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;