When Skaneateles built its own waterworks

Skaneateles voters chose a village-owned water system after their five-year contract with a private company expired. Water commissioners issued $30,000 in village bonds and spent about $24,000 building it. The private company tried to stop them in court.

The arrangement had begun in April 1887, when the village granted the company a franchise to build and operate waterworks. According to the Supreme Court's later account, the company finished its system about 1889. Its five-year supply contract with the village began on February 1, 1891.

The contract ended on February 1, 1896 and was not renewed. The reported case says village electors then voted for municipal ownership. By the time described in the record, the new public works were substantially complete.

The company's challenge relied on its earlier franchise and contract. It argued that those agreements stood in the way of a competing village system. The federal questions reached the U.S. Supreme Court, which decided them on March 3, 1902.

The Court found no exclusive right in the franchise. It also held that the supply contract had ended after five years; it had not continued without renewal. New York law gave the village authority to build waterworks, and the earlier agreements did not prevent it from using that authority.

Nor, the Court held, was the village obliged by implication to buy or condemn the private plant first. The franchise carried no unstated promise that the village would avoid actions that reduced its value.

A competing public system could badly damage the company's business and lower the value of its property. But the Court distinguished that loss from the village taking the property itself. On the facts before it, the municipal competition was not a constitutional taking.

The dispute followed a local choice through several stages: the end of a supply contract, a public vote, borrowing and construction, and a challenge to the new works. The ruling left the village free to operate a system of its own under the authority New York had given it.

About this account

This is an account of the historical dispute and the agreements considered by the Court. It does not summarize later water disputes and is not current legal advice.

Source note

The franchise, construction date, five-year contract, municipal vote, bond issue, spending, and state-court conclusions appear on pages 354 and 356-357 of Skaneateles Water Works Company v. Skaneateles, 184 U.S. 354 (1902). The no-implied-purchase analysis appears on page 363, and the constitutional-taking discussion appears on page 367. This story paraphrases the official report and reproduces no scan, page image, typography, or extended passage.