Columbia Water-Power Company v. Columbia Electric Street-Railway Light Power Company/Opinion of the Court

1. A preliminary motion was made to dismiss this writ of error upon the ground that no federal question was involved, and, even if there were such question, it was not 'specially set up and claimed' in the state court, as required by Rev. St. § 709.

An examination of the complaint shows that the plaintiff relies upon the act of the general assembly of December 24, 1887. This statute (section 1) authorizes the board of directors of the South Carolina penitentiary, which had acquired the ownership of the canal under a previous act of February 8, 1882, to transfer the property to the board of trustees of the Columbia Canal, and (section 7) required the completion of the canal, and a reservation to the state, free of charge, on the line of the canal, of 500 horse power of water power, with a further proviso that the right of the state to the free use of the said 500 horse power should be absolute, and any mortgage, assignment, or other transfer of the said canal by the said board of trustees, or their assignees, should always be subject to this right. In section 21 this reservation is described as a provision for the state, with 500 horse power of water power 'at' the penitentiary. By section 23, as amended in 1890, the board of trustees was given authority to 'sell, alienate, and transfer the canal,' with its appurtenances, lands, and franchises, to any person or corporation, subject, however, to all contracts, liabilities, and obligations made and entered into by said board prior to such sale and transfer. Pursuant to this authority, the board of trustees on January 11, 1892, conveyed the canal and its appurtenances to the plaintiff.

The gist of the complaint is that in 1892 the defendant, acting as the agent of the state, through the board of directors of the penitentiary submitted plans and specifications for the erection of works for making the said 500 horse power of water power available, to which the plaintiff made no objection; but that thereafter, against its protests, defendant proceeded to construct in such works machinery intended for the purpose of running its electric lights and street railway, and furnishing power to the citizens of Columbia for divers industries, and entered upon the premises of the plaintiff, and laid foundations for a steam engine to be used in running its generators, etc., and began the erection of an engine house, boiler house, and coal house for the purpose of establishing a steam plant.

The complaint did not set up the contract of the board of directors of the penitentiary with the defendant, and the act of the general assembly of December, 1892, confirming the same; but these were both set forth in the answer, and relied upon by the defendant as its authority for the erection of its works. In this contract the defendant agreed to erect on the western bank of the canal, opposite the penitentiary, suitable water wheels, of sufficient capacity to utilize and develop the 500 horse power of water power, and to transmit across the canal, to some convenient point within the walls of the penitentiary, not to exceed 100 horse power, for the use and benefit of the penitentiary. In consideration of this the board of directors agreed to allow the defendant the use of all their right, title, and interest to the land on the west side of the canal, and also to allow it the free and uninterrupted use of the said 500 horse power of water power reserved to the penitentiary, with the exception of the 100 horse power so reserved for its private use. This contract was subsequently ratified and confirmed by an act of the general assembly approved December 24, 1892.

While no special mention is made in the complaint of the constitution of the United States, the whole theory of the plaintiff's case, taken in connection with the answer, § that the rights which it acquired to the 500 horse power in question under the act of 1887, were impaired by the subsequent act of December 24, 1892, ratifying and approving the contract of the board of directors of the state penitentiary with the defendant. The contract of the defendant is set up in the complaint, and although the act of December, 1892, ratifying the same, is not set up there, it appears in the answer, and is relied upon as validating the contract; so that, reading the complaint and answer together, the question whether the contract of the plaintiff was impaired by subsequent state action appears on the face of the pleadings.

In passing upon the case, the supreme court, speaking through Mr. Justice Gary, held that one of the objects of the plaintiff's action was to have the contract between the state and the defendant as to the 500 horse power declared null and void on the ground that the state could not lease the same. In view of an intervening suggestion, filed by the attorney general, to the purport that the state had interests which would be affected by granting the relief prayed for, he held that the state being an indispensable party, and refusing to become a party, the cause of action on the equity side of the court could not be sustained; and, in considering the cause of action on the law side of the court, he reached the conclusion that the state was not an indispensable party. He then proceeded to consider whether the contract between the state and the defendant relative to the 500 horse power was null and void, and held that, the proviso the section 7 of the act of 1887 being that the right of the state to the free use of this horse power should be 'absolute,' the construction given to it by the legislature in the act of 1892 was correct, and that the word 'absolute' was used for the purpose of creating a right in the state to this horse power separable and distinct from the ownership in other lands, and not dependent upon any particular lands to which it might be appurtenant. It followed that the contract between the state and the defendant was not null and void.

He further held that the right of the defendant to erect the steam plant depended upon the fact whether it was merely incidental and essential to the enjoyment of the water power plant; that the parties had a right to trial by jury as to these issues, but, as no demand was made therefor, the court assumed that the circuit court properly decided all questions of fact upon which its judgment rested. The other justices concurred in the result, the chief justice saying that he was not satisfied that the plaintiff ever acquired title to the land upon which the works in question had been erected. There is nothing to indicate that either of them dissented from the views expressed by Mr. Justice Gary, who presumably spoke for the court with respect to the federal question.

In holding that the contract with the defendant, and the legislative act confirming the same, were valid, the court proceeded upon the idea that the act of 1887 authorizing the transfer of the property to the board of trustees of the Columbia Canal made the reservation the state of the 500 horse power an absolute one; that the directors of the penitentiary could do with it as they pleased, and hence they had the right to turn it over to the defendant, if, in their judgment, such course was warranted by a due regard for the interests of the state. While, in so holding, the court disposed of the case upon the construction of the contract under which the plaintiff asserted its right, such construction is no less a federal question than would be the case if the construction of the contract were undisputed, and the point decided upon the ground that the subsequent act confirming the contract with the defendant did not impair it. The question in either case is whether the contract has been impaired, and that question may be answered either by holding that there is no contract at all, or that the plaintiff had no exclusi e rights under its contract, or, granting that it had such exclusive rights, that the subsequent legislation did not impair it. These are rather differences in the form of expression than in the character of the question involved, and this court has so frequently dicided, notably in the very recent case of McCullough v. Virginia, 172 U.S. 102, 19 Sup. Ct. 134¢ Y, that it is the duty of this court to determine for itself the proper construction of the contract upon which the plaintiff relies, that it must be considered no longer as an open question. New Orleans Water-Works Co. v. Louisiana Sugar-Refining Co., 125 U.S. 18, 8 Sup. Ct. 741; Bridge Proprietors v. Hoboken Co., 1 Wall. 116.

To the argument that the federal right was not 'specially set up and claimed,' in the language of Rev. St. § 709, it is replied that this is not one of the cases in which it is necessary to do so. Under this section there are three classes of cases in which the final decree of a state court may be re-examined here: (1) 'Where is drawn in question the validity of a treaty, or statute of, or authority exercised under, the United States, and the decision is against their validity;'

(2) 'Where is drawn in question the validity of a statute of, or an authority exercised under, any state on the ground of their being repugnant to the constitution, treaties or laws of the United States, and the decision is in favor of their validity;'

(3) 'Or where any title, right, privilege or immunity is claimed under the constitution, or any treaty or statute of, or commission held or authority exercised under, the United States, and the decision is against the title, right, privilege or immunity specially set up and claimed by either party under such constitution, statute, commission or authority.'

There is no doubt that under the third class the federal right, title, privilege, or immunity must be, with possibly some rare exceptions, specially set up or claimed, to give this court jurisdiction. Spies v. Illinois, 123 U.S. 131, 181, 8 Sup. Ct. 21; French v. Hopkins. 124 U.S. 524, 8 Sup. Ct. 589; Chappell v. Bradshaw, 128 U.S. 132, 9 Sup. Ct. 40; Baldwin v. Kansas, 129 U.S. 52, 9 Sup. Ct. 193; Leeper v. Texas, 139 U.S. 462, 11 Sup. Ct. 577; Oxley Stave Co. v. Butler Co., 166 U.S. 648, 17 Sup. Ct. 709.

But where the validity of a treaty or statute of the United States is raised, and the decision is against it, or the validity of a state statute is drawn is question, and the decision is in favor of its validity, this court has repeatedly held that if the federal question appears in the record, and was decided, or such decision was necessarily involved in the case, and the case could not have been determined without deciding such question, the fact that it was not specially set up and claimed is not conclusive against a review of such question here. Miller v. Nicholls, 4 Wheat. 311; Willson v. Marsh Co., 2 Pet. 245; Satterlee v. Matthewson, Id. 380, 410; Fisher's Lessee v. Cockerell, 5 Pet. 248; Crowell v. Randell, 10 Pet. 368; Harris v. Dennie, 3 Pet. 292; Farney v. Towle, 1 Black, 350; Hoyt v. Shelden, Id. 518; Railroad Co. v. Rock, 4 Wall. 177; Furman v. Nichol, 8 Wall. 44; Kaukauna Co. v. Green Bay & M. Canal Co., 142 U.S. 254, 12 Sup. Ct. 173.

The case under consideration falls within the second class, and, as it appears from the record and from the opinion of the court, which may be examined for that purpose (Kreiger v. Railroad Co., 125 U.S. 39, 8 Sup. Ct. 752), that the question was presented and decided that the act of 1892, affirming the validity of defendant's contract with the board of directors of the state penitentiary, did not impair the obligation of plaintiff's contract, evidence by the act of 1887, because that act, properly construed, conveyed no exclusive rights, we think the federal question sufficiently appears.

2. Upon the merits the case presents but little difficulty. The argument of the plaintiff is that under the act of 1887 the boar of trustees of the Columbia Canal, of which plaintiff is the successor, took an absolute title to the canal and appurtenant lands, with the right to 'purchase, sell or lease lands adjoining the canal useful for purposes of the canal,' and to 'sell or lease the water power of the canal, subject to such rules and regulations as it shall prescribe, having first provided the state with five hundred horse power of water power at the penitentiary,' for the individual use of the pentitentiary alone, and with no right to lease or sublet it to others for private gain. In support of this contention, plaintiff relies, not only upon the act of 1887, under which it takes title, but upon certain prior acts of the general assembly.

Thus, under section 2 of the act of September 21, 1866, 'to provide for the establishment of a penitentiary' (13 St. at Large S.C.. No. 4797), it was made the duty of the commission 'to select and procure a proper site, at some point if practicable where water power may be made available for manufacturing purposes within the enclosure, on which to erect suitable penitentiary buildings.' And by a subsequent act, approved December 19, 1866 (Id. p. 398), the commissioners, who had been authorized by a previous act of December 18, 1865, to sell and convey the Columbia Canal, were authorized to sell it at public or private sale, at their discretion, provided that, at any sale that may be made by said commissioners, there be made a reservation to the state of water power sufficient for the purposes of the state penitentiary for all time free of charge. In a subsequent act of September 21, 1868 (14 St. at Large S.C.. p. 83), the commissioners were vested, by section 4, with like authority to sell at public or private sale, with a similar reservation to the state of water power sufficient for the purposes of the state penitentiary for all time free of charge. In another act, approved March 12, 1878 (16 St. at Large S.C.. p. 445), to provide for the disposal of the Columbia Canal, there was also a proviso, in section 4, that, 'in all grants that may be made, sufficient power shall be reserved to the state for the use of the penitentiary and the city of Columbia.' So, too, in an act of February 8, 1882 (17 St. at Large S.C.. p. 855), to authorize the canal company to transfer the canal and lands to the board of directors of the penitentiary, it was provided that the board of directors should take possession, on behalf of the state, of the canal, with its appurtenances, and, for the purpose of providing an adequate water power for the use of the penitentiary, were authorized to improve and develop the same. By section 6 of the same act they were authorized 'to furnish to the city of Columbia, for the purpose of operating its water works and for other purposes, five hundred horse power of water power; * *  * and after reserving for the use of the penitentiary a power sufficient to meet the demands of its ordinary operations and other industries conducted and carried on within its walls, they are further authorized, with the controller general on behalf of the state, to lease to other persons or corporations water power upon such terms and upon such annual rental per horse power as in their judgment may be proper, and also to lease such millsites along the line of the said canal as may be owned by the state, upon such terms as may be deemed most advantageous to the interest of the state.'

It will be observed that these acts are progressively liberal to the state; that the earlier ones contemplated the use of the water power only for manufacturing purposes within the walls of the penitentiary, while the later ones indicated that such power was also reserved for the use of the city of Columbia, for the purpose of operating its water works and other purposes, as well as for leasing to others. But, however cogent these acts might be to indicate that the object of the state was to reserve to the individual use of the penitentiary the 500 horse power, it is equally clear that the act of 1887 is decisive of a change of purpose in that regard, and, in providing that the right of the state to the free use of its amount of water power should be absolute, it meant that the directors of the penitentiary should make such use of it as they pleased, regardless of prior acts and the immediate requirements of the penitentiary. The clearer the reservation for the individual use of the penitentiary may have formerly been, the clearer the change of purpose becomes manifest by the use of the word 'absolute.' The theory of the plaintiff is that by the use of this word was meant simply the right of the state to the free use of the said 500 horse power, unaffected by any mutations of ownership. This, however, was already secured to the state by the previous clause of section 7, requiring the board of trustees 'to furnish to the state, free of charge, on the line of the canal, five hundred horse power of water power.' Nor are the requirements of this word met by treating it as the equivalent of 'perpetual' or 'for all time.' In construing statutes, words are taken in their ordinary sense. No authority can be found for such a definition of the word 'absolute,' nor does the context suggest it. Its most ordinary signification is 'unrestricted' or 'unconditional.' Thus, an absolute estate in land is an estate in fee simple. 2 Bl. Comm. 104; Johnson v. McIntosh, 8 Wheat. 543, 588¢ Y; Fuller v. Missroon, 35 §. C. 314, 330, 14 S. E. 714; Johnson's Adm'rs v. Johnson, 32 Ala. 637; Converse v. Kellogg, 7 Barb. 590, 597. In the law of insurance, that is an absolute interest in property which is so completely vested in the individual that there could be no danger of his being deprived of it without his own consent. Hough v. Insurance Co., 29 Conn. 10; Reynolds v. Insurance Co., 2 Grant, Cas. 326; Insurance Co. v. Kelly, 32 Md. 452.

We have no doubt that, in providing that the right of the state should be absolute, it was intended to permit the board of directors to do exactly what was done in this case, i. e. to lease such portion of the 500 horse power as was not required for the individual use of the penitentiary. Indeed, we perceive no other reason for the insertion of this clause. The right to use it in the penitentiary was already amply secured by clauses so frequently inserted in prior acts that no question of construction could be raised upon them; and, when the act of 1887 went still further, it was evidently upon the idea that the power not necessary for the penitentiary should not be wasted, but should be applied to such other uses as were conducive to the interests of the state. While the leasing of the same to the defendant may have been for private gain, the lighting of the city by electricity and the establishment of street railways was manifestly a public purpose.

If plaintiff's theory were sound, the penitentiary would be unable to make use of its reserved water power, unless it were also possessed of the requisite means to establish a plant, while under its actual arrangement with the defendant it grants to the latter its surplus water power, and in consideration thereof receives all such power as is necessary for its own purposes, and in addition thereto a substantial annual revenue for its other needs.

3. The remaining question, as to injuries threatened and inflicted upon plaintiff's property by the entry of the defendant upon the western embankment of the canal, the digging, excavating, and removal of the earth, and the erection of buildings and machinery thereon, does not demand an extended consideration. The court of common pleas found that plaintiff was owner of the property upon which these works were erected, but that the state, having the right to the 500 horse power, had also the incidental right to lease the same to the defendant, which took thereby the right to put its electric plant upon the banks of the canal, as well as the supplementary right to put in a steam plant, to be used at times when the water power was unavailable by reas n of freshets, or by necessary repairs to the canal, or other causes. The supreme court did not expressly pass upon the validity of plaintiff's title to the land, but held that whether the contract conferred upon the defendant the right to erect a steam plant depended upon the fact whether it was merely incidental to, or essential to, the enjoyment of the water plant, and that, no jury having been demanded, the court must assume that the circuit judge decided this question properly, and, even if there were error on his part in the finding of fact, it was not the subject of review by the supreme court in a law case. It needs no argument to show that neither of these rulings involved a federal question. Whether plaintiff had a legal title to the lands was purely a local issue, and whether the erection of a steam plant by the defendant was an incident of its contract with the state penitentiary is, for the reason stated by the supreme court, not reviewable here.

In addition to this, however, the deed through which the state and the plaintiff derived their title is not in evidence before us. The answer admitted that the state did acquire a strip of land lying within the boundaries described in the bill, but denied that the buildings erected by the defendant 'at any point touched upon said strip of land.' The state appeared to have derived title from one Rawls, whose deed was filed in the state court, but does not appear in the record before us, and the supreme court of the state found that it could not review the finding of the court below to the effect that the plaintiff was the owner in fee of the land.

The decree of the supreme court of South Carolina is, therefore, affirmed.