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chemical purposes, or for the purpose of engaging in any species of trade or commerce, foreign or domestic. It enacted that three or more persons, who desired to form a company for any of the purposes mentioned, should make, sign, and acknowledge, before some officer competent to take the acknowledgments of deeds, a certificate stating the corporate name of the company, the objects of its formation, the amount of its capital stock, the time of its existence, which could not exceed 50 years, the number of shares of which the stock was to consist, the number of trustees and their names, who should manage the concerns of the company for the first three months, and the name of the city, or town, or county in which the principal place of business of the company was to be located, and file the certificate in the office of the clerk of the county in which such principal place of business was located, and a certified copy thereof, under the hand of the clerk and seal of the county court, in the office of the secretary of state; and that upon filing such certificate the persons signing and acknowledging it, and their successors, should be a body politic and corporate by the name stated in the certificate, and have succession for the period limited, and also such powers as are usually conferred upon corporate bodies. Under this act, and an amendatory act of 1855, porations were formed for the purpose of supplying the inhabitants of the city and county of San Francisco with pure, fresh water. Doubts were how. ever expressed in some quarters whether supplying the water was engaging in any species of trade or commerce within the meaning of those acts. People v. Blake, 19 Cal. 579. Accordingly, on the twenty-second of April, 1858, a general law was passed for the incorporation of water companies, o which referred to the provisions of the act of 1853, and of the amendatory. act of 1855; and declared that they should apply to all corporations already formed or that might afterwards be formed under said acts for the purpose of supplying any city and county, or any cities or towns, in the state, or the inhabitants thereof, with pure, fresh water. On the following day, April 23, 1858, another act was passed, which authorized George H. Ensign and other owners of the Spring Valley water-works to lay down water pipes in the public streets of the city and county of San Francisco. On the nineteenth of June, 1858, the plaintiff was organized as a corporation, referring in its certificate to these last two acts; but as the special act relating to Ensign and others was subsequently declared unconstitutional by the supreme court of the state, the incorporation of the plaintiff rests upon the act of April 22, 1858, or rather upon the acts of 1853 and of 1855, to which it refers. This act of 1858 gave the corporation thus formed the right to purchase or to appropriate and take possession of, and use and hold, all such lands and waters as might be required for the purposes of the company, upon making compensation therefor; with a proviso, however, that all reservoirs, canals, ditches, pipes, aqueducts, and conduits constructed by the corporation should be used exclusively for the purpose of supplying the city and county and the inhabitants thereof with pure, fresh water.
Having provided for the incorporation of the company, the act of 1858 proceeded to prescribe the terms upon which water should be supplied to the city and county and to their inhabitants, and the compensation which the company should receive therefor. It declared that the company should furnish pure, fresh water to the inhabitants for family uses, so long as the supply permitted, at reasonable rates, and without distinction of persons, upon proper demand therefor, and should furnish water, to the extent of its means, to the city or county, “in case of fire or other great necessity, free of charge. The act further declared that the rates to be charged for water should be determined by a board of commissioners, to be selected as follows: two by the oity and county authorities, and two by the water company; and in case the four could not agree to the valuation, then, in that case, the four should choose a fifth person and he should become a member of the board; and if
the four commissioners could not agree upon a fifth, then the sheriff of the county should appoint him; and that the decision of a majority of the board should determine the rates to be charged for water for one year, and until new rates should be established. The act also declared that the board of supervisors might prescribe such other proper rules relating to the delivery of water, not inconsistent with the act and the laws and constitution of the state; and that the corporation should have the right, subject to the reasonable direction of the city authorities as to the mode and manner of exercising it, to use so much of the streets, ways, and alleys of the city and county, or of the public road therein, as might be necessary for laying its pipes for con. ducting water into the city or county, or through any part thereof.
The certificate of incorporation of the plaintiff declared that the objects for which the company was formed were to introduce pure, fresh water into the city and county of San Francisco, and into any part thereof, from any point or place, for the purpose of supplying the inhabitants of the city and county with the same, and to do and transact all such business relating thereto as might be necessary and proper, not inconsistent with the laws and constitution of the state.
The necessary supply of water could not be obtained from any natural streams or lakes on the peninsula, upon the upper end of which the city and county are situated. A small lake near the city furnished an insufficient supply, and of inferior quality. The company, therefore, soon after its incorporation, undertook to collect the required quantity in artificial reservoirs, as it descended in rain from the heavens.
At a distance of about 20 miles from the city, there is a natural ravine ly. ing between the mountains near the ocean and the hills bordering the bay of San Francisco. The company acquired the lands within this ravine and on its sides, amounting, as represented by counsel, to 18,000 acres, and erected in it heavy walls at long distances apart, thus making great reservoirs, into which the water was collected until lakes were formed extending several miles in length. *With acqueducts, pipes, and other conduits, the water thus collected was carried to the city and distributed in mains. It is said that the cost of these works to the company amounted to nearly $15,000,000. Before their construction and the introduction of this water the inhabitants of the city were poorly and inadequately supplied. With the completion of the works of the plaintiff all this was changed. Water was furnished to all persons calling for it at their houses, and, if desired, in every room, and to the city in abundance for all its needs.
The law of 1858, as stated, required the corporation to furnish water, to the extent of its means, to the city and county, “in case of fire or other great necessity, free of charge.” This provision has been construed by the supreme court of the state to require the company also to furnish, without charge, water to sprinkle the streets of the city, to flush its sewers, and to irrigate its public squares and parks. Its effect will be only partially appreciated by those who judge merely from the size of the city, and the fact that the residences are chiefly constructed of wood. There are other uses for a much larger supply of water. The city is situated at the upper end of a peninsula whose width is only a little over six miles. The land there consists principally of a succession of sand hills, and the daily breezes of the ocean keep the sand in almost constant motion, except where vegetation has fixed its roots. For this vegetation water is essential. With it, every plant will thrive, even in the sand, and shrubs and trees will grow in great luxuriance. The absence of water from them for even a few months will cause the plants and shrubs to droop, wither, and perish. The public squares of the city are numerous, and the park-termed the “Golden Gate Park,” because it is near the entrance of the bay which is termed the “Golden Gate”—covers more than a mile square of these sand hills. On these squares and this park the
constant use of water from the reservoirs of the plaintiff is necessary to keep the grasses, plants, and shrubs alive. Yet all water needed for these purposes is, by the law in question, to be furnished without charge. That was one of the burdens imposed upon the plaintiff, in addition to the requirement* that its costly works, consisting of aqueducts extending nearly 30 miles out of the city, and mains within it exceeding 100 miles, should be used exclusively for the purpose of supplying the city and county with water. The reasonable rates allowed for the water furnished to the inhabitants of the city and county constituted the only compensation of the company for the enormous outlay to which it was necessarily subjected, and for all the benefits it undertook to confer. The law in declaring that a company formed under it should supply water to the city and county in cases of great necessity free of charge, and to their inhabitants on demand at reasonable rates, in effect declared that the company complying with such terms should receive those rates for water thus supplied to the inhabitants. When, therefore, the plaintiff organized under the law introduced the water, a contract was completed between it on the one part and the state on the other, that so long as it existed and furnished the water as required it should receive this compensation. The provisions for the creation of an impartial tribunal to determine each year what rates should be deemed reasonable, was the very life of the stipulation, for a reasonable compensation. It would not have done to leave the compensation to be fixed by the company alone, as it might thus make its charges exorbitant; it would not have done to leave the rate to be fixed by the city authorities alone, as they would be constantly under a great pressare to reduce the rates below remunerative prices, as the representatives of the city, itself a larger consumer for public buildings, and as representatives of individual consumers, by whom they were elected and to whom they were to look for the approval of their acts, and because the individuals composing those authorities would also be consumers of the water equally with their constituents. It was therefore provided that the rates should be fixed by commissioners, to be selected as stated above.
It would be difficult to conceive a tribunal fairer in its organization, or more likely to act justly and wisely for both parties, and guard equally againsta extortion in prices on the one hand and their unjust reduction on the other. Such a tribunal was formed, and, from time to time, reasonable rates for water were established by it. But in 1879 the people of California formed a new constitution, which declared that the use of all water then appropriated, or that might thereafter be appropriated, for sale, rental, or distribution, was a public use, and subject to the regulation and control of the state in the manner to be prescribed by law; that the rates or compensation to be collected by any person, company, or corporation for the use of water supplied to any city and county, or to its inhabitants, should be fixed annually by the board of supervisors of the city and county, or other governing body of the same, by ordinance or otherwise, in the manner that other ordinances or legislative acts or resolutions are passed by such body, and should continue in force for one year and no longer; that such ordinances or resolutions should be passed in the month of February of each year, and take effect on the first day of July thereafter. And it further declared that any board or body failing to pass the necessary ordinances or resolutions fixing water rates, when necessary, within such time, should be subject to peremptory process to compel action at the suit of any party interested, and should be liable to such further processes and penalties as the legislature might prescribe; and that any person, company, or corporation collecting water rates in any city and county, otherwise than as so established, should forfeit its franchises and water-works to the city and county, where the same are collected, for public use. Article 14, § 1.
In July, 1878, a vacancy occurred in the board of commissioners, which the
city authorities, after the adoption of the new constitution, refused to fill, contending that, under its provisions, they were authorized to fix the water rates. The present proceeding was to compel them to proceed and com. plete the board; and the question is whether that constitution, in vesting the entire power in the board of supervisors,-the governing authority of the city and county of San Francisco,-impairs the contract between the state and the company, within the prohibition of the federal constitution. There is no question of the continuance of a virtual monopoly in water,* as supposed by the court. There is nothing relating to a monopoly in the case. Any five or more persons in California can, at any time, form themselves into a corporation to bring water into the city and county of San Francisco on the same terms with the plaintiff; and such new corporation can, in the same way, form reservoirs in the ravines in the hills and collect water for sale, or bring water from the mountain lakes. Until within a few years any three or more persons could form such a corporation. The statement that the plaintiff has a monopoly of any kind in water, and desires to secure forever certain charges, must therefore be taken as one inadvertently made, without due consideration of the facts. The only contention in the case is, whether the clause of the new constitution abrogating the stipulation for reasonable rates to be established by a commission created as mentioned, is a valid exercise of power by the state. That the provision of the law of 1858, making that stipulation, was a part of the contract between the state and the company, is not denied by the court; nor is it denied that it was also a part of the contract that the “reasonable rates” should be determined by the commissioners designated. But the position taken, if I understand it, is, that the provision for their appointment is only that the rates shall be established by an impartial tribunal, not necessarily by one created as there prescribed; and that the state has a right to determine what tribunal shall be deemed an impartial one, and, by the fourteenth article of the new constitution, has done so and made the board of supervisors that tribunal; and that this action was within the power reserved by the original act of incorporation.
Of course, this view destroys all the substance and value of the stipulation for reasonable rates, and renders it utterly delusive. The very object of the creation of the tribunal designated in the law of 1858 was to take the establishment of the rates from the city authorities, who, it was believed then, as it is known now, would be influenced and controlled by their relation as representatives of the consumers by whom they are elected, as well as by the fact that the individual members*composing those authorities would be themselves consumers. Admitting for the argument that the meaning of the provision is only that the company shall have an impartial tribunal, and not necessarily the one created as designated, it seems to me to be plain that such new tribunal cannot consist of the city authorities, against whose exclusive control the original contract expressly stipulated. Placing the regulation of rates with them is not furnishing another tribunal equally impartial with the one mentioned. From the very nature of its creation and its relation to others, the board of supervisors, an elective body, cannot be impartial. No tribunal, however honorable and high the character of the persons composing it may be, is, or can be, in a legal sense, impartial, when they are individually Interested, and the tribunal itself, in its representative character, is interested in the determination to be made. It need hardly be said that it is an elementary principle of natural justice that no man shall sit in judgment where he is interested, no matter how unimpeachable his personal integrity. The principle is not limited to cases arising in the ordinary courts of law in the regular administration of justice, but extends to all cases where a tribunal of any kind is established to decide upon the rights of different parties.
In City of London v. Wood, 12 Mod. 687, it was held by the king's bench that an action in the names of the mayor and commonalty of London could
not be brought before the court held by the mayor and aldermen; for, said Chief Justice HOLT, “it is against all laws that the same person should be party and judge in the same cause;" and to the objection that the lord mayor, as the head of the corporation, acted in his political capacity and judged in his natural capacity, he answered: “It is true he acts in different capacities, yet the person is the same, and the difference in the capacities in which he acts does not make a difference,” which would remove the disqualification.
The true doctrine on this subject is stated with great clearness by the supreme court of Massachusetts in the recent case of Hall v.Thayer, 105 Mass. 221, where it was held that the judge of probate was disqualified by personal interest to appoint his wife's brother administrator of the estate of a deceased* person of which her father was principal creditor. Referring to the provision of article 29 of the declaration of rights of that state, “that it is the right of every citizen to be tried by judges as fair, impartial, and independent as the lot of humanity will admit," the court said: “The provision rests upon a principle so obviously just and so necessary for the protection of the citizen against injustice that no argument is necessary to sustain it, but it must be accepted as an elementary truth. The impartiality which it requires incapacitates one to act as judge in a matter in which he has any pecuniary interest, or in which his near relative or connection is one of the parties. It applies to civil as well as criminal causes, and not only to judges of courts of common law and equity and probate, but to special tribunals and to persons authorized on a special occasion to decide between parties in respect to their rights." And, after referring to several decisions where the principle had been applied, the court said: “These decisions show that the provision is to have no technical or strict construction, but is to be broadly applied to all classes of cases where one is appointed to decide the rights of his fellow-citizens.”
I admit that the interest which will disqualify a special tribunal from acting in a matter affecting conflicting rights of parties must be a direct pecuniary interest either in its members or in the persons represented by it, which may be increased or diminished by the determination reached. Such is the precise condition of the board of supervisors of the city and county of San Francisco with respect to the prices to be paid for the water furnished by the plaintiff. The consumers of the water constitute, with few exceptions where a well may have been sunk, the entire people of that district, including the supervisors themselves, and they are all, therefore, directly interested to reduce its price. If the board were to seek to acquire land whereon to open a new street, or to erect public buildings, no one would pretend that the compensation which it would be necessary to make to the owner, could be fixed by the board, or by appraisers whom it should appoint. It would be on that subject an inter.* ested party, and therefore, on the principle already stated, could not act in the matter where the rights of others were concerned.
The supreme court of Wisconsin held a provision of law void which authorized the common council of a municipal corporation to appoint jurors to assess damages to the owner of property taken for public uses of the city, in the place of others previously appointed for that purpose by a judge of the circuit or county court, but who had neglected or refused to serve. “A majority," said the court, “or even all of the jurors selected to establish the necessity of taking the property, may refuse to act in fixing the amount of damages, in which case the common council, one of the parties exc parte, may appoint a jury which shall determine the amount of damages the city must pay. It is impossible to comment in a proper manner upon such a provision, which confounds all our notions of fairness, justice, and right.” Lumsden v. Milwaukee City, 8 Wis. 485, 494.
If instead of land the board should desire to acquire personal propertyfuel for the public buildings of the city, paving material for its streets, engines for its fire department, or any other property for its needs—no one