City and County of Denver v. New York Trust Co.

Background

A New York trust company, acting as mortgage trustee, sued the City and County of Denver and a private Denver water company after a long-running dispute over a franchise granted in 1890. That older ordinance recognized the company’s pipes and set out two options for the city at the end of twenty years: to buy the plant or to renew the contract. In 1907 the city ordered an appraisal and planned a combined vote on purchase or renewal but the plan stalled. In 1910 the city adopted a charter amendment creating a utilities commission, proposing bonds, and offering $7,000,000 to buy the plant or else building a municipal plant.

Reasoning

The Court addressed whether the 1890 ordinance imposed a binding duty on the city to buy or renew, and whether the later 1907 ordinance or 1910 charter amendment amounted to an election to buy. The Court found §§11 and 12 of the 1890 ordinance gave the city mere options — privileges it could exercise or decline — and did not create an obligation to purchase. The 1907 appraisement failed to produce the joint proposal required for a vote, and the 1910 amendment implemented an independent municipal plan rather than exercising the old purchase option. The Court also rejected constitutional attacks on the charter amendment, finding no unlawful deprivation of property or forbidden discrimination.

Real world impact

Because no contractual duty to sell was shown, the trust company cannot force the city to buy the plant and the water company cannot compel a renewed franchise. The Court reversed the injunctions and dismissed both suits, leaving Denver free to pursue municipal ownership steps while the private company can accept or reject the city’s offer.