Opinion — Trenton v. New Jersey

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182 OCTOBER TERM, 1922.

Syllabus. 262 U.S.

CITY OF TRENTON v. STATE OF NEW JERSEY.

ERROR TO THE SUPREME COURT OF THE STATE OF NEW

JERSEY.

No. 430. Argued March 2, 1923—Decided May 7, 1923.

1. A State has power, and it is its duty, to control and conserve

its water resources for the benefit of all its inhabitants. P. 185.

2. Diversion of waters from the sources of supply for this use, is

a legitimate function of the State, which may be left to private

enterprise subject to state regulation, or be performed directly, or

be delegated either to bodies politic created for the purpose or to

the State’s municipalities. P. 185.

3. In the absence of state constitutional provisions safeguarding it

to them, municipalities have no inherent right of self-government

which is beyond the legislative control of the State, but are merely

departments of the State, with powers and privileges such as

the State has seen fit to grant, held and exercised subject to its

sovereign will. P. 187.

4. The power of a State over the rights and properties of cities

held and used for “governmental purposes,” is unrestrained by

the Contract Clause, or the Fourteenth Amendment, of the Fed-

eral Constitution. P. 188.

5. The distinction between a municipality as an agent of the State

for governmental purposes, and as an organization to care for

local needs in a private or proprietary capacity, affords no

ground for the application of those constitutional restraints against

a State in favor of its own municinality. P. 191.

6. The City of Trenton, as successor to a grant made by New

Jersey to a private corporation, claimed a perpetual right, un-

burdened by license fee or other charge, to divert all the water

that might be required for the use of the City or its inhabitants

from the Delaware River, and resisted a charge, imposed under

ec. 252, Laws N. J., 1907, for water diverted beyond the amount

being legally diverted when the act was passed and in excess of

a per capita maximum prescribed by the act. Held, that the City

could not invoke the Contract Clause or the Fourteenth Amend-

ment, even assuming that the private corporation might have done

so if its rights had not passed to the City, and that, in view

of previous decisions, the City’s contention to the contrary did

not present a substantial federal question. Pp. 185, 192.

Writ of error to review 117 Atl. 158, dismissed.

Piss 3

TRENTON v. NEW JERSEY. 183

182 Opinion of the Court.

Error to a judgment of the Supreme Court of New

Jersey, affirmed by the Court of Errors and Appeals, in

favor of the State, in its action to recover license fees

from the City of Trenton, for water diverted from the

Delaware River.

Mr. A. V. Dawes, with whom Mr. Chas. E. Bird was

on the brief, for plaintiff in error.

Mr. William Newcorn, Assistant Attorney General,

with whom Mr. Thomas F. McCran, Attorney General,

of the State of New Jersey, was on the brief, for defend-

ant in error.

Mr. Justice BurieR delivered the opinion of the

Court.

The State of New Jersey recovered judgment against

the City of Trenton for $14,310.00, 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 State’s right to recover depends upon the validity

of an act of the legislature (c. 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 compen-

sation and without due process of law in violation of the

Fourteenth Amendment. The act provides that:

“Every municipality, corporation or private person

now diverting the waters of streams or lakes with out-

lets for the purpose of a public water-supply shall make

annual payments on the first day of May to the State

Treasurer for all such water hereafter diverted in excess

of the amount now being legally diverted; provided, how-

ever, no payment shall be required until such legal diver-

sion shall exceed a total amount equal to one hundred

a

184 OCTOBER TERM, 1922.

Opinion of the Court. 262 U.8.

(100). gallons daily, per capita for each inhabitant of

the municipality or municipalities supplied, as shown by

the census of one thousand nine hundred and five.”

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 there-

of, and that such right was acquired by the President

and Directors of the Trenton Water Works (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 City’s claim is as follows: By an Act of Feb-

ruary 29, 1804, the President and Directors of the Tren-

ton Water Works were created a body politic and cor-

porate. 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 restric-

tions as they might think proper, and they were au-

thorized to lay and extend their water mains through

the streets of the City. Certain springs constituted the

company’s source of supply, and by reason of increase of

population ceased to be adequate. March 24, 1852, a

supplement to the above mentioned act was passed, by

which the company was authorized to take the water re-

quired either in whole or in part from the Delaware River.

Later, March 2, 1855, an act was passed, authorizing the

City to purchase the whole or a majority of the shares

of the capitat stock of the water company, and the City

purchased all of the stock. Thereafter, an Act of March

1, 1859, required the company to convey unto “ the in-

habitants: of the city of Trenton” all the real estate,

works and property and all the corporate powers, fran-

chises 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.

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TRENTON v. NEW JERSEY. 185

182 Opinion of the Court.

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 State 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, affirmed by this Court in 209 U. S. 349, 355;

Collingswood v. Water-Supply Commission, 84 N. J. L.

104, 110; Cobb v. Davenport, 32 N. J. L. 369, 378. The

only way the City could acquire the right to take the

water 01 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. L. 431, 433. The power to deter-

mine the conditions upon which waters may be so di-

verted 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 inhabi-

tants, 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 prop-

erty 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 con-

186 OCTOBER TERM, 1922.

Opinion of the Court. 262 U.S.

venient agency for the exercise of such of the govern-

mental powers of the State as may be entrusted 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 dele-

gated 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 elec-

tric 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 carry-

ing 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:

“ The number, nature and duration of the powers con-

ferred upon these corporations and the territory over

which they shall be exercised rests in the absolute discre-

tion of the State. Neither their charters, nor any-.law con-

ferring governmental powers, or vesting in them prop-

erty to be used for governmental purposes, or authorizing

them to hold or manage such property, or exempting

them from taxation upon it, constitutes a contract with

the State within the meaning of the Federal Constitution.

The State, therefore, at its pleasure may modify or with-

draw all such powers, may take without compensation

such property, hold it itself, or vest it in other agencies,

expand or contract the territorial area, unite the whole

or a part of it with another municipality, repeal the

charter and destroy the corporation. All this may be

done, conditionally or unconditionally, with or without

the consent of the citizens, or even against their protest.

In all these respects the State is supreme, and its legisla-

tive body, conforming its action to the state constitu-

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TRENTON v. NEW JERSEY. 187

182 Opinion of the Court.

tion, may do as it will, unrestrained by any provision of

the Constitution of the United States. . . . The power

is in the State and those who legislate for the State are

alone responsible for any unjust or oppressive exercise

of it.”

In New Jersey it has been held that within the limits

prescribed by the state constitution, the legislature may

delegate to municipalities such portion of political power

as they may deem expedient, withholding other powers,

and may withdraw any part of that which has been dele-

gated. Van Cleve v. Passaic Valley Sewerage Commis-

sioners, 71 N. J. L. 183, 198.

In the absence of state constitutional provisions safe-

guarding it to them, municipalities have no inherent right

of self government which is beyond the legislative control

of the State.* A municipality is merely a department of

the State, and the State may withhold, grant or withdraw

powers and privileges as it sees fit. However great or

small its sphere of action, it remains the creature of the

State exercising and holding powers and privileges sub-

ject to the sovereign will. See Barnes v. District of Co-

lumbia, 91 U.S. 540, 544, 545.

In Mount Pleasant v. Beckwith, 100 U. S. 514, 524, 525,

it was held that where a municipal corporation is legis-

lated out of existence and its territory annexed to other

corporations, the latter, unless the legislature otherwise

provides, become entitled to all its property and immuni-

ties. In the opinion it is said (pp. 524, 525):

“Institutions of the kind, whether called cities, towns,

or counties, are the auxiliaries of the State in the im-

portant business of municipal rule; but they cannot haye

the least pretension to sustain their privileges or their

existence upon anything like a contract between them-

selves and the legislature of the State, because there is

*Cf. 1 Dillon Municipal Corporations, 5th ed., § 98, p. 154, et seq.

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188 OCTOBER TERM, 1922.

Opinion of the Court. 262 U.S.

not and cannot be any reciprocity of stipulation between

the parties, and for the further reason that their objects

and duties are utterly incompatible with everything par-

taking of the nature of compact.”

The power of the State, unrestrained by the contract

clause or the Fourteenth Amendment, over the rights and

property of cities held and used for “ governmental pur-

poses” cannot be questioned. In Hunter v. Pittsburgh,

supra, 179, reference is made to the distinction between

property owned by municipal corporations in their public

and governmental capacity and that owned by them in

their private or proprietary capacity, and decisions of this

Court which mention that distinction are referred to.” In

none of these cases was any power, right or property of

a city or other political subdivision held to be protected

by the contract clause or the Fourteenth Amendment.

This Court has never held that these subdivisions may in-

voke such restraints upon the power of the State.*

In East Hartford v. Hartford Bridge Co., 10 How. 511,

533, 534, 536, it appeared that for many years @ franchise

to operate a ferry over the Connecticut River belonged

to the town of Hartford; that upon the incorporation of

* Commissioners v. Lucas, 93 U. S. 108, 115; Meriwether v. Garrett,

102 U. 8. 472, 518, 530; Essex Public Road Board v. Skinkle, 140

U. 8. 334, 342; New Orleans v. New Orleans Water Works Co., 142

U. 8. 79, 91; Covington v. Kentucky, 173 U. S. 231, 240; Worcester

vy. Worcester Consolidated Street Ry. Co., 196 U. 8. 539, 551; Mon-

terey v. Jacks, 203 U. S. 360.

* Some state cases holding that the state legislature is not restrained

by federal constitutional provisions: St. Louis v. Shields, 52 Mo. 351,

354; Police Jury of Bossier v. Corporation of Shreveport, 5 La. Ann.

661, 665; Trustees of Schools v. 1 atman, 13 Ill. 27; Board of Educa-

tion v. Aberdeen, 56 Miss. 518; Darlington v. City of New York,

31 N. Y. 164, 193. See contra: Town of Milwaukee v. City of

Milwaukee, 12 Wis. 93, 109; Grogan v. San Francisco, 18 Cal. 590,

612, 613; Mount Hope Cemetery v. Boston, 158 Mass. 509, 519;

Spaulding v. Andover, 54 N. H. 38, 56; Ellerman v. McMains, 30 La.

Ann. 190.

TRENTON v. NEW JERSEY. 189

182 Opinion of the Court.

East Hartford, the legislature granted to it one-half of

the ferry during the pleasure of the General Assembly,

and that subsequently, after the building of a bridge

across the river, the legislature discontinued the ferry.

It was held that this was not inconsistent with the con-

tract clause of the Federal Constitution. The reasons

given in the opinion (pp. 533, 534) support the conten-

tion of the State here made that the City cannot possess

a contract with the State which may not be changed or

regulated by state legislation.

In Worcester v. Worcester Consolidated Street Ry. Co.,

196 U. S. 539, 548, it was held that the obligation of the

street railway company to the city to pave and repair

streets occupied by it, based on accepted conditions of a

municipal ordinance granting right of location, is not

private property beyond the legislative control of the

State, and that state legislation taxing the company and

thereby relieving it from its obligation to the city to pave

and repair such streets was not void as violating the con-

tract clause of the Federal Constitution. In the opinion

it is said (pp. 548, 549):

“The question then arising is, whether the legislature,

in the exercise of its general legislative power, could abro-

gate the provisions of the contract between the city and

the railroad company with the assent of the latter, and

provide another and a different method for the paving

and repairing of the streets through which the tracks of

the railroad company were laid under the permit of their

extended location. We have no doubt that the legislature

of the Commonwealth had that power. A municipal cor-

poration is simply a political subdivision of the State, and

exists by virtue of the exercise of the power of the State

through its legislative department. The legislature could

at any time terminate the existence of the corporation

itself, and provide other and different means for the

government of the district comprised within the limits of

190 OCTOBER TERM, 1922.

Opinion of the Court. 262 U.S.

the former city. The city is the creature of the State.”

Citing East Hartford v. Hartford Bridge Co., 10 How. 511,

533, 534; United States v. Railroad Company, 17 Wall.

322, 329; New Orleans v. Clark, 95 U. S. 644, 654; Com-

missioners of Laramie County V. Commissioners of Al-

bany County, 92 U. S. 307; Commissioners v. Lucas,

93 U.S. 108, 114.

In Pawhuska v. Pawhuska Oil & Gas Co., 250 U. S. 394,

399, it was held that a legislative grant to a city of the

power to regulate rates to be charged to the city and its

inhabitants by a gas company might be withdrawn by the

State from the city and conferred upon a commission, and

that thereby no question was presented under the con-

tract clause of the Federal Constitution. In the opinion,

after a statement of the issue, it is said (pp. 397, 398) :

“ Thus the whole controversy is as to which of two ex-

isting agencies or arms of the state government is author-

ized for the time being to exercise in the public interest

a particular power, obviously governmental, subject to

which the franchise confessedly was granted. In this no

question under the contract clause of the Constitution of

the United States is involved, but only a question of local

law, the decision of which by the Supreme Court of the

State is final. . . . In New Orleans v. New Orleans

Water Works Co., 142 U. S. 79, where a city, relying on

the contract clause, sought a review by this court of a

judgment of a state court sustaining a statute so modify-

ing the franchise of a water works company as to require

the city to pay for water used for municipal purposes,

to which it theretofore was entitled without charge, the

writ of error was dismissed on the ground that no question

of impairment within the meaning of the contract clause

was involved.” *

* Cf. Williams v. Eggleston, 170 U. 8. 304, 310; Mason v. Missouri,

179 U. 8. 328, 335.

TRENTON v. NEW JERSEY. 191

182 Opinion of the Court.

The distinction between the municipality as an agent

of the State for governmental purposes and as an organi-

zation to care for local needs in a private or proprietary

capacity has been applied in various branches of the law

of municipal corporations. The most numerous illustra-

tions are found in cases involving the question of liability

for negligent acts or omissions of its officers and agents.

See Harris v. District of Columbia, 256 U. S. 650, and

cases cited. It has been held that municipalities are not

liable for such acts and omissions in the exercise of the

police power, or in the performance of such municipal

faculties as the erection and maintenance of a city hall

and courthouse, the protection of the city’s inhabitants

against disease and unsanitary conditions, the care of the

sick, the operation of fire departments, the inspection of

steam boilers, the promotion of education and the admin-

istration of public charities. On the other hand, they

have been held liable when such acts or omissions occur

in the exercise of the power to build and maintain bridges,

streets and highways, and waterworks, construct sewers,

collect refuse and care for the dump where it is deposited.*

Recovery is denied where the act or omission occurs in

the exercise of what are deemed to be governmental pow-

ers, and is permitted if it occurs in a proprietary capacity.

The basis of the distinction is difficult to state, and there

*See Winona v. Botzet, 169 Fed. 321, 332, et seq., and cases cited.

See also: Brantman v. Canby, 119 Min. 396 (recovery permitted

for gas explosion where city furnished gas to inhabitants) ; Pettengill

v. Yonkers, 116 N. Y. 558, 565 (recovery permitted for injury sus-

tained by excavation in street to lay mains); Watson v. Needham,

161 Mass. 404, 411 (damages recovered for breach of contract by

water commissioners to furnish water for plaintiff's boiler, resulting

in injury to vegetables in greenhouse heated thereby); Brown v.

Salt Lake City, 33 Utah, 222, 234 (city held liable for death by

drowning in conduit forming a part of city water works system).

These cases and others that might be cited serve in general to illus-

trate the course of decision.

192 OCTOBER TERM, 1922.

Syllabus. 262 U.S.

is no established rule for the determination of what be-

longs to the one or the other class. It originated with the

courts. Generally it is applied to escape difficulties, in

order that injustice may not result from the recognition

of technical defenses based upon the governmental char-

acter of such corporations.’ But such distinction fur-

nishes no ground for the application of constitutional re-

straints here sought to be invoked by the City of Trenton

against the State of New Jersey. They do not apply as

against the State in favor of its own municipalities. We

hold that the City cannot invoke these provisions of the

Federal Constitution against the imposition of the license

fee or charge for diversion of water specified in the state

law here in question. In view of former opinions of this

Court, no substantial federal question is presented. Paw-

huska v. Pawhuska Oil & Gas Co., supra, and cases cited.’

The writ of error is dismissed.

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