under their control and be actually furnishing a supply of water sufficient to yield daily seventy-five gallons of water for each water taker or permit holder of the Town of Hagerstown.” That until April 1st, 1910, water was supplied to the inhabitants of Hagerstown at the rate above given, at which time the water company, claiming its right to do so under the terms of the contracts aforesaid, ■ installed meters for measuring the water consumed by the inhabitants of the city, and the use of which, as the bill alleges, they propose to continue, and by the use of them determine the amount that should be exacted of and paid by the consumer of water in the city.

In reference to the provisions of the contract above quoted, the bill alleges that the additional streams named in said contract were to be fully and entirely connected with the existing supply from South Mountain, but it charges that at no time have said streams been so connected with the then existing supply, and that the city has never had the enjoyment of the full and entire supply of the Raven Rock and Warner Gulch streams mentioned’ in said contract, neither separately nor together, with the stream in South Mountain previously in use. And charges that the defendant company has diverted vast quantities of water stored and collected by it from the sources provided for by its contract, and which under the aforesaid contracts the people and inhabitants of Hagerstown are entitled to receive, by furnishing large quantities of water to persons and corporations outside of the corporate limits of Hagerstown, to the injury and damage of ⁵⁰² the inhabitants of said city and in violation of said contracts. • It further charges that the defendant company diverted vast quantities of said water, which the citizens of Hagerstown were entitled to receive as aforesaid, by supplying locomotives and engines of steam railroads entering and passing through Hagerstown; charging that by reason of the diversion of the water as above mentioned, the supply of water to the people of Hagerstown for domestic and other purposes, to which they were entitled under the agreement, has been greatly lessened and diminished, and for many months in the year the supply of water has been thereby rendered inadequate for the purposes in said agreement provided. It-is further alleged in the bill that the defendant company has been grossly negligent in the operation of its» works; that it has built and constructed reservoirs which are faulty, defective, leaky and unfit and nnadapted for the uses for which they are intended, and permitted other parts of their plant to be and remain in bad repair, on account of which there is a great waste and loss in the supply of water to the pitizens of Hagerstown for domestic and other purposes. The bill also charges that meters have been installed in violation of the contracts, and the company has declared its intention to charge, and is now charging or attempting to charge, the water takers and permit holders of the city at the rate of thirty cents per one thousand gallons of water consumed by them.

The bill further alleges that the defendant contends that in its discretion it may charge a schedule of rates not exceeding the flat rate schedule named in the contracts, or a meter rate ' not to exceed thirty cents per one thousand gallons, in the event the said defendant was entitled, under its contracts, to the right to install meters and charge meter rates. “This “combination rate,” as the bill alleges, is not permitted by a proper construction of the contract, but that the rate charged ⁵⁰³ must be wholly and exclusively a meter rate or wholly and exclusively the flat- rate. The bill also alleges that the company has notified the consumers of water that if the charges therefor thus ascertained are not paid within fifteen days after the first day of the calendar month upon which the said bill is rendered, that it will, upon five days’ notice, cut off the consumer’s supply of water altogether, and that it so intends to cut off the supply in conformity with said notice. This, the bill alleges, the defendant is not authorized by its contract to do, and this attempt or procedure to cut off the supply of water to enforce the wrongful demands of the defendant is an attempt to collect a debt by duress and is void. Upon these allegations in the bill the Court is asked: (1) That the defendant company, its officers, agents, servants and employees be enjoined, prohibited and restrained from installing water meters upon the inhabitants of Hagerstown for the purpose of measuring the consumption of water for domestic purposes, and using and maintaining meters heretofore installed for such purposes.

(2) From collecting from the inhabitants of Hagerstown any sum or sums based upon the water consumed and measured by meters. (3) From establishing and adopting the flat rates heretofore in use as a minimum rate to be charged for water consumed and measured by meters. (4) From charging the inhabitants aforesaid an amount in excess of what would be the value of water consumed by meter measurements at thirty cents per one thousand gallons. (5) From charging the said inhabitants, for water consumed, an amount which comprises both the flat rate and the meter rate, if the quantity of water consumed is measured by meter measurements.

(6) From cutting off the water from the consumers thereof in the city, or in any way interfering with them in the use and enjoyment thereof pending the adjustment and settlement of this controversy. (Y) From supplying persons or corporations outside of the limits of Hagerstown with water derived from the sources which under the aforesaid contracts are to supply water to ⁵⁰⁴ the inhabitants of said city. (8) From supplying the engines and locomotives on steam railroads passing through Hagerstown with water from those sources which, under the contracts aforesaid, the inhabitants of Hagerstown are to receive and enjoy. To this bill the defendant company demurred.

The objections urged against the bill are : (1) That the Mayor and Council of Hagerstown is not a proper party as sole plaintiff. (2) That the water company’s charter and schedule B, which is referred to as.being attached to the original agreement, ■when executed, between the parties hereto and which contains the water rents and water charges as established by said contract and agreement, are not filed with the. bill. (3) Because it does not state such a case as entitles the plaintiff to any relief in equity against the defendant. The demurrer was overruled.

In support of the first objection we are referred to by the counsel for the appellant to the case of Simons Sons Co. v. Md. Telephone Co., 99 Md. 142 ; Adams v. Union Railroad Co., 21 R. I. 134; Paducah Lumber Co. v. Paducah Water Supply Co., (Ky.), 7 L. R. A. 77, and others. The first of these cases, Simons Sons Co. v. Md. Telephone Co., was a suit instituted by the appellant against the appellee corporation for an injunction upon the allegations therein contained. In that case the telephone rate or charges were, fixed and established by an ordinance of the city, and by it the company was prohibited from charging in excess of those rates. This, however, they attempted to do, and the plaintiff, four in number, all citizens of Baltimore and all of whom had contracts with the company for telephone service at the rates named in the ordinance, were notified by the company that for the telephone services which they were receiving a higher charge than that established in the ordinance would be imposed upon them, and they were threatened with a discontinuance of the service and a removal of the telephone instruments from their places of business unless they agreed to pay for such service at such higher rate.

The ⁵⁰⁵ prayer of the bill filed for an injunction was, that the appellee he restrained from the aforesaid threatened action and from demanding and receiving from the appellants the excess of charge for telephone services, such as was mentioned in the hill, over the rate provided in the ordinance, and that they and others in a like situation with them he decreed to be entitled to receive and demand from the appellee the kind of service mentioned in the bill at the rate of charge