Pacific Electric Railway Company v. Los Angeles/Opinion of the Court

The jurisdictional question first demands consideration. It will be observed that rights under the 14th Amndment of the rights under the 14th Amendment of the asserted. Besides, the circuit court treated the bill also as presenting for consideration rights under the contract clause of the Constitution, and entertained jurisdiction of the case on the authority of Riverside & A. R. Co. v. Riverside, 118 Fed. 736.

In City Railway Co. v. Citizens' Street R. Co. 166 U.S. 557, 41 L. ed 1114, 17 Sup. Ct. Rep. 653, the railroad company occupied certain streets of the city of Indianapolis under ordinances of the city. Subsequently the city, in pursuance of an act of the general assembly of the state, gave the city railway permission to lay its tracks on some of the same streets which were occupied by the railroad company. The latter brought suit in the circuit court of the United States for the district of Indiana against the railway company, to enjoin it from availing itself of the privilege attempted to be granted. The court granted the relief prayed for and the case was brought here directly. A question of the jurisdiction of the circuit court was raised, and, replying to it, we said: 'All that is necessary to establish the jurisdiction of the court is to show that the complainant had, or claimed in good faith to have, a contract with the city, which the latter had attempted to impair.' And it was further observed whether the contract was or was not impaired could not be passed upon 'on the motion to dismiss so long as the complainant claimed in its bill that it had that effect, and such claim was apparently made in good faith, and was not a frivolous one.' This view was repeated in Illinois C. R. Co. v. Adams, 180 U.S. 28, 45 L. ed. 410, 21 Sup. Ct. Rep. 251.

In those cases the question of jurisdiction was presented on motion to dismiss. In the case at bar it is presented by demurrer; but, however presented, jurisdiction depends primarily upon the allegations of the bill, not upon the facts as they may subsequently turn out. City Railway Co. v. Citizens' Street R. Co. 166 U.S. 557, 41 L. 1114, 17 Sup. Ct. Rep. 653. Nor upon the actual sufficiency, in the opinion of the court, of the facts alleged to justify the relief prayed for. We do not mean, however, that a mere claim in words is sufficient-a substantial controversy must be presented. This requirement is satisfied in the case at bar. The circuit court, therefore, had jurisdiction, and the case was properly brought here from that court, since it involves the construction and application of the Constitution of the United States.

2d. The claim of appellant is that the order of the city council of the 11th of February, 1902, granting the franchise to it, appellant, constituted a contract, the obligation of which the subsequent orders of the council impaired, and, further, deprived appellant of its property without due process of law. The question upon which the claim depends is, in our view, a simple one. We need not quote the provision of the statute applicable to the contentions of the appellees, that the notice given of the sale of the franchise was insufficient, nor need we discuss that contention or the contention that the approval of the mayor of the city under the charter of the city and the Constitution of the state was necessary to a grant of franchises. We will assume the contentions are untenable, and we will also assume that all the steps preliminary to the bidding were rightfully taken, and that the order of the council striking off and selling to appellant the franchise was sufficient to vest title in appellant if its bid was properly and legally accepted under § 5 of the act of 1901. This narrows the question in the case to the construction of that section.

The notice of an application for a franchise is required to state that sealed bids will be received for the franchise 'up to a certain hour and day named therein' (§ 3), and also to state that the franchise 'will be granted to the person, firm, or corporation who shall make the highest cash bid therefor;' and any bid may be raised not less than 10 per cent 'above the highest sealed bid,' and the franchise finally struck off, sold, and granted to the 'highest bidder.' (§ 5). Section 5 also provides that the 'successful bidder shall deposit with said governing body, or such person as it may direct, the full amount of his or its bid, within twenty-four hours thereafter; and in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor.' We italicize the pivotal words. To what do they refer? To bids already made, as contended by appellees, or to a bid or bids to be made, as contended by appellant? More obviously the former. They express the relation between bids in existence,-those already made and pending before the council in pursuance of its notice. It is only in comparison with the next highest of those that the words have signification.

But this construction, it is said, permits the fraud which the bill alleges was practised upon the city council. We cannot say the argument is without force, but that fraud might be attempted may have been considered and weighed by the legislature. It may have been thought that in any plan of competition which could be devised there would be danger of illegal combinations, and that the safeguard against them must be the vigilance of the municipal officers, and, may be, that of competing interests. But be this as it may, the defects of the statute cannot control its plain letter. Obviously, to give them such effect would be to amend the statute, not to interpret it. And we think § 5 is plain, and was intended to express as an alternative of a bid not fulfilled the acceptance of one already made, not one to be made. We are fortified in this view by § 7 of the act. That section provides that the grantee of the franchise shall file a bond to fulfil the terms and conditions of such franchise, and also provides that if such bond be not filed 'the award of such franchise shall be set aside and the same may be granted to the next lowest bidder, or again offered for sale,' in discretion of the governing body. In other words, when there is to be further competition it is explicitly provided for.

It follows that appellant's bid was not the next highest to that of Murray, and the order of the council selling and granting appellant the franchise was void, and the decree of the Circuit Court dismissing the bill is affirmed.