Opinion of the Court. construct in such works machinery intended for the purpose of running its electric lights and street railway and furnishing power to the citizens of Columbia for divers industries; and entered upon the premises of the plaintiff and laid foundations for a steam engine to be used in running its generators, etc., and began the erection of an engine house, boiler house and coal house for the purpose of establishing a steam plant. The complaint did not set up the contract of the board of directors of the penitentiary with the defendant and the act of the general assembly of December, 1892, confirming the same, but these were both set forth in the answer and relied upon by the defendant as its authority for the erection of its works. In this contract the defendant agreed to erect, on the western bank of the canal opposite the penitentiary, suitable water wheels of sufficient capacity to utilize and develop the five hundred horse power of water power, and to transmit across the canal to some convenient point within the walls of the penitentiary not to exceed one hundred horse power for the use and benefit of the penitentiary. In consideration of this the board of directors agreed to allow the defendant the use of all their rights, title and interest to the land on the west side of the canal, and also to allow it the free and uninterrupted use of the said five hundred horse power of water power reserved to the penitentiary, with the exception of the one hundred horse power so reserved for its private use. This contract was subsequently ratified and confirmed by an act of the general assembly approved December 24, 1892. While no special mention is made in the complaint of the Constitution of the United States, the whole theory of the plaintiff's case taken in connection with the answer is that the rights which it acquired to the five hundred horse power in question under the act of 1887 were impaired by the subsequent act of December 24, 1892, ratifying and approving the contract of the board of directors of the state penitentiary with the defendant. The contract of the defendant is set up in the complaint, and although the act of December, 1892, ratifying the same is not set up there, it appears in the answer and is relied upon as validating the contract; so that, reading Opinion of the Court. the complaint and answer together, the question whether the contract of the plaintiff was impaired by subsequent State action appears on the face of the pleadings. In passing upon the case, the Supreme Court, speaking through Mr. Justice Gary, held that one of the objects of the plaintiff's action was to have the contract between the State and the defendant as to the five hundred horse power declared uull and void on the ground that the State could not lease the same. In view of an intervening suggestion, filed by the attorney general, to the purport that the State had interests which would be affected by granting the relief prayed for, he held that the State, being an indispensable party and refusing to become a party, the cause of action on the equity side of the court could not be sustained; and in considering the cause of action on the law side of the court he reached the conclusion that the State was not an indispensable party. He then proceeded to consider whether the contract between the State and the defendant relative to the five hundred horse power was null and void, and held that the proviso to section seven of the act of 1887 being that the right of the State to the free use of this horse power should be absolute, the construction given to it by the legislature in the act of 1892 was correct, and that the word "absolute" was used for the purpose of creating a right in the State to this horse power separable and distinct from the ownership in other lands and not dependent upon any particular lands to which it might be appurtenant. It followed that the contract between the State and the defendant was not null and void. He further held that the right of the defendant to erect the steam plant depended upon the fact whether it was merely incidental and essential to the enjoyment of the water power plant; that the parties had a right to trial by jury as to these issues, but as no demand was made therefor the court assumed that the Circuit Court properly decided all questions of fact upon which its judgment rested. The other justices concurred in the result, the Chief Justice saying that he was not satisfied that the plaintiff ever acquired title to the land upon which the works in question had been erected. There is nothing to Opinion of the Court. indicate that either of them dissented from the views expressed by Mr. Justice Gary, who presumably spoke for the court, with respect to the Federal question. In holding that the contract with the defendant and the legislative act confirming the same were valid, the court proceeded upon the idea that the act of 1887 authorizing the transfer of the property to the board of trustees of the Columbia Canal made the reservation to the State of the five hundred horse power an absolute one; that the directors of the penitentiary could do with it as they pleased, and hence they had the right to turn it over to the defendant if, in their judgment, such course was warranted by a due regard for the interests of the State. While, in so holding, the court disposed of the case upon the construction of the contract under which the plaintiff asserted its right, such construction is no less a Federal question than would be the case if the construction of the contract were undisputed, and the point decided upon the ground that the subsequent act confirming the contract with the defendant did not impair it. The question in either case is whether the contract has been impaired, and that question may be answered either by holding that there is no contract at all, or that the plaintiff had no exclusive rights under its contract, or granting that it had such exclusive rights, that the subsequent legislation did not impair it. These are rather differences in the form of expression than in the character of the question involved, and this court has so frequently decided, notably in the very recent case of McCullough v. Virginia, 172 U. S. 102, that it is the duty of this court to determine for itself the proper construction of the contract upon which the plaintiff relies, that it must be considered no longer as an open question. N. O. Water Works v. La. Sugar Co., 125 U. S. 18; Bridge Proprietors v. Hoboken Co., 1 Wall. 116. To the argument that the Federal right was not "specially set up and claimed" in the language of Revised Statutes, section 709, it is replied that this is not one of the cases in which it is necessary to do so. Under this section there are three classes of cases in which the final decree of a state court may be reëxamined here: Opinion of the Court. (1) "Where is drawn in question the validity of a treaty, or statute of, or authority exercised under, the United States, and the decision is against their validity;" (2) "Where is drawn in question the validity of a statute of, or an authority exercised under, any State on the ground of their being repugnant to the Constitution, treaties or laws of the United States, and the decision is in favor of their validity;" (3) "Or where any title, right, privilege or immunity is claimed under the Constitution, or any treaty or statute of, or commission held or authority exercised under, the United States, and the decision is against the title, right, privilege or immunity specially set up and claimed by either party under such Constitution, statute, commission or authority." There is no doubt that under the third class the Federal right, title, privilege or immunity must be, with possibly some rare exceptions, specially set up or claimed to give this court jurisdiction. Spies v. Illinois, 123 U. S. 131, 181; French v. Hopkins, 124 U. S. 524; Chappell v. Bradshaw, 128 U. S. 132; Baldwin v. Kansas, 129 U. S. 52; Leeper v. Texas, 139 U. S. 462; Oxley Stave Co. v. Butler County, 166 U. S. 648. But where the validity of a treaty or statute of the United States is raised, and the decision is against it, or the validity of a state statute is drawn in question, and the decision is in favor of its validity, this court has repeatedly held that, if the Federal question appears in the record and was decided, or such decision was necessarily involved in the case, and the case could not have been determined without deciding such question, the fact that it was not specially set up and claimed is not conclusive against a review of such question here. Miller v. Nicholls, 4 Wheat. 311; Willson v. Blackbird Creek Marsh Co., 2 Pet. 245; Satterlee v. Matthewson, 2 Pet. 380, 410; Fisher's Lessee v. Cockerell, 5 Pet. 248; Crowell v. Randell, 10 Pet. 368; Harris v. Dennie, 3 Pet. 292; Farney v. Towle, 1 Black, 350; Hoyt v. Shelden, 1 Black, 518; Railroad Co. v. Rock, 4 Wall. 177; Furman v. Nichol, 8 Wall. 44; Kaukauna Co. v. Green Bay &c. Canal, 142 U. S. 254. The case under consideration falls within the second class, Opinion of the Court. and, as it appears from the record and from the opinion of the court, which may be examined for that purpose, (Kreiger v. Shelby Railroad, 125 U. S. 39,) that the question was presented and decided, that the act of 1892, affirming the validity of defendant's contract with the board of directors of the state penitentiary did not impair the obligation of plaintiff's contract, evidenced by the act of 1887, because that act properly construed conveyed no exclusive rights, we think the Federal question sufficiently appears. 2. Upon the merits the case presents but little difficulty. The argument of the plaintiff is that under the act of 1887 the board of trustees of the Columbia Canal, of which plaintiff is the successor, took an absolute title to the canal and appurtenant lands, with the right to "purchase, sell or lease lands adjoining the canal useful for purposes of the canal," and to "sell or lease the water power of the canal, subject to such rules and regulations as it shall prescribe, having first provided the State with five hundred horse power of water power at the penitentiary," for the individual use of the penitentiary alone, and with no right to lease or sublet it to others for private gain. In support of this contention, plaintiff relies not only upon the act of 1887, under which it takes title, but upon certain prior acts of the general assembly. Thus, under section two of the act of September 21, 1866, "to provide for the establishment of a penitentiary," 13 So. Car. Stats. No. 4797, p. 393, it was made the duty of the commission "to select and procure a proper site, at some point if practicable where water power may be made available for manufacturing purposes within the enclosure, on which to erect suitable penitentiary buildings." And by a subsequent act, approved December 19, 1866, 13 So. Car. Stats. 408, the commissioners, who had been authorized by a previous act of December 18, 1865, to sell and convey the Columbia Canal, were authorized to sell it at public or private sale, at their discretion, provided that at any sale that may be made by said commissioners, there be made a reservation to the State of water power sufficient for the purposes of the state penitentiary for all time free of charge. In a subsequent act of |