197 U.S. 178 (1905), 154, Dawson v. Columbia Avenue Saving Fund,

Docket Nº:No. 154
Citation:197 U.S. 178, 25 S.Ct. 420, 49 L.Ed. 713
Party Name:Dawson v. Columbia Avenue Saving Fund,
Case Date:March 06, 1905
Court:United States Supreme Court
 
FREE EXCERPT

Page 178

197 U.S. 178 (1905)

25 S.Ct. 420, 49 L.Ed. 713

Dawson

v.

Columbia Avenue Saving Fund,

No. 154

United States Supreme Court

March 6, 1905

Safe Deposit, Title and Trust Company

Argued January 26-27, 1905

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE NORTHERN DISTRICT OF GEORGIA

Syllabus

An arrangement of parties which is merely a contrivance between friends to found jurisdiction on diverse citizenship in the circuit court will not avail, and when it is obvious that a party who is really on complainant's side has been made a defendant for jurisdictional reasons, and for the purpose of reopening in the United States courts a controversy already decided in the state courts, the court will look beyond the pleadings and arrange the parties according to their actual sides in the dispute.

The wrongful repudiation of, and refusal to pay, a contract debt by a city may amount merely to a naked breach of contract, and in the absence of any legislative authority affecting the contract or on which the refusal to pay is based, the mere fact that the city is a municipal corporation does not give to its refusal the character of a law impairing the obligation

Page 179

of contracts or depriving a citizen of property without due process of law, and give rise to suit under the Constitution of the United States within the jurisdiction of the circuit court.

The facts are stated in the opinion.

HOLMES, J., lead opinion

MR. JUSTICE HOLMES delivered the opinion of the Court.

This is a bill in equity, brought in the circuit court by the appellee, the trust company, as mortgagee of the Dawson Waterworks Company, to restrain the City of Dawson from taking measures to build a new set of waterworks, and to compel it specifically to perform a contract made with the waterworks company in 1890, to pay that company or its mortgagee a certain sum for the use of its water for twenty years. The trust company is a Pennsylvania corporation, and the only ground of jurisdiction for the bill as originally filed was diversity of citizenship. The bill, after stating the contract, set up a formal repudiation of the same by the city on June 27, 1894, refusals to pay for the water from that time, and attempts to collect taxes which, by the contract, were to be satisfied by the furnishing of water, but alleged a continued use of the water by the city. It further stated the calling of an election for December 12, 1894, to see if the city should issue bonds to erect or buy waterworks or electric lights, a vote in favor of the issue, an issue of $10,000 for the erection of an electric light plant, and a present intent to sell the residue for the purpose of erecting new waterworks. It also alleged that the waterworks company, recognizing the plaintiff's right to be paid the rentals for the water, in the events which had happened, which had made the waterworks

Page 180

company unable to pay the interest on the mortgage, had yielded to the plaintiff's demand that it should collect the rentals, and that the plaintiff had notified the city, and had made demand, but that the city refused to pay. Other details are immaterial. The waterworks company was made a party defendant, and was served with process. An answer was served, although not filed, by the defendants other than the waterworks company, setting up, among other things, that the waterworks company was the real plaintiff, and was made...

To continue reading

FREE SIGN UP