Two of the judges of the state court held that the clause of the bill of rights of Kentucky, which declares that 'all freemen, when they form a social compact, are equal, and that no man or set of men are entitled to exclusive, separate public emoluments or privileges from the community but in consideration of public services,' (Const. Ky. 1799, art. 10, § 1; 1850, art. 13, § 1,) for bade the general assembly of that commonwealth to grant to a private corporation the exclusive privilege of manufacturing and distributing gas, for public and private use, in the city of Louisville, by means of pipes and mains laid under the streets and other public ways of that municipality. The other judges were of opinion that that clause did not prohibit a grant by the state to a private corporation, whereby certain privileges were conferred upon the latter in consideration of its discharging a public duty, or of rendering a public service; that the municipality of Louisville being a part of the state government, there was a public necessity for gas-lights upon its streets and in its public buildings, almost as urgent as the establishment of the streets themselves; that the services thus to be performed by the corporation were, in the judgment of the legislative department, an adequate consideration for the grant to it of exclusive privileges; and, consequently, that the grant was a contract, the rights of the parties under it to be determined by the rules applicable to contracts between individuals.
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 New Orleans Gas-light Co. v. Louisiana, etc., Co., ante, 252, just decided, it is 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 exclusive right to engage in their manufacture and sale. But as the distribution of gas in thickly populated districts is, for the reasons stated in the other case, a matter of which the public may assume control, services rendered in supplying it for public and private use constitute, in our opinion, such public services as, under the constitution of Kentucky, authorized the legislature to grant to the defendant the exclusive privileges in question. This conclusion is justified, we think, by the decisions of the court of appeals of that state. In O'Hara v. Lexington & O. R. Co., 1 Dana, 232, the point was made that an inquisition for the assessment of damages for the taking of land by a railroad corporation was void upon certain grounds, one of which was that the company's charter granted exclusive privileges, without any consideration of public services. Chief Justice ROBERTSON, speaking for the court, said that, in the true sense of the constitution, no exclusive privileges were granted to the corporation; observing that 'if the charter be on that ground unconstitutional, it would be difficult to maintain the validity of any statute for incorporating any bridge company or any bank, or even for granting a ferry franchise.'