Owensboro v. Owensboro Water Works Co. of Owensboro

Background

A private company called the Owensboro Water Works Company bought an existing water plant in Owensboro, Kentucky, after an 1878 city ordinance had granted water privileges for twenty-five years to an earlier company. In 1889 the city passed a new ordinance granting the water works franchise to the buyer “for and during the existence of the said corporation.” The company later amended its charter in 1914 to extend its corporate existence another twenty-five years, and the city then claimed the franchise had expired and took steps to interfere with the plant’s operation.

Reasoning

The Court addressed whether the 1889 ordinance gave the company a franchise coextensive with its corporate life and whether the 1914 charter amendment left any one-day gap that would void the extension. The majority read the 1889 ordinance as directly granting the franchise for the company’s existence, found nothing in the ordinance limiting the grant to the earlier twenty-five-year term, and concluded the 1914 amendment effectively extended corporate existence without a disabling hiatus. The Court also explained that separate hydrant-rental contracts made under the 1878 grant expired in 1903 and should not be confused with the 1889 franchise.

Real world impact

The ruling lets the Owensboro Water Works Company continue to maintain and operate the city water plant and use public streets under its franchise, and it prevents the city from enforcing ordinances that would cut off that franchise. The decree affirmed the lower court’s order prohibiting the city from obstructing the company’s operation.

Dissents or concurrances

Three Justices dissented or partly dissented, arguing the grant should be strictly construed as a twenty-five-year franchise and that the parties’ own conduct indicated they understood it to expire in 1914.