Opinion ID: 1475187
Heading Depth: 1
Heading Rank: 3

Heading: Right of Plaintiffs to Injunction.

Text: For the reasons heretofore stated, the plaintiffs are not entitled to an injunction; but, even if the statute were unconstitutional or the action of the administrator unauthorized, they would not be entitled to the injunction which they ask, for the reason that no legal right of theirs is infringed by any proposed action of the county or of the commissioner of public works. The county, in its proposed action, will not infringe any such right; for it is thoroughly settled that competition by a county or municipality violates no right of a public service corporation doing business therein which, as is the case of plaintiffs here, has no exclusive franchise. Puget Sound Co. v. Seattle, 291 U.S. 619, 54 S.Ct. 542, 78 L.Ed. 1025; Madera Waterworks v. Madera, 228 U.S. 454, 33 S.Ct. 571, 57 L.Ed. 915. The administrator will not infringe any such right in making the loan and grant to the county from funds of the United States; for it is equally well settled that no citizen or taxpayer has any such right in funds of the government. Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 601, 67 L.Ed. 1078. In the case just cited the Supreme Court, after referring to taxpayers' suits to enjoin an illegal use of money by a municipal corporation, said: But the relation of a taxpayer of the United States to the federal government is very different. His interest in the moneys of the treasury  partly realized from taxation and partly from other sources  is shared with millions of others, is comparatively minute and indeterminable, and the effect upon future taxation, of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive powers of a court of equity. As the county infringes no right of plaintiffs by entering into competition with them, and as the administrator infringes no right of theirs in making loans or grants of public funds, it would seem to follow necessarily that no such right is infringed when the administrator makes a loan and grant to the county in order that the county may engage in competition; for the addition of negative quantities can never result in a quantity that is positive. The exact question was before the Circuit Court of Appeals of the Eighth Circuit in Arkansas-Missouri Power Co. v. City of Kennett, Mo. (C.C.A.8th) 78 F.(2d) 911, 914, and we see no answer to what was said by Judge Sanborn, speaking for the court, in that case. Said he: The court below was of the opinion that the power company was in no position to question the power of the federal government to loan or give money to the city of Kennett. We are in accord. The United States is not proposing to become a competitor of the power company. It will have no right, title, or interest in the plant when completed and nothing to do with operating it. The destruction of the power company's property will come about by reason of the city's operation of the plant when erected. The position of the United States is that of a lender of money, a buyer of bonds, and a giver of gifts. True, the money procured from the government will enable the city to build the plant, and, if the city builds the plant, it will no doubt operate it, and when it does operate the plant the city will take the customers of the power company, and the company's property in Kennett will become worthless or greatly impaired in value. We know of no rule of law, however, which permits one indirectly hurt, no matter how seriously, by a government expenditure, to question the power of the government to make it. In fact, the rule is to the contrary. Commonwealth of Massachusetts v. Mellon, Secretary of the Treasury et al., 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078; City of Allegan, Mich., v. Consumers' Power Co. (C.C.A.6) 71 F.(2d) 477 (certiorari denied 293 U.S. 586, 55 S.Ct. 100, 79 L.Ed. 681). It is true that in the cases cited the plaintiffs relied upon their status as taxpayers exclusively, while in this case the plaintiff relies, in addition, upon the injury which will be done to its property by municipal competition. That injury, however, is, so far as the government is concerned, clearly consequential and indirect, as we have pointed out. See, also, Missouri Utilities Co. v. City of California, Mo., et al. (D.C., W.D.Mo.) 8 F.Supp. 454, 465. Another case directly in point is the case of City of Allegan v. Consumers' Power Co. (C.C.A.6th) 71 F.(2d) 477, 481 (certiorari denied 293 U.S. 586, 55 S.Ct. 100, 79 L.Ed. 681), referred to by Judge Sanborn in the above quotation. That case, just as the case at bar, involved a grant and loan by the administrator to a municipal corporation to construct an electric lighting plant which would compete with a private power company. The question of the constitutionality of title 2 of the National Recovery Act (40 U.S.C.A. § 401 et seq.) was raised there as it is here; and the Circuit Court of Appeals of the Sixth Circuit held that the company was without right to raise any question either as to the effect of or the constitutionality of the Recovery Act in that suit. It is true that the injury which might result from municipal competition was not discussed in the opinion; but as pointed out above this would have added nothing to plaintiff's position, for the city had a right to engage in such competition and invasion of rights cannot be predicated of competition which is rightful. The precise question as to whether one who will be injured by the competition of another has a standing in court to protest the action of an officer of the government, alleged to be unlawful, which will enable such other to compete with him, was raised in United States v. Dern, 63 App.D.C. 28, 68 F.(2d) 773. That was a suit for mandamus to compel the Secretary of War to cancel certain leases of warehouses which were alleged to have been made contrary to law. Plaintiffs alleged that they were engaged in direct competition with the lessee, and that by reason of the advantageous provisions of the allegedly illegal lease agreements, the lessee was able to underbid them in competing for business. It was held, however, that this gave plaintiffs no right to challenge the legality of the action of the Secretary of War in making the leases. Another decision very much in point is New Orleans M. & T. R. Co. v. Ellerman, 105 U.S. 166, 174, 26 L.Ed. 1015, wherein it was held that a right to question as ultra vires the acts of a railroad corporation did not arise because, as a result of these acts, competition for the business of complainant was created. The court said, The only injury of which he can be heard in a judicial tribunal to complain is the invasion of some legal or equitable right. If he asserts that the competition of the railroad company damages him, the answer is, that it does not abridge or impair any such right. If he alleges that the railroad company is acting beyond the warrant of the law, the answer is, that a violation of its charter does not of itself injuriously affect any of his rights. Applying this language to the case at bar, the only injury of which plaintiffs can be heard in a judicial tribunal to complain is the invasion of some legal or equitable right. If they assert that the competition of the county will damage them, the answer is that it will not abridge or impair any such right. If they allege that the administrator, in making the loan and grant, is acting beyond the warrant of the law, the answer is that such action does not of itself injuriously affect any of their rights. The two cases upon which plaintiffs particularly rely with respect to their right to sue are Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070, 39 A. L.R. 468, and Frost v. Corporation Commission, 278 U.S. 515, 49 S.Ct. 235, 237, 73 L.Ed. 483; but what has already been said is sufficient to distinguish both of these. In the Pierce Case, a state statute, by requiring parents to send their children to public schools, threatened the destruction of the business of a private school by reason of the unlawful coercion exercised on its patrons. The injury threatened was, not from lawful competition, but from unlawful coercion of patrons; and this was what was enjoined. Here the only injury to plaintiffs that can arise is from the competition of the county, which is lawful. In the Frost Case, the plaintiff was the holder of a license to operate a cotton gin which the court held to be exclusive as against persons not similarly licensed. The Legislature attempted to grant a privilege to cooperative societies which was held void because violative of the equal protection clause of the Fourteenth Amendment. It was held that the plaintiff was entitled to enjoin one who attempted to operate in competition with him under a void permit issued under the unconstitutional statute. The court said that the holder of a valid license might resort to a court of equity to restrain the illegal operation upon the ground that such operation is an injurious invasion of his property rights. Here the operation of a power plant by the county is not illegal, and plaintiff has no right to exclude the county from any competition upon which it may see fit to enter. To conclude, we think: (1) That the loan and grant which the administrator of public works proposes to make to Greenwood county cannot be condemned either on the ground that the act of Congress under which they will be made is unconstitutional or that the administrator in making them will exceed his powers under the act; and (2) that, even if this were not true, no right of plaintiffs would be invaded either by the county in the building of the power project or by the administrator in the making of the loan and grant. In a similar case, the Circuit Court of Appeals of the Tenth Circuit, in Kansas Gas & Electric Co. v. City of Independence (C.C.A.10th) 79 F.(2d) 32, 100 A.L.R. 1479, denied relief on the first of these grounds; the Circuit Court of Appeals of the Sixth and Eighth Circuits in City of Allegan v. Consumers' Power Co. (C.C.A.6th) 71 F.(2d) 477, and Arkansas-Missouri Power Co. v. City of Kennett (C. C.A.8th) 78 F.(2d) 911, 914, 924, denied relief on the second ground. The question arises whether there should be a dismissal on the merits or for lack of jurisdiction. While the second ground above mentioned is frequently treated as going to the question of jurisdiction, it really goes to the right of plaintiff to relief rather than to the jurisdiction of the court to afford relief in a proper case. In addition to this, the pleadings ask relief, which as we have seen was properly denied, on grounds other than the unconstitutionality of the statute and lack of authority in the administrator; and, as there was diversity of citizenship, the court had jurisdiction to pass on these matters. We think, therefore, that the decree appealed from should be reversed and that the lower court should be directed to dismiss the bill for lack of equity. Reversed.