New Orleans Waterworks Co. v. La. Sugar Refin. Co., 125 U.S. 18 (1888)

This was a petition, filed March 30, 1883, in the Civil District Court for the Parish of New Orleans, by the New Orleans Waterworks Company against the Louisiana Sugar Refining Company and the City of New Orleans, to restrain the laying of water pipes from the factory of the Louisiana Sugar Refining Company through the streets and p. 19thoroughfares of the city to the Mississippi River. The allegations of the petition are in substance as follows:

Sec . 5. “ That the said Waterworks Company shall own and possess the privileges acquired by the city of New Orleans from the Commercial Bank ; that it shall have for fifty years from the passage of this act the exclusive privilege of supplying the city of New Orleans and its inhabitants with water p. 20from the Mississippi River, or any other stream or river, oy means of pipes and conduits, and for erecting or constructing any necessary works or engines or machines for that purpose; ” and have authority “ to lay and place any number of conduits or pipes or aqueducts, and to cleanse and repair the same, through or over any of the lands or streets of the city of New Orleans; provided the same shall not be an obstruction to commerce or free circulation.”

The answer of the Louisiana Sugar Refining Company also denies all those allegations, except that it admits that by the ordinance aforesaid “the city of New Orleans granted to it license and permission to lay water and sewerage pipes from p. 22its factory to the Mississippi River; and that it has availed itself of the license therein granted, strictly in accordance with the ordinance aforesaid; ” and “ admits that it is the owner of certain property within the square bounded by Front, Clay, Bienville, and Custom-House Streets, in the city of New Orleans; and avers that said property is what is known as batture property, and that the rights, wayp and privileges of the city of New Orleans were transferred by the title given by the said city of New Orleans to its vendors; ” and “ avers that said property fronts on a public street and the quay, a public place, and that it is contiguous and adjacent to the Mississippi River, and that the respondent has riparian rights to draw water therefrom for its own use and manufacturing purposes, and to convey and discharge its water therein; ” “denies that the plaintiff corporation has any exclusive privilege and right to draw water from the Mississippi River by conduits and pipes, or otherwise, which could or would impair the use by this respondent and every other person of the said water for its own and their supply ; ” avers “ that, if there be any such pretended exclusive privilege and right, it is null and void, as in derogation of common right and of law; ” “ denies that it has supplied, or is now supplying, or intends hereafter to supply, the city of New Orleans or any of its inhabitants with water, or to carry off and discharge any waste except its own; and expressly avers that the pipes laid are for its own exclusive use, and that it draws water from said river only for its own use and manufacturing purposes connected with its said factory;” and further avers “that the exclusive rights and privileges claimed by the plaintiff under its charter would constitute a monopoly, and are therefore null and void.”

Upon a trial by jury, it appeared that the material provisions of the aforesaid statutes of Louisiana were as above set forth; and the evidence supported all the allegations of fact in the petition, except that the acts of the Louisiana Sugar Refining Company, and the situation of its factory in relation to the river, were proved to be as follows: The company was constructing a factory on its land, bounded by Front, Clay, Bienville and Custom-House Streets, and had begun to lay water p. 23and sewerage pipes, exclusively for the use of its factory, and according to lines and grades furnished by the city surveyor, from its factory straight to the river, across Front Street, and thence across a broad quay or levee, owned by the city, and open to the public, except that some large sugar sheds occupied by lessees of the city stood upon it, and that the tracks of the Louisville, Nashville and Mobile Railroad were laid across it.

“ In order to determine that question, it is essential, first, to ascertain what is the nature and extent of the privilege p. 24originally conferred by the State upon the Commercial Bank, and which passed to the city of New Orleans, by whom it was afterwards transferred to the defendant [plaintiff] company, organized, as it was, by a charter which is explicit as to its prerogatives and responsibilities.”

“ The right to that exclusive privilege, under the present constitution, is contested by the defendant; but it is entirely out of place to consider whether it exists or not, as, under the p. 25pleadings and the facts, the question of competition is not at all at issue.

“ They had clearly, not only the privilege, in common with all others, to draw the running water from the river for domestic purposes, ad lavandum et potendum, but also, on principle, that, without the need of a previous permission, of laying pipes from the river to their premises, to draw the water necessary for their use. The State and her functionaries — political corporations — however have the right, in the p. 26exercise of the police power, of regulating the enjoyment of that right, denying or permitting it, according as public security and good may or may not demand.

The plaintiff in its original petition relied on a charter from the legislature of Louisiana, which granted to it the exclusive privilege of supplying the city of New Orleans and its inhabitants with water from the Mississippi River, but provided that the city council should not be thereby prevented from granting to any person “ contiguous to the river ” the privilege of laying pipes to the river for his own use. The only matter complained of by the plaintiff, as impairing the obligation of the contract contained in its charter, was an ordinance of the city council, granting to the Louisiana Sugar Refining p. 27Company permission to lay pipes from the river to its factory, which, the plaintiff contended, was not contiguous to the

That opinion, as printed in 35 La. Ann. 1111, and in the record before us, shows that the grounds of the judgment were, that the right conferred by the legislature of the State upon the Commercial Bank by its charter in 1833, and confirmed to the plaintiff by its charter in 1877, was the exclusive privilege p. 28of supplying the city and its inhabitants with water by means of pipes and conduits through the streets and lands of the city; that by the general law of Louisiana, independently of anything in those statutes, riparian or contiguous proprietors had the right of laying pipes to the river to draw the water necessary for their own use, subject to the authority of the State and the city, in the exercise of the police power, to regulate this right, as the public security and the public good might require ; that section 18 of the plaintiff’s charter had no other object than to secure, beyond the possibility of doubt, this right of the contiguous owners and the control of the municipal authorities; and that the city was authorized to permit the defendant company to lay pipes across the quay and through the streets from the river to its factory, for the purpose of supplying it with water for its own use.

The arguments at the bar were principally directed to the question whether upon the facts proved the factory of the defendant company was contiguous to the river. But that is p. 29not a question which this court upon this record is authorized to consider.

This being a writ of error to the highest court of a State, a federal question must have been decided by that court against the plaintiff in error; else this court has no jurisdiction to review the judgment. As was said by Mr. Justice Story, fifty years ago, upon a full review of the earlier decisions, “ it is sufficient if it appears by clear and necessary intendment that the question must have been raised, and must have been decided in order to have induced the judgment,” and “it is not sufficient to show that a question might have arisen or been applicable to the case, unless it is further shown, on the record, that it did arise, and was applied by the State court to the case.” Crowell v. Randall, 10 Pet. 368, 398. The rule so laid down has been often affirmed, and constantly acted on. Grand Gulf Railroad v. Marshall, 12 How. 165, 167; Bridge Proprietors v. Hoboken Co., 1 Wall. 116, 143; Steines v. Franklin County, 14 Wall. 15, 21. In Klinger v. Missouri, 13 Wall. 257, 263, Mr. Justice Bradley declared the rule to be well settled that “ where it appears by the record that the judgment of the State court might have been based either upon a law which would raise a question of repugnancy to the Constitution, laws, or treaties of the United States, or upon some other independent ground; and it appears that the court did, in fact, base its judgment on such independent ground, and not on the law raising the federal question, this court will not take jurisdiction of the case, even though it might think the position of the State court an unsound one.” And in many recent cases, under § 709 of the Revised Statutes, this court, speaking by the Chief Justice, has reasserted the rule, that to give it jurisdiction of a writ of error to a State court, it must appear affirmatively, not only that a federal question was presented for decision to the highest court of the State having jurisdiction, but that “ its decision was necessary to the determination of the cause, and that it was actually decided, or that the judgment as rendered could not have been given without deciding it.” Brown v. Atwell, 92 U. S. 327; Citizens' Bank v. Bank of Liquidation, 98 U. S. 140; Chouteau v. Gibson, p. 30Ill U. S. 200; Adams County v. Burlington & Missouri Railroad, 112 U. S. 123 ; Detroit Railway v. Guthard, 114 U. S. 133.

But the ordinance now in question involved no exercise of legislative power. The legislature, in the charter granted to the plaintiff, provided that nothing therein should “be so construed as to prevent the city council from granting to any person or persons, contiguous to the river, the privilege of laying p. 32pipes to the river, exclusively for his or their own use.” The legislature itself thus defined the class of persons to whom, and the object for which, the permission might be granted. All that was left to the city council was the duty of determining what persons came within the definition, and how and where they might be permitted to lay pipes, for the purpose of securing their several rights to draw water from the river, without unreasonable interfering with the convenient use by the public of the lands and highways of the city. The rule was established by the legislature,’ and its execution only committed to the municipal authorities. The power conferred upon the city council was not legislative, but administrative, and might equally well have been vested by law in the mayor alone, or in any other officer of the city. Railroad Co. v. Ellerman, 105 U. S. 166, 172; Ray v. Green, 4 Cush. 433, 438. The permission granted by the city council to the defendant company, though put in the form of an ordinance, was in effect but a license, and not a by-law of the city, still less a law of the State. If that license was within the authority vested in the city council by the law of Louisiana, it was valid ; if it transcended that authority, it was illegal and void. But the question whether it was lawful or unlawful depended wholly on the law of the State, and not at all on any provision of the Constitution or laws of the United States.

The cases of New Orleans Waterworks v. Rivers, 115 U. 8. 674, and St. Tammany Waterworks v. New Orleans Waterworks, 120 U. S. 64, on which the plaintiff relied in support of its bill, were essentially different from the case at bar. In each of those cases, the validity of the article of the Constitution of 1879 abolishing monopolies was drawn in question by the bill, and relied on by the defendants. Rivers did not contend that his property was contiguous to the river. The St. Tammany Waterworks Company had been incorporated since the New Orleans Waterworks Company, under a general statute of the State, for the purpose of supplying the whole city and its inhabitants with water. And both those cases were appeals from the Circuit Court of the United States, upon which this court was not restricted to the consideration p. 33of federal questions decided below, but had jurisdiction to determine the whole case.

In Thorington v. Smith, 8 Wall. 1, this court, reversing a judgment of the Circuit Court of the United States in Alabama, held that a contract for the payment of money in Confederate currency was not unlawful. Like decisions have often been made in later cases brought here from the Circuit Courts of the United States. Planters" Bank v. Union Bank, 16 Walk 483, 497; Confederate Note Case, 19 Wall. 548 ; Wilmington de Weldon Railroad v. King, 91 U. S. 3; Cook v. Lillo, 103 U. S. 792. Yet in Bethel v. Demaret, 10 Wall. 537, where a suit on a mortgage to secure the payment of promissory notes given for a loan of Confederate currency had been dismissed by the Supreme Court of Louisiana, on the ground that the notes and mortgage were nullities, because the Confederate currency, which constituted the consideration, was illegal by the general law of the State, this court dismissed the writ of error, because no statute of the State was drawn in question. And in Bank of West Tennessee v. Citizens" Bank of Louisiama, 13 Wall. 432; S. C. 14 Wall. 9; where the Supreme Court of Louisiana, affirming a judgment rendered by an inferior court of the State before the adoption of article 127 of the State Constitution of 1868, by which “ all agreements, the consideration of which was Confederate money, notes or bonds, are null and void, and shall not be enforced by the courts of this state,’’ dismissed a suit to recover money payable in Confederate notes, basing its judgment both upon that article of the Constitution and upon adjudications in that state before its adoption, this court, speaking by Mr. Justice Swayne, dismissed p. 34a writ of error, and said : “ The result in this case would have been necessarily the same if the Constitution had not contained the provision in question. This brings the case within the authority of Bethel v. Demaret” above cited. In another case at the same term, the disposition by this court of the case of Bank of West Tennessee v. Citizens’ Bank of Louisiana was thus explained by Mr. Justice Miller: “ As it was apparent from the record that the judgment of the court of original jurisdiction was rendered before that article was adopted, we could not entertain jurisdiction when the decision in that particular point was placed on a ground which existed as a fact and was beyond our control, and was sufficient to support the judgment, because another reason was given which, if it had been the only one, we could review and might reverse.” Delmas n . Insurance, Co., 14 Wall. 661, 666. In Delmas v. Insura/nce Co. just cited, where the judgment of the Louisiana court was put wholly upon that article of the Constitution, this court therefore took jurisdiction, and reversed the judgment, but said that where a decision of the highest court of a State, “ whether holding such contract valid or void, is made upon the general principles by which courts determine whether a consideration is good or bad on principles of public policy, the decision is one we are not authorized to review.” And in Tarver n . Keach, 15 Wall. 67, as well as in Dugger v. Bocock, 104 IL S. 596, 601, the proposition thus stated was affirmed, and was acted on by dismissing a writ of error to a State court. So in Stevenson v. Williams, 19 Wall. 572, where a judgment of the Supreme Court of Louisiana, annulling a judgment of a lower court, on the ground that the promissory notes on which it was rendered had been given for a loan of Confederate money, was brought here by writ of error, this court, speaking by Mr. Justice Field, after disposing of a distinct federal question, and observing that the aforesaid ground would not be deemed, in a federal court, sufficient to set aside the judgment, said: “ But the ruling of the State court, in these particulars, however erroneous, is not subject to review by us. It presents no federal question for our examination. It conflicts with no part of the Constitution, laws or treaties of the United States. p. 35Had the State court refused to uphold the judgment because of the provision in the Constitution of the State, subsequently adopted, prohibiting the enforcement of contracts founded upon Confederate money, a federal question would have been presented. That provision, however, does not appear to have caused the ruling.” 19 Wall. 576, 577. Those cases clearly establish that, on a writ of error to a State court, this court had jurisdiction to review and reverse the judgment, if that judgment was based wholly upon the State Constitution; but that if it was based on the previous law of the State, this court had no jurisdiction to review it, although the view taken by the State court was adverse to the view taken by this court in earlier and later cases coming up from a Circuit Court of the United States.

In actions brought upon promissory notes given for the purchase of slaves before the war, the same distinction has been maintained. The Constitutions adopted in 1868, by the States of Arkansas, Georgia and Louisiana respectively, provided that the courts of the State should not enforce any contract for the purchase or sale of slaves. In Osborn v. Nicholson, 13 Wall. 654, a judgment rendered for the defendant by the Circuit Court of the United States for the District of Arkansas, in an action on a promissory note for the purchase of a slave, was reversed, because this court was of opinion that the contract was valid at the time when it was made, and therefore its obligation was impaired by the subsequent constitution. For like reasons, this court, in White v. Hart, 13 Wall. 646, reversed a similar judgment rendered by the Supreme Court of the State of Georgia, and based upon the provision of its constitution. But in Palmer v. Marston, 14 Wall. 10, where the Supreme Court of Louisiana, in a similar action, had placed its judgment for the defendant upon the law of the State, as established and acted upon before the adoption cf the Constitution of 1868 and since adhered to, and had declined to pass upon the question whether the provision of that constitution was valid or invalid as an act of legislation and in relation to the article of the Constitution of the United States against impairing the obligation of contracts, p. 36because it was unnecessary and could have no practical miiuence upon the result, this court dismissed a writ of error, for want of jurisdiction, saying: “ It thus appears that the provision of the State constitution upon the subject of slave contracts was in no wise drawn in question. The decision was governed by the settled principles of the jurisprudence of the State. In such cases this court has no power of review.” “Substantially the same question arose in Bank of West Tennessee v. Citizens’ Bank of Louisiana, heretofore decided. The writ of error was dismissed for want of jurisdiction. The same disposition must be made in this case.”

The distinction between the two classes of cases — those in which the State court has, and those in which it has not, given effect to the statute drawn in question as impairing the obligation of a contract — as affecting the consideration by this court, on writ of error, of the true construction and effect of the previous contract, is clearly brought out in Kennebec Railroad v. Portland Railroad, 14 Wall. 23. That was a writ of error to the Supreme Judicial Court of Maine, in which a foreclosure, under a statute of 1857, of a railroad mortgage made in 1852, was contested upon the ground that it impaired the obligation of the contract, and the parties agreed that the opinion of that court should be considered as part of the record. Mr. Justice Miller, in delivering judgment, after stating that it did appear that the question whether the statute of 1857 impaired the obligation of the mortgage contract “ was discussed in the opinion of the court, and that the court was of the opinion that the statute did not impair the obligation of the contract,” said: “ If this were all of the case, we should undoubtedly be bound in this court to inquire whether the act of 1857 did, as construed by that court, impair the obligation of the contract. Bridge Proprietors v. Hoboken Co., 1 Wall. 116. But a full examination of the opinion of the court shows that its judgment was based upon the ground that the foreclosure was valid, without reference to the statute of 1857, because the method pursued was in strict conformity to the mode of foreclosure authorized, when the contract was made, by the laws then in existence. Now, if the State court was right in their view of the law as it stood when the contract was made, it is obvious that the mere fact that a new law was made does not impair the obligation of the contract. And it is also clear that we cannot inquire whether the Supreme Court of Maine p. 38was right in that opinion. Here is, therefore, a clear case of a sufficient ground on which the validity of the decree of the State court could rest, even if it had been in error as to the effect of the act of 1857 in impairing the obligation of the contract. And when there is such distinct and sufficient ground for the support of the judgment of the State court, we cannot take jurisdiction, because we could not reverse the case, though the federal question was decided erroneously in the court below against the plaintiff in error. Rector v. Ashley, 6 Wall. 142; Klinger v. Missouri, 13 Wall. 257; Steines v. Kranklin County, 14 Wall. 15. The writ of error must therefore be dismissed for want of jurisdiction.” 14 Wall. 25, 26.

By an act of the legislature of Kentucky of March 15, 1851, the Shelby Railroad Company was incorporated; its capital stock was fixed at $600,000, in shares of $50 each, to be subscribed for by any individual or corporation; at any meeting of the stockholders, each stockholder was to be “ allowed one vote for every share owned by him, her, or it;” on every share subscribed, one dollar was to be paid at the time of the subscription, and the residue in instalments and at times to be fixed by the president and directors; all payments made on the stock were to bear interest until a dividend made, certificates of stock were to be issued to the persons entitled, in addition to the shares subscribed or held by them, and no certificates of stock were to be issued until they were paid for; the county court of Shelby County was empowered to subscribe for stock for all such interest in behalf of the county, its subscription was to be made payable at such times and places and upon such terms as might be agreed on between it and the p. 41commissioners or directors taking its subscription, and, for the purpose of paying that subscription, it was authorized to levy and collect a tax on all the property subject to taxation within the county ; and every person paying any part of the tax was to be entitled to his pro rata share of stock, and to receive a certificate thereof on paying, or producing transfers from those who had paid, for a full, half or quarter share.

“ Sec . 6. Where any such subscription to the capital stock of said company shall have been ordered, and the conditions aforesaid complied with, bonds shall be executed in the name of and under the seal of or scroll of said portion of Shelby County, or said counties, as the case may be, in such form and in such amounts, the entire amount of said bonds not to exceed the sum subscribed, and payable at such places, and bearing interest payable semi-annually, at such rates, not exceeding eight per centum per annum, as the president and directors may elect. The bonds shall be due and payable twenty years from their date, with the privilege reserved to the said counties to pay them after three years from date. The bonds shall be signed by the judge of the county court p. 42and countersigned by the county clerk. When so executed, said bonds shall be delivered to the president and directors of said company, in payment of said subscription, and they may be by them negotiated, hypothecated or sold, upon such terms and at such times as may by said president and directors be deemed expedient, and may be transferred by endorsement.

“ Sec . 3. When any county, or part of a county, city, town or precinct, shall have delivered its bonds in payment for stock subscribed, it shall be entitled to representation, and to vote the amount of such stock in any meeting of the stockholders of said company. The stock owned by a county shall be represented by the county judge and all of the justices of the peace of the county ; stock owned by a part of a county, or a precinct, by the county judge and by the justices of the peace residing in the district or precinct taxed; stock owned by a city or town, by its general council or board of trustees; and p. 43these several bodies may designate a suitable person or persons as their proxies to represent them in any meeting of the stockholders of said company. It shall be the duty of the county judge to call together at the county seat the justices entitled to vote, and to cause their action to be spread upon the records of the county court.”

The statutes of Kentucky require written opinions to be delivered by the Court of Appeals in all cases, and to be recorded by its clerk. Code of Civil Procedure, § 765 ; Gen. Stat. c. 28, art. 2, § 10 ; c. 16, art. 1, § 1. By the settled course of decision under the existing judiciary acts of the United States, this court may examine opinions so delivered and recorded, to ascertain the ground of the judgment of the State court. Murdock v. Memphis, 20 Wall. 590, 633 ; Mc-Manus v. O’ Sullivan, 91 U. S. 578 ; Gross v. United States Mortgage Co., 108 U. S. 481, 487 : Adams County v. Burlington de Missouri Bailroad, 112 U. S. 123,129; Detroit Railway n . Guthard, 114 U. S. 133, 137 ; Jacks v. Helena, 115 U. 8. 288; Philadelphia Fire Association v. New York, 119 U. 8. 110. The decision in Fisher v. Cockerall, 5 Pet. 248, 255, cited by one of the defendants in error, in which, on a writ of error to the Court of Appeals of Kentucky, this court held that the p. 45opinion of that court could not be taken into consideration, was decided under the judiciary act of 1789, which contained a provision, omitted in the later acts, expressly requiring the error assigned as a ground of reversal to appear on the face of the record. Acts of September 25,1789, c. 20, § 25, 1 Stat. 86; February 5, 1867, c. 28, § 2, 14 Stat. 386; Rev. Stat. § 709.