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in that case was on the interest on bonds held, er of attorney which gave authority to the out of the state. Bonds and negotiable instru- agent to sell, assign, or transfer any of them, ments are more than merely evidences of debt. and to invest and reinvest the proceeds of The debt is inseparable from the paper which declares and constitutes it, by a tradition which such sales as it might deem best in the mancomes down from more archaic conditions. Ba- agement of the business and affairs of the con v. Hooker, 177 Mass. 335, 337 [58 N. E. principal. It is difficult to conceive how prop1078, 83 Am. St. Rep. 279).”

erty could be more completely localized in

the United States. There can be no question The Court of Appeals of New York, recog- of the power of Congress to tax the income nizing the same principle, treated such in- from such securities. Thus situated and struments as property in People ex. rel. Jeffer held, and with the authority given to the loson v. Smith, 88 N. Y. 576, 585:

cal agent over them, we think the income de “It is clear from the statutes referred to and rived is clearly from property within the the authorities cited and from the understand United States within the meaning of Congress ing of business men in commercial transactions, as expressed in the statute under consideraas well as of jurists and legislators, that mort- tion. It follows that the question certified gages, bonds, bills and notes have for many by the Circuit Court of Appeals must be anpurposes come to be regarded as property and swered in the affirmative. not as the mere evidences of debts, and that

So ordered. they may thus have a situs at the place where they are found like other visible, tangible chat

Mr. Justice McREYNOLDS took no part tels."

in this case. We have no doubt that the securities, herein involved, are property. Are they property

(250 U. S. 394) within the United States? It is insisted that CITY OF PAWHUSKA y. PAWHUSKA OIL the maxim “mobilia sequuntur personam" *ap

& GAS CO. et al. plies in this instance, and that the situs of the property was at the domicile of the owner in

(Argued March 25, 1919. Decided June 9, France. But this court has frequently de

1919.) clared that the maxim, a fiction at most, must

No. 281. yield to the facts and circumstances of cases

1. CONSTITUTIONAL LAW 135_IMPAIRMENT which require it, and that notes, bonds and

OF “CONTRACT" “MUNICIPAL CORPORAmortgages may acquire a situs at a place oth

TION"-POWER TO REGULATE GAS RATES. er than the domicile of the owner, and be

Municipal corporations are political subdithere reached by the taxing authority. It is visions of the state, for the exercising of such only necessary to refer to some of the deci- governmental powers as may be intrusted to sions of this court. New Orleans v. Stemple, them, the nature and duration of which powers 175 U. S. 309, 20 Sup. Ct. 110, 44 L. Ed. 174; rest in the discretion of the state, and neither Bristol v. Washington County, 177 U. S. 133, their charter nor any law conferring govern

mental powers constitutes a contract with the 20 Sup. Ct. 585, 44 L. Ed. 701; Blackstone v.

state within the meaning of the federal ConstiMiller, supra; State Board of Assessors v. tution; therefore though an Oklahoma city Comptoir National d'Escompte, 191 U. S. 388, gave a gas company a franchise to use the 24 Sup. Ct. 109, 48 L. Ed. 232; Carstairs v. streets and alleys for its pipes, and, pursuant Cochran, 193 U. S. 10, 24 Sup. Ct. 318, 48 L. to Rev. Laws 1910, § 593, regulated charges, Ed. 596; Scottish Union & National Ins. Co. Laws 1913, c. 93, giving power to regulate rates v. Bowland, 196 U. S. 611, 25 Sup. Ct. 345, the city of such authority, is not invalid as im

to the Corporation Commission, and depriving 49 L. Ed. 619; Wheeler v. New York, 233 U. pairing the obligation of a contract. S. 434, 439, 34 Sup. Ct. 607, 58 L. Ed. 1030;

[Ed. Note.-For other definitions, see Words Iowa v. Slimmer, 248 U. S. 115, 120, 39 Sup. and Phrases, First and Second Series, Contract; Ct. 33, 63 L. Ed. 158. Shares of stock in na- Municipal Corporation.] tional banks, this court has held, for the pur- 2. MUNICIPAL CORPORATIONS 64-POWERS pose of taxation may be separated from the

-LEGISLATIVE CONTROL. domicile of the owner, and taxed at the place

A municipal corporation is a mere political where held. Tappan v. Merchants' National division of the state, created as a convenient Bank, 19 Wall. 490, 22 L. Ed. 189.

agency for exercising such governmental powers In the case under consideration the stocks as may be intrusted to it, and the nature of and bonds were those of corporations organ- such powers rests in the absolute discretion of ized under the laws of the United States, and the state. the bonds and mortgages were secured upon property in Pennsylvania. The certificates

In Error to the Supreme Court of the of stock, the bonds and mortgages were in the State of Oklahoma. Pennsylvania Company's offices in Philadel- An order of the Oklahoma Corporation phia. Not only is this so, but the stocks, Commission made on petition of the Paw. bonds and mortgages were held under a pow-huska Oil & Gas Company fixing the rates for

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

968.

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(39 Sup.Ct.) gas was, on appeal by the City of Pawhuska, / so contends here—that at the time the fran. affirmed by the Supreme Court of Oklahoma chise was granted it alone was authorized to (166 Pac. 1058), and the City of Pawhuska regulate such charges and service within its brings error. Writ dismissed.

municipal limits, that the Legislature could *Mr. Preston A. Shinn, of Pawhuska, Okl., not transfer that authority to the Corporafor plaintiff in error.

tion Commission consistently with the ConMr. T. J. Leahy, of Pawhuska, Okl., for stitution of the state, and that in consequence defendant in error.

the act under which the commission pro

ceeded and the order made by it effected an Mr. Justice VAY DEVANTER delivered impairment of the franchise contract bethe opinion of the Court.

tween the city and the gas company in violaA city in Qklahoma is complaining here of tion of the contract clause of the Constituan order of the corporation commission of tion of the United States. Or, stating it in the state, made in 1917, regulating the rates another way, the contention of the city was and service of a gas company engaged in and is that the authority to regulate the supplying natural gas to the city and its in- rates and service, which concededly was habitants. The company has à franchise, reserved at the time the franchise was grantgranted by the city in 1909, which entitles it ed, was irrevocably delegated to the city by to have its pipe lines in the streets and the Constitution and laws of the state, and alleys of the city and provides that the gas

therefore that the exertion of that authority shall be supplied at flat or meter rates, at by any other state agency, even though in the option of the consumer, and that the conformity with a later enactment of the rates shall not be in excess of fixed stand- Legislature, operated as an impairment of ards.

the franchise contract. When the franchise was granted there

Dealing with this contention the state was a provision in the state Constitution court, while fully conceding that the earlier (article 18, § 7) reading:

statute delegated to the city the authority

claimed by it, held that this delegation was "No grant, extension, or renewal of any fran- *to endure only "until such time as the state chise or other use of the streets, alleys, or other saw fit to exercise its paramount authority," public grounds or ways of any municipality, shall divest the state, or any of its subordinate that under the state Constitution the Legissubdivisions, of their control and regulation of lature could withdraw that authority from such use and enjoyment. Nor shall the power the city whenever in its judgment the public to regulate the charges for public services be interest would be subserved thereby, and surrendered; and no exclusive franchise shall that it was effectively withdrawn from the ever be granted."

city and confided to the corporation comAnd there also was a statutory provision this impaired the franchise contract was

mission by the act of 1913. The claim that (Rev. Stat. 1903, § 398; Rev. Laws 1910, 8

overruled. 593) declaring:

[1, 2] It is not contended, nor could it "All such grants shall be subject at all times well be, that any private right of the city to reasonable regulations by ordinance as to the was infringed, but only that a power to reguuse of streets and prices to be paid for gas or late in the public interest theretofore conlight.”

fided to it was taken away and lodged in anIn 1913 the state Legislature adopted an

other agency of the state-one created by the act providing that the corporation commis- state Constitution. Thus the whole controsion “shall have general super*vision over versy is as to which of two existing agencies all public utilities, with power to fix and or arms of the state government is authorized establish rates and to prescribe rules, re- for the time being to exercise in the public quirements and regulations, affecting their interest a particular power, obviously govern. services." Laws 1913, c. 93, § 2. It was un

mental, subject to which the franchise conder this act, and after a full hearing on a fessedly was granted. In this no question petition presented by the gas company, that under the contract clause of the Constitution the order in question was made. The order of the United States is involved, but only a abrogates all flat rates, increases the meter question of local law, the decision of which rates, requires that the gas be sold through by the Supreme Court of the state is final. meters to be supplied and installed at the

"Municipal corporations are political subdivi. company's expense, and recites that the evi- sions of the state, created as convenient agencies dence produced at the hearing disclosed that for exercising such of the governmental powers the franchise rates had become inadequate of the state as may be intrusted to them. For and unremunerative and that supplying gas the purpose of executing these powers properly at flat rates was productive of wasteful use.

and efficiently they usually are given the power On an appeal by the city the Supreme Court

to acquire, hold, and manage personal and real of the state affirmed the order. 166 Pac. of the powers conferred upon these corporations

property. The number, nature, and duration 1058.

and the territory over which they shall be exer. The city contended in that court-and it I cised rests in the absolute discretion of the state.

968

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Neither their charters, nor any law conferring , mere agent of the state, stands in its governgovernmental powers, or vesting in them prop- mental or public character in no contract relaerty to be used for governmental purposes, or tion with its sovereign, at whose pleasure its authorizing them to hold or manage such prop-charter may be amended, changed, or revoked, erty, or exempting them from taxation upon it. without the impairment of any constitutional constitutes a contract with *the state within the obligation, while with respect to its private or meaning of the federal Constitution.” Hunter proprietary rights and interests it may be env. Pittsburg, 207 U. S. 161, 178, 28 Sup. Ct. titled to the constitutional protection. In this 40, 46 (52 L. Ed. 151).

case the city has no more right to claim an im

munity for its contract with the Waterworks In Dartmouth College v. Woodward, 4 Company than it would have had if such conWheat. 518, 629–630, C59-664, 668, 694, 4 tract had been made directly with the state. L. Ed. 629, it was distinctly recognized that The state, having authorized such contract,

might revoke or modify it at its pleasure." as respects grants of political or governmental authority to cities, towns, counties,

The principles announced and applied in and the like the legislative power of the these cases have been reiterated and enstates is not restrained by the contract forced so often that the matter is no longer clause of the Constitution; and in East Hart

debatable. Covington v. Kentucky, 173 U. ford v. Hartford Bridge Co., 10 How. 511, p. s. 231, 241, 19 Sup. Ct. 383, 43 L. Ed. 679; 533 (13 L. Ed. 518), where was involved the Worcester v. Worcester Street Ry. Co., 196 validity of a state statute recalling a grant U. S. 539, 548, 25 Sup. Ct. 327, 49 L. Ed. 591; to a city, theretofore made and long in use, Braxton County Court v. West Virginia, 208 of power to operate and maintain a ferry over U. S. 192, 28 Sup. Ct. 275, 52 L. Ed. 450; Ena river, it was said, that the parties to the glewood v. Denver & South Platte Ry. Co., grant did not stand

248 U. S. 294, 296, 39 Sup. Ct. 100, 63 L Ed. "in the attitude towards each other of making a 253. contract by it, such as is contemplated in the Writ of error dismissed. Constitution, and as could not be modified by subsequent legislation. The Legislature was acting here on the one part, and public municipal and political corporations on the other.

(250 U. S. 454) They were acting, too, in relation to a public HANCOCK et al. v. CITY OF MUSKOGEE, object, being virtually a bighway across the

OKL., et al. river, over another highway up and down the river. From this standing and relation of these (Submitted April 30, 1919. Decided June 9, parties, and from the subject-matter of their

1919.) action, we think that the doings of the Legislature as to this ferry must be considered rather

No. 360. as a public law than as contracts. They related to public interests. They changed as those 1. COURTS 366(5) PRECEDENTS Con interests demanded. The grantees likewise, the STRUCTION OF LOCAL STATUTES. towns being mere organizations for public pur

Decisions of the highest state court construposes, were liable to have their public powers, ing local statutes are conclusive on the federal rights, and duties modified or abolished at any

courts. moment by the Legislature. *

Hence, generally, the doings between them and the Legis- 2. CONSTITUTIONAL LAW C290(3)–MUNIClature are in the nature of legislation rather IPAL CORPORATIONS Ow407(1) - DUE PROthan compact, and subject to all the legislative CESS OF LAW-ASSESSMENTS FOR MUNICIPAL conditions just named, and therefore to be con- IMPROVEMENTS—NOTICE. sidered as not violated by subsequent legislative Comp. Laws Okl. 1909, 88 984–993, authorchanges."

izing the mayor and councilmen in any munici

pality of not less than 1,000 inhabitants to esIn New Orleans v. New Orleans Water- tablish a general sewer system, etc., having delworks Co., 142 U. S. 79, p. 91, 12 Sup. Ct. egated the entire legislative power of the state 142, p. 147 (35 L. Ed. 943), where a city, rely- with respect to the establishmnt of local sewer ing on the contract clause, sought a review systems and the exercise of the taxing power by this court of a *judgment of a state court in aid thereof to the municipalities, a municisustaining a statute so modifying the fran-pal ordinance creating a sewer district and aschise of a waterworks company as to require trict is not invalid, as depriving property own

sessing the cost against property within the disthe city to pay for water used for munici

ers of their property without due process, in pal purposes, to which it theretofore was en- violation of Const. Amend. 14, because giving titled without charge, the writ of error was no notice to property owners or provision for dismissed on the ground that no question of hearing. impairment within the meaning of the con- 3. CONSTITUTIONAL LAW m290(3)—DUE PROtract clause was involved. Some of the

CESS OF LAW MUNICIPAL IMPROVEMENT earlier cases were reviewed, and it was said:

ASSESSMENTS. “But further citations of authorities upon this Where the Oklahoma statutes relating to point are unnecessary; they are full and conclu- the establishment of sewer districts required sive to the point that the municipality, being a the cost of the sewer to be distributed among

For other cases set same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

399

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(39 Sup.Ct.) the different properties in the district in pro-, also to cause district sewers to be constructportion to area, and the matter became one of ed within districts having limits prescribed mere computation, the fact an ordinance cs- by ordinance; the cost of district sewers to tablishing a sewer district did not give proper be apportioned against all lots and pieces of ty owners an opportunity to be heard as to the distribution of the costs of the sewer did not ground in the district in proportion to area, deprive property owners of their property with disregarding improvements and excluding the out due process, in violation of the Fourteenth public highways. Amendment.

It is contended that the statute is void be4. MUNICIPAL CORPORATIONS Cw495—Assess- and makes no provision for hearing them as

cause it gives no notice to property owners MENTS FOR IMPROVEMENTS-APPORTIONMENT -JUDICIAL SUPERVISION.

to the formation of the district or its boundWhether the entire amount, or a part only, aries, the proposed plan or method of buildof the cost of a local improvement, shall be im| ing the sewer, or the amount to be assessed posed as a special tax upon the property bene- upon property in the district. While it is fited, and whether the tax shall be distributed conceded to have been established by preving upon a consideration of the particular benefit ous decisions of this court that, where the to particular lots, apportioned according to Legislature *fixes by law the area of a sewer frontage, value, or area, is a matter of legisla- district or the property which is to be astive discretion, subject to judicial relief in cas- sessed, no advance notice to the property es of actual abuse of power or substantial error

owner of such legislative action is necessary in executing it.

in order to constitute due process of law, it In Error to the Supreme Court of the State is insisted that in the present case the Legis

lature has not done this, and hence it is esof Oklahoma.

sential to the protection of the fundamental Suit by W. A. Hancock and others against rights of the property owner that at some the City of Muskogee, Okl., and others. A stage of the proceeding he have notice and judgment for defendants was affirmed by the an opportunity to be heard upon the question Oklahoma Supreme Court (168 Pac. 445), and whether his property is erroneously included complainants bring error, Affirmed.

in the sewer district because it cannot be

benefited by the sewer, or for any other reaMessrs. B. B. Blakeney and James H. Max.

son is improperly subjected to assessment. ey, both of Tulsa, Okl., and Grant Foreman and James D. Simms, both of Muskogee, Okl., cisions of the Supreme Court of Oklahoma,

[1, 2] But we find it to be settled by defor plaintiffs in error.

which as to this are conclusive upon us, that Messrs. Nathan A. Gibson and Joseph L. in respect to the establishment and construcHull, both of Muskogee, Okl., for defendants tion of local sewer systems and the exercise in error.

of the power of taxation in aid of this pur

pose, the entire legislative power of the * Mr. Justice PITNEY delivered the opinion state has been delegated to the municipaliof the Court.

ties. In City of Perry v. Davis, 18 Okl. 427, Plaintiffs in error, owners of real estate in p. 445, 90 Pac. 865, p. 870, referring to this the city of Muskogee, brought suit in an Ok- same legislation the court held: lahoma state court seeking an injunction to

"When the Legislature delegated the power restrain the city and its officials from encum

to the mayor and councilmen of municipal corbering their lands with a special assessment porations in this territory, having a bona fide to pay for the construction of a sewer in population of not less than 1,000 persons, to sewer district No. 12 of that city, contend-establish a general sewer system, that delegaing that the statutes of the state and the or- tion of power carried with it all the incidental dinances of the city under which the dis- powers necessary to carry its object into effect trict was created and the cost of the sewers within the law. Of what utility would such a therein assessed against the property within grant of power be if unaccompanied with suffithe district were in violation of the Four- cient power to carry it into effect? Under our teenth Amendment, in that they deprived system the power of taxation is vested exclu

sively in the legislative branch of the governplaintiffs of their property without due pro- ment but it is a power that may be delegated cess of law. The trial court refused relief, by the Legislature to municipal corporations, the Supreme Court of Oklahoma aflirmed its which are mere instrumentalities of the state judgment (168 Pac. 445), and the case comes for the better administration of public affairs. here by writ of error.

When such a corporation is created it becomes The statutes, as they existed at the time vested with the power of taxation to sustain the proceedings in question were had, are to itself with all necessary public improvements, be found in Snyder's Comp. Laws Okl. 1909, unless the exercise of that *power be expressly $8 984–993. They authorize the mayor and prohibited. That the mayor and council of the

city of Perri was authorized to establish and councilmen in any municipal corporation hav

construct a necessary sewer system for the ing a population of not less than 1,000 to city, in the absence of prohibitive statutes, establish a general sewer system composed should not be questioned. The power to esof public, district, and private sewers, and tablish and construct a sewer system carried

*457

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 39 SUP.CT.-34

with it the power to create indebtedness and sing for itself what lands shall be included taxation for its payment.”

in a district or what lands will be benefited The court further held that the act consti- by the construction of a sewer, submits the tuted due process, and that the passage and question to some board or other inferior tri

bunal with administrative or quasi judicial publication of an ordinance establishing a sewer district constituted sufficient notice authority, the inquiry becomes in its nature and conferred jurisdiction upon the city au- judicial in such a sense that property owners thorities to perform the work and provide are entitled to a hearing or an opportunity payment therefor. This was followed in City to be heard before their lands are included. of Muskogee v. Rambo, 40 Okl. 672, 680, 138 Fallbrook Irrigation District v. Bradley, 161 Pac. 567, and also in the present case.

U. S. 112, 166, 167, 174, 175, 17 Sup. Ct. 56, So far, therefore, as the present ordinance 41 L. Ed. 369; Parsons v. District of Codetermined that a district sewer should be lumbia, 170 U. S. 45, 52, 18 Sup. Ct. 521, 42 constructed, and established the bounds of L. Ed. 943; Embree v. Kansas City Road the district for the purpose of deterinining District, 240 U. S. 242, 247, 36 Sup. Ct. 317, what property should be subjected to the spe- 60 L. Ed. 624. But they have no application cial cost of constructing it, there was an au

to a case where, as in the case before us, full thorized exercise of the legislative power of legislative power over the subject matter has the state, which, according to repeated deci- been conferred by the state upon a municipal sions of this court, was not wanting in due corporation. Where that has been done, a process of law because of the mere fact that legislative determination by the local legisthere was no previous notice to the property lative body is of the same effect as though owners or opportunity to be heard. The made by the general Legislature. Withnell question of distributing or apportioning the v. Ruecking Construction Co., 249 U. $. 63, burden of the cost among the particular prop-70, 39 Sup. Ct. 200, 63 L. Ed. 479. erty owners is another matter. Spencer v. [3, 4] It is suggested further that the statMerchant, 125 U. S. 345, 355, 357, 8 Sup. Ct. utes and ordinances in question were want921, 31 L. Ed. 763; Paulsen v. Portland, 149 ing in due process, in that they afforded the U. S. 30, 40, 13 Sup. Ct. 750, 37 L. Ed. 637; property owner no opportunity to be heard French v. Barber Asphalt Paving Co., 181 U. as to the distribution of the cost of the sewS. 324, 343, 21 Sup. Ct. 625, 45 L. Ed. 879;

er among the different properties in the disShumate v. Heman, 181 U. S. 402, 21 Sup.trict or the ascertainment of the amount of Ct. 645, 45 L. Ed. 916, 922, affirming Heman the assessment to be imposed upon the lands V. Allen, 156 Mo. 534, 57 S. W. 559; Wagner of plaintiffs in error. Respecting thi- it is v. Baltimore, 239 U. S. 207, 218, 36 Sup. Ct. sufficient to say that as the Legislature itseif 66, 60 L. Ed. 230; Withnell v. Ruecking Con- has prescribed that the entire cost of a disstruction Co., 249 U. S. 63, 39 Sup. Ct. 200, trict sewer shall be apportioned against the 63 L. Ed. 479..

lots in the district in proportion to area (ex. We do not mean to say that if in fact it cluding the highways), there is no occasion were made to appear that there was an arbitrary and unwarranted exercise of the leg which the assessment shall be apportioned,

for a hearing with respect to the mode in islative power, or some denial of the equal since this is resolved into a mere mathemat. protection of the laws in the method of exer-ical calculation. And it is settled by the cising it, *judicial relief would not be accorded to parties aggrieved. The facts of this amount or a part only of the cost of a local

cases above cited that whether the entire case raise no such question. See Wagner v. Baltimore, 239 U. S. 207, 220, 36 Sup. Ct. 66, improvement shall be imposed as a special 60 L. Ed. 230; Houck v. Little River Dis- tax upon the property benefited, and whether trict, 239 U. S. 254, 265, 36 Sup. Ct. 58, 60 the tax shall be distributed upon a consideraL. Ed. 266; Myles Salt Co. v. Iberia Drain-tion of the particular benefit to particular age District, 239 U. S. 478, 485, 36 Sup. Ct. lots or apportioned according to their front204, 60 L. Ed. 392, L. R. A. 1918E, 190; age upon the streets, their values, or their Gast Realty Co. v. Schneider Granite Co., area, is a matter of legislative discretion, 240 U. S. 55, 59, 36 Sup. Ct. 234, 60 L. Ed. subject, of course, to judicial relief in cases 523.

of actual abuse of power or of substantial The chief reliance of plaintiff in error is error in executing it, neither of which is here upon those decisions which have held that asserted. where the Legislature, instead of determin- Judgment affirmed.

469

138

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