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0 262 US 182

United States Supreme Court
No. 430
Argued: March 2, 1923 Decided: May 7, 1923

[262 U.S. 182, 183] Mr. A. V. Dawes, of Trenton, N. J., for plaintiff in error.

Mr. William Newcorn, of Plainfield, N. J., for the State of New Jersey.

Mr. Justice BUTLER delivered the opinion of the Court.

The state of New Jersey recovered judgment against the city of Trenton for $14,310, in an action brought in the state Supreme Court. The judgment was affirmed by the Court of Errors and Appeals, and is here on writ of error.

The states right to recover depends upon the validity of an act of the Legislature (chapter 252, Laws of 1907). The city asserts that this act offends against the contract clause of the Constitution of the United States, and that it takes property owned by the city in its private or proprietary capacity for public use without just compensation and without due process of law, in violation of the Fourteenth Amendment. The act provides that:

The city claims the right to take from the Delaware river all the water that it requires, without limitation as to quantity and without license fee for any part thereof, and that such right was acquired by the president and directors of the Trenton Waterworks (hereinafter called the water company) by grant direct from the state March 24, 1852, and that the city acquired this right by purchase from the water company. Briefly, the basis of the citys claim is as follows:

By an act of February 29, 1804, the president and directors of the Trenton Waterworks were created a body politic and corporate. They and their successors and assigns were made capable of disposing of water to such as might apply for the same for such annual rent and under such restrictions as they might think proper, and they were authorized to lay and extend their water mains through the streets of the city. Certain springs constituted the companys source of supply, and by reason of increase of population ceased to be adequate. March 24, 1852 (P. L. p. 289 ), a supplement to the above-mentioned act was passed, by which the company was authorized to take the water required either in whole or in part from the Delaware river. Later, March 2, 1855 (P. L. p. 141), an act was passed, authorizing the city to purchase the whole or a majority of the shares of the capital stock of the water company, and the city purchased all of the stock. Thereafter an act of March 1, 1859 (P. L. p. 38), required the company to convey unto the inhabitants of the city of Trenton all the real estate, works and property and all the corporate powers, franchises and privileges of the company, and this conveyance was duly made.

If the provision of the act of 1907 imposing the license fee is valid as against the city, the judgment is right. [262 U.S. 182, 185] The Court of Errors and Appeals held that it was valid, that the state under its police power might impose a license fee as specified in the act, and that this does not deprive the city of any contractual or property right.

The stat undoubtedly has power, and it is its duty, to control and conserve the use of its water resources for the benefit of all its inhabitants, and the act of 1907 was passed pursuant to the policy of the state to prevent waste and to economize its water resources. Decision of the Court of Errors and Appeals in this case, 117 Atl. 158; McCarter v. Hudson Water Co., 70 N. J. Eq. 695, 701, 702, 14 L. R. A. (N. S.) 197, 118 Am. St. Rep. 754, 10 Ann. Cas. 116, affirmed by this court in 209 U.S. 349, 355, 28 S. Sup. Ct. 529, 14 Ann. Cas. 560; Collingswood v. Water-Supply Commission, 84 N. J. Law, 104, 110, 86 Atl. 660; Cobb v. Davenport, 32 N. J. Law, 369, 378. The only way the city could acquire the right to take the water of the Delaware river was by grant from the state or by authorized purchase or condemnation from one to whom the right had been granted by the state. State v. Jersey City, 94 N. J. Law, 431, 433, 111 Atl. 544, 19 A. L. R. 646. The power to determine the conditions upon which waters may be so diverted is a legislative function. The state may grant or withhold the privilege as it sees fit. Assuming in favor of the city, that its grantor received a perpetual right, unburdened by license fee or other charge, to divert all the water required for the use of the city and its inhabitants, does it follow that the state as against the city is bound by contract and is without power to impose a license fee as provided in the act?

The relations existing between the state and the water company were not the same as those between the state and the city. The company was organized and carried on its business for pecuniary profit. Its rights and property were privately owned and therefore safeguarded by the constitutional provisions here sought to be invoked by the city against the legislation of the state. The city is a political subdivision of the state, created as a convenient [262 U.S. 182, 186] agency for the exercise of such of the governmental powers of the state as may be intrusted to it. The diversion of waters from the sources of supply for the use of the inhabitants of the state is a proper and legitimate function of the state. This function may be left to private enterprise, subject to regulation by the state; it may be performed directly; or it may be delegated to bodies politic created for that purpose, or to the municipalities of the state. Power to own, maintain and operate public utilities, such as waterworks, gas and electric plants, street railway systems, public markets, and the like is frequently conferred by the states upon their cities and other political subdivisions. For the purpose of carrying on such activities, they are given power to hold and manage personal and real property.

As said by this court, speaking through Mr. Justice Moody, in Hunter v. Pittsburgh, 207 U.S. 161, 178, 179 S., 28 Sup. Ct. 40, 46 (52 L. Ed. 151):

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