Columbia Ry Gas Electric Co v. State of South Carolina, 297

• Decision Date: 19 February 1923
• Docket Number: No. 297,297
• Parties: COLUMBIA RY., GAS & ELECTRIC CO. v. STATE OF SOUTH CAROLINA
• Court: U.S. Supreme Court

261 U.S. 236

43 S.Ct. 306

67 L.Ed. 629

COLUMBIA RY., GAS & ELECTRIC CO.

v STATE OF SOUTH CAROLINA.

No. 297.

Argued Jan. 26, 1923.

Decided Feb. 19, 1923.

Messrs. Wm. Elliott, and Jo-Berry S. Lyles, both of Columbia, S. C., for plaintiff in error.

Messrs. S. M. Wolfe and J. Fraser Lyon, both of Columbia, S. C., for the State of South Carolina.

[Argument of Counsel from pages 237-240 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the Court.

This was an action brought by the state against the defendant (plaintiff in error) to recover possession of a certain canal property, known as the Columbia Canal, on the ground that the defendant had forfeited the same by reason of its failure to fulfill certain conditions subsequent upon which its continued title depended. Prior to the year 1887 a small canal, following the course of the one now in question was owned by the state; the title being vested in the board of directors of the state penitentiary. In 1887 the Legislature passed an act incorporating the board of canal trustees, to whom the penitentiary directors were required to and did transfer the canal. 19 Stat. S. C. 1090.

By section 1 of this act, the title to the canal was vested in the trustees for the use and benefit of the city of Columbia subject to the performance of certain obligations therein set forth, and to the proviso:

'That should the said canal not be completed to Gervais street within seven years from the passage of this act all the rights, powers and privileges guaranteed by this act shall cease, and the said property shall revert to the state.'¹

By section 3 they were authorized to construct a dam across Broad river and raise the water in the river so as to get a fall of 37 feet at the south side of Gervais street, provided that the canal be so enlarged as to carry a body of water 150 feet wide at the top, 110 feet wide at the bottom and 10 feet deep and 'develop at least 10,000 horse power at the south side of Gervais street.'

By section 5 the canal was to be opened for navigation free of charge.

By section 7 the trustees were required to complete the canal within two years so as to carry a body of water of the dimensions stated from the source of the canal down to Gervais street and to furnish free of charge 500 horse power to the state, 500 horse power to Sullivan Fenner and 500 horse power to the city of Columbia, and 'as soon as is practicable, complete the canal down to the Congaree river, a few yards above the mouth of Rocky branch.'²

By a subsequent act, passed in 1890, the trustees were authorized to 'sell, alienate and transfer' the property subject 'to all the duties and liabilities imposed thereby [that is, by the act of 1887], and subject to all contracts, liabilities and obligations made and entered into by said board. * * *' 20 Stat. S. C. 967, § 2. Under this statute the canal was sold to defendant's pr decessor, whose title the defendant now has.

The case turns upon the provision contained in section 7, requiring the trustees, as soon as practicable, to complete the canal down to the Congaree river, and depends upon whether this is a condition subsequent, the failure to perform which incurs a forfeiture, or is a covenant the breach of which gives rise to another form of remedy. That the provision has not been complied with is not disputed.

The Legislature, in 1917, passed an act (30 Stat. S. C. 348), which begins with a preamble reciting certain of the provisions of the act of 1887, including that relating to the completion of the canal down to the Congaree river, and declaring that there had been a failure to fulfill the conditions imposed by that act. By section 1 it is then enacted that these conditions have not been complied with but have been disregarded, by reason whereof the right, title and interest 'transferred by virtue of said acts, have been forfeited and reverted to the state.' By section 2 the Attorney General, and other officers named, are directed, within 90 days, to make such re-entry for the state as might be necessary and proper under the circumstances and to take such steps as might be lawful and proper to obtain possession and control of the property and improvements placed thereon, unless satisfactory arrangements be made by the claimants of the canal. By section 3 the Attorney General is directed, at the time of re-entry or thereafter, to commence such proceedings as might be proper in any of the courts of the state to assert the right of the state to said property and improvements.

In pursuance of the act last referred to this action was brought in a state court of common pleas. The complaint alleged that the defendant had failed to complete the canal as soon as practicable down to the Congaree river, and had failed to comply with the provisions of the act of 1887 in other particulars. The other alleged violations may be dismissed from consideration, since the judgment of the trial court is based alone upon the one just specified, and its judgment is affirmed by the state Supreme Court without reference to the others.

That the legislation of 1887 and 1890, and the transactions based thereon, establish a contract between the state and the defendant is clear. The remaining inquiries are: (1) What is the pertinent obligation of this contract? and (2) has that obligation been impaired, in violation of article 1, section 10, of the Constitution?

We are met at the threshold with a challenge on the part of the state to our jurisdiction, and this must first be considered. The judgment of the state court, it is asserted, was based upon its own construction of the contract and not at all upon the act of 1917.

As this court has repeatedly ruled, the Constitution affords no protection as against an impairment by judicial decision. New Orleans Waterworks v. Louisiana Sugar Refining Co., 125 U. S. 18, 30, 8 Sup. Ct. 741, 31 L. Ed. 607; Louisiana Ry. & Nav. Co. v. New Orleans, 235 U. S. 164, 170, 35 Sup. Ct. 62, 59 L. Ed. 175, and cases cited.

If, therefore, the judgment, although in effect impairing the obligation of the contract, nevertheless proceeds upon reasons apart from and without giving effect to the statute, this court is without jurisdiction to review it. Bacon v. Texas, 163 U. S. 207, 216, 16 Sup. Ct. 1023, 1027 (41 L. Ed. 132) wherein the doctrine is stated as follows:

'Where the federal question upon which the jurisdiction of this court is based grows out of an alleged impairment of the obligation of a contract, it is now definitely settled that the contract can only be impaired within the meaning of this clause in the Constitution, and so as to give this court jurisdiction on writ of error to a state court, by some subsequent statute of the state which has been upheld or effect given it by the state court. Lehigh Water Co. v. Easton, 121 U. S. 388; New Orleans Water Works Co. v. Louisiana Sugar Refi ing Co., 125 U.S. 18; Central Land Co. v. Laidley, 159 U. S. 103, 109. * * * If the judgment of the state court gives no effect to the subsequent law of the state, and the state court decides the case upon grounds independent of that law, a case is not made for review by this court upon any ground of the impairment of a contract.'

But, although the state court may have construed the contract and placed its decision distinctly upon its own construction, if it appear, upon examination, that in real substance and effect, force has been given to the statute complained of our jurisdiction attaches. In Houston & Texas C. R. Co. v. Texas, 177 U. S. 66, 77, 20 Sup. Ct. 545, 549 (44 L. Ed. 673), this court said:

'Thus we see that, although the decision of the state court was based upon the ground that the warrants in which these payments were made had been issued in utter violation of the state Constitution, and were hence void, and that no payments made with such warrants had any validity, and although this ground of invalidity was arrived at without any reference made to the act of 1870, yet the necessary consequence of the judgment was that effect was thereby given to that act, and in a manner which the company has always claimed to be illegal and unwarranted by the act when properly construed. The company has never accepted such a construction, but, on the contrary, has always opposed it, and raises the question in this proceeding at the very outset. Upon these facts this court has jurisdiction, and it is its duty to determine for itself the existence, construction and validity of the alleged contract, and also to determine whether, as construed by this court, it has been impaired by any subsequent state legislation to which effect has been given by the court below. Bridge Proprietors v. Hoboken Company, 1 Wall. 116; University v. People, 99 U. S. 309; Fisk v. Jefferson Police Jury, 116 U. S. 131; New Orleans Water Works Company v. Louisiana Sugar Refining Company, 125 U. S. 18; Central Land Company v. Laidley, 159 U. S. 103, 109; Bacon v. Texas, 163 U. S. 207, 216; McCullough v. Virginia, 172 U. S. 102.'

The record before us in the present case plainly discloses that the basis for bringing the action against the defendant was the act of 1917. The complaint alleges at considerable length the provisions of the Act of 1887 and the various transactions resulting in the acquisition of the property by the defendant and its consequent assumption of the obligations contained in that statute. The provisions of the act of 1917, as heretofore recited, are then set forth, followed by a statement of certain negotiations had with the defendant, and it is then alleged that the Attorney General and the other officers mentioned, not considering it appropriate and proper to commit a breach of the peace by making forcible entry upon the property and taking possession thereof, have, therefore, by virtue of section 3 of said act instituted this action.

The sufficiency of the complaint was challenged by demurrer, upon the ground,...