Soloman v. Sewerage Co., 142 N.C. 439 (1906)

Oct. 30, 1906 · Supreme Court of North Carolina

142 N.C. 439

SOLOMAN v. SEWERAGE COMPANY.

(Filed October 30, 1906).

Contracts — Questions for Court — Interlocutory Injunction— Effect of Decision on Appeal — Specific Performance of Contract — Uncertainly as to Time — Want of Mutuality— Public Service Corporations — Contracts of Sewerage Company.

1. Where the terms of a contract are found by the jury, the relative rights and duties of the par-ties under the contract become questions of law for the decision of the Court.

2. The decision of an appeal from an order continuing or refusing to grant an interlocutory injunction is neither an estoppel nor the “law of the case.”

3. In an action for the specific performance of a contract between the plaintiffs and the defendant sewerage company by which the company agreed that if they would pay to the company the sum of fifty dollars for making the connection between the premises of each of them and the pipes, the company would charge each so paying the fifty dollars, as an entrance fee, and for the use and service of the sewerage system the sum of two dollars, as an annual rental, the Court will not decree specific performance because the contract is uncertain in regard to its duration, and because there is an absence of mutuality in the obligation.

4. The principle that a corporation owing the duty to serve the public, charging reasonable and equal rates, cannot contract away its power to discharge such duty, applies to a sewerage company.

ActioN by B. Soloman and others against Wilmington Sewerage Company, beard by Judge James L. Webb and a jury, at May Term, 1906, of the Superior Court of New Hanover.

This action was brought by the plaintiffs for the purpose of restraining the defendant from disconnecting their residences from the main sewer-pipe of the defendant company and for specific performance of the contract set out in the complaint. The undisputed facts are that, prior to 1-902, there were several private companies and systems of sewerage in the city of Wilmington. That defendant company was chartered by an act of the General Assembly of North Carolina (Private Acts 1893, ch. 382), by which it is permitted, authorized and empowered to establish a system of sewerage in, under and through the streets and public lanes, roads and alleys of the city of Wilmington, and lay all such necessary pipes, conduits and mains as may be deemed requisite to carry out the provisions of said act, under such rules and regulations as may be prescribed by the Board of Aldermen of said city, and have authority to charge for the use of said sewers such reasonable sums as the board of directors may, from time to time, adopt, and to enforce the collection of such charges by severing the connection of said defaulting user with the main sewer. That permission was duly granted to the said defendant to lay down its pipe and construct a system of sewerage in the said city. That the plaintiffs are citizens and residents of said city, living along the streets upon which the defendant, pursuant to said authority, laid down its pipes and constructed its sewerage system. That plaintiffs entered into a contract with the said defendant company, the terms of which, as set out in the complaint, are as follows:

“That these plaintiffs and a great many other of the citizens of Wilmington, living along the streets and on the alleys upon which, by public authority, the defendant has laid down its pipes and constructed its sewerage system, whose names are not all known to these plaintiffs, and cannot by reasonable diligence be ascertained, were desirous of obtaining the benefit of an efficient sewerage system for their respective premises, and at what they regarded as a reasonable cost; and each of the plaintiffs, and the others so situated, approached the proper officers of the defendant and madé application for connection, and, after some negotiations, the defendant company proposed to these plaintiffs, and for all others for whom this suit is brought, that if they would pay to the defendant the sum of fifty dollars for making tbe connection between tbe premises of each and every one of these plaintiffs and tbe others, and tbe pipes of tbe defendant, that tbe defendant would charge each of them so paying tbe sum of fifty dollars, as an entrance fee, and for tbe use and service of tbe sewerage system of tbe defendant tbe sum of two dollars, as an annual fee or rental, and no more; or, alternately, that if persons desiring to connect with and to use their said system preferred it, they might pay an entrance fee of twenty-five dollars and an annual rental of four dollars, and no more.”

That pursuant to said contract tbe connections were made and plaintiffs have, in all respects, complied with tbe terms of said contract, paying tbe annual rental of two dollars per year. That tbe control of tbe stock of tbe defendant company passed into tbe bands of other persons subject to said contracts. That on tbe first day of January, 1903, in disregard and in violation of tbe contract rights of tbe plaintiffs, tbe defendant undertook to raise tbe rate of annual rental for tbe use of said system.

Tbe jury upon an issue submitted to them found for their verdict that the defendant entered into tbe contract with tbe plaintiffs as alleged. Under tbe instruction of tbe Court they found that, notwithstanding such contract, defendant bad a right to raise the rate of annual rental.

Tbe Court thereupon rendered tbe following judgment: “This cause, having been called for trial, and being tried, * * * and during tbe trial tbe plaintiffs’ counsel having admitted in open court, for tbe purposes of this action alone, that tbe rates charged as set forth in tbe answer in Exhibit B. are reasonable and not discriminative, and that tbe said rates set forth in tbe answer have been raised from tbe amount set forth in tbe complaint to tbe amount set forth in tbe answer, as shown in Exhibit B., and that a resolution of tbe defendant company, raising tbe rates, was promulgated on 2 November, 1902, to go into effect the first day of January, 1903; and it being further admitted by the defendant that the plaintiffs continued to pay at the old rates up to the first day of January, 1903, and that the present owners of the corporation obtained control thereof some time in the year 1901 \ and it being further admitted that this suit began on the first day of March, 1903, and that the payments made by the plaintiffs under the old rate were paid by them from 1 January, 1902, to 1 January, 1903 ; and it being admitted that the following plaintiffs obtained their connection with the defendant company, paying fifty dollars connection fee, and two dollars annual dues, on the dates mentioned, as follows * * *: It is ordered, adjudged and decreed by the Court, that the restraining order heretofore issued in this 'cause be and the-same is hereby dissolved, vacated and annulled. It is further ordered, adjudged and decreed by the Court, that the plaintiffs are not entitled to" a perpetual injunction in this cause.”

The plaintiffs excepted to said judgment and appealed, assigning errors alleged to have been committed in the course of the trial and in rendering the judgment, all of which, other than those abandoned, are set out in the opinion.

Bellamy & Bellamy and Rountree & Carr for the plaintiffs.

JE. K. Bryan and John D. Bellamy & Son for the defendant.

CoNNOR, J.,

after stating the case: Considered from the point of view in which this case was argued by counsel, and which we think decisive of the merits of the controversy, much of the testimony and many of the exceptions become immaterial. There is no substantial contradiction in the testimony regarding the terms of the contract. The jury having found it to be as alleged in the complaint, we concur with plaintiffs that the second issue was unnecessary. The relative rights and duties of the parties under the contract become, in the light of the admissions, questions of law for the decision of tbe Court. Tbe plaintiffs insist that we decided tbe question when the case was here upon an appeal from tbe order continuing the injunction to tbe bearing. We cannot concur in this view; it must be conceded that tbe writer of that and of this opinion used language calculated to make such an impression. 'The only question then before tbe Court was whether tbe defendant should be enjoined, pending tbe litigation. For tbe reasons and upon tbe authorities there set out'we-held with tbe plaintiffs’ contention. We then said: “Whether tbe plaintiffs shall be entitled to specific performance of the contract, and for what length of time the contract shall exist, and to what extent it might be in the power of the defendant corporation to perform the contract without impairing or destroying its power to perform its duties to the public, or whether the rates now charged are unreasonable or discriminating, are all questions to be determined upon the facts as they may be found by some competent tribunal upon the final hearing.”

The effect of an appeal from an order continuing or refusing to grant an interlocutory injunction is discussed in Carter v. White, 134 N. C., 466. The decision of such an appeal is neither an estoppel nor the “law of the case.” Its effect upon the rights of the parties to the action in the final hearing is pointed out in the decision in that case. The plaintiffs concede that the contract does not create or vest in them an easement to flow their sewage through the pipe, because not in writing, nor is it a license to do so.

Plaintiffs’ counsel, with his usual frankness, rests his case upon the proposition that his clients have made a valid contract with defendant founded upon a valuable consideration, and that by reason of the peculiar nature of the subject-matter of the contract, the right acquired under it can only be secured to them by a decree for specific performance and a perpetual injunction against its infringement. That no time being fixed for the life of the contract, it extends to the corporate life of the defendant company. This the defendant denies, and insists: 1. That no time being fixed during’ which the two-dollar rate was to continue, it is indefinite, and therefore its specific performance cannot be enforced. 2. That the contract is wanting in mutuality, that defendant only is bound, whereas plaintiffs are under no obligation to use the sewer and pay the two-dollar rate. 3. That the defendant company is a public utility, subject to the well-defined duty to serve .all persons entitled to its service, at reasonable rates, without discrimination between its customers.

If the defendant can sustain either of these propositions, the plaintiffs may not invoke the equitable jurisdiction of the Court. There are certain well-defined limitations imposed by the courts upon the right to call for specific performance of contracts.

After enumerating several of the requisites essential to the right to demand specific performance, Mr. Bispham says: “The other circumstances, in addition to those already mentioned, which usually influence the discretion of a- Chancellor in decreeing or refusing specific performance, are that the agreement must be mutual, that its terms must be certain, and that its performance by the Court must be practicable.” Equity, 377. Tie further says: “It was one of the rules laid down by Lord Rosslyn in Walpole v. Oxford, that all agreements, in order to be executed in this Court, must be certain and defined; and the law, as thus stated, is well settled, both in England and in this country. If the uncertainty is owing to the default of the defendant or, in obedience to the maxim, id cerium est quod cerium reddi potest, performance will be decreed if the means of ascertaining the contract are at'hand.” In Leigh v. Crump, 36 N. C., 299, Gaston, J., says: “An agreement, to be carried into execution, must be certain, fair and just in all its parts. Although it will be valid at law and, if it had been executed by the parties, could not be set aside because of any vice in its nature, yet, if its strict performance be, under tb.e circumstances, barsb and inequitable, a court of equity will not decree sucb performance, but leave tbe party claiming it to bis legal remedy.” Tbe uncertainty in tbis contract is in respect to its duration. How long shall tbe plaintiffs enjoy tbe right to use tbe sewer-pipe of defendant company ? They say “as long as they please, even to tbe life of tbe company, by paying tbe annual dues.” Tbis would extend it sixty years. Private Laws 1893, cb. 382.

Defendants say that as tbe charge of two dollars a year is a rental, tbe contract is for but one year, or, at most, from year to year, with a right on its part to put an end to it after reasonable notice. If it be suggested that tbe right continued for a reasonable term and until, by reason of changed conditions, or, as defendant says, largely increased cost of building and maintaining tbe sewerage system, it would become barsb and unjust to compel its continuance, we would have no satisfactory guide by which to fix tbe limit of its duration. If we seek for analogies for guidance, we find but little aid.

In contracts for personal service tbe English rule is that, when no time is fixed and no stipulation as to' payment made, it will be presumed to extend for a year. ■ In tbis country, when no time is fixed, and no stipulated period of payment made, tbe contract is terminable at tbe will of either party. 20 Am. and Eng. Enc. (2 Ed.), 14. Tbis seems to be tbe rule adopted by tbis Court in Edwards v. Railroad, 121 N. C., 490.

We cannot think that it was tbe intention of tbe parties that tbe contract was to last for sixty years. To put tbis construction upon it would, when we consider tbe probable changes in tbe status of tbe property and tbe parties, tbe growth of tbe city and enlarged demands upon defendant company, tbe almost certain exhaustion of tbe connecting pipes from wear, weather and other causes, be unreasonable. Again, bow would it be possible for a court of equity to supervise and enforce the performance of its decree during so long a period ? If we do not adojDt the plaintiffs’ view in respect to the duration of the contract, we. have no guide, and if we reject, as equally unreasonable, the defendant’s contention that it is limited to one year, we are confronted with the insuperable difficulty that the contract, in regard to one of its essential elements, is uncertain and therefore not caj)able of specific performance. This view does not involve the proposition that the contract is void for uncertainty.

In an action for damages for breach of the contract we presume that the law would read into it that the right to use the sewer, upon the terms fixed, should continue for a reasonable time — to be settled in view of the character of the contract and all other matters and things pertinent to the inquiry. In this view of the case, we simply hold that, by reason of its uncertainty in respect to time, specific performance will not be decreed.

In regard to the second objection urged by defendant, we find the rule laid down by courts of equity to be, that a contract which is not mutual, that is, in which both parties are not and cannot be bound by the decree, will not be specifically enforced. In Ten Eyck v. Manning, 52 N. J. Eq., 47, Van Fleet, V. C., speaking of the right to demand specific performance of contracts, says: “The enforcement or denial of this remedy is regulated by certain well-established principles, one of which is that it will not be granted, as a general rule, in cases where mutuality of obligation and remedy does not exist; or, stated in another form, mutuality of remedy is essential to the maintenance of a suit for specific performance,” citing Fry on Spec. Perf., sec. 286; Waterman Spec. Perf., sec. 196.

In Beard v. Linthicum, 1 Md. Ch., 345, it is said that if one of the parties is not bound, or is not able to perform his part of the contract, he cannot call upon the-Court to compel specific performance by the opposite party. Duvall v. Myers, 2 Md. Ch., 401. Tbe principle is well stated in Woodruff v. Woodruff, 44 N. J. Eq., 349: “Tbe lack of mutuality, it is claimed, exists in tbe fact tbat tbe covenant gives tbe complainant tbe right to repurchase, but does not provide tbat be must do so. It is laid down, as a general rule, tbat .equity will not specifically enforce tbe performance of a contract when, from its terms, a right does not arise in favor of each party against the other, and when each party is not entitled to tbe equitable remedy of specific execution of such obligation against tbe other contracting party,” citing Pomeroy Spec. Perf., 162; Rutland, etc. v. Ripley, 77 U. S., 339. As stated in tbe opinions cited, and by Mr. Bispham and other authors, there are exceptions to these general rules, as when, by tbe terms of the contract, it is optional with tbe plaintiff to be bound, and he elects and consents that be will be so bound, as in contracts for tbe sale of land, be will pay tbe purchase-money, or immediately perform tbe contract on bis part. Tbe contract becomes mutual and, if otherwise free from obligation, will be specifically enforced. There are decided cases, however, which bold tbat the element of mutuality must enter into tbe contract at its inception. Tbat if either party could not demand strict performance or maintain an action for da'mages for breach, specific performance will not be decreed. It is said by tbe Supreme Court of Arkansas: “What is meant by mutuality of remedy is tbat tbe contract must be of such a nature tbat performance on both sides can be judicially secured.” Shields v. Trammell, 19 Ark., 51; 26 Am. and Eng. Enc., 32.

In Rodman v. Robinson, 134 N. C., 503, this Court held tbat when a contract was entered into to convey land, tbe promise to pay tbe purchase-money constituted a valuable consideration to support tbe promise. This is unquestionably correct. Tbe case was argued and decided largely upon other questions, and tbat which we are discussing was not pressed or considered. There is much contrariety of opinion whether mere options will be specifically enforced.

Ours is not the case of an ordinary option; parties who are not bound ash specific performance of a contract to run sixty years, during which time they may at any moment put an end to it by refusing to pay the rental. We have here several parties suing, for themselves and many others not known to them, to compel specific performance on the part of •the defendant of a contract to run for considerably more than the average life of an adult human being, during all of which period, either by death, sale of the property connected with the sewer, or at the mere will and pleasure of any one or more of them, the contract may be terminated and the defendant be without remedy to compel plaintiffs to continue to use the sewer.

The difficulties which would be'encountered in attempting to make or enforce a decree in such a case are pointed out in Texas, etc., Railroad v. Marshall, 136 U. S., 393. Plaintiffs urge upon our attention the case of Franklin Telegraph Co. v. Harrison, 145 U. S., 459. The objection made to the decree in that case was that by reason of change of conditions since the execution of the contract, and increased value of the privilege conferred to maintain the wires upon the poles of the plaintiff company, specific performance would be harsh and inequitable. The Court held that in ascertaining the value of the privilege it would look to the conditions existing at the time of making the contract, and that no such change in conditions was shown to deprive the defendant of the right to have strict performance. The general principles governing the courts in such cases were conceded. The facts were peculiar, and in many respects distinguishable from those before us. Fuller, G. J., and Brewer, J., dissented from the decision in that case.

The last objection urged by defendant against.the relief demanded presents interesting and important questions. TIow far contracts of tbis character may be made by corporations owing a duty to serve the public at reasonable rates and without discrimination, is an interesting question. Whether such contracts are void, as contrary to public policy, or become unenforceable when it is shown that their enforcement will disable the corporation from serving the public, is also interesting. We are not prepared, and it is not necessary for us to do so, to decide the question. The authorities cited by defendant sustain its contention that the contract is made subject to the limitations imposed by the charter, and that whatever rights plaintiffs acquired are subject to such provisions. Salt Lake City v. Hollister, 118 U. S., 256; Cent. Trans. Co. v. Pull. Pal. Car Co., 139 U. S., 24. It seems well settled that a public corporation or a private one owing the duty to serve the public, charging reasonable and equal rates, cannot contract away its power to discharge such duty. The principle has been applied by this Court to County Commissioners in Glenn v. Comrs., 139 N. C., 412, and to Town Commissioners in Edwards v. Goldsboro, 141 N. C., 60. In the opinion of Mr. Justice Walicer in the last case, authorities are cited applying it to railroad companies. That gas and water companies come within the rule is well settled. Griffin v. Water Co., 122 N. C., 206; Williams v. Mutual Gas Co., 52 Mich., 499. The same reasons apply to sewerage companies. We do not understand the plaintiffs, to controvert this proposition. Plaintiffs admit that the advanced rates are reasonable and not discriminative. Defendant makes an allegation, in its answer, which, if true, would seem to show that if compelled to serve plaintiffs at the contract rate, it would be unable to serve other citizens of Wilmington at what is conceded to be a reasonable rate. No facts, however, in this respect are found or admitted; hence, we may not consider the allegations in this connection. We place our conclusion upon the ground that the contract is uncertain in regard to its duration and that there is an absence of mutuality in the obligation. We incline to the opinion that if we were to accept the plaintiffs’ view that it gave them the right to use the sewer at the contract rate for sixty years, in view of the character of the contract, its subject-matter, and defendant’s duty to render equal service at equal rates to all of the citizens of Wilmington, the contract would be unreasonable, and therefore plaintiffs would not be entitled to the decree demanded.

Upon an examination of the entire record we concur with his Honor, and the judgment must be

Affirmed.