Memphis v. Cumberland Telephone & Telegraph Company/Opinion of the Court

We are met at the threshold of this case with a challenge of the appellate jurisdiction of this court. The case was begun in the circuit court of the United States for the western district of Tennessee by a bill filed by the Cumberland Telephone & Telegraph Company against the city of Memphis, seeking to enjoin the enforcement of the provisions of an ordinance of that city, passed September 24, 1907, regulating charges by telephone companies in the city.

The bill averred that the complainant was a corporation organized and existing under the laws of the state of Kentucky, and that the respondent, the city of Memphis, was a municipal corporation, created and existing under the laws of Tennessee. The jurisdiction of the circuit court, therefore, might rest upon diverse citizenship. Concerning the ordinance regulating the charges of telephone rates, the enforcement of which it was the object of the suit to enjoin, it was averred to be null and void, for the reason that the city of Memphis was incorporated under a legislative act of the state of Tennessee, with certain powers and authority which nowhere included, either by express terms or necessary implication, a power to fix and regulate telephone charges, and that the attempt to do so was an abuse of power, and an attempt to exercise a power which the city wholly lacked.

The bill also charged that the ordinance was null and void because it was unjust, inequitable, and unreasonable, because the tariff rates were fixed so low that complainant could not operate its exchange without actual loss of money; that said ordinance was, in truth and effect, confiscatory; and that it totally destroyed the value of the complainant's plant in the city of Memphis for profitable use as a telephone exchange. The prayer of the bill was for an injunction against the enforcement of the ordinance in question.

A preliminary injunction was granted, the judge holding the circuit court at that time delivering an opinion announcing the conclusion that the ordinance in question was passed by the city without legislative authority, the court saying that was all which was necessary to decide at that time, but beyond that, he thought the city estopped by a certain contract which was set up in the bill from adopting the ordinance in question, and a preliminary injunction was granted.

The answer took issue upon the allegations of the bill, a considerable amount of testimony was taken as to the reasonableness of the rates fixed in the ordinance, and the judge who heard the case upon the merits reached the conclusion that the rates fixed in the ordinance were confiscatory, and said: 'That result seems to us to be destructive of the complainant's rights under the Constitution of the United States.'

Adverting to the opinion delivered upon the granting of the temporary injunction, the court rendering the final decree stated that the former decision was based upon a want of authority in the city to pass the ordinance, and the estoppel of the contract set up in the bill, adding: 'We are not to be considered as dissenting from either of these views. We have not had time to examine either proposition, or inclination to do so, because we are entirely content to decide the case upon final hearing upon the one ground herein discussed.'

As was said by Mr. Justice Moody, speaking for the court in MacFadden v. United States, 213 U.S. 288, 53 L. ed. 801, 29 Sup. Ct. Rep. 490, a right to review the judgments of the circuit courts of appeals and of the circuit and district courts of the United States rests upon different grounds, and that unless this fact is borne in mind, confusion is liable to result. The appellate jurisdiction from the circuit court of appeals to this court, as Mr. Justice Moody pointed out, is determined by the sources of jurisdiction of the trial court, and depends upon the finality of the judgment of the circuit court of appeals, as under § 6 of the court of appeals act in all other cases there is a right of review in this court if the amount in controversy exceeds $1,000. [26 Stat. at L. 828, chap. 517, U.S.C.omp. Stat. 1901, p. 550.] The right to come directly to this court by appeal or writ of error from the district or circuit courts of the United States arises under § 5 of the court of appeals act, and so far as the case now under consideration is concerned, depends upon the case being within the class of cases mentioned in that section; namely, 'in any case in which the Constitution or law of a state is claimed to be in contravention of the Constitution of the United States.'

The right to take jurisdiction of a case in the circuit court of the United States, arising under the Constitution or laws of the United States, must appear in the allegations of the bill or petition with such distinct averments as to show that it is such. Under § 5 of the court of appeals act, the right to come to this court by direct appeal is given in any case in which it is 'claimed' that a Constitution or law of a state is in contravention of the Constitution of the United States. It is thus apparent that the claim, to give a right of appeal under this section, need not necessarily be in the pleading of the party invoking the jurisdiction of the court. It is sufficient if such right is duly claimed in the case. The statute is silent as to how this claim shall be made. The subject was under consideration in Loeb v. Columbia Twp. 179 U.S. 472, 45 L. ed. 280, 21 Sup. Ct. Rep. 174, and the distinctions between the requirements of jurisdiction in an appeal to the circuit court of appeals and an appeal direct to this court were pointed out. In that case it was held that where the defendant brought the constitutional question into the record by demurrer, and the opinion of the circuit court showed that it had considered and determined that question, the proper basis for jurisdiction by direct appeal to this court was shown.

In saying that the opinion of the circuit court might be looked to when annexed and transmitted as part of the record, to ascertain whether either party claimed that a state statute was in contravention of the Constitution of the United States, this court, in the Loeb Case, added: 'By this [view], however, we must not be understood as saying that the opinion below may be examined in order to ascertain that which, under proper practice, should be made to appear in a bill of exceptions, or by an agreed statement of facts, or by the pleadings.'

In Lampasas v. Bell, 180 U.S. 276, 45 L. ed. 527, 21 Sup. Ct. Rep. 368, a suit was brought against the city of Lampasas to recover upon certain bonds, and the jurisdiction rested upon diverse citizenship. The defendant sought to introduce a constitutional question into the record in the contention set up in the answer, that the residents of certain territory incorporated into the city had not been given an opportunity to be heard as to whether they should be included in and be subject to taxation in the proposed incorporation. It was therefore contended that the bonds were void, and an attempt to levy and collect taxes to pay them was in violation of § 1 of the 14th Amendment of the Constitution of the United States. This court dismissed the writ of error, saying:

'This court has only jurisdiction by appeal or writ of error directly from the circuit court in certain cases, one of which is when 'the Constitution or law of a state is claimed to be in contravention of the Constitution of the United States.' Sec. 5 of the judiciary act of March 3, 1891, chap. 517, 26 Stat. at L. 826, 828, U.S.C.omp. Stat. 1901, pp. 488, 549. But the claim must be real and substantial. A mere claim in words is not enough. We said by the chief justice in Western U. Teleg. Co. v. Ann Arbor R. Co. 178 U.S. 239, 44 L. ed. 1052, 20 Sup. Ct. Rep. 867: 'When a suit does not really and substantially involve a dispute or controversy as to the effect or construction of the Constitution or laws of the United States, upon the determination of which the result depends, it is not a suit arising under the Constitution or laws. And it must appear on the record by a statement in legal and logical form, such as is required in good pleading, that the suit is one which does really and substantially involve a dispute or controversy as to a right which depends on the construction of the Constitution or some law or treaty of the United States before jurisdiction can be maintained on this ground. Little York Goldwashing & Water Co. v. Keyes, 96 U.S. 199, 24 L. ed. 656; Blackburn v. Portland Gold Min. Co. 175 U.S. 571, 44 L. ed. 276, 20 Sup. Ct. Rep. 222; 20 Mor. Min. Rep. 358.'

In this case a perusal of the bill, answer, and testimony in the case makes it apparent that if brought into the record at all, the alleged claim of a violation of the Federal Constitution by a state law must be found in the bill itself. It appears from an examination of the bill that it is distinctly charged therein that the ordinance was passed without authority of the state, and its attempted passage, it is alleged, was an abuse of power by the city. There is no reference in the bill to any provision of the Federal Constitution. If any can be said to be violated, it must be the 14th Amendment. It is hardly necessary to say that that Amendment is aimed at state action, in the provision that no state shall deprive any person of life, liberty, or property without due process of law. The bill, therefore, so far from charging a violation of the 14th Amendment by an authorized action of the state, distinctly and in terms avers that the ordinance was passed without state authority. That such municipal legislation does not lay the foundation of Federal jurisdiction has been repeatedly held in this court. Hamilton Gaslight & Coke Co. v. Hamilton, 146 U.S. 258, 36 L. ed. 963, 13 Sup. Ct. Rep. 90, in which many of the previous cases in this court are cited. In that case Mr. Justice Harland, speaking for the court, said of an ordinance passed without legislative authority: 'A suit to prevent the enforcement of such an ordinance would not, therefore, be one arising under the Constitution of the United States.'

In Barney v. New York, 193 U.S. 430, 48 L. ed. 737, 24 Sup. Ct. Rep. 502, the bill invoked the jurisdiction of the circuit court of the United States upon the ground that the plaintiff was deprived of his property without due process of law; other allegations of the bill showed that the matters complained of were not only not authorized, but were forbidden by the legislation of the state; hence, the action did not invoke the protection of the 14th Amendment because of action by the state of New York, and therefore it was held the bill was properly dismissed for want of jurisdiction. In that case some of the previous cases in this court, to the same effect, are reviewed by Mr. Chief Justice Fuller, who delivered the opinion of the court.

A question closely analogous to the one at bar came before the court of appeals of the sixth circuit, Judge Lurton delivering the opinion of the court. Louisville v. Cumberland Teleph. & Teleg. Co. 84 C. C. A. 151, 155 Fed. 725, 12 A. & E. Ann. Cas. 500. In that case the jurisdiction of the circuit court was invoked on the ground that the ordinance of the city of Louisville regulating rates was in violation of a contract between the complainant and the city; also on the ground that the rates were unreasonable, unjust, and confiscatory, depriving the complainant of property without due process of law, in violation of the 14th Amendment of the Constitution. In that case the bill was dismissed upon the ground that the allegations of the complaint showed that the case was not one arising under the Constitution and laws of the United States. This was held to be so because of other statements of the bill, which was held negatived state action, which alone could lay the foundation of jurisdiction, in that it averred that no power to regulate the rates charged by the complainant had been granted by the state of Kentucky to the municipality which had undertaken to pass the regulating ordinance, and that the attempt to pass such ordinance was an unwarranted and unfounded assumption of power upon the part of the city.

The claim that the jurisdiction should be sustained because the common council of the city of Louisville had assumed to act under authority of the legislature of the commonwealth of Kentucky, which was averred in the bill, was answered by the court saying that the existence of such regulating power was distinctly negatived by the allegation of the bill that the city had acted in the premises wholly without authority.

So, in the present case, the statements of the bill are clear and distinct that the passage of the ordinance was without power, and a usurpation on the part of the city; and the allegations of the bill as to the confiscatory character of the ordinance can, consistently with the other averments of the bill, be referred only to the state Constitution, which, as well as the Federal Constitution, inhibits attempts to take property without due process of law. Harbinson v. Knoxville Iron Co. 103 Tenn. 421, 56 L.R.A. 316, 76 Am. St. Rep. 682, 53 S. W. 955.

It is suggested that the bill, when properly construed, may have a twofold aspect, one of which charges that the city acted without authority of law, and the other that, conceding the city to act with authority, the rates fixed were confiscatory, in violation of the Federal Constitution. Assuming that a bill might be framed in this manner, it is sufficient to say of the present bill that it is not one of that character. There is nothing in it qualifying the allegation as to the action of the city without authority of the state, and, as we have said, the allegations as to the confiscatory character of the ordinance are to be referred, as they can be, consistently with the other allegations of the bill, to the state Constitution, which would be violated if such allegations were true. This construction harmonizes the bill and does violence to none of its averments.

The case, then, is this: The first and only reference to the Federal Constitution is in the final opinion of the circuit judge who heard the case upon the merits, in the part of the opinion above quoted, to the effect that the rates fixed are in violation of the complainant's rights under the Federal Constitution. This observation was doubtless made by the learned judge as the equivalent of saying that the rates were confiscatory, and therefore unlawful; but whether so or not, so far as it makes the 14th Amendment a ground of decision, it is inconsistent with the position taken in the bill, and as there is no basis for a claim of denial of rights under that Amendment in the case, it cannot be made the ground of direct appeal to this court under the 5th section of the court of appeals act.

We are of opinion that this case must be dismissed for want of jurisdiction in this court, and it is so ordered.

Mr. Justice White, with whom concur Mr. Justice McKenna and Mr. Justice Hughes, dissenting: