Newport Light Company v. Newport

This case is before the court on motion of defendants in error to dismiss the writ of error for want of jurisdiction.

In 1880 the board of councilman of the city of Newport, state of Kentucky, entered into a contract with the Newport Light Company to light the streets and public places of that city with gas for a term of 25 years, to the exclusion of all others, and it was agreed that the company should also have the exclusive privilege of using the streets and public places for the purpose of laying pipes in which to convey the gas.

In 1885, while the Newport Light Company was in the actual performance of its contract, the city of Newport entered into another contract with the Dueber Light Company, by whith the latter corporation agreed to undertake to furnish gas for lighting the city of Newport for a designated period. Before this latter contract was carried into execution, the Newport Light Company instituted suit in the Louisville law and equity court against the city of Newport and the Dueber Light Company to restrain the city, its officers and agents, from carrying into effect the contract with the Dueber Light Company during the existence of the contract between the Newport Light Company and the city of Newport. The court rendered a judgment, which, in substance, enjoined the city from making or carrying into execution a contract with any person for lighting the streets, alleys, public buildings, and public places of the city with gas during the continuance of its contract with the Newport Light Company. The case was carried to the court of appeals of the state of Kentucky, and in May, 1886, the judgment of the lower court was affirmed. 89 Ky. 454, 12 S. W. 1040.

In March, 1887, the city of Newport and the Newport Light Company entered into a compromise agreement for the settlement of differences between them, one of the provisions of which was that 'the amount of gas consumed to be paid for by meter measurement, and that when the city shall determine that a gas post shall be removed from one point to another, or be discontinued, the gas company shall remove the same at the expense of the city, and, if discontinued, the same, including the reguisite fixtures for the posts, shall be purchased by said city at their original cost.' The compromise, however, was not to be understood as in any way waiving any existing rights or privileges granted the Newport Light Company by the existing contract.

By an act of the legislature, passed in 1890, the Suburban Electric Illuminating, Heating & Power Company, of Newport, Ky., was incorporated. Among other provisions of the incorporating act, it was provided:

'Sec. 7. The general nature of the business of the corporation shall be the erecting operating, and maintaining a general system of electrical dynamos and other apparatus for the purpose of generating, furnishing, and selling electricity for light, heat, and power, and for any other purpose that the electric current may be applied in the city of Newport, and furnishing and supplying said city and its inhabitants, and other persons and corporations, and municipal corporations, located in or near said city, with light, heat, and power by the electric current.

'Sec. 8. Said corporation is authorized, subject to the same regulations and restrictions imposed by the city authorities of Newport upon other corporations in said city, to run its wires and conduits for electric power, lighting, and heating, in, under, on, and over the streets, alleys, and by-ways of said city and adjacent thereto: provided, it shall in no way permanently obstruct the use of the same to the public or any individual; and it is hereby required to place in repair any street or highway under which it may lay its conduits, or in which it may erect its poles, or do such other work consistent with the general nature of the business of the corporation; but it may temporarily obstruct the same.' On April 17, 1890, the legislature amended the charter of the city of Newport as follows:

'The board of councilmen are hereby authorized to contract for lighting the city of Newport and [supplying] its inhabitants in any mode now known or which may hereafter be discovered, and in so doing grant the use of the public places and of the streets of the city for such purposes: provided, that said contract shall not interfere with any existing right or contract.

'Sec. 7. All acts in conflict with this act are hereby repealed.

'Sec. 8. This act shall take effect from and after its passage.'

It was assumed by the city of Newport that the act incorporating the Electric Illuminating Company, and the act amending the charter of the city, in connection with the modification of the original contract between the city and the Newport Light Company, operated to suspend or abrogate the injunction granted in the suit of the Newport Light Company against the city of Newport and the Dueber Company; and, acting upon this theory, the city of Newport, after proper resolution had been passed in April, 1891, by its board of councilmen, entered into a contract with the Suburban Electric Illuminating, Heating & Power Company for furnishing the city with electric lights. In connection with this contract the board of councilmen resolved 'that the city discontinue the use of the lamp posts now in use for both gas and gasoline, and the gas light thereby furnished, on July 1, 1891, and the city clerk is directed to notify the Newport Light Company thereof, and request that it send the city a statement of the original cost of the lamp posts, including the requisite fixtures thereof.'

Thereafter, on July 7, 1891, the Newport Light Company procured a rule from the Louisville law and equity court to issue against the city of Newport and its board of councilmen to show cause why they should not be punished for contempt of court for a violation of the decree in the former suit of the Newport Light Company v. City of Newport and the Dueber Company.

The affidavit of the president of the Newport Light Company, upon which the rule issued, set forth that the contract entered into by the city of Newport with the Suburban Electric Illuminating, Heating & Power Company to light the city of Newport by electricity for the term of fifteen years, which went into effect on July 1, 1891, and at which time the Electric Illuminating Company commenced to furnish electric light under the contract, was an attempt on the part of the city of Newport to annul and set aside the contract made June 3, 1880, between the city and the Newport Light Company; and that this, with all other acts attending the making of the contract with the Electric Illuminating Company, was a violation on the part of the city of the injunction granted in the former suit of the Newport Light Company v. City of Newport and the Dueber Company, and in contempt of the authority of the court.

To this affidavit, on which the rule was issued, a demurrer was interposed by the defendants in error, which was overruled, and a response was then filed thereto, in which it was claimed that by the compromise of 1887 it was agreed that when the city should determine that a gas post was to be discontinued, the same, including the requisite fixtures for the post, should be purchased by the city at their original cost, and that this new modified contract was in force from that date until the doing of the several acts complained of, and was in lieu of the original contract, wherein the injunction was granted, and was a novation between the parties of the rights as to the lighting and discontinuance of the lamp posts, gas, and gaslights.

The response further stated that, after the decree granting the injunction had been rendered, the general assembly, by an act passed in 1890, had invested the city of Newport with full power to provide for the lighting of its streets and public places with imporoved lights, and that the Suburban Electric Illuminating, Heating & Power Company was by the general assembly invested with full power to enter the streets of the city of Newport for the purpose of supplying electric lights to all such persons and corporations, including the city of Newport, as might contract for the same.

It also averred that the city entered into its contract with the Electric Illuminating Company under the authority conferred by these two acts of the legislature.

The Newport Light Company interposed its demurrer and exceptions to the response, which were sustained by the court, its ruling being that 'the said response is adjudged insufficient, to which said respondents except, and, the respondents to the rule failing to make further response, it is adjudged that the acts set forth in the affidavit herein constitute a violation of the injunction heretofore granted in these causes, to which said respondents except; and the said respondents are allowed until the 24th day of July, 1891, to purge themselves of their contempt herein by setting aside and annulling the contract with the Suburban Electric Illuminating, Heating and Power Company, dated April 23, 1891, and ceasing to light or have lighted the streets, lanes, alleys, public buildings, or places of the city of Newport under said contract; and the said respondents are hereby ordered to rescind and set aside, before the said 24th day of July, 1891, the resolution passed on the 23d day of April, 1891, to discontinue the lamp posts and the light furnished thereby by the Newport Light Company, to which said respondents except; and the city of Newport is ordered to continue to take gas from the said company for the lighting of the places aforesaid as may be required for that purpose according to the contract between said city of Newport and the said company, dated June 3d, 1880, to which said respondents except.'

From this judgment the respondents below appealed to the court of appeals of the state, which court, on March 4, 1893, rendered a decision reversing the judgment of the Louisville law and equity court. (21 S. W. 645.) The grounds on which the court of appeals rested its reversal of the action of the lower court were that the contract between the Newport Light Company and the city of Newport, which was construed and sustained in 1885 in the suit between those parties, did not preclude the city from making a contract for lighting its streets and public places with electricity, as long as the contract for furnishing it with gas remained in force; that the legislative enactments authorizing the city to contract with the Electric Illuminating Company for electric light did not authorize the violation of the contract between the city and the Newport Light Company, as those acts provided that existing contracts should not be interfered with; that, while the Newport Light Company, under its contract, had the right to supply the city with gas, to which alone its contract had reference, it had no unlimited power over the streets for the purpose of lighting them, and had no right to restrict the city in the use of other and superior lights; that its contract with the city authorized it to furnish gas or other light equally as good; that it could not be required to furnish, or the city to receive from it, electric light, because its contract had reference to gas only, and could not have been construed in any other way by the court below or by the court of appeals in the suit between the Newport Light Company and the city of Newport, decided in 1886; that the contention between the two corporations in that litigation was as to which gaslight company should furnish the gas, the Dueber Light Company of the Newport Light Company; that that decision did not go to the extent of adjudging that no other company should furnish light of a different character, when, in the judgment of the city, the public interests required it.

It was also held that the original decree under which the injunction was made perpetual was in reference to the supply of gas alone, and could only be considered in that light; and the word 'otherwise,' used in the vestraining order, could not be construed as giving the Newport Light Company the absolute right to furnish gas or any other light during the existence of its contract with the city; that the Newport Light Company had its legal remedy, and must resort to that remedy if it shall have sustained damages by reason of the refusal of the city to have its streets and public places lighted by gas.

It was accordingly held by the court of appeals 'that a court of equity will not interfere to prevent the city from lighting the streetsand public places with electric light,' and that the defendants in error had not violated the injunction in the original suit of the Newport Light Company against the city of Newport and the Deuber Company, and was not guilty of contempt. The court therefore directed the lower court to discharge the rule against the defendants in error.

At the request of the Newport Light Company, the court of appeals certified 'that on the trial and hearing of this suit and case in this court the validity of said act of the general assembly incorporating the said Suburban Electric Illuminating, Heating and Power Company, and the authority exercised under the same in making said contract between said appellant and said last-named company as aforesaid, was drawn in question on the ground that the same impaired the obligation of the contract between the appellant and the appellee, before mentioned, and was repugnant to the constitution of the United States, and that the decision of this the highest court of law and equity of this state in which a decision of this suit could be had was in favor of the validity of said last-mentioned act of the said general assembly, and of the authority exercised thereunder by said appellant in making said contract with said Suburban Electric Illuminating, Heating and Power Company.'

A writ of error having been sued out from this court to the court of appeals, the motion is now made by the defendants in error to dismiss that writ on the ground that the case presents no federal question.

Wm. Lindsay and Chas. J. Helm, for the motion.

R. W. Nelson, E. A. Ferguson, J. B. Foraker, and Wm. Stone Albert, opposed.

[Argument of Counsel from pages 534-536 intentionally omitted]

Mr. Justice JACKSON delivered the opinion of the court.