other designs, and that he had ordered lows: "Referring to your communicaits manufacture, as suggested by the tion of November 5, 1902, upon the subChief of Ordnance he should do in such ject of breech mechanism for guns of case. It was thereafter manufactured 1895 model, I have the honor to state and used by the United States on a that the claims in the patent of Owen F. number of guns. Leibert, owned by you, are so much involved with the original designs of Farcot and the patents of F. F. Fletcher and John W. Stockett that this Department does not feel that it is in a position to pass on the legal aspects of the case. If the Bethlehem Steel Company will bring suit to establish the points involved, this office will lend its assistance in bringing before the court all documents on hand pertaining to the subject." The design that was used was prepared by John W. Stockett, a draftsman in the Ordnance Bureau, and was known and referred to as the "Stockett design," and the "Department design,' but more generally as "model 1895." Stockett applied for and received a patent for the design. From time to time during 1894 to 1896 the Ordnance Bureau considered different forms of mechanism, and the On February 27, 1903, the Steel Comcompany notified the Bureau that work pany responded to the above letter of under the contract had reached a point the Ordnance Bureau as follows: "In that it was necessary to know the accordance with your suggestion we mechanism to be used, and requested have instructed our attorney to bring that if any change was to be made, the suit against the Department, to estab company be notified. The Bureau re-lish the points involved.'' plied that it had no objection to the [326] The findings contain a detail use of the "model 1895." The company of the mechanisms of the Leibert patent answered that it had no objection to and the Stockett patent, with copies of conforming to that design, provided no the letters patent. modification be made in the price to be paid for the guns named in the contract on account of change in the breech mechanism. March 3, 1898, the Ordnance Bureau indicated its assent to that proposition. On August 16, 1901, the Bethlehem Iron Company assigned all of its rights and franchises to the Bethlehem Steel Company, and the latter company asked that it be recognized as the successor to the Iron Company. [325] This was refused and the Bureau entered into an independent contract with the Steel Company, and Congress subsequently (June 6, 1902) authorized the Steel Company to be the successor to the Iron Company. On November 5, 1902, the Steel Company reported that it was proceeding with its contracts, using the compound gear wheel shown in its prints 7374 and 7381, copies of which it inclosed, also a copy of the Leibert patent, and said: "We believe that the wheel we are now putting on the guns, as stated, and which we understand the Department is also using on its guns built elsewhere, of several calibers, is the same as that described in claim 1 et seq., of the said patent. We should be glad if the De partment, at its convenience, would give us an opportunity to lay before it more fully our views in this regard." In reply to the above-quoted letter, the Chief of Ordnance, on February 25, 1903, wrote the Steel Company as fol The findings also give a list of patents constituting the prior art at the time of Leibert's application, in which was included the patent of F. F. Fletcher, mentioned in the last letter (February 25, 1903) of the Chief of Ordnance to the Steel Company. And it was found that none of the patents of the prior art anticipated the Leibert design, and that it was a patentable advance upon them, and it was further found that the combination of claims 1, 2, and 3 of it were found in "model 1895." From its findings the court deduced the ultimate facts: (1) That the breech mechanisms of the Leibert patent possessed patentable novelty, utility, and invention, and (2) that those mechanisms were used by the United States "in and as a part of the said 'model 1895." And it ordered and adjudged that the Steel Company have and recover from the United States the sum of $60,700. There is but one question in the case, and that is the attitude of the Ordnance Bureau, representing the United States, toward the Leibert patent, whether in recognition of it, as tended by the Steel Company, or in opposition to, or, it may be said, in tortious use of it, as contended by the United States. con We have in other cases expressed our aversion to the latter conclusion except upon explicit declaration, or upon a course of proceedings tantamount to Works Company. it. A contract, express or implied in [328] BANKERS TRUST COMPANY, fact, must, it is true, be established, but Appt., one to pay for a mechanism used will CITY OF RATON and the Raton Water be implied rather than a tortious appropriation of it, rather than the exercise by the United States of its sovereignty in aggression upon the rights of its citi zens. (See S. C. Reporter's ed. 328-337.) Estoppel by taking benefits ing franchise. accept near the 1. A private waterworks company hav ordinance by which the company agreed to ing applied for and accepted a municipal furnish water to the municipality for the period of twenty-five years, and the municipality agreed that it would not operate or maintain waterworks in or town for the same period, and also agreed to pay rental for fire hydrants for the same time, at a rate to be fixed in the ordinance, is estopped to deny that its right to furnish water to the municipality [For other cases, see Estoppel, III. b, 7, in was derived from that contract. Digest Sup. Ct. 1908.] Waters public water supply -franchise term. The court of claims so construed our cases. Mr. Justice Booth, speaking for the court, said the difficulty was [327] more in the application of the determining rule than in its ascertainment. And further: "From cases heretofore adjudicated upon similar principles it may be safely asserted that where the government used a patented invention 'with the consent and express permission of the owner' and does not repudiate the title of such owner,' an implied contract to pay a reasonable compensation for such usage arises." Berdan Fire Arms Co. v. United States, 156 U. S. 552, 39 L. ed. 530, 15 Sup. Ct. Rep. 420, and United States v. Société Anonyme des the franchise of a waterworks company to 2. Twenty-five years is the term of Anciens Etablissements Cail, 224 U. S. furnish water to a municipality, derived 320, 56 L. ed. 784, 32 Sup. Ct. Rep. from the company's application for and ac479, were cited. We think the cases ceptance of a municipal ordinance under sustain the principle announced and we which the company agreed to furnish waconcur in it. And the findings demon-ter to the municipality for a period of strate that it is sustained in the present case. There can be no doubt that the Ordnance Bureau knew that the Stockett design could only be used with the Leibert mechanism, and though declining, as it said, to pass "on the legal aspect" of such use, it would "lend its assistance in bringing before the court all documents on hand pertaining to the subject." | twenty-five years, and the municipality Sup. Ct. 1908.] tion. streets This necessarily means that, it would accept the decision as a determination of the right of the company and the obligation of the United States. In other words, its attitude was not that of repudiation, not that even of antagonism, but that of submission to and acceptance of the right as it should be declared, and certainly consideration for cannot successfully be asserted of the bill 4. A misjoinder of causes of action the rights of inventors, instead of ag- in a suit by the trustee in a trust deed gression upon them, is a policy of wis- given by a waterworks company, to endom regarding the purpose of the War join a municipality from enforcing an ordiDepartment, and, it may be, its necessi-nance requiring the removal of the waterties. It gives incentive to the inventive works company's system from the streets. genius of the country by assuring recog- to protect the enjoyment by the company to enjoin the disturbance of the system, and nition and reward to its work, if its work of its water rights, and to require the have merit. It is to be remembered that the government is the only user of heavy Note.-On estoppel by receiving beneordnance, and must encourage, not de-fits-see note to Michigan ex rel. Atty. ter, its improvement, if it, the govern- Gen. v. Flint & P. M. R. Co. 38 L. ed. ment, would keep ready for whatever U. S. 478. emergency may come to it. We think, therefore. that the judgment of the Court of Claims should be, and it is, affirmed. 642 On injunction against enforcement of municipal ordinance-see note to New Orleans Waterworks Co. v. New Orleans, 41 L. ed. U. S. 519. New Castle v. Lake Erie & W. R. Co. 155 Ind. 18, 57 N. E. 416. municipality to compensate the bondhold- to grant a franchise does not prevent the ers for the loss and injury to the trust state from granting a similar or a differproperty through the impairment and ent franchise. breach of the contract through which, it is alleged, the municipality gave exclusive rights to the company to furnish water to the municipality, since these are but the specifications of the elements of the right of suit or equity that complainant has, being the enumeration of the elements of the asserted aggression upon the company, and in emphasis of it. [For other cases, see Action or Suit. II.; Pleading, I. t, in Digest Sup. Ct. 1908.] Pleading misjoinder of parties. 5. Misjoinder of parties defendant in a suit by the trustee in a trust deed given by a waterworks company, for relief against aggression by a municipality upon the company, cannot be successfully asserted on the grounds that the waterworks company should have been joined with the trustee as complainant, and that there was no allegation that it refused to join as complainant, and that it was made a defendant when it should have been made a complainant. [For other cases, see Pleading, I. t, in Digest Sup. Ct. 1908.] [No. 167.] Argued March 16 and 17, 1922. Decided April 10, 1922. APPEAL from the District Court of the United States for the District of New Mexico to review a decree which dismissed the bill in a suit by a trustee in a trust deed given by a waterworks company, to enjoin an asserted aggression by the municipality upon the company. Affirmed. The facts are stated in the opinion. Mr. Alva B. Adams argued the cause, and, with Mr. Robert S. Gast, filed a brief for appellant: The city has no inherent power to grant franchises in its streets. It has only such powers in this respect as are granted expressly or by fair or necessary implication. McQuillin, Mun. Corp. 1624; 28 Cyc. 866; Jersey City Gas Co. v. Dwight, 29 N. J. Eq. 242; Elizabeth City v. Banks, 150 N. C. 407, 22 L.R.A.(N.S.) 925, 64 S. E. 189. The city can act in these matters only as the agent of the state, and within the scope of its delegated powers; and a grant or franchise by a city ordinance under delegation of power is a grant from the state. · Dill. Mun. Corp. 5th ed. § 1242; Boisé Artesian Hot & Cold Water Co. v. Boisé City, 230 U. S. 84, 94, 57 L. ed. 1400, 1407, 33 Sup. Ct. Rep. 997. The fact that a city is given the right A statute granting rights of way to certain corporations is not repealed by a subsequent statute delegating to cities power to grant and regulate such franchises. Wichita v. Old Colony Trust Co. 66 C. C. A. 19, 132 Fed. 641; Michigan Teleph. Co. v. Benton Harbor, 121 Mich. 512, 47 L.R.A. 104, 80 N. W. 386; Wisconsin Teleph. Co. v. Oshkosh, 62 Wis. 32, 21 N. W. 828; Northwestern Teleph. Exch. Co. v. Minneapolis, 81 Minn. 140, 53 L.R.A. 175, 83 N. W. 527, 86 N. W. 69. A trustee not only has the power, but it is its duty, to invoke the aid of a court of equity to protect the trust estate whenever the necessity arises. Mercantile Trust & D. Co. v. Columbus, 203 U. S. 311, 51 L. ed. 198, 27 Sup. Ct. Rep. 83; Old Colony Trust Co. v. Wichita, 123 Fed. 767, affirmed in 66 C. C. A. 19, 132 Fed. 641; Guardian Trust Co. v. White Cliffs Portland Cement & Chalk Co. 109 Fed. 527; Den ver Y. New York Trust Co. 110 C. C. A. 24, 187 Fed. 894; Denver v. Mercantile Trust Co. 120 C. C. A. 100, 201 Fed. 790; Knickerbocker Trust Co. v. Kalamazoo, 182 Fed. 865; Phinizy v. Augusta & K. R. Co. 56 Fed. 277. A grant of the right to use the streets, either by direct legislative act or by an ordinance under the power delegated to a city, when accepted and acted upon by the grantee, is a contract between the grantee and the state which is protected by the prohibition of the Federal Constitution against laws impairing the obligation of contracts. Walla Walla v. Walla Walla Water Co. 172 U. S. 1, 9, 43 L. ed. 341, 345, 19 Sup. Ct. Rep. 77; Vicksburg v. Vicksburg Water Co. 202 U. S. 453, 50 L. ed. 1102, 26 Sup. Ct. Rep. 660, 6 Ann. Cas. 253; Vicksburg Water Co. v. Vicksburg, 185 U. S. 65, 81, 46 L. ed. 808, 815, 22 Sup. Ct. Rep. 585; New Orleans Gaslight Co. v. Louisiana Light & H. P. Mfg. Co. 115 U. S. 650, 660, 29 L. ed. 516, 520, 6 Sup. Ct. Rep. 252; Boisé Artesian Hot & Cold Water Co. v. Boisé City, 230 U. S. 84, 90, 57 L. ed. 1400, 1406, 33 Sup. Ct. Rep. 997; Cleveland v. Cleveland City R. Co. 194 U. S. 517, 48 L. ed. 1102, 24 Sup. Ct. Rep. 756; Dill. Mun. Corp. $$ 1242, 1306; Russell v. Sebastian, 233 U. S. 195, 58 L. ed. 912, L.R.A. 1918E, 882, 34 Sup. Ct. Rep. 517, Ann. Cas. 1914C, 1282; Mercantile Trust & D. Co. v. Columbus, 203 U. S. 311, 320, 51 L. ed. 198, 202, 27 Sup. Ct. Rep. 83; Davis & F. Mfg. Co. v. Los Angeles, 189 U. S. 207, 47 L. ed. 778, 23 Sup. Ct. Rep. 498; Knoxville Water Co. v. Knoxville, 200 U. S. 22, 50 L. ed. 353, 26 Sup. Ct. Rep. 224. Mr. John H. Fry argued the cause and filed a brief for appellee, city of Raton: The provisions of § 24 of the Act of February 24, 1887, were not sufficient to grant to the Water Works Company the rights now claimed for it by the Trust Company. Pomona v. Sunset Teleph. & Teleg. Co. 224 U. S. 330, 56 L. ed. 788, 32 Sup. Ct. Rep. 477; Owensboro v. Cumberland Teleph. & Teleg. Co. 99 C. C. A. 1, 174 Fed. 739; Owensboro V. Cumberland Teleph. & Teleg. Co. 230 U. S. 58, 57 L. ed. 1389, 33 Sup. Ct. Rep. 988; Federal Gas & Fuel Co. v. Columbus, 96 Ohio St. 530, 118 N. E. 103; Little Rock V Reinman-Wolfort Auto. Livery Co. 107 Ark. 174, 155 S. W. 105; Madison v. Southern Wisconsin R. Co. 156 Wis. 352. 10 A.L.R. 910, 146 N. W. 492; Andrews v. National Foundry & Pipe Works, 10 C. C. A. 60, 18 U. S. App. 458, 24 U. S. App. 81, 61 Fed. 782; Pawhuska v. Pawhuska Oil & Gas Co. 28 Okla. 563, 115 Pac. 353; Fifth Ave. Coach Co. v. New York, 194 N. Y. 19, 21 L.R.A.(N.S.) 744, land City R. Co. 194 U. S. 517, 48 L. ed. 1102, 24 Sup. Ct. Rep. 756; Cleveland v. Cleveland Electric R. Co. 201 U. S. 529, 50 L. ed. 854, 26 Sup. Ct. Rep. 513; Cleveland v. Cleveland Electric R. Co. 204 U. S. 116, 51 L. ed. 399, 27 Sup. Ct. Rep. 202; Cowell v. Colorado Springs Co. 100 U. S. 55, 61, 25 L. ed. 547, 550; Joy v. St. Louis, 138 U. S. 1, 34 L. ed. 843, 11 Sup. Ct. Rep. 243; Gibson v. Lyon, 115 U. S. 440, 29 L. ed. 440, 6 Sup. Ct. Rep. 129; Grand Rapids & I. R. Co. v. Osborn, 193 U. S. 17, 48 L. ed. 598, 24 Sup. Ct. Rep. 310; Columbus v. American Gas Co. 96 Kan. 367, L.R.A. 1915F, 1180, 149 Pac. 402, P.U.R.1915F, 889; Des Moines Water Co. v. Des Moines, 124 C. C. A. 445, 206 Fed, 657; Denver v. New York Trust Co. 229 U. S. 123, 57 L. ed. 1101, 33 Sup. Ct. Rep. 657; Detroit United R. Co. v. Detroit, 229 U. S. 39, 57 L. ed. 1056, 33 Sup. Ct. Rep. 697; Louisville Trust Co. v. Cincinnati, 22 C. C. A. 334, 47 U. S. App. 36, 76 Cedar Rapids, 118 Iowa, 234, 91 N. W. Fed. 296; Cedar Rapids Water Co. v. 1081; Scott County Macadamized Road Co. v. Missouri, 215 U. S. 336, 54 L. ed. 221, 30 Sup. Ct. Rep. 110; St. Clair County Turnp. Co. v. Illinois, 96 U. S. 63, 24 L. ed. 651; State ex rel. Otero de Burg v. Water Supply Co. 19 N. M. 36, L.R.A.1915A, 246, 140 Pac. 1059, Ann. Cas. 1916E, 1230; Pacific R. Co. v. Leavenworth, 1 Dill. 393, Fed. Cas. No. 10,649. Mr. Justice McKenna delivered the opinion of the court: 86 N. E. 824, 16 Ann. Cas. 695, 221 U. S. 467, 55 L. ed. 815, 31 Sup. Ct. Rep. 709; Blair v. Chicago, 201 U. S. 400, 50 L. ed. 801, 26 Sup. Ct. Rep. 427; State ex rel. Scotillo v. Water Supply Co. 19 N. The Water Works Company is a corM. 27, L.R.A.1915A, 242, 140 Pac. 1056;poration of New Mexico, and was inColorado Teleph. Co. v. Fields, 15 N. M. corporated to furnish the city of Raton with water. 431, 30 L.R.A. (N.S.) 1088, 110 Pac. 571. Its system is constituted Implied appeals are not favored. of pipes, mains, conduits, sources of waState ex rel. Milwaukee v. Milwaukee ter, reservoir sites, and reservoirs. [331] (These accessories are to he understood when we use the word "system.") Electric R. & Light Co. 169 Wis. 183, 172 N. W. 233; 25 R. C. L. 918. The Water Works Company, by accepting the franchise, was bound by the terms of such franchise and the provisions of the law under which it was granted. Daniels v. Tearney, 102 U. S. 415, 26 L. ed. 187; 16 Cyc. 802; The Idlewild, 59 Fed. 628, affirmed in 12 C. C. A. 328, 26 U. S. App. 469, 64 Fed. 603; Seymour v. Slide & S. Gold Mines, 153 U. S. 523, 38 L. ed. 807, 14 Sup. Ct. Rep. 847; Maltman v. Chicago, M. & St. P. R. Co. 72 Ill. App. 378; Bedenbaugh v. Southern R. Co. 69 S. C. 1, 48 S. E. 53; Fox v. Windes, 127 Mo. 502, 48 Am. St. Rep. 648, 30 S. W. 323; Cleveland v. Cleve itself to be the successor of the original The Bankers Trust Company, alleging trustee in a deed of trust or mortgage executed by the Water Works Company to secure an issue of bonds, brings this suit (1) to enjoin the city from enfore ing an ordinance requiring the removal of the Water Works Company's system from the city, (2) to enjoin the disturbance of the system, and to protect the enjoyment by the Water Works Company of its water rights, (3) that the city be required to pay the Trust Company such sum as will compensate the bondholders for the loss and injury to the trust property through the impair ment and breach of the contract through which, it is alleged, the city gave exclusive rights to the Water Company to furnish water to the city. cure an issue of bonds to the amount of $300,000. "The Bankers Trust Company has duly succeeded to all the rights, duties, and obligations of the Manhattan Trust Company under and by virtue of the provisions of said deed of trust, and now is the duly qualified and acting trustee under said mortgage or deed of trust." The bonds are outstanding in the hands of holders in due course and for value, and none have been paid or otherwise canceled or satisfied. To justify the relief prayed and to establish the jurisdiction of the district court (and we may say, of the appeal to this court), the Trust Company alleged that the value of the matter in controversy exceeds $3,000, and involves the Constitution of the United States, because the acts of the city produced the results from which relief is prayed by violating the contract the city entered into with the Water Works Company, and will deprive the Trust Company of its property without due process of law, in violation of the 14th Amendment to the Constitution of the United States. The bill is very long and replete with repetitions, but, as it constitutes the case, we give a summary of it as follows: The town of Raton (it was then a town) having no water supply, the Raton Water Company was incorporated, and constructed a system to fur-duced to the extent of over $30,000. nish water to the town. The town grew, and its officials and citizens induced the incorporation of the Raton Water Works Company, and selected its present source of the supply of water. The company then began and completed its water system, [332] and subsequently purchased the property and rights of the Raton Water Company. On or about July 20, 1891, the Water Works Company and the city entered into a contract evidenced by an ordinance by which the company agreed to furnish water to the city for a period of twenty-five years, and the city agreed that it would not operate or maintain waterworks in or near the town for the same period from July 25, 1891, and also agreed to pay a rental for fire hydrants for the same time, at a rate fixed in the ordinance. The ordinance was known as Ordinance No. 10. It was ratified by a vote of the citizens of the town and accepted by the company. The company constructed a system in accordance with the contract and the act of its incorporation, and has performed its terms and conditions. And it has become the owner of valuable and extensive water rights, reservoirs, and reservoir sites. On February 1, 1905, the Water Works Company executed and delivered to the Manhattan Trust Company of New York a deed of trust conveying all of the Water Company's property, rights, privileges, and franchises, to se The city, in 1912, began steps with intention to impair the contract between it and the Water Works Company, and, after an election authorizing an issue of bonds for the purpose of constructing a waterworks system, proceeded, in accordance with an ordinance passed July 16, 1913, to the construction of a waterworks system, and erected fire [323] hydrants, prior to the expiration of the company's exclusive contract, which caused the revenues and income from the latter to be impaired and re The city ordered the company to remove its system, and on August 6, 1915, by an ordinance, repealed Ordinance No. 10, and revoked all the rights conferred by it, and ordered the company to immediately remove its system, and the mayor, clerk, and city attorney were directed to enforce the ordinance, which took effect five days after its passage and repealed all other ordinances. The ordinance was known as Ordinance No. 197. The only source of supply for the city's system is that of the Water Works Company, and the city has taken possession of a portion of the reservoirs of the company, and such taking is a deprivation of the property of the company without due process of law. Other deprivations are alleged, and that the city has occupied with some of its works the lands of the company more than 2 miles from the exterior boundaries of the city. The only source of income to the company is the system and lands thus taken. At the time of filing the original bill there were pending two actions between the Water Works Company and the city, one of which was in the United States court and the other in the state court, in each of which there were matters pertinent and material to the cause of the complainant in this action. By stipulation, this case was delayed to await the final determination of those actions, and the bill here has been amended to |