This section is from the book "Popular Law Library Vol8 Partnership, Private Corporations, Public Corporations", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
Section 40. Municipal corporations are of a double or twofold character, one public as agents of the State in governmental matters, and the other private, in respect to the management and control of their own local affairs and concerns. The State has made the municipal corporation, in its governmental character, a local repository of certain limited and prescribed political powers to be exercised for the public good of the State, and in its private or proprietary capacity, it is endowed with certain functions and powers for the benefit of its own citizens, and which are separate and distinct from such that it possesses as an agency of the State government. The rights and liabilities of a municipality in its private capacity are governed by the same rules, which control those of private corporations or individuals. "A municipal corporation which supplies its inhabitants with gas or water does so in its capacity of a private corporation, and not in the exercise of its powers of local sovereignty. If this power is granted to a borough or city, it is a special private franchise, made as well for the private emolument and advantage of the city as for the public good. In separating the two powers - public and private - regard must be had to the object of the legislature in conferring them. If granted for public purposes exclusively, they belong to the corporate body in its public, political or municipal character; but if the grant was for purposes of private advantages and emolument, though the public may derive a common benefit therefrom, the corporation quo ad hoc is to be regarded as a private company. It stands upon the same footing as would any individual or body of persons, upon whom the like special franchises had been conferred." 2