Citizens' Street R. Co. v. City Ry. Co.

• Decision Date: 11 July 1893
• Docket Number: 8,866.
• Citation: 56 F. 746
• Parties: CITIZENS' ST. R. CO. v. CITY RY. CO.
• Court: United States Circuit Court, District of Indiana

56 F. 746

CITIZENS' ST. R. CO. v. CITY RY. CO.

No. 8,866.

United States Circuit Court, D. Indiana.

July 11, 1893

Miller Winter & Elam and Benjamin Harrison, for complainant.

A. C Harris and Elliott & Elliott, for defendant.

BAKER District Judge.

The question presented for decision arises on the motion of defendant to dismiss the bill of complaint on the ground that the cause of action is one over which the circuit court of the United States has no rightful original jurisdiction. The parties to the bill are corporations organized and existing under the laws of the state of Indiana, and citizens thereof. The jurisdiction of the court to entertain this bill is bottomed on the question whether or not the cause is one arising under the constitution of the United States. Article 3, § 2, cl. 1, of the constitution of the United States provides that 'the judicial power shall extend to all cases in law and equity arising under this constitution, the laws of the United States, and treaties made, or which shall be made, under their authority.' The words 'shall extend,' in this clause, are used in an imperative sense, and import an absolute grant of power. Martin v. Hunter, 1 Wheat. 304. The congress has by appropriate legislation conferred on the circuit courts of the United States original cognizance of suits of a civil nature arising under the constitution or laws of the United States. The statute at present in force provides 'that the circuit courts of the United States shall have original cognizance, concurrent with the courts of the several states of all suits of a civil nature, at common law, or in equity, where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars, and arising under the constitution or laws of the United States, or treaties made, or which shall be made, under their authority.' Act March 3, 1887, as re-enacted August 13, 1888, (25 Stat. 433.)

The complainant derives its rights under ordinances of the city of Indianapolis, adopted, pursuant to law, in the years 1864, 1865, 1880, 1888, and 1889. The several ordinances are set out in full in the bill. By these ordinances the complainant is authorized to lay a single or double track for passenger railway lines on all the streets of the city, and on all extensions of the same, and to operate cars on such railway lines by animal power or electricity, and to receive certain tolls from passengers. The bill alleges that the complainant has constructed over 40 miles of railway lines on the streets of the city at an expense of more than $1,000,000, and has equipped a suitable number of cars for use thereon, and has 40 miles of street railway in constant operation for the use of the public, and that it has fully performed all the duties and obligations imposed upon it by said several ordinances. It is expressly provided in the ordinance of 1864 that 'the said city of Indianapolis shall not, during all the time to which the privileges hereby granted to said company shall extend, grant to or confer upon any person or corporation any privilege which will impair or destroy the rights and privileges herein granted to said company.' It is shown that the rights, privileges, and franchises granted to complainant have not determined by efflux of time. The bill alleges that on April 24, 1893, the common council of the city of Indianapolis, by an ordinance adopted by it, entered into a contract with the defendant, the City Railway Company which will not only impair, but will substantially destroy, the rights, privileges, and franchises granted to complainant. It is alleged that in pursuance of the ordinance and contract of April 24, 1893, the city, by its common council, in May, 1893, adopted an ordinance granting to the City Railway Company the right to lay, maintain, and operate its lines of street railway over and upon a large number of the streets now occupied by complainant, with single and double lines of railway tracks, on which it is constantly operating its cars. It is alleged that the City Railway Company cannot lay, maintain, and operate its lines of street railway without interfering with and substantially destroying complainant's lines of street railway, and impairing and destroying the rights, privileges, and franchises previously granted to it. Certain other ordinances are made parts of the bill, which, it is alleged, repeal and annul the ordinances granting rights and privileges to complainant, because wholly inconsistent therewith. The complainant maintains that its bill exhibits a cause of action of a civil nature in equity, arising under the constitution of the United States, because its rights are secured by contract; and in disregard of that contract, under color of a law of the state, the city, by its board of public works and its common council, has granted to defendant rights, privileges, and franchises in derogation of the rights, privileges, and franchises previously granted to complainant. It is provided in article 1,§ 10, of the constitution of the United States that 'no state shall pass any law impairing the obligation of contracts.'

Assuming the truth of the facts alleged in the bill, as we must, for the purpose of this motion, there can be no doubt that the rights, privileges, and franchises granted to the defendant impair the rights, privileges, and franchises previously granted to the complainant, nor is there any doubt that the grant of rights, privileges, and immunities to the complainant, coupled with its acceptance, and the expenditure of large sums of money on the faith thereof, constitute a contract protected by section 10 of article 1 of the constitution. So it was held in the case of Western Paving & Supply Co. v. Citizens' St. R. Co., 128 Ind. 525, 26 N. E. Rep. 188, and 28 N. E. Rep. 88, in which the ordinances in question were considered by the supreme court of the state, and were adjudged to constitute a contract between the city and the complainant. Since the decision in the case of Dartmouth College v. Woodward, 4 Wheat. 518, it is no longer open to debate that where rights, privileges, and immunities are lawfully granted to and accepted by a private or quasi public corporation, and money or its equivalent is expended on the faith of such grant, a binding contract is thereby created, whose violation by a law of the state is forbidden by section 10 of article 1 of the constitution of the United States.

It is contended by counsel for the defendant that, conceding that the grant of rights, privileges, and immunities to the complainant by the city constitutes a contract falling within the above constitutional guaranty, still it is not impaired by a law of the state, and, therefore, that no federal question is presented. When it is sought to invoke the original jurisdiction of this court on the ground that the suit involves in its determination a question arising under the constitution, laws, or treaties of the United States, it must be made to appear clearly and unmistakably from the complaint that the cause or controversy involves the consideration and determination of such federal question. That such federal question may possibly arise in the progress of the litigation is not sufficient. The complaint must disclose the existence of a federal question fairly presented for decision. If the complaint simply shows that, in the progress of the trial, some federal question may possibly be presented, it will be insufficient to confer jurisdiction. If, however, the complaint shows that a federal question is fairly presented, and that the consideration and determination of that question is involved, a cause of action is presented within the rightful jurisdiction of this court, even though other questions are involved whose decision are necessary to the determination of the rights of the parties. The law of the state, under color of whose authority the city of Indianapolis, by its board of public works and its common council, is claimed to have granted rights, privileges, and immunities to the defendant in derogation of the rights, privileges, and immunities previously granted to the complainant, is found in the Acts of 1891, and is entitled 'An act concerning the incorporation and government of cities having more than one hundred thousand population, according to the last...