1. Where a bill is based not only upon diversity of citizenship,
but also upon the alleged unconstitutionality of municipal
ordinances as impairing the obligation of a contract, an appeal
lies to this Court and the whole case is opened for
consideration.
Where a statute delegates powers to a city, the ordinances of
the municipality are the acts of the state, and their
unconstitutionality is the unconstitutionality of a state law
within the meaning of sec. 5 of the Circuit Court of Appeals
Act.
2. A court of equity has no general power to enjoin or stay
criminal proceedings unless they are instituted by a party to a
suit already pending before it, and to try the same right that is
in issue there, or to prohibit the invasion of the rights of
property or the enforcement of an unconstitutional law.
In re
Sawyer, 124 U. S. 200.
One who has contracted to deliver gas machinery to a gas and
fuel company has no standing in a court of equity to restrain a
city from enforcing an ordinance prohibiting the erection of gas
works within a portion of the city in which the erection of gas
works was not prohibited when the contract was made on the ground
that such ordinances are repugnant to the federal Constitution as
impairing the obligation of a contract, it not appearing that the
plaintiff has any contract with the city or that the gas and fuel
company would not or could not, by reason of insolvency, respond to
its claim under the contract.
This was a bill in equity filed in the Circuit Court for the
Southern District of California by appellant, a citizen of
Massachusetts, to restrain the City of Los Angeles and its officers
from enforcing certain municipal ordinances prohibiting the
erection or maintenance of gas tanks or reservoirs within certain
portions of the city.
The gravamen of the bill was that, on September 1, 1901,
Caroline W. Dobbins made a contract with the Valley Gas & Fuel
Company, a California corporation, to build certain gas works for
her, including all things necessary for the manufacture,
Page 189 U. S. 208
recovery, and storage of gas on lands thereafter to be
designated; that, on September 17, the appellant made a contract
with the gas and fuel company to erect upon Mrs. Dobbins' premises
a water tank and gas holder having a capacity of 100,000 cubic feet
of gas, and that immediately thereafter it constructed and prepared
the material and machinery necessary for the erection of the tank
and gas holder, and shipped the same to Los Angeles; that, on
September 28, Mrs. Dobbins purchased certain lands in Los Angeles,
which were within the limits wherein it was lawful to erect gas
works as described in a municipal ordinance adopted August 26,
1901, and on November 1, applied to the board of fire commissioners
for a permit to erect such gas works; that, on November 22, her
petition came on for hearing before the fire commissioners, and
after proof had been made that all provisions of prior ordinances
had been complied with, the matter was duly considered, and finally
resulted, November 29, in a vote to grant a permit to erect and
maintain the gas works.
That upon the 22d day of November, Mrs. Dobbins' contractors
began at once to lay the foundation for said works at a cost of
upwards of $2,500, when, on November 25, the city adopted an
ordinance, amending that of August 26, 1901, including her property
in the prohibited territory for the erection or maintenance of gas
works (which ordinance, however, seems to have proved defective),
and subsequently, in February, 1902, caused certain of the
employees of the gas and fuel company to be arrested, charging them
with a violation of this ordinance. Subsequently, under new
proceedings, certain employees of the plaintiff were arrested, and
the work stopped.
Another ordinance was passed on March 3, 1902, also amending
that of August 26, 1901, and other arrests were made of the
employees for a violation of this ordinance. It was averred that
the gas works are in an uncompleted condition, exposed to the
elements and in danger of being destroyed, and that all of the
aforesaid ordinances were adopted by the common council at the
instigation of the Los Angeles Light Company, which has enjoyed a
monopoly of the gas business for the last ten years.
Page 189 U. S. 209
A demurrer was filed to this bill by the city for want of equity
and of jurisdiction, which was sustained by the court, and the bill
dismissed, 115 F. 537, apparently upon the ground that a court of
chancery has no power to restrain criminal proceedings unless they
are instituted by a party to a suit already pending before it and
to try the same right that is in issue there. Whereupon an appeal
was taken to this Court.
Page 189 U. S. 216
MR. JUSTICE BROWN delivered the opinion of the Court.
As the bill in this case is based not only upon diversity of
citizenship, but upon the alleged unconstitutionality of the
municipal ordinances of November 25, 1901, and March 3, 1902, as
impairing the obligation of Mrs. Dobbins' contract with the city
under prior ordinances, an appeal lies directly to this Court, and
upon such appeal the whole case is opened for consideration.
Horner v. United States, 143 U. S. 570;
Chappell v. United States, 160 U.
S. 499. The state having delegated certain powers to the
city, the ordinances of the municipal authorities in this
particular are the acts of the state through one of its properly
constituted instrumentalities, and their unconstitutionality is the
unconstitutionality of a state law within the
Page 189 U. S. 217
meaning of section 5 of the Circuit Court of Appeals Act.
City Railway Co. v. Citizens' R. Co., 166 U.
S. 557;
Penn Mutual Life Insurance Co. v.
Austin, 168 U. S. 685,
168 U. S. 694;
St. Paul Gas Light Co. v. St. Paul, 181 U.
S. 142,
181 U. S.
148.
2. The court below did not pass upon the validity of these
ordinances, but came to the conclusion that a bill in equity would
not lie to restrain their enforcement, and in this aspect we shall
discuss the case. As the only method employed for the enforcement
of these ordinances was by criminal proceedings, it follows that
the prayer of the bill to enjoin the city from enforcing these
ordinances or prevent plaintiff from carrying out its work must be
construed as demanding the discontinuance of such criminal
proceedings as were already pending and inhibiting the institution
of others of a similar character.
That a court of equity has no general power to enjoin or stay
criminal proceedings unless they are instituted by a party to a
suit already pending before it, and to try the same right that is
in issue there, or to prohibit the invasion of the rights of
property by the enforcement of an unconstitutional law, was so
fully considered and settled in an elaborate opinion by Mr. Justice
Gray in
In re Sawyer, 124 U. S. 200,
that no further reference to prior authorities is deemed necessary,
and we have little more to do than to consider whether there is
anything exceptional in the case under consideration to take it out
of the general rule. The plaintiff in the case of
Sawyer
sought to restrain the mayor and committee of a city in Nebraska
from removing a city officer under charges filed against him for
malfeasance in office. This was held to fall within the general
rule, and not within the exception.
The general rule that a circuit court of the United States
sitting as a court of equity cannot stay by injunction proceedings
pending in a state court to enforce the criminal laws of such state
was applied in
Harkrader v. Wadley, 172 U.
S. 148, to a case where the plaintiff sought to enjoin
proceedings against him for the embezzlement of the assets of a
bank, and in
Fitts v. McGhee, 172 U.
S. 516, to a suit brought by the receiver of a railroad
against the attorney general of the state to restrain him from
instituting or prosecuting criminal proceedings
Page 189 U. S. 218
to enforce against the plaintiff the provisions of a state law
reducing the tolls which had been exacted of the public by the
railroad, of which the plaintiff was receiver. This was held to be
in reality a suit against the state to enjoin the institution of
criminal proceedings, and hence within the general rule.
See
also Prout v. Starr, 187 U. S.
537.
Plaintiff seeks to maintain its bill under the exception above
noted, wherein, in a few cases, an injunction has been allowed to
issue to restrain an invasion of rights of property by the
enforcement of an unconstitutional law where such enforcement would
result in irreparable damages to the plaintiff. It cites in that
regard the case of
Reagan v. Farmers' Loan & Trust
Co., 154 U. S. 362, in
which, under a law of Texas giving express authority to a railroad
company or other party in interest to bring suit against the
railroad commissioners of that state, a bill was sustained against
such commission to restrain the enforcement of unreasonable and
unjust rates, and in the opinion a few instances were cited where
bills were sustained against officers of the state who, under color
of an unconstitutional statute, were committing acts of wrong and
injury to the rights and property of the plaintiff acquired under a
contract with the state. It would seem that, if there were
jurisdiction in a court of equity to enjoin the invasion of
property rights through the instrumentality of an unconstitutional
law, that jurisdiction would not be ousted by the fact that the
state had chosen to assert its power to enforce such law by
indictment or other criminal proceeding.
Springhead Spinning
Co. v. Riley, L.R. 6 Eq. 551, 558.
In order to determine the exact property rights at stake in the
case under consideration, it should be borne in mind that this is
not a bill by Mrs. Dobbins, the owner of the land and of the
proposed gas works, to enjoin the city from interfering with
carrying out the permit she had obtained to erect these gas works,
nor by the Valley Gas & Fuel Company, with which she had made a
contract to erect these works but by a subcontractor which had made
a contract with the gas and fuel company to erect for it, and upon
premises to be designated by Mrs. Dobbins, a water tank and gas
holder; and, without even
Page 189 U. S. 219
alleging that the gas and fuel company had refused to carry out
its contract, or pay to plaintiff damages, or that Mrs. Dobbins had
refused to settle any claim the gas and fuel company might have
against her, seeks to enjoin the City of Los Angeles in the assumed
right of Mrs. Dobbins from interfering with its servants and
employees and from preventing plaintiff from carrying out the work
of erecting the water tank and gas holder, and also to desist and
refrain from enforcing its ordinances. It sets up no contract of
its own with the city which the municipal ordinances have impaired,
but a contract of the city with Mrs. Dobbins, to which it was no
party, in which it had no direct interest, and that, too, without
averring that the gas and fuel company was insolvent or unable to
respond to its claim for damages. It proceeds wholly upon the
assumption that the revocation of Mrs. Dobbins' license will
operate injuriously to it, and that it cannot obtain a full and
adequate remedy at law by an action against the gas and fuel
company upon its contract to pay the price agreed upon between
them.
It is true the bill is based upon the theory that plaintiff
would suffer great and irreparable loss by the interference of the
city and by the exposed condition of the works, and that the
refusal of an injunction would result in innumerable actions at law
and a multiplicity of suits, which would have to be instituted at
great expense and without the possibility of recovering indemnity.
We are not, however, bound by this allegation when the facts set
forth in the bill show that, if the plaintiff be entitled to a
remedy at all, it has an action against the gas and fuel company,
which is presumed at least to be able to respond in damages for all
such as plaintiff may have suffered by the interruption of the
contract. Whether the gas and fuel company in such action could
defend upon the ground that the municipality had forbidden the
prosecution of the work might depend somewhat upon the terms of the
contract, and upon the right of the gas and fuel company to take
advantage of the interference of the city. As to this, we express
no opinion. It is true the employees of the plaintiff were
arrested, but that fact alone wrought no legal injury to the
plaintiff, since, if it were prevented from any cause for which the
gas and fuel company
Page 189 U. S. 220
were chargeable, it might bring an action for damages against
that company, with which alone its contract was made, and recover
such damages as it could prove to have sustained.
It is true that, in a number of cases, bills have been sustained
by one or more stockholders in a corporation against the
corporation and other parties to restrain the enforcement of an
unconstitutional law against the corporation itself, but it has
always been held, and General Equity Rule 94 requires, that such
bill must contain an allegation under oath that the suit is not a
collusive one to confer on a court of the United States
jurisdiction, and must also contain an allegation that the
directors of a corporation have refused to institute the
proceedings themselves in the name of such corporation, and the
efforts of the plaintiff to secure such action on the part of the
directors, and the cause of his failure to obtain it.
Dodge v.
Woolsey, 18 How. 331;
Hawes v. Oakland,
104 U. S. 450;
Corbus v. Alaska Co., 187 U. S. 455.
This rule, however, has no application to subcontractors, who stand
in no position to enforce the right of their immediate contractors,
such as was the gas and fuel company, or of the owner of the
property, who had agreed with such immediate contractors to do the
work. The plaintiff in this case stands practically in the position
of one who seeks to take advantage of the unconstitutionality of a
law in which it has only an indirect interest, and by the
enforcement of which it has suffered no legal injury. In this, it
stands much in the position of the plaintiff in
Tyler v. Court
of Registration, 179 U. S. 405, and
in
Turpin v. Lemon, 187 U. S. 51;
In re Wellington, 16 Pick. 87, 96;
Sinclair v.
Jackson, 8 Cow. 543;
Jones v. Black, 48 Ala. 540;
Shehane v. Bailey, 110 Ala. 308;
Dejarnett v.
Haynes, 23 Miss. 600.
In this connection also, the appellant cites the case of
Reagan v. Farmers' Loan & Trust Co., 154 U.
S. 362,
154 U. S. 393,
in which we held that the trustee of the bondholders of a railway
corporation could maintain a suit against the state railway
commission to restrain the enforcement of unreasonable and unjust
rates. The case, however, was put upon the express ground that the
bondholders were the equitable and the beneficial owners of the
property of the corporation, and in that capacity
Page 189 U. S. 221
might
"invoke the judgment of the federal courts as to whether the
contract rights created by the charter, and of which it is the
beneficial owners, are violated by subsequent acts of the state in
limitation of the right to collect tolls."
In that case, the bondholders were not only the beneficial
owners of the property, but a reduction of the tolls might have
resulted in the practical destruction of their securities, and
unless the bill were maintained, they were practically remediless.
The case has but a remote analogy to the one under
consideration.
As the appellant has shown no legal interest in this litigation,
and no lack of a complete and adequate remedy at law, it results
that the bill was properly dismissed, and the decree of the court
below is therefore
Affirmed.
