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the plant, and that the company had nolars overdue and unpaid. For the purpose right to charge any greater rate than had of relieving the city it was averred that the then been charged by the city. Various legislature in 1877 passed an act providing other grounds were stated in the petition not for a sale of the plant by the city under necessary to be particularly noticed. The the circumstances mentioned in the act, but prayer of the petition was for the forfeiture for some reason subscribers enough were not of the charter of the company and all its found who would form a corporation and franchises, and, in the alternative, should take the plant upon the terms therein menthat relief not be granted, that then it tioned. Accordingly, in 1878 the act was might be decreed that the company had for- amended, making the terms more liberal, feited all exclusive privileges, and that the and thereupon subscribers who were owncity of New Orleans should be adjudged to ers of the city bonds and other obligations have the right to contract with anyone else came together and formed a* corporation for a supply of water and to expropriate with a capital stock of $2,000,000* divided the tangible property of the company if the into 20,000 shares of $100 each. In accord. city should see fit, etc.
ance with the terms of the act these shares Exceptions were filed to this complaint, were assigned to the city, and the city, in which were overruled by the court, and the consideration thereof, sold and assigned to waterworks company then answered, deny the company the entire waterworks plant ing the allegations of the petition. The city of the city, including the franchises and of New Orleans then filed a petition for rights granted by the state and sold with leave to intervene and to become a party the balance of the property, rights, and plaintiff in the proceeding. The board of franchises so offered for sale by the act of liquidation of the city also filed a petition the legislature, amongst which property thus to intervene and be made a party defendant, sold was the valuable and indispensable franon the ground that it had an interest in chise to be a corporation, which, as averred, common with the waterworks company to was a right not severable in law from the have the complaint against it dismissed. balance of the property. The city has since The court allowed both petitions in inter- sold all of the 20,000 shares of the stock of vention to be filed, and* the state then an. the company, excepting 3,927 shares held by swered the petition in intervention of the the board of liquidation in trust and as seboard of liquidation, and the water company curity for the extinguishment of the debts filed its answer to the petition of the city of the city. The balance of the 20,000 of New Orleans.
shares is in other hands, whose title is The answer of the water company to the traceable to the city. In order to raise complaint on the part of the state, after money to carry out its obligations, having denying various allegations, averred that received none for the stock issued to the the primary reason for the incorporation of city for the property purchased, the comthe defendant was neither to provide the pany has, pursuant to the permission grantcity with a proper water supply nor to ob- ed it by the act of 1877, twice mortgaged tain an enlargement of the existing water the property, including the franchise to be works, because for more than forty years a corporation, and the bonds secured hy prior thereto the city had works adequate those mortgages are in the hands of bona to furnish such a supply, with full power to fide purchasers for value, and it is claimed enlarge the works as occasion required. The on the part of the defendant that they are answer also averred that in 1833 the Com- indispensable parties to this or any action mercial Bank of New Orleans was incorpo- to destroy the franchise of the defendant to rated for the purpose of providing a water- be a corporation. The defendant also avers works plant and system for the city of New that the state as plaintiff acts in bad faith Orleans, and that it immediately complied in assailing the franchises of the defendant with the duty of providing the same, and in such an action, and also in violation of had operated it for many years; that the the 14th Amendment of the Constitution of city, about the time of the incorporation of the United States, which forbids a state to the bank, had become an owner of 5,000 deprive any person of life, liberty, or propshares of the stock of the company, and had erty without due process of law, or to deny issued its bonds in payment therefor at the any person within its jurisdiction the equal time of the purchase. There was a provi- protection of the laws. It was also alleged sion in the charter of the bank that the that the grant of the corporate life to the city might purchase the plant in thirty-five defendant was not, as is usually the case, years upon the conditions mentioned in the a grant of corporate life for the purpose act. It was further averred that the city and consideration only of the establishment had become the owner of the waterworks of public works or improvements of a pubplant under this provision in 1869, and that lic character, where the only consideration it had operated the same up to and includ- passing to the state for the grant of corpoing the year 1878. At that time the city rate life is some supposed increased general was under great financial pressure and al- public benefit* resulting from the construc-* most bankrupt, and had failed to pay most tion and installation of public works; but of the bonds it had issued for the 5,000 shares that, on the contrary, in the case of the de of stock it had owned in the bank corpora- fendant corporation, the contract and agree. tion, although such bonds were due, and also ment between the state and the defendant there were the current obligations of the was, and is, an unquestionable contract city to an amount of several million of dol.' of bargain and sale of all the prop
erty, rights, and franchishes described in plaintiff's suit might be dismissed. The the acts of 1877 and 1878, for an exact price case came to trial in the city of New Orfixed by the state in its offer of the prop: leans, and after an investigation of the iserty for sale, which offer was accepted and sues raised by the pleadings, including the price paid by the defendant as the result examination of a large number of witnesses of a bargaining in which the state was act and the hearing of arguments of counsel, ing, not alone in its character as a sover the court determined (1) that the two ineign, but as a merchant and trader in com. tervening, parties, the city of New Orleans merce; and that in the bargaining and sale and the board of liquidation, should not of the said property and franchises the have been allowed to intervene, and accordstate must, in law and by the courts, be ingly it was decreed that the intervention considered a trader engaged in driving a of those parties should be dismissed at the hard commercial bargain in its own intercost of the respective interveners. (2) The est and on its own terms, and for its own court then ordered judgment in favor of benefit and profit. The contract thus set the water company and against the plainforth, it was averred, was protected from tiff, the state of Louisiana, rejecting its de all impairment at the hands of the state mand for the forfeiture of the defendant's by the Constitution of the United States, charter. The state appealed from that particularly by $ 10 of article 1, acting on judgment to the supreme court, and the the state of Louisiana as a prohibition, city of New Orleans also took a separate while acting
or moving, as plaintiff in this appeal from the judgment dismissing its in. action, in impairment of the faith of its tervention. Upon hearing in the supreme own contract, to the same extent as if such court the judgment in favor of the water impairment had been attempted through company was reversed, and, as already and by means of legislation compassing the stated, a judgment was entered forfeiting same effect and result, that if the joint res the charter of the water company. olution of the state legislature, referred to in the petition, could be construed as direct. Messrs. Ernest B. Kruttschnitt, Eding the institution and prosecution of this gar H. Farrar, Benjamin F. Jonas, and suit, or as directing the attorney general James R. Beckwith for plaintiff in error. of the state, in the name of the state, to in
Messrs. Benjamin R. Forman, Walstitute and prosecute this action, for the ter Guion, and Samuel L. Gilmore for purpose and with the intent to segregate defendant in error. 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 * Mr. Justice Peckham, after making the statutes of the state authorizing or direct. foregoing statement of facts, delivered the ing the attorney general to that end and opinion of the court: purpose, such joint resolution and statutes
The defendant in error has made a are repugnant to the Constitution of the motion to dismiss this writ of error on the United States, particularly to § 10 of arti- ground of a lack of jurisdiction, because no cle 1 thereof, which is specially pleaded in Federal question is disclosed in the record. defense of this action. The defendant also
The plaintiff in error, on the contrary, averred that by virtue of the provisions claims the existence in the record of several of $ 15 of the charter of defendant (act No. questions of a Federal character, and in the 33 of the Laws of 1877) the remedy for il: brief prepared to oppose this motion they legal charges for water was confined to an
are set forth as follows: application by the city for a mandamus to
“(1) The charter of the waterworks comcompel the company to desist from such pany prescribing mandamus as a remedy to charges. The section is reproduced in the maintain a lawful tariff of water rates, is margin.f
not the substitution by the writs of forfeitThe answer further specifically denied all ure of charter, as a remedy for the maintegrounds of forfeiture and prayed that the nance of unlawful rates, a breach of the
contract, and a deprivation of the property Sec. 12. Be it further enacted, etc., That without due process of law, and a denial said waterworks company shall have the right of the equal protection of the laws? to fix the rates of charges for water; provided that the net profits of the company shall not
"(2) If such remedy be sanctioned by and exceed ten per cent per annum, and shall pub- sought pursuant to a state statute, subselish sworn annual statements of its business quent in date to the charter of the water. and condition; and that the city council shall works company, does not such a statute imbave the power to appoint a committee of not pair the obligation of the charter contract, less than five, who shall have access to the books devest vested rights, and deny to said comof the said company and make such extracts pany the equal protection of the laws ? from the same as they may deem necessary, and “13) Can the state forfeit such a charter In case the said profit shall exceed ten per cent, and take back the franchises at the same the city council shall have the right to require time that she leaves the corporation in posmaid company to reduce the price of water in session of the physical property depleted in such manner and in such a proportion that the value by the loss of the franchise, and at profits shall rates ; and provided, further, that the rates the same time that she keeps the money charged shall never exceed those now paid by paid for the property plus the franchise? the city, and in case said company shall refuse
"(4) The general law of the state procompliance, the demand of said city may be en viding a restitutio in integrum in all cases forced by a writ of mandamus.
where & synallagmatic, commutative con
tract is dissolved, and the charter containing miss the writ of error on the ground that no no special provision taking the state's con Federal question was involved, it was said tract from under general provisions of by the court (p. 87, L. ed. p. 946, Sup. law, is not a state statute authorizing the ct. Rep. p. 145) attorney general to institute proceedings to "While there is in the amended and supforfeit the contract and take back the fran- plemental answer of the city a formal averchise, at the same time that the state keeps ment that the ordinance No. 909 impaired the consideration paid for the same, a stat. the obligation of a contract arising out of ute impairing the obligations of a contract ? | the act of 1877, which entitled the city to
* “(5) Is not a judicial decision refusing a supply of water free of charge, the bare to apply to this contract the general pro- averment of a Federal question is not in visions of the law of contracts prevailing in all cases sufficient. It must not be wholly the state a taking by the state through her without foundation. There must be at least judiciary of the property of the defendant color of ground for such averment, othercorporation without due process of law? wise a Federal question might be set up in
"(6) Is not the legislative resolution, the almost any case, and the jurisdiction of this action of the attorney general, and the accourt invoked simply for the purpose of tion of the supreme court of the state the delay." taking by the state of property without due Again, in Hamblin v. Western Land Co. process of law through the instrumentality 147 U. S. 531, 37 L. ed. 267, 13 Sup. Ct. of her legislative, her executive, and her Rep. 353, upon a like motion to dismiss the judicial departments, both jointly and sev- writ of error, the court said: “It is doubterally?
ful whether there is a Federal question in “(7) Is not the refusal to apply to this this case. A real, and not a fictitious, Fed. case the general provisions of the law oferal question is essential to the jurisdiction contract prevailing in the state of Louis- of this court over the judgment of state iana a denial to the plaintiff in error of the courts,"-citing the two cases just above equal protection of the laws of the state referred to. of Louisiana ?”
In St. Joseph & G. I. R. Co. v. Steele, 167 These questions are, as is said, simply U. S. 659, 42 L. ed. 315, 17 Sup. Ct. Rep. amplifications of the grounds actually 925, it was said by the court (p. 662, L. ed. taken by plaintiff in error upon the trial p. 316, Sup. Ct. Rep. p. 354): and on the argument of the case in “We cannot accede to the proposition the supreme court of the state, and which that, because the acts of Congress which are plainly set out in the record. This may authorized the construction of the bridge in be assumed, and the point which arises is question gave the right to build a railroad whether the matters thus set forth do in and toll bridge, the conceded power of the truth create even a color of a Federal ques. state to tax did not extend to the bridge in tion.
both aspects. Nor can we agree that the It has long been the holding of this court making of such a contention raised a Fedthat in order to warrant the exercise of eral question of a character to confer origjurisdiction over the judgments of state inal jurisdiction in the circuit court of the courts there must be something more than United States. Not every mere allegation a mere claim that a Federal question exists. of the existence of a Federal question in a There must, in addition to the simple set. controversy will suffice for that purpose. ting up of the claim, be some color there. There must be a real, substantive question, for, or, in other words, the claim must be on which the case may be made to turn." of such a character that its mere mention Although the above case relates to the does not show it destitute of merit; there jurisdiction of the circuit court, yet, so far must be some fair ground for asserting its as this question is concerned, the principles existence, and, in the absence thereof, a is the same as to both courts. writ of error will be dismissed, although the * And in Wilson v. North Carolina, 169 U.* claim of a Federal question was plainly set S. 586, 42 L. ed. 865, 18 Sup. Ct. Rep. 435, up. Thus, in Millinger v. Hartupee, 6 Wall. it was held that there must be a real and 258, 18 L. ed. 829, the Chief Justice (at substantial Federal question existing in or. page 261, L. ed. p. 830) said: “Something der to give this court jurisdiction to review more than a bare assertion of such an a judgment of a state court, and if the quesanthority seems essential to the jurisdiction tion raised were so unfounded in substance of this court. The authority intended by that the court would be justified in saying the act is one having a real existence, de there was no fair color for the claim that rived from competent governmental power." it was of a Federal nature, the writ would This case arose under the 25th section of be dismissed. the judiciary act, and jurisdiction was These cases show the rule and its limitasought to be maintained upon the assertion tions, and where by the record it appears that the validity of*an authority exercised that although a claim of a Federal quesunder the United States was drawn in question had been plainly made, if it also clearly tion, and the decision was against its valid-appear that it lacked all color of merit, and ity. It was held not sufficient to make the had no substance or foundation, the mere claim, but there must be some color of foun- fact that it was raised was not sufficient to dation for its assertion.
give this court jurisdiction. In New Orleans v. New Orleans Water. We must look at the question submitted works Co. 142 U. S. 79, 35 L. ed. 943, 12 by the plaintiff in error in the light of these Sup. Ct. Rep. 142, upon a motion to dis- decisions for the purpose of determining
whether there is any fair foundation for and by such modes of procedure as wero the several claims. It must also be remein- consistent with law. Although no such bered that for years prior to and at the time condition is expressed in the company's of the formation of this corporation it was charter, it is necessarily implied in every the unquestioned law that all corporations grant of corporate existence. Terrett v. were created by the state subject to its im- Taylor, 9 Cranch, 43, 51, 3 L. ed. 650, 653; plied power, if not stated in the charter, to Ang. & A. Priv. Corp. 9th ed. $ 774, note." dissolve the corporation for a misuse or for In that case the question was whether the a nonuse of its corporate powers or obliga company could be dissolved on account of tions. The contract contained in a charter its insolvency. Here one of the questions is always subject to this power residing in is whether this company can be dissolved the state.
and its charter forfeited on account of the Thus in Terrett v. Taylor, 9 Cranch, 43, illegal rates charged for supplying water. 3 L. ed. 650, it was stated by the court (p. Upon the question of insolvency in the 51, L. ed. p. 653):
Needles Case, the court (at page 581, L. ed. “A private corporation created by the leg. p. 1087, Sup. Ct. Rep. p. 684) said: islature may lose its franchises by a mis- “It is not competent, under existing laws, 4 user or a nonuser of them; and they may for this court to inquire whether the state be resumed by the government under a ju- court correctly interpreted the evidence as * dicial judgment upon a quo warranto to as to the company's insolvency; nor whether certain and enforce a forfeiture. This is the facts make a case which, under the statthe common law of the land, and is a tacitute of 1874, required or permitted a judg. condition annexed to the creation of every ment perpetually enjoining it from doing such corporation."
any further business. We are restricted by It is stated by Chancellor Kent, in his the settled limits of our jurisdiction to the Commentaries (vol. 2, p. 378, Comstock's specific inquiry whether the statutes them. ed.), that there were two modes of proceed selves, upon which the judgment below ing judicially to ascertain and enforce the rests, impair the obligation of any contract forfeiture of a charter for default or abuse which the company or its policyholders had of power; the one by scire facias, the other with the state, or infringe any right secured by information in the nature of a quo war- by the national Constitution.
Did ranto; both these modes of proceeding the company, by its charter, have a contract against corporations being at the instance that it should, without reference to the will and on behalf of the government. The of the state or the public interests, exercise state must be a party* to the prosecution, the franchises granted by the state after it for the judgment is that the parties be became insolvent and consequently unable ousted, and the franchises seized into the to meet the obligations which, as a corpo. hands of the government.
ration, under the sanction of the state, it In Chicago L. Ins. Co. v. Needles, 113 U. had assumed to its policyholders ? Our an. S. 574, 28 L. ed. 1084, 5 Sup. Ct. Rep. 681, swer to these questions is sufficiently indithe court (at page 579, L. ed. p. 1086, Sup. cated by what has been said." Ct. Rep. p. 683) said:
The statute in question in the above ca se, "The case upon the merits, so far as they it will be observed, was passed subsequently involve any question of which this court to the grant of the charter to the corporamay take cognizance, is within a very nar- tion. Even there it was held that such a row compass. The main proposition of the statute did not impair the obligation of the counsel is that the obligation of the con contract contained in such charter. In the tract which the company had with the state case before us there is no subsequent stat. in its original and amended charter will ute. be impaired, if that company be held sub- And again, at page 584, L. ed. p. 1088, ject to the operation of subsequent statutes Sup. Ct. Rep. p. 686, of the same case: regulating the business of life insurance and "It is further contended that the state authorizing the courts, in certain contin. enactments in question impair the obligagencies, to suspend, restrain, or prohibit in- tion of the contracts which the company lias surance companies incorporated in Illinois made with its creditors and policyholders. from further continuance in business. This To this it is sufficient to reply in the lan. position cannot be sustained consistently guage of the court in Mumma v. Potomao with the power which the state has, and, Co. 8 Pet. 281, 287, 8 L. ed. 945, 948, where upon every ground of public policy, must it was said: 'A corporation, by the very always have, over corporations of her own terms and nature of its political existence, creation. Nor is it justified by any reasona- is subject to a dissolution, by a surrender of ble interpretation of the language of the its corporate franchises, and by a forfeitcompany's charter. The right of the plain. ure of them for wilful misuse and nonuse. tiff in error to exist as a corporation, and Every creditor must be presumed to underits authority, in that capacity, to conduct stand the nature and incidents of such a the particular business for which it was body politic, and to contract with reference created, were granted subject to the condi- to them. And it would be a doctrine new in tion that the privileges and franchises con- the law that the existence of a private confered upon it should not be abused, or so tract of the corporation should force upon employed as to defeat the ends for which it it a perpetuity of existence contrary to pubwas established, and that, when so abused lic policy and the nature and objects of its or misemployed, they might be withdrawn charter.' The contracts of policyholders or reclaimed by the state in such a way and creditors are not annihilated by such a
judgment as was rendered below; for, to 206, 28 L. ed. 629, 697, 5 Sup. Ct. Rep. 8, the extent that the* company has any prop. 97, it was held that a state statute reg. erty or assets, their interests can be pro- ulating proceedings for the removal of a tected, and are protected, by that judgment. person from a state office was valid with The action of the state may or may not have regard to the Federal Constitution, if affected the intrinsic value of the company's it provided for bringing the party proceeded policies; that would depend somewhat on against into court, notifying him of the case the manner in which its affairs have been he had to meet, giving him an opportunity conducted, upon the amount of profits it has to be heard in his defense, and for the derealized from business, and upon its actual liberation and judgment of the court. condition when this suit was instituted; And in Simon v. Craft, 182 U. S. 427, 45 but the state did not, by granting the orig. L. ed. 1165, 21 Sup. Ct. Rep. 836, it was inal and amended charter, preclude herself held that the essential elements of due procfrom seeking, by proper judicial proceed.ess of law were notice and an opportunity ings, to reclaim the franchises and privi- to defend, and in determining whether those leges she has given, when they should be rights were denied the court will be gove 80 misused as to defeat the objects of her erned by the substance of things, and not by grant, or when the company had be mere form; that the due process clause in come insolvent so as not to be able to meet the 14th Amendment of the Constitution the obligations which, under the authority did not necessitate that the proceedings in of the state, it had assumed to policyholders a state court should be by a particulaı and creditors."
mode, but only that there should be a reg. That the state has power to forfeit the ular course of proceeding, in which notice charter of a corporation for an abuse of its was given of the claim asserted and opporprivileges is recognized as the law of Louis- tunity offered to defend against it. iana. The Civil Code of that state, article Regarding the impairment of any alleged 447, has for many years authorized a pro- contract, it must be borne in mind that the ceeding in the nature of a quo warranto to constitutional provision refers to state leg. forfeit the charter for misuse, and it has islation, or to an enactment of a legislative been held that such article applies to every character, though by a municipal corporacharter granted since its adoption. Atcha- tion, made subsequent to the contract, and falaya Bank v. Dawson, 13 La. 497; State which impairs its obligation. New Orleans v. New Orleans Gaslight & Bkg. Co. 2 Rob. Waterworks Co. v. Louisiana Sugar Ref. Co. (La.) 529, 532.
125 U. S. 18, 30, 31 L. ed. 607, 612, 8 Sup. Again, the claim that the judgment de- ct. Rep. 741; st. Paul Gaslight Co. v. St. prives the plaintiff in error of property Paul, 181 U. S. 142, 148, 45 L. ed. 783, 21 without due process of law must be looked Sup. Ct. Rep. 575. at with reference to the cases upon the sub This court does not obtain jurisdiction to ject as to what constitutes due process of review a judgment of a state court because law. Thus, in Davidson v. New Orleans, 96 that judgment impairs or fails to give effect U. S. 97, 24 L. ed. 616, it was held that a to a contract. The state court must give statute which required that before an as- effect to some subsequent statute or state sessment upon land should become effectual Constitution which impairs the obligation it must be submitted to a court of justice, of the contract, and the judgment of that with notice to the owner of the property court must rest on the statute either exand an opportunity given him to appear pressly or by necessary implication. Misand contest the assessment, constituted due sissippi & M. R. Co. v. Rock, 4 Wall. 177, process of law.
180, 18 L. ed. 381, 382; Mississippi & M. In Den es dem. Murray v. Hoboken Land R. Co. v. McClure, 10 Wall. 511, 19 L. ed. & Improv. Co. 18 How. 272, 15 L. ed. 372, 997; Know v. Exchange Bank, 12 Wall. 379, the question of what amounted to due proc-20 L. ed. 414. ess of law was examined, and the proceedl These cases are referred to and applied ing in that case held valid. Mr. Justice in Lehigh Water Co. v. Easton, 121 U. S. Curtis said, in delivering the opinion of the 338, 392, 30 L. ed. 1059, 1060, 7 Sup. Ct. court:
Rep. 916. "To what principles, then, are we to re With these principles in mind, we come to sort to ascertain whether this process, an examination of the questions raised by enacted by Congress, is due process? To the plaintiff in error. this the answer must be twofold. We must The answer to the first question, as to examine the Constitution itself, to see mandamus being the exclusive remedy for whether this process be in conflict with any illegal rates, is that the state court has of its provisions. If not found to be so, otherwise construed the charter, and has held we must look to those settled usages and that mandamus is not the only remedy, but modes of proceeding existing in the common that the company was liable to be proceeded and statute law of England before the emi. against by quo warranto at the suit of the gration of our ancestors, and which are state through its attorney general. The shown not to have been unsuited to their claim that by so proceeding there is any imcivil and political condition by having been pairment of the obligation of a contract by acted on by them after the settlement of any subsequent legislation, or that there has this country."
thus been a deprivation of property with In Kennard v. Louisiana ex rel. Morgan, out due process of law, or a denial of the 92 U. S. 480, 23 L. ed. 478, cited in Foster equal protection of the laws, has no colorV. Kansas ex rel. Johnston, 112 U. S. 201, able foundation.