Heim v. McCall
239 U.S. 175 (1915)

Annotate this Case

U.S. Supreme Court

Heim v. McCall, 239 U.S. 175 (1915)

Heim v. McCall

No. 386

Argued October 12, 1915

Decided November 29, 1915

239 U.S. 175

Syllabus

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

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