Cedar Rapids Gas Light Company v. City of Cedar Rapids

• Decision Date: 11 March 1912
• Docket Number: No. 163,163
• Citation: 223 U.S. 655,56 L.Ed. 594,32 S.Ct. 389
• Parties: CEDAR RAPIDS GAS LIGHT COMPANY, Plff. in Err., v. CITY OF CEDAR RAPIDS, George S. Lightner, Mayor, et al
• Court: U.S. Supreme Court

223 U.S. 655

32 S.Ct. 389

56 L.Ed. 594

CEDAR RAPIDS GAS LIGHT COMPANY, Plff. in Err.,

v CITY OF CEDAR RAPIDS, George S. Lightner, Mayor, et al.

No. 163.

Argued February 29, 1912.

Decided March 11, 1912.

Messrs.James H. Trewin and John N. Hughes for plaintiff in error.

[Argument of Counsel from pages 656-666 intentionally omitted]

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Messrs.James W. Jamison and William Chamberlain for defendants in error.

Mr. Justice Holmes delivered the opinion of the court:

This is a bill brought by the plaintiff in error to restrain the enforcement of an ordinance fixing 90 cents per thousand cubic feet as the highest price to be charged in Cedar Rapids for gas. As the ordinance was passed in 1906, and had not yet been enforced, the supreme court of the state dismissed the bill without prejudice to a later suit after it should have been given a fair test. 144 Iowa,

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426, 138 Am. St. Rep. 299, 120 N. W. 966. The plaintiff, having specially set up that the ordinance violated the contract clause of the Constitution (article 1, § 10) and the 14th Amendment, brings the case here. There is a motion to dismiss, but the constitutional questions appear upon the record, and are not so frivolous as to warrant that summary course.

The supposed contract arises from a term in the ordinance under which the plaintiff was granted a renewal of its franchise in 1896. By § 3, 'In consideration of the privileges herein granted to said company it shall furnish to the inhabitants of said city gas for lighting at a price not to exceed $1.80 per thousand feet, and 20 cents per thousand cubit feet discount if consumers pay on or before the 10th of each month after consumption,' etc. It is admitted that under the laws of Iowa the rate could be changed by the city, but it is argued that the quoted words import a contract that it shall not be changed to such an extent as to make impossible the offer of a discount for prompt payment,—that being the cheapest and most efficient way of collecting the price of the gas. The state court assumed that there was no contract in the case, and in discussing what it treated as the sole question, whether the plaintiff would be deprived of a fair compensation for its services, pointed out that the company could secure payment by requiring a deposit in advance or by making other reasonable rules.

We are of opinion that there was no contract on the part of the city that the price should be kept high enough to allow a discount for prompt payment. The general power reserved to regulate rates was limited only by the 14th Amendment. The words relied upon by the plaintiff express its promise in consideration of the privileges granted,—not a promise by the city. Knoxville Water Co. v. Knoxville, 189 U. S. 434, 437, 47 L. ed. 887, 891, 23 Sup. Ct. Rep. 531. It is true that the contract was in the form of an ordinance, but the ordinance was drawn as a contract, to be accepted, and it was accepted

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by the plaintiff; it contained reciprocal undertakings, the one in question being that of the plaintiff, as we have said; and it was subject to the power retained by the city to regulate rates. That power, it was expressly provided by the Iowa statute, was not to be abridged by ordinance, resolution, or contract. Code of 1897, § 725, 22 G. A. (1888) chap. 16.

Upon the issue under the 14th Amendment, the plaintiff argues on the strength of Rev. Stat. § 709, U. S. Comp. Stat. 1901, p. 575, that the facts are open to re-examination here. By that section it is provided that a writ of error to a state court 'shall have the same effect as if the judgment or decree complained of had been rendered or passed in a court of the United States.' It is argued that, as the decree of a state court can be reviewed only by writ of error, the foregoing words give to a writ of error in a chancery case the effect of an appeal, and open the evidence to re-examination to the same extent as upon an appeal. A suggestion to that effect was made in Republican River Bridge Co. v. Kansas P. R. Co. 92 U. S. 315, 317, 23 L. ed. 515, 516, but the practice and decisions from an early date have been the other way. Egan v. Hart, 165 U. S. 188, 189, 41 L. ed. 680, 681, 17 Sup. Ct. Rep. 300; Almonester v. Kenton, 9 How. 1, 7, 13 L. ed. 21, 23; Dower v. Richards, 151 U. S. 658, 663, 38 L. ed. 305, 307, 14 Sup. Ct. 452, 17 Mor. Min. Rep. 704; Gardner v. Bonesteel, 180 U. S. 362, 365, 370, 45 L. ed. 574, 577, 21 Sup. Ct. Rep. 399; Thayer v. Spratt, 189 U. S. 346, 353, 47 L. ed. 845, 849, 23 Sup. Ct. Rep. 576; German Sav. & L. Soc. v. Dormitzer, 192 U. S. 125, 129, 48 L. ed. 373, 376, 24 Sup. Ct. Rep. 221; Adams v. Church, 193 U. S. 510, 513, 48 L. ed. 769, 770, 24 Sup. Ct. Rep. 512.

But, of course, findings,...