stand it, and it would have been a rather unusual method of proceeding. But it is difficult to make out what other purpose there could have been, unless it was that the bank might thereby gain a better standing with the public, or, possibly, that the new subscriptions would be more securely tied. Being of opinion that the decree of the court below should be sustained upon the general grounds we have indicated, we have preferred to rest our opinion upon them, rather than upon the construction of the clause of the resolution in question. Our conclusion is that the decree of the circuit court should be affirmed.

MERCANTILE TRUST & DEPOSIT CO. OF BALTIMORE v. COLLINS PARK & B. R. CO. et al.

(Circuit Court, N. D. Georgia. February 7, 1900.)

No. 1,090.

1. CONSTITUTIONAL LAW-STATE LAW IMPAIRING OBLIGATION OF CONTRACTSCITY ORDINANCE.

Under the provision of the constitution of Georgia (article 3, § 7, par. 20) prohibiting the legislature from authorizing the construction of a street railroad in a city or town without the consent of the corporate authorities, the action of such authorities upon an application for a street-railroad franchise is the action of the state; and an ordinance granting such a franchise is passed under authority delegated by the state, and is a law of the state, within the meaning of the contract clause of the constitution of the United States.

2. JURISDICTION OF FEDERAL COURTS-FEDERAL QUESTION.

A suit to enjoin the enforcement of a city ordinance which has the force of a state law, within the meaning of the contract clause of the constitution, on the ground that it impairs the obligation of a prior contract made by the city, involves a federal question, which gives a federal court jurisdiction, without regard to the citizenship of the parties.1

This is a suit in equity to enjoin the enforcement of an ordinance of the city of Atlanta. On demurrers to bill.

King & Anderson, Goodwin & Hallman, and Payne & Tye, for complainant.

King & Spalding, Brandon & Arkwright, Rosser & Carter, and John L. Hopkins & Sons, for defendant Collins Park & B. R. Co.

James A. Anderson, City Atty., for defendant city of Atlanta.

NEWMAN, District Judge. The demurrers to the bill in this case raise the question of the jurisdiction of the court. The bill was filed by the Mercantile Trust & Deposit Company of Baltimore, a corporation of the state of Maryland, against the Collins Park & Belt Railroad Company, a corporation of the state of Georgia, exercising its corporate powers in the county of Fulton, and against the city

1 As to jurisdiction of cases involving federal questions, see note to Bailey v. Mosher, 11 C. C. A. 308, and, supplementary thereto, note to Montana OreFurchasing Co. v. Boston & M. Consol. Copper & Silver Min. Co., 35 C. C. A. 7.

of Atlanta, a municipal corporation of said county of Fulton. The purpose of the bill is to enjoin the enforcement of an ordinance which authorized the Collins Park & Belt Railroad Company to condemn for its use certain parts of the track of the Atlanta Railway & Power Company, a corporation also of Georgia, and of the county of Fulton. The complainant is trustee for a large amount of bonds issued by the Atlanta Railway & Power Company, and the holder of all of its stock, except 25 shares.

The first question is as to whether or not the railway and power company is an indispensable party to the litigation. It is contended that there is a distinction between this case and the case of Old Colony Trust Co. v. Atlanta Ry. Co. (decided in this court in 1899) 100 Fed. 798, in which it was held that the Atlanta Consolidated Street-Railway Company was an indispensable party, and, as the facts of the case placed it on the side of the complainant in the litigation, that that defeated the jurisdiction of the court on the ground of citizenship, because in this case substantially all the stock of the railway and power company is in the hands of the nonresident trust company. I am not satisfied that this would be sufficient to make a distinction between the two cases, and would be indisposed to retain jurisdiction on this ground, but it is unnecessary to discuss it further, if a federal question exists in the case, as claimed by the complainant; and the greater part of the argument has been directed to this latter question.

The bill alleges that the action complained of is a violation of the provision of the constitution of the United States which prohibits any state from passing a law impairing the obligation of contracts. In order to determine this question, it is necessary to decide whether the ordinance of the city of Atlanta authorizing the Collins Park Company to condemn certain portions of the track of the railway and power company is a law of the state, in the meaning of the provision of the constitution of the United States. It is not denied that ordinances of a city, acting in its legislative and governmental capacity, and proceeding as an instrumentality of the state, may be, and often have been, held to be laws of the state, in this connection; but it is claimed that under the facts here it is not true of the ordinance passed by the governing body of the city of Atlanta.

The city in 1891 granted to certain persons, as the representatives of several street-railroad lines in the city, then having a separate corporate existence, the right to consolidate the same and to electrically equip them. It is unnecessary at present to go into any extended discussion of these ordinances, for the purpose of reaching the precise question at issue. It is sufficient to say that in the report of a committee, which was subsequently adopted, the city, in granting the rights mentioned, reserved the right to allow any other street-railroad company to condemn as much as five blocks of the several lines which subsequently became the Consolidated Street. Railway, whenever it should be necessary for the purpose of allowing other street-railroad companies to reach the center of the city.. The grant now to the Collins Park Company is a right to condemn

more than five blocks of the railway and power company, which has become the successor of the Consolidated. One question, among others, which will be at issue when the merits of the case are reached, is whether the city reserved the right to condemn five blocks in all of the Consolidated tracks, or whether it reserved the right to condemn five blocks of each of the lines, the consolidation of which was authorized by the city at the same time that the reservation was made. The complainant contends, and will contend on the hearing of the case, for the former construction, and the defendants for the latter.

The constitution of the state of Georgia (article 3, § 7, par. 20) provides that "the general assembly shall not authorize the construction, of any street passenger-railway within the limits of any incorporated town or city, without the consent of the corporate authori ties." The same provision is contained in the general street-railway law of the state subsequently enacted. Consequently no streetrailroad company can lay a track in any of the streets of a city in Georgia without the consent of the city authorities. In conformity with this provision of the constitution and laws, the city's consent was asked and given in 1891 to the Consolidated Company, with the reservation stated. Consent being asked in 1899 by the Collins Park Company for the use of the streets, the city's consent was given to the use of a number of streets, as well as its permission to condemn a portion of the track of the railway and power company by the same ordinance. Of course, the primary authority over all the highways of the state, as well as the streets of the cities and towns, is in the state, and this authority over the same would usually be exercised by the legislature. The constitution of Georgia wisely provides, however, that even the legislature shall not authorize a passenger street-railway company to occupy any of the streets of a city or town until it has the consent of the authorities controlling the affairs of the city or town in which such right may be desired. Is it not true, then, that this act of consent-of withholding or granting the use of the streets of the city for such purposes, and, indeed, the entire subject-matter of control of the streets in this way-is the act of the state, through the city authorities as its instrumentality? Does not the provision of the constitution requiring such consent before the legislative grant becomes effective make the action of the city in this respect a part of the legislative act? The legislature grants the use of the streets, subject to the city's consent, and is not the city's consent, therefore, a part of the grant? Let us examine some of the authorities on the subject, with a view to the determination of this question. It will be unnecessary to go very far back in examining the decisions of the courts for the purpose of elucidating this question. The recent decisions have been so full and ample on the subject that a few citations will show the conclusion that must inevitably be reached.

The first case on the subject to which attention need be called is the case of Wright v. Nagle, 101 U. S. 791, 25 L. Ed. 921. This case went to the supreme court from the state of Georgia, and one of the questions in the case was whether the action of the inferior court of Georgia in granting a franchise, acting under legislative

authority, was the action of the state. This was decided in the ai firmative. On this subject the court says:

"We think, also, that the motion to dismiss must be overruled. It is true, the court below disposed of the case by deciding that the state statutes did not authorize the inferior court to grant Miller an exclusive right to maintain bridges within the designated limits, and that in so doing it gave a construction to a state statute. It is also true that ordinarily such a construction would be conclusive on us. One exception, however, exists to this rule, and that is when the state court has been called upon to interpret the contracts of states, though they have been made in the forms of law, or conformity with state legislation.' Bank v. Skelly, 1 Black, 436, 17 L. Ed. 173. It has been decided in Georgia that the right to receive tolls for the transportation of travelers and others across a river on a public highway is a franchise which belongs to the people collectively. Young v. Harrison, 6 Ga. 130: A grant of this franchise from the public in some form is therefore necessary to enable an individual to establish and maintain a toll bridge for public travel. The legis lature of the state alone has authority to make such a grant. It may exercise this authority by direct legislation, or through agencies duly established, having power for that purpose. The grant, when made, binds the public, and is, directly or indirectly, the act of the state. The easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities. Justices of Inferior Court v. Plank Road, 14 Ga. 486. The complainants claim they have such a grant through the agency of the inferior court, acting under the authority of the legislature. This is denied, because, as is insisted, the legislature has not given the court power to make an exclusive grant. That was the precise question decided below, and, under the exception to the rule just stated, is reviewable here."

The next case to which attention is called is a case which is very much relied on here by the defendants. Hamilton Gaslight & Coke Co. v. Hamilton City, 146 U. S. 258, 13 Sup. Ct. 90, 36 L. Ed. 963. It is contended that, tested by this decision, the action of the city in this case is not a state law, in the meaning of the constitution of the United States. The language of the court on this subject is as follows:

"The plaintiff's first contention is that there is no statute of Ohio authorizing any city, in which there are already gas works in full and complete operation, to erect gas works, or to levy a tax for that purpose. If this were conceded, we should feel obliged-the plaintiff and defendant both being corporations of Ohio-to reverse the judgment and remand the cause, with directions to dismiss the suit for want of jurisdiction in the circuit court. The jurisdiction of that court can be sustained only upon the theory that the suit is one arising under the constitution of the United States. But the suit would not be of that character, if regarded as one in which the plaintiff merely sought protection against the violation of the alleged contract by an ordinance to which the state has not, in any form, given or attempted to give the force of law. 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; Water Co. v. Easton, 121 U. S. 388, 392, 7 Sup. Ct. 916, 30 L. Ed. 1059; New Orleans Waterworks Co. v. Louisiana Sugar-Refining 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. We sustain the jurisdiction of the cir cuit court because it appears that the defendant grounded its right to enact the ordinance in question, and to maintain and erect gas works of its own, upon that section of the Municipal Code of Ohio adopted in 1869 (now section 2486 of the Revised Statutes) providing that the city council of any city or village should have power, whenever it was deemed expedient and for the pub

lic good, to erect gas works at the expense of the corporation, or to purchase gas works already erected therein, which section, the plaintiff contends, if construed as conferring the authority claimed, impaired the obligation of its contract previously made with the state and the city."

It is difficult to see how counsel find a different rule in this case from that announced in the former cases and in subsequent cases decided by the supreme court.

The next case to which attention is called is the case of City Ry. Co. v. Citizens' St. R. Co., 166 U. S. 557, 17 Sup. Ct. 653, 41 L. Ed. 1114. The following quotation from the opinion of the court in that case will show sufficiently for present purposes what was decided:

"(1) There can be no doubt that the circuit court had jurisdiction of the case, notwithstanding the fact that both parties are corporations and citizens of the state of Indiana. It should be borne in mind in this connection that jurisdiction depended upon the allegations of the bill, and not upon the facts as they substantially turned out to be. The gravamen of the bill is that under the act of the general assembly of 1861, and the ordinances of January 18, 1864, and April 7, 1880, the Citizens' Railroad Company had become vested with certain exclusive rights to operate a street railway in the city of Indianapolis, either in perpetuity or for the term of thirty years or thirtyseven years, which the city had attempted to impair by entering into a contract with the City Railway Company to pay and operate a railway upon the same streets. All that is necessary to establish the jurisdiction of the court is to show that the complainant had, or claimed in good faith to have, a contract with the city, which the latter had attempted to impair. Conceding that the legislature of the state alone had the right to make such grant, it may,' as was observed in Wright v. Nagle, 101 U. S. 791, 794, 25 L. Ed. 921, 'exercise its authority by direct legislation, or through agencies duly established, having power for that purpose. The grant, when made, binds the public, and is directly or indirectly the act of the state. The easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities.' See, also, Saginaw Gaslight Co. v. Saginaw City (C. C.) 28 Fed. 529; Weston v. Charleston, 2 Pet. 462, 7 L. Ed. 481; Waterworks Co. v. Rivers, 115 U. S. 674, 6 Sup. Ct. 273, 29 L. Ed. 525. That the complainant had a contract with the city is entirely clear. It was so held by the supreme court of Indiana in Western Pav. & S. Co. v. Citizens' St. R. Co., 128 Ind. 525, 26 N. E. 188, 28 N. E. 88, and 10 L. R. A. 770, in which the liability of the company for certain street improvements was discussed and passed upon. It is true that by section 11 of the original act of 1861 a right was reserved to the general assembly to amend or repeal at their discretion the act authorizing the incorporation of street-railway companies; but that was a right reserved to the general assembly itself, and was never delegated, if in fact it could be delegated, to the common council of the city. That the city did attempt to impair this contract by the agreement of April 24, 1893, with the City Railway Company, and its ordinance ratifying the same, is equally clear. This contract was entered into in pursuance of a supposed right given by the act of the general assembly of March 6, 1891, known as the 'City Charter,' the fifty-ninth section of which enacted that 'the board of public works shall have power to authorize and empower by contract telephone, telegraph, electric light, gas, water, steam or street car or railroad companies to use any street, alley or other public place in such city: provided, that such contracts shall, in all cases, be. submitted by said board to the council of such city, and approved by them by ordinance before the same shall take effect.' This contract and ordinance of April 24, 1893, even if otherwise valid, could not be construed to interfere with the rights of the complainant to occupy the streets of the city under the act of 1861 and the ordinance of January 18, 1864, without coming in conflict with that provision of the constitution which forbids states from enacting laws impairing the obligation of contracts. Whether the state had or had not impaired the obligation of this contract was not a question which could be properly passed