The City vs. The Water Company

A decision has been rendered by Judge Hanford, of the United States circuit court, granting an injunction to the Walla Walla Water Company to restrain the city of Walla Walla from building water works and issuing bonds for that purpose. In his decision, Judge Hanford cited the city charter provisions allowing the city to grant a franchise for the construction of water works for a term not to exceed twenty-five years. When the contract was made in 1887, the city could not have raised the money by taxation or by incurring debt except in excess of the legal limit. The company contends that the construction of city water works would be equivalent to confiscation of its property, in violation of the United States Constitution prohibiting laws which impair the obligation of contracts. The court held that having induced the company to make large investments of capital, the city cannot at this time honestly destroy the value of the plant instead of purchasing or condemning and paying for it. Therefore, the present scheme is unlawful as an attempted repudiation of a binding promise.