Hamilton Gas Light & Coke Co. v. Hamilton City - 146 U.S. 258 (1892)
U.S. Supreme Court
Hamilton Gas Light & Coke Co. v. Hamilton City, 146 U.S. 258 (1892)
Hamilton Gas Light and Coke Co. v. Hamilton City
Argued November 2-3, 1892
Decided November 21, 1892
146 U.S. 258
The provision in sec. 2486 of the Revised. Statutes of Ohio authorizing cities and villages in that state to erect gas works at the expense of the municipality or to purchase any gas works therein do not infringe the contract clause of the Constitution of the United States when exercised by a municipality within which a gas company has been authorized, under the provisions of the acts of May 1, 1852, and March 11, 1853, to lay down pipes and mains in the public streets and alleys and to supply the inhabitants with gas and has exercised that power, and with which the municipal authorities have contracted, by contracts which have expired by their own limitation, to supply the public streets, lanes and alleys of the municipality with gas.
A municipal ordinance not passed under legislative authority is not a law of the state within the meaning of the constitutional prohibition against state laws impairing the obligation of contracts.
Public grants susceptible of two constructions mast receive the one most favorable to the public.
Although a legislative grant to a corporation of special privileges may be a contract when the language of the statute is so explicit as to require such a construction, yet if one of the conditions of the grant be that the legislature may alter or revoke it, a law altering or revoking the exclusive character of the granted privileges cannot be regarded as one impairing the obligation of the contract.
The Court stated the case as follows:
The Hamilton Gaslight and Coke Company invokes against a certain ordinance of the City of Hamilton, a municipal corporation
of Ohio, the protection of the clause of the Constitution of the United States which forbids the passage by a state of any law impairing the obligation of contracts as well as the clause declaring that no state shall deprive any person of property without due process of law. By the final judgment, a temporary injunction granted against the city was dissolved, and the bill dismissed. 37 F. 832.
The appellant became a corporation on the 6th day of July, 1855, under the general statute of Ohio of May 1, 1852, providing for the creation and regulation of incorporated companies. By the fifty-third section of that statute, it was provided that any corporation formed under it should have full powers, if a gas company, to manufacture and sell and to furnish such quantities of gas "as might be required in the city, town, or village where located, for public and private buildings, or for other purposes," with authority to lay pipes for conducting gas through the streets, lands, alleys, and squares in such city, town, or village, "with the consent of the municipal authorities of said city, town, or village, and under such reasonable regulations as they may prescribe." The fifty-fourth section gave the municipal authorities power "to contract with any such corporation for lighting . . . the streets, lands, squares, and public places in any such city, town, or village." 1 Swan & Critchfield Stats. 271, 300; 50 Ohio Laws 274.
On the 11th of March, 1853, a supplementary act was passed authorizing the city council to regulate by ordinance from time to time the price which gaslight or gaslight and coke companies should charge for gas furnished to citizens or for public buildings, streets, lanes, or alleys in such cities, and providing that such companies should in no event charge more than the price specified by ordinance of the city council, and that the city council might by ordinance regulate and fix the price for the rent of meters. Other sections of the act were in these words:
"SEC. 31. That if such companies shall at any time hereafter be required by any city council, as aforesaid, to lay pipes and light any street or streets, and shall refuse or neglect for six months after being notified by authority of such city council to lay pipes and light said streets, then and in that case
such city council may lay pipes and erect gas works for the supply of said streets and all other streets which are not already lighted, and the said gas companies, gaslight and coke companies, shall thereafter be forever precluded from using or occupying any of the streets not already furnished with gas pipes of such companies, and such city council may have the right to open any street for the purpose of conveying gas as aforesaid."
"SEC. 32. That a neglect to furnish gas to the citizens or other consumers of gas, or to any city, by such companies, in conformity to the preceding section of this act and in accordance with the prices fixed and established by ordinance of such city council, from time to time, shall forfeit all rights of such company under the charter by which it has been established, and any such city council may hereafter proceed to erect, or by ordinance empower any person or persons to erect, gas works for the supply of gas to such city and its citizens, as fully as any gaslight or gaslight and coke company can now do, and as fully as if such companies had never been created."
Curwen's Stats. c. 1248, pp. 2153, 2164, 2165; 51 Ohio Laws 360.
Another act was passed April 5, 1854, empowering the city council to fix from time to time, by ordinance, the minimum price at which it would require the company to furnish gas for any period not exceeding ten years, and providing that from and after the assent of the company to such ordinance, by written acceptance thereof filed in the clerk's office of the city, it should not be lawful for the council to require the company to furnish gas to the citizens, public buildings, public grounds, or public lamps of the city at a less price during the period of time agreed on, not exceeding ten years. That act, it was declared, should not operate to impair or affect any contract theretofore made between any city and any gaslight or gaslight and coke company. It was further provided:
"SEC. 2. That the city council of such city may at any time after the default mentioned in the thirty-first section of the act to which this is supplementary [c. 1248, p. 2164], by ordinance permit such gas company to use and occupy the streets of such city for the purpose of lighting the same and furnishing the gas to
the citizens and public buildings."
"SEC. 3. That any temporary failure to furnish gas shall not operate as a forfeiture under the thirty-second section of the act to which this is supplementary unless such failure shall be by neglect or misconduct of such gaslight or gaslight and coke company, provided that such company shall, without unnecessary delay, repair the injury and continue to supply such gas."
Curwen's Stats. c. 1248, p. 2164; 52 Ohio Laws 30.
When the municipal laws of Ohio relating to gas companies were revised and codified in 1869, the above provisions were retained without material alteration, and now appear in the Revised Statutes of Ohio. 66 Ohio Laws, Title "Municipal Code," 145, 149, 218, 219, §§ 415-423; 1 Rev.Stats. Ohio, Title 12, Div. 8, c. 3, p. 637 et seq. 3d ed, 1890.
But this revision and codification contained a provision not appearing in any previous statute, and now constituting section 2486 of the Revised Statutes of Ohio. That section is in these words:
"SEC. 2486. The council of any city or village shall have power, whenever it may be deemed expedient and for the public good, to erect gas works at the expense of the corporation or to purchase any gas works already erected therein."
By an ordinance of the City of Hamilton passed July 9, 1855, the appellant was authorized to place pipes in streets, lanes, alleys, and public grounds to convey gas for the use of the city and its inhabitants, the company to have
"the exclusive privilege of laying pipes for carrying gas in said city, and of putting up pipes in dwellings in connection with the street pipes for the term of twenty years from the passage of this ordinance,"
but not to charge for gas furnished the city or its inhabitants a price greater than, during the period of the contract, was usually charged in cities of similar size and with like facilities for the making and furnishing of gas. The company from time to time, as required by the city, placed lamp posts at the points indicated by resolutions passed by the council.
Written contracts were made from time to time between the parties for lighting the city. The first one was dated
April 10, 1862. The last one was dated July 16, 1883, and expired by its terms January 1, 1889.
On the second day of January, 1889, the council passed a resolution reciting the termination of the last contract and declaring that the city no longer desired the company to furnish gas for lighting streets and public places, and would not after that date pay for any lighting furnished or attempted to be furnished by the company, which was forbidden the use of the lamp posts and other property of the city and notified to remove without delay any attachment or connection theretofore maintained with the city's lamp posts and other property. The company, having been served with a copy of this resolution, protested against the validity of this action of the city. In a written protest addressed to the council, it announced that its gas mains, filled with gas, extended throughout all the streets, etc., as theretofore designated and required by the city;
"that all said mains are connected with your lamp posts, lamps, and the burners thereon, and are all ready and fit for the purpose for which they were constructed and connected, and that this company is ready now and at all times to supply all the gas needed for the wants of your city and its inhabitants, and will furnish the same upon notice from you. This company owns the mains through which such gas is furnished and distributed for said public and private lighting; you own the lamp posts, lamps, and burners connected therewith."
The city, January 4, 1889, passed an ordinance looking to the issuing (such issuing being first approved by the popular vote) of bonds for the purpose of itself erecting works to supply the city and its inhabitants with gas.
The present suit was thereupon commenced by the company. The relief asked was a decree perpetually enjoining the city from disconnecting its lamp posts from the company's mains, or from lighting the city by any means or process other than that of the plaintiff's gas, as well as from issuing bonds for the purpose of erecting gas works or for the purpose of providing gas works to supply gaslight for the streets, lanes, alleys, public buildings and places, and for private consumers.