And in connection with said ordinance, on October 15, 1901, passed the following resolution:

"Be it resolved by the city council of the city of Sioux Falls:

"That a special election be held on the fifth (5) day of November, A. D. 1901, for the purpose of submitting to the legal voters of the city of Sioux Falls, South Dakota, the question whether the said city of Sioux Falls shall issue its bonds for the purpose of constructing, equipping, maintaining and operating or purchasing a system of waterworks to provide water for domestic

uses.

"Also resolved, that the amount of bonds to be issued shall be two hundred and ten thousand ($210,000) dollars to run twenty (20) years from the date of their issuance, and shall bear interest not to exceed five per cent. per annum, and the purpose for which said bonds are to be issued is to construct, equip, maintain and operate or purchase a system of waterworks to provide water for domestic uses..

"Also resolved, that the question to be submitted at said special election and the ballots to be voted at said special election shall read as follows:

"In favor of the proposition of issuing bonds to the extent of two hundred and ten thousand ($210,000) dollars for the purpose of providing water for domestic uses.'

66 6

'Against the proposition of issuing bonds to the extent of two hundred and ten thousand ($210,000) dollars for the purpose of providing water for domestic uses.'

"Also resolved, that said special election shall be conducted and the votes cast thereat shall be counted, returned and canvassed in such manner as is now provided by law in the case of regular annual elections."

And in pursuance of said resolution the notice of special election was given, which, so far as is material to the decision of this case, was as follows: "Be it resolved by the city council of the city of Sioux Falls:

"That notice is hereby given that a special election will be held on Tuesday, November 6th, A. D. 1901, for the purpose of submitting to the legal voters of the city of Sioux Falls, South Dakota, the question whether the said city of Sioux Falls shall issue its bonds to the amount of two hundred and ten thousand ($210,000) dollars to run twenty (20) years from the date of their issuance and to bear interest not to exceed five (5) per cent per annum, said bonds to be issued for the purpose of constructing, equipping, maintaining and operating or purchasing a system of waterworks to provide water for domestic

uses.

"The question to be submitted at said special election and the ballots to be voted at said special election shall be as follows:

"In favor of the proposition of issuing bonds to the extent of two hundred and ten thousand ($210,000) dollars for the purpose of providing water for domestic uses.'

"Against the proposition of issuing bonds to the extent of two hundred and ten thousand ($210,000) dollars for the purpose of providing water for domestic uses." "

In pursuance of said ordinance, resolution, and notice of special election, a special election, which it is claimed authorized the issuance of the said $210,000 of bonds mentioned in said ordinance and resolution, was held. In the summer of 1903, $210,000 of the bonds of said city were issued and sold, and the city has received the sum of $182,300 as the proceeds of said bonds, and has expended in the construction of the proposed water plant for itself about the sum of $150,000. That the assessed valuation of property subject to taxation in the city of Sioux Falls for the year 1901 was $2,510,671, for the year 1902 $2,739,598, and for the year 1903 $3,481,988. That the indebtedness of the city of Sioux Falls in the year 1903 and at the time the said $210,000 of bonds were issued by said city was $391,000. That the indebtedness of the city of Sioux Falls in the year 1903 and at the time the bonds hereinbefore referred to were issued, based upon the assessed value of the property of said city for the year 1903, was between 14 and 15 per cent. That the addition to said indebtedness of the sum of $210,000 would make the indebtedness of the city of Sioux Falls, figuring on the same assessed valuation, over 21 per cent.

Davis, Lyon & Gates, for complainant Farmers' Loan & Trust Co. Bartlett Tripp (Bailey & Voorhees, of counsel), for cross-complainant South Dakota Water Co.

H. H. Keith (R. H. Warren, of counsel), for defendants.

Before SANBORN, Circuit Judge, and CARLAND, District Judge.

CARLAND, District Judge, after stating the case as above, delivered the opinion of the court.

In this opinion the Farmers' Loan & Trust Company will be called "complainant," the South Dakota Water Company "water company," and the city of Sioux Falls "the city."

Upon this record the complainant and the water company insist that the city must be enjoined from proceeding further in the construction and operation of a system of waterworks of its own for supplying itself and the citizens of said city with water for public and domestic uses in competition with the defendant water company, the complainant and defendant water company claiming that the construction and operation by the city of a system of waterworks, to be supported by taxation, would absolutely ruin the plant and revenues of the water company, in which the complainant and the water company are interested, the water company as owner and the complainant as trustee for the holders of bonds issued under the trust deed executed to it by the water company upon the property, franchises, rentals, and income of the water company. The evidence conclusively established that the construction and operation of a system of waterworks by the city will inflict grave, nay, irreparable, injury upon the complainant and upon the water company. It will institute a ruinous competition between their business and that of the city, and will impose a tax upon their property, so that the security of the complainant and the value of the property of the water company will be practically destroyed. The complainant and the water company are therefore entitled to the relief which they seek, unless the city has the right, under the Constitution and the statutes of the state, to inflict this serious damage. Every one has a right to the fruits and advantages of his property, skill, and industry, and to its protection against every injury not justified by the law. Damages inflicted by authority of law are, indeed, a part of that great mass of wrongs termed "damnum absque injuria," for which neither law nor equity furnishes a remedy. But damages inflicted without the authority or in violation of the law are never remediless. The threatened injury in the case at bar is not debatable. The only question is whether or not its infliction is justified by the law. The complainant and the water company insist that it is without justification, (1) because the city is not authorized to inflict, but is prohibited from inflicting, it, by the Constitution and the statutes of the state of South Dakota, which forbid it to construct and maintain its waterworks; and (2) because it agreed by the contract of April 9, 1884, that it would not do so, and that Kuhn and his associates should have the exclusive privilege of constructing and maintaining such

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works in the city of Sioux Falls. If either of these propositions is tenable, the complainant and the water company are manifestly entitled to an injunction. In the discussion of these propositions the right of the water company and of the complainant to a perpetual injunction by virtue of the contract will first be considered. În the discussion of this right the assumption will be indulged that under the constitution and laws of the state the city is authorized to construct and maintain its own waterworks, and the question presented by that proposition will be later considered. All that is said in the consideration and determination of the question whether the contract entitles to relief is based upon this assumption.

In the view of this case which the court has been compelled to adopt, it is unnecessary to consider or decide whether or not the privilege to lay and operate the water mains granted to Kuhn and his assigns continued after the expiration of the 20 years specified in the contract, because the city has neither taken nor threatened any action inconsistent with this continuance. When, if ever, it attempts to prevent the exercise of this privilege, it will be time enough to consider its duration. The material question which the contract now presents is whether the grant of the "exclusive privilege" contained in it estops the city, if otherwise lawfully authorized to do so, from constructing, completing, and maintaining its own waterworks. It is conceded by counsel for the complainant and the water company that the word "exclusive" in the contract between the city and Kuhn, if construed to exclude every person perpetually, would be void as against public policy; but that the word "exclusive" must be construed as having the effect of an agreement on the part of the city not to construct and maintain a system of waterworks in the city of Sioux Falls in competition with the water company. As bearing upon the complainant's and water company's claim based upon or arising out of the contract of April 9, 1884, we believe that the following propositions are sound:

First. The city of Sioux Falls, on April 9, 1884, had no power to grant to W. S. Kuhn a perpetual exclusive franchise or privilege for laying water pipes for public use beneath the surface of the highways of said city. Authorities in support of this proposition need not be cited, as counsel for complainant and the water company, at the argument, conceded its correctness.

Second. On April 9, 1884, the city of Sioux Falls had the power to grant the privilege to W. S. Kuhn to lay water pipes for public use beneath the surface of the highways of said city for a reasonable time. This proposition needs no discussion in view of the fact that for 20 years the city and the water company have performed their several obligations under the contract referred to.

Third. The city had the power by an express contract to renounce. its authority to construct and maintain waterworks itself during the time which it would be proper and lawful to grant the privilege to a third party. Walla Walla City v. Walla Walla Water Co., 172 U. S. 1, 19 Sup. Ct. 77, 43 L. Ed. 341.

Fourth. The grant of the privilege by the city to W. S. Kuhn to lay water pipes beneath the surface of the highways of said city for

public use did not imply that the city would not itself construct and maintain a rival waterworks system. Skaneateles Waterworks Co. v. Skaneateles, 184 U. S. 354, 22 Sup. Ct. 400, 46 L. Ed. 585; City of. Joplin v. S. W. Missouri Light Co., 191 U. S. 150, 24 Sup. Ct. 43, 48 L. Ed. 127.

Fifth. The word "exclusive" in the contract between the city and W. S. Kuhn is insufficient to raise the implication that the city, by the use of said word, thereby agreed to renounce its power to construct waterworks itself, because (1) such is not the ordinary meaning of the word; (2) because it is conceded that under the law the word "exclusive," if given its usual interpretation, would render the exclusive feature of the contract void; (3) because the express provision of the contract of the city to take water for a term of 20 years raises the contrary implication that, after the expiration of that 20 years, both parties intended that the city should be free to exercise its power to construct and maintain waterworks, or to obtain its water in any other lawful way.

Sixth. As the city is not bound by the contract to refrain from exercising its powers to construct and maintain waterworks, and as the terms of its contract with the complainant and the water company were that it should cease to have effect on April 9, 1904, its subsequent construction and operation of waterworks for its own benefit and that of its citizens would not be a violation of any of the express or implied terms of this contract, and would not entitle the complainant or the water company to any relief, if, under the Constitution and the statutes, the city had the lawful right to construct and operate them. If the city had lawful authority to build and operate rival works, neither the destructive competition nor the depreciation of the value of the property of the complainant and the water company would entitle them to any relief, because the infliction of this loss would not violate any legal or moral duty of the city, would not break or impair the obligation of any of its contracts, and would not take away any private property without compensation, within the meaning of the Constitution and the law. Irreparable injury alone furnishes no ground for equitable interposition. Damage inflicted. by lawful competition is damnum absque injuria, and remediless. Skaneateles Waterworks Co. v. Skaneateles, 184 U. S. 354-367, 22 Sup. Ct. 400, 46 L. Ed. 585; Lehigh Water Co. v, Easton, 121 U. S. 388-390,7 Sup. Ct. 916, 30 L. Ed. 1059.

The general doctrine that no legal damage arises from the lawful pursuit of another's rights and duties is well stated by the Supreme Court of Massachusetts in the case of Walker v. Cronin, 107 Mass. 555, where, at page 564, the following language is used:

"Every one has the right to enjoy the fruits and advantages of his own enterprise, industry, skill, and credit. He has no right to be protected against competition, but he has a right to be free from malicious and wanton interference, disturbance, or annoyance. If disturbance or loss come as a result of competition, or the exercise of like rights by others, it is damnum absque injuria, unless some superior right by contract or otherwise is interfered with. But if it come from the merely wanton or malicious acts of others, without the justification of competition or the service of any interest or lawful purpose,

it then stands upon a different footing, and falls within the principle of the authorities first referred to."

See, also, Passaic Print Works v. Ely & Walker D. C. Co., 105 Fed. 165, 44 C. C. A. 426, 62 L. R. A. 673.

It is said that the complainant and the water company have invested more than $430,000 in their plant in the faith that the city would. not construct and operate rival works. If this municipality is without authority, or if it was forbidden, to build and maintain a rival plant by the Constitution or by the statutes of the state, that fact raises a persuasive-a controlling-equity, which entitles the complainant and the water company to relief, because they had the right to invest their money and to establish their business in the faith that the city would not be permitted to violate the Constitution or the law to destroy their property or their business. But if the city was lawfully authorized to construct and operate a rival plant, there is nothing in the contract or in the investment to forbid it. The thought that underlies the suggestion under consideration is that the city is equitably estopped by its acquiescence in the construction and operation of the plant of the water company and by its silence from building and maintaining rival works. But if the city has lawful authority to build and operate a rival plant, the case lacks two essential elements of an estoppel-ignorance of the complainant and of the water company, and deceit or fraudulent concealment by the city. Neither of these is to be found in this case. All the parties to this controversy knew that at the end of the 20 years the contract would no longer bind the city not to build and operate its own waterworks, because it plainly so declared. The city never made any concession or representation to the contrary. If the city had lawful authority to build and maintain its own works, the damage from prospective competition and taxation was irremediable.

It is argued that an injunction should be issued because the city is about to levy and collect a tax upon the property of the complainant and the water company for the purpose of constructing and maintaining its own works. But this contention is conditioned by the same considerations which have already been expressed. If the construction of the new works and the threatened taxation to build and maintain them is in violation of the Constitution and of the law, it is wrongful. It inflicts irreparable injury, and it presents an unanswerable ground for an injunction to forbid it. But if the city has lawful power to construct and maintain its own plant, it has the right to tax the property of the complainant and of the water company within its limits to pay for this construction and maintenance. The contract contains no express or implied agreement to the contrary.

We have been cited to the case of White v. City of Meadville, 177 . Pa. 613, 35 Atl. 695, 34 L. R. A. 567, in support of the argument that a taxpayer may sustain a bill upon a contract similar to that here under consideration to enjoin a city from constructing a rival plant, although it has lawful power to do so under the Constitution and the law. After an examination, however, of the decisions of the Supreme Court, so far as that court has had occasion to intimate its