Source: http://supreme.nolo.com/us/168/685/case.html
Timestamp: 2019-04-24 01:52:20+00:00

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The complainants in their bill predicated their right to relief upon the averment that certain ordinances adopted by the municipal authorities of Austin, and an act of the Legislature of Texas referred to in their bill impaired the obligations of a contract which the bill alleged had been entered into with the complainants by the City of Austin, and that both the law of the state and the city ordinances were in contravention of the Constitution of the United States. Held that these allegations plainly brought the case within the provision in the Act of March 3, 1891, c. 517, 26 Stat. 826, conferring upon this Court jurisdiction to review by direct appeal any final judgment rendered by a Circuit Court in any case in which the Constitution or a law of a state is claimed to be in contravention of the Constitution of the United States.
enforce the right has existed, but upon the change of condition which may have arisen during the period in which there has been neglect, and when a court of equity finds that the position of the parties has so changed that equitable relief cannot be afforded without doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it will not exert its equitable powers in order to save one from the consequences of his own neglect.
The facts in this case bring it within that rule.
The court below sustained a demurrer to and dismissed for want of equity the bill of the complainants, by which, as citizens of the States of Pennsylvania, Maryland, and New York, respectively, they impleaded the defendants, the one a municipal corporation created by a law of the State of Texas, and its mayor and board of public works, citizens of the State of Texas, and the other a corporation organized under the authority of the general laws of the State of Texas regulating the formation of corporations, also a citizen of that state.
water works which the contract required the company to erect; that the contract fixed a reasonable price to be paid for the use of water to be furnished by the water company, provided for the establishment of a given number of hydrants for the use of the city, and stipulated a rental therefor; that it imposed upon the corporation obligations of the most onerous character, compelling it to erect a large and costly plant, to lay extensive mains and pipes, and to extend them at any time during the life of the contract wherever the city might direct, and exacted that the company should add new hydrants for municipal uses as the city might require, giving to the water company as compensation, in addition to the rentals to be paid by the city for hydrants, as above stated, a commutation of municipal taxation.
the complainants. The bill, moreover, alleged that in March, 1883, after the plant had been constructed and many miles of mains had been laid, the city, by ordinance duly enacted, accepted the work and declared that the water company had fully performed its obligations; that subsequent to this date the city directed a very large extension of the mains and pipes to be made, which was promptly executed by the water company with money obtained from an additional issue of bonds to the Farmers' Loan & Trust Company amounting to $100,000, $10,000 of which Jacob Tome, another of the complainants, bought for full value in open market.
the last-named complainants. The bill averred that the waterworks thus originally established and extended were in every respect entirely adequate to supply every want, not only of all the inhabitants of the City of Austin, but of the municipality, and that in each and every particular the municipality was as advantageously placed with respect to a water supply as it could have been under any condition or circumstance whatever.
"An ordinance ordering an election to obtain the consent of the property tax paying qualified voters of the City of Austin to the extension by the city council of the bonded indebtedness of the City of Austin for the purposes of constructing a system of waterworks and furnishing lights for the City of Austin;"
water to be furnished should be so regulated that their product would equal the sum of the interest on the bonds, and a sinking fund to provide for the retirement of the principal thereof. The money to be realized from the sale of the bonds was required to be set apart in a distinct fund, to be warranted for from time to time in payment of the work as it progressed. The character of the work to be done was, moreover, fixed by an ordinance which empowered the board of public works to construct waterworks by means of a dam across the Colorado River at a designated point, in accordance with the plans o a civil engineer who was named therein.
It was alleged that, as the purpose and necessary effect of the foregoing action of the city was to impair the contract rights of the Austin Water, Light & Power Company held by it as the assignee of the two original companies, the ordinances passed by the city, and each and everything subsequently done thereunder, was void because repugnant to the Constitution of the United States. The bill, moreover, averred that in April, 1891, the Legislature of the State of Texas passed an act giving a new charter to the City of Austin, which contained an express grant of power to that city to construct for its own use a waterworks plant, and that the sole object of this new charter was to sanction the action of the municipality previously taken, and therefore the act in question was also void under the Constitution of the United States because it impaired the previous contract rights of the Austin Water, Light & Power Company.
"are now actually laying water pipe in and along the streets of the City of Austin, and it is the avowed intention of the said city to press the construction of said rival system of waterworks to a speedy completion, and upon the completion of the same to discontinue the taking of water from the said water company, and to refuse to perform any obligation resting upon the said city as embraced in the said contract with the said city water company."
"That as soon as the said City of Austin announced its intention of constructing a rival system of waterworks, and before anything was done in pursuance thereof, the said M. D. Mathers, President of the Austin Water, Light & Power Company, on behalf of the said water company and these bondholders, remonstrated with the said mayor and city council, and requested them and urged them not to violate the said contract, or to take any steps to depreciate the value of the property of the said water company, but to exercise the right which the said city has to purchase the said works at their appraised value, and the said bondholders have continued, ever since that time, to remonstrate with the said City of Austin and the officers thereof, but that the said city has entirely disregarded the said remonstrances and requests, and has openly repudiated all liability under the said contract."
to protect the property of the said water company, and the rights therein of the said bondholders, but that the said water company has failed to comply with the request of your orators and said bondholders; but the said Austin Water, Light & Power Company, and the officers thereof, by reason of the contract relations existing between the said City of Austin and the said company, fear that the consequences of any such litigation instituted by the said water company would be exceedingly disastrous, and would precipitate adverse and hostile action by the said City of Austin."
said works, so constructed at its instance and for its benefit with money furnished upon the faith of its obligation by the said Austin Water, Light & Power Company, and the said bondholders, and that your orators may have such other and further relief as the case may, in equity, require and as to this honorable court may seem proper."
The demurrer which the lower court sustained, besides asserting that the bill disclosed no cause for equitable relief, rested upon seven grounds, which may be reduced to six, substantially as follows: (1) because by the Constitution of the State of Texas, the contract made by the City of Austin with the water company was void; (2) because the contract was beyond the power of the corporation as defined in its charter and as limited by the general laws of the State of Texas; (3) because the commutation of taxation granted to the water company was in its essence but an exemption, and the city was without power, under the Constitution of the State of Texas, to grant it; (4) because, even if an exclusive right was given to the water company, such grant, under the Constitution and laws of the State of Texas, was subject to alteration, amendment, or repeal by the legislature which had exercised such reserved power; (5) because the granting of any exclusive rights was forbidden by the Constitution which was in force at the time the alleged contract was made; (6) because even if the complainants had any contract rights, and if there had been an impairment thereof, full and adequate remedy was afforded by an action at law, and there was hence no reason for the interposition of a court of equity.
MR. JUSTICE WHITE, after making the foregoing statement of the case, delivered the opinion of the Court.
from the decision of the trial court was desired, it should have bee had in the circuit court of appeals, and cannot be here obtained.
By the fifth section of the Act of March 3, 1891, c. 517, 26 Stat. 826, creating the circuit courts of appeals, jurisdiction is conferred upon this Court to review by direct appeal any final judgment rendered by the circuit court "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." There can be no doubt that the case at bar comes within this provision. The complainants in their bill in express terms predicated their right to the relief sought upon the averment that certain ordinances adopted by the municipal authorities of the City of Austin, and an act of the Legislature of the State of Texas referred to in the bill, impaired the obligations of the contract which the bill alleged had been entered into with the complainants by the City of Austin, and that both the law of the State of Texas and the city ordinances were in contravention of the Constitution of the United States. No language could more plainly bring a case within the letter of a statute than do these allegations of the bill bring this case within the law of 1891.
that there was involved in this case a federal question the determination of which was essential to a correct decision of the case."
But the words of the statute, which empower this Court to review directly the action of the circuit court, are that such power shall exist wherever it is claimed on the record that a law of a state is in contravention of the federal Constitution. Of course the claim must be real and colorable, not fictitious and fraudulent. The contention here made, however, is not that the bill, without color of right, alleges that the state law and city ordinances violate the Constitution of the United States, but that such claim as alleged in the bill is legally unsound. The argument, then, in effect, is that the right to a direct appeal to this Court does not exist where it is claimed that a state law violates the Constitution of the United States unless the claim be well founded. But it cannot be decided whether the claim is meritorious and should be maintained without taking jurisdiction of the case. The authorities referred to as supporting the position indicate that the argument is the result of a confusion of thought, and that it arises from confounding the power of this Court to review on a writ of error the action of a state court with the power exercised by this Court, under the act of 1891, to review by direct appeal the final action of the circuit court where, on the face of the record, it appears that the claim was made that the statute of a state contravened the Constitution of the United States. These classes of jurisdiction are distinct in their nature, and are embraced in different statutory provisions. Having jurisdiction of the cause, there exists the power to consider every question arising on the record. Horner v. United States, 143 U. S. 570.
their obligations and entitled to all their rights; and, further, conceding that the complainants, as bondholders, have the capacity to assert the impairment of the contract made by the City of Austin with the City Water Company -- it yet becomes at the outset necessary to decide whether, granting arguendo all these propositions, the complainants are entitled to the relief which they seek; that is to say, whether they can be heard to invoke the interposition of a court of equity. As a prerequisite to the solution of this question, it is necessary to determine precisely the remedy which it is the purpose of the bill to obtain in order to redress the wrongs which it alleged to exist. While the prayer of the bill asks that the validity of the contract be recognized, and while it also prays that the legality of the commutation of taxation created by the city ordinance be decreed, these prayers are made but the foundation or premise for the real relief which the bill invokes -- that is, the exercise of the power to enjoin, in order thereby to perpetually restrain, the City of Austin from completing the waterworks by it commenced and from levying on the property of the Austin Water, Light & Power Company and taxation to be used to complete the new waterworks. The preliminary inquiry, therefore, is whether the complainants have so exercised their rights as to entitle them to prevent the city from completing the waterworks.
"Independently of any statute of limitations, courts of equity uniformly decline to assist a person who has slept upon his rights and shows no excuse for his laches in asserting them."
"has always refused its aid to state demands, where the party slept upon his rights and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience, good faith, and reasonable diligence. Where these are wanting, the court is passive and does nothing. Laches and neglect are always discountenanced, and therefore from the beginning of this jurisdiction there was always a limitation to suits in this Court. "
"The question of laches turns not simply upon the number of years which have elapsed between the accruing of her rights, whatever they were, and her assertion of them, but also upon the nature and evidence of those rights, the changes in value, and other circumstances occurring during the lapse of years. The cases are many in which this defense has been invoked and considered. It is true that, by reason of their difference of fact, no one case becomes an existing precedent for another, yet a uniform principle pervades them all."
"But the recognized doctrine of courts of equity to withhold relief from those who have delayed the assertion of their claims for a reasonable length of time may be applied in the discretion of the court, even though the laches are not pleaded or the bill demurred to. Sullivan v. Portland & Kennebec Railroad, 94 U. S. 806, 94 U. S. 811; Lansdale v. Smith, 106 U. S. 391, 106 U. S. 394; Badger v. Badger, 2 Wall. 87, 69 U. S. 95."
In Lane & Bodley Co. v. Locke, 150 U. S. 193, and Mackall v. Casilear, 137 U. S. 566, it was held that the mere assertion of a claim, unaccompanied with any act to give effect to the asserted right, could not avail to keep alive a right which would otherwise be precluded because of laches. Indeed, the principle by which a court of equity declines to exert its powers to relieve one who has been guilty of laches, as expressed in the foregoing decisions, has been applied by this Court in so many cases besides those above referred to as to render the doctrine elementary. Whitney v. Fox, 166 U.S.
637, 166 U. S. 647-648; Gildersleeve v. New Mexico Mining Co., 161 U. S. 573, 161 U. S. 582; Abraham v. Ordway, 158 U. S. 416, 158 U. S. 423; Ware v. Galveston City Co., 146 U. S. 102, 146 U. S. 116; Foster v. Mansfield, Cold Water &c. Railroad, 146 U. S. 88, 146 U. S. 102; Galliher v. Cadwell supra, where the earlier cases are fully reviewed; Hoyt v. Latham, 143 U. S. 553; Hanna v. Moulton, 138 U. S. 486, 138 U. S. 495; Richards v. Mackall, 124 U. S. 183, 124 U. S. 189.
"proceed on the assumption that the party to whom laches is imputed has knowledge of his rights, and an ample opportunity to establish them in the proper forum; that, by reason of his delay, the adverse party has good reason to believe that the alleged rights are worthless or have been abandoned, and that, because of the change in condition or relations during this period of delay, it would be an injustice to the latter to permit him now to assert them."
estopped in maintaining either trespass or ejectment for the entry, and will be regarded as having acquiesced therein and be restricted to a suit for damages."
"But it is unnecessary to multiply cases. They all proceed upon the theory that laches is not, like limitation, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced -- an inequity founded upon some change in the condition or relations of the property or the parties."
"of providing for the interest and sinking fund on the bonds of the said City of Austin, issued for said purpose [that is, the new waterworks], the said City of Austin has levied a tax. . . ."
forbid the finishing of the waterworks structure, which the bill alleges has been largely completed, without seriously impairing the rights of the bondholders under the ordinances in question. One of the methods of payment stipulated, as we have seen, for these bonds was the revenue to be derived from the new waterworks, and of course no such revenues can ever result if the waterworks are never to be finished. It is certain, then, that if the completion of the new waterworks be restrained by an injunction, the interest of the new bondholders will be seriously affected, and that this result will be brought about by a decree of a court of equity rendered in the enforcement of asserted rights of complainants, who, if they had taken timely action, could have adequately protected themselves from injury without resulting wrong to the rights of many other persons.
The court below did not err in sustaining the demurrer and dismissing the bill for want of equity. We think, however, that the dismissal should have been without prejudice, and the decree below is therefore modified in that particular, and, as so modified, it is affirmed.

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