Nelson v. City of Murfreesboro

• Decision Date: 13 March 1909
• Parties: NELSON v. CITY OF MURFREESBORO et al.
• Court: U.S. District Court — Middle District of Tennessee

179 F. 905

NELSON v. CITY OF MURFREESBORO et al.

United States Circuit Court, M.D. Tennessee.

March 13, 1909

This case was heard upon demurrers to the complainant's bill and on the complainant's application for preliminary writ of injunction.

The bill, which was filed by John H. Nelson, a resident and citizen of Rutherford county, Tenn., doing business under the name of the City Gas & Electric Light Company, against the city of Murfreesboro, a municipal corporation located in Rutherford county, Tenn., and John A. Davis and David F Elam, residents and citizens of said county, alleged: That the city of Murfreesboro on June 16, 1905, enacted an ordinance granting to the complainant, under the name of said company, a franchise or right to establish and maintain a plant for the manufacture of gas and electricity and poles wires, and pipes for the transmission thereof in, through and along the streets, alleys, and sidewalks of the city for the purpose of supplying and furnishing the city and its inhabitants with light, heat, and power; this ordinance providing that in order to be binding it should be accepted by the company and a contract entered into pursuant thereto between the city and the company whereby the city should be furnished electric light at specified prices for not less than 10 years, for the use and lighting of the city, and the eleventh section of the ordinance specifically providing as follows: 'It is hereby agreed, intended and understood that a perpetual gas anl electric light franchise, with a ten-year exclusive feature, expiring with the contract, is hereby granted to said City Gas & Electric Light Company in consideration of the contract to be entered into for street lights, and in further consideration that all consumers and patrons of said company shall at no time be charged in excess of the present rates for gas and electricity'-- such rates being specifically set forth in said section. That said ordinance was accepted by the company and a written contract entered into between the city and the company in compliance with said ordinance and acceptance. That since said time the company had furnished and supplied all lights required by the city under the contract, and had been paid therefor by the city, without objection or complaint, and had continuously supplied and furnished light, power, and heat to all inhabitants of the city desiring the same pursuant to the terms of said contract and ordinance, and in order to meet the requirements of said ordinance and contract and the demands of its patrons had expended in erecting and fitting up its plant many thousands of dollars. That the income or receipts from the city for lights supplied under said contract are not remunerative alone, and the income or receipts from the inhabitants of the city for the light, heat, and power are not remunerative alone; but both together are sufficient to be remunerative and to yield a fair return as an investment. That on November 4, 1908, the city had enacted an ordinance granting to the defendants Davis and Elam, and their associates, the right to erect and maintain a line of poles and wires in, over, and along the streets and alleys of the city, and to furnish and supply light, heat, and power, produced by electricity, to the inhabitants thereof at rates specified in the ordinance and being the same as those specified in the ordinance and contract of complainant, which ordinance had been accepted by the said Davis, Elam, and associates. That by the ordinance of June 16, 1905, the acceptance thereof, and the contract executed pursuant thereto, a valid contract was made and entered into between the complainant and the city whereby complainant was vested with the sole and exclusive right to furnish and supply the city and its inhabitants with light, heat, and power at the prices fixed therein for the 10-year period covered by the ordinance and contract, and whereby the city contracted and agreed and bound itself not to authorize or permit any other person during such 10-year period to sell, furnish, or supply gas or electric light, power, and heat to the city or any of its inhabitants, and to forbid and prevent the occupancy of its streets for such purpose. That under the laws of Tennessee the city of Murfreesboro was authorized to make and enter into said contract with complainant granting him the exclusive right with which he was vested by said ordinance and contract. That the ordinance of November 4, 1908, authorizing Davis, Elam, and their associates to erect and maintain poles and wires in, over, and along the streets and highways of the city for the purpose of furnishing and supplying electric light, power, and heat to the inhabitants of the city, and also to the city should it desire to take the same, is in violation of the Constitution of Tennessee and of section 10 of article 1 of the Constitution of the United States. That the injury done complainant thereby, and which he will suffer from the competition of the defendant Davis and associates, is great and irreparable, the value of which will amount to more than $2,000 a year during each of the remaining years of his exclusive term.

The complainant prayed that the defendants Davis and Elam be enjoined from erecting and maintaining poles and wires within the corporate limits of the city and from supplying its inhabitants with electric light, heat, and power prior to the expiration of the 10-year term of complainant's contract; that the city be enjoined from suffering or permitting this to be done; that it be adjudged and decreed that under the contract between complainant and the city the complainant is vested with and has the sole and exclusive right to furnish and supply the city and its inhabitants with gas and electric light, heat, and power, and to maintain the plant, wires, and poles necessary and proper therefor until the expiration of said 10-year term; and that the ordinance of November 9, 1908, impairs the obligation of complainant's contract, is in violation of his rights under the Constitution of the United States, and to that extent is null and void.

The defendants demurred to the bill, first, for want of jurisdiction in the court; second, for want of equity on the face of the bill.

John J. Vertrees and Thos. B. Lytle, for complainant.

James D. Richardson, Jr., and Jesse W. Sparks, Jr., for defendants.

SANFORD District Judge (after stating the facts as above).

The bill alleges, in effect: That the complainant acquired by the contract and ordinance of June 16, 1905, the exclusive right, for the period of 10 years, not merely of lighting the streets of the city, but also of furnishing gas and electricity to the city and its inhabitants for light, heat, and power, with an exclusive right of way in the streets of the city during such period, for such purposes; that the obligation of this contract is impaired by the ordinance of November 9, 1908, granting the defendant Davis and his associates the right to furnish electricity to the inhabitants of the city, for heat, light, and power, and a right of way in the streets of the city for such purpose; and that irreparable injury will result to complainant unless the defendants are enjoined from carrying this last-mentioned ordinance into effect in violation of the contract and exclusive franchise claimed by the complainant.

1. The first ground of demurrer is, in effect, that as all the parties are citizens and residents of Tennessee, and as the bill does not allege that the state of Tennessee has passed any law impairing, or attempting to impair, the obligation of the complainant's alleged contract, no federal question is presented giving this court jurisdiction.

This ground of demurrer must be overruled.

It is well settled that a municipal ordinance, legislative in character, passed in the exercise of delegated authority to make laws which the Legislature might have made, has the force of a state law within the meaning of the contract clause of the Constitution, and that, where such ordinance impairs the obligation of a prior contract made by the city, a suit to enjoin its enforcement involves a federal question arising under the Constitution of the United States, of which the federal courts have jurisdiction, where the requisite amount is involved, without regard to the citizenship of the parties. Hamilton Gaslight Co. v. Hamilton City, 146 U.S. 248, 13 Sup.Ct. 90, 36 L.Ed. 963; City Ry. Co. v. Citizens' Street Railway Co., 166 U.S. 557, 17 Sup.Ct. 653, 41 L.Ed. 1114; Pa. Mut. Life Insurance Co. v. City of Austin, 168 U.S. 685, 18 Sup.Ct. 223, 42 L.Ed. 626; Iron Mountain Railroad Co. v. City of Memphis, 96 F. 113, 37 C.C.A. 410; Capital City Gaslight Co. v. Des Moines (C.C.) 72 F. 828; Mercantile Trust Co. v. Collins Park Co. (C.C.) 99 F. 812; American Waterworks Co. v. Water Co. (C.C.) 115 F. 171. And in Walla Walla City v. Water Co., 172 U.S. 1, 19 Sup.Ct. 77, 43 L.Ed. 341, Vicksburg Waterworks Co. v. Vicksburg, 185 U.S. 65, 22 Sup.Ct. 585, 46 L.Ed. 808, and Vicksburg v. Vicksburg Waterworks Co., 202 U.S. 453, 26 Sup.Ct. 660, 50 L.Ed. 1102, this principle was applied even where the ordinances sought to be enjoined were not passed by the municipalities in their direct legislative characters, but in their proprietary capacities for the purpose of constructing municipal waterworks. See, also, Water Co. v. Knoxville, 200 U.S. 22, 32, 26 Sup.Ct. 224, 50 L.Ed. 353.

2. The second ground of demurrer is, in effect, that it appears from the allegations of the bill and the exhibits made a part thereof that in so far as the city, in the ordinance under which complainant claims, sought to give the complainant an exclusive right of furnishing the individual inhabitants of the city with gas and electricity,...