The constitution of Florida has a clause to the effect that the
legislature is invested with full powers to prevent unjust
discrimination and excessive charges by persons and corporations
engaged as common carriers and performing other public services of
a public nature, and that it shall provide for enforcing such laws.
In pursuance of this clause, a law was passed empowering cities to
prescribe by ordinance maximum reasonable charges for water,
provided that the act should not impair the validity of any valid
contract, or be held to validate any contract theretofore made.
After the constitution but before the act, the City of Tampa had
made a contract with a water company giving the water company the
right to charge certain rates. After the act, it passed an
ordinance fixing lower rates, not, however, alleged to be
unreasonable. The Supreme Court of Florida sustained the ordinance,
reading the statute as giving the power to fix reasonable rates,
when it was possible, without impairing the obligation of
contracts, and the constitution as meaning that the legislature was
to have an inalienable power to make such laws.
Held that
this interpretation was sufficiently plausible to be followed.
The facts are stated in the opinion.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This case comes here by writ of error to a decree dismissing the
bill of the plaintiff in error upon demurrer. 45 Fla. 600. The bill
alleges a contract between the plaintiff water company and the City
of Tampa by which the former was to erect waterworks and to
Page 199 U. S. 242
have the right to charge certain rates for the use of its water
for thirty years, with various other terms, not necessary to
mention. By a subsequent ordinance, the city fixed lower rates as
the highest to be charged by any person or corporation furnishing
water to the city or its inhabitants, and imposed a penalty on
violation of this ordinance or refusal to furnish water in
compliance with its terms. The bill sets up that this ordinance
impairs the obligation of the plaintiff's contract and takes its
property without due process of law, contrary to the Constitution
of the United States. The city justified under section 30, Article
XVI, of the state constitution in force when the contract was made,
and under an act approved May 31, 1901, c. 5070, after the date of
the contract. The supreme court of the state held the justification
sufficient and dismissed the bill.
We assume for the purpose of decision that the contract made was
within the powers of the city, subject to whatever qualification of
inherent weakness the constitution created or imposed. We assume
also that the case shows more than a mere breach of contract by the
city if its justification fails, and pass at once to the merits of
the justification.
The clause of the state constitution is as follows:
"The legislature is invested with full power to pass laws for
the correction of abuses and to prevent unjust discrimination and
excessive charges by persons and corporations engaged as common
carriers in transporting persons and property, or performing other
services of a public nature, and shall provide for enforcing such
laws by adequate penalties or forfeitures."
In pursuance of this clause in the constitution, the legislature
passed the act referred to above. By this act, the corporate
authorities of cities, towns, and villages were empowered to
prescribe by ordinance maximum charges for water.
"Such charges to be just and reasonable: Provided, that this act
shall not be so construed as to impair the validity of any valid
contract heretofore entered into between any city, town, or village
and any person, firm, or corporation for the supply of water to
Page 199 U. S. 243
such city, town, or village or its inhabitants. But this act
shall not be held to validate any contract heretofore made."
This act was construed by the Supreme Court of Florida, as we
understand it, to mean that cities might establish reasonable
maxima in any case where they could do so without impairing the
obligation of contracts. Therefore the act was held to authorize
the ordinance complained of unless the ordinance was open to
constitutional objection. This construction of the statute is a
very slight extension of the direct meaning of the words used, and
seems to us reasonable even if a somewhat different one could be
conceived. Of course, it removes any question of constitutionality
from the statute, and therefore there seems to be no ground for
reviewing the decision upon that point.
Central Land Co. v.
Laidley, 159 U. S. 103;
Weber v. Rogan, 188 U. S. 10.
We turn to the construction of the constitution of the state.
There was some argument that the clause was not self-executing.
But, so far as it expressed a power of the legislature, of course,
as soon as the constitution went into effect, that power existed at
once, and contracts afterwards were made subject to the possibility
of its exercise, as it was exercised by the subsequent statute.
Spring Valley Waterworks v. Schottler, 110 U.
S. 347,
110 U. S. 355;
Bienville Water Supply Co. v. Mobile, 186 U.
S. 212. The only question, then, is how far the clause
of the constitution goes. When the contract was made, there had
been no judicial construction of the clause which withdrew the
contract from its operation, nor has there been since, so far as we
are aware. There is no ground for the application of the doctrine
of
Muhlker v. New York & Harlem R. Co., 197 U.
S. 544, or
Gelpcke v.
Dubuque, 1 Wall. 175. In such circumstances,
although we construe the constitution for ourselves, and determine
the existence or nonexistence of the contract set up, and whether
its obligation has been impaired by the state enactment,
Douglas v. Kentucky, 168 U. S. 488,
168 U. S. 502,
"the federal courts will lean towards an agreement of views with
the state courts if the question seems to them balanced
Page 199 U. S. 244
with doubt" -- a principle reinforced by the later cases.
Burgess v. Seligman, 107 U. S. 20,
107 U. S. 34;
Wilson v. Standefer, 184 U. S. 399,
184 U. S. 412;
Bienville Water Supply Co. v. Mobile, 186 U.
S. 212,
186 U. S. 220;
Chicago Theological Seminary v. Illinois, 188 U.
S. 662,
188 U. S.
674-675,
188 U. S.
677.
It cannot be said that the interpretation adopted is not a
possible one. Water companies are corporations performing services
of a public nature quite as much as common carriers, and therefore
are within the words of the clause which is not confined to common
carriers. A natural method of preventing excessive charges is the
passage by the cities or towns within which the services are
performed, of ordinances establishing reasonable rates and
punishing noncompliance. Therefore the power to prevent excessive
charges, given to the legislature, properly was exercised by a law
granting cities authority to pass ordinances of the kind
supposed.
So much probably would be admitted; but it is said that the
clause is merely declaratory of powers which the legislature would
have had without it, and which, with or without it, the legislature
could cut down by contract. The argument is not without force, but
it did not prevail in this case, and we are not prepared to
overrule the Florida courts in their interpretation of their own
laws. It is entirely possible to read the words as conferring a
power which, by their very form, they were meant to make
inalienable. No doubt some sort of a legislature would exist,
constitution or no constitution, and presumably would have power to
regulate rates charged by companies performing public services, or
to restrict that power by a constitutionally binding contract. But
the actual legislature derives its being, its form as a senate and
house of representatives, and its powers from the instrument in
force. When the constitution says that the legislature "is
invested" with a certain power, it invests it with that power, and
does so nonetheless that, in the absence of those words, a more or
less similar power would be implied by more general expressions in
the same instrument. It says that the power shall be "full
Page 199 U. S. 245
power;" and the adjective may be read as meaning a power which
cannot be cut down. When it goes on to require that the legislature
"shall" provide for enforcing the laws which it is expected to pass
for the correction of abuses and the prevention of excessive
charges, the argument is strengthened that it means to impose a
duty which the legislature is not at liberty to give up. Such was
the opinion of the Supreme Court of Florida, and we have yielded to
the judgment of the state court upon more doubtful questions than
this.
The case stands on the single ground of contract. There is no
allegation that the rates fixed by the new ordinances are
unreasonable, or that their effect will be to destroy or
considerably impair the value of the plaintiff's property. Although
the Fourteenth Amendment is invoked, no case is made out under it
on any other ground than that the obligation of a binding contract
is impaired. The single question is whether the City of Tampa is
bound for thirty years from the date of its agreement to permit
certain specified rates to be charged, even if they have ceased to
be reasonable. We are not prepared to say that the Supreme Court of
Florida was wrong in deciding that it is not bound under the
Florida Constitution and laws. The effect of a former decree
dismissing a bill brought by the city, which is set up in this
bill, cannot be reargued here.
Decree affirmed.
MR. JUSTICE BROWN, with whom was MR. JUSTICE PECKHAM,
dissenting:
In September, 1887, the waterworks company made a contract with
the city for the establishment of waterworks in which it was agreed
that the contract should continue in force for thirty years from
the time the works were completed and ready for duty, and that the
owners might charge and collect quarterly, in advance, for water
furnished to private consumers, prices not to exceed certain
maximum rates fixed by the contract.
Page 199 U. S. 246
At this time there, was in force the following constitutional
provision in Florida:
"The legislature is invested with full power to pass laws for
the correction of abuses and to prevent unjust discrimination and
excessive charges by persons and corporations engaged as common
carriers in transporting persons and property, or performing other
services of a public nature, and shall provide for enforcing such
laws by adequate penalties or forfeitures."
By an act of the legislature passed May 31, 1901 (chap. 5070),
the corporate authorities of any city were empowered to prescribe
by ordinance maximum rates and charges for the supply of water,
such charges to be just and reasonable; provided
"that this act shall not be so construed as to impair the
validity of any valid contract heretofore entered into . . . for
the supply of water to such city, . . . but this act shall not be
held to validate any contract heretofore made."
On December 20, 1901, the City Council of Tampa passed the
ordinance complained of (No. 274), which provided that
"it shall be unlawful for any individual, company or corporation
furnishing water to the City of Tampa or its inhabitants to charge
any higher rates for water than those hereinafter specified."
The ordinance made a large deduction in the rates fixed by the
original ordinance or contract, and thereby, as it is alleged,
impaired its obligation.
The constitutional provision was evidently not self-executing,
though it vested full power in the
legislature to prevent
excessive charges for the performance of public services. The
legislature did not see fit to exercise this power to its full
extent, but, in authorizing corporate authorities in any city,
etc., to fix rates, provided that
the act should not be so
construed as to impair the validity of any valid contract.
This it had the right to do. It was not bound to exercise the whole
power vested in it by the constitution, but might grant so much of
such power to the corporate authorities as it deemed best for the
public interests. This we have repeatedly held with respect to
parceling out the power vested in Congress by the Constitution.
Page 199 U. S. 247
McIntire v.
Wood, 7 Cranch 504;
Kendall v.
United States, 12 Pet. 524,
37 U. S. 616;
Cary v.
Curtis, 3 How. 236,
44 U. S.
245.
It follows that, if the ordinance of 1901 impaired the original
contract between the waterworks and the city, it exceeded its
powers under the act of the legislature.
In its opinion the Supreme Court of Florida assumed, without
deciding, that "the powers granted to the city were sufficient to
authorize it to contract with the water company for a public and
private supply of water," and were also sufficient to enable the
city to insert clauses fixing the rates and obligating the city to
pay these rates for water used by it during the entire contract
period, and that the same powers existed of fixing the rates for
water supply to individuals.
Now, as the constitution only delegated to the
legislature the power to authorize the corporate
authorities to reduce rates, and the legislature delegated that
power only in cases where it did not impair the validity of any
contract, it seems to me clear that the City Council of Tampa
exceeded its authority in reducing rates protected by a contract,
and must be held to have impaired its obligation.