to corporations, or amendments thereof, shall be ject to amendment or repeal at the will of the Lerature, unless a contrary intent be plainly exped; Provided, That whilst privileges and frands so granted may be changed or repealed, no eriment or repeal shall impair other rights pre: asy rested;" also, that the provisions of that arte "shall only apply to charters and Acts of inperation to be granted hereafter." By an Act pased in 1889, amendatory of the charter of the vile Gas Company of 1867, and granting the erave privileges before mentioned, it was prored that "no alteration or amendment to the thaner of the gas company shall be made without currence of the city council and the direcas of the gas company." Held, that the last Act *plainly expressed" an intent that the charter of the company should not be subject to amendment at the mere will of the Legislature, but ay with the concurrence of the city council and Dymany's directors. 1 According to the principles announced in N. O. Light Co. v. Louisiana Light and Heat ProducManufacturing Company, the Citizens Gas La Company, incorporated in 1872, and endowed the privilege of manufacturing and distributr in the City of Louisville, by means of pipes at mains laid in its streets and public ways, is not ed to an injunction restraining the Louisville Company from claiming and exercising the exve privileges granted by its charter. [No. 489.] Submitted Nov. 2, 1885. Decided Dec. 7, 1885. ERROR to the Court of Appeals of the State The history and facts of the case appear in the minion of the court. Mr. J. G. Carlisle, John K. Goodloe. Thomas F. Harris and Alex. P. Humphrey, for plaintiff in error: The charter of the Louisville Gas Company, sting of the Acts of January 30, 1867, and Jary 22, 1869, is a contract between the a of Kentucky, said Company, and the City Lasville, which is under the protection of Constitution of the United States and also of the State of Kentucky, both of which deare that no law impairing the obligation of Cлcts shall be made. Grstood v. Freight Co. 105 U. S. 20 (Bk.z6, 965); Stone v. Wisconsin, 94 U. S. 181, 183 24, L. ed. 102, 103); Farrington v. Tennes5 C. 8. 679 (Bk. 24, L. ed. 558); Wilming R. v. Reid, 13 Wall. 266 (80 U. S. bk. Led 569); Gordon v. Appeal, Tax Ct. 3 153 (44 Ú. S. bk. 11, L. ed. 529); New v. Yard, 95 U. S. 113 (Bk. 24, L. ed. 354); Jonge v. Woolary, 18 How. 331 (59 U. S. bk. 15, ed 401; State Bk. v. Knoop, 16 How. 369 TS bk. 14, L. ed. 977); Cooley, Const. Lim. 159, Bridge Proprietors v. Hoboken Co. 116 (68 U. S. bk. 17, L. ed. 571); Bank fate Fear v. Edwards, 5 Ired. 516; Union tate, 9 Yerg. (Tenn.) 490; Boston, etc. Salem, etc., R. R. Co. 2 Gray, 1; JohnCommonwealth, 7 Dana, 342; Hamilton And 5 Bush, 458; Louisville v. University ile, 15 B. Mon. 642. the case of the State of Wisconsin v. Mil terras L. Co. 29 Wis. 454, it was held that leesisture of that State might confer upon *ate corporation the exclusive right to acture and to sell gas, and to erect works ares therefor, within the limits of a ja corporation. *** 180 Shepard v. Milwaukee Gas Co. 6 Ja State v. Cincinnati Gas Co. 18 Ohio Taylor. Carondelet, 22 Mo. 110; Cres. 7. N. Orleans Gas Co. 27 La. Ann. 138; Gas Light Co. v. Colliday, 25 Md. 1; People v. Manhattan Gas Co. 45 Barb. 136. The undertaking of the Company to furnish gas to all the citizens who should apply therefor was a valuable and sufficient consideration for the grant of the exclusive privilege of making and vending gas to the City and citizens of Louisville. Gas Light Co. v. Colliday, 25 Md. 1; People v. Manhattan Gas Co. 45 Barb. 136; Shepard v. Milwaukee Gas Co. 6 Wis. 546; Weymouth v. Penobscot Driving Co. 71 Me. 29, 38. Messrs. John Mason Brown, George M. Davie and Wm. Lindsay, for defendant in error: To prohibit all but one favored individual from engaging in a business which is lawful is, unless under legitimate exercise of the police power, a denying to others of equal privileges," and a "depriving of them of their rights of property," and of their "liberty," in the meaning of the American Constitution. Cooley, Const. Lim. 5th ed. 343–5, 486, 745; Re Jacobs, 40 N. Y. Sup. Ct. (33 Hun), 378; S. C. 98 N. Y. 98; People v. Marx, 99 N. Y. 377; Commonwealth v. Bacon, 13 Bush, 212; Norwich Gas Co. v. Norwich City Gas Co. 25 Conn. 19; Smith v. Burlingame, 4 McLean, 121; Bertholf v. O'Reilly, 74 N. Y. 509; Butchers Union Co. v. Crescent City Co. 111 U. S. 746 (Bk. 28, L. ed. 585). Some courts have held that the making and selling of gas is not an unwholesome and dangerous occupation, and an exclusive privilege to make it cannot be sustained, even under the police power. Norwich Gas Light Co., Norwich City Gas Co. 25 Conn. 37; St. Louis Gas Co. case 19, Central Law Journal, 201; Paterson Gas Co. v. Brady (27 N. J. L.), 3 Dutch, 248; Jersey City Gas Co. v. Dwight, 29 N. J. Eq. 248. The grant of an easement, franchise or privilege, with respect to the use of streets or other highways, will be construed strictly and will not be treated as exclusive, unless words of exclusion are explicit and "unequivocal." Charles River Bridge v. Warren Bridge, 11 Pet. 420 (36 U. S. bk. 9, L. ed. 773); High, Injunctions, sec. 901; Lehigh Water Co's Appeal, 102 Pa. St. 527; Holyoke Co. v. Lyman, 15 Wall. 512 (82 U. S. bk. 26, L. ed. 137); Fertilizer Co. v. Hyde Park, 97 U. S. 666 (Bk. 24, L. ed. 1038); Wright v. Nagle, 101 U. S. 796 (Bk. 25, L. ed. 923); State v. Cincinnati Gas Co. 18 Ohio St. 290; Norwich Gas Co. v. Norwich City Gas Co. 25 Conn. 19. The "exclusive privilege," if valid, could be, and was, pro tanto, repealed, under the right reserved to the Legislature, by the Kentucky Act of 1856, to amend, alter or repeal all legislative grants and franchises. Griffin v. Kentucky Ins. Co. 8 Bush, 592; Cumberland & Ohio R. R. v. Barren Co. 10 Bush, (Ky.) 608, 609; Greenwood v. Freight Co. 105 U. S. 20 (Bk. 26, L. ed. 964); see also Newton v. Comrs. 100 U. S. 561 (Bk. 25, L. ed.712); Wright v. Nagle, 101 U. S. 796 (Bk. 25, L. ed. 923). The grant of the exclusive privilege herein, if a contract at all, was without any consideration, and, therefore, could be repealed at any time. Johnson v. Crow, 87 Pa. St. 184; Philadelphia R. R. Co's Appeal, 102 Pa. St. 129; Norwich [684] [685] Gas Light Co. v. City Gas Co. 25 Conn. 36; Tucker v. Ferguson, 22 Wall. 574 (89 U. S. bk. 22, L. ed. 816). Mr. Justice Harlan delivered the opinion of the court: This is a writ of error to the highest court of Kentucky. The general question to be determined is whether certain legislation of that Commonwealth is in conflict with the clause of the National Constitution which forbids a State to pass any law impairing the obligation of contracts. The appellant, the Louisville Gas Company, contends that its charter, granting certain exclusive rights and privileges, constituted, within the meaning of that Constitution, a contract, the obligation of which has been impaired by the charter subsequently granted to the appellee, the Citizens Gas Light Company. The Court of Appeals of Kentucky sustained as constitutional the legislation under the authority of which the latter Company is exercising the rights, privileges and franchises conferred by its charter. By an Act of the General Assembly of Kentucky, approved February 15, 1838 (Sess. Lcts, 1837-8, p. 206), the Louisville Gas and Water Company was created a corporation to continue for the term of thirty years from January 1, 1839. It was made its duty, within three years after its organization, to establish in Louisville a gas manufactory of sufficient extent and capacity to supply that city and its people with Buch public and private lights as might, from time to time, be required; and, within five years after the establishment of its gas works, to erect and establish water works sufficient to supply the city with water for the extinguishment of fires, for the cleansing and sprinkling of streets and alleys, and for all manufacturing and domestic purposes; to which end, it might lay down and extend pipes through any of the streets and alleys of the city, the Company being responsible to the city for any damages resulting therefrom. The Act imposed limit upon the price to be charged for gas lights used by the city; and gave the latter the right to subscribe for four thousand shares in the Company, payment for one half of which could be made in city coupon bonds for $200,000, redeemable at any time within three years after the expiration of the Company's charter. It was made a fundamental condition that, upon the termination of the Company's charter, the city at its election could take the gas and water works at a fair estimate of what they would cost and be worth at that time, to be ascertained by the judgment of competent engineers, selected by the parties, or, in case they disagreed, by the Louisville Chancery Court. Under this charter the Company proceeded at once to erect gas works, including suitable buildings and machinery. It supplied itself with all necessary apparatus, laid down mains and pipes, and erected lamp-posts, for the purpose of lighting the streets. It supplied gas for the public buildings, and for street lights, as well as for domestic purposes. And it continued so to do during the term of its original charter. By an Act passed in 1842, the authority to erect water works was withdrawn by the Legislature. By an Act, entitled "An Act to Extend the Charter of the Louisville Gas Company," ap proved January 30, 1867, a new charter was granted, to take effect January 1, 1869, and to continue in force for twenty years from that date, unless the City of Louisville should exercise its privilege of purchasing the works established under the authority of the original charter. That Act created a corporation by the name of the Louisville Gas Company, with a capital stock of $1,500,000. It provided, among other things, that such stock should consist, "first, of the stock of the present Louisville Gas Company, on the 31st of December, 1868, at par value; secondly, of the contingent fund and undivided profits that the Company may own at the expiration of the present charter, said fund to be capitalized pro rata for the benefit of the present stockholders, except fractional shares which shall be paid in cash; and, thirdly, new stock may be issued and sold by the new Company, when required, to the extent of the capital stock, the sales to be made at public auction, after ten days' notice in the city papers; should said stock be sold above its par value, such excess shall not be capitalized or divided among the stockholders, but be employed in the first extensions made by the Company after the sale of said stock;" that the business of the Company should be to make and furnish gas to the City of Louisville and its residents; that within two years after its charter took effect, it should extend gas distribution to Portland, lay down mains, and erect street lights in certain named streets in that part of the city; should extend mains wherever the private and public lights would pay 8 per cent on the cost of extension, until its entire capital was absorbed in the gas works and extensions continuing the use of the pipes and conductors already laid down, and, with the consent of the city council, extending the pipes and conductors through other streets and alleys of the city. It was, also, provided that the Company should put up gas lamps at certain distances apart on the streets where there were mains, supply the same with gas, and light and extinguish the same, and charge the city only the actual cost thereof-such charges not to exceed the average charges for similar work or service in the Čities of Philadelphia, Baltimore, Cincinnati, Chicago and St. Louis, and the charges against other consumers not to be greater than the average price in said cities; that the stockholders, exclusive of the City of Louisville, should elect five directors, while the gen eral council of the city should elect four; that the city might, upon the termination of the charter, purchase the gas works at a fair esti mate of what they would be then worth; and that the charter should be valid and in force when accepted by those who held the majority of stock in the old Company, all of whose prop erty should belong to the new Company. When the Act of 1867 was passed, the city owned 4,985 shares of the stock of the old com pany. All the gas with which its streets wer then lighted, or which was furnished to it people, was supplied by that Company. On the 22d of January, 1869, an Act wa passed amending that of January 30, 1867. It preamble recites that the City of Louisville and the stockholders of the old Company had accept ed the extended charter, and desired that th amendments embodied in that Act should be come part of that charter. The amende charter repealed so much of the Act of 1867 as La profit of 8 per cent on the cost of rons, and, among other things, provides Late Company shall extend its main pipes ever the public and private lights, imely arising from said extension, will pay Ter cent profit on the cost thereof; that the pany shall put lamp-posts, fixtures, etc., the street mains, as they are extended, at tance apart of about two hundred feet; keep the lamps in order, furnish gas, and and extinguish the same, each light to Lave an illuminating power of about twelve candles; shall furnish public lights to the actual cost, which shall in no event exnally $35 per lamp; that the charges ⚫vate consumers shall be so graded that Company's profits shall not exceed 12 at per annum on the par value of the . 10 per cent of which may be drawn by Hers in semi-annual dividends, and the ing 2 per cent to be laid out for exts, not to be capitalized except at the end Tears. fth and sixth sections of the last Act rows: That said Gas Company shall have the ve privilege of erecting and establishing Trks in the City of Louisville during the tion of this charter, and of vending lights, and supplying the city and with gas by means of public works; Vnd 1, Viteter. This shall not interfere with of any one to erect, or cause to be as works on their own premises, for sing themselves with light. That no alteration or amendment to the of the Gas Company shall be made withthe concurrence of the city council and the its of the Gas Company." Act approved March 21, 1872, the Gas Light Company of Louisville was rated, for the term of fifty years, with y to make, sell and distribute gas for ose of lighting public and private 2. streets, lanes, alleys, parks and other places in that city and its vicinity. It orized, the general council consenting, the streets and other public ways of the for the purpose of laying gas pipes, subach regulations as the city council ake for the protection of the lives, and health of citizens. That body sent by ordinance passed December The Louisville Gas Company having claimed regoing section of the Act of Janu, granting the exclusive privileges defined, constituted a contract, the obof which was impaired by the charter , and that the latter's charter was oid, the present suit was brought by 4 Gas Light Company in the Louisastery Court for the purpose of obtainperpetual injunction against the assertion ch exclusive privileges, and against ence with the plaintiff's rights as detarter. Among the rights asserted elser under its charter was "to make, apply coal gas for lighting the public and other places, public and private," le and the adjoining localities, by of papes laid in the public ways and streets. The court of original jurisdiction dis- Two of the judges of the state court held While the judgment below, in view of the equal division in opinion of the judges of the state court, does not rest upon any final determination of this question by that tribunal, it cannot be ignored by us; for, at the threshold of all cases of this kind, this court must ascertain whether there is any such agreement on the part of the State as constitutes a contract, within the meaning of the Constitution of the United States. If the services which the Gas Company undertook to perform, in consideration of the exclusive privileges granted to it, were public services, within the meaning of the Bill of Rights of Kentucky, then the grant of such privileges was not forbidden by the State Constitution. In N. O. Gas Light Co. v. Louisiana Heat and Light Producing and Manufacturing Co. [post, 516], just decided, it was held that the supplying of gas to a city and its inhabitants, by means of pipes and mains laid under its public ways, was a franchise belonging to the State, and that the services performed, as the consideration for the grant of such a franchise, are of a public nature. Such a business is not like that of an ordinary corporation engaged in the manufacture of articles that may be quite as indispensable to some persons as are gas lights. The former articles may be supplied by individual effort, and with their supply the government has no such concern that it can grant an exclu sive right to engage in their manufacture and [691] (692) [693] sale. But as the distribution of gas in thickly | come under no obligation whatever to serve the keeping ferries and competing with those it has licensed. The establishment of public highways being a function of government, no person has a right to establish such a highway without the consent of the government; and hence, in prohibiting unlicensed persons from keeping a ferry, the government does not invade the right of even those who own the soil on both sides of the stream." In Commonwealth v. Bacon, 13 Bush, 212, the question was as to the constitutionality of an Act giving a strictly private corporation, which owed no duty to the public, a monopoly of an ordinary business in which every citizen was entitled to engage upon terms of equality. Its validity was attempted to be sustained on the same principle upon which the grant of ferry privileges was upheld. But the Act was held to be unconstitutional, the court, among other things, saying: "Ferries are parts of highways, and the government may perform But the principles announced in Gordon v. its duty in establishing and maintaining them Winchester, etc., A880. 12 Bush, 114, seern mor through the agency of private individuals or directly applicable to the present case. Judge corporations, and such agencies are representa Cofer, speaking for the whole court, after obtives of government and perform for it a part serving that there were unquestionably cases in of its functions. And in consideration of the which the State may, without violating the Con- service thus performed for the public, the gov stitution, grant privileges to specified individ-ernment may prohibit altogether persons from uals, which, from the nature of the case, could not be enjoyed by all, and in respect of which the State could designate the grantee, said: "But in all such cases the person, whether natural or artificial, to whom the privilege is granted, is bound, upon accepting it, to render to the public that service, the performance of which was the inducement to the grant; and it is because of such obligation to render service to the public that the Legislature has power to make the grant." In illustration of this principle he proceeds to say: "Permission to keep a tavern or a ferry, to erect a toll-bridge over a stream where it is crossed by a public highway, to [694] build a mill-dam across a navigable stream, and the like, are special privileges, and, being matters in which the public have an interest, may be granted by the Legislature to individuals or corporations; but the grantee, upon accepting the grant, at once becomes bound to render that service, to secure which the grant was made; and such obligation, on the part of the grantee, is just as necessary to the validity of a legislative grant of an exclusive privilege, as a consideration, either good or valuable, is to the validity of an ordinary contract. Whenever, by accepting such privilege, the grantee becomes bound, by an express or implied undertaking, to render service to the public, such undertaking will uphold the grant, no matter how inadequate it may be; for, the Legislature being vested with power to make grants of that character, when the public convenience demands it, the legislative judgment is conclusive, both as to the necessity for making the grant and the amount of service to be rendered; and the courts have no power to interfere, however inadequate the consideration or unreasonable the grant may appear to them to be. But when they can see that the grantee of an exclusive privilege has In the later case of Commonwealth v. Whipps, 80 Ky. 272, where the validity of a statute of Kentucky authorizing a particular person to dispose of his property by lottery was assailed as a violation of the before mentioned clause in the Bill of Rights, Pryor, J. (Chief Justice Lewis concurring), said: "This constitutional inhibition was intended to prevent the exercise of some public function, or an exclusive privilege affecting the interests and rights of the public generally, when not in consideration of public service, and, if made to apply to the exercise of mere private rights or special privileges, it nullifies almost innumerable enactments that are to be found in our private statutes, sanctioned in many instances by every department of the State Government." The precise question here presented seems not to have been directly adjudicated by the highest court of the State. But, as the exclusive privileges granted to the Louisville Gas Company affected the rights and interests of the public generally, and related to matters of which the public might assume control, we are not prepared to say that the grant was not in consideration of public services, within the meaning of the Constitution of Kentucky. We perceive nothing in the language of that instru ment, or in the decisions of the highest court of that Commonwealth, that would justify us in holding that her Legislature, in granting the sire privileges in question, exceeded its Buthority. On behalf of the Citizens' Gas Light Comit is contended that the charter of the sville Gas Company, granted January 30, and amended by the Act of January 22, was at all times subject to alteration or real at the pleasure of the Legislature. Asthat the Act of 1867 was not a prolonof the corporate existence of the original sville Gas Company, but created a new rporation by the same name, it is clear that charter was granted subject to the proTs of a general statute of Kentucky, aced on the 14th of February, 1856, entitled As Art Reserving Power to Amend or Repeal arers and Other Laws." That statute is as D 1. That all charters and grants of or to tions or amendments thereof, and all statutes, shall be subject to amendment real at the will of the Legislature, unless ry intent be therein plainly expressed; ed, That whilst privileges and franchises Pared may be changed or repealed, o ment or repeal shall impair other rights sly vested. within the protection of the Constitution of the That when any corporation shall exbe dissolved, or its corporate rights and ets shall cease by reason of a repeal of a charter or otherwise, and no different prois made by law, all its works and propand all debts payable to it, shall be subthe payment of debts owing by it, and to distribution among the members acPng to their respective interests; and such ration may sue and be sued as before, for rpose of settlement and distribution as That the provisions of this Act shall apply to charters and Acts of incorporabe granted hereafter; and that this Act take effect from its passage." Tlanguage of this statute is too plain to will of the Legislature, but in the first instance terpretation. It formed a part of the to the concurrence of the city council and the er of the new Louisville Gas Company directors of the Gas Company. If there can be rporated in 1867, and the right of no amendment or repeal without the concurLegislature, by a subsequent Act, passed in rence of the city council and the directors of * o cture and distribute gas in Louisville, amendment or repeal depends entirely upon s of pipes laid, at its own cost, in the the will of the Legislature, as declared in the sary of that city, so far from impairing Act of 1856. It was as if the Legislature had zation of defendant's contract with the said: "As the municipal government of Louisas authorized by its reserved power of ville and the Company are agreed, the latter ment or repeal, unless it be that the Act may enjoy the rights, privileges and franchises dary 22, 1869, "plainly expressed" the granted by its charter for the whole term of that the charter of the new Louisville twenty years, unless before the expiration of Company should not be subject to amend- that period the city council and its directors repeal at the mere will of the Legisla- concur in asking alterations or amendments, The judges of the state court all con- which will be made if, in the judgment of the in the opinion that no such intent was General Assembly, the public interests will be pssed. As this question is at the thereby promoted." 3. But it is argued that, as the defendant's fodation of the inquiry whether the de- | had a valid contract with the State, the charter of 1867 conferred upon it no exclusive of which has been impaired by sub-privileges, the granting of such privileges in astlegation, we cannot avoid its deter- the Act of 1869 was without consideration, and ate legislation, or by agreement with sufficient to answer that, apart from the public Whether an alleged contract arises is to be deemed a mere gratuity. To this it is of a State, by its authority, or by services to be performed, the obligations of the s between individuals exclusively, Company were enlarged by the Act of 1869, Brady of the adjudication of the state sened and burdened in the following particured, upon our own judgment and and its rights under that of 1867 materially les, decide whether there exists a contract lars: The amended charter limited the profits [698] |