A bylaw or ordinance of a municipal corporation may be such an
exercise of legislative power, delegated by the legislature as a
political subdivision of the state, having all the force of law
within the limits of the municipality, that it may properly be
considered as a law within the meaning of the Constitution of the
United States.
In this case, as no legislative act is shown to exist from the
enforcement of which an impairment of the obligations of such a
contract did or could result, it follows that the record involves
solely an interpretation of the contract, and therefore presents no
controversy within the jurisdiction of this Court.
Page 181 U. S. 143
The charter of the St. Paul Gas Light Company was granted in
1856, and it expires in 1907. The corporation was empowered to
construct a plant to supply the City of St. Paul and its
inhabitants with illuminating gas. It may be assumed, for the
purposes of the question arising on this record, that the
corporation discharged its duties properly under its charter, and
that, from the time the charter became operative, the company has
lighted the city in accordance with the contracts made for that
purpose from time to time with the municipal authorities. The
charter did not purport to engage permanently with the company for
lighting the city, but provided for agreements to be entered into
on that subject with the city for successive periods, and from the
beginning of the charter, the parties did so stipulate for a
specified time, a new contract supervening upon the termination of
an expired one. It may also be assumed for the purposes of this
case that the rights which the corporation asserts on this record
were not foreclosed by any of the contracts which it made at
different periods, with the city. The question which here arises
concerns only section 9 of the charter, which is as follows:
"SEC. 9. That it shall be the duty of the St. Paul Gas Light
Company to prosecute the works necessary to the lighting the whole
city and suburbs with gas, and to lay their pipes in every and all
directions, whenever the board of directors shall be satisfied that
the expenses thereon shall be counterbalanced by the income
accruing from the sales of gas. It shall also be their duty to put
the gas works into successful operation as soon as practicable:
Provided, That whenever the corporation of the City of St. Paul
shall, by resolution of the board of aldermen, direct lamps to be
erected and lighted in the streets of the city, the company shall
make contract therefor, and furnish and provide, lay, set up, and
keep in good repair at their own proper expense and charge the
street posts and lamps, and their pipes and meters, all to be of
the best quality of work and material now in use. In consideration
whereof, the said corporation of the city shall pay quarterly to
the St. Paul Gas Light Company an interest of eight percent per
annum on the amount of the sum of the original cost of said
street
Page 181 U. S. 144
lamps and lamp posts, gas meters and gas pipes, and the cost of
laying and erecting the same. But said company shall not be bound
to lay every pipe in such places where the proceeds from the sale
of gaslight would not be sufficient to defray the expenses of
furnishing the same."
Under the foregoing section, the gas company, by direction of
the city, constructed street lamps, and up to January 1, 1897, they
numbered 3,362. The interest on the cost of these lamps at the rate
fixed by section 9, was regularly paid by the city up to January 1,
1897. About or shortly after that date, in certain portions of the
city, the use of electricity for lighting the streets was by
direction of the municipality substituted for gas, and hence the
street gas lamps in those portions of the city which were lighted
by electricity were no longer used. It is fairly to be deduced from
the record that, either by its original charter or by amendments
thereto, the gas company was empowered to supply electricity as
well as gas, and in virtue of this power, it constructed an
electrical plant and contracted with the city to supply the
electric lights in those portions of the city where the use of gas
had been dispensed with. The gas company asserted its right to
recover from the city the interest on the cost of placing in
position the lamps the use of which had been discontinued under the
circumstances just above stated. The city denied its obligation to
pay interest on account of the cost of these lamps. A the result of
this disagreement, the city, in 1897, passed the following
ordinance:
"Resolved, That the St. Paul Gas Light Company be and it is
hereby required forthwith to remove the gas street lamp posts in
that portion of the city now lighted by electric light under
contract with said company, and which said lamps have been
discontinued by order of the board of public works."
"Resolved further that the board of public works is hereby
required to transmit to the city comptroller a statement showing
the number and location of said gas street lamp posts not now in
service in said electric light district above referred to, and that
from and after the passage of this resolution, no interest be paid
by the City of St. Paul to said St. Paul Gas Light
Page 181 U. S. 145
Company on account of the cost of the purchase and equipment of
said gas street lamp posts."
Thereupon the gas company commenced this suit to recover the
interest on the cost of the construction of the lamps referred to
in the ordinance. Without going into unnecessary detail, it is
adequate to say that the complaint alleged that the city was
obliged by section 9 of the charter of the company to pay the
interest on the cost of the lamps, although they were no longer in
use for lighting purposes. The ordinance of the city which we have
reproduced was expressly referred to in the complaint, and it was
therein alleged that the ordinance, in legal purview, amounted to
action by the state impairing the obligations of the contract
embodied in section 9 of the charter, and was hence void because
repugnant to the Constitution of the United States. After answer
and due proceedings, the case was decided by the trial court in
favor of the gas company. On appeal, the judgment of the trial
court was reversed by the Supreme Court of Minnesota, and a final
judgment was ordered against the gas company. 78 Minn. 39. To this
judgment of the supreme court of the state this writ of error is
prosecuted.
MR. JUSTICE WHITE, after stating the case, delivered the opinion
of the Court.
The Supreme Court of Minnesota held that the charter of the gas
company did not impose on the city the obligation to pay the
interest on the cost of constructing the lamps not used. Construing
the whole charter, the court decided that, as it provided for
contracts between the parties from time to time for the supply of
lights, the sole obligation imposed was that the interest on the
cost of the construction of the lamps should be paid by the city
only during the time it was agreed that the lamps should be used,
and not during the life of the charter. We
Page 181 U. S. 146
excerpt in the margin an extract from the opinion of the Supreme
Court of Minnesota which more fully expresses the reasoning by
which the court sustained the construction of the contract which
was expounded.
*
Page 181 U. S. 147
Because the Supreme Court of Minnesota decided the controversy
solely upon its appreciation of the meaning of the original
contract, it does not necessarily follow that no federal question
is presented for decision. Where subsequent state legislation is
asserted to be repugnant to the Constitution of the United States
because such legislation impairs the obligation of a contract, the
power to determine whether there be such impairment imposes also on
this Court the duty, when necessary, to ascertain whether there was
a contract and its import. And this though it be in a given case
the state court has decided that there was no impairment either
because the contract had never existed or because, from an
interpretation of its provisions, it was found that the obligations
which it is asserted were impaired never arose.
Houston &
Texas Central Rd. v. Texas, 177 U. S. 66,
177 U. S. 77,
and cases cited. In cases of this nature, therefore, the questions
to be considered are these: was there a contract, and, if yes, what
obligations arose from it? and has there been state legislation
impairing the contract obligations? Abstractly speaking, the duty
would be first in order to determine whether the contract existed
and its true meanings, before ascertaining whether any obligations
of the contract had been impaired by subsequent legislation. As,
however, the authority to review the judgment of the Supreme Court
of Minnesota in this case, and in doing so to interpret the
contract and enforce its obligations, arises solely because of the
assertion that the obligations of the contract have been impaired
by subsequent legislation, we will first consider whether, under
any view which may be taken of the contract, there is shown on this
record any act of state legislation which can be properly said to
have impaired the obligations of the contract in the constitutional
import of these words. That is to say, we propose first to
consider, even although it be conceded
arguendo that the
Supreme Court of the State of Minnesota erroneously decided that
the contract relied upon did not impose the duty on the city to pay
interest on the cost of construction of the unused gas lamps,
whether there has been any state legislation impairing the
obligation of such contract. While it is not pretended that there
is any law of the State of Minnesota by which the obligation of the
contract was
Page 181 U. S. 148
impaired, it is asserted that such consequence results from the
ordinance adopted by the Municipal Council of the City of St. Paul,
the text of which ordinance has been reproduced in the statement of
the case.
It is no longer open to question that
"a bylaw or ordinance of a municipal corporation may be such an
exercise of legislative power delegated by the legislature to the
corporation as a political subdivision of the state, having all the
force of law within the limits of the municipality, that it may
properly be considered as a law within the meaning of this article
of the Constitution of the United States."
New Orleans Waterworks v. Louisiana Sugar Refining
Company, 125 U. S. 18,
125 U. S. 31;
Hamilton Gas Light & Coke Company v. Hamilton City,
146 U. S. 258;
Walla Walla v. Walla Walla Water Company, 172 U. S.
1.
Referring to the ordinance in question, from the provisions of
which it is alone contended the impairment of the contract arose,
it will be seen that only two subjects are therein referred to: the
first, a command by the city to the gas company to
"forthwith remove the gas street lamp posts in that portion of
the city now lighted by electric light under contract with the said
company, which said lamps have been discontinued by order of the
board of public works,"
and second, a declaration on the part of the Municipal Council
of St. Paul of its intention not thereafter to pay the gas company
interest on the cost of construction of the lamps so directed to be
removed. If, then, there be any subsequent legislation impairing
the obligation of the contract, it must arise from one or both of
the provisions just referred to. Now it is apparent that the
command given by the city to the gas company to remove the unused
gas lamp posts from the streets in no way even tended to impair the
obligation, if any, resting on the city to pay interest on the cost
of the construction of the lamp posts which were ordered to be
removed, since, in any event, if the contract imposed the
obligation to make such payment, the duty of the city to do so was
left absolutely unaffected by the order to remove. That is to say
if the duty to pay was created by the contract, such obligation
remained wholly untouched by the order of removal. This being true,
it results that the order to remove the unused lamp posts
Page 181 U. S. 149
cannot be treated as an impairment of the obligations of the
contract without saying that such obligations were destroyed,
although they were absolutely unaffected by the act which it is
asserted brought about the impairment. And it will become at once
manifest from a consideration of the remaining provision of the
ordinance that the same result must follow. The other provision in
question created no new right or imposed no new duty substantially
antagonistic to the obligations of the contract, but simply
expressed the purpose of the city not in the future to pay the
interest on the cost of construction of the lamp posts which were
ordered to be removed. That is to say, it was but a denial by the
city of its obligation to pay, and a notice of its purpose to
challenge in the future the existence of the duty to make such
payment. This denial, while embodied in an ordinance, was no more
efficacious than if it had been expressed in any other form, such
as by way of answer filed on behalf of the city in a suit brought
by the company against the city to enforce what it conceived to be
its rights under the contract. When the substantial scope of this
provision of the ordinance is thus clearly understood, it is seen
that the contention here advanced of impairment of the obligations
of the contract arising from this provision of the ordinance
reduces itself at once to the proposition that, wherever it is
asserted, on the one hand, that a municipality is bound by a
contract to perform a particular act and the municipality denies
that it is liable under the contract to do so, thereby an
impairment of the obligations of the contract arises in violation
of the Constitution of the United States. But this amounts only to
the contention that every case involving a controversy concerning a
municipal contract is one of federal cognizance, determinable
ultimately in this Court. Thus, to reduce the proposition to its
ultimate conception is to demonstrate its error.
It is argued, however, that as, under the charter of the City of
St. Paul, the comptroller of the city was empowered to audit the
claims of the gas company as a prerequisite to the appropriation by
the city council of the necessary money to pay such claims,
therefore the ordinance, to the extent that it deprived the
comptroller of the power to audit, divested him
Page 181 U. S. 150
of an attribute which he could otherwise have exercised on
behalf of the claim if he favored its payment, and hence the
ordinance impaired the contract obligations. But it is not
pretended that the effect of the auditing by the comptroller would
have been to authorize the payment of the claim, or indeed that it
was anything but advisory, since even after he had audited, the
payment could not have been procured without the passage of an
appropriation by the council for that purpose. A large number of
cases were cited in the argument at bar under the assumption that
they sustain the proposition that, wherever a mere denial of
contract liability is made by a municipality, such denial is an
impairment of the obligations of the contract, since it is a
refusal to comply with the contract, and hence is a disregard of
the obligations which the contract created. We do not stop to refer
to all these cases thus relied upon, because we think it results
from the statement of the proposition that it is without
foundation. However, we briefly advert to a few of the cases to
show how inapposite they are to the proposition which they are
cited to maintain. Thus, in
Murray v. Charleston,
96 U. S. 432, the
decision which was under review had given effect to an ordinance of
the City of Charleston deducting a sum of taxation from the bonds
held by the complainant. In
Walla Walla v. Walla Walla Water
Company, 172 U. S. 1, the
decision of the state court gave effect to a municipal ordinance
which provided for the construction by the city of a new waterworks
plant which was to become a competitor with the contracting
company. In
McCullough v. Virginia, 172 U. S.
102, it was expressly held, although the state court had
rested its decision on the ground that there was no contract, in
view of the previous decisions of this Court and of the state court
relating to the contract which was under consideration, that the
necessary effect of the ruling was in substance to give effect to
an act of the Legislature of Virginia, passed subsequent to the
contract and which impaired its obligations. In
Houston &
Texas Central Railroad Co. v. Texas, 177 U.
S. 74, this Court, after noticing the fact that the
state court had decided the case
"without reference to the act of 1870 which the plaintiff in
error (the railroad company) alleges to be an impairment of the
contract set
Page 181 U. S. 151
up by it in the pleadings,"
said: "We think the judgment of the court did give effect to
that act." And the soundness of this conclusion the opinion then
proceeded to demonstrate, it being apparent that the legislative
act of impairment which the court found had been given effect to by
the state decision was not a mere denial of liability, but amounted
to an impairment of the substantial rights conferred by the
contract.
As it is apparent from the foregoing considerations that, even
conceding the contract to be as contended for, no legislative act
is shown to exist, from the enforcement of which an impairment of
the obligations of the contract -- within the purview of the
Constitution -- did or could result, it follows that the record
involves solely an interpretation of the contract, and therefore
presents no controversy within the jurisdiction of this Court.
Dismissed for want of jurisdiction.
*
"It seems to us that it would be unreasonable to hold that, if
at the inception of the fifty years which this charter was to run,
the city had ordered such street lamps to be erected, had used them
ten years under a contract for lighting the streets which expired
at the end of that time, and then, on account of some such
contingency, had ceased to light the streets with gas, the city
would be bound to pay such compensation for maintaining and keeping
in repair the street lamps, lamp posts, connecting pipes and meters
for forty years more, and to permit them to encumber the streets
for that length of time, although the city had not a particle of
use for such street lamps during all of that time. Again, it would
be unreasonable to hold that the city council might, under section
9, compel the gas company to erect street lamps and then, after
using them a month or a year, abandon the use of gas for street
lighting purposes, and thereby avoid all liability to pay any other
compensation for the erection and use of the street lamps than
eight percent per annum, during such use, on the cost of erecting
the same."
"But we are of the opinion that section 9 does not give the
council the right, in its discretion, to compel the erection of
street lamps regardless of how long the city may use them, and
without protecting the gas company by stipulating a length of time
during which the city shall use them."
"Section 9 provides that whenever the city shall, 'by resolution
of the board of aldermen, direct lamps to be erected and lighted in
the streets of the city,' the gas company shall erect the same and
keep them in repair. But, as we have seen, the city has no power
under the charter to compel the streets to be lighted except by
making for that purpose a contract voluntary as to both parties.
When making such a contract, the gas company can refuse to contract
for lighting any street lamps except those already erected, and
before the city can compel the erection of more lamps, it must
first make a contract for lighting them. In making such a contract,
the gas company can protect itself by insisting that such contract
for lighting such new lamps shall cover a period of time of
sufficient length that the eight percent per annum to be paid
during that time will remunerate the gas company for erecting the
lamps. We are of the opinion that, under these circumstances, the
charter does not require the city to pay such compensation for
street lamps which it is not under any contract to use."
"This, in our opinion, is the more reasonable and proper
construction of the provision of the charter, and the one which
should be adopted. We therefore hold that the city is not liable
for such compensation for street lamps after it has ceased the use
of the same and abandoned the use of gas in lighting its
streets."
