Plaintiff, a hydroelectric company organized under a general law
of Ohio, averred in its bill to quiet title that its incorporation
constituted a contract whereby the state granted it a right of way
for
Page 252 U. S. 389
its plant, along a certain river, between the termini designated
in its articles, with the power of eminent domain to acquire title
from private owners; that these rights were crystallized by a
resolution of its board of directors adopting a detailed plan of
power development and definitely and irrevocably fixing the
location of its proposed works on specific lands, surveyed by its
engineers and essential to the enterprise; that all this,
supplemented by condemnation proceedings initiated but not as yet
consummated, gave exclusive rights to acquire the lands for
plaintiff's corporate objects through its power of eminent domain,
and that the purchase of such lands from their owners by one of two
defendant public service corporations, also organized under general
laws of Ohio, their transfer to the other with the consent of the
State Public Utilities Commission, and their occupation and use by
the other for generating electric power, with assertion of immunity
from plaintiff's power of condemnation, worked an impairment of
plaintiff's contract, and a taking of its property, by state action
or agency.
Held that the asserted federal questions were
too plainly without merit to afford jurisdiction to the district
court. P.
252 U. S. 395.
Sears v. City of Akron, 246 U. S. 242.
Affirmed.
The appeal is direct to this Court, the laws and Constitution of
the United States being asserted to be involved. Upon motion of
defendants (appellees), the bill was dismissed for want of
jurisdiction and equity. Its allegations therefore become necessary
to consider.
Plaintiff (appellant) was incorporated as a hydroelectric power
company on May 29, 1908, for the purposes specified in the act of
the legislature of Ohio, passed in 1904, and contained in §§ 10128
and 10134 of the Ohio General Code of 1910.
The articles of incorporation filed May 29, 1908, with the
Secretary of State, specified the streams across which the dams
were to be built and maintained -- that is, the streams in
controversy, the Big Cuyahoga River and certain of its
tributaries.
By said incorporation, a contract was duly made and entered into
between the state and plaintiff whereby the state granted to
plaintiff a right of way over and along the
Page 252 U. S. 390
Cuyahoga River between the designated termini, and a vested
right and franchise to construct, maintain, and operate, within the
limits of the right of way, a hydroelectric plant for the
development of electric current and energy from the waters of the
river, together with a right or franchise to exercise the state's
power of eminent domain in order to appropriate and acquire
property necessary to carry out and perform the grant and make it
effective. The grant has not been repealed.
The grants were accepted, and are of great value, and upon the
faith of that, the capital stock of plaintiff was subscribed for,
and large expenditures and investments made and obligations
incurred, including bonds of the par value of $150,000, and stock
to the value of $210,000, all in a large part prior to December,
1910.
On June 4, 1908, plaintiff, by its board of directors, adopted a
specific and detailed plan for the development of the power and
sale of the same to the public, and definitely located its proposed
improvements for that purpose upon specifically described lands,
which had previously been entered upon and surveyed by its
engineers, and then and there declared and resolved that the
parcels of land were necessary to carry out the purpose of the
plaintiff's organization and that it thereby appropriated and
demanded them for its corporate purposes. The parcels of land
described in the resolution include all that were necessary for the
purpose of the corporation, and the location of the improvement so
fixed by the resolution was permanent and irrevocable, and
conclusive upon plaintiff and all other persons except as the same
might be altered by further act of the state.
June 5, 1908, the plaintiff instituted a suit in the court of
proper jurisdiction to condemn or appropriate in accordance with
the statutes of Ohio the parcels of land mentioned in the
resolution, and the persons owning the same were made parties. The
suit was continuously pending
Page 252 U. S. 391
until a date subsequent to July 18, 1911, but, at the instance
and request of one of the owners of the parcels and of the Northern
Ohio Traction & Light Company, called the Traction Company, the
suit was not pressed for trial against them until January, 1911, up
to which date certain negotiations in regard to the improvement of
the company were proposed, but finally terminated in the refusal of
the owner of the land and the Traction Company to sell the land to
plaintiff.
December 20, 1910, pending the suit and negotiations, the
landowner executed a deed of the lands to the Northern Realty
Company, conveying to it a fee-simple title.
January 20, 1911, after unsuccessful negotiations with the
Realty Company, plaintiff instituted another suit for the
condemnation of the land, which suit was prosecuted in the probate
court (the court of jurisdiction) and is now pending in the Supreme
Court of the United States, undetermined, to which court it was
carried by a writ of error from the Court of Appeals of Ohio.
January 31, 1911, and while the suit above mentioned was
pending, the Realty Company conveyed the land that had been
conveyed to it to the Northern Ohio Power Company, and the latter
company conveyed that and other land which it had acquired, and all
of its properties, rights, and franchises to the Traction Company,
and the latter company entered upon the lands, and now holds
possession of them and of the improvements erected thereon.
Prior to January 20, 1911, no location or improvement upon the
lands above designated was made for the purpose of utilizing them
in the development of power, and they were actually employed for no
use whatsoever except a small wooden structure intended and
occasionally used for dances and roller skating, a small portion of
which structure was within all of the parcels.
Between January 31, 1911, and February 24, 1914, there
Page 252 U. S. 392
was erected upon the lands designated a powerhouse and other
appliances for the generation of electric current and energy by
means of steam power, also a dam, a powerhouse, and other
appliances for the generation of electric current and energy by the
flow and fall of the waters of the river.
(There is an allegation of the capacity of the plants which may
be omitted. Other allegations in regard to the various companies
and the powers they possess and do not possess also may be omitted.
It is only necessary to say that it is alleged that the Power
Company had not, and the Traction Company has not, power to use the
designated lands or the waters of the river to operate the steam
power plant and the hydroelectric plant, or for the development of
such powers, and therefore neither company had power to exercise
eminent domain for such purposes, though asserting its right and
intention to do so, and, if it should do so, it would invade and
injure rights of plaintiff, "inflicting upon the plaintiff and the
persons interested therein a continuing and irreparable injury for
which there is no adequate remedy at law.")
From and after the time of the adoption of the resolution of
June 4, 1908, the designated parcels of land were subjected to
plaintiff's public use and its rights and franchises, exclusive of
all other persons and corporations; that such rights and franchises
were granted to plaintiff by the State of Ohio under and by
authority of plaintiff's contract with the state, and for the
protection of which plaintiff is entitled to, and claims, the
protection of the Constitution of the United States and of the
amendments thereof, as well as § 5 of Article XIII of the
Constitution of the State of Ohio.
The effect and result of the Traction Company's use of the
designated parcels of land and of the waters of the river is an
appropriation by it of the rights and franchises of plaintiff and
the deprivation of its property for private
Page 252 U. S. 393
use without compensation and without due process of law,
contrary to the Fourteenth Amendment of the Constitution of the
United States, and an impairment of the contract of plaintiff with
the state of Ohio within the meaning of Article I of the
Constitution of the United States.
Plaintiff has at all times, and since its incorporation,
actively and diligently and in good faith proceeded to carry out
and accomplish its corporate purpose.
In April, 1909, the plaintiff amended its resolution of June 4,
1908, and enlarged its proposed plant and the output and product
thereof and obtained a grant from the state over the additional
portion or section of the Cuyahoga River so as to carry out the
amended plan, and it provides for the utilization of the designated
parcels of land necessary to the plaintiff's rights and franchises.
(The additional capacity is alleged.)
The prayer is that plaintiff's rights and franchises be
established and adjudged; that the proceedings complained of be
decreed a violation of the plaintiff's rights, and of the
Constitution of Ohio and the Constitution of the United States, and
a taking of its property without due process of law, and that an
injunction be granted against their further exercise, that
defendants be required to remove the structures and devices already
erected upon the lands, or to convey them to the plaintiff, and
that a receiver be appointed to take possession of the lands and
structures. An accounting is also prayed, and general relief.
Page 252 U. S. 394
MR. JUSTICE McKENNA after stating the case as above, delivered
the opinion of the Court.
As we have said, a motion was made to dismiss the bill. The
grounds of the motion were that there was no jurisdiction in the
court, the controversy not arising under the Constitution and laws
of the United States, and that the bill did not state facts
sufficient to constitute a cause of action against defendants or
either of them.
There is an assertion, in words, of rights under the
Constitution of the United States, and the only question now
presented is whether the assertion is justified by the allegations
of the bill. Putting the question concretely, or rather the
contention which constitutes its foundation, the district court
said:
"The contention of the plaintiff is that, by virtue of its
charter, it has appropriated the potentialities of the river and
its tributaries within the boundaries by it designated in its
resolution of improvement, and that it is entitled, because of its
incorporation under the general laws of the state, to exclude any
use of the water power of these streams of the nature of the use
which it anticipates enjoying in the future while it proceeds,
however dilatorily, to make its improvements in detail and to
complete its ambitious scheme. In brief, its proposition is that
its charter is equivalent to a contract with the state of Ohio
giving it the exclusive right to the employment of the benefits
which nature has conferred upon the public through the forces of
these streams to the end that, until it finds itself able to
completely occupy all the territory which it has privately
designated to be necessary for its use, the public shall not have
the advantage of any portion not immediately occupied by it through
the employment of the resources thereof by another public utility
company."
The court rejected the contention holding that it was not
tenable under the law and Constitution of Ohio. To
Page 252 U. S. 395
sustain this view, the court cited prior Ohio cases, and certain
cases on the docket of the court, and, as an inference from them,
declared that it was
"not true in Ohio that the character of complainant gave to it
'a vested right seemingly unlimited in time to exclude the rest of
the world from the water sheds it chose' simply by declaring by
resolution just what territory it hoped in the future to occupy to
carry out its purposes,"
and further:
"The terms of § 19, Art. I, of the Ohio Constitution militate
against the plaintiff's claim. Until appropriation is completed as
provided by the condemnation laws of the state, the Traction
Company's right to dominion over its holdings is inviolate.
Wagner v. Railway Co., 38 O.S. 32."
The court also cited
Sears v. City of Akron,
246 U. S. 242
(then just delivered), expressing the view that, if the case had
been brought to the court's attention sooner, a less extended
discussion of the motion to dismiss could have been made.
We concur with the district court both in its reasoning and its
deductions from the cited cases. The contention of plaintiff is
certainly a bold one, and seemingly erects into a legal principle
that unexecuted intention, or partly executed intention, has the
same effect as executed intention, and that the declaration of an
enterprise gives the same right as its consummation. Of course,
there must be a first step in every project as well as a last step,
and, in enterprises like those we are considering, there may be
attainment under the local law of a right invulnerable to opposing
assertion. And this plaintiff contends. To be explicit, it contends
that, as against the Power Company and the Traction Company, they
being its competitors in the same field of enterprise, its
resolution of June 4, 1908, constituted an appropriation of the
waters of the river, and a definite location of "its proposed
improvement for that purpose upon specifically described parcels of
land previously entered upon and surveyed by its engineers."
Whether the
Page 252 U. S. 396
resolution had that effect under the Ohio laws we are not called
upon to say. Indeed, we are not so much concerned with the
contention as the ground of it. Plaintiff alleges as a ground of it
a contract with the State of Ohio, by its incorporation, "wherein
and whereby said state duly granted to the plaintiff a right of way
over and along said Cuyahoga River" between the designated termini,
with the rights and franchises which we have mentioned,
together
"with the right or franchise to exercise the state's power of
eminent domain in order to appropriate and acquire all property
necessary to carry out and perform said grant and make the same
effective,"
and that the acts of defendants, having legislative sanction of
the state, impair plaintiff's contract.
It is manifest, therefore, that the determining and effective
element of the contention is the charter of the state, and
plaintiff has proceeded in confidence in it against adverse
adjudications. One of the adjudications is
Sears v. City of
Akron, supra. The elemental principle urged here was urged
there -- that is, there was urged there, as here, that the charter
of the company constituted a contract with the state, and that the
contract was to a conclusive effect executed by the resolution of
the board of directors of plaintiff on June 4, 1908, such
resolution constituting an appropriation of the lands described
therein, they being necessary to be acquired in order to construct
and maintain the improvement specified in the plaintiff's charter
and resolution. The principle was rejected, and it was decided that
the incorporation of plaintiff was not a contract by the state with
reference to the riparian rights, and that, if plaintiff acquired
riparian rights or specific rights in the use and flow of the
water, that "would be property acquired under the charter, not
contract rights expressed or implied in the grant of the
charter."
The case is determinative of the plaintiff's contention here,
and it is manifest, if plaintiffs have any rights, they
Page 252 U. S. 397
are against defendants as rival companies, or against them as
landowners, rights under the charter, not by the charter,
considered as a contract express or implied. The district court
recognized the distinction, and confined its decree accordingly.
The court refused to speculate as to what plaintiff might be able
to do hereafter in the assertion of rights against the Traction
Company, but declared that it was against public policy to accede
to the contention of plaintiff that, in the absence of specific
acquirement, it (plaintiff) could prevent an owner of property
within its territory from occupying or using the same without
condemnation proceedings being had, and compensation paid or
secured for such property.
The court therefore was considerate of the elements of the case
and of plaintiff's rights, both against defendants as rival
companies or as landowners, and necessarily, as we have said, if
either or both of them be regarded as involved in the case, its or
their assertion cannot be made in a federal court unless there be
involved a federal question, and a federal question not in mere
form, but in substance, and not in mere assertion, but, in essence
and effect. The federal questions urged in this case do not satisfy
the requirement. The charter as a contract is the plaintiff's
reliance primarily and ultimately. Independent of that, it has no
rights or property to be taken -- that is, independently of the
resolution of June 4, 1908, there was no appropriation or
condemnation of the land.
Wagner v. Railway Co., 38 O.S.
32.
Having nothing independently of its charter and the resolution
of June 4, 1908, it could be divested of nothing, and it must rely
upon the assertion of a contract and the impairment of it by the
state, or some agency of the state, exercising the state's
legislative power. That there is such agency is the contention, but
what it is exactly it is not easy to say. We, however, pick out of
the confusion of the bill, with the assistance of plaintiff's
brief, that the rights
Page 252 U. S. 398
it acquired, and by what they are impaired, are as follows: by
the resolution of June 4, 1908, the lands described in the bill
(Exhibit A) became, and ever since have been, subjected to
plaintiff's public use and subject to its rights of way and
franchises, exclusive of all other persons or corporations, that
the Traction Company asserts and claims that, by reason of
purchases of the rights and franchises of the Northern Ohio Power
Company sanctioned by the orders of the Public Utilities Commission
as set forth in the bill, and the construction by it (the Traction
Company) of power plants upon the designated tracts of land, they,
the tracts of land, have become subject to a public use, and cannot
be appropriated by plaintiff. And it is said (in the brief) that
the Traction Company bases its claim upon the state laws -- that
is, the incorporation of the defendant Power Company and the Public
Utilities Commission's orders.
It is manifest that there was no state legislative or other
action against any charter rights which plaintiff possessed. What
the Traction Company may or does claim cannot be attributed to the
state (its incorporation antedated that of plaintiff), and it would
be a waste of words to do more than say that the incorporation of
plaintiff under the general laws of the state did not preclude the
incorporation of the Power Company under the same general laws.
What rights, if any, the Power Company thereby acquired against
plaintiff is another question. There remains, then, only the order
of the Public Utilities Commission authorizing the conveyance by
the Power Company of the latter's rights and franchises to the
Traction Company to complain of as an impairment of plaintiff's
asserted contract. But here again, we are not disposed to engage in
much discussion. The commission's order may or may not have been
the necessary condition to a conveyance by the Power Company of
whatever rights it had to the Traction Company. (§ 614-60, Page
& Adams Ohio General
Page 252 U. S. 399
Code.) The order conferred no new rights upon the Power Company
which that company could or did convey to the Traction Company, nor
give them a sanction that they did not have, nor did it affect any
rights of the plaintiff.
From every federal constitutional standpoint, therefore, the
contentions of plaintiff are so obviously without merit as to be
colorless, and whatever controversies or causes of action it had
were against the defendant companies as rivals in eminent domain,
or as owners of the lands, and, diversity of citizenship not
existing, the district court of the United States had no
jurisdiction.
Decree affirmed.
MR. JUSTICE DAY and MR. JUSTICE CLARKE took no part in the
consideration or decision of this case.
