CITY OF LOUISVILLE v. CUMBERLAND TELEPHONE & TELEGRAPH CO., 155 F. 725

LURTON, Circuit Judge. This is a bill filed in the Circuit Court to restrain the enforcement of a municipal ordinance regulating charges for telephone service in the city of Louisville, on the ground that the ordinance was violative of the obligation of a contract between the complainant and the city, and also on the ground that the rates prescribed were unreasonable, unjust, and confiscatory, and, if enforced, would deprive complainants of their property without compensation and without that due process of law guaranteed by the fourteenth amendment.

An injunction pendente lite was allowed upon the averments of the bill, and from, this order the city of Louisville has appealed under the seventh

section of the Court of Appeals act, as amended by Act April 14, 1906, c. 1627, 34 Stat. 116. The propriety of the preliminary injunction must turn here upon the question of the jurisdiction of the Circuit Court. There was no jurisdiction by reason of diversity of citizenship; the complainant being a business corporation created under the laws of Kentucky, and the defendant a municipal corporation of the same state. Jurisdiction was invoked upon the contention that this is a suit arising under the Constitution or laws of the United States.

That the bill does aver that the ordinance impairs the obligation of a contract and is also an attempt to deprive complainant of its property without due process of law is plain enough.

But the constitutional prohibitions which are invoked run against the state, and the state alone, while the bill of the complainant in plain words negatives state action by averring that “no power to regulate the rates charged by your orator or other telephone companies” has been granted “by the Constitution or the Legislature of the state of Kentucky, or in any other way,” and that the enactment of said ordinance was and is beyond the power of the common council of said city, and the said “ordinance void and an assumption of power and authority upon the part of the said common council unwarranted and unfounded.” If this be true, there was no state authority behind the action of the Louisville common council, and no ground to claim that constitutional prohibitions have been violated which are pointed at state aggression only.

A municipal ordinance may be the exercise of a delegated legislative power conferred upon it as one of the political subdivisions of the state; but, to be given the effect and force of a law of the state, it must have been enacted in the exercise of some legislative'power conferred by the state in the premises. Murray v. Charleston, 96 U. S. 432, 440, 24 L. Ed. 760; New Orleans Water Works v. La. Sugar Co., 125 U. S. 18, 31, 8 Sup. Ct. 741, 31 L. Ed. 607; Hamilton Gaslight Co. v. Hamilton, 146 U. S. 258, 266, 13 Sup. Ct. 90, 36 L. Ed. 963; Iron Mountain R. R. Co. v. Memphis, 96 Fed. 113, 126, 37 C. C. A. 410; St.

Paul Gas Co. v. St. Paul, 181 U. S. 142, 148, 21 Sup. Ct. 575, 45 L. Ed. 788; Barney v. City of New York, 193 U. S. 430, 24 Sup. Ct. 502, 48 L. Ed. 737; Manhattan Railway v. City of New York (C. C.) 18 Fed. 195; Kiernan v. Multnomah County (C. C.) 95 Fed. 849; and Savannah, etc., Ry. Co. v. Savannah, 198 U. S. 392, 25 Sup. Ct 690, 49 L. Ed. 1097. In Hamilton Gaslight Co. v.

Hamilton, cited above, Justice Harlan said: “A municipal ordinance, not passed under supposed legislative authority, cannot be regarded as a law of the state within the meaning of the constitutional prohibition against state laws impairing the obligations of contracts. Murray v. Charleston, 96 U. S. 432, 440, 24 L. Ed. 760; Williams v. Bruffy, 96 U. S. 176, 183, 24 L. Ed. 716; Lehigh Water Co. v. Easton, 121 U. S. 388, 392, 7 Sup. Ct. 916, 30 L. Ed. 1059; N. O. Waterworks v. Louisiana Sugar Co., 125 U. S. 18, 31, 38, 8 Sup. Ct. 741, 31 L. Ed. 607.

A suit to prevent the enforcement of such an ordinance would not therefore be one arising under the Constitution of the United States.” If the state has conferred authority upon the municipality to establish and enforce reasonable rates for telephone service, then the establishment of rates under this power would be the establishment of rates by the state itself. Reagan v. Farmer’s Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014.

But this is just what the bill charges has not been done, thereby depriving the Circuit Court of every foundation for its jurisdiction as a suit arising under the Constitution or laws of the United States.

Counsel now say that the averment that no power has been delegated by the state to the city of Louisville t© regulate the rates to be charged for telephone service to be rendered in the city is a mistaken averment of law, and should be ignored in consequence of a prior statement of the bill, in which it is said that “the common council of the city of Louisville assumed and claimed to have been given the authority by the Legislature of the commonwealth of Kentucky, to' regulate the charges and rates to be charged by telephone companies,” and had upon such assumption* passed the ordinance complained of.

Counsel says this shows that the city council acted under color of authority and should save the jurisdiction. But these averments are not inconsistent, and do not bring the case within Savannah, etc., Ry. Co. v. Savannah, cited above, where there were inconsistent and contradictory averments as to the authority for the tax assessment in question. That the common council “assumed” and “claimed” to have the power to do what it did do is self-evident. The enactment of the ordinance is in itself, and from any point of view, an assumption and claim of right to do what it did.

This averment is therefore far from an averment that the common council was exercising a power of regulation conferred by the state. To make it clear that it had no general regulating power over such companies, and that it was acting outside of any such delegated regulating power, the clause relied upon now as asserting that the city council did act by authority of the state was followed by the distinct averment, above referred to, that the council acted wholly without any authority from the state. This makes an issue under the law of the state.

If the fact be that no provision of the state Constitution, or of state law, or of the municipal charter, delegates the state power in respect to the regulation of the charges of telephone companies rendering services within the city of Louisville, the ordinance is void as ultra vires, and its enactment did not violate any prohibition of the Constitution of the United States, because not enacted in pursuance of any state authority.

When jurisdiction depends upon the case being one arising under the Constitution or laws of the United States, the facts necessary to malee such a case must be plainly shown upon the record, and it is not' enough that such question may or may not arise. New Orleans v. Benjamin, 153 U. S. 411, 14 Sup. Ct. 905, 38 L. Ed. 764; McCain v. Des Moines, 174 U. S. 168, 181. 19 Sup. Ct. 644, 43 L. Ed. 936; Western Union Tel. Co. v. Ann Arbor R. R. Co., 178 U. S. 239, 244, 20 Sup. Ct. 867, 44 L. Ed. 1052; Manhattan R. R. Co. v. City of New York (C. C.) 18 Fed. 195; Levy v. Shreveport (C. C.) 28 Fed. 209.

The most that can be made of the averments of this bill is that it presents questions arising under the Constitution and laws of the state. The remedy in such cases is in the courts of the state. If it shall turn out that the common council did have general power to regulate the charges of telephone companies rendering services within the city of Louisville, and that it has illegally exercised that power, either because it has thereby impaired the obligation of a contract, or by imposing rates which are unjust and confiscatory, a federal question may arise.

But it is not enough to found jurisdiction upon that such a question may arise when the bill expressly avers that the action of the common council is not imputable to the state by charging that no such power had been delegated by the state. The conclusion is that the court below erred in allowing an injunction, because it was without jurisdiction to entertain the bill at all. Remanded, with direction to dissolve the injunction and dismiss the •bill.