New Orleans Waterworks Co. v. La. Sugar Ref. Co., 125 U.S. 18 (1888)
U.S. Supreme CourtNew Orleans Waterworks Co. v. La. Sugar Ref. Co., 125 U.S. 18 (1888)
New Orleans Waterworks Co. v. Louisiana Sugar Refining Company
Argued October 26-27, 1887
Decided March 19, 1888
125 U.S. 18
The opinion of the Supreme Court of Louisiana is strictly part of the record, and is so considered on writ of error from this Court.
The provision of the Constitution of the United States, which declares that no state shall pass any law impairing the obligation of contracts is aimed at the legislative power of the state, and not at decisions of its courts, or acts of executive or administrative boards or officers, or doings of corporations or individuals.
This Court has no jurisdiction of a writ of error to the highest court of a state on the ground that the obligation of a contract has been impaired unless some legislative act of the state is upheld by the judgment sought to be reviewed, and when the state court gives no effect to a law of the state subsequent to the contract, but holds, upon grounds independent of that law, that the right claimed was not conferred by the contract, the writ of error must be dismissed for want of jurisdiction.
The legislature of Louisiana in 1877, having granted to a corporation the exclusive right of constructing waterworks to supply the City of New Orleans and its inhabitants with water, provided that nothing in this charter should prevent the city council from granting to any person contiguous to the Mississippi River permission to lay water pipes exclusively for its own use, an ordinance of the city council in 1883, granting such permission to a corporation whose property is separated from the river by a street and a broad quay or levee owned by the city, is but a license from the city council exercising an administrative power, and not a law of the state, and if the highest court of the state, in a suit between the waterworks company and the licensee, gives judgment for the latter, upon the construction and effect of the charter and the license, and not because of the provision of the state constitution of 1879 abolishing monopolies, this Court has no jurisdiction on writ of error, although the question whether the licensee's property was contiguous to the river was in controversy.
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 thoroughfares
of the city to the Mississippi River. The allegations of the petition are in substance as follows:
That the Legislature of Louisiana, by an Act of April 1, 1833, chartering the Commercial Bank of New Orleans, declared the chief object of that corporation to be "the conveying of water from the river into the City of New Orleans and its faubourgs, and into the houses of its inhabitants," and enacted that it should
"have forever the exclusive privilege, from and after the passing of this act, of supplying the city and inhabitants of New Orleans and its faubourgs with water from the River Mississippi by means of pipes or conduits,"
and the right to construct the necessary works for that purpose, and provided that its works, rights, and privileges might be purchased by the City of New Orleans at any time after thirty-five years from the passage of the act. That in 1869, the City of New Orleans purchased the same accordingly, and took charge of and used the works for the purpose of supplying the city and its inhabitants with water. That the act of the Legislature of Louisiana of March 31, 1877, incorporating the plaintiff, contained the following provisions:
"SEC. 2. That immediately after the organization of the said waterworks company as hereinafter provided, it shall be required to issue to the City of New Orleans stock to the amount of six hundred and six thousand six hundred dollars, as full paid, and not subject to assessment, and in addition thereto, one similar share for everyone hundred dollars of waterworks bonds which said city may have taken up heretofore and extinguished by payment, exchange, or otherwise, and that the residue of said capital stock shall be reserved for the benefit of all holders of waterworks bonds, to the extent of the amount now outstanding, who may elect to avail themselves of the provisions of this act."
"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
from the Mississippi River or any other stream or river by 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."
"SEC. 11. That the City of New Orleans shall be allowed to use water from the pipes and plugs of said company now laid, or hereafter to be laid, free of any charge, for the extinguishment of fires, cleansing of the streets, and for the use of all public buildings, public markets, and charitable institutions."
"SEC. 17. That at the expiration of fifty years from the organization of the company, the city shall have the right to buy the works, conduits, pipes, etc., of the company at a valuation to be fixed by five experts, . . . but should the city neglect or refuse to purchase said works, etc., as above provided, the charter of the company shall be ipso facto extended for fifty years longer, but without any exclusive privilege or right to supply water, according to the provisions of the charter."
"SEC. 18. That nothing in this act shall be so construed as to prevent the city council from granting to any person or persons, contiguous to the river, the privilege of laying pipes to the river, exclusively for his own or their own use."
That on April 9, 1878, the city transferred the waterworks and franchises aforesaid to the plaintiff. That
"since said transfer the petitioner has faithfully discharged the trust imposed on it, and complied with all its obligations; that, by virtue of the aforesaid exclusive privilege thus conferred upon it by the aforesaid charters, statutes, and acts of transfer, the City of New Orleans cannot grant to anyone the privilege of laying pipes to the river to convey water within her limits without a flagrant violation of the aforesaid contracts and a breach of warranty, with the exception, however, of such privilege or facility as said city may think it expedient to extend riparian owners of property lying contiguous to said river. "
That the City of New Orleans granted permission to the Louisiana Sugar Refining Company, a corporation domiciled in the Parish of Orleans, to lay pipes from its factory to the Mississippi River, as appeared by the following ordinance, adopted by the city council on March 13, and approved by the mayor on March 15, 1883:
"An ordinance providing for the erection of all necessary machinery, boilers, and engines, and laying of water and sewerage pipes in connection with the Louisiana Sugar Refining Company's works."
"Be it ordained that permission be, and is hereby, granted to the Louisiana Sugar Refining Company to erect all necessary machinery, boilers, and engines in their factory in course of construction in the square bounded by Front, Clay, Bienville and Custom-House streets, and to lay water and sewerage pipes from said factory to the Mississippi River according to lines and grades for same to be furnished by the city surveyor, provided that all excavations and street crossings, paving, etc., broken up shall be replaced, repaired, and relaid to the entire satisfaction of the commissioner of public works; revocable at the pleasure of the council."
"under said permission, the said Louisiana Sugar Refining Company has broken the grounds along and across the streets and thoroughfares of the said city in the direction of the said river from its aforesaid factory, and will, unless restrained by the equitable writ of injunction, complete said works, pipes, and conduits and proceed to draw therewith water from the Mississippi River, in violation of the exclusive privileges aforesaid of the petitioner, and to its great damage and injury;"
and "that said Louisiana Sugar Refining Company has no riparian rights in the premises, and its property is not contiguous to said river."
The answer of the City of New Orleans denies all the allegations of the petition.
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
its factory to the Mississippi River, and that it has availed itself of the license therein granted, strictly in accordance with the ordinance aforesaid,"
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, ways, and privileges of the City of New Orleans were transferred by the title given by the said City of New Orleans to its vendors,
"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,"
"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
and 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. The plaintiff asked the court to instruct the jury:
"1st. That the word 'contiguous,' as used in § 18 of the charter of the plaintiff company, means riparian, or on the edge of the river."
"2d. That the City of New Orleans has no right to grant permission to any person or corporation whose property is not contiguous to the river to lay pipes or conduits to the Mississippi River to draw water therefrom through said pipes or conduits for manufacturing or other purposes."
The court refused to give either of said instructions "on the ground that the jury were judges both of the law and the facts of the case," and allowed a bill of exceptions. The jury returned a verdict for the defendants, and the court, with the verdict and the evidence before it, gave judgment for the defendants, dismissing the suit. The plaintiff appealed to the Supreme Court of Louisiana, which affirmed the judgment, and in its opinion recapitulated the substance of the provisions of the statute of Louisiana, above quoted, the conveyances from the Commercial Bank to the City of New Orleans in 1868, and from the city to the plaintiff in 1877, and the ordinance, passed by the city council in 1883, granting to the Louisiana Sugar Refining Company authority to lay pipes from its factory to the Mississippi River, and stated the question to be decided and the grounds of its decision as follows:
"The question which arises under such state of facts is simply whether the City of New Orleans had the right to grant the authority. If the city had such a right, the defendant company has a right to exercise it."
"In order to determine that question, it is essential first to ascertain what is the nature and extent of the privilege originally
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 conferred by the legislature in 1833, and confirmed in 1877, was not to draw water from the river, nor was it to lay pipes and conduits on the lands and streets of the City of New Orleans. It was the exclusive privilege of supplying the city and its inhabitants with water drawn from the river by those means, the object in view being, on account of benefits derived by the city, the exclusion of all others, corporations and individuals, from making a similar supply -- in other words, from selling and vending water. The Commercial Bank, in common with all the inhabitants of the city, possessed, independent of any legislative grant or concession, the right to draw water from the river for its own purposes and to supply the city and its inhabitants with it; but it did not, any more than any of the inhabitants of the city, have the right of laying the pipes and conduits necessary to convey the water through or over any of the lands or streets of the city, and to do so it required special authority either directly from the state or from its functionary, the city herself. The right which it did not possess, and which no other inhabitant possessed, was the exclusive privilege of supplying the city and its inhabitants forever, or a limited time, by means of pipes and conduits laid through the public soil."
"The moment that privilege was conferred by the state on the corporation to supply the city and its inhabitants with water from the river through pipes and conduits which it was authorized to lay through and over any of the lands or streets of the city, all preexisting as well as all subsequently arising rights which could have otherwise been exercised ceased to be available, and competition for such supply became an absolute legal impossibility."
"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
pleadings and the facts, the question of competition is not at all at issue."
"The City of New Orleans does not claim to have conferred on the defendant company, and that company does not claim to have received from the city, the right or privilege of supplying the city and its inhabitants with water by means of pipes, conduits, and hydrants."
"The city and the defendant company claim only that the former had a right to grant and the latter to enjoy the permission of laying pipes and conduits from the river to its factory for the sole purpose of supplying itself with water for its own purposes, and for no other. It cannot be doubted for an instant that as the city has, under general laws and by her charter which emanates directly from the sovereign, the exclusive control and regulation of her public lands, quays, streets, and avenues, she had the right of permitting the defendant company to lay pipes and conduits across the quay and through the streets from the river to within its factory limits for the purpose of supplying itself with the water needed for its objects. Rev.Civil Code, arts. 450, 453, 455, 457; Brown v. Duplessis, 14 La.Ann. 842; Board of Liquidation v. New Orleans, 32 La.Ann. 915."
"It is true that section 18 of the charter of 1877 expressly protects riparian or contiguous proprietors against a possible effect of the exclusive privilege granted, but the provision there found is not to be construed as one conferring a privilege or right which otherwise would have had no existence. It is indisputable that such riparian or contiguous owners would, independently of the declarations in § 18, have enjoyed that right, which could under no contingency have thus been abridged."
"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 exercise
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."
"If section 18 was designed for any practical object, it could only have been to secure to the contiguous owners, beyond the possibility of a doubt, their indisputable rights, subjecting them however to the control of the municipal authorities, as the improvident or careless exercise of such rights across the river bank and through the public street of a populous metropolis might be attended with great calamitous consequences, inflicting incalculable wrong and injury."
35 La.Ann. 1111.
A writ of error from this Court was allowed by the Chief Justice of the Supreme Court of Louisiana upon the plaintiff's petition representing
"That said plaintiff set up its charter as a contract between it and said City of New Orleans and the State of Louisiana, and that the ordinance of said city in favor of said defendant, the Louisiana Sugar Refining Company, was a violation of said contract, which was protected by the Constitution of the United States, and said supreme court in its decree maintained the legality of said ordinance and decreed it to be no violation of said contract."