New Orleans v. New Orleans Waterworks Co.
142 U.S. 79 (1891)

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U.S. Supreme Court

New Orleans v. New Orleans Waterworks Co., 142 U.S. 79 (1891)

New Orleans v. New Orleans Waterworks Company

Nos. 632, 639

Argued November 2-3, 1891

Decided December 14, 1891

142 U.S. 79

Syllabus

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

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