Saginaw Gaslight Co. v. City of Saginaw

Decision Date07 September 1886
Citation28 F. 529
PartiesSAGINAW GAS-LIGHT CO. v. CITY OF SAGINAW and another.
CourtU.S. District Court — Eastern District of Michigan

The facts of the case were substantially as follows:

On the twenty-second of April, 1868, the common council of the city of Saginaw passed an ordinance, in which, after reciting that it was desirable that the city should be lighted with gas and that, to induce any company to erect gas-works, lay down gas-pipes, and furnish a supply of gas, it was necessary to grant to such company certain exclusive rights and privileges, it was enacted 'that the exclusive right and privilege of erecting, maintaining, and continuing and operating gas-works within said city, * * * and the exclusive right and privilege of manufacturing gas in said city for sale for lights, and of selling the same, and of supplying the inhabitants of said city, etc., be, and is hereby granted to' four individuals, (naming them,) for 30 years: provided, that they should, within 30 days after the passage of the ordinance, organize a corporation, file a copy of their articles of association, and their acceptance of the ordinance, and agreements to perform on their part, according to the terms and conditions thereof, to supply gas for lights; to erect, within one year and six months, permanent and sufficient gas-works in said city; to lay down in the streets thereof at least 9,000 feet of main pipe; and to supply, and to continue to supply, gas to all persons along the line of said main pipe who should require it, and conform to the rules of the company, and pay for the same at the rates provided for in said ordinance.

Within 30 days from the passage of this ordinance the four individuals named as grantees proceeded to organize a gas company, as required by the terms of the ordinance, under the name of the Saginaw Gas-light Company, the plaintiff in this bill. The company was organized, erected gas-works within the time required, and expended somewhat over $75,000 in laying pipes and in erecting works, and in all other respects complied with the ordinance; and, within the 30 days required, filed with the recorder of the city a copy of its articles of association, and its acceptance of the ordinance.

On July 6, 1871, the city passed a further ordinance, making a contract with the plaintiff to furnish gas for the public lamps for that city, to commence on the eighth day of July 1871; and which, after providing terms, price, and conditions upon which the lighting was to be done, contained this further stipulation: 'This proposition, if accepted, to remain in force until the first day of January, 1873, and to be considered as renewed from year to year, unless either party gives notice to the other of their desire to terminate the same, not less than 30 days previous to the first day of January of any year;' and a further stipulation that 'this ordinance shall be construed as a contract between said city and said Saginaw Gas-light Company;' and a further stipulation that 'nothing in this ordinance contained shall be construed so as to release said gas-light company from the operation, effect, and obligations of the ordinance of said city adopted April 22, 1868,' etc.

Both of said ordinances continued to remain in force, and no attempt was ever made to terminate them, or either of them, by notice or otherwise. The plaintiff always complied with the regulations of the common council, and the terms of these ordinances, and no claim was ever made of any failure on its part to comply with the conditions of the ordinances, or to keep its works, pipes, and meters in good repair; or of any failure to supply the city of Saginaw, or its inhabitants, with a good article of burning gas, of as good quality as was furnished by other companies to cities similarly situated.

On the twenty-first day of July, 1886, the common council passed another resolution, accepting a proposition which had previously been made by the said Fort Wayne Jenney Electric Light Company, granting permission to that company to purchase a location, to erect buildings, and put up a plant in the said city of Saginaw, for city and commercial lighting; and made a contract with that company to light the public streets of Saginaw with electric light.

The claim of the plaintiff was:

(1) That the city of Saginaw, under its charter, was charged with the duty of lighting its public streets and buildings, and had the power to contract with others to furnish the means of obtaining gas, and to pass the ordinances of 1868 and of 1871, giving the plaintiff the exclusive right to furnish gas for 30 years, and imposing upon it a corresponding obligation to do so; and that, by the terms of those ordinances, it adopted gas as its light for public and private use.

(2) That the ordinance of 1871 constituted a contract between the city of Saginaw and plaintiff, still in force and binding upon both parties.

(3) That the exclusive gas franchise conferred by the ordinance of 1868 was, in effect, an exclusive light franchise, and could not be defeated by the introduction of naphtha lamps, electric lights, or any other substitute, because the substantial right secured by the company under the ordinance was to furnish light for the public streets and buildings, and for the inhabitants of the city, and the introduction of any other light besides gas was fatal to the benefits intended to be conferred by the ordinance.

Wheeler & McKnight, for plaintiff.

Benton Hanchett, for the City of Saginaw.

Perry A. Randall, for the Electric Light Co.

BROWN J.

A preliminary objection to the jurisdiction of the court in this case demands our first consideration. That no jurisdiction is acquired by reason of the citizenship of the parties is too clear for argument. The plaintiff and the city of Saginaw (the principal defendant) are citizens of the same state, and the fact that another party, viz., the Fort Wayne Jenney Electric Light Company, a citizen of Indiana, is also joined as defendant, is insufficient. Under the original judiciary act of 1789, which conferred upon the circuit courts jurisdiction of all suits 'between a citizen of the state where the suit is brought and a citizen of another state,' it was uniformly held that, if there were several co-plaintiffs, each plaintiff must be competent to sue, and, if there were several co-defendants, each defendant must be liable to be sued, in the federal court, or jurisdiction could not be entertained. While the designation of party 'plaintiff' or 'defendant' was in the singular number, it was intended to embrace all persons who were on one side, however numerous; so that each distinct interest must be represented by persons all of whom were entitled to sue, or were liable to be sued, in the federal court. Strawbridge v. Curtiss, 3 Cranch, 267; Coal Co. v. Blatchford, 11 Wall. 172.

In section 1 of the act of 1875 the phraseology is but slightly changed, and jurisdiction given of 'controversies' 'between citizens of different states;' but the construction of the act is the same, except that the court may examine the record, and rearrange the parties upon different sides of the actual 'controversy' or the real matter in dispute. Pacific R.R. v. Ketchum, 101 U.S. 289, 297; Teal v. Walker, 10 Ch.Leg.News, 131.

The same language is used in first clause of the second section of the same act, providing for the removal of cases from states courts, and to this language a like construction has been given in a large number of cases. Removal Cases, 100 U.S. 457; Blake v. McKim, 103 U.S. 336; Shainwald v. Lewis, 108 U.S. 158; S.C. 2 S.Ct. 385; Hyde v. Ruble, 104 U.S. 407.

As there is no doubt that the parties in this cause are properly arranged upon the record, the jurisdiction must fail, unless it can be supported upon some other ground.

It is insisted, in this connection, that the suit is one 'arising under the constitution or laws of the United States,' within the meaning of the act of 1875, and that, therefore, this court may take cognizance of the case independent of the citizenship of the parties. Granting the premises, plaintiff's conclusion therefrom is undoubtedly correct. Its claim is that the resolution of the common council of the city of Saginaw adopted July 21, 1886, accepting the proposition of the electric light company, granting permission to that company to purchase a location, to erect buildings, and to put up a plant in said city, and contracting with the company to light the public streets of the city with electric lights, is a practical repudiation of its contract with the plaintiff, and a violation of the constitutional provision that 'no state shall pass any law impairing the obligations of contracts. ' If the decision of the case is dependent upon the proper construction of this clause of the constitution, there can be no doubt of our jurisdiction. Gold-washing Co. v. Keyes, 96 U.S. 199; Railroad Co. v. Mississippi, 102 U.S. 135, 141; Levy v. Shreveport, ante, 209.

But if the case be not one of this class,-- in others words, if the resolution of the common council in question be not a 'state law,' within the meaning of this clause,-- then we cannot be called upon to determine whether it impairs the obligation of plaintiff's contract. To illustrate: If the plaintiff corporation and received its franchise directly from the state legislature, and the electric light company had also received its franchise of July 21, 1886, from the same body, there could be no question that the consonance of this action with the above clause of the constitution would be directly put in issue by this case. Suits arising upon conflicting legislative grants of this description are of frequent occurrence, and have been uniformly held to be cognizable in the ...

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