City of Omaha v. Omaha Water Co.

Headnotes

1. Arbitration & Dispute Resolution — Unanimity Requirement — Public vs. Private Matters The award of arbitrators or appraisers must be unanimous in matters of private concern unless the submission provides otherwise, but a majority may act where the matter submitted concerns the public, the probable basis for the distinction being that public affairs are controlled by majorities. 218 U.S. at 191
2. Municipal Law — Acquisition of Waterworks — Public Concern A municipality's purchase of a water supply system under the authority and direction of the state legislature, and the determination of the price to be paid for an existing plant, are matters of public concern; accordingly, an appraisement fixing that price is not defeated because one of the three appraisers refused to concur in the valuation. 218 U.S. at 191–192
3. Arbitration & Dispute Resolution — Appraisement Distinguished from Arbitration An arbitration implies an existing dispute or difference and carries with it the implied rights to notice, to produce evidence, and to cross-examine, whereas an appraisement is a valuation fixed by persons agreed upon where the parties have agreed that one shall sell and the other buy a specific thing, and such an arrangement precludes or prevents a difference rather than settling one that has arisen. 218 U.S. at 192–194
4. Civil Procedure — Appraisers — Examination of Books Ex Parte Where a valuation is an appraisement rather than a technical arbitration, the strict rules governing arbitration and awards do not apply, and appraisers are not rigidly confined to matters within their own knowledge or formally submitted in the presence of the parties, but may inform themselves from other sources as experts who must act upon their own judgment; in the absence of evidence of actual bad faith, an appraisers' confidential examination of the company's books without the presence of the municipality does not vitiate the valuation. 218 U.S. at 195–198
5. Municipal Law — Power to Purchase Waterworks Extending Beyond City Limits A state legislature may authorize a municipality to purchase an existing waterworks system extending beyond the city limits and to supply water to adjacent sections, and a municipality may acquire such a system as a unitary plant where the operative legislation, read in light of the surrounding conditions, confers that power. 218 U.S. at 198–200
6. Contracts Law — Interpretation There is a presumption against an intent to dismember a complete waterworks system having a common source of supply and common main connections; an ordinance to purchase such a system will not be construed as requiring dismemberment unless the limitation to property within the corporate limits is so plain as to admit of no other meaning, even if the city lacked power to use certain portions of the system. 218 U.S. at 200–202
7. Energy & Utilities Law — Valuation — "Going Value" Where the parties contemplate the purchase of a complete water system in operation, a reasonable amount should be included in the appraised valuation for the "going value" of the plant as a going concern over and above the cost of duplicating its physical properties less depreciation, and this is so even though the value of the unexpired franchise is expressly excluded from the appraisal; such going-concern value is independent of any franchise to continue operating or any mere good will, which is of little or no commercial value where the business is a natural monopoly. 218 U.S. at 202
8. Remedies — Specific Performance A transaction of great magnitude such as a city's purchase of a water supply system will not be defeated by minor obstacles; where title to a few properties is imperfect or the properties are encumbered, a court of equity may bring the necessary parties before it, modify the deed, and protect outstanding interests so as to carry the transaction into effect rather than defeat it. 218 U.S. at 203–204