Tampa Water Works Co. v. Tampa

Background

A private water company made a 30-year agreement with the city of Tampa to build water works and charge fixed maximum rates to customers. Years later the city adopted an ordinance setting lower maximum water rates after a 1901 state law gave cities power to fix such rates. The water company sued, saying the new ordinance impaired its contract and took its property without due process; the Florida Supreme Court dismissed the company’s bill and the case reached the United States Supreme Court.

Reasoning

The main question was whether the Florida constitution and the later statute allowed the legislature to give cities authority to set reasonable maximum water rates even when earlier local contracts existed. The majority said the state constitutional clause gave the legislature full power to prevent excessive charges for services of a public nature, and the legislature lawfully authorized cities to fix reasonable maxima. The Court accepted the Florida Supreme Court’s reasonable construction of the statute and found no clear impairment shown: the bill did not allege the new rates were unreasonable or that they destroyed the company’s property value. For these reasons the U.S. Supreme Court would not overturn the state court and affirmed the dismissal.

Real world impact

The decision leaves in place state authority to let cities set reasonable maximum water prices and makes it harder for a utility to win by claiming only that a contract’s prices were later reduced. The Court emphasized that a successful federal constitutional claim needed more than the assertion that a contract rate had been lowered.

Dissents or concurrances

Justice Brown dissented, arguing the legislature’s proviso meant valid prior contracts could not be impaired and that the Tampa ordinance unlawfully reduced contract-protected rates.