City of Atlanta v. Dekalb County , 196 Ga. 252 ( 1943 )

1. The provision in the charter of the City of Atlanta, that "The Mayor and General Council, and all persons acting under their authority, shall have the right to use the ground or soil under any road, railroad, highway, street, lane, alley, or court, within the State, for the purpose of constructing, enlarging, or improving any of the work contemplated by this chapter, upon condition that they shall not permanently injure any such railroad, highway, street, lane, alley, or court, same to be restored to its original state and all damages done thereto to be repaired," did not have the effect of conferring upon the municipality any property right in the public roads or highways of other political subdivision, such as might be transferred as consideration for a contract. Accordingly, where the city entered into an agreement with a private corporation, in which it consented for such corporation to lay water-mains or pipes in the roads and highways of a designated county and without the limits of the City of Atlanta, and in which the other corporation purported to grant to the city "the exclusive right" to flow water into and through such mains or pipes and to tap them for the purpose of furnishing water to customers in the locality, such consent on the part of the city did not constitute anything in the nature of a valuable consideration; and in the absence of something else that would amount to a consideration, the agreement did not confer any right, exclusive or otherwise, upon the City of Atlanta.

2. Nor under the terms of the agreement did the permission of the city for the other corporation to connect the mains that would be laid by it with the existing mains of the city amount within itself to a consideration for the right claimed, since the connection was to be made for the sole purpose of enabling the city to flow water into and through the mains, and would be valueless to the other party unless the city became bound in some way to use it for that purpose.

3. Where as a part of the agreement the city expressly reserved "the right to cut off water from said mains and service pipes" at any time, and stipulated that it "does not guarantee service through this line, and . . shall not be liable for damage or claims for damage on account of a lack of sufficient water or for cutting the water off and discontinuing the service at any time for any cause whatever," and declined to assume any other obligation under the agreement, there was no promise or undertaking on the part of the city that would serve as a consideration to the other party; and therefore the city did not obtain any right under the agreement, unless there was some other consideration therefor.

4. While the test of mutuality in an agreement is to be applied as of the time it is to be enforced, and an offer may contemplate acceptance merely by the doing of an act, this principle would have no application in the instant case, where it was expressly agreed in effect that the city would have the right to cut off the water at any time, and that no use of the facilities afforded or offered by the other party would have the effect of binding the city in any manner.

5. Under the preceding rulings, the alleged agreement between the city and the other corporation appeared to be a nudum pactum at the time it was made, and was not rendered effectual as a contract by the subsequent action of the city in using the water-mains laid by the other party; nor in the circumstances could the city render the agreement binding on the other party by incurring expense and becoming obligated by contracts with individual customers to supply them with water through the water-mains or pipes in question. It follows that the petition of the city to enjoin a transferee of the other contracting party from disconnecting such mains or pipes from the city's water system, and from otherwise interfering with the city in its use of them, did not state a cause of action for the relief sought, and was properly dismissed on general demurrer.

No. 14560. JUNE 12, 1943. The City of Atlanta filed suit against the County of DeKalb, and Scott Candler as commissioner of roads and revenues, seeking to enjoin the defendants from disconnecting from the water system of the city certain water-mains in DeKalb County and beyond the limits of the city, through which it had supplied water for a number of years to residents of Druid Hills subdivision under an alleged contract between the city and Druid Hills, a corporation; and also to enjoin the defendants from connecting the means to the water system of DeKalb County, and from interfering in any way with the right of the city to flow water through said mains. The court sustained a general demurrer and dismissed the action, and the city excepted.

The petition alleged: On May 26, 1924, the city entered into a contract with Druid Hills, a corporation, with reference to the laying of water-mains in that part of DeKalb County outside of the corporate limits of the City of Atlanta which is known as Druid Hills, a copy of the alleged contract being attached to the petition as an exhibit. By the terms of this contract the City of Atlanta gave to Druid Hills permission to extend water-mains along specified roads in DeKalb County outside of the limits of the city, and Druid Hills laid said mains in pursuance of this contract and under authority thereof. In order to supply water to the Druid Hills section, petitioner had to enlarge and extend its own mains within its corporate limits, all of which it did at great expense. Said contract provided that petitioner should have exclusive right to flow water in said mains laid by Druid Hills under the authority of said contract, and the exclusive right to tap said mains and furnish water therefrom to the customers residing along said mains or accessible therefrom. Petitioner also was granted by said contract the right to extend said mains laid by Druid Hills.

Petitioner is informed and believes that DeKalb County, acting by Scott Candler as its commissioner of roads and revenues, has purchased from Druid Hills its right, title, and interest in and to said water-mains or pipes. Said defendants had notice of said contract and the provisions thereof. They acquired said pipes subject to all the rights of petitioner therein under petitioner's contract with Druid Hills. Defendants have recently installed in DeKalb County a water system for the purpose of supplying the citizens of DeKalb County, and have laid mains for that purpose. One of these mains has been laid up to the main in Clifton Road, it being one of those laid by Druid Hills under the authority of said contract. Defendants have connected their main to said main in Clifton Road, and have placed a valve at that point in the main in Clifton Road now served by the City of Atlanta. Defendants have laid another main up to within a few feet of the said main in Clifton Road; and petitioner is informed and believes that defendants are about to cut off the City of Atlanta from said mains and flow their water through said mains.

Under the provisions of said contract between petitioner and Druid Hills, petitioner was given the right to tap on to the mains laid by Druid Hills for the purpose of supplying individual customers. Petitioner has tapped on to said mains at a large number of places, and has run pipes from said taps to its customers for the purpose of supplying them with water, and petitioner has a large number of such customers in the Druid Hills section being served in this way by petitioner with water. The tapping on to said mains in order to serve such customers was done by and with the knowledge and consent of the said Druid Hills. Petitioner has obligated itself by contracts with such customers to furnish them with water.

Subsequently to the laying of said mains pursuant to said contract, a number of property owners have erected residences on property abutting said mains on Clifton Road, and have obtained water connections and water services from petitioner, and have been served by petitioner with water, said customers having no knowledge of the terms of the said contract, which was not recorded in said county; and as to such customers petitioner does not have the right to discontinue such water supply and services, even though petitioner might care to do so. The furnishing by petitioner of water to said customers along said water-main, which was laid pursuant to the terms of said contract, was done originally by petitioner at considerable expense to itself, and the continued furnishing of said water to such customers is now a source of revenue and profit to petitioner.

Because of all the facts and circumstances stated above, petitioner has the right to continue to furnish water to its customers along said mains, to receive from them the customary charges for such water pursuant to contracts between the City of Atlanta and such customers, and pursuant to valid ordinances of the City of Atlanta such customers have the right to the continuance of such water service by petitioner, and the threatened action by defendants in disrupting such water service by disconnecting such mains from the Atlanta Waterworks Department and connecting same with the DeKalb Waterworks Department is illegal and a violation of property rights of petitioner. Said threatened acts of the defendant are illegal and will interfere with valuable property rights of petitioner as aforesaid, and the damage to be suffered by petitioner will be difficult if not impossible of ascertainment and will be irreparable; and petitioner has no adequate remedy at law. It was prayed, that the defendants be enjoined from disconnecting the said water-mains from the water system of the city, and from connecting them with the system of DeKalb County, and from interfering in any way with petitioner in the flowing of water through said mains; and for general relief.

The writing which the city relied on as a contract, after reciting that on February 25, 1924, Druid Hills, a corporation, filed with the Mayor and General Council of Atlanta a request in writing for permission to lay water-mains in designated roads in DeKalb County, same to be done at the expense and liability of the requesting corporation, and that this request was granted by the Mayor and General Council on March 3, 1924, and that it was desired to put this agreement in the form of a contract, proceeded to state the following as embodying the agreement:

"Therefore this contract entered into on this 26th day of March, 1924, by and between Druid Hills by Adair Realty Trust Company, party of the first part, and the City of Atlanta, a municipal corporation of said state and county, party of the second part, Witnesseth:

"1. This contract is granted upon the following conditions precedent, which are hereby incorporated specifically: Permission is granted as prayed to extend the eight (8)-inch main Clifton Road from Ponce de Leon Avenue northwardly to North Decatur Road. Also a six (6)-inch main on E. Clifton Road from Clifton Road in a circular direction east, north and westerly back into Clifton Road. Also a six (6)-inch main on Ridgewood Drive from Clifton south and easterly to the property of Thompson. Also a six (6)-inch line on Oxford Road northwesterly to N. Decatur Road.

"2. It is expressly agreed between the parties hereto that the pipe and such connections as are made in the public road under this agreement shall become the right and property of the City of Atlanta at such time as the limit of said city may hereafter be extended over the territory in which the water-mains or pipes laid under this contract are constructed, as to all of same or such part of same as said limits, when so extended, may include; and thereupon no claims for reimbursements or damage or otherwise shall remain in said petitioner, concerning the cost or other expense incurred by them in the original construction or subsequent maintenance of said water-mains or pipes, but same shall be the property of the city free of all claims such as mentioned, or of any other kind or character of said petitioner or its assigns. It is further condition of this grant that the right, privilege, and permission herein granted shall be exercised within ninety (90) days from the date of this contract; and if not exercised within said ninety (90) days, all privileges, rights, and permissions herein granted shall thereupon determine and cease and become thereby void and of no effect. Said party of the first part agrees to save the city harmless on account of any damages to persons or property that may be caused in the laying of the main petitioned for, or that may hereafter be caused by a rupture in the water-main or service-pipe laid under this contract. [The contract as shown in the record contained no paragraph numbered 3.]

"4. All material and work shall be paid for by party of the first part, and party of the first part shall pay for the expenses of supervision of said work by the department of waterworks. Said party of the first part agrees that all hydrants, pipes, and appliance necessary for said service shall be put in, and shall be required and approved by this department, and that any and all other future work as may be required shall be laid and put in under the supervision of this department. No part of the costs or expenses provided for in said work shall be chargeable to the water department of the City of Atlanta.

"5. The City of Atlanta expressly reserves the right to extend said service-pipe or main, and connect same with any other mains or service-pipe, at such places and at such times as the city, acting through its Board of Water Commissioners, shall require or decide, either for the purpose of the said city or for the service of other companies or individuals. These connections or extensions to be made and permitted without any charge or claim for royalty or rent on the part of the said party of the first part, as against the city, or its customers, or third party as aforesaid. Provided the waterworks committee may estimate the sum to be paid by any person or corporation hereafter connecting with said pipe or main, and their decision shall be final.

"6. That all ordinances heretofore passed by the Mayor and General Council of the City of Atlanta regulating water service, and all rules of this department now in force or that shall hereafter be put in force, shall apply to this service, and this service shall be subject to any and all ordinances that may hereafter be passed which apply to this service or to water service under the waterworks committee, and all such ordinances, rules, and regulations are specifically made a part hereof as if fully set out and attached hereto. The City of Atlanta has exclusive right to flow water in the water-main built under this contract, and also the exclusive right to tap same and the furnishing of water therefrom to customers residing along same, or accessible therefrom. All applications to connect, tap, or extend to be made to the City of Atlanta, acting through its waterworks committee.

"7. The service covered by this contract shall be subject to any changes of rates that may be made in charges for service of like character by the City of Atlanta, applying to all service of like character outside the city limits of said city. Until such changes the rate now in force and effect shall apply and control.

"8. It is further agreed that the Board of Water Commissioners, acting for the City of Atlanta, shall have the right to cut off water from said mains and service-pipes laid under this contract at any time, and that the City of Atlanta shall not be liable for damages sustained by party of the first part, or any of its assigns, by reason of having said water cut off by order of the Board of Water Commissioners. The City of Atlanta, acting thru its Board of Water Commissioners, reserves the right to use its discretion over the continuance or discontinuance of water through the water-mains or service-pipes laid under this contract.

"9. Neither party of the first part or its assigns shall have any right to extend or attach any extension or connections other than specified in the petition filed by party of the first part, as shown by the map attached thereto."

Paragraphs 10 and 12 related exclusively to the right of the city at its option to purchase the pipes laid by Druid Hills "under this agreement," which "option" was never exercised.

Paragraph 11 provided that the city reserved the right to have the location of the water-mains removed from time to time in the discretion of the Board of Water Commissioners, the same to be done at the expense of the other contracting party, and such removal to be a "condition precedent to the continuance of water through said mains after said removal shall have been ordered."

Paragraph 13 referred to an ordinance that had been passed in reference to this matter. Paragraph 14 limited the size of pipes to specified dimensions, in the absence of further petition and action thereon by the city. Paragraph 15 declared that the foregoing provisions "with reference to the rights, control, managements, connections, and purchase by the city" should not be applicable if the corporate limits of the city should be extended so as to include the territory in which the pipes or mains were laid, for in that case the pipes should become the absolute property of the City of Atlanta. But the city limits were never so extended.

The 16th and final paragraph was as follows: "It is understood and agreed by the parties hereto that the city does not guarantee service thru this line, and that the city shall not be held liable for damage or claims for damage on account of a lack of sufficient water or for cutting the water off and discontinuing the service at any time for any cause whatsoever."

The demurrer filed by the defendants contained seven paragraphs or grounds, all being general in nature. The court sustained all of these grounds, except one which was not passed on. The petition of the city as plaintiff was based upon the theory that under the terms of the agreement the city obtained from Druid Hills "the exclusive right" to flow water into and through the mains or pipes that would be laid by Druid Hills, with further exclusive right to tap them for the purpose of furnishing water to customers in the locality, and that since DeKalb County and its commissioner of roads and revenues purchased such mains or pipes with notice of the alleged contract, they acquired them subject to the rights of the city, and therefore should be enjoined from disconnecting them from the water system of the city, and from connecting them with the county's system, and from otherwise interfering with the rights of the city under such contract. In the brief filed in the city's behalf it is stated that the principal ground of the defendants' demurrer was that the contract gave to the city the right to cut off the water at any time, and therefore that it was without consideration and void. Counsel then state several specific reasons why, as they contend, the agreement is a valid and binding contract, thus presenting the questions which the city as plaintiff in error seeks to have determined by this court. In our view of the case, a proper decision upon these questions will be controlling, and therefore we will lay aside all other questions. While the very matter for determination is whether there was a contract, we may for convenience use the term in this opinion, without regard to its precise legal meaning.

1. It is contended that the city granted a valuable right when it authorized Druid Hills to lay its water-mains in the roads of DeKalb County, a right which had not otherwise been granted to Druid Hills, a mere private corporation, but which had been conferred upon the City of Atlanta by a provision in its charter. The provision relied on was contained in the charter as granted by the General Assembly in 1874, as follows: "The Mayor and General Council, and all persons acting under their authority, shall have the right to use the ground or soil under any road, railroad, highway, street, lane, alley, or court, within the State, for the purpose of constructing, enlarging, or improving any of the work contemplated by this chapter, upon condition that they shall not permanently injure any such railroad, highway, street, lane, alley, or court, same to be restored to its original state, and all damage done thereto to be repaired." Attention is specifically called to the words "all persons acting under their authority," and it is insisted that the City of Atlanta was thereby given authority to convey or assign to Druid Hills the right to lay water-mains or pipes in the public roads of the county.

We can not agree that it was the purpose or intent by this section of the charter to confer upon the municipality any property right in the public roads or highways of other political subdivisions, such as might be transferred as consideration for a contract. It seems to us that the sole purpose of this provision was to grant charter authority to do the acts therein mentioned, so that if the city desired to perform them it would have the power, and if it did perform them it would not be subject to the imputation that it was engaging in acts that were ultra vires. Manifestly the General Assembly did not intend by this provision to grant a right or easement in the public roads of DeKalb or other county without any consideration or agreement of the latter with respect to such right; and since the provision was intended merely to confer power and not to grant a property right, the city obtained nothing that it could bargain or sell to another. The phrase "all other persons acting under their authority," as properly construed, would include only such persons as the city might authorize to act for and on its behalf, as officers, agents, or contractors, and would not include a transferee. It follows that the consent of the city for Druid Hills to lay water-mains or pipes on the public roads of DeKalb County did not constitute anything in the nature of a property right, and did not supply anything as a monetary consideration, such as might within itself and without more make the agreement binding in whole or in part upon Druid Hills as the other contracting party. So, in the absence of something else that would amount to a consideration, the agreement of Druid Hills did not confer any right, exclusive or otherwise, upon the City of Atlanta.

2. It is further insisted, however, that under the terms of the agreement the city permitted Druid Hills to connect the mains laid by it with the existing mains of the City of Atlanta, and that the grant of this right alone constituted a valuable consideration. We have examined the contract carefully as to this matter, and find no language indicating an intention to grant any such permit or privilege, except for the purpose of enabling the city to flow water into and through the mains that would be constructed by Druid Hills, if it elected to use the mains for this purpose; and the permission to make such connection, being thus a mere incidental matter, would count for nothing as a consideration independently of benefit resulting to Druid Hills through the use of such connection for the purpose indicated. It follows that unless the city became bound in some way to use the connection for the purpose of flowing water into the mains to be constructed by Druid Hills, the mere permission to make it would be valueless to Druid Hills and would not amount to a consideration. See Schmidt v. Mitchell, 117 Ga. 6 (4) (43 S.E. 371). The question whether there was any promise or obligation on the part of the city in this respect is a different matter, and will be considered in the next division of this opinion.

3. A consideration may exist in a mere promise or obligation; and it is insisted that the city became bound by this agreement to furnish water through these mains to individuals residing along same or accessible therefrom, and that in so contracting to furnish water to residents, and in furnishing water to them, the city furnished a valuable and ample consideration to Druid Hills, so as to make the agreement valid and binding as against that party. It is suggested that the contract was in a sense made for the benefit of such third persons, and therefore that a consideration moving to them was a benefit and consideration to Druid Hills. We do not think the agreement will bear interpretation to the effect that the city promised therein to do anything toward supplying water through these mains, either to Druid Hills as the other contracting party, or to any person residing in the subdivision. The city was careful at every point to avoid assuming liability for any expense or act, and would not promise even to furnish water through the facilities thus to be placed at its disposal by Druid Hills. In paragraph 8 of the agreement, it was provided that the city through its Board of Water Commissioners "shall have the right to cut off water from said mains and service-pipes laid under this contract at any time, . . and shall not be liable for damages sustained by the party of the first part or any of its assigns by reason of having said water cut off by order of the Board of Water Commissioners," and in paragraph 16 it was stipulated that the city "does not guarantee service through this line, and that the city shall not be liable for damage or claims for damage on account of a lack of sufficient water or for cutting the water off and discontinuing the service at any time for any cause whatever." The word "guarantee" as used in this paragraph is the equivalent of "promise," and so it was declared in positive terms that the city did not promise any service whatever through this line.

It is urged, however, that the provisions in paragraphs 8 and 16 should be construed in the light of the charter power to make rules and regulations respecting the introduction of water into any premises, and did not reserve or contemplate the right to discontinue service arbitrarily and without cause. Compare Dodd v. Atlanta, 154 Ga. 33 (7) (113 S.E. 166, 28 A.L.R. 465). Nor can we agree with counsel in this view or interpretation. In language about as plain and strong as could be used, it was declared in these paragraphs that the city would not be bound in any manner or to any extent; and since it had already been said in paragraph 6 that the agreement would be subject to all ordinances of the mayor and council, and all rules and regulations of the water department, whether then in force or subsequently adopted, there would seem to be no reason to construe the specific reservations and disclaimers in paragraphs 8 and 16 otherwise than according to their natural import. The city, having expressly declined to bind itself, could not be heard to say that the opposite party was bound, unless there was some other consideration for the unilateral right claimed. Morrow v. Southern Express Co.,101 Ga. 810 (28 S.E. 998); Harrison v. Wilson Lumber Co.,119 Ga. 6 (3) (45 S.E. 730); Cooley v. Moss, 123 Ga. 707 (51 S.E. 625); Simpson v. Sanders, 130 Ga. 265 (60 S.E. 541);Bankers Trust Audit Co. v. Farmers Merchants Bank,163 Ga. 352 (136 S.E. 143); Snell v. Spalding Foundry Co.,180 Ga. 582 (3) (180 S.E. 218); Pepsi-Cola Co. v. Wright,187 Ga. 723, 727 (2 S.E.2d 73).

4. Counsel for the city also rely upon the principle that although a promise may be a nudum pactum when made, because the promisee is not bound, it will become binding when he subsequently furnishes the consideration contemplated, by doing what he was expected to do. Compare Brown v. Bowman,119 Ga. 153 (46 S.E. 410); Hall v. Wingate, 159 Ga. 630 (126 S.E. 796). It is true, of course, that the test of mutuality is to be applied as of the time the contract is to be enforced, and that an offer may contemplate acceptance merely by the doing of an act. The question then is whether Druid Hills, in laying these water-mains with the city's consent, made an offer to allow the city to use them for the purpose of furnishing water to the residents of the subdivision, and, if so, whether a mutually binding agreement was effectuated, and was made continuous, when the city did actually begin to use the mains for such purpose, and continued to do so. There might perhaps be some basis for affirmative answer to this question, except for the fact that it was expressly agreed that the city would have the right to cut off the water at any time, and reserved the right to use its own discretion over the continuance or discontinuance of water through these mains, and did not "guarantee service through this line." The parties thus determined in advance that no use by the city of the facilities afforded or offered by Druid Hills would have the effect of binding it to continue the service; and so the principle invoked has no application. Since the city refused to bind itself in any manner, and gave notice to this effect in the written agreement, neither was Druid Hills bound, nor did it become bound. Compare Atlanta Buggy Co. v. Hess Spring Axle Co.,124 Ga. 338 (52 S.E. 613, 4 L.R.A. (N.S.) 431); Federal FarmMortgage Corporation v. Dixon, 185 Ga. 466 (195 S.E. 414).

5. But it is contended further, that the city has obligated itself by contracts with customers to furnish them with water through these mains; and that since the customers and property owners had no knowledge of the alleged agreement between the city and Druid Hills, the same not having been recorded in DeKalb County, the city does not now have the right to discontinue such service to residents, even though it might care to do so. Allegations to this effect were made in the petition, and it was averred also that the city incurred considerable expense in tapping the mains for the purpose of furnishing water to such customers, together with great expense in enlarging and extending its own mains in order to supply water to the Druid Hills section. It is urged that since the city has thus become obligated by contracts to supply water to individual customers, and has incurred expense in providing for such service, it has acquired an easement to flow water through these mains, and that neither Druid Hills nor its assignees can legally take such right away from it.

The petition does not show the terms or conditions of any of the contracts which the city claims to have made with individual customers. Hence the allegation that the city has obligated itself by such contracts would seem to be a mere conclusion of law, with no sufficient allegation of fact to support it. Regardless of this, however, we do not think it would be material in this case whether the city has entered into binding contracts with customers, and we will not at this time determine any question as between the city and its customers. Since the agreement as made with Druid Hills was entirely void for want of consideration and mutuality, if the city did enter into binding contracts with customers on such foundation, it did so with full knowledge of the facts, and acted at its peril in so doing. So far as shown, Druid Hills did nothing to mislead it, and there is no basis for estoppel. In the circumstances, the city could not by dealing with the residents cure the fatal defect in its agreement with Druid Hills. Mayor c. of Gainesville v.Dunlap, 147 Ga. 344 (3) (94 S.E. 247); National Surety Co. v. Atlanta, 151 Ga. 123 (106 S.E. 179); Foster v. Mack,180 Ga. 418 (179 S.E. 97); Exchange National Bank of Rome v.Alford, 187 Ga. 60 (200 S.E. 128, 120 A.L.R. 761). The necessary conclusion is, that the alleged agreement was without consideration and wanting in mutuality, and therefore unenforceable.

The County of DeKalb claims authority to establish and maintain a water system, under an amendment to the constitution proposed in 1937, in reference to the particular county. Ga. L. 1937, p. 20. But in this case we need not consider the effect of this amendment, if any, upon the City of Atlanta, since it appears that the city has no valid contract with Druid Hills, and for this reason, regardless of other questions, is not entitled to the relief sought. The judge did not err in sustaining the general demurrer and in dismissing the suit.

Judgment affirmed. All the Justices concur, except Jenkins,J., disqualified.