Is Defiance Water Co. v. Defiance still good law?

Opinion · Supreme Court of the United States

Defiance Water Co. v. Defiance

191 U.S. 184

Type: Opinion
Court: Supreme Court of the United States
Jurisdiction: Federal
Date: 1903-11-30
Topic: general

How later courts describe this case

noting “the presumption” that “in all cases . . . the state courts will do what the Constitution and laws of the United States require”
“If there be ground for complaint of [the state court’s] decision, the remedy is by writ of error.”
“The fundamental question of jurisdiction, first, of this court, and then of the court from which the record comes, presents itself on every writ of error or appeal, and must be answered by the court, whether propounded by counsel or not.”

Citator

UpLaw has not yet analyzed Defiance Water Co. v. Defiance. The absence of a flag is not a finding that it is good law.

Cited by: 111 opinions

Headnotes

Federal Courts & Jurisdiction — Duty to Examine Jurisdiction The question of jurisdiction — both of the appellate court and of the court from which the record comes — presents itself on every writ of error and appeal and must be answered by the court whether raised by counsel or not. 191 U.S. 184
Federal Courts & Jurisdiction — Arising Under the Constitution or Laws A suit does not arise under the Constitution or laws of the United States unless it really and substantially involves a dispute or controversy as to the effect or construction of the Constitution or laws upon the determination of which the result depends; it must appear on the record, by a statement in legal and logical form such as is required in good pleading, that the suit involves a right depending on the construction of the Constitution or some law or treaty of the United States. 191 U.S. 184
Federal Courts & Jurisdiction — Deference to State Courts on Federal Questions State courts are competent to decide federal questions arising before them, it is their duty to do so, and the presumption is that they will do what the Constitution and laws of the United States require; if error intervenes, the remedy lies in § 709 of the Revised Statutes, and the federal courts cannot interpose in a controversy properly pending in the state courts on the ground that the state court might so decide as to render its final action unconstitutional. 191 U.S. 184
Federal Courts & Jurisdiction — Impairment of Contract as Basis for Jurisdiction A city council resolution allowing a pending bill of a water company claiming a franchise, containing a saving clause against the city being estopped from denying the existence of a contract right, is not a law impairing the obligation of a contract within the purview of the Federal Constitution, and does not give a circuit court jurisdiction over an action in equity to enjoin the city from appropriating money in the water fund to the payment of any indebtedness other than the complainant's. 191 U.S. 184
Federal Courts & Jurisdiction — Attempts to Remove Pending State Litigation Litigation properly pending in the state courts cannot be dragged into the federal courts on the ground that the state courts might ultimately decide so as to render their final action unconstitutional. 191 U.S. 184
Federal Courts & Jurisdiction — Evasion of Diversity Requirement A bill that brings into the circuit court controversies between citizens of the same State evades the constitutional and statutory discrimination between suits between citizens of the same State and suits between citizens of different States, and should be dismissed for want of jurisdiction. 191 U.S. 184
Federal Courts & Jurisdiction — Appellate Power to Correct Want of Jurisdiction Where a circuit court has maintained jurisdiction on the ground that the case arose under the Constitution of the United States and proceeded to decree, the appeal is properly brought directly to the Supreme Court, which has the power to determine the jurisdiction of the courts below and, upon holding that the circuit court erred in retaining the case, to direct that the case be dismissed for want of jurisdiction at the costs of the appellant. 191 U.S. 184

DEFIANCE WATER CO.v. DEFIANCE,191 U.S. 184(1903)

24 S.Ct. 63

DEFIANCE WATER COMPANYv. DEFIANCE.

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT

OF OHIO.

No. 21.

Argued April 22, 1903.

Decided November 30, 1903.

The fundamental question of jurisdiction, first, of this court, and then of the court from which the record comes, presents itself on every writ of error and appeal, and must be answered by the court whether propounded by counsel or not. When a suit does not really and substantially involve a dispute or controversy as to the effect or construction of the Constitution or laws of the United States, upon the determination of which the result depends, it is not a suit arising under the Constitution or laws; and it must appear on the record, by a statement in legal and logical form, such as is required in good pleading, that the suit is one which does really and substantially involve a dispute or controversy as to a right which depends on the construction of the Constitution or some law or treaty of the United States, before jurisdiction can be maintained on that ground. State courts are competent to decide Federal questions arising before them; it is their duty to do so, and the presumption is that they will do what the Constitution and laws of the United States require. If error intervenes the remedy is found in § 709 of the Revised Statutes, and the Federal courts cannot be called on to interpose in a controversy properly pending in the state courts on the ground that the state court might so decide as to render their final action unconstitutional. The fact that the council of a city has passed a resolution providing for payment of a pending bill of a water company claiming a franchise, with a saving clause against the city, being estopped from denying the existence of contract right, does not give the Circuit Court jurisdiction to maintain an action in equity to enjoin the city from appropriating money in the water fund to the payment of any indebtedness other than the complainant on the ground that such resolution is a law impairing the obligation of a contract within the purview of the Federal Constitution. Where in an action of which the lower court did not have jurisdiction the bill was dismissed, but not for want of jurisdiction, the decree will be reversed by this court at the cost of appellant who takes nothing by the appeal and remanded to the lower court with instructions to dismiss the bill for want of jurisdiction.

ON the fourth day of January, 1898, the city of Defiance, a

municipal corporation of the State of Ohio, by its solicitor,

filed a bill in equity against the Council of the city of

Defiance

Page 185

and the Defiance Waterworks Company, in the Court of Common Pleas

of Defiance County, Ohio, praying that future payments under an

alleged contract of August 17, 1887, between the Council of the

City and Bullock Company, who had subsequently assigned it to

the Water Company, for the furnishing of water to the city for

the term of thirty years from the date of the contract, be

enjoined because of the invalidity of said contract, on grounds

set forth. A preliminary injunction was granted. The Defiance

Water Company thereupon presented its petition and bond for the

removal of the case to the Circuit Court of the United States for

the Northern District of Ohio, the petition alleging: "That this

is a suit of a civil nature in which there is a controversy

arising under the Constitution of the United States, in this

especially that by means of it, the said plaintiff seeks to

abrogate the contract alleged in its suit and to deprive this

defendant of its property, the amount alleged in said plaintiff's

petition to be due this defendant, under said contract, without

due process of law and without trial by jury; to which end and

for which purpose, the said Council of the said city of Defiance

have colluded and conspired with the said plaintiff and it is by

their said Council's procurement that the said plaintiff has

brought the said suit."

The case was removed, but on January 24, 1898, was remanded by

the Circuit Court of the United States to the Court of Common

Pleas. On the same day the Water Company filed its bill in the

Circuit Court of the United States against the city of Defiance,

and the Council of the City of Defiance, and complained that

complainant was a corporation organized under the laws of the

State of Ohio for the purpose of operating waterworks in the city

of Defiance and thereby furnishing water to the city and to its

citizens; that on January 4 the city brought the suit herein

before mentioned, and had obtained a preliminary injunction

therein; that on August 17, 1887, the city of Defiance duly

passed an ordinance entitled "An ordinance to authorize and

provide for the construction and maintenance of a system of

waterworks in the

Page 186

city of Defiance, Defiance County, Ohio," a copy of which

ordinance was annexed. The provisions of the ordinance were then

set forth to the effect that by its terms the right and privilege

for the period of thirty years thereafter was granted to Bullock

Company, their associates, successors and assigns, to locate

and operate a system of waterworks in that city, and to use the

streets of the city for the purposes thereof; that the city

contracted to rent of Bullock Company a certain number of

hydrants and to pay a certain rental therefor; that the city, at

the expiration of ten years, was given the right to purchase the

system, or, if that was not then done, then at the expiration of

five years thereafter.

It was averred that the ordinance was accepted by Bullock

Company, and the works were constructed, in the course of which

Bullock Company became indebted, and certain mortgage bonds

were issued, which were outstanding and held by certain persons

named; that Bullock Company assigned all their rights and

interests to the Defiance Water Company, and the Water Company

completed the construction of the works to the entire

satisfaction of the city, and the same were accepted March 5,

1889, by resolution.

The bill further averred that the city had used the hydrants

and was still using them, and that it had paid all of the rentals

claimed under the contract down to January 1, 1898, except the

sum of $500 due in 1895, to recover which suit had been

commenced. It was then alleged that the City Council "at its

regular meeting, January 7th, 1896, passed an ordinance or

resolution in substance rescinding and annulling said contract of

the city with the Defiance Water Company, your orator, so far as

it had power so to do; and providing by the terms of said

ordinance or resolution, by which it should allow the bill of

said Water Company for the rents that had accrued to them from

the said city for the last half of the year 1895, that the

payment of the said bill should not be `construed or taken to be

any acknowledgment of any contract between them and the said city

for said water rentals or in any manner implying

Page 187

any actual performance of any alleged contract and that no

further payment at the present rate be made to the said

company.'"

The bill then stated that there was due to the Water Company

for the last half of the year 1897 the sum of $3,142.50 less

$756, which, it was subsequently said, had been paid. And it was

charged, on information and belief, that the Council and the

several members of it had, ever since the passage of the

resolution or ordinance of January 7, A.D. 1896, claimed and

repeatedly stated and given out to the public generally, that the

city had no such contract as aforesaid for furnishing water to it

by the Water Company; and that they had also passed resolutions

and ordinances looking toward the construction of waterworks by

the city, but nevertheless the city had given no notice of its

intention to purchase and had not offered to purchase

complainant's waterworks. And furthermore, that many, if not all,

of the members of the Council combined, colluded and confederated

together, and with the city solicitor, to procure him to

institute the suit before mentioned, and to procure an order of

injunction against themselves, the City Council, prohibiting them

from paying complainant the amounts due and owing. The bill then

averred "that if said order of injunction shall stand and be made

perpetual, the said City and Council of Defiance, said

defendants, will thereby deprive your orator of its property

without due process of law, and by means of said order of

injunction they will confiscate your orator's property and

convert it to their own use without payment therefor and without

trial by jury, contrary to the provisions of the Constitution of

the United States." And it was further averred "that the passage

of said ordinance or resolution and the attempt thereby to

abrogate and annul said contract, contravenes the provisions of

section 10 of article I of the Constitution of the United States,

in this, that they are laws impairing the obligation of their

said contract with your orator."

The prayer was that an account might be taken of the amount

Page 188

due complainant from the city of Defiance for water rents that

may have accrued to it, and that the City and the City Council be

decreed and ordered to allow and pay the same; that a provisional

or preliminary injunction be issued to restrain defendants from

appropriating and diverting the moneys in the water fund to the

payment of any other indebtedness than that due complainant; and

that on final hearing the Council and the City be perpetually

enjoined from thereafter denying the existence of the contract,

and abrogating or attempting to abrogate or annul the same; and

for general relief.

The bill was subsequently amended and a supplemental bill

filed.

To the bill as amended defendants demurred for want of

jurisdiction, among other grounds specially assigned, and the

demurrers were overruled. Complainant then filed a supplemental

bill, and to the amended and supplemental bills defendants filed

a joint plea, with an answer in support thereof, insisting, among

other things, that the Court of Common Pleas of Defiance County

had jurisdiction in the premises and that the Circuit Court had

not. The plea was overruled and defendants answered, May 1, 1899,

reserving their rights under their demurrers and plea; asserting

the illegality of the alleged contract; insisting that

complainant's bill was an attempt to secure a removal of the case

from the state court to the Circuit Court, which had already been

determined against complainant; denying the passage of any

resolution or ordinance by the City Council impairing or intended

to impair the obligation of any contract with complainant or its

assignors; and the performance of any act or the intention to

perform any act toward the erection or construction of waterworks

by the city; and submitting that the Circuit Court had no

jurisdiction of the subject matter and that it ought to refuse to

further hear or consider the cause.

Defendants attached to their answer, as they did to their

plea, a copy of the resolution of January 7, 1896, referred to in

the bill, and also copies of sundry other ordinances or

resolutions,

Page 189

and denied that that of January 7, 1896, or any other, had the

effect, or was intended to have the effect, of impairing the

obligation of the alleged contract with complainant; and insisted

that if that, or any other resolution or ordinance, had the scope

attributed to it, it was not lawfully passed under the statutes

of Ohio; and further, that such resolution or ordinance had been

repealed by various subsequent resolutions or ordinances for the

payment of rentals to complainant, copies of which were attached.

Defendants disclaimed any reliance on or benefit from any or all

said resolutions and ordinances as releasing or intending to

release the city from the obligation of the alleged contract, or

that they served any other purpose than as notice that defendants

claimed the ordinance of 1887 was void and illegal from the

beginning. Defendants denied combination or collusion in the

institution of the suit in the state court, and averred that the

city solicitor acted on his own volition.

Replication was filed, and evidence taken, and on June 17,

1901, defendants, by leave of court, filed a plea setting up the

final decree of the Circuit Court of Defiance County, entered

March 15, 1901, in the suit commenced in the Court of Common

Pleas, adjudging the alleged contract to be null and void, and

perpetually enjoining the city of Defiance and the Defiance Water

Company from carrying it out. Replication was filed to this plea,

and a transcript of the record in the state courts was put in

evidence. This showed that after the case commenced in the Court

of Common Pleas was remanded to that court, a demurrer was filed

to the petition, was sustained, and the petition dismissed,

whereupon the case was carried to the Circuit Court of Defiance

County by appeal. In that court the demurrer was overruled, the

Water Company answered, the city replied, the case was heard on

pleadings and evidence, and a final decree was rendered in favor

of the City and against the Water Company and the City Council to

the effect above stated. The Circuit Court of the United States

on hearing sustained defendant's plea and dismissed the bill.

From that decree complainant prosecuted this appeal, which was

Page 190

argued in this court, April 22, 1903. Thereafter, and on October

13, counsel for all the parties called the attention of the court

to the fact that the case in the Circuit Court of Defiance County

had been carried to the Supreme Court of Ohio by the Water

Company, and that that court on June 16, 1903, had reversed the

decree of said Circuit Court, sustained the demurrer to the

petition, and directed it to be dismissed. 48 Ohio Law Bulletin,

687. The Supreme Court held that, even if the alleged contract

between the City and Bullock Company were invalid, the cause of

action to restrain its performance was barred by statute.

Mr. Henry NewbeginandMr. Robert Newbeginfor appellant.Mr. Robert W. Binghamwas on the brief.Mr. Fred L. HayandMr. Henry B. Harrisfor appellee.Mr.John P. Cameronwas on the brief.

MR. CHIEF JUSTICE FULLER, after making the foregoing statement, delivered the opinion of the court.

The decree of the Circuit Court was based on the decree of the state Circuit Court, which had been reversed by the state Supreme Court, and various suggestions have been made by counsel in respect of the judgment which they think should be rendered here in view of the termination of the litigation in the state courts.

But the question of the jurisdiction of the Circuit Court meets us on the threshold, and the disposal of that question disposes of this appeal.

Diverse citizenship did not exist, and, unless the case was one arising under the Constitution or laws of the United States, the jurisdiction of the Circuit Court was not properly invoked, and should not have been maintained.

We have repeatedly held that "when a suit does not really and substantially involve a dispute or controversy as to thePage 191effect or construction of the Constitution or laws of the United States, upon the determination of which the result depends, it is not a suit arising under the Constitution or laws. And it must appear on the record, by a statement in legal and logical form, such as is required in good pleading, that the suit is one which does really and substantially involve a dispute or controversy as to a right which depends on the construction of the Constitution or some law or treaty of the United States, before jurisdiction can be maintained on this ground."Western Union Telegraph Co. v.Ann Arbor Railroad Co.,178 U.S. 239;Gold Washing WaterCo. v.Keyes,96 U.S. 199;Blackburnv.Portland GoldMining Co.,175 U.S. 571;Shreveportv.Cole,129 U.S. 36;New Orleansv.Benjamin,153 U.S. 411,424.

In the case last cited we said:

"The judicial power extends to all cases in law and equity arising under the Constitution, but these are cases actually and not potentially arising, and jurisdiction cannot be assumed on mere hypothesis. In this class of cases it is necessary to the exercise of original jurisdiction by the Circuit Court that the cause of action should depend upon the construction and application of the Constitution, and it is readily seen that cases in that predicament must be rare. Ordinarily the question of the repugnancy of a state statute to the impairment clause of the Constitution is to be passed upon by the state courts in the first instance, the presumption being in all cases that they will do what the Constitution and laws of the United States require,Chicago Alton Railroad Co. v.Wiggins Ferry Co.,108 U.S. 18; and if there be ground for complaint of their decision, the remedy is by writ of error under section 709 of the Revised Statutes. Congress gave its construction to that part of the Constitution by the twenty-fifth section of the judiciary act of 1789, and has adhered to it in subsequent legislation."

Complainant rested its assertion of jurisdiction on two grounds:

1. That the resolution or ordinance of January 7, 1896, impaired the obligation of the contract created by the ordinance of August 17, 1887.Page 192

2. That if complainants were perpetually enjoined, as prayed in the suit in the state courts, the State would thereby have deprived it of its property without due process of law.

1. The bill did not set forth the resolution or ordinance of January 7, 1896,in extenso, but stated that by its passage the City Council "in substance" rescinded and annulled the contract "so far as it had power so to do," in that in allowing a bill of the Water Company for accrued rentals it provided that the payment should not be "construed or taken to be any acknowledgment of any contract between them and the said city for said water rentals," . . .

The record shows the resolution, which was as follows:

"JAN'Y 7TH, 1896.

"A resolution to draw warrant in favor of water company for $3,160.00.

"Whereas, the Defiance Water Company have submitted a bill to the city council for $3,160, alleged to be due them from said city for water rental for the past six months; and

"Whereas, said council are of the opinion that no valid contract exists, or is between said city and said company for the payment of the same; and furthermore, that said bill is, in view of the deplorable inefficiency of the alleged water service, wholly without merit in reason and equity; and

"Whereas, the best interests of the city, in their opinion, demand that the present service be discontinued and immediate steps be taken for the purpose of supplying water to said city upon fair and equitable terms: therefor;

"Be it resolved, That the city clerk is hereby directed to forthwith draw his warrant on the city treasurer against the water fund of said city for the said sum of $3,160.00, in favor of said Defiance Water Company, in full payment of said bill; provided, however, that if said warrant be accepted by said company, it be taken and accepted by them without thereby in any manner being construed or taken to be any acknowledgment of any contract between them and said city for said waterPage 193rental, or in any manner implying any actual performance of any alleged contract and that no further payments at the present rate be made to said company.

"Passed Jan. 7th, 1896."

Clearly this resolution was not a law impairing the obligation of the contract. It was merely the allowance of a claim for rentals with a saving clause to prevent estoppel; and the semi-annual payments for 1896, and the first for 1897, were directed by subsequent ordinances to be made without any reservation.

And the City not only denies that the resolution (or any other) had or was intended to have the effect now attributed to it, but says that if this had been otherwise the resolution would have been invalid because not passed in accordance with the statutes of Ohio in that behalf.

The position of the City as disclosed by the record was, indeed, that no valid contract existed, and it was to test that question that the suit was instituted by the City Solicitor in the Court of Common Pleas, but there was no definitive legislative action taken by the City for the erection of its own waterworks, or otherwise, which was obnoxious to the prohibition of the Federal Constitution.

2. Nor does the contention that if the temporary injunction granted by the Court of Common Pleas should ultimately be made perpetual justify the assumption of jurisdiction because of violation of the Fourteenth Amendment.

Litigation in the state courts cannot be dragged into the Federal courts at such a stage, and in such a way. The proposition is wholly untenable that, before the state courts in which a case is properly pending can proceed to adjudication in the regular and orderly administration of justice, the courts of the United States can be called on to interpose on the ground that the state courts might so decide as to render their final action unconstitutional.

Moreover the state courts are perfectly competent to decide Federal questions arising before them and it is their duty toPage 194do so.Robbv.Connolly,111 U.S. 624,637;Missouri PacificRailway Co. v.Fitzgerald,160 U.S. 556,583.

And, we repeat, the presumption is in all cases that the state courts will do what the Constitution and laws of the United States require.Chicago Alton Railroadv.Wiggins FerryCo.,108 U.S. 18;Shreveportv.Cole,129 U.S. 36;Nealv.Delaware,103 U.S. 370,389;New Orleansv.Benjamin,153 U.S. 411,424.

If error supervenes the remedy is found in section 709 of the Revised Statutes.

The present case strikingly illustrates the applicability of these well-settled principles. The preliminary injunction was dissolved by the court by which it was granted, and the City's suit was dismissed by the highest judicial tribunal of the State.

We regard this bill as an attempt to evade the discrimination between suits between suits between citizens of the same State and suits between citizens of different States, established by the Constitution and laws of the United States, by bringing into the Circuit Court controversies between citizens of the same State, an evasion which it has been the constant effort of Congress and of this court to prevent,Bernards Townshipv.Stebbins,109 U.S. 341,353;Shreveportv.Cole,129 U.S. 36,44; and are of opinion that it should have been dismissed for want of jurisdiction.

The fundamental question of jurisdiction, first, of this court, and then of the court from which the record comes, presents itself on every writ of error or appeal, and must be answered by the court, whether propounded by counsel or not.Mansfield, Coldwater c. Railwayv.Swan,111 U.S. 379,382;Metcalfv.Watertown,128 U.S. 586;Morrisv.Gilmer,129 U.S. 315;Continental National Bankv.Buford, ante, 119.

The Circuit Court having maintained jurisdiction on the ground that the case arose under the Constitution of the United States, and having proceeded to decree, the appeal was properly brought directly to this court, and it at once became our duty to inquire whether the Circuit Court shouldPage 195have retained the case. Having reached the result that the court erred in so doing, we are vested with the power to direct that conclusion to be carried into effect, and in its exercise we discharge one of our essential functions, the determination of the jurisdiction of the courts below.Morrisv.Gilmer,129 U.S. 315;Wetmorev.Rymer,169 U.S. 115;Aztec Mining Co. v.Ripley,151 U.S. 79.

The bill was dismissed by the Circuit Court but not for want of jurisdiction, and the decree will be reversed in order that the case may be disposed of on that ground, at the costs of appellant, which takes nothing by its appeal.The decree is reversed at appellant's costs, and the causeremanded with instructions to dismiss the bill for want ofjurisdiction.