The highest court of the state not having commented on the
question of right of plaintiff as a taxpayer to maintain the action
although the same was raised, this Court may -- even not required
so to do -- assume that the right existed.
It belongs to the state, as guardian and trustee for its people,
and having control of its affairs, to prescribe the conditions upon
which
Page 239 U. S. 176
it will permit public work to be done on its behalf, or on
behalf of its municipalities.
Atkins v. Kansas,
191 U. S. 207.
No court can review the action of the state in regard to
prescribing conditions upon which its public works shall be done,
as regulations in that respect suggest only considerations of
policy with which the courts have no concern.
Atkins v.
Kansas, 191 U. S. 207.
This Court must follow the decisions of the state court that a
provision of its general laws in regard to employment of labor on
public work applies to its municipalities and to the particular
work involved.
In this case,
held that neither the municipality nor
its contractors nor a taxpayer on its behalf could assert the
rights of an individual, proprietary in character, as against the
state itself in determining who should be employed on public work
authorized by the state itself.
The equality of rights assured by Articles I and II of the
Treaty of 1871 with Italy is in respect of protection and security
for person and property.
The provisions in § 14 of the Labor Law of 1909 of New
York, that only citizens of the United States shall be employed on
public works and that preference shall be given to citizens of that
state is not unconstitutional under the privilege and immunities
clause of the Constitution of the United States or under the equal
provision or due process clause of the Fourteenth Amendment
thereto, or as violative of the Treaty of 1871 with Italy.
214 N.Y. 629 affirmed.
Bill in equity to restrain the Public Service Commission for the
First District of the New York from declaring certain contracts for
the construction of portions of the rapid subway system of the city
of New York void and forfeited for violation of certain provisions
inserted in the contracts in pursuance of § 14 of the labor
law (so-called) of the state. Laws 1909, c. 36, Consol.Laws, c. 31.
It reads as follows:
"Section 14. Preference in employment of persons upon public
works. -- In the construction of public works by the state or a
municipality, or by persons contracting with the state or such
municipality, only citizens of the United States shall be employed,
and in all cases where laborers are employed on any such public
works, preference
Page 239 U. S. 177
shall be given citizens of the State of New York. In each
contract for the construction of public works, a provision shall be
inserted to the effect that, if the provisions of this section are
not complied with, the contract shall be void. . . .
*"
It is provided that a list of contracts theretofore made, with
the names and addresses of the contractors, shall be filed in the
office of the commissioner of labor, and when new contracts are
allowed, the names and addresses of such new contractors shall
likewise be filed, and, upon demand, each contractor shall furnish
a list of subcontractors in his employ. Each contractor is required
to keep a list of his employees which shall set forth whether they
are naturalized or native-born citizens of the United States. A
violation of the section is made a misdemeanor.
The case went off on demurrer, and it is therefore necessary to
give a summary of the bill, which we do in narrative form, as
follows:
Heim is a property owner and taxpayer of the State of New York.
The defendants are the acting Public Service Commissioners for the
First District of the New York and have been constituted and are
the Public Service Commission of that district.
The board of Rapid Transit Railroad Commissioners for the City
of New York, under the laws of the state (referred to as the rapid
transit act), in 1896 laid out and established a route for said
railroad in the city, and which was subsequently constructed,
equipped, and operated.
Page 239 U. S. 178
Afterwards other routes were established, constructed, equipped,
and operated.
These routes were located in the Boroughs of Manhattan and the
Bronx and Brooklyn, and, since 1912 and prior thereto, have been
leased and operated by the Interborough Rapid Transit Company,
referred to as the Interborough Company. There has been a like
lease of roads in Brooklyn by the Consolidated Railroad Company,
called the Brooklyn Company.
The Board of Rapid Transit Commissioners, acting under the laws
of the state, decided that other rapid transit railroads were
necessary, and determined and established routes and the general
plans for the construction thereof.
The lines are described and respectively called Interborough
lines and Brooklyn lines.
The Board and the Public Service Commission contemplated that
such extension and additions would form, with the existing
Interborough and Brooklyn lines, a complete and comprehensive rapid
transit system for the accommodation of the entire city. And the
construction of such roads was deemed and was and has been an
imperative necessity for the comfort and convenience of the
residents and taxpayers of the city.
The cost of construction of such new roads was upwards of
$235,000,000 and their equipment $44,000,000. The city had no
available money, and could not borrow the necessary moneys for a
large part of such construction or equipment without exceeding its
legal and constitutional debt limit by many million dollars.
To utilize the old with the new systems upon a 5-cent fare
basis, and to overcome the difficulties and delays for lack of
funds, and accomplish the early construction and operation of the
system on the best possible terms for the city, negotiations were
entered into between the Public Service Commission and the city
authorities, on the one
Page 239 U. S. 179
part, and the Interborough Company and the Brooklyn Company, on
the other part, with a view of formulating and entering into
contracts with the companies for the provision of funds for the
construction and operating of roads.
A form of contract was finally agreed upon, and a contract was
duly signed, executed, and delivered by the Interborough Company,
on the one part, and the Public Service Commission in behalf of the
city, on the other part, on or about March 19, 1913.
As a result of the negotiations, another contract was entered
into with the New York Municipal Railway Company, which had been
formed in the interest of the Brooklyn Company, whereby the latter
company agreed to contribute toward the cost of construction and
equipment and to lease and operate a portion of the roads in
conjunction with the then-existing system. There is an enumeration
of the provisions of the contracts and the amounts to be
contributed by the companies and for the lease of the routes.
The contracts were made a part of the public records and
approved by the Board of Estimates and Apportionment and other
proper authorities before execution.
The Public Service Commission has let and awarded each of the
contracts for construction of the new routes, and the Interborough
Company became a party to many of them for the purpose stated in
the contracts -- that is, "solely for the purpose of paying out a
part of its contribution towards the cost of construction of the
said respective routes."
The new routes were duly approved by the proper authorities, and
the Public Service Commission, in accordance with the general plan
of the routes, either obtaining the consent of the property owners
along the routes, or, failing to obtain such consent, having
commissioners appointed by the appellate division of the supreme
court to determine
Page 239 U. S. 180
and report whether the routes were to be constructed and
operated according to the plans adopted. The commissioners reported
favorably, and their report was confirmed by the court, and the
general plans "thereafter constituted and now are the routes and
general plans of the so-called Dual System of Rapid Transit
Railroads herein referred to."
In pursuance of the Rapid Transit Act, the Public Service
Commission prepared plans and specifications for the construction
of the major portion of said routes in accordance with the general
plans, and thereafter, before awarding any contract, advertised for
proposals in the form of an invitation to contractors and in
compliance with the Rapid Transit Act and the acts amending and
supplementing it.
Bids were duly made and contracts duly awarded and approved by
the proper authorities.
Each of the contracts contained the following provisions:
"In obedience to the requirements of section XIV of the Labor
Law, it is further provided that, if the provisions of said section
XIV are not complied with, this contract shall be void."
A provision in identical language was contained in the
invitation to bidders.
The requirement (it is alleged) both in the proposals and
contracts is unconstitutional, void, and of no effect, in that it
is in conflict with § 2 of article IV of the Constitution of
the United States (that is, "the citizens of each state shall be
entitled to all privileges and immunities of citizens in the
several states") and with § 1 of Article XIV of the Amendments
to the Constitution, and with other sections and provisions; also
in violation of the Constitution of the state, and in conflict with
the treaty between the United States and Italy and various other
treaties which contain "the most favored nation clause" -- in other
words, providing that the citizens of such countries shall enjoy
all the privileges, rights, and
Page 239 U. S. 181
immunities which the citizens of countries most favored in any
existing treaty with the United States enjoy.
All of the contractors promptly made the necessary preparations
for the execution of their contracts, and all are in the process of
performance at different stages, some of them having been performed
to the extent of 75 percent, and all performed to a very large
extent. In no instance are any of the contractors in default.
In the course of construction, each of the contractors has
constantly employed and now employs a large number of laborers and
mechanics who are residents of the city of New York, but who were
born in Italy and are subjects of its King, and also employed
laborers who, though citizens of the United States, were not
citizens of New York, and did not give preference to citizens of
the State of New York over such laborers so employed who were not
citizens of the state, but citizens of the United States.
At the time of the proposals it, was known to be and is
necessary to employ a large number of such subjects of the King of
Italy and citizens of other states and of other countries to
perform said contracts within the time and at the prices stated in
order to keep the construction and equipment of the Dual System
within the total amount provided and specified in the contracts and
plans.
The treaty between the United States and Italy of 1871 provides
that the subjects of the King of Italy residing in the United
States shall have and enjoy the same rights and privileges with
respect to persons and property as are secured to the citizens of
the United States residing in the United States.
At no time since the letting of such contracts has there been
available a sufficient force or number of laborers citizens of the
United States or of the State of New York to perform the work in
accordance with such contracts, and no question was raised until a
few days since of the right of the contractors to employ alien
laborers, which
Page 239 U. S. 182
the contractors believed that they had a right to do, and they
regarded the provision of the law and of the contract prohibiting
the same as in effect null and void.
Within the past ten days, complaint has been made to the Public
Service Commission of the violation of the law and the alien labor
provision in the contracts, and the Commission has threatened to
refuse to approve further monthly estimates of amounts payable to
contractors, thus depriving them of the means of prosecuting the
work and the right to perform the same -- indeed, have refused to
approve certain monthly estimates, and, unless enjoined, will
declare such contracts void and terminate the same.
The termination of the contracts will result in irreparable loss
and damage and waste of money to the city, the work will be delayed
or not done, or the cost will be enormously increased because the
supply of labor will be diminished, resulting necessarily in the
diminution of labor available for the work, which will greatly
protract the same, and litigation with the contractors will be
caused. Also, damage will result because of the fact that a large
percentage of capital and money necessary for the work is supplied
by third parties under contract with the city to supply the same,
which contracts were based upon estimates made in advance, and said
contracts may be invalidated, and the purpose for which they were
made defeated.
The total capital to be supplied was $250,000,000, of which the
said third parties agreed to supply $115,000,000, and the city the
balance. If the contracts be declared void, the capital so to be
supplied will be inadequate for the work, and the money already
supplied by the city and the said third parties will have been
wasted.
Injunction is prayed against declaring the contracts void and
forfeited and refusing to prepare and certify vouchers of the
amount of monthly estimates for work done.
Page 239 U. S. 183
There was a demurrer to the bill, which was sustained by the
supreme court, and injunction denied. The judgment was reversed by
the appellate division, and an injunction ordered, which action was
reversed by the Court of Appeals and the bill ordered dismissed.
214 N.Y. 629.
Page 239 U. S. 186
After stating the case as above, MR. JUSTICE McKENNA delivered
the opinion of the Court.
There seems to have been no question raised as to the right of
Heim to maintain the suit, although he is not one of the
contractors nor a laborer of the excluded nationality or
citizenship. The appellate division felt that there might be
objection to the right, under the holding of a
Page 239 U. S. 187
cited case. The Court of Appeals, however, made no comment, and
we must -- certainly may -- assume that Heim had a right of suit,
and, so assuming, we pass to the merits.
The supreme court put its decision upon the power of the state
"to provide what laborers shall be employed upon public works," and
that "the state has the same right in conducting its business that
an individual has," and had therefore "a perfect right to enact
§ 14 of the Labor Law, and it does not violate any rights of
an alien under existing treaties."
The appellate division of the court, however, was of opinion
that the law could not be sustained upon such consideration, and
saw in it such flagrant discrimination as to be offensive to the
Fourteenth Amendment to the Constitution of the United States, and,
so concluding, the court considered it unnecessary to discuss the
effect of treaties.
The court also passed, without absolute decision, the question
whether the labor law applies to the work of building subways for
the Rapid Transit in the City of New York. It was, however, stated
in the opinion of the court that, in view of the language in a
cited case, there was
"much ground for saying that, even if the state could lawfully
impose the test of citizenship upon employees of its own
contractors, and the contractors with the city engaged in what is
properly state work, it has no more power to impose such test upon
persons employed in building a subway for the city than it would
have if the subways were being constructed by a private corporation
or individual."
Two members of the court were clear that the state had no such
power, and concurred besides with the majority in holding that the
labor law was "a violation of both the federal and state
constitutions."
The Court of Appeals reversed the action of the appellate
division.
Page 239 U. S. 188
The basic principle of the decision of the Court of Appeals was
that the state is a recognized unit, and those who are not citizens
of it are not members of it. Thus recognized, it is a body
corporate, and,
"like any other body corporate, it may enter into contracts and
hold and dispose of property. In doing this, it acts through
agencies of government. These agencies, when contracting for the
state, or expending the state's moneys, are trustees for the people
of the state (
Illinois Central Railroad v. Illinois,
146 U. S.
387). It is the people,
i.e., the members of
the state, who are contracting or expending their own moneys
through agencies of their own creation."
And it was hence decided that, in the control of such agencies
and the expenditure of such moneys, it could prefer its own
citizens to aliens without incurring the condemnation of the
national or the state constitution. "The statute is nothing more,"
said Chief Judge Bartlett, concurring in the judgment of the court,
"in effect than a resolve by an employer as to the character of his
employees."
Notwithstanding the simplicity of the determining principle
pronounced by the Court of Appeals, its decision is attacked in
many and voluminous briefs.
The fundamental proposition of plaintiff in error Heim is that,
assuming that § 14 applies to the subway construction
contracts in question, it (the law) contravenes the provisions of
the Constitution of the United States (a) in that it violates the
corporate rights to the city and the rights of its residents and
taxpayers, (b) the rights of the various subway contractors with
the city, (c) the rights of aliens and citizens of other states
resident in New York, and (d) it is in violation of treaty
rights.
Plaintiffs in error Cranford Company and Flinn-O'Rourke Company
were made defendants upon their motion at the argument for
injunction. In the appellate division, they, their counsel say,
"neither assenting to nor denying the special allegations,
doubtless urged by complainant's
Page 239 U. S. 189
counsel, . . . urged the single ground of the
unconstitutionality of the law and its violation of treaties."
And these ground are again urged.
To sustain the charge of unconstitutionality, the Fourteenth
Amendment is adduced and the specification is that the law abridges
the privileges and immunities of the contractors and those of their
alien employees in depriving them of their right of contracting for
labor, and that the State of New York, by enacting and enforcing
the law, deprives employers and employees of liberty and property
without due process of law, and denies to both the equal protection
of the law.
The treaty that it is urged to be violated is that with Italy,
which, it is contended, "put aliens within the State of New York
upon an equality with citizens of the state with respect to the
right to labor upon public works," and that Congress has fortified
the treaty by § 1977 of the Revised Statutes -- a part of the
civil rights legislation.
The application of the law to the subway contracts, and whatever
its effect and to what extent it affects the corporate rights of
the city or of the subway contractors, are local questions
(
Stewart v. Kansas City, ante, p.
239 U. S. 14), and
have in effect been decided adversely to plaintiffs in error by the
Court of Appeals. The principle of its decision was, as we have
seen, that the law expressed a condition to be observed in the
construction of public works, and this necessarily involved the
application of § 14 to subway construction and the subordinate
relation in which the city stood to the state. Therefore, the
contention of plaintiffs in error that the rapid transit lines have
given the city rights superior to the control of the state, so far
as the law in question is concerned, has met with adverse decision.
Whatever of local law or considerations are involved in the
decision we are bound by; whatever of dependence the decision has
in the general power of a
Page 239 U. S. 190
state over its municipalities has support in many cases. We have
recently decided the power exists, and we may be excused from
further discussion of it.
Stewart v. Kansas City,
supra.
With the rejection of the asserted rights of the city must go
the asserted rights of residents and taxpayers therein and the
rights of subway contractors, so far as they depend upon the
asserted freedom of the city from the control of the state.
The claim of a right in the city of such freedom is peculiar.
The state created a scheme of rapid transit, constituted officers,
and invested them with powers to execute the scheme, yet, the
contention is that scheme, officers, and powers have become in some
way in their exercise and effect superior to the state law; or,
according to the explicit contention (we say explicit contention,
but it is rather a conclusion from an elaborate argument and much
citation of cases), that the city's action in regard to the subway
is proprietary in character, and, being such, the city can assert
rights against the state, and that individual rights have accrued
to residents of the city of which the city is the trustee, and
which "are so interwoven and bound up with the rapid transit system
as to be
beyond the control of the state.'" Counsel have not
given us a sure test of when action by a city is governmental and
when proprietary. We need not attempt a characterization. If it be
granted that the city acted in the present case in a proprietary
character and has secured proprietary rights, to what confusion are
we brought! A taxpayer of the city, invoking the rights of the
city, asserts against the control by the state of the proprietary
action of the city the protection of the Fourteenth Amendment, and
then against the proprietary action of the city that Amendment is
urged in favor of the contractors with the city, and their
exemption from the performance of their contracts declared. There
seems to be a jumble of rights.
Page 239 U. S.
191
If the city is not an agent of the state (it is contended
the city is not), but a private proprietor (it is contended the
city is), it would seem as if it has the rights and powers of such
a proprietor, and, as such, may make what contracts please it,
including or excluding alien laborers.
But upon these suppositions we need not dwell. It is clear it is
with the state law and the city's execution of it as agent of the
state that we must deal, and only on the assumption that the state
law has been held to apply by the Court of Appeals, and, by a
consideration of the power to enact it, determine the contentions
of all of the plaintiffs in error.
The contentions of plaintiffs in error under the Constitution of
the United States and the arguments advanced to support them were
at one time formidable in discussion and decision. We can now
answer them by authority. They were considered in
Atkin v.
Kansas, 191 U. S. 207. It
was there declared, and it was the principle of decision, that
"it belongs to the state, as the guardian and trustee for its
people, and having control of its affairs, to prescribe the
conditions upon which it will permit public work to be done on its
behalf, or on behalf of its municipalities."
And it was said:
"No court has authority to review its action in that respect.
Regulations on this subject suggest only considerations of public
policy. And with such considerations the courts have no
concern."
This was the principle declared and applied by the Court of
Appeals in the decision of the present case. Does the instance of
the case justify the application of the principle? In
Atkin v.
Kansas, the law attacked and sustained prescribed the hours
(8) which should constitute a day's work for those employed by or
on behalf of the state, or by or on behalf of any of its
subdivisions. The Fourteenth Amendment was asserted against the law
-- indeed, there is not a contention made in this case that was not
made in that. Immunity of municipal corporations from
legislative
Page 239 U. S. 192
interference in their property and private contracts was
contended for there (as here); also that employees of contractors
were not employees of cities. It was contended there (as here) that
the capacity in which the city acted, whether public or private,
was a question of general law not dependent upon local
considerations or statutes, and that this Court was not bound by
the decision of the state court. And there (as here) was asserted a
right to contest the law, though the contracts were made subsequent
to and apparently subject to it, upon the ground that they were
entered into under the belief that the law was void. Finally, the
ultimate contention there was (as it is here) that the liberty of
contract assured by the Fourteenth Amendment was infringed by the
law. In all particulars except one, the case was the prototype of
this. There, the hours of labor were prescribed; here the kind of
laborers to be employed. The one is as much of the essence of the
right regulated as the other -- that is, the same elements are in
both cases -- the right of the individual employer and employee to
contract as they shall see fit; the relation of the state to the
matter regulated -- that is, the public character of the work.
The power of regulation was decided to exist whether a state
undertook a public work itself or whether it "invested one of its
governmental agencies with power to care" for the work, which, it
was said, "whether done by the state directly or by one of its
instrumentalities," was "of a public, not private, character." And,
being of public character, it (the law -- the Kansas statute) did
not "infringe the liberty of anyone." The declaration was
emphasized. "It cannot be deemed," it was said,
"a part of the liberty of any contractor that he be allowed to
do public work in any mode he may choose to adopt, without regard
to the wishes of the state."
And, obversely, it was said (as we have already quoted):
"On the contrary, it belongs to the state, as the guardian of
its people, and
Page 239 U. S. 193
having control of its affairs, to prescribe the
conditions [italics ours] upon which it will permit public
work to be done on its behalf, or on behalf of its
municipalities."
See also Ellis v. United States, 206 U.
S. 246. The contentions of plaintiffs in error therefore
which are based on the Fourteenth Amendment cannot be
sustained.
Are plaintiffs in error any better off under the treaty
provision which they invoke in their bill? The treaty with Italy is
the one especially applicable, for the aliens employed are subjects
of the King of Italy. By that treaty (1871) it is provided:
"The citizens of each of the high contracting parties shall have
liberty to travel in the states and territories of the other, to
carry on trade, wholesale and retail, to hire and occupy houses and
warehouses, to employ agents of their choice, and generally to do
anything incident to, or necessary for trade, upon the same terms
as the natives of the country, submitting themselves to the laws
there established. The citizens of each of the high contracting
parties shall receive, in the states and territories of the other,
the most constant protection and security for their persons and
property, and shall enjoy in this respect the same rights and
privileges as are, or shall be, granted to the natives, on their
submitting themselves to the conditions imposed upon the
natives."
There were slight modifications of these provisions in the
Treaty of 1913, as follows: that
"the citizens of each of the high contracting parties shall
receive, in the states and territories of the other, the most
constant security and protection for their persons and property and
for their rights. . . ."
Construing the provision of 1871, the Court of Appeals decided
that it "does not limit the power of the state, as a proprietor, to
control the construction of its own works and the distribution of
its own moneys." The conclusion
Page 239 U. S. 194
is inevitable, we think, from the principles we have announced.
We need not follow counsel in dissertation upon the treatymaking
power or the obligations of treaties when made. The present case is
concerned with construction, not power, and we have precedents to
guide construction. The treaty with Italy was considered in
Patsone v. Pennsylvania, 232 U. S. 138,
232 U. S. 145,
and a convention with Switzerland (as in the present case) which
was supposed to become a part of it. It was held that a law of
Pennsylvania making it unlawful for unnaturalized foreign-born
residents to kill game, and to that end making the possession of
shotguns and rifles unlawful, did not violate the treaty. Adopting
the declaration of the court below, it was said "that the equality
of rights that the treaty assures is equality only in respect of
protection and security for persons and property." And the ruling
was given point by a citation of the power of the state over its
wild game, which might be preserved for its own citizens. In other
words, the ruling was given point by the special power of the state
over the subject matter -- a power which exists in the case at bar,
as we have seen.
From these premises, we conclude that the Labor Law of New York
and its threatened enforcement do not violate the Fourteenth
Amendment or the rights of plaintiffs in error thereunder, nor
under the provisions of the treaty with Italy.
Judgment affirmed.
* Section 14 of the labor law was amended by Act of March 11,
1915, c. 51, Laws of New York, 1915, as follows:
"Section 14. Preference in employment of persons upon public
works. -- In the construction of public works by the state or a
municipality, or by persons contracting with the state or such
municipality, preference shall be given to citizens over aliens.
Aliens may be employed when citizens are not available. . . ."
