Defiance Water Company v. Defiance/Opinion of the Court
The decree of the circuit court was based on the decree of the state circuit court, which has been reversed by the state supreme court, and various suggestions have been made by counsel in respect of the judgment which they think should be rendered here in view of the termination of the litigation in the state courts.

But the question of the jurisdiction of the circuit court meets us on the threshold, and the disposal of that question disposes of this appeal.

Diverse citizenship did not exist, and, unless the case was one arising under the Constitution or laws of the United States, the jurisdiction of the circuit court was not properly invoked, and should not have been maintained.

We have repeatedly held that 'when a suit does not really and substantially involve a dispute or controversy as to the effect or construction of the Constitution or laws of the United States, upon the determination of which the result depends, it is not a suit arising under the Constitution or laws. And it must appear on the record, by a statement in legal and logical form, such as is required in good pleading, that the suit is one which does really and substantially involve a dispute or controversy as to a right which depends on the construction of the Constitution or some law or treaty of the United States, before jurisdiction can be maintained on this ground.' Western U. Teleg. Co. v. Ann Arbor R. Co. 178 U.S. 239, 44 L. ed. 1052, 20 Sup. Ct. Rep. 867; Little York Gold-Washing & Water Co. v. Keyes, 96 U.S. 199, 24 L. ed. 656; Blackburn v. Portland Gold Min. Co. 175 U.S. 571, 44 L. ed. 276, 20 Sup. Ct. Rep. 222; Shreveport v. Cole, 129 U.S. 36, 32 L. ed. 589, 9 Sup. Ct. Rep. 210; New Orleans v. Benjamin, 153 U.S. 411, 424, 38 L. ed. 764, 769, 14 Sup. Ct. Rep. 905, 909.

'The judicial power extends to all cases in law and equity arising under the Constitution, but these are cases actually, and not potentially, arising, and jurisdiction cannot be assumed on mere hypothesis. In this class of cases it is necessary to the exercise of original jurisdiction by the circuit court that the cause of action should depend upon the construction and application of the Constitution, and it is readily seen that cases in that predicament must be rare. Ordinarily the question of the repugnancy of a state statute to the impairment clause of the Constitution is to be passed upon by the state courts in the first instance, the presumption being in all cases that they will do what the Constitution and laws of the United States require (Chicago & A. R. Co. v. Wiggins Ferry Co. 108 U.S. 18, 27 L. ed. 636, 1 Sup. Ct. Rep. 614, 617); and if there be ground for complaint of their decision, the remedy is by writ of error under § 709 of the Revised Statutes (U.S.C.omp. Stat. 1901, p. 575). Congress gave its construction to that part of the Constitution by the 25th section of the judiciary act of 1789 [1 Stat. at L. 85, chap. 20], and has adhered to it in subsequent legislation.'

Complainant rested its assertion of jurisdiction on two grounds:

1. That the resolution or ordinance of January 7, 1896, impaired the obligation of the contract created by the ordinance of August 17, 1887.

2. That if complainant were perpetually enjoined, as prayed in the suit in the state courts, the state would thereby have deprived it of its property without due process of law.

1. The bill did not set forth the resolution or ordinance of January 7, 1896, in extenso, but stated that by its passage the city council 'in substance' rescinded and annulled the contract 'so far as it had power so to do,' in that in allowing a bill of the water company for accrued rentals it provided that the payment should not be 'construed or taken to be any acknowledgment of any contract between them and the said city for said water rentals,' . . .

The record shows the resolution, which was as follows:

'January 7th, 1896.

'A resolution to draw warrant in favor of water company for      $3,160.

'Whereas, the Defiance Water Company have submitted a bill to      the city council for $3,160, alleged to be due them from said      city for water rental for the past six months; and

'Whereas, said council are of the opinion that no valid      contract exists or is between said city and said company for      the payment of the same; and, furthermore, that said bill is,      in view of the deplorable inefficiency of the alleged water      service, wholly without merit in reason and equity; and

'Whereas, the best interests of the city, in their opinion,      demand that the present service be discontinued and immediate      steps be taken for the purpose of supplying water to said      city upon fair and equitable terms: therefore;

'Be it resolved, That the city clerk is hereby directed to      forthwith draw his warrant on the city treasurer against the      water fund of said city for the said sum of $3,160, in favor      of said Defiance Water Company, in full payment of said bill;      provided, however, that if said warrant be accepted by said      company it be taken and accepted by them without thereby in      any manner being construed or taken to be any acknowledgment      of any contract between them and said city for said water rental, or in any manner implying any actual performance of      any alleged contract, and that no further payments at the      present rate be made to said company.

'Passed Jan. 7th, 1896.'

Clearly, this resolution was not a law impairing the obligation of the contract. It was merely the allowance of a claim for rentals, with a saving clause to prevent estoppel; and the semiannual payments for 1896, and the first for 1897, were directed by subsequent ordinances to be made without any reservation.

And the city not only denies that the resolution (or any other) had or was intended to have the effect now attributed to it, but says that if this had been otherwise the resolution would have been invalid because not passed in accordance with the statutes of Ohio in that behalf.

The position of the city as disclosed by the record was, indeed, that no valid contract existed, and it was to test that question that the suit was instituted by the city solicitor in the court of common pleas; but there was no definitive legislative action taken by the city for the erection of its own waterworks, or otherwise, which was obnoxious to the prohibition of the Federal Constitution.

2. Nor does the contention that if the temporary injunction granted by the court of common pleas should ultimately be made perpetual justify the assumption of jurisdiction because of violation of the 14th Amendment.

Litigation in the state courts cannot be dragged into the Federal courts at such a stage and in such a way. The proposition is wholly untenable that, before the state courts in which a case is properly pending can proceed to adjudication in the regular and orderly administration of justice, the courts of the United States can be called on to interpose on the ground that the state courts might so decide as to render their final action unconstitutional.

Moreover, the state courts are perfectly competent to decide Federal questions arising before them, and it is their duty to do so. Robb v. Connolly, 111 U.S. 624, 637, 28 L. ed. 542, 546, 4 Sup. Ct. Rep. 544; Missouri P. R. Co. v. Fitzgerald, 160 U.S. 556, 583, 40 L. ed. 536, 543, 16 Sup. Ct. Rep. 389.

And, we repeat, the presumption is in all cases that the state courts will do what the Constitution and laws of the United States require. Chicago & A. R. Co. v. Wiggins Ferry Co. 108 U.S. 18, 27 L. ed. 636, 1 Sup. Ct. Rep. 614, 617; Shreveport v. Cole, 129 U.S. 36, 32 L. ed. 589, 9 Sup. Ct. Rep. 210; Neal v. Delaware, 103 U.S. 370, 389, 26 L. ed. 567, 571; New Orleans v. Benjamin, 153 U.S. 411, 424, 38 L. ed. 764, 769, 14 Sup. Ct. Rep. 905.

If error supervenes, the remedy is found in § 709 of the Revised Statutes (U.S.C.omp. Stat. 1901, p. 575).

The present case strikingly illustrates the applicability of these well-settled principles. The preliminary injunction was dissolved by the court by which it was granted, and the city's suit was dismissed by the highest judicial tribunal of the state.

We regard this bill as an attempt to evade the discrimination between suits between citizens of the same state, ans suits between citizens of different states, established by the Constitution and laws of the United States, by bringing into the circuit court controversies between citizens of the same state,-an evasion which it has been the constant effort of Congress and of this court to prevent (Bernards Twp. v. Stebbins, 109 U.S. 341, 353, 27 L. ed. 956, 960, 3 Sup. Ct. Rep. 252; Shreveport v. Cole, 129 U.S. 36, 44, 32 L. ed. 589, 592, 9 Sup. Ct. Rep. 210); and are of opinion that it should have been dismissed for want of jurisdiction.

The fundamental question of jurisdiction, first, of this court, and then of the court from which the record comes, presents itself on every writ of error or appeal, and must be answered by the court, whether propounded by counsel or not. Mansfield, C. & L. M. R. Co. v. Swan, 111 U.S. 379, 382, 28 L. ed. 462, 464, 4 Sup. Ct. Rep. 510; Metcalf v. Watertown, 128 U.S. 586, 32 L. ed. 543, 9 Sup. Ct. Rep. 173; Morris v. Gilmer, 129 U.S. 315, 32 L. ed. 690, 9 Sup. Ct. Rep. 289; Continental Nat. Bank v. Buford, 191 U.S. 54, ante, 54, 24 Sup. Ct. Rep. 54.

The circuit court having maintained jurisdiction on the ground that the case arose under the Constitution of the United States, and having proceeded to decree, the appeal was properly brought directly to this court, and it once became our duty to inquire whether the circuit court should have retained the case. Having reached the result that the court erred in so doing, we are vested with the power to direct that conclusion to be carried into effect, and in its exercise we discharge one of our essential functions,-the determination of the jurisdiction of the courts below. Morris v. Gilmer, 129 U.S. 315, 32 L. ed. 690, 9 Sup. Ct. Rep. 289; Wetmore v. Rymer, 169 U.S. 115, 42 L. ed. 682, 18 Sup. Ct. Rep. 293; Aztec Min. Co. v. Ripley, 151 U.S. 79, 38 L. ed. 80, 14 Sup. Ct. Rep. 236.

The bill was dismissed by the circuit court, but not for want of jurisdiction, and the decree will be reversed in order that the case may be disposed of on that ground, at the costs of appellant, which takes nothing by its appeal.

The decree is reversed at appellant's costs, and the cause remanded, with instructions to dismiss the bill for want of jurisdiction. 

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