131) provided as follows: The city "shall be capable of contracting and being contracted with, and shall have all the powers possessed by municipal corporations at common law." Chap. 1, § 1. "The common council in addition to all powers herein specifically men

To

tempting in any manner to force it to continue to sell gas at the ordinance rate. A motion by the company for a preliminary injunction was denied. Thereafter, on motion of the city, the court dismissed the bill for want of equity, on the ground that there was a "valid and subsisting contract between the city tioned, shall have full power and auand the plaintiff company governing the thority to make all such ordimatter of a maximum rate for fuel gas." nances for the general welfare The company, by reason of the constitu- of the city and the inhabitants thereof, tional question involved, has appealed as they shall deem expedient." Chap. 4, directly to this court. Judicial Code, §§ 4. "The common council shall have 238; Columbus R. Power, & Light Co. v. full power by ordinance: Columbus, 249 U. S. 399, 63 L. ed. 669, provide for and control the erection and 6 A.L.R. 1648, P.U.R.1919D, 239, 39 Sup. operation of gas works, electric lights, Ct. Rep. 349. or other works or material for lighting It has been long settled that a state the streets and alleys, public_grounds, may authorize a municipal corporation to and buildings of said city, and supplyestablish by an inviolable contract the ing light and power to said city and its rates to be charged by a public service inhabitants; and to grant the right to corporation for a definite term, not gross- erect, maintain and operate such works, ly unreasonable in time, and that the with all rights incident or pertaining effect of such a contract is to suspend, thereto, to one or more private compaduring its life, the governmental power nies or corporations. ; to proof fixing and regulating the rates. Home vide for and control the erection and Teleph. Co. v. Los Angeles, 211 U. S. 265, operation of works for heating the public 273, 53 L. ed. 176, 182, 29 Sup. Ct. Rep. buildings of said city by [357] steam, 50, and cases there cited. And where a gas, or other means, and supplying light, public service corporation and the munic-heat, and power to the inhabitants of ipality have power to contract as to rates, and exert that power by fixing the rates to govern during a particular time, the enforcement of such rates is controlled by the obligation resulting from the contract, and the question whether they are [356] confiscatory is immaterial. Southern Iowa Electric Co. v. Chariton, 255 U. S. 539, 542, 65 L. ed. 764, 775, 41 Sup. Ct. Rep. 400, and cases there cited; Paducah v. Paducah R. Co. 261 U. S. 267, 273, 67 L. ed. 647, 651, 43 Sup. Ct. Rep. 335; Georgia R. & Power Co. v. Decatur, 262 U. S. 432, 438, 67 L. ed. 1065, 1073, 43 Sup. Ct. Rep. 613. The existence of a binding contract as to the maximum rate for fuel gas is therefore the controlling issue upon which this controversy depends. Its solution turns upon the questions whether the city had power to contract on this subject by the Ordinance of 1905; and, if so, whether the ordinance constituted such a con

tract.

1. Was the city authorized to enter into a contract as to the rate to be charged for fuel gas? Such authority must clearly and unmistakably appear. Home Teleph. Co. v. Los Angeles, supra, p. 273; Paducah v. Paducah R. Co. supra, p. 272. Whether it existed depends upon the laws of Minnesota in force at the time. The consolidated charter of the city (Special Laws of 1889, chap. 6, p.

said city; to grant the right to erect such
works and all incident rights to one or
more private companies or corporations,
and to control and regulate the erection
and operation of such works
provided,

that the common council shall have authority to regulate and prescribe the fees and rates and charges of any and all companies herein before mentioned." Chap. 4, § 5, cl. 10.

In construing and giving effect to these provisions of the charter we look to the decisions of the supreme court of the state. In Reed v. Anoka (1902) 85 Minn. 294, 297, 298, 88 N. W. 981, the city charter likewise enacted in 1889-conferred upon the municipality the power "to make and establish public pumps, wells, cisterns and hydrants, and to provide for and control the erection of wa terworks for the supply of water for the city and its inhabitants." The city, by ordinance, entered into a contract with individuals for the construction and operation of a system of waterworks for such purposes, for a term of thirty-one years: the city agreeing to pay the grantees a specified sum per year for each hydrant, and restrictions and limitations being imposed as to the charges to be made by the grantees for water furnished the inhabitants. In a suit brought by taxpayers to enjoin the performance of

.. The obligations thus entered into were mutual. Upon the one hand, the grantees, their successors and assigns, would be protected by the courts in the enjoyment of their [359] rights;-for instance, in the collection of the hydrant

this contract the court said that there the purpose of extending the system. could be "no doubt but that these charter provisions confer upon the municipality authority to enter into contracts with individuals for the purpose of providing itself and its inhabitants with a supply of water. The authorities are very uniform that contracts of this na-rentals; on the other hand, the courts ture are not within the legislative or gov- of the state are open to the city to seernmental prerogatives of the municipal- cure the enforcement of its rights. No ity, but rather within its proprietary or serious question can arise as to the business powers. Their purpose is not nature of the contract obligation." to govern the inhabitants, but to secure In the light of these decisions of the for them and for itself a private benefit. supreme court of the state of Minnesota It was so held in [358] we think it is clear that the city had auFlynn v. Little Falls Electric & Water thority, in 1905, under its charter and Co. 74 Minn. 180, 77 N. W. 38, 78 the laws of the state, to enter, by ordiN. W. 106. While this pre-nance, into a contract, in its proprietary cise point of distinction was not made capacity and for the benefit of its inin that case, it is authority for habitants as well as itself, providing for the proposition that a municipality the construction and operation of gas does not exercise its legislative functions in entering into contracts of this kind, but only its business or proprietary powers, to which the rules and principles of law applicable to contracts and transactions between individuals apply." In St. Cloud v. Water, Light & P. Co. (1903) 88 Minn. 329, 332, 92 N. W. 1112, there was involved an ordinance passed by the present appellee in 1887, providing for the sale of the city's waterworks to certain persons, and granting them the right to maintain the system for the period of thirty years, and to furnish water to its inhabitants at certain specified rates; in consideration of which the grantees agreed to extend the system, to furnish water without charge for certain purposes, and to supply a specified amount of pure water for domestic purposes. The original charter of the city (Special Laws 1868, chap. 28, p. 144) made it capable of contracting, vested it with all the general powers possessed by municipal corporations at common law, and gave it the power of establishing and constructing public pumps, wells, cisterns, reservoirs, and hydrants. In a suit by the city to set aside the contract entered into by the ordinance for failure of the grantees to furnish pure water in the stipulated quantities, the court said: "The obligations of the parties, as set out in the ordinance, constitute a contract. The city was enabled to enter into such obligation by virtue of its charter powers and the general laws of the state, and was endowed with the right to construct, or cause to be constructed, a water system for the benefit of its inhabitants, and had control of its streets, and could contract with reference to their use for

works for a period of thirty years, and fixing the rates to be charged for gas sold to it and its inhabitants. This power existed, under the doctrine of the Reed Case, under the provisions of the charter giving the council the power to provide for the control and erection of gas works for the purpose of supplying the city and its inhabitants with heat and light. And we do not think that this contractual power was limited by the proviso that the council should have the right to "regulate and prescribe" the rates and charges of the companies to which it might grant the right of constructing such works. It is true that, standing alone, this proviso, in the absence of any state decision to the contrary, would, under the_construction given similar language in Home Teleph. Co. v. Los Angeles, 211 U. S. 274, 53 L. ed. 183, 29 Sup. Ct. Rep. 50, be regarded as conferring authority merely to exercise the governmental power of regulating rates, and not authority to enter into a contract. In that case, however, it was pointed out that there was no other provision of the charter authorizing the city to contract as to rates. And in the present case, as the other provisions of the charter gave the city authority so to contract, we must regard the proviso as merely an alternative provision; that is to say, we think that the city might either contract as to the rates, as an incident to its [360] power of granting the right to construct and operate the. public utility, or, if it did not exercise this power to contract, might thereafter "regulate and prescribe" the rates in the exercise of the governmental authority conferred by the proviso. One power, however, is not destructive

of the other. And where a munici-, municipality acting under the authority pality has both the power, to contract as of the legislature, and is, as we view it, to rates and also the power to prescribe merely a limitation upon the direct aurates from time to time, if it exercises thority of the legislature itself, to the the power to contract, its power to regu- extent that we have indicated. late the rates during the period of the contract is thereby suspended, and the contract is binding. Paducah v. Paducah R. Co. 261 U. S. 272, 273, 67 L. ed. 650, 651, 43 Sup. Ct. Rep. 335.

Nor do we find anything in the Laws of 1893, chap. 74, p. 189 (Gen. Stat. 1913, § 6137), in conflict with the conclusion which we have reached as to the power of the city to contract as to rates.

"shall conform" to all reasonable regulations prescribed by the city (8 4). "In consideration of the rights and privileges herein granted, the grantee hereby covenants and agrees that it will

We find nothing in conflict with our 2. Did the ordinance constitute a conconclusion as to the city's authority to tract fixing the maximum rate for gas? contract in § 33 of article 4 of the Min- The intention to so contract must clearly nesota Constitution, as amended in and unmistakably appear. Paducah v. 1881, providing that "the legislature is Paducah R. Co. supra, p. 272. The esprohibited from enacting any special or sential provisions of the ordinance are: private laws in the following cases: The right and privilege is granted to 7th. For granting corporate construct and maintain for thirty years powers or privileges, except to cities. works and instrumentalities for the 10th. For granting to any in- manufacture and distribution of elecdividual, association or corporation, ex- tricity and gas (§ 1). The grantee cept municipal, any special or exclu- is "authorized" to manufacture and sive privilege, immunity or franchise sell electricity and gas to the city whatever." Gen. Laws 1881, p. 22. and its inhabitants during such period Clauses 7 and 10, read together, plainly (§ 2). The construction shall be done show that the prohibition against the with the least practicable inconvengranting of special or exclusive privileges ience to the public and individuals, and by the legislature does not apply to the the "grantee shall restore" all places granting of corporate powers or privi- were excavated to their original conleges to cities. It did not prohibit the dition as far as practicable, and relegislature from granting to the city, by pair all damage done by such excavathe consolidated charter of 1889, the tion (§ 3). In laying down pipes power of contracting in its proprietary or [362] erecting wires the grantee capacity in reference to the construc-" tion and operation of gas works. If it had had such an effect, we cannot assume that it would have been overlooked by the supreme court of Minnesota in the Reed Case, in which no reference was made to this provision. It is unnecessary, therefore, to consider whether the provisions of the consolidated charter were authorized as an amendment to the original charter of 1862. [361] See Brady v. Moulton, 61 Minn. 185, 63 N. W. 489. This constitutional provision is obviously entirely different from that involved in San Antonio v. San Antonio Pub. Serv. Co. 255 U. S. 547, 549, 65 L. ed. 777, 780, 41 Sup. Ct. Rep. 428, providing "that no irrevocable or uncontrollable grant of special privileges or immunities shall be made, but all privileges and franchises granted by the legislature, or created under its authority shall be subject to the control thereof," which was held to prevent a municipality, acting under the authority of the legislature, from entering into a binding contract as to public service rates. The provision of the Minnesota Constitution makes no reference either to irrevocable or uncontrollable privileges, or to privileges created by a

erect

an ef

ficient coal-gas generating plant or system of ample capacity, and after the erection thereof will manufacture and offer for sale to the city and its inhabitants coal gas of at least fourteen candle power" (§ 5). "The grantee is authorized hereby to sell illuminating gas when the works therefor shall have been completed

at the price of not to exceed" $1.85 per thousand cubic feet, "and fuel gas at the rate of not to exceed" $1.35 per thousand cubic feet, and shall be at liberty to cut off the supply from any person not paying for a period of thirty days (§ 6). "The rights hereby granted are upon the express condition" that the city may purchase the electrio and gas works of the grantee at specified intervals at the appraised value thereof, as determined by arbitrators to be chosen in a prescribed manner (§ 7).

We think that the language of the ordinance, viewed in its entirety, clearly shows that it was the intention of the parties to enter into a contract for the

construction of gas works and the manu- | 756; Cleveland v. Cleveland Electric R. facture and supply of gas to the city and Co. 201 U. S. 529, 532, 50 L. ed. 854, 855, its inhabitants during the thirty-year 26 Sup. Ct. Rep. 513; Georgia R. & period, at the maximum rate prescribed. Power Co. v. Decatur, 262 U. S. 434, 67 Although § 6, "authorizing" the sale of L. ed. 1072, 43 Sup. Ct. Rep. 613. And fuel gas at a price not exceeding $1.35, the fact that here the parties inis not phrased in the language of an tended to contract as to the gas rates agreement, as the preceding section is emphasized by the contrast between whereby the grantee "agreed" to con- the provisions of the ordinance as struct the plant and manufacture and to gas and electricity. While the sell gas to the city and its inhabitants, grantee is authorized to maintain both -it is an essential part of the agree- gas and [364] electric works for the ment. It is no less contractual than the period of thirty years, the ordinance provision in § 2, "authorizing" the gran-specifies the maximum rates for gas, tee to manufacture and sell electricity but contains no provision as to the and gas to the city and its inhabitants rates for electricity; the apparent for thirty years,-upon which the com- purpose being to establish definitely pany necessarily relies as the basis of the by contract the maximum rates for gas, rights which it now [863] claims and but to leave the rates for elecis seeking to enforce, or than that in § tricity to be thereafter "regulated and 7, giving the city the right to purchase prescribed" by the council from time to the plant at an appraised value. The time, under the power given it by the provision that the grantee is "author- proviso of the charter. ized" to sell fuel gas at a rate not exceeding $1.35 clearly implies that it shall not sell such gas at a higher rate. This is recognized by the bill itself. In this respect the language has the same effect as that involved in Vicksburg V. Vicksburg Waterworks Co. 206 U. S. 496, 508, 516, 51 L. ed. 1155, 1160, 1163, 27 Sup. Ct. Rep. 762.. There the ordinance granted the right to make such charges for the use of water as the grantees might determine, provided that they should not exceed 50 cents for each thousand gallons. This was held to constitute a binding contract fixing the maximum rates for water supplied to private consumers for the period of thirty years, as set forth in the ordinance. So, in Reed v. Anoka, 85 Minn. 296, 88 N. W. 981, the ordinance imposed "restrictions and limitations" upon the charges to be made; and in St. Cloud v. Water, Light, & P. Co. 88 Minn. 332, 92 N. W. 1112, the ordinance "gave the right" to furnish water at specified rates. And provisions in ordinances granting franchises to street railway companies, that the rate of fare shall not be more than 5 cents, or that the grantee shall not charge a higher fare, are contractual. Detroit v. Detroit Citizens' Street R. Co. 184 U. S. 368, 369, 46 L. ed. 592, 595, 22 Sup. Ct. Rep. 410; Cleveland v. Cleveland City R. Co. 194 U. S. 517, 524, 48 L. ed. 1102, 1103, 24 Sup. Ct. Rep. There are repeated references in the bill to this provision as fixing a maximum rate, thus: The "maximum rate fixed for the price of gas in the ordinance" (§ 36); and similar references to the "maximum rate" in §§ 39, 41, 42, and 44, cl. 1.

3. The general provision of the Laws of 1919, chap. 469, p. 603, authorizing cities of the class of the appellee, "through its city council or like governing body, by ordinance, to prescribe from time to time the rates which any public service corporation supplying gas or electric current for lighting or power purposes within said city may charge for such service," has no application to the present case. Even if, in any aspect, it could otherwise be applicable, it is excluded from operating here by the specific proviso that it shall not be "construed to impair the obligation of any contract or franchise provision now existing between any such city council and any such public service corporation." The city, clearly, could not avail itself of this statute to reduce the gas rates below the maximum prescribed in the contract of 1905; and the company, conversely, cannot under it obtain higher rates. The contract is binding on both parties alike.

The decree of the District Court is affirmed.

Mr. Justice Butler took no part in the hearing or decision of this case.

[365] LIBERTY NATIONAL BANK OF ROANOKE, VIRGINIA, Petitioner,

V.

JAMES A. BEAR, Trustee in Bankruptcy
of the Estates of W. L. Becker, Sr., and
W. L. Becker, Jr., Partners, etc.
(See S. C. Reporter's ed. 365-371.)
Bankruptcy effect on lien of judg-

ment.

1. Under § 67f of the Bankruptcy Act,

Argued April 25, 1924. Decided May 26, in bankruptcy, involves claims by a judg