In order to warrant the exercise by this Court of jurisdiction
over the judgments of state courts, there must be some fair ground
for asserting the existence of a federal question, and in the
absence thereof, a writ of error will be dismissed although the
claim of a federal question was plainly set up, and where by the
record it appears that such a claim, although set up, had no
substance or foundation, the fact that it was raised was not
sufficient to give this Court jurisdiction.
That the state has power to forfeit the charter of a corporation
for an abuse of its privileges is recognized as law in
Louisiana.
In Louisiana, a corporation is liable to be proceeded against
for taking illegal rates by
quo warranto at the suit of
the state.
Upon a careful review of all the questions, the Court is of
opinion that no federal question exists in this record, and that
the Court is without jurisdiction in this case.
This is a proceeding in the nature of a
quo warranto,
brought by the Attorney General of the State of Louisiana, in the
name
Page 185 U. S. 337
of the state, to obtain a forfeiture of the charter of the
defendant, the waterworks company. Upon the trial, there was
judgment in favor of the company, but upon appeal to the supreme
court of the state, that judgment was reversed and judgment in
favor of the state and against the company was entered decreeing
the forfeiture of the charter and of all the franchises heretofore
conferred upon the defendant. The company has brought the case here
by writ of error for review.
It appears from the petition filed in behalf of the state,
through its Attorney General, that in June, 1898, the general
assembly of the state adopted a concurrent resolution providing for
the appointment of a committee, with instructions to investigate
the complaints against the methods of operation of the New Orleans
Waterworks Company, and to report back to the general assembly such
action as it might deem necessary to the public interests in the
premises. The committee was duly appointed, made the investigation,
and having submitted two reports thereon, the legislature on July
14, 1898, adopted the following:
"Whereas the majority and minority reports of the joint
committee of the house and senate, appointed to investigate the
affairs, administration, and condition of the New Orleans
Waterworks Company, have been submitted to the general assembly,
together with the testimony and evidence adduced at the various
sessions of the said committee; and"
"Whereas the subject matter of the said reports involves the
consideration and the determination of intricate questions of law
and fact; and"
"Whereas it is impossible in view of the limited time at its
disposal for the general assembly to give the matter the
examination and consideration necessary for a proper determination
thereof;"
"
Be it therefore resolved by the senate, the house of
representatives concurring, that the whole subject matter of
the said report, together with the testimony and evidence upon
which they are based, be respectfully referred to the Attorney
General of the state for such action in the premises as he may deem
proper. "
Page 185 U. S. 338
The Attorney General, after such reference, commenced this
proceeding, and in the petition it was averred that the water
company had been duly incorporated by the state legislature, and
that, after its incorporation it had been guilty of repeated and
continuous violations of the charter, and had thereby forfeited the
same and its franchises, and the petition then set forth twelve
different causes of forfeiture which were alleged to have been
violations of its charter. It was alleged that the company had
failed to supply the inhabitants of the city with pure water; that
the supply was not only muddy and impure, but also wholly
inadequate either to extinguish fires, to wash yards, alleys, and
streets, or to furnish the inhabitants with water for bathing and
domestic purposes; that the water furnished was at no time fit for
drinking or cooking.
It was also averred that the company had habitually, since 1878
to the time of filing the petition, illegally exacted and collected
greater rates than those exacted and collected by the City of New
Orleans for the same quantity of water when it was the owner of the
plant, and that the company had no right to charge any greater rate
than had then been charged by the city. Various other grounds were
stated in the petition not necessary to be particularly noticed.
The prayer of the petition was for the forfeiture of the charter of
the company and all its franchises, and, in the alternative, should
that relief not be granted, that then it might be decreed that the
company had forfeited all exclusive privileges, and that the City
of New Orleans should be adjudged to have the right to contract
with anyone else for a supply of water and to expropriate the
tangible property of the company if the city should see fit,
etc.
Exceptions were filed to this complaint, which were overruled by
the court, and the waterworks company then answered, denying the
allegations of the petition. The City of New Orleans then filed a
petition for leave to intervene and to become a party plaintiff in
the proceeding. The board of liquidation of the city also filed a
petition to intervene and be made a party defendant, on the ground
that it had an interest in common with the waterworks company to
have the complaint against it dismissed. The court allowed both
petitions in intervention to be filed, and
Page 185 U. S. 339
the state then answered the petition in intervention of the
board of liquidation, and the water company filed its answer to the
petition of the City of New Orleans.
The answer of the water company to the complaint on the part of
the state, after denying various allegations, averred that the
primary reason for the incorporation of the defendant was neither
to provide the city with a proper water supply nor to obtain an
enlargement of the existing waterworks, because for more than forty
years prior thereto, the city had works adequate to furnish such a
supply, with full power to enlarge the works as occasion required.
The answer also averred that in 1833, the Commercial Bank of New
Orleans was incorporated for the purpose of providing a waterworks
plant and system for the City of New Orleans, and that it
immediately complied with the duty of providing the same, and had
operated it for many years; that the city, about the time of the
incorporation of the bank, had become an owner of five thousand
shares of the stock of the company, and had issued its bonds in
payment therefore at the time of the purchase. There was a
provision in the charter of the bank that the city might purchase
the plant in thirty-five years upon the conditions mentioned in the
act. It was further averred that the city had become the owner of
the waterworks plant under this provision in 1869, and that it had
operated the same up to and including the year 1878. At that time,
the city was under great financial pressure and almost bankrupt,
and had failed to pay most of the bonds it had issued for the five
thousand shares of stock it had owned in the bank corporation,
although such bonds were due, and also there were the current
obligations of the city to an amount of several million of dollars
overdue and unpaid. For the purpose of relieving the city, it was
averred that the legislature, in 1877, passed an act providing for
a sale of the plant by the city under the circumstances mentioned
in the act, but for some reason subscribers enough were not found
who would form a corporation and take the plant upon the terms
therein mentioned. Accordingly, in 1878, the act was amended,
making the terms more liberal, and thereupon subscribers who were
owners of the city bonds and other obligations came together and
formed a corporation
Page 185 U. S. 340
with a capital stock of two million dollars divided into twenty
thousand shares of one hundred dollars each. In accordance with the
terms of the act, these shares were assigned to the city, and the
city, in consideration thereof, sold and assigned to the company
the entire waterworks plant of the city, including the franchises
and rights granted by the state and sold with the balance of the
property, rights, and franchises so offered for sale by the act of
the legislature, amongst which property thus sold was the valuable
and indispensable franchise to be a corporation, which, as averred,
was a right not severable in law from the balance of the property.
The city has since sold all of the twenty thousand shares of the
stock of the company, excepting 3,927 shares held by the board of
liquidation in trust and as security for the extinguishment of the
debts of the city. The balance of the twenty thousand shares is in
other hands, whose title is traceable to the city. In order to
raise money to carry out its obligations, having received none for
the stock issued to the city for the property purchased, the
company has, pursuant to the permission granted it by the act of
1877, twice mortgaged the property, including the franchise to be a
corporation, and the bonds secured by those mortgages are in the
hands of
bona fide purchasers for value, and it is claimed
on the part of the defendant that they are indispensable parties to
this or any action to destroy the franchise of the defendant to be
a corporation. The defendant also avers that the state as plaintiff
acts in bad faith in assailing the franchises of the defendant in
such an action, and also in violation of the Fourteenth Amendment
of the Constitution of the United States, which forbids a state to
deprive any person of life, liberty, or property without due
process of law, or to deny any person within its jurisdiction the
equal protection of the laws. It was also alleged that the grant of
the corporate life to the defendant was not, as is usually the
case, a grant of corporate life for the purpose and consideration
only of the establishment of public works or improvements of a
public character, where the only consideration passing to the state
for the grant of corporate life is some supposed increased general
public benefit resulting
Page 185 U. S. 341
from the construction and installation of public works; but
that, on the contrary, in the case of the defendant corporation,
the contract and agreement between the state and the defendant was,
and is, an unquestionable contract of bargain and sale of all the
property, rights, and franchises described in the acts of 1877 and
1878, for an exact price fixed by the state in its offer of the
property for sale, which offer was accepted and price paid by the
defendant as the result of a bargaining in which the state was
acting, not alone in its character as a sovereign, but as a
merchant and trader in commerce, and that, in the bargaining and
sale of the said property and franchises, the state must, in law
and by the courts, be considered a trader engaged in driving a hard
commercial bargain in its own interest and on its own terms, and
for its own benefit and profit. The contract thus set forth, it was
averred, was protected from all impairment at the hands of the
state by the Constitution of the United States, particularly by
Section 10 of Article I, acting on the State of Louisiana as a
prohibition, while acting or moving, as plaintiff in this action,
in impairment of the faith of its own contract, to the same extent
as if such impairment had been attempted through and by means of
legislation compassing the same effect and result, that, if the
joint resolution of the state legislature, referred to in the
petition, could be construed as directing the institution and
prosecution of this suit, or as directing the Attorney General of
the state, in the name of the state, to institute and prosecute
this action, for the purpose and with the intent to segregate from
the mass of the property sold by the state to the defendant its
franchise to be a corporation, or if there exist any other statutes
of the state authorizing or directing the Attorney General to that
end and purpose, such joint resolution and statutes are repugnant
to the Constitution of the United States, particularly to Section
10 of Article I thereof, which is specially pleaded in defense of
this action. The defendant also averred that, by virtue of the
provisions of section 15 of the charter of defendant (Act No. 33 of
the Laws of 1877), the remedy for illegal charges for water was
confined to an application by the city for a mandamus to compel
the
Page 185 U. S. 342
company to desist from such charges. The section is reproduced
in the margin.
*
The answer further specifically denied all grounds of forfeiture
and prayed that the plaintiff's suit might be dismissed. The case
came to trial in the City of New Orleans, and after an
investigation of the issues raised by the pleadings, including the
examination of a large number of witnesses and the hearing of
arguments of counsel, the court determined (1) that the two
intervening parties, the City of New Orleans and the board of
liquidation, should not have been allowed to intervene, and
accordingly it was decreed that the intervention of those parties
should be dismissed at the cost of the respective interveners; (2)
the court then ordered judgment in favor of the water company and
against the plaintiff, the State of Louisiana, rejecting its demand
for the forfeiture of the defendant's charter. The state appealed
from that judgment to the supreme court, and the City of New
Orleans also took a separate appeal from the judgment dismissing
its intervention. Upon hearing in the supreme court, the judgment
in favor of the water company was reversed, and, as already stated,
a judgment was entered forfeiting the charter of the water
company.
Page 185 U. S. 343
MR. JUSTICE PECKHAM, after making the foregoing statement of
facts, delivered the opinion of the Court.
The defendant in error has made a motion to dismiss this writ of
error on the ground of a lack of jurisdiction, because no federal
question is disclosed in the record.
The plaintiff in error, on the contrary, claims the existence in
the record of several questions of a federal character, and in the
brief prepared to oppose this motion they are set forth as
follows:
"(1) The charter of the waterworks company prescribing mandamus
as a remedy to maintain a lawful tariff of water rates, is not the
substitution by the writs of forfeiture of charter, as a remedy for
the maintenance of unlawful rates, a breach of the contract, and a
deprivation of the property without due process of law, and a
denial of the equal protection of the laws?"
"(2) If such remedy be sanctioned by and sought pursuant to a
state statute, subsequent in date to the charter of the waterworks
company, does not such a statute impair the obligation of the
charter contract, divest vested rights, and deny to said company
the equal protection of the laws?"
"(3) Can the state forfeit such a charter and take back the
franchises at the same time that she leaves the corporation in
possession of the physical property depleted in value by the loss
of the franchise, and at the same time that she keeps the money
paid for the property plus the franchise?"
"(4) The general law of the state providing a
restitutio in
integrum in all cases where a synallagmatic, commutative
contract is dissolved, and the charter containing no special
provision taking the state's contract from under general provisions
of law, is not a state authorizing the Attorney General to
institute proceedings to forfeit the contract and take back the
franchise at the same time that the state keeps the consideration
paid for the same, a statute impairing the obligations of a
contract? "
Page 185 U. S. 344
"(5) Is not a judicial decision refusing to apply to this
contract the general provisions of the law of contracts prevailing
in the state a taking by the state through her judiciary of the
property of the defendant corporation without due process of
law?"
"(6) Is not the legislative resolution, the action of the
Attorney General, and the action of the supreme court of the state
the taking by the State of property without due process of law
through the instrumentality of her legislative, her executive, and
her judicial departments, both jointly and severally?"
"(7) Is not the refusal to apply to this case the general
provisions of the law of contract prevailing in the State of
Louisiana a denial to the plaintiff in error of the equal
protection of the laws of the State of Louisiana?"
These questions are, as is said, simply amplifications of the
grounds actually taken by plaintiff in error upon the trial and on
the argument of the case in the supreme court of the state, and
which are plainly set out in the record. This may be assumed, and
the point which arises is whether the matters thus set forth do in
truth create even a color of a federal question.
It has long been the holding of this Court that in order to
warrant the exercise of jurisdiction over the judgments of state
courts there must be something more than a mere claim that a
federal question exists. There must, in addition to the simple
setting up of the claim, be some color therefor, or, in other
words, the claim must be of such a character that its mere mention
does not show it destitute of merit; there must be some fair ground
for asserting its existence, and, in the absence thereof, a writ of
error will be dismissed, although the claim of a federal question
was plainly set up. Thus, in
Millinger v.
Hartupee, 6 Wall. 258, the Chief Justice (at page
73 U. S. 261)
said:
"Something more than a bare assertion of such an authority seems
essential to the jurisdiction of this Court. The authority intended
by the act is one having a real existence, derived from competent
governmental power."
This case arose under the twenty-fifth section of the Judiciary
Act, and jurisdiction was sought to be maintained upon the
assertion that the validity of
Page 185 U. S. 345
an authority exercised under the United States was drawn in
question, and the decision was against its validity. It was held
not sufficient to make the claim, but there must be some color of
foundation for its assertion.
In
New Orleans v. New Orleans Waterworks Company,
142 U. S. 79, upon
a motion to dismiss the writ of error on the ground that no federal
question was involved, it was said by the Court (p.
142 U. S.
87):
"While there is in the amended and supplemental answer of the
city a formal averment that the ordinance No. 909 impaired the
obligation of a contract arising out of the act of 1877, which
entitled the city to a supply of water free of charge, the bare
averment of a federal question is not in all cases sufficient. It
must not be wholly without foundation. There must be at least color
of ground for such averment, otherwise a federal question might be
set up in almost any case, and the jurisdiction of this Court
invoked simply for the purpose of delay."
Again, in
Hamblin v. Western Land Company, 147 U.
S. 531, upon a like motion to dismiss the writ of error,
the Court said:
"It is doubtful whether there is a federal question in this
case. A real, and not a fictitious, federal question is essential
to the jurisdiction of this Court over the judgment of state
courts,"
citing the two cases just above referred to.
In
St. Joseph & Grand Island Railroad Company v.
Steele, 167 U. S. 659, it
was said by the Court (p.
167 U. S.
662):
"We cannot accede to the proposition that, because the acts of
Congress which authorized the construction of the bridge in
question gave the right to build a railroad and toll bridge, the
conceded power of the state to tax did not extend to the bridge in
both aspects. Nor can we agree that the making of such a contention
raised a federal question of a character to confer original
jurisdiction in the circuit court of the United States. Not every
mere allegation of the existence of a federal question in a
controversy will suffice for that purpose. There must be a real,
substantive question on which the case may be made to turn."
Although the above case relates to the jurisdiction of the
circuit court, yet, so far as this question is concerned, the
principle is the same as to both courts.
Page 185 U. S. 346
And in
Wilson v. North Carolina, 169 U.
S. 586, it was held that there must be a real and
substantial federal question existing in order to give this Court
jurisdiction to review a judgment of a state court, and if the
question raised were so unfounded in substance that the court would
be justified in saying there was no fair color for the claim that
it was of a federal nature, the writ would be dismissed.
These cases show the rule and its limitations, and where by the
record it appears that, although a claim of a federal question had
been plainly made, if it also clearly appear that it lacked all
color of merit, and had no substance or foundation, the mere fact
that it was not sufficient to give this Court jurisdiction.
We must look at the question submitted by the plaintiff in error
in the light of these decisions for the purpose of determining
whether there is any fair foundation for the several claims. It
must also be remembered that, for years prior to and at the time of
the formation of this corporation, it was the unquestioned law that
all corporations were created by the state subject to its implied
power, if not stated in the charter, to dissolve the corporation
for a misuse or for a nonuse of its corporate powers or
obligations. The contract contained in a charter is always subject
to this power residing in the state.
Thus, in
Terrett v.
Taylor, 9 Cranch 43, it was stated by the Court (p.
13 U. S. 51):
"A private corporation created by the legislature may lose its
franchises by a misuser or a nonuser of them, and they may be
resumed by the government under a judicial judgment upon a
quo
warranto to ascertain and enforce a forfeiture. This is the
common law of the land, and is a tacit condition annexed to the
creation of every such corporation."
It is stated by Chancellor Kent, in his Commentaries (vol. 2, p.
378, Comstock's ed.), that there were two modes of proceeding
judicially to ascertain and enforce the forfeiture of a charter for
default or abuse of power, the one by
scire facias, the
other by information in the nature of a
quo warranto, both
these modes of proceeding against corporations being at the
instance and on behalf of the government. The state must be a
party
Page 185 U. S. 347
to the prosecution, for the judgment is that the parties be
ousted, and the franchises seized into the hands of the
government.
In
Chicago Life Insurance Company v. Needles,
113 U. S. 574, the
Court, at page
113 U. S. 579,
said:
"The case upon the merits, so far as they involve any question
of which this Court may take cognizance, is within a very narrow
compass. The main proposition of the counsel is that the obligation
of the contract which the company had with the state in its
original and amended charter will be impaired if that company be
held subject to the operation of subsequent statutes regulating the
business of life insurance and authorizing the courts, in certain
contingencies, to suspend, restrain, or prohibit insurance
companies incorporated in Illinois from further continuance in
business. This position cannot be sustained consistently with the
power which the state has, and, upon every ground of public policy,
must always have, over corporations of her own creation. Nor is it
justified by any reasonable interpretation of the language of the
company's charter. The right of the plaintiff in error to exist as
a corporation, and its authority, in that capacity, to conduct the
particular business for which it was created, were granted subject
to the condition that the privileges and franchises conferred upon
it should not be abused or so employed as to defeat the ends for
which it was established, and that, when so abused or misemployed,
they might be withdrawn or reclaimed by the state in such a way and
by such modes of procedure as were consistent with law. Although no
such condition is expressed in the company's charter, it is
necessarily implied in every grant of corporate existence.
Terrett
v. Taylor, 9 Cranch 43,
13 U. S.
51; Angell & Ames on Corporations, 9th ed., sec.
774, note."
In that case, the question was whether the company could be
dissolved on account of its insolvency. Here, one of the questions
is whether this company can be dissolved and its charter forfeited
on account of the illegal rates charged for supplying water. Upon
the question of insolvency in the
Needles case, the Court
(at page
113 U. S. 581)
said:
"It is not competent under existing laws for this Court to
inquire a whether the state court correctly interpreted the
evidence
Page 185 U. S. 348
as to the company's insolvency, nor whether the facts make a
case which, under the statute of 1874, required or permitted a
judgment perpetually enjoining it from doing any further business.
We are restricted by the settled limits of our jurisdiction to the
specific inquiry whether the statute themselves, upon which the
judgment below rests, impair the obligation of any contract which
the company or its policyholders had with the state, or infringe
any right secured by the national Constitution. . . . Did the
company, by its charter, have a contract that it should, without
reference to the will of the state or the public interests,
exercise the franchise granted by the state after it became
insolvent and consequently unable to meet the obligations which, as
a corporation, under the sanction of the state, it had assumed to
its policyholders? Our answer to these questions is sufficiently
indicated by what has been said."
The statute in question in the above case, it will be observed,
was passed subsequently to the grant of the charter to the
corporation. Even there, it was held that such a statute did not
impair the obligation of the contract contained in such charter. In
the case before us, there is no subsequent statute.
And again at page
113 U. S. 584
of the same case:
"It is further contended that the state enactments in question
impair the obligation of the contracts which the company has made
with its creditors and policyholders. To this it is sufficient to
reply in the language of the Court in
Mumma v. Potomac
Co., 8 Pet. 281,
33 U. S.
287, where it was said:"
"A corporation, by the very terms and nature of its political
existence, is subject to a dissolution, by a surrender of its
corporate franchises, and by a forfeiture of them for willful
misuse and nonuse. Every creditor must be presumed to understand
the nature and incidents of such a body politic, and to contract
with reference to them. And it would be a doctrine new in the law
that the existence of a private contract of the corporation should
force upon it a perpetuity of existence contrary to public policy
and the nature and objects of its charter."
"The contracts of policyholders and creditors are not
annihilated by such a judgment as was rendered below; for, to the
extent that the
Page 185 U. S. 349
company has any property or assets, their interests can be
protected, and are protected, by that judgment. The action of the
state may or may not have affected the intrinsic value of the
company's policies; that would depend somewhat on the manner in
which its affairs have been conducted, upon the amount of profits
it has realized from business, and upon its actual condition when
this suit was instituted; but the state did not, by granting the
original and amended charter, preclude herself from seeking, by
proper judicial proceedings, to reclaim the franchises and
privileges she has given when they should be so misused as to
defeat the objects of her grant, or when the company had become
insolvent so as not to be able to meet the obligations which, under
the authority of the state, it had assumed to policyholders and
creditors."
That the state has power to forfeit the charter of a corporation
for an abuse of its privileges is recognized as the law of
Louisiana. The Civil Code of that state, article 447, has for many
years authorized a proceeding in the nature of a
quo
warranto to forfeit the charter for misuse, and it has been
held that such article applies to every charter granted since its
adoption.
Atchafalaya Bank v. Dawson, 13 La. 497;
State v. New Orleans Gas Light & Banking Company, 2
Rob. (La.) 529, 532.
Again, the claim that the judgment deprives the plaintiff in
error of property without due process of law must be looked at with
reference to the cases upon the subject as to what constitutes due
process of law. Thus, in
Davidson v. New Orleans,
96 U. S. 97, it was
held that a statute which required that, before an assessment upon
land should become effectual, it must be submitted to a court of
justice, with notice to the owner of the property and an
opportunity given him to appear and contest the assessment,
constituted due process of law.
In
Murray's Lessee v. Hoboken
Land &c. Company, 18 How. 272, the question of
what amounted to due process of law was examined, and the
proceeding in that case held valid. Mr. Justice Curtis said, in
delivering the opinion of the Court:
"To what principles, then, are we to resort to ascertain whether
this process, enacted by Congress, is due process? To
Page 185 U. S. 350
this the answer must be two-fold. We must examine the
Constitution itself, to see whether this process be in conflict
with any of its provisions. If not found to be so, we must look to
those settled usages and modes of proceeding existing in the common
and statute law of England before the emigration of our ancestors,
and which are shown not to have been unsuited to their civil and
political condition by having been acted on by them after the
settlement of this country."
In
Kennard v. Louisiana, 92 U. S.
480, cited in
Foster v. Kansas, 112 U.
S. 201,
112 U.S.
206, it was held that a state statute regulating proceedings
for the removal of a person from a state office was valid with
regard to the federal Constitution if it provided for bringing the
party proceeded against into court, notifying him of the case he
had to meet, giving him an opportunity to be heard in his defense,
and for the deliberation and judgment of the court.
And in
Simon v. Craft, 182 U.
S. 427, it was held that the essential elements of due
process of law were notice and an opportunity to defend, and in
determining whether those rights were denied the court will be
governed by the substance of things, and not by mere form; that the
due process clause in the Fourteenth Amendment of the Constitution
did not necessitate that the proceedings in a state court should be
by a particular mode, but only that there should be a regular
course of proceeding in which notice was given of the claim
asserted and opportunity offered to defend against it.
Regarding the impairment of any alleged contract, it must be
borne in mind that the constitutional provision refers to state
legislation, or to an enactment of a legislative character, though
by a municipal corporation, made subsequent to the contract, and
which impairs its obligation.
New Orleans Waterworks Company v.
Louisiana Sugar Refining Company, 125 U. S.
18,
125 U. S. 30;
St. Paul Gas Light Company v. St. Paul, 181 U.
S. 142,
181 U. S.
148.
This Court does not obtain jurisdiction to review a judgment of
a state court because that judgment impairs or fails to give effect
to a contract. The state court must give effect to some subsequent
statute or state constitution which impairs the obligation
Page 185 U. S. 351
of the contract, and the judgment of that court must rest on the
statute either expressly or by necessary implication.
Railroad Company v.
Rock, 4 Wall. 177,
71 U. S. 180;
Railroad Company v.
McClure, 10 Wall. 511;
Knox v.
Exchange Bank, 12 Wall. 379.
These cases are referred to and applied in
Lehigh Water Co.
v. Easton, 121 U. S. 388,
121 U. S.
392.
With these principles in mind, we come to an examination of the
questions raised by the plaintiff in error.
The answer to the first question, as to mandamus being the
exclusive remedy for illegal rates, is that the state court has
otherwise construed the charter, and has held that mandamus is not
the only remedy, but that the company was liable to be proceeded
against by
quo warranto at the suit of the state through
its Attorney General. The claim that, by so proceeding, there is
any impairment of the obligation of a contract by any subsequent
legislation, or that there has thus been a deprivation of property
without due process of law, or a denial of the equal protection of
the laws, has no colorable foundation.
An examination of this question, among others, was made by the
state court after full hearing by all parties, and all that can
possibly be claimed on the part of the plaintiff in error is that
such court erroneously decided the law. That constitutes no federal
question.
As to the second question, there is no state statute subsequent
in date to the charter of the water company under or by virtue of
which this proceeding was commenced, or which in any way affects
the contract of plaintiff in error. The joint resolution of the
Legislature of Louisiana referred the whole matter to the Attorney
General for him to bring suit to forfeit the charter or to take
such action as he might think proper. It was a simple authority, if
any were needed, to present the question to the court, and neither
the contract nor any other rights of the parties were in any wise
altered by such resolution. The proceeding herein is based solely
upon an alleged violation of the terms of the charter by the
corporation; that question has been judicially determined after a
full investigation by the state courts, and in a proceeding to
which the company was a party, and
Page 185 U. S. 352
after a full hearing has been accorded it in such proceeding.
This was due process of law, and no federal question arises from
the decision of the court.
The same answer would seem to fit the other questions submitted
by the plaintiff in error. They are all based upon the proposition
that the judicial determination of these particular questions by
the state tribunal was erroneous, and on account of such error the
rights of the plaintiff in error, under the federal Constitution,
have been violated. But mere error in deciding questions of this
nature furnishes no ground of jurisdiction for this Court to review
the judgments of a state court.
Assuming that there was a contract, as is claimed by the
plaintiff in error, arising by virtue of the passage of the acts of
1877 and 1878 and their acceptance by the corporation, yet still
the erroneous decision by the state court, admitting,
arguendo, that it was erroneous, raises no federal
question. This Court does not and cannot entertain jurisdiction to
review the judgment of a state court, solely because that judgment
impairs or fails to give effect to a contract.
Curtis v.
Whitney, 13 Wall. 68, holds that a statute may even
affect a prior contract without always impairing its obligation.
The judgment must give effect to some subsequent state statute or
state constitution, or, it may be added, some ordinance of a
municipal corporation passed by the authority of the state
legislature, which impairs the obligation of a contract, before the
constitutional provision regarding the impairment of such contract
comes into play.
See authorities above cited.
The state in this case has secured the forfeiture of the charter
of the defendant by means of a judicial decree obtained in a state
court which had jurisdiction to give the relief prayed for, and
after a hearing of the defendant in the usual manner pertaining to
courts of justice. The facts upon which such forfeiture was based
have been judicially declared and found, and the defendant has had
full opportunity for its defense upon such hearing. The cause of
forfeiture was the fact, which was found by the court, that the
corporation had charged illegal rates for the water it furnished,
and the right to declare such forfeiture, because of a violation by
defendant of the conditions
Page 185 U. S. 353
of its charter, was implied in the very grant of the charter
itself. The claim, therefore, that the forfeiture was a violation
of the charter, and of the contract therein contained, and was on
that account a taking of defendant's property without due process
of law, or that the state by such judgment had denied to defendant
the equal protection of the laws -- cannot obtain. Whether
defendant had so violated its charter was a fact to be decided by
the state court. That court had full jurisdiction over the parties
and the subject matter, and its decision of the question was
conclusive in this case so far as this Court is concerned.
Neither the legislative resolution, nor the action of the
Attorney General, nor that of the supreme court of the state, nor
all combine, can, as contended for by plaintiff in error, be in
anywise regarded as the taking by the State of property without due
process of law through the instrumentality of its legislative, its
executive, and its judicial departments, either jointly or
severally. When analyzed, the whole claim is reduced to the
assertion that in enforcing a condition which is impliedly a part
of the charter, the state, through the regular administration of
the law by its courts of justice, has by such courts erroneously
construed its own laws. This Court in such a case has no
jurisdiction to review that determination.
The assumption that the state court has refused to apply to the
contract herein set up the general provisions of the law of
contracts prevailing in the state, and that therefore the state has
taken through her judiciary the property of the plaintiff in error
without due process of law, is wholly without foundation. If it
were otherwise, then any alleged error in the decision by a state
court, in applying state law to the case in hand, resulting in a
judgment against a party, could be reviewed in this Court on a
claim that, on account of such error, due process of law had not
been given him. This cannot be maintained.
That the bondholders were not made parties is also a question
which this Court cannot review. As is said in the
Needles
case, 113 U.S.,
supra, the corporation, by the very terms
of its existence, is subject to a dissolution at the suit of the
state on account of any willful violation of its charter, and the
creditors
Page 185 U. S. 354
of the corporation deal with it subject to this power. They must
accept the result of the decision of the state court.
Upon a careful review of all the questions, we are of opinion
that, within the authorities cited, the claim that any federal
question exists in this record is so clearly without color of
foundation that this Court is without jurisdiction in this case,
and the writ of error is therefore
Dismissed.
*
"SEC. 12. Be it further enacted, etc., That said waterworks
company shall have the right to fix the rates of charges for water,
provided that the net profits of the company shall not exceed ten
percent per annum, and shall publish sworn annual statements of its
business and condition, and that the city council shall have the
power to appoint a committee of not less than five, who shall have
access to the books of the said company and make such extracts from
the same as they may deem necessary, and in case the said profit
shall exceed ten percent, the city council shall have the right to
require said company to reduce the price of water in such manner
and in such a proportion that the profits shall never exceed the
above-named rates, and provided further that the rates charged
shall never exceed those now paid by the city, and in case said
company shall refuse compliance, the demand of said city may be
enforced by a writ of mandamus."
