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The substantial relief asked was a perpetual injunction restraining the city, its agents or officers, and the Waterworks Commission from entering into any contract for the construction of a separate, independent and competing plant, and from issuing any bonds for such a purpose.

Upon the question of the jurisdiction of the Circuit Court to take cognizance of this case, without regard to the citizenship of the parties, but little need be said. The Water Company, as we have seen, insists that the agreement of 1882 constituted a contract, whereby it acquired, for a given period, an exclusive right, by means of pipes laid in the public ways and a system of works established for that purpose, to supply water for the use of the city and its inhabitants. It also insists, as just stated, that the obligation of this contract will be impaired if the city, proceeding under the acts of the Legislature and under the ordinances in question, establishes and maintains an independent, separate system of waterworks in competition with those of the Water Company. These questions having been aptly raised by the company's bill, the case is plainly one arising under the Constitution of the United States.

The fundamental question in the case is whether the city, by the agreement of 1882, or in any other way, has so tied its hands by contract that it cannot, consistently with the constitutional rights of the Water Company, establish and maintain a separate system of waterworks of its own. If the city made no such contract that will be an end of the case; for, in the absence of a contract protected by the Constitution of the United States, the Circuit Court could not take cognizance of the dispute between the parties, all citizens of Tennessee; and it could not be said that any taking of private property for public use could arise merely from the construction and maintenance by the city of a waterworks plant.

The principles which must control in determining the scope and obligations of the agreement of 1882 have been clearly outlined in our decisions. We may assume, for purposes of the present discussion, but without deciding, that the city of Knox

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ville was invested by the Legislature with full authority, or that under its general municipal powers it could bind itself by contract, to give to a single corporation or company the exclusive right for a specified period to supply water for the use of itself and its inhabitants. It will yet be conceded that whatever authority it possessed in this matter was granted solely for the public good, and that in every substantial, legal sense the agreement with the Water Company is to be deemed a public grant, entitling that company to exercise certain public functions that appertain to the city as a municipal corporation.

Although the doctrines which must control in determining the scope of such a grant are clearly settled and are familiar, it may be well to recall the words of some of the adjudged cases. In Charles River Bridge v. Warren Bridge, 11 Pet. 420, 544, 547, 548, the doctrine announced was that government, possessing powers that affect the public interests, and having entered into a contract involving such interests, is not, by means merely of implications or presumptions, to be disarmed of powers necessary to accomplish the objects of its existence; that any ambiguity in the terms of such a contract "must operate against the adventurers and in favor of the public, and the plaintiffs can claim nothing that is not clearly given by the act;'" that "it can never be assumed that the Government intended to diminish its power of accomplishing the end for which it was created;" and that those who insist that the Government has surrendered any of its powers or agreed that they may be diminished, must find clear warrant for such a contention before it can be heeded. "Grants of franchises and special privileges are always to be construed most strongly against the donee, and in favor of the public." Such were the words of this court in Turnpike Co. v. Illinois, 96 U. S. 63, 68. The universal rule in doubtful cases-this court said in Oregon Railway Co. v. Oregonian Ry. Co., 130 U. S. 1, 26-is that "the construction shall be against the grantee and in favor of the Government." As late as Coosaw Mining Co. v. South Carolina, 144 U. S. 550, 562, this court said: "The doctrine is firmly established that only VOL. CC -3

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that which is granted in clear and explicit terms passes by a grant of property, franchises or privileges in which the Government or the public has an interest. Statutory grants of that character are to be construed strictly in favor of the public, and whatever is not unequivocally granted is withheld; nothing passes by mere implication. This principle, it has been said, is a wise one, as it serves to defeat any purpose concealed by the skillful use of terms to accomplish something not apparent on the face of the act, and thus sanctions only open dealing with legislative bodies." Slidell v. Grandjean, 111 U. S. 412, 438. We have never departed from or modified these principles, but have reaffirmed them in many cases.3

It is true that the cases to which we have referred involved in the main the construction of legislative enactments. But the principles they announce apply with full force to ordinances and contracts by municipal corporations in respect of matters that concern the public. The authorities are all agreed that a municipal corporation, when exerting its functions for the general good, is not to be shorn of its powers by mere implication. If by contract or otherwise it may, in particular circumstances, restrict the exercise of its public powers, the intention to do so must be manifested by words so clear as not to admit of two different or inconsistent meanings.

Turning, now, to the agreement of 1882, we fail to find in it any words necessarily importing an obligation on the part of the city not to establish and maintain waterworks of its own during the term of the Water Company. It is said that the

1 Citing: Rice v. Railroad Co., 1 Black, 358, 380; Fertilizing Co. v. Hyde Park, 97 U. S. 659, 666; Hannibal &c. R. R. v. Missouri Packet Co., 125 U. S. 260, 271; Central Transportation Co. v. Pullman's Car Co., 139 U. S. 24, 49; Stein v. Bienville Water Supply Co., 141 U. S. 67, 80; State v. Pacific Guano Co., 22 S. Car. 50, 83, 86.

2 Citing: Holyoke Co. v. Lyman, 15 Wall. 500; The Binghamton Bridge, 3 Wall. 51, 75.

United States v. Arredondo, 6 Pet. 691, 738; Mills v. St. Clair County, 8 How. 569, 581; Richmond &c. R. R. Co. v. Louisa R. R. Co., 13 How. 71, 81; Dubuque & Pacific R. R. Co. v. Litchfield, 23 How. 66, 88; Newton v. Commissioners, 100 U. S. 548, 561.

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company could not possibly have believed that the city would establish waterworks to be operated in competition with its system, for such competition would be ruinous to the Water Company, as its projectors, on a moment's reflection, could have perceived when the agreement of 1882 was made. On the other hand, the city may with much reason say that, having once thought of having its own waterworks, the failure to insert in that agreement a provision precluding it, in all circumstances and during a long period, from having its own separate system, shows that it was not its purpose to so restrict the exercise of its powers, but to remain absolutely free to act as changed circumstances or the public exigencies might demand. The stipulation in the agreement that the city would not, at any time during the thirty years commencing August 1, 1883, grant to any person or corporation the same privileges it had given to the Water Company, was by no means an agreement that it would never, during that period, construct and maintain waterworks of its own. For some reason, not distinctly disclosed by the record, the city abandoned the scheme it had at one time formed of constructing its own system of waterworks. And it may be that it did not in 1882 intend or expect ever again to think favorably of such a scheme. It may also be that the Water Company, having knowledge of what the city had done or attempted prior to 1882, deliberately concluded to risk the possibility of municipal competition, if the city would agree not to give to other persons or corporations the same privileges it had given to that company. The city did so agree, and thereby bound itself by contract to the extent just stated, omitting, as if purposely, not to bind itself further. The agreement, as executed, is entirely consistent with the idea that while the city, at the time of making the agreement of 1882, had no purpose or plan to establish and operate its own waterworks in competition with those of the Water Company, it refrained from binding itself not to do so, although willing to stipulate, as it did stipulate, that the grant to the Water Company should be exclusive as against all other persons or corporations. We are therefore

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constrained by the words of the agreement to hold that the city did not assume, by any contract protected by the Constitution of the United States, to restrict its right to have a system of waterworks, independent altogether of the system established and maintained by the Water Company. If this interpretation of the contract will bring hardship and loss to the Water Company, and to those having an interest in its property and bonds, the result (omitting now any consideration of the question of power) is due to the absence from the agreement between the parties of any stipulation binding the city not to do what, unless restrained, it now proposes to do.

While there is no case precisely like the present one in all its facts, the adjudged cases lead to no other conclusion than the one just indicated. We may well repeat here what was said in a somewhat similar case, where a municipal corporation established gas works of its own in competition with a private gas company which under previous authority had placed its pipes, mains, etc., in public streets to supply, and was supplying, gas for a city and its inhabitants: "It may be that the stockholders of the plaintiff supposed, at the time it became incorporated, and when they made their original investment, that the city would never do what evidently is contemplated by the ordinance of 1889. And it may be that the erection and maintenance of gas works by the city at the public expense, and in competition with the plaintiff, will ultimately impair, if not destroy, the value of the plaintiff's works for the purposes for which they were established. But such considerations cannot control the determination of the legal rights of parties. As said by this court in Curtis v. Whitney, 13 Wall. 68, 70: 'Nor does every statute which affects the value of a contract impair its obligation. It is one of the contingencies to which parties look now in making a large class of contracts, that they may be affected in many ways by state and National legislation.' If parties wish to guard against contingencies of that kind they must do so by such clear and explicit language as will take their contracts out of the established rule that public grants,

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