CITY AND COUNTY OF SAN FRANCISCO et al. v. UNITED RAILROADS OF SAN FRANCISCO, 190 F. 507

GILBERT, Circuit Judge (after stating the facts as above). The question arises whether there is jurisdiction on the ground that the bill presents a federal question. As sustaining the jurisdiction, the appellee relies on the allegation that

section 499 of the Civil Code entered into and became a part of its contract, and that the ordinances adopted by the city with a view to the construction of a municipal railroad and its acts in carrying out those ordinances would result in an impairment of the appellee’s contract as expressed in its franchises. Referring to those franchises, which are made exhibits to the bill, it will be seen that in the franchise for a street railway on Market street it is provided in

section 5, as follows: “It shall be lawful for the board of supervisors of the city and county of San "Francisco to grant to one other corporation and no more the right to use either of the aforesaid streets for a distance of five blacks and no more, upon the terms and conditions specified in the 499th

section of the Civil Code of this state. This

section shall apply to persons and companies, as well as corporations.” In the franchise under which the appellee operates its road on Point Pobos avenue, no reference is made to

section 499, but it is provided that the rights and privileges therein granted shall be held and enjoyed by the grantee, “upon such terms, conditions and restrictions as are now or may be hereafter imposed by the laws of the state of California relative to street railroads in the cities and towns therein, or are or shall be hereafter imposed by orders of the board of supervisors, and a strict compliance with said laws and orders is hereby required.” So long as

section 499 remained in force, these provisions of the contract added nothing to its obligations. They would have force only in case of the material amendment or repeal of the statute. But the statute has not been repealed. • It is still in force, and not substantially amended.

At the time of the adoption of the ordinances which are here complained of, the statute read as follows: “Two or more lines of street railway, operated under different managements, may by lease or contract, use the same street or tracks upon such terms as may have been agreed upon between the companies operating such railways; and two lines of street railway operated under different managements may be permitted to use the same street or tracks for a distance of five blocks without such lease or contract, upon payment of an equal portion for the construction of the tracks and appurtenances used by such' railways jointly; but in no case shall a company owning or operating one line of street railway be permitted to condemn the right to occupy and use the same street or tracks for a distance of more than five blocks consecutively.” The inquiry is whether on the facts alleged in the bill there has been state action impairing the obligation of the contract.

A state may act through a municipal corporation to which it has delegated powers of legislation, but, where the ordinance of such a corporation is relied upon as constituting the impairment, it must be shown to have been enacted pursuant to the legislative authority of the state. Otherwise it ‘is not state action. If, as alleged in the bill, the impairment of the appellee’s contract consists in the fact that the city is proceeding to disregard its covenant, and to construct a road in violation of the provisions of

section 499, which was made a part of the contract, we are confronted with the fact that the city is proceeding to violate a law of the-state. If its action is illegal and unwarranted, it is primarily so because it violates that law. If its action has the effect to impair the obligation of the contract, it also has the effect to violate the express and paramount law of the state, and it is therefore void, and is not state legislation. In Hamilton Gaslight Co. v. Hamilton City, 146 U. S. 258, 266, 13 Sup. Ct. 90, 36 L. Ed. 963, Mr.

Justice Harlan said: “A municipal ordinance not passed under a supposed legislative authority cannot be regarded as a law of the state within the meaning of the constitutional prohibition against state laws impairing the obligation of contracts.” In Barney v. City of New York, 193 U. S. 430, 24 Sup. Ct. 502, 48 L. Ed. 737, jurisdiction was invoked on the ground of deprivation of property without due process of law in violation of the fourteenth amendment.

It appeared on the face of the plaintiff’s bill that the acts of the city officers therein complained of were not only unauthorized, but were forbidden by state legislation. It was held that no federal question was involved. The court said: "In the present ease defendants were proceeding, not only in violation of provisions of the state law, but in opposition to plain prohibitions.” In Dawson v. Columbia Trust Company, 197 U. S. 178, 25 Sup. Ct. 420, 49 L.

Ed. 713, the trust company, as mortgagee of the Dawson Waterworks Company, brought a suit to restrain the city of Dawson from taking measures to build new waterworks. It set forth the contract of the waterworks company with the city, the repudiation of that contract by the city, the calling of an election to determine whether the city should issue bonds to erect or buy waterworks, the vote in favor of the issue, and the issuance of the bonds. It was alleged that all these acts were unlawful, and were not warranted by the laws of the state.

The court held that the acts of the municipality under the averments of the bill did not constitute an impairment of the contract by the act of the state. In Memphis v. Cumberland Telephone Co., 218 U. S. 624, 31 Sup. Ct. 115, 54 L. Ed. 1185, the complainant, which had a contract with the city, alleged the impairment thereof by ordinances of the city, which were alleged to have been enacted without authority either by express terms or by necessary implication in the legislative act -whereby the city was incorporated.

The court' reviewed its former decisions, and held that the case was not one arising under the Constitution and laws of the United States. The opinion reviewed also and approved the decision of the Circuit Court of Appeals for the Sixth Circuit in City of Louisville v. Cumberland Telephone &: Telegraph Co., 155 Fed. 725, 84 C. C. A. 151.

In that case it was sought to restrain the enforcement of a municipal ordinance regulating charges for telephone service on the «'round that the ordinance violated the obligation of a contract between the complainant and the city, and the bill alleged that no power to regulate the rates had been granted by the Constitution or by the Legislature of the state.

"If this be true,” said Judge Lurton, delivering the opinion of the court, "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 he 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.” In line with these authorities is the decision of this court in Seattle Electric Co. v. Seattle, R. & S. Ry. Co., 185 Fed. 365, 107 C. C. A. 421.

In that case the ordinance which was complained of and which it was said would operate to deprive the complainant of its property without due process of law was alleged in the bill to have been granted illegally, and without right, and to be “without authority in law', and null and void and of no force and effect.” We held, following the cases above cited, that, taking those averments to be true, the ordinance complained of was not the act of the state, and that there was no federal question involved.

When it comes to the question whether the ordinance of a municipality is or is . not legislation by the state, there can be no difference between an ordinance which has been enacted ultra vires and an ordinance which has been enacted in violation of a general statute of the state which prohibits the precise and specific act which is done by the ordinance. In neither case is the ordinance state action, for in both cases it is void under the state law.

Whether or not the ordinances ■complained of here would in fact, if carried out, have the effect to impair the obligation of the appellee’s contract, we do not undertake to decide. What we hold is that the averments of the bill itself exclude the case from the cognizance of a federal court as a case arising under the, Constitution of the United States by alleging that the very ordinances which the appellee relies upon as constituting a violation of its contract have been enacted in violation of the positive law of the state. The judgment is reversed, and the cause remanded with instructions to dismiss the bill.