1. The Chicago & Northwestern Railway Company was, by its
charter, and the charters of other companies consolidated with it,
"to demand and receive such sum or sums of money for the
transportation of persons and property, and for storage of
property, as it shall deem reasonable."
The Constitution of Wisconsin, in force when the charters were
granted, provides that all acts for the creation of corporations
within the State "may be altered or repealed by the legislature at
any time after their passage." Held
that the legislature
had power to prescribe a maximum of charges to be made by said
company for transporting persons or property within the state, or
taken up outside the state and brought within it, or taken up
inside and carried without.
2. Certain Wisconsin railroad corporations were consolidated
with others of Illinois on terms which, in effect, required that
the consolidated company should, when operating in Wisconsin, be
subject to its laws. Held
that Wisconsin can legislate for
the company in that state precisely as it could have legislated for
its own original companies, if no consolidation had taken
Page 94 U. S. 165
3. The Act of Wisconsin approved March 11, 1874, entitled "An
Act relating to railroads, express and telegraph companies, in the
State of Wisconsin," is confined to state commerce, or such
interstate commerce as directly affects the people of Wisconsin.
Until Congress shall act in reference to the relations of this
consolidated company to interstate commerce, the regulation of its
fares, &c., so far as they are of domestic concern, is within
the power of that state.
4. The decision of the Supreme Court of the State of Wisconsin,
that said Act of March 11, 1874, was not repealed by that entitled
"An Act in relation to railroads," approved March 12, 1874, is
binding upon this court.
5. Where property has been clothed with a public interest, the
legislature may fix a limit to that which shall in law be
reasonable for its use.
6. No party to this record can raise the question that the
statute of Wisconsin violates the obligation of the consolidated
company, under the land grant to the Wisconsin and Superior
Railroad Company, to keep the part of its road which formerly
belonged to the latter company open as a public highway for the use
of the government of the United states, free from toll, &c.
The appellants in the first case, nonresidents of the State of
Wisconsin, and owners of first mortgage bonds of the Chicago &
Northwestern Railway Company, filed their bill to restrain the
company from obeying, and Paul, Osborn, and Hoyt, railroad
commissioners, and Sloan, Attorney-General of Wisconsin, from
enforcing, c. 273, Laws of 1874, of that state, which limits the
rate of charges for transporting passengers and freights on all the
railroads in the state.
The bill sets out the various acts incorporating the company and
the companies with which it is consolidated, and it alleges that
the company was authorized to give its bonds and mortgages to
secure the payment of borrowed money; that the complainants are
owners of bonds issued or guaranteed by the company, and secured by
mortgages upon various portions of its railroad, executed pursuant
to law; that the tariff of rates charged by the company before the
passage of that chapter did not produce sufficient income to pay
interest on its debt, the legal rate of interest allowed by the
laws of the state to its stockholders, and expenses; that the
enforcement of said chapter will cause the destruction of the
securities held by the complainants; that the classes of freight
established by sec. 3 of said chapter are different from the
classes of freight established
Page 94 U. S. 166
by the laws of Illinois, Iowa, and Minnesota, for the
transportation of freight upon the railroads of the company in
those states, and that it is practically impossible to carry on the
business of transporting freight from Wisconsin to either of those
states; that the enforcement of said chapter will impair the
obligation of the contract entered into between the company and the
complainants; that said chapter is in violation of the thirteenth
article of the bill of rights of the Constitution of Wisconsin,
which declares that the property of no person shall be taken for
public use without just compensation therefor; that the General
Assembly of Wisconsin had no constitutional power to pass said
chapter; that the eighteenth section is a regulation of interstate
commerce; and that the company has never accepted said chapter, but
will be obliged to conform to the reduced rates of fare and freight
therein specified, or cease operations in Wisconsin unless said
chapter shall be held to be unconstitutional.
The bill in the second case was filed by stockholders of the
company, and is substantially the same as that in the first
Chapter 273 classifies railroads in the state, fixes the limit
of fare for the transportation of any person, classifies freights
and the maximum rates therefor, and prescribes certain penalties
and forfeitures for receiving any greater rate or compensation for
carrying freight or passengers than the act provides. It appoints
railroad commissioners and prescribes their duties and powers. The
eighteenth section is in the following words:
"Nothing contained in this act shall be taken as in any manner
abridging or controlling the rates for freight charged by any
railroad company in this state for carrying freight which comes
from beyond the boundaries of the state, and to be carried across
or through the state; but said railroad companies shall possess the
same power and right to charge such rates for carrying such freight
as they possessed before the passage of this act."
The defendants in each case demurred to the bill of complaint
therein filed. The demurrers were sustained, and the defendants
brought the cases here.
Page 94 U. S. 175
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
These suits present the single question of the power of the
Legislature of Wisconsin to provide by law for a maximum of charge
to be made by the Chicago & Northwestern Railway Company for
fare and freight upon the transportation of persons and property
carried within the state, or taken up outside the state and brought
within it, or taken up inside and carried without. That company was
by its charter authorized "to demand and receive such sum or sums
of money for the transportation of persons and property, and for
storage of property, as it shall deem reasonable." Charter of the
Wisconsin & Superior Railroad Co., sec. 6. Other forms of
expression are used in charters granted by Wisconsin to other
companies, which by consolidation have become merged in the present
corporation; but they are all the same in effect. None goes beyond
The constitution of the state in force when each of the several
acts of incorporation was passed provides that all acts for the
creation of corporations within the state "may be altered or
repealed by the legislature at any time after their passage." Art.
11, sec. 1.
It was conceded upon the argument that this reserved power of
the constitution gave the legislature "the same power over the
business and property of corporations that it has over
Page 94 U. S. 176
or, as it is expressed by one of the counsel,
"nothing more could have been intended than to leave the
stockholders in corporations in such a position that the
legislature could place them on the same footing with natural
persons before the law and disable them from permanently evading
the burdens on all others engaged in similar vocations by appealing
to the letter of their charter. Their object was not to open the
door to oppression, but to secure simple equality between citizens
of the state, whether working singly or in corporate
And in another place, the same learned counsel says:
"The privilege, then, of charging whatever rates it may deem
proper is a franchise, which may be taken away under the reserved
power, but the right to charge a reasonable compensation would
remain as a right under the general law governing natural persons,
and not as a special franchise or privilege."
Without stopping to inquire whether this is the extent of the
operation of this important constitutional reservation, it is
sufficient to say that it does, without any doubt, have that
effect. In Munn v. Illinois, supra,
p. 94 U. S. 113
Chicago, Burlington & Quincy Railroad Co. v. Iowa,
p. 94 U. S. 155
decided that the state may limit the amount of charges by railroad
companies for fares and freights unless restrained by some contract
in the charter, even though their income may have been pledged as
security for the payment of obligations incurred upon the faith of
the charter. So far, this case is disposed of by those
It remains only to consider a few questions raised here which
were not involved in the cases that have already been decided.
1. As to the consolidation of the Wisconsin corporations with
those of Illinois. For the purpose of promoting this consolidation,
the Legislature of Wisconsin passed an enabling act, and in so
doing provided that if such consolidation was perfected,
"the consolidated company shall be and remain subject to the
laws of the State of Wisconsin and the State of Illinois,
respectively, and shall have in all respects the same privileges as
though this consolidation had not taken place, provided that the
laws of Illinois shall have no force and effect in the State of
Wisconsin Consolidation Act, March 10, 1855,
Page 94 U. S. 177
sec. 8. The second section of the same act also provided that
the consolidated company should
"have all the rights, privileges, and franchises conferred on
the said companies [those in Illinois as well as those in
Wisconsin] by the laws of the States of Illinois and Wisconsin,
respectively, the same, and not otherwise, as though the said
consolidation had not taken place."
In this way, Wisconsin in effect said to the Illinois
"You may consolidate your interest with those of the named
companies in this state, and form one corporation in the two
states, but in so doing you must, in Wisconsin, be subject to our
laws. In Wisconsin, all corporations are liable to have their
charters altered or repealed at the will of the legislature. If you
are willing to take this risk, we will care for you within our
jurisdiction precisely as we do for our own corporations."
Upon these terms the consolidation was finally perfected, and
the consolidated company now exists under the two jurisdictions,
but subject to the same legislative control as to its business in
Wisconsin as private persons. The Illinois companies might have
stayed out. But they chose to come in, and must now abide the
consequences. Thus Wisconsin is permitted to legislate for the
consolidated company in that state precisely the same as it would
for its own original companies if no consolidation had taken place.
This is the contract by which the Illinois stockholders must abide.
Having availed themselves of what they supposed to be the
advantages of the consolidation, they cannot repudiate their
There is nothing, therefore, in this objection.
2. The obligations of the consolidated company, under the land
grant to the Wisconsin and Superior Railroad Company, to keep that
part of its road which formerly belonged to that company open as a
public highway for the use of the government of the United states,
free from toll or other charges upon the transportation of property
or troops of the United states, and to transport the mails at such
prices as Congress may by law direct. The United States do not
complain. It will be time enough for us to consider this objection
when they do.
3. As to the effect of the statute as a regulation of interstate
commerce. The law is confined to state commerce, or
Page 94 U. S. 178
such interstate commerce as directly affects the people of
Wisconsin. Until Congress acts in reference to the relations of
this company to interstate commerce, it is certainly within the
power of Wisconsin to regulate its fares, &c., so far as they
are of domestic concern. With the people of Wisconsin this company
has domestic relations. Incidentally, these may reach beyond the
state. But certainly until Congress undertakes to legislate for
those who are without the state, Wisconsin may provide for those
within, even though it may indirectly affect those without.
4. As to the repeal of this act by that of March 12, 1874. The
Supreme Court of Wisconsin has decided that there is no such repeal
as is claimed. The Atty.-Gen. v. Railroad Companies,
Wis. 427. This is binding on us.
5. As to the claim that the courts must decide what is
reasonable, and not the legislature. This is not new to this case.
It has been fully considered in Munn v. Illinois.
property has been clothed with a public interest, the legislature
may fix a limit to that which shall in law be reasonable for its
use. This limit binds the courts as well as the people. If it has
been improperly fixed, the legislature, not the courts, must be
appealed to for the change.
6. The sale of the Chicago, St. Paul, and Fond du Lac Railroad
Company. The charter of the company whose road was sold does not
confer any right which has been impaired by this legislation. That
company, like other railroad companies in Wisconsin, was subject to
regulation as to its fares, &c. It is therefore unnecessary to
consider what might under other circumstances have been the effect
of such a sale.
This disposes of the case. No other questions need be
considered. If the question ever arises whether the company can be
compelled to continue its business at the prices fixed, it will be
time enough for us to pass upon it when it reaches here in due
course of proceeding. It is not here now.
MR. JUSTICE FIELD and MR. JUSTICE STRONG dissented.