A state statute which attaches onerous penalties to the
nonpayment of extravagant demands denies the due process of law
guaranteed by the Fourteenth Amendment.
The statute of Arkansas of 1907, Act 61, providing that railroad
companies must pay claims for live stock killed or injured by their
trains within thirty day after notice and that failure to do so
shall entitle the owner to double damages and an attorney's fee,
even if the amount sued for is less than the amount originally
demanded, as construed by the Supreme Court of that state, is
unconstitutional as a denial of due process of law under the
Fourteenth Amendment.
Quaere, and not decided, whether the statute is
unconstitutional as denying due process of law even where the
original demand is sustained.
90 Ark. 538 reversed.
The facts, which involve the constitutionality under the due
process and equal protection clauses of the Constitution of a
statute of the State of Arkansas imposing double liability in
certain instances upon railway corporations, are stated in the
opinion.
Page 224 U. S. 358
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
A statute of the State of Arkansas (Laws of 1907, Act 61),
relating to the liability of carriers by railroad for livestock
killed, wounded, or injured by their trains, contains this
provision:
"And said railroad shall pay the owner of such stock within
thirty days after notice is served on such railroad by such owner.
Failure to do so shall entitle said owner to double the amount of
damages awarded him by any jury trying such cause, and a reasonable
attorneys' fee.
And provided further, That if the owner of
such stock killed or wounded shall bring suit against such railroad
after the thirty days have expired, and the jury trying such cause
shall give such owner a less amount of damage than he sues for,
then such owner shall recover only the amount given him by said
jury, and not be entitled to recover any attorneys' fees. "
Page 224 U. S. 359
The owner of two horses which were killed within the state by a
train of a railway company served upon the company a written notice
demanding damages in the sum of $500. The company refused to pay
the demand, and after the expiration of thirty days the owner
brought suit in a court of the state to recover his damages,
alleged in the complaint to be $400. A trial to a jury resulted in
a verdict for the owner, assessing his damages at the amount sued
for, and the court, deeming the statute applicable, gave judgment
for double that amount and for an attorneys' fee of $50. The
company objected that the statute, as thus applied, was repugnant
to the due process of law clause of the Fourteenth Amendment to the
Constitution of the United States, but the objection was overruled,
and, on appeal to the supreme court of the state, the judgment was
affirmed. 90 Ark. 538. The case is here on a writ of error to that
court.
It will be perceived that, while before the suit the owner
demanded $500 as damages, which the company refused to pay, he did
not in his suit either claim or establish that he was entitled to
that amount. On the contrary, by the allegations in his complaint,
he confessed, and by the verdict of the jury it was found, that his
damages were but $400. Evidently, therefore, the prior demand was
excessive and the company rightfully refused to pay it. And yet the
statute was construed as penalizing that refusal and requiring a
judgment for double damages and an attorneys' fee. In other words,
the application made of the statute was such that the company was
subjected to this extraordinary liability for refusing to pay the
excessive demand made before the suit.
We think the conclusion is unavoidable that the statute, as so
construed and applied, is an arbitrary exercise of the powers of
government and violative of the fundamental rights embraced within
the conception of due process of law. It does not merely provide a
reasonable
Page 224 U. S. 360
incentive for the prompt settlement, without suit, of just
demands of a class admitting of special treatment by the
legislature, as was the case with the statute considered in
Seaboard Air Line Railway Co. v. Seegers, 207 U. S.
73, but attaches onerous penalties to the nonpayment of
extravagant demands, thereby making submission to them the
preferable alternative. Thus, it takes property from one and gives
it to another not because of a breach by the former of a duty to
the latter or to the public, but because of a lawful exercise of an
undoubted right. Plainly this cannot be done consistently with due
process of law. And, in principle, the supreme court of the state
has so held since its decision in this case. In
Pacific Mut.
Life Insurance Co. v. Carter, 92 Ark. 378, that court had
occasion to consider a statute of the state providing that, if a
loss under a policy of insurance was not paid within the time
specified, "after demand made therefor," the company should be
liable, in addition to the amount of the loss, to twelve percent
damages and a reasonable attorneys' fee. An insured demanded in
payment of a loss under such a policy the sum of $1,666.66, which
the insurance company refused to pay, and in a suit on the policy,
wherein it was found that the loss was but $1,444.44, the insured
was awarded the statutory damages and an attorneys' fee. That part
of the judgment was reversed, and it was said:
"But the act makes the company liable for failure to pay the
loss 'after demand made therefor.' The statute thus contemplates
that there shall be a demand. A recovery for penalty and attorneys'
fee cannot be had when complainant makes demand for more than he is
entitled to recover. It could never have been the purpose of the
legislature to make the insurance companies pay a penalty and
attorneys' fee for contesting a claim that they did not owe. Such
an act would be unconstitutional. The companies have the right to
resist the payment of a
Page 224 U. S. 361
demand that they do not owe. When the plaintiff demands an
excessive amount, he is in the wrong. The penalty and attorneys'
fee is for the benefit of the one who is only seeking to recover
after demand what is due him under the terms of his contract, and
who is compelled to resort to the courts to obtain it."
In the brief for the railway company, the contention is advanced
that the statute would still be wanting in due process of law were
it construed as imposing double liability, with an attorneys' fee,
only where the prior demand is fully established in the suit
following the refusal to pay; but that question does not
necessarily arise upon the facts of this case, and we purposely
refrain from considering it.
Confining ourselves to what is necessary for the decision of the
case in hand, we hold that the statute, as construed and applied by
the state courts, is wanting in due process of law and repugnant to
the Fourteenth Amendment of the Constitution of the United
States.
The judgment is accordingly reversed, and the case is remanded
for further proceedings not inconsistent with this opinion.
Reversed.