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CHAPTER I

INTRODUCTION

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ONE of the most marked characteristics of American as of European civilization is the great development of urban life. This development has been not only extensive but intensive. Cities have increased not only in number but also in size, and not only are the problems incident to urban life becoming of interest to greater and still greater numbers of persons but the solution of these problems is at the same time becoming more difficult and more necessary.

One of the methods of solving these problems is the extension of the sphere of municipal activity. At one time our conception of a city, similar to our conception of the government as a whole, was that it was an organization which should preserve order and, within the limits of the law which it was its duty to enforce, permit the greatest possible freedom of action to the individual, from whose initiative and energetic activity it was believed that the community as a whole would derive the utmost advantage.

It was found, however, that unregulated or insufficiently regulated individual activity was followed in the life of our urban communities by such evils that it became necessary to have greater and greater recourse to the repressive activity of municipal as well as state governmental organs. Such repressive activity was believed at first in many instances to be inconsistent with the guarantees of individual rights contained in our constitutions. But our courts, to which appeal was had by those who thought that their constitutional rights were being violated through the increase in the activity of our governments, decided that all in7]

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dividuals held their rights subject to the regulatory power of the state. They elaborated what was called the police power through the exercise of which the community could, 'notwithstanding constitutional provision, protect itself against the undue emphasis by the individual on what he regarded as his constitutional rights.

Of late years, however, it has come to be believed by many that a due consideration for the rights of the community and the proper promotion of the public welfare are not secured through the mere repressive action of our governments and that on the contrary the only way in which the greatest advantage to the public as a whole can be secured is through the positive action of our governmental agencies by offering greater opportunities to the masses to better both their physical and their spiritual conditions.

Inasmuch as the problems of our modern civilization become more acute in the most complex conditions which exist and which are to be found in our cities, this demand for the extension of governmental activity has naturally assumed the form of a demand for the municipal ownership and operation of what have come to be known as municipal public utilities.

But just as when the demand was made for the extension of the repressive activity of government, it was alleged that such action was prohibited by our constitutional provisions protecting private rights, so now it is claimed that the system of municipal government outlined in our constitutions and in our law of municipal corporations is of a distinctly governmental character, as it is sometimes called, and does not permit the city as we know it to enter into the field of what is denominated as private business. The city in our system, it has been said, is organized for government and not for profit. Its activity should therefore be confined to those purposes which, be

cause their pursuit is unprofitable, will not be undertaken by private effort; and profitable undertakings must be left to such private effort which will both undertake all that is necessary and do what is done better than the city can be expected to do it.

It is to answer the legal questions raised by such a claim that the following inquiry is undertaken. In order to accomplish the purpose, which has thus been outlined, the attempt has been made to ascertain both the nature of the city organization as expressed in the law and the construction placed by the courts on the powers given to cities; to discover what are the limitations on municipal activity which are contained in our constitutions, as construed by the courts, and how far the judicial construction of the law with regard to the taxation and sale of the property of cities aids or hampers the cities in the discharge of the new duties which they may be called upon to assume; and finally to ascertain what are the powers of control possessed by cities over the operation by private individuals of those public utilities which it is deemed wise to leave in private hands.

While it is not intended to anticipate here the results of this inquiry, it may not perhaps be amiss to say that the courts have again shown themselves to be regardful of the necessity of changing our conceptions of what is the proper sphere of governmental activity when the change in our economic and social conditions has seemed to make such a change necessary. As in the past they developed the idea of a repressive police power whose exercise was not inconsistent with constitutional private rights, so now they have elaborated the doctrine of implied powers through whose application the cities may be recognized as possessing powers which at one time would probably not have been regarded as theirs.

CHAPTER II

THE Two CAPACITIES OF MUNICIPAL CORPORATIONS

MUNICIPAL corporations, like all others, are creatures of statutory origin and possess only the powers granted to them by the legislature. These powers consist of those granted in express words; those necessarily or fairly implied in or incident to the powers expressly granted; and those essential to the declared objects and purposes of the corporation—not simply convenient, but indispensable.

The powers with which municipal corporations are thus endowed are of two main classes and bring it about that municipal corporations act in two distinct capacities. The one is governmental, legislative or public; the other is proprietary and essentially business or commercial.

As an agent of the state which creates it the municipality administers justice, attends to the preservation of the public peace, and performs other duties, essentially public and governmental.? On the other hand, in the enforcement of many of its own by-laws, in the erection and operation of gas works, electric-light plants, and waterworks and in attending to matters of local interest merely the corporation acts as a business concern.3

Over all the public or governmental powers exercised 1 Dillon, Municipal Corporations, sec. 89 and cases cited.

2 Springfield Fire & Marine Ins. Co. vs. Keeseville, 148 N. Y., 46; Illinois Trust & Savings Bank vs. Arkansas City, 76 Fed., 271.

3. City of Henderson vs. Young, 83 S. W., 583; Port Jervis Water Co. vs. Port Jervis, 151 N. Y., III; The City of Indianapolis vs. The Indianapolis Gas, etc., Co., 66 Ind., 396; Blood vs. Electric Co., 68 N. H., 340.

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