Ennis Water Works v. City of Ennis

Background

In 1909 the City of Ennis passed an ordinance that purported to give A. M. Morrison a 30-year right to supply city water from local reservoirs; Morrison accepted and assigned those rights to the Ennis Water Works, a private water company. The city then passed a later ordinance declaring that the earlier ordinance had conferred no rights and directed a suit to test that claim; another similar ordinance was adopted in 1910 and added to the case. Lower Texas courts entered judgment for the city and the company filed this writ of error to press a federal claim that the later city acts impaired its contract.

Reasoning

The Supreme Court did not reach the merits of a federal contract claim because it concluded the claim was insubstantial. The Texas Supreme Court had applied a long-standing Texas rule (from an 1887 decision) holding this kind of municipal ordinance void under the State Constitution, meaning the original 1909 ordinance had no legal effect when adopted. The high Court explained that when a supposed contract comes from a state law or city ordinance, it must be read in light of the settled state law that existed when the ordinance was passed. Because that settled state rule made the asserted federal right frivolous, the Court dismissed the case for lack of jurisdiction.

Real world impact

The decision ends this company’s federal route for relief and leaves the state courts’ ruling controlling. It means companies relying on municipal ordinances must account for the state legal context that existed when the ordinance was made, and the U.S. Supreme Court will decline to review federal claims shown to be plainly insubstantial by settled state law.