If it appear in a case, brought here in error from a state
court, that the decision of the state court was made upon rules of
general jurisprudence, or that the case was disposed of there on
other grounds broad enough in themselves to sustain the judgment
without considering the federal question, and that such question
was not necessarily involved, the jurisdiction of this Court will
not attach.
Before this Court can be asked to determine whether a statute
has impaired the obligation of a contract, it must be made to
appear that there was a legal contract subject to impairment, and
some ground to believe that it has been impaired.
In order to constitute a violation of the constitutional
provision against depriving a person of his own property without
due process of law, it should appear that such person has a
property in the particular thing of which he is alleged to have
been deprived.
The contract between the City of New Orleans and the Waterworks
Company which forms the basis of these proceedings was void as
being
ultra vires, and, having been repudiated by the
city, cannot now be set up by it as impaired by subsequent state
legislation.
A municipal corporation, being a mere agent of the state, stands
in its governmental or public character in no contract relation
with its sovereign at whose pleasure its charter may be amended,
changed or revoked without the impairment of any constitutional
obligation; but such a corporation, in respect of its private or
proprietary rights and interests, may be entitled to constitutional
protection.
There was no contract between the city and the Waterworks
Company, which was protected against state legislation by the
Constitution of the United States.
The repeal of a statute providing that a municipal government
may set off the taxes of a water company against the company's
rates for water, and the substitution of a different scheme of
payment in its place, does not deprive the municipality of its
property without due process of law in the sense in which the word
"property" is used in the Constitution of the United States.
Page 142 U. S. 80
The Court stated the case as follows:
This was a motion to dismiss the writs of error in these cases
upon the ground that no federal question was involved. The suit was
originally begun by the filing of a petition in the Civil District
Court for the Parish of Orleans by Edward Conery, Jr., and about
forty others, resident taxpayers of the City of New Orleans,
against the New Orleans Waterworks Company and the city to enjoin
the city from making any appropriations or drawing any warrants in
favor of the Waterworks Company under a certain contract set forth
in the bill.
The petition set forth in substance:
1. That the legislature in 1877 incorporated the New Orleans
Waterworks Company for the purpose of furnishing the inhabitants of
the city with an adequate supply of pure water, granting it the
exclusive privilege of furnishing water to the city and its
inhabitants, by means of pipes and conduits, for fifty years from
the passage of the act; that the eleventh section of the act
provided that the city should be allowed to use all water for
municipal purposes free of charge, and in consideration thereof the
franchises and property of the company should be exempt from
taxation, municipal, state, or parochial; that in 1878, the act was
amended in such manner as to make the company liable to state
taxes, and that the act was accepted by the city, by the Waterworks
Company, and by all others interested, and the property purchased
by the city from the Commercial Bank was transferred to the
corporation.
2. That at the time the company was incorporated, it was known
by every intelligent person in the state that the legislature had
no power to exempt property from taxation except such as was used
for church, school, or charitable purposes; that for several years,
the Waterworks Company supplied the city with water and the city
demanded of the company no taxes; that in the year 1881, the city
brought suit against the company for the sum of $11,484.87, taxes
assessed upon its property for that year; that the Waterworks
Company reconvened in that suit and demanded payment for the
water
Page 142 U. S. 81
it had furnished; that in the civil district court, where the
case was tried, judgment was rendered in favor of the city for the
taxes, and also in favor of the company against the city for the
value of the water supply of that year -- namely, $40,281.87; that
the city appealed, and in the supreme court the judgment in favor
of the city was affirmed, but the judgment in favor of the company
was reduced to $11,484.87, the exact amount of the taxes for that
year, and that the supreme court decided that, under the act of
1877, the company had no right to recover from the city any sum for
the water supply greater than the city taxes for that year.
3. That the company in 1884 procured an act of the legislature
providing that the city should be required to pay the company the
value of all the water it had supplied or should supply during any
year for which taxes had been levied for municipal purposes; that
unless the city should provide and appropriate a sum sufficient for
this purpose, the company should not be compelled to deliver water
to it; that the taxes imposed should not be exacted until the city
should have provided for the payment of the water supply for the
same year, and that the city should be empowered to contract with
the company and determine upon the terms and conditions, and fix a
price for obtaining from said company such supply of clear or
filtered water.
4. That, acting under this statute, the city council, in
September, 1884, passed an ordinance, No. 909, authorizing the
mayor to enter into a contract with the company, and in pursuance
thereof the mayor did enter into such contract, binding the city,
during the whole of the remainder of the charter of the company, to
pay it the sum of $60 for every fire plug, fire hydrant, and fire
well connected with the mains or pipes of the company, "of which
there are now 1,139, and which number shall ever be the least
measure of the annual sum to be paid said company," and to pay $60
each for every additional hydrant, etc. This contract was executed
October 3, 1884.
5. That said ordinance No. 909 and said contract were not
authorized by the act of 1884; that the legislature did not
Page 142 U. S. 82
contemplate that the contract relations between the city and the
company, as set forth in its charter and interpreted by the supreme
court, should be in any manner changed except for the purpose of
enabling the company to furnish clear and filtered water to the
city; that the only proper interpretation of said act was that the
city, before it demanded the taxes from the Waterworks Company,
should provide in its budget for the payment of the amount due to
the company under its charter as interpreted by the supreme court
for the water furnished in that year by the company, and that the
value of the water mentioned did not mean new value to be fixed by
contract between the company and the city, but the value as fixed
in the charter of the company, which was binding upon both parties;
that if the act did contemplate a new and different contract
stipulating what the value of the water was, it was
unconstitutional, null, and void in that first, it violated that
provision of the state constitution which declares that "the
General Assembly shall not pass any local or special law creating
corporations, or amending, renewing, extending, or explaining the
charter thereof;" second, that it violated article 57, which
declares that
"the General Assembly shall have no power to release or
extinguish, or to authorize the releasing or extinguishing, in
whole or in part the indebtedness, liability, or obligation of any
corporation or individual to this state, or to any parish or
municipal corporation therein;"
third, that it violated Article 234, which provides against
remitting the forfeiture of the charter of any corporation, or
renewing, altering, or amending the same, or passing any general or
special law for the benefit of said corporation, "except on the
condition that said corporation shall thereafter hold its charter
subject to the provisions of this constitution;" fourth, that it
also violates Article 45 because it embraces more than one
object.
6. That in accordance with this unlawful contract, the city
appropriated, for the year 1885, $68,340, to be paid to the
Waterworks Company for the water supply for that year, of which it
had already been paid $39,875; that the petitioners presented a
petition to the council protesting against this contract,
Page 142 U. S. 83
calling attention to its unconstitutionality and illegality and
asking the council to repudiate it; that the council neglected to
take any action, and that they believe it did not intend to do so,
but would continue to recognize the contract from year to year, and
make appropriations to pay it.
Wherefore, they prayed an injunction against the city from
making any appropriation under the contract, and that the contract
of October 3, 1884, and ordinance No. 909, and the act of the
legislature of 1884, be declared unconstitutional, null, and void,
and both parties be enjoined from setting up the contract as valid
and binding. Exceptions were filed to this petition, which were
sustained, and the petition dismissed. An appeal was thereupon
taken to the supreme court of the state. It does not appear clearly
what became of this appeal, though the decree of the court below
seems to have been reversed, as an answer was subsequently filed in
the court of original jurisdiction admitting most of the
allegations of fact in the bill but denying the construction put
upon the contract and denying that the price contracted to be paid
by the city was unfair or exorbitant. Judgment was subsequently
entered to the effect that the contract, the ordinance No. 909 of
September 23, 1884, and the act of the legislature of 1884 were
unconstitutional, null, and void, and an injunction was issued
according to the prayer of the bill. An appeal was taken to the
supreme court of the state, upon the hearing of which the judgment
of the lower court was reversed and the bill dismissed and the
injunction dissolved. 41 La.Ann. 910. Thereupon writs of error were
sued out from this Court both by the City of New Orleans and by
Conery and the other taxpayers. The record being filed, this motion
was made to dismiss.
Page 142 U. S. 84
MR. JUSTICE BROWN, after stating the facts as above, delivered
the opinion of the Court.
In order to sustain the jurisdiction of this Court upon the
ground that a federal question is presented, it should appear
either that such question was apparent in the record and that a
decision was made thereon or that, from the facts stated, such
question must have arisen and been necessarily involved in the
case. If it appear either that the decision of the state court was
made upon rules or general jurisprudence, or that the case was
disposed of upon other grounds broad enough in themselves to
sustain the judgment without considering the federal question, and
that such question was not necessarily involved, the jurisdiction
of this Court will not attach.
(1) Was there a federal question involved in this case? None
such appears upon the face of the bill, the basis of which is a
conflict between the act of 1884, and the ordinance and contract
thereunder, and the constitution of the state. Four clauses of the
Constitution are cited, all of which this act is alleged to
violate, but in none of them is there a suggestion of a conflict
with the federal Constitution or laws. On May 27, 1887, the City of
New Orleans filed a brief answer to the bill denying all and
singular the allegations therein contained, etc., and praying
judgment against the plaintiffs' demand. On November 3, 1888,
without withdrawing its first answer, it filed an amended or
supplemental answer in which it assumed an entirely different
position, averring that by the terms of the act of 1877, the city
was entitled to its supply of water free of charge
"and that the guarantee of this law to the city, securing to it
the benefits of free water, has not been and cannot be diminished
without impairing the obligation of contracts, and thereby
violating Article I, Section 10, of the Constitution of the United
States,"
and that the ordinance No. 909 was an attempt to frustrate and
set at naught the terms of the act of 1877.
Page 142 U. S. 85
The second answer further proceeded to allege the illegality of
the contract of October 3, 1884, also of the ordinance No. 909,
which was charged to be in direct violation of the act of 1884, and
that the decision of the supreme court gave a judicial construction
to § 11 of the act of 1877, and determined the effect of the
legislative contract between the city and the Waterworks Company by
virtue of the act of 1877, and declared that the latter, under said
contract, had no power to demand or require from the City of New
Orleans in any year any sum for the water supply, which it was
bound under its charter to furnish to the city, greater than the
amount of the city taxes for that year.
The answer, in its further averments, is a substantial iteration
of the charges made in the bill, and sets forth that in case the
courts should decide that the act of 1884 did authorize the city
and the company to enter into a new contract, stipulating the value
of the water to be supplied, the act itself was unconstitutional,
in that it violated no less than six articles of the state
constitution.
The district court, in giving its reasons for judgment, held
that notwithstanding the act of 1884, the obligation of the company
to furnish the water supply still subsisted, subject only to the
qualification that compensation equal in amount to the taxes
exacted might be claimed, and that in requiring the city to pay for
all the water it received, in the event of its demanding the tax,
and in providing specially that, unless it set apart a sufficient
sum to make such payment, the company should not be compelled to
deliver water as provided in its charter, the legislature was
releasing or extinguishing an obligation which had been ascertained
and defined by the supreme court of the state, from the water
company to the City of New Orleans, within the meaning of the state
constitutional provision, Article 57, which provided that
"The General Assembly shall have no power to release or
extinguish, or to authorize the releasing or extinguishing, in
whole or in part, the indebtedness, liability, or obligation of any
corporation or individual to this state or to any parish or
municipal corporation therein."
The court therefore sustained the prayer of
Page 142 U. S. 86
the bill, and granted an injunction. There was no reference in
this opinion to any federal question.
On appeal to the supreme court, the judgment of the district
court was reversed, the majority of the court holding that the
decision of the court in the prior case annulling the exemption
from taxation contained in § 11 of the act of 1877 did not
regulate the contract between the parties for the future as to the
price of the water to be furnished by the company, since that would
be making a contract for the parties which they never intended, and
which was not warranted by any promises in the waterworks charter;
that there was no other section of the act imposing any obligation
upon the company to furnish free water to the city for any
franchise or privilege granted by the state, and that the city
could not impose any obligation upon it contrary to the original
grant without its consent. The court further held that there was no
proof in the record of any fraud or undue advantage obtained by the
Waterworks Company over the city, and that, independent of any
statutory provision subsequently enacted authorizing the city to
contract for its water supply (alluding to the act of 1884), it had
full and plenary power to do so under the provisions of its
charter. The court also held that the act of 1884, and the
ordinance, and the contract made in pursuance of it, violated no
provision of the state constitution, and were valid. No allusion
was made in this opinion to any federal question.
The chief justice, dissenting, was of the opinion that the
judgment in the prior suit settled forever the question of the
respective liability of both corporations -- the one for the water
supplied, the other for the taxes demandable; that its effect was
to close the door for all time to those litigants on the subject of
such reciprocal liability, the one to the other; that the moment it
was rendered, it became the property of each party, who then
acquired the right of using it as an effectual shield for
protection against any further demand; that it was designed to
establish firmly for the future, during the term of the existence
of the company, that in no case would it ever claim from the city
for water supply any amount in excess of
Page 142 U. S. 87
that which the city would have the right to demand for taxes due
her; that while the City of New Orleans was a functionary created
by the sovereign, it did not follow that the sovereign could divest
it of its property, appropriate it to its own use, or give it away,
or impair the obligation of contracts in its favor, and that it was
incompetent for the legislature to deprive the City of its right of
ownership to the judgment in its favor, whereby it was to be
relieved from all amount exceeding the taxes due it by the
Waterworks Company. This is the only opinion which contains any
suggestion of a federal question. There was another dissenting
opinion, but the dissent was based solely upon the ground of a
conflict between the act of 1884 and the state constitution, and
upon the theory that the prior judgment operated by way of estoppel
against any subsequent agitation of the questions therein
decided.
While there is in the amended and supplemental answer of the
city a formal averment that the ordinance No. 909 impaired the
obligation of a contract arising out of the act of 1877, which
entitled the city to a supply of water free of charge, the bare
averment of a federal question is not in all cases sufficient. It
must not be wholly without foundation. There must be at least color
of ground for such averment, otherwise a federal question might be
set up in almost any case, and the jurisdiction of this Court
invoked simply for the purpose of delay. Thus, in
Millingar
v. Hartupee, 6 Wall. 258, it was held
"that to bring a case within that provision of the Judiciary
Act, which declares that the final judgment of a state court may be
reexamined where is drawn in question the validity of an authority
exercised under the United States, there must be something more
than a bare assertion of the exercise of such authority."
In delivering the opinion of the Court, THE CHIEF JUSTICE
observed:
"The authority intended by the act is one having a real
existence, derived from competent governmental power. If a
different construction had been intended, Congress would doubtless
have used fitting words. The act would have given jurisdiction in
cases of decisions against claims of authority under the United
States. In respect to the question we are now considering,
'authority'
Page 142 U. S. 88
stands upon the same footing with 'treaty' or 'statute.' If a
right were claimed under a treaty or statue, and, on looking into
the record, it should appear that no such treaty or statute existed
or was in force, it would hardly be insisted that this Court could
review the decision of a state court, that the right claimed did
not exist."
This language was used in connection with the first clause of
section 709 of the Revised Statutes,
"where is drawn in question the validity of a treaty or statute
of, or an authority exercised under, the United States, and the
decision is against their validity,"
but it is equally applicable to the next clause, which covers
the case under consideration,
"where is drawn in question the validity of a statute of, or an
authority exercised under, any state on the ground of their being
repugnant to the Constitution, treaties, or laws of the United
States, and the decision is in favor of their validity."
Applying the principle of this decision to the present case, we
think that before we can be asked to determine whether a statute
has impaired the obligation of a contract, it should appear that
there was a legal contract subject to impairment, and some ground
to believe that it has been impaired, and that, to constitute a
violation of the provision against depriving any person of his
property without due process of law, it should appear that such
person has a property in the particular thing of which he is
alleged to have been deprived.
(2) The contract relied upon in this case is that contained in
section 11 of the act of 1877, which provided that the city should
be allowed the free use of water for municipal purposes, in
consideration whereof the franchise and property of the water
company should be exempted from taxation. There are several
reasons, however, why the city cannot claim that this contract was
impaired by subsequent legislation: first because the contract
itself, which was in reality between the state and the Waterworks
Company, was
ultra vires and void, and was so declared by
the Supreme Court of Louisiana in the case between the city and the
Waterworks Company, 36 La.Ann. 432; second, because the city
repudiated its contract by bringing suit against the company for
its taxes, and
Page 142 U. S. 89
it does not now lie in the mouth of its counsel to claim that
the obligation of such contract was impaired by subsequent
legislation when such legislation was rendered necessary by, or at
least was the natural outgrowth of, its own repudiation of the
contract; third, the city, being a municipal corporation and the
creature of the state legislature, does not stand in a position to
claim the benefit of the constitutional provision in question,
since its charter can be amended, changed, or even abolished at the
will of the legislature. In the
Dartmouth
College Case, 4 Wheat. 518,
17 U. S.
660-661, in which the inviolability of private charters
was first asserted by this Court, a distinction is taken in the
opinion of Mr. Justice Washington between corporations for public
government and those for private charity, and it is said that the
first, being for public advantage, are to be governed according to
the law of the land, and that such a corporation may be controlled,
and its Constitution altered and amended, by the government in such
manner as the public interest may require.
"Such legislative interferences cannot be said to impair the
contract by which the corporation was formed, because there is in
reality but one party to it, the trustees or governors of the
corporation being merely the trustees for the public, the
cestui que trust of the foundation."
Mr. Justice Story was also of opinion, page
17 U. S. 694,
that "corporations for mere public government, such as towns,
cities, and counties, may in many respects be subject to
legislative control."
In the case of
East Hartford v. Hartford
Bridge Company, 10 How. 511,
51 U. S.
533-534, the constitutionality of an act of the
legislature discontinuing a ferry the franchise of which for more
than one hundred years had belonged to the Town of Hartford, and
subsequently to that of East Hartford, was drawn in question. It
was claimed by the town that the state had impaired the obligation
of its contract, but it was held that
"the parties to this grant did not, by their charter, stand in
the attitude toward each other of making a contract by it such as
contemplated in the Constitution, and as could not be modified by
subsequent legislation. The legislature was acting here on the one
part, and public municipal and political
Page 142 U. S. 90
corporations on the other. . . . The grantees likewise, the
towns being mere organizations for public purposes, were liable to
have their public powers, rights, and duties modified or abolished
at any moment by the legislature. . . . Hence, generally, the
doings between them and the legislature are in the nature of
legislation, rather than compact, and subject to all the
legislative conditions just named, and therefore to be considered
as not violated by subsequent legislative changes."
So in
Laramie County v. Albany County, 92 U. S.
307,
92 U. S. 311,
it was held that the legislature had power to diminish or enlarge
the area of a county whenever the public convenience or necessity
required. "institutions of the kind," said Mr. Justice
Clifford,
"whether called counties or towns, are the auxiliaries of the
state in the important business of municipal rule, and cannot have
the least pretension to sustain their privileges or their existence
upon anything like a contract between them and the legislature of
the state, because there is not and cannot be any reciprocity of
stipulation, and their objects and duties are utterly incompatible
with everything of the nature of compact."
So, in the recent case of
Williamson v. New Jersey,
130 U. S. 189,
130 U. S. 199,
it was held that the power of taxation on the part of a municipal
corporation is not private property or a vested right of property
in its hands, but the conferring of such power is an exercise by
the legislature of a public and governmental power which cannot be
imparted in perpetuity, and is always subject to revocation,
modification, and control, and is not the subject of contract. Said
MR. JUSTICE BLATCHFORD:
"We are clearly of opinion that such a grant of the power of
taxation by the legislature of a state does not form such a
contract between the state and the township as is within the
protection of the provision of the Constitution of the United
States which forbids the passage by a state of a law impairing the
obligation of contracts."
At the last term of this Court, in the case of
Essex Public
Road Board v. Skinkle, 140 U. S. 334, it
was held, THE CHIEF JUSTICE speaking for the Court, that an
executive agency created by a state for the purpose of improving
public highways, and empowered to assess the cost of its
improvements upon
Page 142 U. S. 91
adjoining lands and to purchase such lands as were delinquent in
the payment of the assessment, did not by such purchase acquire a
contract right in the land so bought which the state could not
modify without violating the provisions of the Constitution of the
United States. But further citations of authorities upon this point
are unnecessary. They are full and conclusive to the point that the
municipality, being a mere agent of the state, stands in its
governmental or public character in no contract relation with its
sovereign, at whose pleasure its charter may be amended, changed,
or revoked without the impairment of any constitutional obligation,
while with respect to its private or proprietary rights and
interests it may be entitled to the constitutional protection. In
this case, the city has no more right to claim an immunity for its
contract with the Waterworks Company than it would have had if such
contract had been made directly with the state. The state, having
authorized such contract, might revoke or modify it at its
pleasure.
Equally untenable is the claim that the supreme court of the
state gave a construction to this act of 1877 which constitutes a
contract between the Waterworks Company and the city which
subsequent legislation could not impair. In construing section 11,
the supreme court held that the exemption from taxation was invalid
and that the reconventional demand of the Waterworks Company for
the water supplied was sustainable only to the exact amount of
taxes for the same year. This, however, was not the making of a new
contract between the Waterworks Company and the city, but the
nullification of an old one, and a determination of the respective
rights of the city and the company under that section of the act.
Courts have no power to make new contracts or to impose new terms
upon parties to contracts without their consent. Their powers are
exhausted in fixing the rights of parties to contracts already
existing. But, conceding that the decision of the supreme court
amounted simply to an interpretation of an existing contract by
which the company agreed to furnish the city with water in
consideration of the amount of its taxes, yet the contract was, for
the reasons already
Page 142 U. S. 92
stated, so far as the city was concerned, subject to the will of
the legislature. As was justly remarked in the concurring opinion
of Mr. Justice Poche in this case:
"It surely cannot be seriously urged that the legislature is
stripped of its power to authorize a contract to have effect in the
future by judicial interpretation of a contract, and which at the
time had reference to the present and to the past only. A very
large proportion of the legislation in all the states is prompted
by the decisions of courts, and is intended to remedy some mischief
pointed out by, or resulting from the utterances of, the courts of
the country."
Our conclusion upon this branch of the case therefore is that
there was no contract between the city and the Waterworks Company
which was protected by the constitutional provision in
question.
(3) Has the city been deprived of its property without due
process of law? It certainly has not been deprived of its property
in the judgment of the supreme court in its favor for the taxes,
since the judgment was paid and satisfied. The only property it is
assumed to have, then, arises from the interpretation put by the
supreme court upon the act of 1877, which, it is argued, created an
indefeasible right on the part of the city to set off its taxes
against the claim of the Waterworks Company for water, of which it
could not be deprived. But such interpretation determined only the
respective rights of the parties as they then existed, and, for the
reasons already stated, such rights, at least so far as the city is
concerned, were subject to change at the will of the legislature.
Indeed, under the act of 1884 and ordinance No. 909, the right of
the city to its taxes remains unimpaired. The only change made is
in the creation of a new basis of liability of the city in respect
to its water supply for municipal purposes. The only property of
which it was deprived was the right it had possessed under the act
of 1877 of paying for its water supply in taxes; but if this were
property at all, even within the liberal definition of that word
given by Mr. Justice Bradley in
Campbell v. Holt,
115 U. S. 620,
115 U. S. 630,
it was not such a vested right as was beyond the control of the
legislature. An adjudication of the
Page 142 U. S. 93
rights of two private parties to a contract, with respect to the
terms of such contract, does not prevent their agreeing upon other
and different terms for the future. The fact that such parties are
a private and a public corporation is immaterial so long as the
right to contract exists.
(4) Little need be said with regard to the appeal of Conery and
the other taxpayers. They sue in the right of the city, the rights
of the city are their rights, and they have no other or greater
rights upon this appeal than has the city. Indeed, the city has, in
its amended and supplemental answer, joined with them in the
assertion of its rights, and they are bound by the disposition of
the case against it. As there is no federal question properly
presented in this case,
The motion to dismiss is granted.
MR. JUSTICE HARLAN is of opinion that this Court has
jurisdiction, and that the judgment below should be affirmed.
