[350] choose a fifth person, and he shall become a Sec. 2. The right to collect rates or compenmember of said board; if the four commission-sation for the use of water supplied to any coun ty, city and county, or town, or the inhabitants thereof, is a franchise and cannot be exercised except by authority of and in the manner prescribed by law." ers cannot agree upon a fifth, then the sheriff of rates to be charged by the Company for water, In 1879 the people of California adopted a The general question involved in this case is whether water companies in California, formed under the Act of 1858 before the adoption of the Constitution of 1879, have a right, which the State is prohibited by the Constitution of the United States from impairing or taking away, to charge their customers such prices for water as may from time to time be fixed by a commission made up of two persons selected by the company, two by the public authorities of the locality and, if need be, a fifth selected by the other four, or by the sheriff of the county. The Spring Valley Company claims no rights of this character that may not also be claimed by every other company formed under the same Act. That the companies must sell at reasonable pute is as to the power of the State, under the Water and Water Rights. Section 1. The uses of all water now appropriated or that may hereafter be appropriated, for sale, rental or distribution, is hereby declared to be a public use, and subject to the reg-pany and the public, is not denied. The disulation and control of the State, in the manner to be prescribed by law; Provided, That the rates or compensation to be collected by any person, company or corporation in this State for the use of water supplied to any city and county, or city or town, or the inhabitants thereof, shall be fixed, annually, by the Board of Supervisors, or city and county, or city or town council, or other governing body of such city and county, or city or town, by ordinance or otherwise, in the manner that other ordinances or legislative Acts or resolutions are passed by such body, and shall continue in force for one year and no longer. Such ordinances or resolutions shall be passed in the month of February of each year, and take effect on the first day of July thereafter. Any board or body failing to pass the necessary ordinances or resolutions fixing water rates, where necessary, within such time, shall be subject to peremptory process to compel action at the suit of any party interested, and shall be liable to such further processes and penalties as the Legislature may prescribe. Any person, company or corporation collecting water rates in any city and county, or city or town [351] in this State, otherwise than as so established, shall forfeit the franchises and water works of such person, company or corporation to the city and county, or city or town where the same are collected, for the public use. The Spring Valley Company is an artificial being created by or under the authority of the Legislature of California. The people of the State, when they first established their government, provided in express terms that corporations, other than for municipal purposes, should not be formed except under general laws, subject at all times to alteration or repeal. The reservation of power to alter or repeal the charters [352] of corporations was not new, for almost imme- | Board of the municipality, and they are to act diately after the judgment of this court in the in their official capacity as such a Board when Dartmouth College Case, 4 Wheat., 518, the performing the duty which has been imposed States, many of them, in granting charters acted upon them. Their general duty is, within the on the suggestion of Mr. Justice Story in his con- limit of their powers, to adminster the local curring opinion (p. 712) and inserted provisions government and, in so doing, to provide that by which such authority was expressly retained. all shall so conduct themselves and so use their Even before this decision, it was intimated by own property, as not unnecessarily to injure the Supreme Judicial Court of Massachusetts in others. They are elected by the people for that Wales v. Stetson, 2 Mass., 143, that such a reser- purpose, and whatever is within the just scope vation would save to the State its power of con- of the purpose may properly be intrusted to trol. In California, the Constitution put this them at the discretion of the Legislature. That reservation into every charter, and consequent- it is within the power of the government to regly this Company was from the moment of its ulate the prices at which water shall be sold by creation subject to the legislative power of alter- one who enjoys a virtual monopoly of the sale, ation and, if deemed expedient, of absolute ex- we do not doubt. That question is settled by tinguishment as a corporate body. what was decided on full consideration in Munn Water for domestic uses was difficult to be v. Ill., 94 U. S., 113 [XXIV., 77]. As was got in some parts of the State. Large amounts said in that case, such regulations do not de[353] of money were needed to secure a sufficient sup- prive a person of his property without due proc ply for the inhabitants in many localities, and ess of law. What may be done if the municas a means of combining capital for such pur-ipal authorities do not exercise an honest judgposes the Act of 1858 was passed. Other stat- ment, or if they fix upon a price which is manutes had been enacted before to effect the same ifestly unreasonable, need not now be considobject, but it is said they were not such as a com- ered, for that proposition is not presented by this pany with capital enough to supply San Fran- record. The objection here is not to any imcisco was willing to accept. The Act of 1858 proper prices fixed by the officers, but to their was thought sufficiently favorable, and the power to fix prices at all. By the Constitution Spring Valley Company, after organizing under and the legislation under it, the municipal auit, expended a large amount of money to pro- thorities have been created a special tribunal to vide the means of supplying the territory on determine what, as between the public and Comwhich San Francisco is built, and make it pos- pany shall be deemed a reasonable price dursible to support a great population there. All ing a certain limited period. Like every other this was done in the face of the limitations of tribunal established by the Legislature for such the Constitution on the power of the Legislature a purpose, their duties are judicial in their to create a private corporation and put it beyond nature, and they are bound in morals and in the reach of legislative control, not only as to its law to exercise an honest judgment as to all matcontinued existence, but as to its privileges and ters submitted for their official determination. franchises. One of the obligations the Compa- It is not to be presumed that they will act otherny assumed was to sell water at reasonable wise than according to this rule. And here prices, and the law provided for a special com- again it is to be kept in mind that the question mission to determine what should be deemed before us is not as to the penalties to be inflicted reasonable both by the consumers and the Com- on the Company for a failure to sell at the prices pany, but there is nowhere to be found any evi- fixed, but as to the power to fix the price; not dence of even a willingness to contract away the whether the Company shall forfeit its property power of the Legislature to prescribe another and franchises to the city and county if it fails mode of settling the same question if it should to meet the requirements of the Constitution, be considered desirable. In the Sinking Fund but whether the prices it shall charge may be esCases, 99 U. S., 721 [XXV., 502], it was said tablished in the way provided for in that instru. [355] that whatever rules for the government of the ment. It will be time enough to consider the affairs of a corporation might have been put into consequences of the omissions of the Company the charter when granted could afterwards be when a case involving such questions shall be established by the Legislature under its reserved presented. power of amendment. Long before the Constitution of 1879 was adopted in California, statutes had been passed in many of the States requiring water companies, gas companies and other companies of like character, to supply their customers at prices to be fixed by the municipal authorities of the locality; and, as an independent proposition, we see no reason why such a regulation is not within the scope of legislative power, unless prohibited by constitutional limitations or valid contract obligations. Whether expedient or not is a question for the Legislature, not the courts. It is said, however, that appointing municipal officers to fix prices between the seller and the buyers is, in effect, appointing the buyers themselves, since the buyers elect the offi[354 cers, and that this is a violation of the principle that no man shall be a judge in his own case. But the officers here selected are the governing But it is argued that as the laws in force before 1858, for the formation of water companies, which provided for fixing the rates by the municipal authorities, were not accepted by the Spring Valley Company, and that of 1858, without such a provision, was, it is to be inferred that the State contracted with this Company not to subject it to the judgment of such authorities in a matter so vital to its interests. If the question were one of construction only, this argument might have force, but the dispute now is as to legislative power, not legislative action. The Constitution of California, adopted in 1849, prohibited one Legislature from bargaining away the power of succeeding Legislatures to control the administration of the affairs of a private corporation formed under the laws of the State. Of this legislative disability, the Spring Valley Company had notice, when it accepted the privileges of the Act of 1858, and it must be By a general law of California, passed April 14, 1853, provision was made for the formation of corporations for manufacturing, mining, mechanical and chemical purposes, or for the purpose of engaging in any species of trade or com merce, 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 fifty 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 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. presumed to have built its works and expended endeavor to show that this doctrine is unsound, Its moneys in the hope that neither a succeeding believing that in this case and in all others where Legislature, nor the people in their collective it is asserted it will work injustice. capacity when framing a Constitution, would ever deem it expedient to return to the old mode of fixing rates, rather than on any want of power to do so, if found desirable. The question here is not between the buyer and the seller as to prices, but between the State and one of its corporations as to what corporate privileges have been granted. The power to amend corporate charters is no doubt one that bad men may abuse, but when the amendments are within the scope of the power, the courts cannot interfere with the discretion of the Legislatures that have been invested with authority to make them. The organization of the Spring Valley Company was not a business arrangement between the State and the Company as contracting parties, but the creation of a new corporation to do business within the State and to be governed as natural persons or other corporations were or might be. Neither are the chartered rights acquired by the Company under the law to be [356] looked upon as contracts with the City and County of San Francisco. The Corporation was created by the State. All its powers came from the State and none from the city or county. As a Corporation it can contract with the city and county in any way allowed by law, but its pow-upon filing such certificate, the persons signing ers and obligations, except those which grow out of contracts lawfully made, depend alone on the statute under which it was organized, and such alterations and amendments thereof as may, from time to time, be made by proper authority. The provision for fixing rates cannot be separated from the remainder of the statute by calling it a contract. It was a condition attached to the franchises conferred on any corporation formed under the statute and indissolubly connected with the reserved power of alteration and repeal. [357] Under this Act, and an amendatory Act of Mr. Justice Field, dissenting: I am not able to concur with the court in its meaning of those Acts. Heyneman v. Blake, [359] with a proviso, however, that all reservoirs, reservoirs, into which the water was collected 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 twenty miles from the city, there is a natural ravine lying 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 eighteen thousand acres, and erected in it heavy walls at long distances apart, thus making great other great necessity, free of charge. This pro- the water as required, it should receive this com- | between the State and the Company, within the It would be difficult to conceive of a tribunal, 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 complete 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 The only contention in the case is, whether the That the provision of the Law of 1858, mak- [363] 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 authori- [364] ties 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 |