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not final, in the sense that an appeal would lie therefrom. It was undoubtedly interlocutory, and not appealable, and, being interlocutory, was subject to change by the court before final decree or upon the final hearing. Fourinquet v. Perkins, 16 How. 82, 84, 14 L. Ed. 854; Latta v. Kilbourn, 150 U. S. 524, 529, 14 Sup. Ct. 201, 37 L. Ed. 1169; Bates, Fed. Eq. Proc. $ 781. Though interlocutory, it was a decree upon the merits deciding upon the facts and law one of the material issues in the case, and, as such, was a proper subject of a rehearing, according to the settled principles of practice when a rehearing is desired upon the ground of newly discovered evidence. Such an interlocutory decree cannot be reopened to let in new evidence, except upon the same terms and conditions upon which new evidence may be heard in the case of a final decree. Bates, Fed. Eq. Proc. § 684; Gillette v. Refrigerating Co. (C. C.) 12 Fed. 108. Baker v. Whiting, i Story, 228, Fed. Cas. No. 786, and Jenkins v. Eldredge, 3 Story, 299, Fed. Cas. No. 7,267, the whole subject of the practice in such cases is examined with the care characteristic of Justice Story. The proposal of the defendants to inject into the record additional evidence, without laying any ground or obtaining any order of the court upon a matter which had been adjudged against him by the interlocutory decree, was without any precedent whatever, and would tend to break down every principle affecting the finality of an adjudication upon facts until reopened according to the settled principles of equity practice. The new evidence was properly disregarded by the master, and there was no error in overruling the appellants' exception to the master's report. The law authorized building associations to lend money upon a premium in addition to legal interest. The loans were presumptively made according to law, and not in violation of law; the transaction being one between a building association and a shareholder. The fact that the bill averred that the lending was upon competition was a fact made out in the absence of proof by the presumption of legality. The case of the defendant was not made out by the evidence upon which he went to trial, and he could only introduce new evidence by showing that it was new, and not cumulative; that he had no knowledge of it until after the decree, and had been guilty of no negligence in not sooner producing it.

3. The court below directed that Deitch should be credited, upon the principle of partial payments, with all of the premiums and interest paid by him upon the loan made to him personally. This crediting of the principal with sums paid under a valid contract as premiums seems to have been put upon the ground that the insolvency of the association had and would prevent the payment of the loan by the payment of the shares according to the scheme of the business of such associations, and the terms of the loan to Deitch, and to therefore relieve him of all obligation, except to return the money actually received, with interest from date of loan. The association has not appealed, or complained of this decree. But in respect to the loan to Bloom and Goodfriend, which Deitch assumed to pay as the price for Bloom and Goodfriend's equity of redemption in the land mortgaged to secure the loan to them, the court held that Deitch must settle according to the contract, and was not entitled to have payments of premiums credited as payments upon the principal of the debt. The contracts in the two cases were not alike. Bloom and Goodfriend borrowed $2,000, for which they gave a straight note, payable in 10 years. The agreement, as evidenced by the bidding and mortgage, was that for this loan they should pay interest at the lawful rate monthly, and a premium of $7.59 monthly, and pay the note at maturity, and that failure to pay either interest or premium should precipitate the maturity of the principal. The full term of 10 years had expired when the decree below was made, and the borrowers had had the loan for the full term of the agreement, and were bound to pay the principal according to the agreement. Deitch made all the terms of this agreement his own by his assumption of the contract as the price he was to pay for the mortgaged property. After paying both interest and premium for years, according to the contract, he notified the association, before it had passed into the hands of a receiver, that he should pay nothing more. By a multitude of cases, Deitch was in no situation to strip the loan to Bloom and Goodfriend of usury, even if such a defense had been open to the bor

53 C.C.A.--10

The defense was personal so far as that no one assuming the debt could rely upon it. As the purchaser of the mortgaged property, he got the full benefit of the incumbrance, in the reduced price paid. Nance v. Gregory, 6 Lea, 343, 40 Am. Rep. 41; Parker v. Hotel Co., 96 Tenn. 289, 34 S. W. 209, 31 L. R. A. 706; Lloyd v. Scott, 4 Pet. 205, 7 L. Ed. 833. Having had the full benefit of the loan for the full term of the contract, it was not inequitable to require Deitch to comply with the terms upon which the loan was made. He has been paid to do this, and is in no situation to complain, for the agreement has not been broken by the association in any particular.

The decree must be accordingly affirmed.


(115 Fed. 318.)
(Circuit Court of Appeals, Sixth Circuit. April 8, 1902.)


A municipal ordinance passed under the authority of a power over the subject-matter delegated to the municipality by the legislature, at least where there is good color for the claim that it was in fact passed under delegated authority, is in effect a "law of the state," within the meaning of section 5 of the act creating the circuit courts of appeals (26 Stat. 836); and where a bill filed in a circuit court seeks to enjoin the enforcement of such an ordinance on the ground that it is in contravention of the constitution of the United States the supreme court has jurisdiction of an

appeal in the case under said section. 2. CIRCUIT COURT OF APPEALS-JURISDICTION.

Where the jurisdiction of a circuit court is based solely on the ground, clearly disclosed by the plaintiff's pleading, that a law of a state is claimed to be in contravention of the constitution of the United States, the parties being citizens of the same state, the supreme court has exclusive jurisdiction of an appeal in the case, and an appeal will not lie to the circuit court of appeals, although other questions may also have been

involved and may have determined the decision. 12. Review of Jurisdiction of circuit courts, see note to Excelsior WoodenPipe Co. v. Pacific Bridge Co., 48 C. C. A. 351.

See Courts, vol. 13, Cent. Dig. $ 1099 [h, i, ii, j, p, t].

Appeal from the Circuit Court of the United States for the Western District of Kentucky.

George W. Jolly, for appellant. W.T. Ellis and W. W. Davies, for appellee. Before DAY and SEVERENS, Circuit Judges, and WANTY, District Judge.

SEVERENS, Circuit Judge. The Owensboro Waterworks Company, a Kentucky corporation, filed the bill in this case in the circuit court for the purpose of restraining the city of Owensboro from putting in execution a certain ordinance, which the common council of the city had passed for the purpose of regulating the rates at which water should be supplied to the people of that city, and the collection of such rates; and also for the purpose of requiring the waterworks company to put meters into the lines of pipe supplying the water to the several consumers in certain conditions specified. The bill sets forth the ordinances and the terms of the contract under which it was supplying water to the city and its inhabitants, the contract being one between the city and the predecessor of the waterworks company, to whose rights the waterworks company had, with the consent of the city, succeeded, and certain supplementary stipulations between the city and the waterworks company made at the time when the latter took over the contract from its predecessor. The ordinance granting the franchise to the predecessor contained the following provisions :

"Sec. 9. The said company shall have the power and authority to make and enforce as part of the conditions upon which it will supply water to its consumers, all needful rules and regulations not inconsistent with the law, or the provisions of this ordinance.

"Sec. 10. The city will adopt and enforce all ordinances protecting the said company in the safe and unmolested exercise of these franchises, and against fraud and imposition and against injury to the hydrants rented by it to said city and against waste of water by consumers."

And the bill alleges that the waterworks company had established, and was operating under, rules and regulations pursuant to the authority of these sections of the ordinances. Thereupon the bill proceeds to allege that on March 12, 1900, the common council of the city passed an ordinance fixing the rate at which the company should supply water to the inhabitants of the city, denying the company the right to collect the rents in advance, and requiring it to put in meters for measuring the water delivered in certain cases specifically provided for. The bill alleges, further, that the city claims and pretends that it had rightful authority to pass this ordinance, and that it is valid, and that the city intends to enforce it. The complainant thereupon alleges against the ordinance that it is in contravention of the grant to the company of the right to make rules and regulations; that the city has no lawful authority to fix the rates at which the company shall charge its customers; that the rates fixed by the ordinance are so low, and the requirements made so oppressive, that the company cannot conform to them and obtain any income from its investment, and, in fact, could not carry on its business without positive loss. The insistence of the bill is that the ordinance is in violation of the con

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stitution of Kentucky, which forbids ex post facto laws and laws impairing the obligation of contracts; and it is also insisted that the ordinance is in contravention of the fifth amendment to the constitution of the United States, in that it takes private property for public use without just compensation, and also of the fourteenth amendment to the constitution of the United States, which provides that “no state shall make or enforce any law, which will abridge the privileges or immunities of the citizens of the United States, nor shall any state deprive any person of life, liberty or property without due process of law, nor deny to any person within its precincts the equal protection of the laws.'

The answer admits the passage of the ordinance, and the intention of the city to enforce it; claims that it had lawful authority to pass it; denies that it is prohibited by any of the provisions of the constitutions of Kentucky or of the United States above referred to, or that it is unreasonable, or that it prevents the company from securing a fair return on its investment.

Other averments are made in the pleadings, but it is unnecessary to recite them for the present purpose. The foregoing contains the substance of the controversy. Proofs were taken, and at the hearing the circuit court decided in favor of the complainant, upon the ground that the legislature of Kentucky had not delegated to the city the power to pass such an ordinance, referring to section 3290 of the Kentucky Statutes, which contains the grant of power in respect to such subjects to municipalities of that class to which the city of Owensboro belongs. That section reads as follows:

“Sec. 3290. The common council of said city shall, within the limitations of the constitution of the state and this act, have power, by ordinance:

(5) To provide the city and the inhabitants thereof with water, light, power, heat and telephone service, by contract, or by works of its own, located either within or beyond the boundaries of the city. To make regulations for the management thereof, and to fix and regulate the price to private consumers and customers."

The construction adopted by the court was that the power of the city to make rules and regulations extended only to waterworks constructed and operated by itself, and the court seems to have held that the city had no other power in the premises than the power thus expressly conferred.

An appeal was taken to this court, and, prior to its being reached for hearing, the appellee moved to dismiss the appeal upon the ground that this court had no jurisdiction to entertain it, but that it should have been taken to the supreme court, because the case involved the question whether the ordinance complained of was in contravention of the constitution of the United States. Upon the submission of the motion we passed an order directing that it be postponed to the hearing on the merits, and be then heard. The case having now been fully argued, the first question with which we have to deal is that arising upon the motion to dismiss the appeal. Inasmuch as an ordinance of a municipality, if passed under the authority of a power over the subject-matter delegated to it by the legislature of a state, stands upon the footing of a legislative act for the purpose of determining whether


a right, secured by the constitution of the United States, has been infringed thereby, and such a case is upon that ground regarded as one falling within the jurisdiction of the federal courts, we see no reason to doubt that such an ordinance is to be regarded as a law of the state, within the meaning of section 5 of the act of March 3, 1891, creating the circuit court of appeals, and distributing the appellate jurisdiction. Perhaps we should add the proviso, which would apply to both the original and appellate jurisdictions, that the case be one in which there is good color for the claim that the ordinance was in fact passed under a delegated authority. But we think, without going into a discussion of the matter, that there is fair ground in the present case for contending that the common council had legislative authority for dealing with the subject to which the ordinance relates. The question is therefore whether the appeal in this case is one comprehended within the classes of cases enumerated by section 5 of the act referred to. If it is, it must be taken to the supreme court; for it is only of such cases as remain after those enumerated in section 5 have been carved out of the whole body of appellate cases that the circuit courts of appeals have jurisdiction; and as was said by Chief Justice Fuller in American Sugar Refining Co. v. City of New Orleans, 181 U. S. 277, 21 Sup. Ct. 646, 45 L. Ed. 859: "Where it appears on the record, from plaintiff's own statement, in legal and logical form, such as is required by 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 or application of the constitution or some law or treaty of the United States (Water Co. v. Keyes, 96 U. S. 199, 24 L. Ed. 656; Blackburn v. Gold Min. Co., 175 U. S. 571, 20 Sup. Ct. 222, 44 L. Ed. 276; W. U. Tel. Co. v. Ann Arbor Ř. Co., 178 U. S. 239, 20 Sup. Ct. 867, 44 L. Ed. 1052),” such a case falls within the exclusive appellate jurisdiction of the supreme court. Looking at the language of the act, we can see no good reason for thinking that the destination of the appeal is altered by the circumstance that other questions besides those enumerated in section 5 are comprehended in the controversy which the case presents. It is still, and none the less, a case in which a question arises of the character specified in designating what cases must go by appeal or writ of error to the supreme court. The appeal or writ of error in all cases, in which no question of the character described in section 5 is involved, goes to the circuit court of appeals under the operation of section 6, which expressly bounds the appellate jurisdiction of the latter court in that way. Saving such questions as arise under the first clause of the enumeration of section 5, relating to the original jurisdiction, and the consideration of the effect of making final the judgments of the circuit courts of appeals when the jurisdiction of the circuit court depends upon diversity of citizenship by section 6 (a matter to which we shall presently recur), this makes the line of demarcation clear, and the only difficulty to be encountered in prosecuting an appeal or writ of error is in determining whether or not there is in truth a question involved in the controversy comprehended in the classes mentioned in section 5.

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