spectively: Provided, however, that noth-] since the acquisition of the plants and proping in this act shall be construed as extin-erty of those corporations that complainant guishing said companies entering into the had uniformly charged the same net rate agreement or agreements mentioned in this or price for gas sold by it in the city, which act, or annulling or impairing any of their gas was better in quality and of higher canrespective franchises, licenses, or privileges, dle power than the gas theretofore sold by but they shall severally be regarded as still the companies acquired; and complainant subsisting, so far as their continuance for averred, as matter of law, that the price or the purpose of upholding any right, title, or rate thus fixed was a fixing and regulating interest, power, privilege, or immunity ever by the state of the price or rate to be exercised or enjoyed by any of them, may charged by complainant for gas supplied be necessary for the protection of their re- subsequent to the acquisition of said other spective creditors or mortgagees, or any of companies. them; the separate exercise of their respective powers, and the separate enjoyment of their separate privileges and immunities, being suspended until the protection of such creditors or mortgagees shall require their resumption, when such suspension shall cease, so far as, and for such time as, the protection of such creditors or mortgagees may require." The bill also set forth an agreement made between the city and the People's Gaslight & Coke Company, July 20, 1899, which recited that agreements had theretofore subsisted between the city and the People's Company, and between the city and certain other gas companies, which companies subsequently became merged into the People's Company, and provided for a continuance " 11. Any corporation purchasing or of the lighting of the streets on the same leasing the property of any company or com- terms as it had been done, and for the paypanies, or into which any company or comment by the People's Company to the city of panies are consolidated and merged under a certain percentage of the gross receipts of this act, shall be, at the time of availing itself of or accepting the benefits of this act, in the actual business of furnishing gas to consumers; and shall be subject to the following provisions: "Such corporation shall not increase the price charged by it for gas of the quality furnished to consumers during any part of the year immediately preceding such purchase or lease or such consolidation and merger. "Such corporation shall furnish gas to consumers as good in quality as it furnished previous to such purchase or lease or such consolidation and merger." The People's Gaslight & Coke Company under this act became consolidated with the People's Company from the sales of gas during 1899, including therein the receipts from the operation of the properties of each of the gas companies consolidated with the People's Company, and for the payment by the city of amounts due or to become due to the People's Company or confession of judgment for amounts remaining unpaid; and the bill further set forth cer tain orders of the city between August 5, 1897, and March 11, 1901, for the laying of pipes and mains by the People's Company in the streets and avenues of the city. Certain mortgages were likewise referred to and been sold to parties who purchased the same it was alleged that bonds thereunder had some ten other gas companies, most of in the belief that the city was prohibited by its charter from compelling the People's which were organized under general laws passed in pursuance of the Constitution of Company to furnish gas at a less rate than 1870. One of them, the Chicago Gaslight & $3 per thousand cubic feet. Coke Company, was incorporated by special act of February 12, 1849, amended February 9, 1855, but this contained no restriction on the right of the general assembly or the city to regulate the price of gas from time to time. The bill also averred that the People's Company, prior to the consolidation, distributed gas chiefly in the west division of the city, although its pipes and mains extended into the south division, and that the other companies, or nearly all them, severally had plants and were engaged in manufacturing and distributing gas in various other sections of the city. The bill quoted from the 11th section of the act of 1897 the clause in reference to the increase of price for gas of the quality furnished consumers during any part of the On March 5, 1900, the city council passed year immediately preceding purchase or an ordinance which provided “that no corpolease, or consolidation and merger, and al-ration, company or companies, firm or perleged the fact to be that during the year im-sons manufacturing, selling, supplying, or mediately preceding the acquisition by com-distributing gas in the city of Chicago for plainant of the various other gas compa-illuminating or for fuel purposes shall nies, complainant charged the net rate or charge, exact, demand, or collect from any price of $1 per thousand cubic feet, and consumer thereof more than the sum of sev 12 *14 enty-five (75) cents per one thousand eral law of Illinois of 1871-2 providing for (1,000) cubic feet of gas consumed or used." the incorporation of cities and villages unThe jurisdiction of the circuit court was der which the city of Chicago as now constiinvoked on the ground of impairment or tuted was incorporated. deprivation by the ordinance of contract rights of complainant acquired by its charter, and the bill prayed, among other things, "that it may be adjudged and decreed that by said charter of the People's Gaslight & Coke Company, the people of the state of Illinois agreed with the People's Gaslight & Coke Company that the common council of the city of Chicago should never be authorized to compel the People's Gaslight & Coke Company to furnish gas at a less rate than $3 per thousand cubic feet, and that such contract is a valuable property right of the said People's Gaslight & Coke Company." The circuit court declined to specifically dispose of complainant's contention that by the act of February 7, 1865, the state had contracted that the city should never require the company to furnish gas at a less rate than $3 per thousand feet, because it held that the limitation or exemption, even if conceded, did not apply to the territory and rights acquired by the merger, and that the bill did not seek divisional relief, and was not framed in that aspect; while most of the consolidated companies were organized under the general incorporation law passed in pursuance of the Constitution of 1870, and the right to fix reasonable rates was reserved, the works not having been installed under any explicit contract to the contrary, if such could have been entered into. As to the clause of the 11th section of the act of June 5, 1897, providing: "Such corporation shall not increase the price charged by it for gas of the quality furnished to consumers during any part of the year immediately preceding such purchase or lease, or such consolidation and merger," the circuit court ruled that this did not fix a rate unalterable by either party, but a rate beyond which the consolidated companies could not go. The circuit court further held that the contention that the state's power to regulate rates had not been delegated to the city was not a Federal question, and that, as the ground of impairment or deprivation of contract rights acquired by the charter failed under the bill as framed, the court could not go further and decide that question in this case. While the decree, as it stands, amended by consent, in terms reserved the question, to be raised in some other appropriate suit in a proper court. In these circumstances we are constrained to decline the consideration of that question zo far as it relates to the contention that power to regulate was conferred by the gen But the decree dismissed the bill "as to the alleged contract rights of complainant," and in so doing the circuit court dealt with the alleged fixing of rates by the act of 1897, as well as with the alleged contract of 1865, that the city should not be authorized to fix a rate of less than $3; for although, as we have said, it was the impairment or deprivation of the latter which was made the ground of Federal jurisdiction, it was in effect as asserted to have been modified by the act of 1897. We agree with the circuit court that the clause of § 11 of the act of 1897, that "such corporation shall not increase the price charged by it for gas of the quality furnished to consumers during any part of the year immediately preceding such purchase or lease or such consolidation or merger," read according to the plain and ordinary signification of the words, it being a general law applicable to every gas com. pany and to every city in the state, was not intended to fix and did not fix, a rate unalterable by either party, but simply a rate above which consolidated companies could not go. This disposes of it as an independent ground of relief, and leaves to be considered the provision of the amended charter of 1865, that "ten years after the passage of this act the common council of the city of Chicago may, by resolution or ordinance, regulate the prices charged by said company for gas; but said common council of the city of Chicago shall, in no case, be author ized to compel the said company to furnish gas at a less rate than $3 per thousand feet,” as affected by the act of 1897. That is to say, was the city cut off from reducing the price below $1, conceding the power of the state to do so? It is contended, on the one hand, that the first part of this provision granted the city the general power to regulate the price after ten years, and that the latter part then ceased to operate as a restriction. And, on the other hand, that the whole clause constituted a contract that the general assembly would not thereafter authorize the city to fix the rate at less than $3. But it is expressly conceded that the general assembly possessed the power to regulate the price of gas and to prescribe reasonable rates, and that, as complainant availed itself of the act of 1897, and thereby acquired the plants of other gas companies, it can now only charge the rate it had been charging the year immediately preceding the acquisition of those properties,—namely, $1 per thousand cubic feet. Assuming, but without intimating any opinion to that effect, that by the amended | mine rates of fare, or to control tolls, and charter of 1865 the state contracted with the like, does not pass to a new corporation the People's Gaslight & Coke Company that the city should not thereafter be empowered to reduce the price of gas below $3 per thousand feet, the preliminary inquiry is whether, by the consolidation, that contract was extended to the plants of, and territory occupied by, the companies absorbed. *The circuit court held that it was not so extended, and that as the bill sought relief in respect of the entire plants and territory, the entire system as consolidated, it could not be maintained, because there was no such contract which the ordinance impaired or destroyed. succeeding others by consolidation or purchase, in the absence of express direction to that effect in the statute. St. Louis & S. F. R. Co. v. Gill, 156 U. S. 656, 39 L. ed. 569, 15 Sup. Ct. Rep. 484; Norfolk & W. R. Co. v. Pendleton, 156 U. S. 667, 39 L ed. 574, 15 Sup. Ct. Rep. 413; Covington & L. Turnp. Road Co. v. Sandford, 164 U. S. 586, 41 L. ed. 562, 17 Sup. Ct. Rep. 198; Minneapolis & St. L. R. Co. v. Gardner, 177 U. S. 332, 41 L. ed. 793, 20 Sup. Ct. Rep. 656; Georgia R. & Bkg. Co. v. Smith, 128 U. S. 174, 32 L. ed. 377, 9 Sup. Ct. Rep. 47. And the same rule is applicable where the conIt is said that partial relief might have stituent companies are merely owned and been accorded unless by the consolidation operated by one of them as authorized by the alleged exemption was lost, but the bill the legislature. An exemption held by the was not framed in the alternative, and the latter would not pass to the others unless so ordinance itself did not contemplate a divid- provided. So that the act of 1897 cannot be ed operation, although, if the exemption ex- construed as extending any prior immunity isted as to part of the system, the ordinance the acquiring company possessed over the would not necessarily be wholly void, but whole system of all the companies consolimight be held inoperative pro tanto, not-dated. withstanding serious difficulties in so applying it. See Chesapeake & O. R. Co. v. Virginia, 94 U. S. 718, 24 L. ed. 310, and cases cited. Was the alleged exemption extended by the act of 1897, when the other companies were acquired? Prior to that time the operations of the People's Company were practically confined to the west division of the city, and although it was empowered to lay pipes in any of the streets or avenues, this was only with the city's consent. The city in 1858 authorized the company to do this, but this was "subject at all times" to the city's resolutions and ordinances. It is true that after the acquisition of the other companies the city compromised with the People's Company in respect of claims for gas furnished, and also ordered the company to lay mains in streets which formerly did not have them, but this action was not equivalent to consent to the extension of the alleged restriction on rates to territory acquired under the merger, with the accomplishment of which the city had nothing to do. And if not, and the circuit court was right, as we think it was, in holding that under the present bill complainant's alleged exemption could not be enforced as to so much of the system as originally belonged to it, then the court was justified in declining to discuss whether, by the consolidation, the alleged exemption was lost altogether. In short, agreeing with the circuit court, we are of opinion that the asserted immunity (conceding it arguendo) did not extend to so much of the system as passed to the consolidated company from companies not possessing such immunity in their own right; that under this bill relief could not be accorded in respect of part of the system; that no contract that the price of gas should not be reduced below $1 per thousand feet was created, nor was the alleged original exemption merely modified and extended; and that the decree dismissing the bill because there were no such contract rights as alleged impaired or destroyed by the ordinance was right. Decree affirmed. (193 U. S. 581) The act of 1897 provided that the consolidated corporation should be subject to the THIRD NATIONAL BANK OF BUFFALO, legal obligations of the companies taken over, and most of these were not exempt N. Y., Plff. in Err., v. from the right of regulation, and were BUFFALO GERMAN INSURANCE COMobliged to submit to its exercise. PANY. By the state Constitution the general assembly was forbidden to make "any irre-National banks—by-law against transfer of vocable grant of special privileges or* imshares by stockholder while indebted to munities," and the general rule is that a bank, invalid. special statutory exemption, such as immu nity from taxation, from the right to deter-A national bank is impliedly precluded from for. *582 bidding any transfer of its shares of stock, without the consent of the directors, by a stockholder while he is indebted to the bank, because of the repeal, by the act of June 3, 1864 (13 Stat. at L. 99, chap. 106), re-enacting, in completer form, the entire law as to national banks, of the provisions of the act of Feb. 25, 1863 (12 Stat. at L 665, chap. 58), subjecting transfers of stock in a national bank to debts due by the stockholders to the bank, or permitting the board of directors to provide to that effect. [No. 146.] Argued January 27, 28, 1904. Decided See same case below, 171 N. Y. 670, 64 N. E. 1119. Statement by Mr. Justice White: The Third National Bank of Buffalo, spoken of hereafter as the bank, was organized on the 9th of February, 1865, and its articles of association contained the following: and all the profits thereof, and dividends and certificates of stock shall contain upon them notice of this provision." Pursuant to this by-law the stock certificates of the bank were thus framed: "This is to certify that is the own er of shares of $100 each of the capital stock of the Third National Bank of Buffalo, subject to the lien or liens referred to in § 15 of the by-laws of said bank, in the following words: 'No transfer of the stock of this association shall be made without the consent of the board of directors, by any stockholder who shall be liable to the association either as principal debtor or otherwise, which liability shall be a lien upon the said stock and all profits thereof and dividends.' And the said stock is transferable only on the books of the bank by him or his attorney on the surrender and cancelation of this certificate and compli ance with the said by-laws." Emmanuel Levi became the registered IN ERROR to the Court of Appeals of the State of New York to review a judgment affirming a judgment of the Appellate Division of the Supreme Court for the Fourth Department, which had affirmed a judgment of the trial court in favor of plaintiff, in a suit to compel a transfer of shares of stock by a national bank, and the payment of div-holder and owner of 450 shares of the capidends which had accrued thereon since the ital stock, evidenced by certificates in the date of the demand for such transfer. Af- form just stated. Levi borrowed money firmed. from the bank upon his promissory notes, secured by various collaterals. On the first day of October, 1890, he applied for a further loan, which the bank agreed to make, provided the new loan was indorsed by Louis Levi, a son of Emmanuel. At that time, in a conversation between the president of the bank and Levi, it was understood that all the stock held by Levi in the bank should be considered as additional security for his entire loan. When this conversation took place, however, the certificates evidencing Levi's stock were in his possession, and no formal pledge or subsequent delivery of the certificates of stock to the bank took place. A few months after (on December 3, 1890), Emmanuel Levi borrowed $25,000 from the Buffalo German Insurance Company, hereafter spoken of as the insurance company, and secured this loan by pledging, delivering, and assigning to the insurance company his certificates of stock in the bank. The written contract of pledge gave the insurance company power, in default of payment of the loan at its maturity, to sell the stock at public or private sale after no"Transfers of Stock.-Sec. 15. The stock tice and apply the proceeds to the debt. of this bank shall be assignable only on the On August 13, 1891, and on May 5, 1892, books of this bank, subject to the restric- Levi borrowed additional sums from the intions and provisions of the act, and a trans-surance company and secured these loans by fer book shall be kept in which all assign a pledge and assignment of his remaining ments and transfers of stock shall be made. stock in the bank. These contracts of No transfers of the stock of this associa- pledge also contained a power of sale simition shall be made, without the consent of lar to that conferred by the first contract. the board of directors, by any stockholder In June, 1893, Emmanuel Levi died, and who shall be liable to the association either Louis and Rosa Levi were appointed and as principal debtor or otherwise, which qualified as his executors. On the 9th of liability shall be a lien upon the said stock June, 1896, there was due to the insurance 1. See Banks and Banking, vol. 6, Cent. Dig. § 905, 909. "That the board of directors shall have power to make all by-laws that may be proper and convenient for them to make under said act for the general regulation of the business of the association and the manage ment and administration of its affairs, which by-laws may prohibit, if the directors shall so determine, the transfer of stock owned by any stockholder who may be liable to the association either as principal debtor or otherwise, without the consent of the board." In virtue of the authority assumed to be conferred by the foregoing provision, the board of directors adopted in February, 1865, a by-law as follows: *583 *585 *584 Mr. Arthur W. Hickman for defend ant in error. Mr. Justice White, after making the foregoing statement, delivered the opinion of the court: It is obvious that the bank had no lien on the stock of Levi * as the result of an express contract of pledge. The mere statement by Levi in a conversation with the president of the bank when the last loan was made to him, that his stock was a security to the bank, did not amount to a pledge of such stock, as there was no de livery of the certificates. As tersely said by the court below: "If we assume the existence of a contract between the defendant bank and Levi (and all we know of it is the testimony of the president of the defendant as to a conversation with Levi, in which he said the bank could consider the stock in his safe as collateral for his loans), it was executory in its nature as long as the stock remained in his possession and until it was in fact pledged to the bank by a delivery. Possession is of the essence of a pledge in order to raise a privilege against third persons. Casey v. Cavaroc, 96 U. S. 467, 24 L. ed. 779; Wilson v. Little, 2 N. Y. 443, 51 Am. Dec. 307." company on the notes of Levi, secured by the pledge of his stock as above stated, the eum of $55,000 of principal, with certain unpaid interest. On that date the insurance company served upon the executors of the estate of Levi a demand for the payment of the debt, accompanied with a notice that if payment were not made the stock would be sold and the proceeds applied to the debt. Payment not having been made, after adequate notice, the attorneys for the bank, the attorneys of the executors of Levi, and one of the executors being present, the stock was sold at public auction, and was bought by the insurance company for the sum of $44,000, that being the highest bid offered. The insurance company thereupon presented to the bank the certificates of stock, the assignment thereof, and the evidence of the purchase at auction, and demanded a transfer to its name. This the bank refused on the ground of Levi's indebtedness to it. Subsequently the insurance company filed its bill, praying that the bank be decreed to transfer the stock and pay the dividends which had accrued thereon since the date of the demand to transfer. The bank, by its answer, set up the debt due by Levi to it, asserting that under the provision of its articles of association and by-laws, as well as under the terms of the certificates of stock and We may, therefore, at once lay out of the agreement with Levi, it had the right view the provisions of § 5201, Revised Statto apply the dividends on the stock, acutes, prohibiting a national bank from crued since the purchase by the insurance company, to its debt, and, indeed, having a prior lien upon the stock for its debt, had the right to withhold the transfer of the stock until the debt due it by Levi or his estate was paid. There was a decree in the trial court in favor of the bank. The case was appealed by the insurance company to the appellate division of the supreme court, fourth department, in which court the judgment of the trial court was affirmed. 29 App. Div. 137, 51 N. Y. Supp. 667. The insurance company prosecuted its appeal to the court of appeals of the state of New York, and in that court the judgments below were reversed and the case was remanded for further proceedings. 162 N. Y. 168, 48 L. R. A. 107, 56 N. E. 521. The cause was again tried and resulted in a decree in favor of the insurance company in both the trial court and the appellate division of the supreme court, and these judgments were affirmed by the court of appeals on the authority of its previous opinion. It is to review such decree of affirmance that this writ of error is prosecuted. making any loan or discount on the secur- Messrs. Adelbert Moot and George L. were valid it is obvious that the insurance Lewis for plaintiff in error. company took the stock subject to the par *589 587 |