Illinois Trust & Savings Bank v. City of Pontiac

Mr. Presiding Justice Dibell

delivered the opinion of the court.

This .record presents no question of the competency of any of the testimony. If the stipulation reserves the right to object generally as to competency of testimony, no such objection was interposed. The bill of exceptions shows that no propositions of law were presented. Four days after the judgment, plaintiff filed with the clerk propositions of law and requested that the judgment be vacated in order to permit their presentation. That motion was denied. The only exception preserved in this record is an exception by each party to the judgment of the court. The only question presented is whether under all the evidence, treating it all as competent or as heard without objection, the judgment is sustained by the facts. The record raises no question of law, except as legal principles are involved in the question whether the proof sustains the judgment. The judgment erroneously awards an execution against the city, but neither party has assigned that for error, or argued that the judgment is erroneous in that respect, and the error is therefore waived. The title of the cause in the record kept by the clerk is defective, so that the judgment there appears to be in favor of “ Pontiac Light & Power Co.,” a party not otherwise known to this record, but that defect is waived in like manner.

Plaintiff’s argument is chiefly based upon the position that the court is here enforcing a forfeiture, and- plaintiff insists forfeitures are not favored; that he who seeks to enforce a forfeiture is held to a strict compliance with all prescribed conditions, and that the courts will seize upon any act which can reasonably be construed as a waiver of a forfeiture; and then plaintiff insists that by continuing to use water from the hydrants for fire and other purposes, defendant waived the forfeiture. We conclude the basis of this argument is unsound. Though the Avord “forfeit” is used in the ordinance and in the notice by the city to the Avater company, Avhieh folloAved the language of the ordinance, yet we conceive that a forfeiture was not intended either by the ordinance or the notice, in the sense iri which that word is used in the argument of plaintiff and in the cases cited by it. There Avas no effort by the city to forfeit the franchise of the water company, to require’it to cease doing business or to compel it to remove its mains from the streets. It, or the party succeeding to its franchises and property under the foreclosure, is still exercising all the rights and privileges given by the ordinance, and though the water it supplies is not fit for and is not used for drinking, culinaiw or domestic purposes, yet it continues to supply Avater to customers for other purposes, which produces to it, from sources other than the city, an annual income of about $7,000, which income is increasing. The city was contracting not merely, and not chiefly, for the purpose of securing a supply of water for protection against fire. It had a right to make a contract for the benefit of the inhabitants of the city; and the first íavo sections of this ordinance show that to secure a supply of pure, Avholesome water for drinking, culinary and domestic purposes, put into the homes of the inhabitants of the city Avho chose to take it and pay the prescribed rates, was one of the chief purposes which the city meant to accomplish by this ordinance. It was manifest that if, after the water company had torn up the streets and put down its mains, it should fail or refuse to furnish that quality of water, a great loss and injury would result, not, indeed, primarily to the city as a corporation, but to the citizens for whose health and comfort it was so properly legislating and contracting. Tet if the city were left to sue the water company for money damages for such a breach of contract it would be difficult, and perhaps impossible, to show what sum ought to be awarded as the damages therefor. It was accordingly provided, in effect, in the ordinance, that if the water company should fail to furnish water fit for the purposes above stated the city might give it notice, and if the water company did not within sixty days thereafter maintain such filtering processes as would make the water suitable 'for those purposes, then from and after the expiration of said sixty days and until such time as the water company did install filtering-processes which would make the water fulfill the demands of the contract, the city should be relieved from paying hydrant rentals while still using the water from the hydrants as before for fire and other prescribed purposes. This was the way the contract provided that the city should be compensated for such a breach of contract. It was no doubt the opinion of the contracting parties that the loss of hydrant rentals would be sufficient incentive to induce the water company to fulfill its contract. The parties were evidently satisfied that there were filtering processes which would render the water pure and wholesome and fit foer domestic use, and the water company undertook to supply them if they were needed, and agreed that the city should be relieved from paying the hydrant rentals during any period in which they failed to render the water pure and wholesome, after sixty days’ notice to the water company. It is worthy of note in this connection that there is no proof that the water company could not have furnished pure and wholesome water during all the time it was so in default. As we are óf opinion that the provision for withholding payment of hydrant rentals during such period of default by the company was not a forfeiture, but a provision for stipulated and liquidated damages, it follows that we consider the authorities cited upon that subject by plaintiff are not in point.

It is argued that by accepting the works when no filtering processes had been installed, the city waived the right to insist upon them, or to withhold water rentals because of a failure afterwards to install such filtering processes as would render the water pure and 'wholesome, as required by the contract. Section three of the ordinance did not provide for a preliminary test of the quality of the water, but only of the power and capacity of the water works to throw a certain number of streams to a specified height through nozzles of a certain diameter. The stipulation does not show that the city authorities then knew that the water was impure and unfit for domestic use, but the contrary is implied, and it is stipulated that the city ascertained these facts in June, 1897. As was said in Farmers Loan and Trust Company v. Galesburg, 133 U. S. 156, on page 178, “ Nor could the test required by the ordinance and satisfactorily made by the water company be a test of anything but the pressure power of the works. It could not be a test of the quantity of water which would thereafter be supplied by the works nor of its continuing quality for domestic purposes.”

Plaintiff hrgues that if defendant did not intend to pay-hydrant rentals after sixty days from its notice to the water company, it should have ceased to use the hydrants at the end of said sixty days; and that its use of the water from the hydrants after that date was an abandonment of its notice, or at least left it liable to pay at the contract rate for its subsequent use of the hydrants. What has already been said disposes of this contention. We are satisfied the ordinance did not mean that, when the city was relieved from paying hydrant rentals because of the failure of the water company to comply with its contract after sixty days’ notice, the city was prohibited from thereafter using the hydrants during the time that hydrant rentals were suspended. On the contrary we are of opinion that the contract meant that the city should use the hydrants during the period when the water company was so in default, but without paying for their use.

The notice which was served upon the superintendent of the water company was signed by the city clerk, and professes to be by virtue of an order of the city council made on July 2, 1897. Among the proceedings of the city council on July 2,- 1897, was a motion adopted by the city council that the city attorney prepare a notice to the water works company that the city would withhold, all hydrant rentals till it complied with the ordinance by furnishing pure water. It is argued that the city council only voted to have a notice prepared, and that it was obviously intended by the council that such notice should.be submitted for its future consideration; that the council did not authorize any one to serve a notice on the company, and that the notice by the city clerk was unauthorized and of no effect. This argument ignores that part of the stipulation which states that the city caused this notice to be served. That is an admission that the notice was the act of the city. That admitted fact answers the argument. It is also argued service of the notice upon the superintendent of the company was not sufficient, but, first, it should have been served upon the trustee, and second, it should have been served upon the president of the water company. There is no provision in the ordinance for notice to the trustee. Section two thereof, under which this notice was given, only contemplates notice to the water company. The stipulation is that the notice was served upon H. L. Traphagen, that he was then the superintendent of the water company, and was operating its plant at Pontiac. The notice was that unless within sixty days the water furnished by the water company was so filtered as to comply with and be fit for the uses prescribed in the franchise to the water company, hydrant rentals from the city would be forfeited. Tkismotice related to the business which the superintendent was conducting for the water company. Notice to an agent is notice to his principal, where it arises from or is at the time connected with the subject-inatter of his agency. Mullanphy Savings Bank v. Schott, 135 Ill. 655; Coryell v. Klehm, 157 Ill. 462; Germania Life Ins. Co. v. Koehler, 168 Ill. 293. But, further, there is not only no proof that the superintendent did not discharge his obvious duty of communicating this notice to his principal, but it is stipulated that in July, 1897, in pursuance of this very notice, the water company bought, erected 'and used a filtering apparatus, though it failed to purify the water. As the company installed the filtering apparatus in July, 1897, in pursuance of this notice, it follows that it did receive the notice and understood its .purport.

It is argued that section two of the ordinance only required the water company to maintain filtering processes and that the ordinance nowhere required the water company to construct them. This ignores section one, which provided that the water should be at all times “ filtered, if necessary,” which certainly imposed upon the water company the duty of providing the necessary filtering processes. Section two said: “ The water company shall at all times be required to maintain such filtering processes as shall render the water suitable for the purposes heretofore mentioned, and in case such company neglects or refuses to maintain such filtering processes after sixty days’ notice by said city, then said company shall forfeit the hydrant rental prescribed in the ordinance until such filtering processes are provided.” Those last words required that the water company should provide filtering processes. To find out what the “ purposes heretofore mentioned ” are, we turn to section one and the first part of section two. We find that section one calls for “good and wholesome water,” “ to be at all times settled, cleansed and purified, filtered, if necessary, and suitable for fire, drinking, domestic and other purposes;” and in the first part of section two, that the water shall not be subject to any sewerage pollutions from the'city drains and shall be suitable for the requirements of the city and its inhabitants. It is stipulated that the water company has not at any time maintained such filtering processes as to render the water furnished by it to the city or its citizens suitable for drinking or domestic purposes, and that such water ever since June 17, 1893, was nob suitable for drinking and domestic purposes, but was impure, unhealthy and impregnated with organic matters. This then is a clear admission that the water company has not képt its contract, but has broken it in the very’ particular which, under section two of the contract, after sixty days’ notice, authorized the city to forfeit the hydrant rentals until the required filtering processes were provided. The city gave the notice, and after the sixty days no further hydrant rentals could be collected until filtering processes were maintained which rendered the water suitable for the purposes above named.

It is argued these bondholders whom the trustee represents, and for whose exclusive benefit it is stipulated this suit is prosecuted, are innocent purchasers, not affected by the failure of the water company to perform its contract. We are of opinion that when the bondholders purchased these bonds they were charged with notice that the city was not a party to the bonds, and that the liability of the city to pay hydrant rentals depended upon a continued compliance by the water company with its contract. They were bound to ascertain the terms of the ordinance, which is the contract between the water company and the city. The bonds they bought were evidences of the indebtedness of the water company, and not of the city. The ordinance informed them the city would not be liable for hydrant rentals if the water company failed to maintain such filtering processes as would render the water suitable for fire, drinking, domestic and other purposes, for the city and its inhabitants; and that goodand wholesome water, settled, cleansed, purified, and filtered, if necessary, was demanded by the contract. The rights of these -bondholders to have the hydranr, rentals applied upon their interest was subject to the continuing compliance by the water company with the terms of the contract. The rights of the bondholders depended upon performance by the bondmakers.' The water company could not by giving bonds expose the city to a greater liability to the bondholders than it was under, to the water company. Farmers Loan & Trust Co. v. Galesburg, supra.

The court gave judgment for such hydrant rentals as had accrued prior to the service of this notice and remained unpaid, and for hydrant -rentals during the period of sixty days after the service of the notice, and interest on that sum. We are of opinion the court correctly held that hydrant rentals were not stopped by the mere failure of the company to furnish the quality of water required by the contract, but that such rentals continued to run until-sixty days after the notice was given to the water company. The provisions above quoted from section eight of the ordinance bound the city to pay legal interest on all sums due from it, and it is not claimed or shown that more than legal interest was awarded.

The judgment is therefore affirmed.

Affirmed.