US SUPREME COURT DECISIONS

1. A construction by a state supreme court of a contract between the state and an individual is not binding on this Court when assailed under the Contract Clause of the federal Constitution. P. 278 U. S. 433.

2. A statute of South Dakota empowers municipal authorities to grant leases to operate ferries upon waters within the state to persons who shall bid and secure the highest rent for the same; declares it unlawful to operate a ferry without a license, and provides that, when a lease has been granted, another shall not be granted across the same stream within two miles of the ferry landing of the first. After the plaintiff, by complying with the statute, chanrobles.com-red

Page 278 U. S. 430

had acquired leases and at large expense established a profitable ferry under them, the state, pursuant to later Acts of the legislature, constructed a free bridge within the granted limits, the effect of which was to destroy the value of his leases and business and render his investment worthless.

Held:

(1) The exclusive ferry leases were contracts between the state and the lessee. P. 278 U. S. 432.

(2) A public grant is to be strictly construed, and nothing passes to the grantee by implication. P. 278 U. S. 435.

(3) So construed, the ferry leases were not infringed by the building of the bridge. P. 278 U. S. 437.

51 S.D. 561 affirmed.

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 § 2109, South Dakota Revised Code of 1919.

Petitioner alleged in his complaint that he was granted ferry franchises under §§ 8696 to 8704 of the same Code. Section 8696 provided:

"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 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 board of county commissioners of the proper county or the governing body of the proper city or incorporated town to whom application shall be made for a ferry

Page 278 U. S. 431

lease, in the manner hereinafter provided, shall have authority and it shall be its duty to grant a ferry lease, for the term of not exceeding fifteen years to the person who shall bid and secure the highest amount of rent for the same. . . ."

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 § 237(a) of the Judicial Code.

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. chanrobles.com-red

Page 278 U. S. 432