The appellant, hereafter to be called the petitioner, sued the state of South Dakota, in its Supreme Court, for damages for the destruction of his ferry franchises on the Missouri river, under the authority of section 2109, South Dakota Revised Code of 1919
Petitioner alleged in his complaint that he was granted ferry franchises under sections 8696 to 8704 of the same Code. Section 8696 provided: [278 U.S. 429, 430] 'It shall be unlawful for any person to establish, maintain or operate upon any waters within this state any ferry, upon which to convey, carry or transport any person or property for hire or reward, without first having procured a ferry lease, as provided in this article; and where but one bank or shore is in this state, the board of county commissioners of the proper county, or the governing body of the proper city or incorporated town, shall have the same authority as if the entire stream or water were within this state so far as the banks and waters actually within it are concerned, and when any ferry lease has been granted, no other lease shall be granted within a distance of two miles from the place described, in the application for a ferry lease, as the ferry, landing across the same stream. ...'
Section 8697 provided:
The complaint further alleged that the state, by appropriate action of the county commissioners of Walworth county in 1916, and of those of Corson county in 1921, for a valuable consideration, granted to the petitioner exclusive leases or ferry franchises of 15 and 5 years' duration respectively, and authorized him to operate a ferry upon and across the Missouri river for such toll charges as were provided by law, in an area extending two miles in either direction from the landing point; that the petitioner accepted the ferry franchises, and invested money in the purchase of ferryboats, motorboats, landings, and buildings to equip the ferry, to the amount of $14,000. He further alleged that the state, pursuant to acts of its Legislature, during the years 1923 and 1924, constructed a steel and concrete bridge across the Missouri river at a site designated by law, upon and within the confines of plaintiff's exclusive ferry franchises and within two miles west of the point of the ferry landing; that the bridge is a free bridge and became usable about November 10, 1924; that the ferry had first been run at a loss, as expected, but that recently it had yielded over $5,000 a year profit; that by the construction of the bridge petitioner's business as a ferryman and his property right in his franchises were totally destroyed, and the investments made by him were rendered worthless, and resulted in a damage to him of $44,000, no part of which has been paid. He therefore asked judgment in that amount.
The defendant, the state, demurred to the complaint of the petitioner, on the ground, among others, that the complaint did not state facts sufficient to constitute a cause of action. The Supreme Court sustained the demurrer. The petitioner having failed to file an amended complaint, the original complaint was dismissed. 51 S. D. 561, 215 N. W. 880.
An appeal to this court was allowed under section 237(a) of the Judicial Code, 28 USCA 344(a).
The petitioner contended in the state court, and contends here, that the acts of the state Legislature, under which the bridge was constructed, impaired the obligation of the contract embodied in his ferry leases or franchises, and therefore were void, as being in conflict with the contract clause of the Constitution of the United States. [278 U.S. 429, 432] Messrs. Wm. M. Potts, of Mobridge, S. D., and Byron S., Payne, of Pierre, S. D., for appellant.
Mr. Chief Justice TAFT, after stating the case, delivered the opinion of the Court.
The exclusive ferry leases were contracts between the state and the petitioner. The Binghamton Bridge, 3 Wall. 51. Was the building of the bridge a breach of them?
The Supreme Court of the state has had the meaning of 'exclusive ferry franchise' before it twice before this case, in Nixon v. Reid, 8 S. D. 507, 67 N. W. 57, 32 L. R. A. 315, and in Chamberlain Ferry & Cable Bridge v. King, 41 S. D. 246, 170 N. W. 145; but these cases did not require consideration of the effect of the term as applied to anything but ferries. The court said on that subject in the present case:
Coming from the state Supreme Court, this language is very persuasive of the meaning of the statute, and would indicate that in its view the building of a bridge was not a breach of the ferry contracts.
The petitioner relies on the contract clause of the federal Constitution, and is not prevented from invoking from this court an independent consideration of what the contract means, and whether by a proper construction, the building of a bridge impairs its obligation. Appleby v. City of New York, 271 U.S. 364, 380 , 46 S. Ct. 569; Columbia Ry. Co. v. South Carolina, 261 U.S. 236, 245 , 43 S. Ct. 306; Long Sault Development Co. v. Call, 242 U.S. 272, 277 , 37 S. Ct. 79; Louisiana Ry. & Navigation Co. v. Behrman, 235 U.S. 164, 170 , 35 S. Ct. 62; Mobile & Ohio R. R. Co. v. Tennessee, 153 U.S. 486, 492 , 14 S. Ct. 968; Huntington v. Attrill, 146 U.S. 657, 684 , 13 S. Ct. 224; New Orleans Waterworks Co. v. Louisiana Sugar Co., 125 U.S. 18, 38 , 8 S. Ct. 741; Wright v. Nagle, 101 U.S. 791 , 794; Northwestern University v. Illinois ex rel. Miller, 99 U.S. 309 , 321; Bridge Proprietors v. Hoboken Co., 1 Wall. 116, 145; The Binghamton Bridge, 3 Wall. 51, 81; Jefferson Branch Bank v. Skelly, 1 Black, 436, 443.
We must therefore treat the question as an open one and determine as an independent matter what the parties must be held to have had in mind in the use of the term 'exclusive lease.'
The chapter of the Revised Code of the state immediately preceding that which directs the letting and granting of exclusive ferry leases provides for the building of bridges over the rivers of South Dakota. This close relation of the chapters suggests that, if bridges were intended to be forbidden by the contract, the parties would have [278 U.S. 429, 434] been likely to mention a bridge as a breach. But there is no mention of a bridge in the statute or contract dealing with ferries.
On the other hand, it is argued that it was so well understood by every one, including the parties, that the erection of a bridge in the forbidden area would destroy the value of the ferry leases, and so defeat the real object of the leases, that an implication necessarily arises that a bridge would be a breach of the leases.
Reference is made to Newburgh & C. Turnpike Co. v. Miller, 5 Johns. Ch. (N. Y.) 101, 111, 9 Am. Dec. 274, a decision by Chancellor Kent. That was a suit to enjoin as a nuisance the construction and use of a bridge over the Wallkill river, upon which the plaintiff had a toll bridge of more than 10 years' standing, and the injunction was granted. The Chancellor said:
It will be observed that the facts there related to two bridges, and the case is not necessarily an express authority holding that an exclusive franchise for a ferry excludes a bridge. Yet it may be strongly argued from the language used that that is what the Chancellor had in mind.
We think, however, a broader question arises in the proper construction of a public grant like this. The leading case on the subject in federal jurisprudence is that of Charles River Bridge v. Warren Bridge, 11 Pet. 420, 547. In that case the Legislature of Massachusetts incorporated a company to build a bridge over the Charles river where a ferry stood, granting it tolls. Years after, the Legislature incorporated another company for the erection of another bridge within 800 feet of the original one. The new bridge was to become free after a few years, and at the time of the litigation it had become actually free. The Charles River Bridge was deprived of the tolls and its value was destroyed. Its proprietors filed a bill against the proprietors of the Warren Bridge, for an injunction against the use of the bridge as an act impairing the obligations of a contract and repugnant to the Constitution of the United States. The Supreme Court of Massachusetts (7 Pick. 344) dismissed the bill and the case case was brought by error to this court, which affirmed the judgment of the Massachusetts court. The principle of the case is that public grants are to be strictly construed, that nothing passes to the grantee by implication. The court cited United States v. De la Maza Arredondo, 6 Pet. 691, 738; Jackson ex dem. Hart v. Lamphire, 3 Pet. 280, 289; Beaty v. Lessee of Knowler, 4 Pet. 152, 165; Providence Bank v. Billings and Pittman, 4 Pet. 514, 561. In the last case Chief Justice Marshall said, of an asserted limitation on the taxing power:
The case then before the court was held to be subject to the same rule, although one of a corporate grant. The act of incorporation was silent in respect to the contested power. The argument made in favor of the proprietors of the Charles River Bridge was the same as that of the Providence Bank, namely, that the power claimed by the state, if it existed, must be so used as not to destroy the value of the franchise granted to the corporation. The argument was rejected.
Chief Justice Taney, delivering the opinion in the Charles River Bridge Case, said:
The cases above cited are not exactly on all fours with the specific issue presented here, but they serve to show with great emphasis the necessity for one who relies upon a public grant as a basis for a private right, to bring it expressly within the grant or statute.
It is clear from them that in determining the effect of a public grant to an individual the principle 'ut res magis valeat quam pereat' is not to be applied in his favor or an implication to be made enlarging his grant, as seems to have been the view of Chancellor Kent in Newburgh & C. Turnpike Co. v. Miller, supra.
The contention that an exclusive ferry franchise should be construed to cover all methods of travel and transportation across the water is rejected in Dyer v. Tuskaloosa Bridge Co., 2 Port. 296, 27 Am. Dec. 655 ( Ala. 1835); Piatt v. Covington & Cincinnati Bridge Co., 8 Bush, 31 (Ky. 1871); Snidow v. Board of Supervisors of Giles County, 123 Va. 578, 96 S. E. 810 (1918); Dibden v. Skirrow, (1908) 1 Ch. 41. There are many strong dicta to this same effect. Morey v. Orford Bridge, Smith 91, 95 (N. H. 1804); Piscataqua Bridge v. New Hampshire Bridge, 7 N. H. 35, 59 (1834); Bush v. Peru Bridge Co., 3 Ind. 21, 24 (1851); Parrot v. Lawrence, Fed. Cas. No. 10772 (C. C. Kan. 1872); State ex rel. McPherson Bros. v. Superior Court, 142 Wash. 284, 291, 252 P. 906 (1927). [278 U.S. 429, 438] The great weight of authority holds that a contractual term forbidding a ferry or a toll bridge does not exclude a railroad bridge. Mohawk Bridge Co. v. Utica & Schenectady R. R., 6 Paige, 554, 564 (N. Y. 1837); McLeod v. Savannah, Albany & Gulf R. R., 25 Ga. 445 (1858); Bridge Proprietors v. Hoboken Co., 1 Wall. 116, 149 (1863); Hopkins v. Great Northern Ry., 2 Q. B. D. 224 (1877), overruling Regina v. Cambrian Ry., L. R. 6 Q. B. 422 (1871). Contra: Enfield Toll Bridge Co. v. Hartford & New Haven R. R., 17 Conn. 40, 42 Am. Dec. 716 (1845); Id., 17 Conn. 454, 44 Am. Dec. 556 (1845).
There is some conflicting authority on the main question. Gates v. McDaniel, 2 Stew. 211, 19 Am. Dec. 49 (Ala. 1829); Norris v. Farmers' & Teamsters' Co., 6 Cal. 590, 65 Am. Dec. 535 (1856); Menzel Estate Co. v. City of Redding, 178 Cal. 475, 174 P. 48 (1918); Blanchard v. Abraham, 115 La. 989, 40 So. 379 (1906). But all of these cases are distinguishable, in that the infringing bridge or ferry was established without legal authority, and there were other reasons, such as obstruction to navigation, special statutes, or injury to tangible property, which affected the decisions.
The strongest case for the appellant is Mason v. Harper's Ferry Bridge Co., 17 W. Va. 396 (1880), where a statute forbidding other ferries was held to give an exclusive right to transportation over the river and hence to prohibit rival bridges as well, but the court said that the Legislature could take away at any time all the exclusive privileges of the proprietors theretofore existing.
In Hopkins v. Great Northern Railway, 2 Q. B. D. 224, 230 (1877), a railway company built a railway bridge and a footbridge across a river one- half mile above an ancient ferry, which then went out of business. It was held that the ferry could not obtain compensation for either bridge, the railway being necessary for new traffic, and the footbridge being used by those going to the railway station or by trespassers. There was a dictum by a court of dis- [278 U.S. 429, 439] tinguished English judges 'that the owner of a ferry has not a grant of an exclusive right of carrying passengers and goods across the steam by any means whatever, but only a grant of an exclusive right to carry them across by means of a ferry.'
We can hardly say, therefore, from the weight of authority, that an exclusive grant of a ferry franchise, without more, would prevent a legislature from granting the right to build a bridge near the ferry. Following the cases in this court in its limited and careful construction of public grants, it is manifest that we must reach in this case the same conclusion.
The judgment of the Supreme Court of South Dakota is