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U.S. Supreme Court


262 U.S. 182

No. 430.

Argued March 2, 1923.
Decided May 7, 1923.

[262 U.S. 182, 183]   Mr. A. V. Dawes, of Trenton, N. J., for plaintiff in error.

Mr. William Newcorn, of Plainfield, N. J., for the State of New Jersey.

Mr. Justice BUTLER delivered the opinion of the Court.

The state of New Jersey recovered judgment against the city of Trenton for $14,310, in an action brought in the state Supreme Court. The judgment was affirmed by the Court of Errors and Appeals, and is here on writ of error.

The state's right to recover depends upon the validity of an act of the Legislature (chapter 252, Laws of 1907). The city asserts that this act offends against the contract clause of the Constitution of the United States, and that it takes property owned by the city in its private or proprietary capacity for public use without just compensation and without due process of law, in violation of the Fourteenth Amendment. The act provides that:

The city claims the right to take from the Delaware river all the water that it requires, without limitation as to quantity and without license fee for any part thereof, and that such right was acquired by the president and directors of the Trenton Waterworks (hereinafter called the water company) by grant direct from the state March 24, 1852, and that the city acquired this right by purchase from the water company. Briefly, the basis of the city's claim is as follows:

By an act of February 29, 1804, the president and directors of the Trenton Waterworks were created a body politic and corporate. They and their successors and assigns were made capable of disposing of water to such as might apply for the same for such annual rent and under such restrictions as they might think proper, and they were authorized to lay and extend their water mains through the streets of the city. Certain springs constituted the company's source of supply, and by reason of increase of population ceased to be adequate. March 24, 1852 (P. L. p. 289 ), a supplement to the above-mentioned act was passed, by which the company was authorized to take the water required either in whole or in part from the Delaware river. Later, March 2, 1855 (P. L. p. 141), an act was passed, authorizing the city to purchase the whole or a majority of the shares of the capital stock of the water company, and the city purchased all of the stock. Thereafter an act of March 1, 1859 (P. L. p. 38), required the company to convey unto 'the inhabitants of the city of Trenton' all the real estate, works and property and all the corporate powers, franchises and privileges of the company, and this conveyance was duly made.

If the provision of the act of 1907 imposing the license fee is valid as against the city, the judgment is right. [262 U.S. 182, 185]   The Court of Errors and Appeals held that it was valid, that the state under its police power might impose a license fee as specified in the act, and that this does not deprive the city of any contractual or property right.

The stat undoubtedly has power, and it is its duty, to control and conserve the use of its water resources for the benefit of all its inhabitants, and the act of 1907 was passed pursuant to the policy of the state to prevent waste and to economize its water resources. Decision of the Court of Errors and Appeals in this case, 117 Atl. 158; McCarter v. Hudson Water Co., 70 N. J. Eq. 695, 701, 702, 14 L. R. A. (N. S.) 197, 118 Am. St. Rep. 754, 10 Ann. Cas. 116, œaffirmed by this court in 209 U.S. 349, 355 , 28 S. Sup. Ct. 529, 14 Ann. Cas. 560; Collingswood v. Water-Supply Commission, 84 N. J. Law, 104, 110, 86 Atl. 660; Cobb v. Davenport, 32 N. J. Law, 369, 378. The only way the city could acquire the right to take the water of the Delaware river was by grant from the state or by authorized purchase or condemnation from one to whom the right had been granted by the state. State v. Jersey City, 94 N. J. Law, 431, 433, 111 Atl. 544, 19 A. L. R. 646. The power to determine the conditions upon which waters may be so diverted is a legislative function. The state may grant or withhold the privilege as it sees fit. Assuming in favor of the city, that its grantor received a perpetual right, unburdened by license fee or other charge, to divert all the water required for the use of the city and its inhabitants, does it follow that the state as against the city is bound by contract and is without power to impose a license fee as provided in the act?

The relations existing between the state and the water company were not the same as those between the state and the city. The company was organized and carried on its business for pecuniary profit. Its rights and property were privately owned and therefore safeguarded by the constitutional provisions here sought to be invoked by the city against the legislation of the state. The city is a political subdivision of the state, created as a convenient [262 U.S. 182, 186]   agency for the exercise of such of the governmental powers of the state as may be intrusted to it. The diversion of waters from the sources of supply for the use of the inhabitants of the state is a proper and legitimate function of the state. This function may be left to private enterprise, subject to regulation by the state; it may be performed directly; or it may be delegated to bodies politic created for that purpose, or to the municipalities of the state. Power to own, maintain and operate public utilities, such as waterworks, gas and electric plants, street railway systems, public markets, and the like is frequently conferred by the states upon their cities and other political subdivisions. For the purpose of carrying on such activities, they are given power to hold and manage personal and real property.

As said by this court, speaking through Mr. Justice Moody, in Hunter v. Pittsburgh, 207 U.S. 161, 178 , 179 S., 28 Sup. Ct. 40, 46 (52 L. Ed. 151):

In New Jersey it has been held that within the limits prescribed by the state Constitution, the Legislature may delegate to municipalities such portion of political power as they may deem expedient, withholding other powers, and may withdraw any part of that which has been delegated. Van Cleve v. Passaic Valley Sewerage Commissioners, 71 N. J. Law, 183, 198, 58 Atl. 571.

In the absence of state constitutional provisions safeguarding it to them, municipalities have no inherent right of self-government which is beyond the legislative control of the state. 1 A municipality is merely a department of the state, and the state may withhold, grant or withdraw powers and privileges as it sees fit. However great or small its sphere of action, it remains the creature of the state exercising and holding powers and privileges subject to the sovereign will. See Barnes v. District of Columbia, 91 U.S. 540, 544 , 545 S..

In Mt. Pleasant v. Beckwith, 100 U.S. 514, 524 , 525 S. (25 L. Ed. 699), it was held that where a municipal corporation is legislated out of existence and its territory annexed to other corporations, the latter, unless the Legislature otherwise provides, becomes entitled to all its property and immunities. In the opinion it is said ( 100 U.S. 524 , 525):

The power of the state, unrestrained by the contract clause or the Fourteenth Amendment, over the rights and property of cities held and used for 'governmental purposes' cannot be questioned. In Hunter v. Pittsburgh, 207 U.S. 179 , 28 Sup. Ct. 40, reference is made to the distinction between property owned by municipal corporations in their public and governmental capacity and that owned by them in their private or proprietary capacity, and decisions of this court which mention that distinction are referred to.2 In none of these cases was any power, right, or property of a city or other political subdivision held to be protected by the Contract Clause or the Fourteenth Amendment. This court has never held that these subdivisions may invoke such restraints upon the power of the state. 3  

In East Hartford v. Hartford Bridge Co., 10 How. 511, 533, 534, 536, it appeared that for many years a franchise to operate a ferry over the Connecticut river belonged to the town of Hartford, that upon the incorporation of [262 U.S. 182, 189]   East Hartford the Legislature granted to it one-half of the ferry during the pleasure of the General Assembly, and that subsequently, after the building of a bridge across the river, the Legislature discontinued the ferry. It was held that this was not inconsistent with the contract clause of the federal Constitution. The reasons given in the opinion (10 How. 533, 534) support the contention of the state here made that the city cannot possess a contract with the state which may not be changed or regulated by state legislation.

In Worcester v. Street Railway Co., 196 U.S. 539, 548 , 25 S. Sup. Ct. 327, it was held that the obligation of the street railway company to the city to pave and repair streets occupied by it, based on accepted conditions of a municipal ordinance granting right of location, is not private property beyond the legislative control of the state, and that state legislation taxing the company, and there y relieving it from its obligation to the city to pave and repair such streets, was not void as violating the contract clause of the federal Constitution. In the opinion it is said ( 196 U.S. 548, 549 , 25 S. Sup. Ct. 327, 329):

In Pawhuska v. Pawhuska Oil Co., 250 U.S. 394, 399 , 39 S. Sup. Ct. 526, it was held that a legislative grant to a city of the power to regulate rates to be charged to the city and its inhabitants by a gas company might be withdrawn by the state from the city and conferred upon a commission, and that thereby no question was presented under the contract clause of the federal Constitution. In the opinion, after a statement of the issue, it is said ( 250 U.S. 397, 398 , 39 S. Sup. Ct. 527, 528):

The writ of error is dismissed.


[ Footnote 1 ] Cf. 1 Dillon, Municipal Corporations (5th Ed.) 98, p. 154, et seq.

[ Footnote 2 ] Commissioners v. Lucas, 93 U.S. 108 , 115; Meriwether v. Garrett, 102 U.S. 472, 518 , 530 S.; Essex Board v. Skinkle, 140 U.S. 334, 342 , 11 S. Sup. Ct. 790; New Orleans v. Water Works Co., 142 U.S. 79, 91 , 12 S. Sup. Ct. 142; Covington v. Kentucky, 173 U.S. 231, 240 , 19 S. Sup. Ct. 383; Worcester v. Street Railway Co., 196 U.S. 539, 551 , 25 S. Sup. Ct. 327; Monterey v. Jacks, 203 U.S. 360 , 27 Sup. Ct. 67.

[ Footnote 3 ] Some state cases holding that the state Legislature is not restrained by federal constitutional provisions: City of St. Louis v. Sheelds, 52 Mo. 351, 354; Police Jury of Bossier v. Corporation of Shreveport, 5 La. Ann. 661, 665; Trustees of Schools v. Tatman, 13 Ill. 27; Board of Education v. Aberdeen, 56 Miss. 518; Darlington v. Mayor &c. of New York, 31 N. Y. 164, 193, 88 Am. Dec. 248. See contra: Town of Milwaukee v. City of Milwaukee, 12 Wis. 93, 109; Grogan v. City of San Francisco, 18 Cal. 590, 612, 613; Mt. Hope Cemetery v. Boston, 158 Mass. 509, 519, 33 N. E. 695, 35 Am. St. Rep. 515; Spaulding v. Andover, 54 N. H. 38, 56; Ellerman v. McMains, 30 La. Ann. 190, 31 Am. Rep. 218.

[ Footnote 4 ] Cf. Williams v. Eggleston, 170 U.S. 304, 310 , 18 S. Sup. Ct. 617; Mason v. Missouri, 179 U.S. 328, 335 , 21 S. Sup. Ct. 125.

[ Footnote 5 ] See City of Winona v. Botzet, 169 Fed. 321, 332, et seq., 94 C. C. A. 563, 23 L. R. A. (N. S.) 204, and cases cited. See, also, Brantman v. City of Canby, 15 Am. St. Rep. 442 (recovery permitted for injury 862 ( recovery permitted for gas explosion where city furnished gas to inhabitants); Pettengill v. City of Yonkers, 116 N. Y. 558, 565, 22 N. E. 1095, 1k Am. St. Rep. 442 (recovery permitted for injury sustained by excavation in street to lay mains); Watson v. Needham, 161 Mass. 404, 411, 37 N. E. 204, 24 L. R. A. 287 (damages recovered for breach of contract by water commissioners to furnish water for plaintiff's boiler, resulting in injury to vegetables in greenhouse heated thereby); Brown v. Salt Lake City, 33 Utah, 222, 234, 93 Pac. 570, 14 L. R. A. (N. S.) 619, 126 Am. St. Rep. 828, 14 Ann. Cas. 1004 (city held liable for death by drowning in conduit forming a part of city waterworks system). These cases and others that might be cited serve in general to illustrate the course of decision.

[ Footnote 6 ] Cf. 1 Dillon, Municipal Corporations (5th Ed.) 110, p. 154.

[ Footnote 7 ] See decisions per curiam: City of Chicago v. Dempcy, 250 U.S. 651 , 40 Sup. Ct. 53; People of the Stat of Michigan ex rel. Groesbeck v. Detroit United Railway, 257 U.S. 610 , 42 Sup. Ct. 46; City of Chicago v. Chicago Railways Company, 257 U.S. 617 , 42 Sup. Ct. 95; Township of Avon v. Detroit United Railway, 257 U.S. 618 , 42 Sup. Ct. 168; Borough of Edgewood v. Wilkinsburg & East Pittsburgh Street Railway Co., 258 U.S. 605 , 42 Sup. Ct. 313; City of Sapulpa v. Oklahoma Natural Gas Co., 258 U.S. 608 , 42 Sup. Ct. 316.

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