The right of a state to reasonably limit the amount of charges
by a railroad company for the transportation of persons and
property within its jurisdiction cannot be granted away by its
legislature unless by words of positive grant or words equivalent
in law.
A statute which grants to a railroad company the right "from
time to time to fix, regulate and receive, the tolls and charges by
them to be received for transportation" does not deprive the state
of its power, within the limits of its general authority, as
controlled by the Constitution of the United States, to act upon
the reasonableness of the tolls and charges so fixed and
regulated.
An act of incorporation which confers upon the directors of a
railroad company the power to make bylaws, rules, and regulations
touching the disposition and management of the company's property
and all matters appertaining to its concerns confers no right which
is violated by the creation of a state railroad commission charged
with the general duty of preventing the exaction of unreasonable or
discriminating rates upon transportation done within the limits of
the state and with the enforcement of reasonable police regulations
for the comfort, convenience, and safety of travelers and persons
doing business with the company within the state.
A railroad forming a continuous line in two or more states, and
owned and managed by a corporation whose corporate powers are
derived from the legislature of each state in which the road is
situated, is, as to the domestic traffic in each state, a
corporation of that state, subject to state laws not in conflict
with the Constitution of the United States.
This Court agrees with the Supreme Court of Mississippi that a
statute creating a commission, and charging it with the duty of
supervising railroads, is not in conflict with the Constitution of
that state.
The provisions of the statute of Mississippi of March 11, 1884,
creating a railroad commission are not so inconsistent and
uncertain as to necessarily render the entire act void on its
face.
This is a suit brought by the Farmers' Loan and Trust Company, a
New York corporation, to enjoin the Railroad
Page 116 U. S. 308
Commission of Mississippi from enforcing against the Mobile and
Ohio Railroad Company the provisions of the statute of Mississippi
passed March 11, 1884, entitled
"An act to provide for the regulation of freight and passenger
rates on railroads in this state, and to create a commission to
supervise the same, and for other purposes."
That act is as follows:
"SECTION 1. Be it enacted by the Legislature of the State of
Mississippi that the track of every railroad in this state is a
public highway, over which all persons have equal rights of
transportation for passengers and freights on the payment of just
compensation to the owner of the railroad for such transportation,
and any person or corporation engaged in transporting passengers or
freights over any railroad in this state who shall exact, receive,
or demand more than the rate specified in any bill of lading issued
by such person or corporation, or who, for his or its advantage or
for the advantage of any connecting line or for any person or
locality, shall make any discrimination in transportation against
any individual, locality, or corporation shall be guilty of
extortion."
Sections 2 and 3 relate to the punishment of those so guilty,
and their liability in double damages to parties injured. Sections
4 and 5 provide for the appointment of three commissioners, to be
known as the "Railroad Commission of the State of Mississippi,"
prescribe their qualifications and tenure of office, fix their
salaries, and subject them to penalties and punishment for
violation of duty. Section 6 is as follows:
"SEC. 6. Be it further enacted that it shall be the duty of all
persons or corporations who shall own or operate a railroad in this
state, within thirty days after the passage of this act, to furnish
the commission with its tariff of charges for transportation of
every kind, and it shall be the duty of said commission to revise
said tariff of charges so furnished and determine whether or not,
and in what particular, if any, said charges are more than just
compensation for the services to be rendered, and whether or not
unjust discrimination is made in such tariff of charges against any
person, locality, or corporation, and when said charges are
corrected, as approved by said
Page 116 U. S. 309
commission, the commission shall then append a certificate of
its approval to said tariff of charges; but in revising or
establishing any and every tariff of charges, it shall be the duty
of said commission to take into consideration the character and
nature of the service to be performed and the entire business of
such railroad, together with its earnings from the passenger and
other traffic, and shall so revise such tariffs as to allow a fair
and just return on the value of such railroad, its appurtenances
and equipments, and it shall be the duty of said commission to
exercise a watchful and careful supervision over every such tariff
of charges and continue such tariff of charges from time to time as
justice to the public and each of said railroad companies may
require, and to increase or reduce any of said rates according as
experience and business operations may show to be just, and said
commission shall accordingly fix tariffs of charges for those
railroads failing to furnish tariffs as above required. And it
shall be the duty of said railroad companies, or persons operating
any railroad in this state, to post at each of its depots all
rates, schedules, and tariffs for the transportation of passengers
and freights made or approved by said railroad commission, with
said certificate of approval, within ten days after said approval,
in some conspicuous place at such depot, and it shall be unlawful
for any such person or corporation to make any rebate or reduction
from such tariff in favor of any person, locality, or corporation
which shall not be made in favor of all other persons, localities,
or corporations by a change in such published rates, except as may
be allowed by the commission, and when any change is contemplated
to be made in the schedule of passenger or freight rates of any
railroad by the commission, said commission shall give the person
or corporation operating or managing said railroad notice in
writing at least ten days before such change of the time and place
at which such change will be considered."
Section 7 makes it unlawful for a company to grant reductions or
rebates prohibited by the act, and fixes a penalty for so
doing.
Section 8 allows reduced rates for certain kinds of
transportation.
Page 116 U. S. 310
Section 9 is as follows:
"SEC. 9. Be it further enacted that it shall be the duty of said
commission to hear all complaints made by any person against any
such tariff of rates so approved on the ground that the same in any
respect is for more than just compensation or that such charges, or
any of them, amount to or operate so as to effect unjust
discrimination. Such complaint must be in writing, and specify the
items in the tariff against which complaint is made. And if it
appears to the commission that there may be justice in the
complaint or that the matter ought to be investigated, the
commission shall forthwith furnish to the person or corporation
operating the railroad a copy of the complaint, together with
notice, which said notice shall be served as other legal process is
now required by law to be served on railroad companies, that at a
time and place stated in the notice that tariff, as to said items,
will be revised by the commission, and at such time and place it
shall be the duty of the commission to hear the parties to the
controversy in person or by counsel, or both, and such evidence as
may be offered, oral or in writing, and may examine witnesses on
oath, conforming to the mode of proceedings, as nearly as may be
convenient, to that required of arbitrators, giving such time and
latitude to each side, and regulating the opening and conclusion of
any argument, as the commission may consider best adapted to arrive
at the truth, and when the hearing is concluded, the commission
shall give notice of any change deemed proper by them to be made to
the person or corporation operating the railroad,
provided
in no instance shall any corporation, railroad, or person be
criminally or civilly liable for the making of any charge or
discrimination whatever if the same is not in violation of the
tariff of charges or rules and regulations prescribed by the
commission."
Sections 10 and 11 are unimportant in this case.
The remainder of the statute is as follows:
"SEC. 12. Be it further enacted that every person or corporation
operating a railroad in this state shall furnish the said
commission with all the information required relative to the
management of their respective lines, and particularly with
Page 116 U. S. 311
copies of all leases, contracts, and agreements for
transportation with express, sleeping car, or other companies to
which they are parties."
"SEC. 13. Be it further enacted that every railroad company
shall, within twenty-four hours after the occurrence of any
accident to a train attended with serious personal injury on any
portion of its line within the limits of this state, give notice of
the same to the railroad commissioners, who, upon information of
such accident, may repair or dispatch one or more of their number
to the scene of said accident and inquire into the facts and
circumstances thereof, which shall be recorded in the minutes of
their proceedings, and embraced in their annual report."
"SEC. 14. Be it further enacted that the commission shall make
annual reports to the governor on or before the first day of
January in each year, for transmission to the legislature, of their
doings for the year ending on the 30th day of September next
preceding, containing such facts as will disclose the actual
workings of the railway system in this state and such suggestions
as to the general railroad policy of the state as may seem to them
appropriate."
"SEC. 15. Be it further enacted that it shall be the duty of
every railroad company or person operating a railroad in this state
to make quarterly returns of the business of said railroad to the
railroad commission of Mississippi, which returns shall embrace all
the receipts and expenditures of said railroad, and to be made
according to forms furnished by the said railroad commissioners for
that purpose."
"SEC. 16. Be it further enacted that the quarterly returns
herein provided shall be made as aforesaid within thirty days after
the end of each quarter to which they relate, and any railroad
company, or persons operating any railroad in this state, which
shall fail or refuse to make the quarterly returns as provided for
in this act, shall forfeit to the State of Mississippi fifty
dollars for every day of such refusal or neglect."
"SEC. 17. Be it further enacted that the said quarterly returns
shall be sworn to by one or more officers of said company or of the
persons operating the said railroad who has
Page 116 U. S. 312
knowledge of their truth, and any person knowingly swearing
falsely to any statement in any of said quarterly reports shall be
guilty of perjury."
"SEC. 18. Be it further enacted that it shall be the duty of the
commissioners to inspect the depots of the railroads operated in
this state and see that at least one comfortable and suitable
reception room is provided at each depot for the use and
accommodation of persons desiring and awaiting transportation over
their line, and any railroad company failing or refusing to provide
such room, after sixty days' notice from the commissioners to
provide the same, shall be liable to a penalty of not less than
fifty dollars for each day they so fail or refuse to provide such
room, and said railroad company shall keep at all times in such
reception rooms a bulletin board, which shall show the time of the
arrival and departure of trains, and when any passenger train or
other train for transporting passengers is delayed, notice of same
shall be made on said bulletin board for the information of
passengers, stating, as nearly as can be ascertained, the extent of
the delay and probable time of arrival."
"SEC. 19. Be it further enacted that the determination of every
matter of said commission shall be in writing, and proof thereof
shall be made by a copy of the same, duly certified to by the clerk
of said commission, and whenever may matter has been determined by
said commission in the course of any proceeding before it relating
to the regulation or supervision of any railroad in this state and
coming within the jurisdiction of such commission, proof of the
fact of such determination, duly certified as aforesaid, shall be
received in all the courts of this state or before any officers
thereof, in all civil cases, as
prima facie evidence that
such determination was right and proper, and the record of the
proceedings of said commission shall be deemed a public record, and
shall at all reasonable times be subject to the inspection of the
public."
"SEC. 20. Be it further enacted that said commission, or any one
of said commissioners, may, in the discharge of any of the duties
imposed upon them by this act, administer oaths, take affidavits,
and summon and examine witnesses under oath in all matters coming
before them, and if any person shall testify
Page 116 U. S. 313
or make any false affidavit or oath before said commission or
before any of said commissioners or before any officers to any
matter coming before said commission, he shall be deemed guilty of
perjury, and upon conviction thereof shall be punished according to
law."
"SEC. 21. Be it further enacted that all summons for witnesses
to appear before said commission or before any one or more of said
commissioners, and notice to persons or corporations, shall be
issued by one of said commissioners, and be directed to any
sheriff, constable, or marshal, of any city or town, who shall
execute the same in his bailiwick, and make due return thereof as
directed therein under the penalties prescribed by law for a
failure to execute and return the process of any court, and if any
person, duly summoned to appear and testify before said commission,
or before any one or more of said commissioners, shall fail or
refuse to appear and testify without a lawful excuse, or shall
refuse to answer any proper question propounded to him by said
commission or any of said commissioners, or if any person shall
obstruct said commission or one or more of said commissioners in
the discharge of duty or shall conduct himself in a rude,
disrespectful, or disorderly manner before said commission or any
of them deliberating in the discharge of duty, such person shall be
deemed guilty of a misdemeanor, and, upon conviction thereof shall
be fined not less than fifty nor more than one thousand
dollars."
"SEC. 22. Be it further enacted that witnesses summoned to
appear before said commission shall be entitled to the same
per
diem and mileage as witnesses attending circuit court, and
witnesses summoned by said commission on its behalf shall be paid
out of the state treasury on warrants to be drawn by the auditor,
upon the certificate of the commission, showing the amount and
items thereof, to which such witness may be entitled, and witnesses
summoned for any railroad shall be paid by such railroad."
"SEC. 23. Be it further enacted that if any railroad company or
person or corporation operating any railroad in this state shall
violate any of the provisions of this act or the tariff of charges
as fixed by such commission, such company,
Page 116 U. S. 314
person, or corporation, shall be liable to a penalty of five
hundred dollars for each violation not otherwise provided for, and
such penalty may be recovered by an action to be brought in the
name of the State of Mississippi in any county where such violation
may occur or injury or wrong be done. The commission shall
institute such action through the district attorney of the proper
district, and no such suit shall be dismissed without the consent
of the court and of said commission, and if any district attorney
shall neglect for thirty days after notice to bring any such suit,
the commission may direct some attorney at law to bring the same,
and his fee therefor shall be fixed by the court, and shall not
exceed fifty percent of the amount collected, and the district
attorney shall not interfere in such suit, and the same shall not
be dismissed without consent as aforesaid,
provided that
in all trials of cases brought for a violation of any tariff of
charges as fixed by the commission, it may be shown in defense that
such tariff so fixed was unjust."
"SEC. 24. Be it further enacted, that the remedies hereby given
shall be regarded as cumulative to the remedies now given by law
against railroad corporations, and this act shall not be construed
as repealing any statute giving such remedies."
"SEC. 25. Be it further enacted that the provisions of this act
shall apply to and include all persons, firms, and companies, and
to all associations of persons, whether incorporated or otherwise,
that shall operate a railroad in this state (street railways
excepted)."
"SEC. 26. Be it further enacted that hereafter the election of
railroad commissioners shall be at such time, in such manner, and
for such term as may be determined by the legislature."
"SEC. 27. Be it further enacted that the schedules adopted by
the for charges for transportation of persons and freight shall not
be enforced against any railroad in this state before the first day
of May, A.D. 1884."
"SEC. 28. Be it further enacted that this act shall take effect
and be in force from and after its passage."
On the 15th of March, 1884, the following supplemental act was
passed:
Page 116 U. S. 315
"SEC. 1. Be it enacted by the Legislature of the State of
Mississippi that the act entitled"
"An act to provide for the regulation of freight and passenger
rates on railroads in this state, and to create a commission to
supervise the same, and for other purposes,"
"approved March 11, 1884, shall not be so construed as to
authorize said commissioners to require bulletin boards to denote
the delay of trains noted thereon, or to require the erection of
stationhouses, in any case where in their judgment the public
travel does not make it necessary; nor shall said act be so
construed as to require said commission to investigate or call upon
any railroad company for rates of charges in transportation or
travel from any point outside of this state to points outside of
this state, or in any way interfere with such rates of
charges."
On the third of February, 1848, the Legislature of Alabama
passed an act to incorporate the Mobile and Ohio Railroad Company,
with power
"to locate, construct, and finally complete a single, double, or
treble railroad or way from some suitable point in the City of
Mobile in a westerly or northwesterly direction to the west line of
this state, toward the mouth of the Ohio River in such route as
shall be deemed most expedient, and to transport, take, and carry
property and persons upon said railroad or way by the power and
force of steam, of animals, or of any other mechanical or other
power, or any combination of them, which said company may choose to
apply,"
and
"with permission to make any lawful contract with any other
railroad corporation in relation to the business of said company,
and also to make joint stock with any other railroad
corporation."
The immediate government and direction of the affairs of the
company was vested in a board of directors, to be chosen by the
stockholders, and by § 7 it was provided
"That the directors shall have full power to make and prescribe
such bylaws, rules, and regulations as they shall deem needful and
proper touching the disposition and management of the stock,
property, estate, and effects of said company not contrary to this
charter or the laws of this state or of the United States, the
transfer of shares, the duties and conduct of their officers
Page 116 U. S. 316
and servants, touching the election of and meeting of the
directors, and all matters whatsoever which may appertain to the
concerns of said company."
Section 12 is as follows:
"SEC. 12. And be it further enacted that it shall be lawful for
the company hereby incorporated, from time to time, to fix,
regulate, and receive the toll and charges by them to be received
for transportation of persons or property on their railroad or way
aforesaid, hereby authorized to be constructed, erected, built, or
used, or upon any part thereof."
On the 17th of February, 1848, the Legislature of Mississippi
passed "An act to incorporate the Mobile and Ohio Railroad
Company." This act, after reciting the incorporation of the company
in Alabama and setting out that act of incorporation in full, "the
same as printed in Alabama," and also reciting that Mississippi was
"desirous to aid in accomplishing the object of the said act,"
proceeded as follows:
"SEC 1. Be it enacted by the Legislature of the State of
Mississippi that the railroad described in the above-recited act be
extended, in the State of Mississippi, from the Alabama line to the
State of Tennessee in such direction and on such a route as shall
be deemed most expedient, and that as to said extension there is
granted to the said Mobile and Ohio Railroad Company, when
organized, the same rights, powers, and privileges as are granted
to it within the State of Alabama by the said act, subject,
however, to the same and similar conditions, restriction,
modifications, and provisions as are in said act above recited,
contained and set forth, excepting the provision contained in
section 15 of said act, and the said act is hereby concurred in and
adopted within the State of Mississippi in reference to the said
railroad as extended, and in reference to the said Mobile and Ohio
Railroad Company, with the exception of that portion contained in
section 15, as before stated,
provided that in case of
persons absent or unknown, whose lands may be condemned pursuant to
sections 7, 8, and 9 of said recited act, the placing of the amount
of the damages assessed to the credit of the owner, in the hands of
the state treasurer, shall be taken as payment, and on such owner
appearing
Page 116 U. S. 317
or tendering satisfactory evidence of his claim thereto, such
damages shall be paid him by the treasurer on the warrant of the
auditor of public accounts."
The excepted section related to taxation, and as to this a
different provision was made in Mississippi from that in the
Alabama charter. Power was also given the company to cross the
tracks of other railroads in Mississippi, and some slight changes
were made in the provision for depositing the amount of damages
assessed upon the condemnation of property for the use of the
company. Otherwise the charters of the company in these two states
were substantially identical.
On the same day, February 28, 1848, the Legislature of Tennessee
passed "An act to incorporate the Mobile and Ohio Railroad Company
and the Tennessee Central Railroad Company." This act began as
follows:
"Whereas it appears to this General Assembly, from the memorial
of Jonathan Emanuel, President, and George N. Stewart, Sidney
Smith, Moses Waring, Charles Le Baron, and S. Griffith Fisher,
directors, of the Mobile and Ohio Railroad Association, that a
company has been organized at Mobile, in the State of Alabama, for
the purpose of constructing a railroad from Mobile to the Tennessee
River, and from thence to a suitable point near the mouth of the
Ohio River, for which purpose said board of president and directors
have applied to this general assembly for the passage of such a law
as may be necessary to authorize the construction of said road
through the State of Tennessee, and whereas it is deemed a matter
of vital importance to this state that a direct communication by
railroad to the Gulf of Mexico be established, therefore,"
"SEC 1. Be it enacted by the General Assembly of the State of
Tennessee that the said Jonathan Emanuel, president, and the said
George N. Stewart Sidney Smith, Moses Waring, Charles Le Baron, and
S. Griffith Fisher, directors, and their associates, who shall be
the stockholders of said company, and their successors, under the
name and style of 'The Mobile and Ohio Railroad Company,' are
hereby declared to be a body corporate and politic under the laws
of Tennessee,
Page 116 U. S. 318
with succession for five hundred years, and a common seal, with
capacity to have, receive, and enjoy, to them and their successors,
property and estate of whatsoever nature and quality, and the same
to alien, transfer, and dispose of, so far as may be necessary to
carry into effect the main object of this charter, which is hereby
declared to be the construction, use, and maintenance of a railroad
from Mobile, in the State of Alabama, to some point on the
Mississippi or Ohio River near the mouth of the Ohio, passing
through the State of Tennessee."
The remainder of the act relates to the powers and privileges of
the company in Tennessee.
On the 26th of February, 1848, the General Assembly of Kentucky
passed an act "to authorize the Mobile and Ohio Railroad Company to
extend their railroad from the south boundary line of the State of
Kentucky to the Mississippi or Ohio Rivers," as follows:
"SEC 1. Be it enacted by the General Assembly of the
Commonwealth of Kentucky that the Mobile and Ohio Railroad Company,
when formed under the Act of the General Assembly of the State of
Alabama approved February 3 1848, entitled 'An act to incorporate
the Mobile and Ohio Railroad Company,' shall be allowed the
privilege of making any necessary reconnaissance and survey for the
purpose of ascertaining the most eligible route for extending the
Mobile and Ohio Railroad to any point upon the Mississippi or Ohio
Rivers in this state."
"SEC. 2. Be it further enacted that as soon as said route and
point shall be ascertained, the said Mobile and Ohio Railroad
Company shall be allowed the right of way for the extension and
construction of their said railroad from the Tennessee line to the
Mississippi or Ohio Rivers, and that they shall be entitled to all
the privileges, rights, and immunities, and subject to all such
restrictions, as are granted, made, and prescribed for the benefit,
government, and direction of said Mobile and Ohio Railroad Company
within the State of Alabama by the act above described."
On the 20th of September, 1850, Congress passed
"An Act
Page 116 U. S. 319
granting the right of way and making a grant of land to the
States of Illinois, Mississippi, and Alabama in aid of the
construction of a railroad from Chicago to Mobile."
This act provided
"that the said railroad and branches shall be and remain a
public highway for the use of the government of the United States,
free from toll or other charges,"
and
"that the United States mail shall at all times be transported
on the said railroad, under the direction of the Post Office
Department at such price as the Congress may by law direct."
These lands were transferred by Alabama and Mississippi to the
Mobile and Ohio Railroad Company in 1850 and 1851, and in 1859
Congress ratified and confirmed the grants and extended the time
for building the road.
The case was heard on demurrer to the bill. The circuit court
rendered a decree allowing the injunction, and from that decree
this appeal was taken.
Page 116 U. S. 324
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
After stating the facts in the language reported above, he
continued:
The argument in support of the decree below is:
1. That the statute under which the commissioners are to act
impairs the obligation of the charter contract of the Mobile and
Ohio Railroad Company.
2. That it is, so far as that company is concerned, a regulation
of commerce among the states.
3. That it denies the company the equal protection of the laws,
and deprives it of its property without due process of law.
4. That it confers both legislative and judicial powers on the
commission, and is thus repugnant to the Constitution of
Mississippi, and
5. That it is void on its face by reason of its inconsistencies
and uncertainties.
These several positions will be considered in their order.
1. The provisions of the charter on which the claim of contract
rests are found in §§ 1, 7, and 12, as follows:
"SEC 1. And the said company is hereby authorized and empowered
. . . to transport, take, and carry property
Page 116 U. S. 325
and persons upon said railroad or way by the power and force of
steam, of animals, or of any other mechanical or other power, or
any combination of them which the company may choose to apply."
"SEC. 7. That the directors shall have full power to make and
prescribe such bylaws, rules, and regulations as they shall deem
needful and proper touching the disposition and management of the
stock, property, estate, and effects of said company not contrary
to this charter or the laws of this state or of the United States,
the transfer of shares, the duties and conduct of their officers
and servants, touching the election of and meeting of the
directors, and all matters whatsoever which may appertain to the
concerns of said company."
"SEC. 12. That it shall be lawful for the company hereby
incorporated from time to time to fix, regulate, and receive the
toll and charges by them to be received for transportation of
persons or property on their railroad or way aforesaid, hereby
authorized to be constructed, erected, built, or used, or upon any
part thereof."
From this it is claimed that the state granted to the company,
for the full term of its corporate existence -- that is to say,
forever -- the right of managing its own affairs and regulating its
charges for the transportation of persons and property free of all
legislative control.
It is now settled in this Court that a state has power to limit
the amount of charges by railroad companies for the transportation
of person and property within its own jurisdiction unless
restrained by some contract in the charter or unless what is done
amounts to a regulation of foreign or interstate commerce.
Railroad Co. v.
Maryland, 21 Wall. 456;
Chicago, Burlington
& Quincy Co. v. Iowa, 94 U. S. 155;
Peik v. Chicago & Northwestern Railway Co.,
94 U. S. 164;
Winona & St. Peter Railroad Co. v. Blake, 94 U. S.
180;
Ruggles v. Illinois, 108
U. S. 531. This power of regulation is a power of
government, continuing in its nature, and if it can be bargained
away at all, it can only be by words of positive grant, or
something which is in law equivalent. If there is reasonable doubt,
it must be resolved in favor of the
Page 116 U. S. 326
existence of the power. In the words of Chief Justice Marshall
in
Providence Bank v.
Billings, 4 Pet. 560: "Its abandonment ought not to
be presumed in a case in which the deliberate purpose of the state
to abandon it does not appear." This rule is elementary, and the
cases in our reports where it has been considered and applied are
numerous. Thus, in
Providence Bank v. Billings, it was
held that the incorporation of a bank without any special provision
for taxation did not imply a contract on the part of the state not
to tax at all. In
Charles River Bridge v.
Warren Bridge, 11 Pet. 419,
36 U. S. 548,
the Court said this rule of construction was not confined to the
taxing power, and accordingly it held that the charter of a toll
bridge company did not imply a contract not to allow the building
of another bridge in the immediate vicinity which would materially
interfere with its revenues. In delivering the opinion of the
Court, Chief Justice Taney used this language:
"This of incorporation is in the usual form, and the privileges
such as are commonly given to corporations of that kind. It confers
on them the ordinary faculties of a corporation for the purpose of
building the bridge, and establishes certain rates of toll which
the company are authorized to take; this is the whole grant. There
is no exclusive privilege given to them over the waters of Charles
River above or below the bridge; no right to erect another bridge
themselves, nor to prevent other persons from erecting one; no
engagement from the state that another shall not be erected, and no
undertaking not to sanction competition, nor to make improvements
that may diminish its income."
In
Minot v. Philadelphia,
Wilmington & Baltimore Railroad, known as the
Delaware Railroad Tax Case, 18 Wall. 206,
85 U. S. 226,
it was held that a provision in the charter that the railroad
company "should pay annually into the treasury of the state a tax
of one-quarter of one percent on its capital stock of four hundred
thousand dollars," without any words "indicating the intent of the
legislature that no further or different tax should be subsequently
levied," was not sufficient to show a contract binding the state
not to make such a levy, the Court remarking that
"the surrender, when claimed, must be shown by clear and
unambiguous
Page 116 U. S. 327
language which will admit of no reasonable construction
consistent with the reservation of the power."
So, in
Bailey v.
Magwire, 22 Wall. 215, it was held that a clause in
a charter which subjected a corporation "to taxation at the rate
assessed by the state on other real or personal property of like
value" did not relieve the company from taxation for other than
state purposes. And here the Court said: "silence on such a
subject" -- that is to say, taxation for other purposes --
"cannot be construed as a waiver of the right of the state in
this regard. There must be something said which is broad enough to
show clearly that the legislature intended to relieve the
corporation from a part of the burdens borne by other real or
personal property."
In
Fertilizing Co. v. Hyde Park, 97 U.
S. 660, it appeared that a company had been incorporated
with authority to establish and maintain for fifty years
"chemical and other works at the place designated . . . for the
purpose of manufacturing and converting dead animals and other
animal matter into an agricultural fertilizer, or into other
chemical products, by means of chemical or other processes,"
but this Court held that the state was not thereby prevented
from causing the works to be abated in case they should, within the
time of the charter, become a public nuisance because of the growth
of population in the neighborhood, and among the reasons assigned
was the absence from the charter of any express exemption of the
company from the operation of the powers of the state applicable to
its existing condition for the time being. In
Newton v.
Commissioners, 100 U. S. 548, the
seat of justice of a county had been fixed at Canfield, but the
statute by which this was done provided "that before the seat of
justice shall be considered permanently established at Canfied,"
the citizens should donate a lot and make certain provisions for
the erection of public buildings thereon. The citizens complied
with all the requirements of the law, and the seat of justice
remained undisturbed at the place where it has been "permanently
established" until 1874, when a law was passed for its removal to
another town. The citizens of Canfield then caused a bill to be
filed for an injunction restraining the county commissioners from
effecting the
Page 116 U. S. 328
removal on the ground that the original act and what was done
under it constituted an executed contract on the part of the state
that the seat of justice should remain forever at Canfield, and the
later act impaired the obligation of that contract, but this Court
held otherwise, saying, among other things:
"If the legislature had intended to assume an obligation that it
should be kept there in perpetuity, it is to be presumed it would
have said so. We cannot -- certainly not in this case --
interpolate into the statute a thing so important which it does not
contain."
The cases in which it has been held that a contract was entered
into are equally instructive. Thus, in
Gordon v.
Appeal Tax Court, 3 How. 133, the statute was:
"That upon any of the banks of this state complying with the
conditions of this act, the faith of the state is hereby pledged
not to impose any future tax or bonus on the said banks during the
continuance of their charters under this act."
In
State Bank of Ohio v.
Knoop, 16 How. 369, the provision was that each
bank organized under the act should semiannually, on the days
designated for declaring dividends, set off to the state six
percent on the profits, deducting therefrom the expenses and
ascertained losses for the six months next preceding, which sum or
amount so set off shall be in lieu of all taxes to which the
company, or the stockholders therein, would otherwise be subject,
and from the judgment that this was a contract of exemption from
any further exercise of the power of taxation three justices
dissented. In
Bridge Proprietors v. Hoboken
Co., 1 Wall. 116, the words of exclusion were:
"That it should not be lawful for any person or persons
whatsoever to erect, or cause to be erected [within certain
specified limits] any other bridge or bridges over or across the
said river."
In
Home of the Friendless v.
Rouse, 8 Wall. 430, the provision was that all
property of said corporation shall be exempt from taxation and that
a certain existing statute to the effect that every act of
incorporation should be subject to alteration and repeal "shall not
apply to this corporation."
Such being the rule and such its practical operation, we return
to the special provisions of the charter on which this case
Page 116 U. S. 329
depends, and find, first, the authority given the corporation to
carry persons and property. This of itself implies authority to
charge a reasonable sum for the carriage. In this way the
corporation was put in the same position a natural person would
occupy if engaged in the same or like business. Its rights and
privileges in its business of transportation are just what those of
a natural person would be under like circumstances -- no more, no
less. The natural person would be subject to legislative control as
to the amount of his charges. So must the corporation be. That was
decided in
Railroad Co. v. Maryland; Chicago, Burlington &
Quincy Railroad Co v. Iowa; Peik v. Chicago & Northwestern
Railway Co.; Winona & St. Peter Railroad Co. v. Blake, and
Ruggles v. Illinois, all cited above.
Next follows the power of the directors to make bylaws, rules,
and regulations for the management of the affairs of the company,
but it is expressly provided that such bylaws, rules, and
regulations shall not be contrary to the laws of the state. This we
held, in
Ruggles v. Illinois, included laws in force when
the charter was granted, and those which came into operation
afterwards as well. It is true that the clause which thus limits
the power of the directors is found in the middle of the sentence
which confers the power, but it clearly was intended to refer to
everything that might be done in this way "touching . . . all
matters whatsoever that may appertain to the concerns of said
company." There is nothing here, therefore, which in any manner
implies a contract on the part of the state to exempt the company
from the operation of laws enacted within the scope of legislative
power for the regulation of the business in which it is authorized
to engage.
The case turns, consequently, on § 12, which is "that it shall
be lawful for the company . . . from time to time to fix, regulate,
and receive the toll and charges by them to be received for
transportation," &c. This would have been implied from the rest
of the charter if there had been no such provision, and it is
argued that unless it had been intended to surrender the power of
control over fares and freights, this section would not have been
inserted. The argument concedes that the power of
Page 116 U. S. 330
the company under this section is limited by the rule of the
common law which requires all charges to be reasonable. In
Munn
v. Illinois, 94 U. S. 134,
and
Chicago, Burlington & Quincy Railroad Co. v. Iowa,
94 U. S. 155, this
Court decided that, as to natural persons and corporations subject
to legislative control, the state could in cases like this fix a
maximum beyond which any charge would be unreasonable, and that
such maximum, when fixed, would be binding on the courts in their
adjudications, as well as on the parties in their dealings. The
claim now is that by § 12 the state has surrendered the power to
fix a maximum for this company, and has declared that the courts
shall be left to determine what is reasonable, free of all
legislative control. We see no evidence of any such intention.
Power is granted to fix reasonable charges, but what shall be
deemed reasonable in law is nowhere indicated. There is no rate
specified nor any limit set. Nothing whatever is said of the way in
which the question of reasonableness is to be settled. All that is
left as it was. Consequently all the power which the state had in
the matter before the charter it retained afterwards. The power to
charge being coupled with the condition that the charge shall be
reasonable, the state is left free to act on the subject of
reasonableness, within the limits of its general authority, as
circumstances may require. The right to fix reasonable charges has
been granted, but the power of declaring what shall be deemed
reasonable has not been surrendered. If there had been an intention
of surrendering this power, it would have been easy to say so. Not
having said so, the conclusive presumption is there was no such
intention.
This is not in conflict with the judgment of the Supreme Court
of Mississippi in
Railroad Commission v. Yazoo &
Mississippi Railroad Co., in which it was decided that the
power had been surrendered in favor of that company because in that
charter, a maximum of rates was fixed. In the opinion, a copy of
which has been furnished us in advance of its publication in the
regular series of reports, the court says distinctly that
"A grant in general terms of authority to fix rates is not a
renunciation of the right of legislative control so as to secure
reasonable rates. Such a grant evinces merely a purpose to
confer
Page 116 U. S. 331
power to exact compensation which shall be just and reasonable.
It is only where there is an unmistakable manifestation of a
purpose to place the unrestricted right in the corporation to
determine rates of compensation that the power of the legislature
afterwards to interfere can be denied."
In
Railroad Commission v. Natchez, Jackson & Columbia
Railroad Co., it was held by the same court that the charter
authority for the company "from time to time to fix, regulate, and
receive tolls and charges by them to be received for transportation
of persons and property" did not amount to a contract of exemption,
and the commission was allowed to proceed under the law.
From what has thus been said, it is not to be inferred that this
power of limitation or regulation is itself without limit. This
power to regulate is not a power to destroy, and limitation is not
the equivalent of confiscation. Under pretense of regulating fares
and freights, the state cannot require a railroad corporation to
carry persons or property without reward; neither can it do that
which in law amounts to a taking of private property for public use
without just compensation or without due process of law. What would
have this effect we need not now say, because no tariff has yet
been fixed by the commission, and the statute of Mississippi
expressly provides
"that in all trials of cases brought for a violation of any
tariff of charges, as fixed by the commission, it may be shown in
defense that such tariff so fixed is unjust."
It is also claimed that the charter contains a contract binding
the state to allow the company at all times and in all ways to
manage its own affairs through its own board of directors, and that
the obligation of this contract will be impaired if the provisions
of the statute are enforced by the commissioners. As has already
been seen, the power of the directors is coupled with a condition
that their management shall be in accordance with the laws of the
state. This undoubtedly means with such laws as may be
constitutionally enacted touching the administration of the affairs
of the company. The present statute requires the company 1, to
furnish the commissioners with copies of its tariffs for all kinds
of transportation, 2, to post in some conspicuous place at each of
its depots the tariff approved by
Page 116 U. S. 332
the commissioners, with the certificate of approval attached, 3,
to conform to the tariff as approved, without discrimination in
favor of or against persons or localities, 4, to furnish the
commissioners with all the information they require relative to the
management of its line, and particularly with copies of all leases,
contracts, and agreements for transportation with express, sleeping
car, or other companies, to which they are parties, 5, to report
all accidents within the limits of the state attended with any
serious personal injury, 6, to make quarterly returns of its
business to the commissioners, which returns shall embrace all the
receipts and expenditures of its railroad, 7, to provide at least
one comfortable and suitable reception room at each depot for the
use and accommodation of persons desiring or awaiting
transportation over its road, and 8, to keep at all times in such
reception rooms a bulletin board which shall show the time of the
arrival and departure of trains, and when any passenger or other
train for transporting passengers is delayed, notice of the extent
of the delay, and the probable time of arrival, as near as it can
be ascertained.
The second and third of these requirements relate only to the
duty of the company to keep its charges within the limit of the
tariff approved by the commissioners without discrimination in
favor of or against persons or localities. The first, fourth, and
sixth are clearly intended as a means of furnishing the
commissioners with the information necessary to enable them to act
understandingly in fixing the tariff. Whether, under these
provisions, the company can be required to make report of or give
information about its business outside of Mississippi is a question
we do not now undertake to decide. The second, fifth, seventh, and
eighth are nothing more than reasonable police regulations for the
comfort, convenience, and safety of those traveling upon the road
or doing business with the company in the state.
The commissioners have power, 1, to approve and, if need be, to
fix the tariff of charges for transportation, both of persons and
property, by which the company must be governed, and to exercise a
watchful and careful supervision over such tariff, 2, to notify the
company of the times and places when and where
Page 116 U. S. 333
the propriety of a change in existing tariffs will be
considered, 3, to entertain complaints made by any person against a
tariff which has been approved, on the ground that the same is in
any respect for more than a just compensation, or that the charges
amount to or operate so as to effect unjust discrimination, and,
after due notice to the company and proper inquiry had, to make any
changes that may be deemed proper, 4, to repair to the scene of an
accident within the state attended with serious personal injury and
inquire into the facts and circumstances thereof, to be recorded in
the minutes of their proceedings and embraced in the annual report
they are required to make to the governor for transmission to the
legislature, 5, to inspect the depots of all railroads operated in
the state and to see that comfortable and suitable reception rooms
are provided, and 6, to institute all necessary suits for the
recovery of the penalties prescribed by the statute for a violation
of its provisions. The first three of these relate entirely to
proceedings for fixing charges and supervising the tariff, and the
rest, like the correlative requirements of the company, are mere
police regulations which the commissioners are to enforce. All this
comes clearly within the supervising power of the state in the
administration of the affairs of its domestic corporations.
We conclude, therefore, that the charter of the company contains
no contract the obligation of which is in any way impaired by the
statute under which the commissioners are to act.
2. There can be no doubt that each of the states through which
the Mobile and Ohio Railroad passes incorporated the company for
the purpose of securing the construction of a railroad from Mobile,
through Alabama, Mississippi, Tennessee, and Kentucky, to some
point near the mouth of the Ohio River, where it would connect with
another railroad to the lakes, and thus form a continuous line of
interstate communication between the Gulf of Mexico in the south
and the Great Lakes in the north. It is equally certain that
Congress aided in the construction of parts of this line of road so
as to establish such a route of travel and transportation. But it
is nonetheless true that the corporation created by each state is,
for
Page 116 U. S. 334
all the purposes of local government, a domestic corporation,
and that its railroad within the state is a matter of domestic
concern. Every person, every corporation, every thing within the
territorial limits of a state is, while there, subject to the
constitutional authority of the state government. Clearly, under
this rule, Mississippi may govern this corporation, as it does all
domestic corporations, in respect to every act and everything
within the state which is the lawful subject of state government.
It may, beyond all question, by the settled rule of decision in
this Court, regulate freights and fares for business done
exclusively within the state, and it would seem to be a matter of
domestic concern to prevent the company from discriminating against
persons and places in Mississippi. So it may make all needful
regulations of a police character for the government of the company
while operating its road in that jurisdiction. In this way, it may
certainly require the company to fence so much of its road as lies
within the state; to stop its trains at railroad crossings; to
slacken speed while running in a crowded thoroughfare; to post its
tariffs and timetables at proper places, and other things of a
kindred character affecting the comfort, the convenience, or the
safety of those who are entitled to look to the state for
protection against the wrongful or negligent conduct of others.
This company is not relieved entirely from state regulation or
state control in Mississippi simply because it has been
incorporated by, and is carrying on business in, the other states
through which its road runs. While in Mississippi, it can be
governed by Mississippi in respect to all things which have not
been placed by the Constitution of the United States within the
exclusive jurisdiction of Congress -- that is to say, using the
language of this Court in
Cardwell v. Bridge Co.,
113 U. S. 210,
"when the subjects on which it is exerted are national in their
character and admit and require uniformity of regulations affecting
all states alike." Under this rule, nothing can be done by the
government of Mississippi which will operate as a burden on the
interstate business of the company or impair the usefulness of its
facilities for interstate traffic. It is not enough to prevent the
state from acting that the road in Mississippi is
Page 116 U. S. 335
used in aid of interstate commerce. Legislation of this kind, to
be unconstitutional, must be such as will necessarily amount to or
operate as a regulation of business without the state as well as
within.
The commission is in express terms prohibited by the Act of
March 15, 1884, from interfering with the charges of the company
for the transportation of persons or property through Mississippi
from one state to another. The statute makes no mention of persons
or property taken up without the state and delivered within, nor of
such as may be taken up within and carried without. As to this, the
only limit on the power of the commissioners is the constitutional
authority of the state over the subject. Precisely all that may be
done or all that may not be done it is not easy to say in advance.
The line between the exclusive power of Congress and the general
powers of the state in this particular is not everywhere distinctly
marked, and it is always easier to determine when a case arises
whether it falls on one side or the other than to settle in advance
the boundary so that it may be in all respects strictly accurate.
As yet, the commissioners have done nothing. There is certainly
much they may do in regulating charges within the state which will
not be in conflict with the Constitution of the United States. It
is to be presumed they will always act within the limits of their
constitutional authority. It will be time enough to consider what
may be done to prevent it when they attempt to go beyond.
3. General statutes regulating the use of railroads in a state
or fixing maximum rates of charges for transportation, when not
forbidden by charter contracts, do not necessarily deprive the
corporation owning or operating a railroad within the state of its
property without due process of law within the meaning of the
Fourteenth Amendment of the Constitution of the United States nor
take away from the corporation the equal protection of the laws.
Munn v. Illinois, 94 U. S. 134,
94 U. S. 135;
Railroad Co. v. Richmond, 96 U.
S. 529;
Spring Valley Waterworks v. Schottler,
110 U. S. 354.
The great purpose of the statute now under consideration is to fix
a maximum of charges and to regulate in some matters of a
police
Page 116 U. S. 336
nature the use of railroads in the state. In its general scope,
it is constitutional, and it applies equally to all persons or
corporations owning or operating railroads in the state. No
preference is given to one over another, but all are treated alike.
Whether in some of its details the statute may be defective or
invalid we do not deem it necessary to inquire, for this suit is
brought to prevent the commissioners from giving it any effect
whatever as against this company.
4. The Supreme Court of Mississippi has decided in the cases of
Railroad Commission v. Yazoo & Mississippi Railroad
Company and
Railroad Commission v. Natchez, Jackson &
Columbia Railroad Company, not yet officially reported, that
the statute is not repugnant to the constitution of the state "in
that it creates a commission and charges it with the duty of
supervising railroads." To this we agree, and that is all that need
be decided in this case. As was said by the Supreme Court of
Mississippi in the case first referred to above: "Many questions
may arise under it not necessary to be disposed of now, and we
leave them for consideration when presented."
5. It is difficult to understand precisely on what ground we are
expected to decide that this statute is so inconsistent and
uncertain as to render it absolutely void on its face. The statute
of Tennessee which was under consideration in
Louisville &
Nashville Railroad Company v. Railroad Commission of
Tennessee, 19 F. 679, is materially different from this in
many respects. That case was decided before this statute was
passed, and it is not at all unlikely that the Legislature of
Mississippi made use of the decision in framing their bill so as to
avoid some, if not all, of the objections which, in the opinion of
the court, were fatal to what had been done in Tennessee. The
argument on this branch of the controversy contains much that might
have been useful if addressed to the legislature while considering
the bill before its final enactment, but we find nothing in it to
show that the statute as it now stands is altogether void and
inoperative. When the commission has acted, and proceedings are had
to enforce what it has done, questions may arise as to the validity
of some of the various
Page 116 U. S. 337
provisions which will be worthy of consideration, but we are
unable to say that, as a whole, the statute is invalid.
The decree of the circuit court is reversed and the cause
remanded with instructions to dismiss the bill.
BLATCHFORD, J., did not sit in this case or take any part in its
decision.
MR. JUSTICE HARLAN, dissenting.
*
This case and the case against the Illinois Central Railroad
Company, argued with it, are unlike that of
Chicago, Burlington
& Quincy Railroad Co. v. Iowa, 94 U. S.
155, where the charter of the company was granted
expressly subject to such rules and regulations as the legislature
might from time to time enact and provide, or of
Peik v.
Chicago & Northwestern Railway Co., 94 U. S.
164,
94 U. S. 175,
where at the time the railroad charter was granted, the state
constitution provided that all charters of corporations "may be
altered or repealed by the legislature at any time after their
passage," or of
Winona & St. Peter Railroad Co. v.
Blake, 94 U. S. 180, where
the charter prescribed no limit upon the legislative power to fix
rates for transportation and conferred no express power upon the
company to fix or establish such rates as it might deem proper.
Different questions from any of these are now presented.
The Mobile and Ohio Railroad Company was chartered on the third
of February, 1848, by the State of Alabama, with authority to
construct and maintain a railroad from the City of Mobile to the
west line of that state, toward the mouth of the Ohio River, and to
transport and carry property and persons under such regulations, as
to time and manner, as its board of directors might establish. It
was also invested by its charter with power,
"from time to time to fix, regulate, and receive the toll and
charges by them to be received for the transportation of persons
and property over the line of railroad hereby authorized to be
constructed and completed, or any part thereof."
§ 12. The Legislature of Mississippi in the same month approved
of the Alabama charter except in certain particulars not important
to be here mentioned and consented to the
Page 116 U. S. 338
extension of the road through that state to the Tennessee line,
conferring upon the company, when organized, "the same rights,
powers, and privileges" that were granted to it within the State of
Alabama. Like consent was given, and similar action was taken, by
the States of Tennessee and Kentucky with reference to the proposed
road within their respective limits.
The Illinois Central Railroad Company is the lessee of the
Chicago, St. Louis and New Orleans Railroad Company. By an Act of
the Legislature of Mississippi of April 18, 1873, the New Orleans,
Jackson and Great Northern Railroad Company, owning a line of
railroad from New Orleans, Louisiana, to Canton, Mississippi, and
the Mississippi Central Railroad Company, owning a line running
from the latter place northward to Jackson, Tennessee, were
authorized to consolidate into one corporation, the latter to have
all the rights, powers, privileges, immunities, and franchises in
perpetuity then conferred upon the constituent companies or upon
either of them. Such consolidation took place under the name of the
Chicago, St. Louis and New Orleans Railroad Company, and by an Act
of February 28, 1878, was ratified. But the same act provided that
it should be of no force or effect until the debt due the state
from the Mississippi Central Railroad Company was adjusted by the
Chicago, St. Louis and New Orleans Railroad Company. Subsequently,
by an Act approved March 1, 1882, the payment of this debt by the
latter company to the state was acknowledged, and the Chicago, St.
Louis and New Orleans Railroad Company was declared to be a
corporation of Mississippi,
"with perpetual succession, and, as such, is invested with all
the rights, powers, privileges, liberties, and franchises conferred
by the act to which this is a supplement, and especially the rights
and powers . . . of § 10 of an act entitled 'An act to incorporate
the Mississippi Railroad Company,' approved March 10, 1852."
The 10th section of the act last named, to the rights and powers
conferred by which particular reference was made, is in these
words:
"That the president and directors be, and are hereby, authorized
to adopt and establish such a tariff of
Page 116 U. S. 339
charges for the transportation of persons and property as they
may think proper, and the same to alter and change at
pleasure."
The amount paid to the state by the Chicago, St. Louis and New
Orleans Railroad Company on account of the debt due from the
Mississippi Central Railroad Company was $158,978.82.
It is thus seen that the Mobile and Ohio Railroad company and
the Chicago, St. Louis and New Orleans Railroad Company were given
by their charters the power to fix and regulate rates for
transportation of persons and property upon their respective roads.
This power was, of course, not without limit, for the general grant
of the franchises, rights, and privileges enumerated in these
charters was attended by the condition, which the law always
implies in such cases, that the charges for transportation
established by the companies shall be reasonable.
The Mississippi statute of 1884 provides for the appointment of
three commissioners, and invests them with the power of
establishing, upon the basis of "just compensation," and the
protection of persons, localities, or corporations against "unjust
discrimination," a tariff of charges for the transportation of
persons and property on any railroad owned or operated in that
state. The commissioners so appointed are required, in ascertaining
such compensation,
"to take into consideration the character and nature of the
service to be performed, and the entire business of such railroad,
together with its earnings from the passenger and other
traffic,"
to so revise these tariffs "as to allow a fair and just return
on the value of such railroad, its appurtenances and equipments,"
and to increase or reduce the rates so established "as justice to
the public and each of said railroad companies may require," and
"as experience and business operations may show to be just." Any
person, company, or corporation operating a railroad in Mississippi
who fails to conform to the tariff of charges established by the
commission is made liable to a penalty of $500 for each violation,
recoverable in the name of the state.
I am of opinion that this statute impairs the obligation of the
contract which the state made with these companies, in
Page 116 U. S. 340
this, that it takes from each of them the power conferred by its
charter of fixing and regulating rates for transportation within
the limit of reasonableness and confers upon a commission authority
to establish from time to time such rates as will give a "fair and
just return on the value of such railroad, its appurtenances, and
equipments," and "as experience and business operations may show to
be just." In short, the companies are placed by the statute in the
same condition they would occupy if their charter had not conferred
upon them the power to fix and regulate rates for transportation.
The whole subject of transportation rates is thus remitted to the
judgment of commissioners who have no pecuniary interest whatever
in the management of these vast properties, and who, if they had
any such interest, would be disqualified under the statute from
serving, and who are required to fix rates according to the value
of the property, without any reference to what it originally cost
or what it had cost to maintain it in fit condition for public
use.
It is hardly necessary to discuss the proposition that the right
to fix and regulate rates for transportation, within the limit of
reasonableness, was and is one of great practical value to these
companies, for the rates so fixed would have governed the conduct
of parties interested in them unless it was made to appear
affirmatively and in some legal mode that they were unreasonable.
The object of the construction of the roads operated by these
companies was, as the bill avers and the opinion of the Court
admits, to establish a continuous line of interstate communication
between the Gulf of Mexico and the Great Lakes of the north. In the
accomplishment of that object the entire country took a deep
interest, for Congress, by grants of land and otherwise, gave those
enterprises every possible encouragement. Does anyone believe that
private capitalists would have supplied the money necessary to
establish and maintain these lines of interstate communication had
they supposed that the states through which the roads were extended
reserved the right, by commissioners, to take charge of the whole
matter of rates, and abrogate at their pleasure such tariffs of
charges as might be established by the companies
Page 116 U. S. 341
under the power, expressly conferred, of fixing and regulating
rates? Would they have risked the immense sums invested in these
enterprises had the charters of the companies contained a provision
making rates to depend, not on the capabilities, wants, and
interests of the territory to be supplied with railroad service, or
on the amount expended in constructing and maintaining these roads,
but on their "
value" as estimated by commissioners, and on
such basis as the latter, from time to time, might deem to be
justified by "experience and business operations?" Their value upon
what basis or at what period of their existence? When they were
constructed? Or what they would bring at a sale under a decree of
court? In the place of charter provisions, under which rates fixed
by the companies would be deemed legal until the contrary was made
to appear, the statute substitutes a system under which rates
established by a commission, and by it increased or diminished from
time to time, must be observed by the companies, unless it is made
to appear affirmatively that such rates are "unjust" -- officers
and agents of the companies, acting in conformity with express
provisions of their charters, being made liable to heavy penalties,
unless they prove that the commission have established an "unjust"
tariff of charges.
The Court concedes that the power which the state asserts, by
the statute of 1884, of limiting and regulating rates does not
involve the power to destroy or to confiscate the property of these
companies, and consequently it is said the state cannot compel them
to carry persons or property without reward nor do that which in
law would amount to a taking of private property for public use
without just compensation. And reference is made to that clause of
the statute which provides
"that in all trials of cases brought for a violation of any
tariff of charges as fixed by the commission, it may be shown in
defense that such tariff so fixed is unjust."
But if I do not misapprehend the effect of the opinion, it means
to declare that where the tariff of charges fixed by the
commissioners does not certainly work the destruction or
confiscation of these properties or amount in law to taking them
for public use without just compensation, the charges so
established must be accepted by
Page 116 U. S. 342
the courts, as well as by the companies, as reasonable, and
therefore not be held or treated "unjust" in any prosecution under
the act for disregarding such tariff. I cannot otherwise interpret
the observation that the legislature may establish a maximum any
charge in excess of which must be deemed by the courts and the
parties to be unreasonable.
In expressing the foregoing views, I would not be understood as
denying the power of the state to establish a railroad commission
or to enforce regulations, not inconsistent with the essential
charter rights of the companies, in reference to the general
conduct of their merely local business. My only purpose is to
express the conviction that each of these companies has a contract
with the state whereby it is exempted from absolute legislative
control as to rates, and under which it may, through its directors,
from time to time, within the limit of reasonableness, establish
such rates of toll for the transportation of persons and property
as they deem proper, such rates to be respected by the courts and
by the public unless they are shown affirmatively to be
unreasonable.
The bill, in my judgment, makes a case that justifies a court of
equity in interfering to prevent the commissioners from imposing
upon the defendants any such tariff of charges as the statute in
question authorizes them to establish in reference to their
business exclusively within the State of Mississippi. As the Court
withholds any expression of opinion as to the validity of the
statute when applied to interstate commerce -- that is, to the
transportation of persons and property taken up out of the state
and put down in the state, or taken up in the state and put down
out of the state -- I have no occasion to discuss that question.
For the reasons stated, I dissent from the opinion and judgment of
the Court in these cases.
* This dissent applies also to the judgment and opinion of the
Court in
Stone v. Illinois Central Railroad Co., post,
116 U. S. 347.
MR. JUSTICE FIELD, dissenting.*
I concur with MR. JUSTICE HARLAN that the act of Mississippi
impairs the obligation of the contract contained in the charter
originally granted to the Mobile and Ohio Railroad Company
Page 116 U. S. 343
by Alabama, and soon afterwards adopted by Mississippi. At that
time, it was a matter of great public interest to have railway
communication between the Gulf of Mexico and the Ohio River,
passing through Alabama, Mississippi, Tennessee, and Kentucky, and
to secure it, these states, by legislative acts passed in February,
1848, incorporated the company, to construct, equip, and operate a
railroad from Mobile, in Alabama, to a point opposite Cairo, in
Illinois at the junction of the Mississippi and Ohio Rivers. The
road was to run, as thus seen, many hundred miles, part of which
was in a country sparsely settled and in some places covered by
almost irreclaimable swamps. It would require several years, and
the expenditure of many millions, for its construction. The return
for the heavy investment was to be in the distant future when the
country should become more densely populated and its resources
better developed. It was a difficult matter to secure the necessary
capital for an enterprise so costly in its character, so remote in
its completion, and so uncertain in its returns. To effect this,
the several acts of incorporation authorized the president and
directors of the company to adopt and establish such a tariff of
charges for the transportation of persons and property as they
might thank proper, and to alter and change the same at pleasure.
The bill alleges -- and the allegation must be taken as true on the
demurrer -- that it was also understood by all parties that when
the road was completed, it should be managed by officers selected
by the stockholders, and adds that this right of selecting its
officers and of charging and receiving what it should fix as its
tariff was not only a material part of the contract, but was the
sole inducement or consideration upon which it was entered into by
the company.
Certainly no one will deny that the right to adopt a rate of
charges, subject, as such rate always is, to the condition that
they shall be reasonable, was of vital importance to the company.
Without that concession, no one acquainted with the difficulties,
expenses, and hazards of the projected enterprise can believe that
it would have been undertaken. It was certainly the expectation of
the constructors of the road that
Page 116 U. S. 344
they should be allowed to receive compensation having some
relation to its cost. But the act of Mississippi allows only such
compensation as parties appointed by the legislature, not
interested in the property nor required to possess any knowledge of
the intricacies and difficulties of the business, shall determine
to be a fair return on the value of the road and its appurtenances,
though they may be much less than the original cost. Within the
last few years, such have been the improvements in machinery and
such the decline in the cost of materials that it is probably less
expensive by one-third to build and equip the road now than it was
when the constructors completed it. Does anybody believe that they
would have undertaken the work or proceeded with it had they been
informed that, notwithstanding their vast outlays, they should only
be allowed, when it was finished, to receive a fair return upon its
value, however much less than cost that might be?
Under the charter, the company could make such reasonable
discriminations in its charges, dependent upon the amount of
business done, the character of the material transported, the
existence of competitive lines or points, as its interest might
suggest, and which to some extent are indispensable to the
successful management of the business of every railway company.
Differences in the bulk of property of the same weight, differences
in value and in liability to breakage or decay, exact different
degrees of care and speed in its transportation and consequently
require and justify different charges. And all experience shows
that where competition by water or otherwise exists, variations in
charges must be made from time to time to secure any portion of the
business. These considerations must have their influence with the
stockholders when they accepted the charter and undertook the
construction of the road. The act of Mississippi, which the Court
says is the exercise of a lawful right to interfere with the
affairs of the company, never relinquished nor qualified by any
stipulation, declares that no discrimination shall be made in the
charges of the company in any case. Its language is that
"Any person or corporation engaged in transporting passengers of
freight over any railroad in this state, . . . who for his or
its
Page 116 U. S. 345
advantage or for the advantage of any connecting line or for any
person or locality shall make any discrimination against any
individual, locality, or corporation shall be guilty of
extortion."
And in such cases, the injured party can recover double the
amount of damages sustained by him, and the offending party is
declared to be guilty of misdemeanor, and subject to a fine of from
ten to five hundred dollars. The harshness and impolicy of such
legislation are well shown by illustrations mentioned by counsel.
If, for instance, where its road touches a navigable stream, the
company charges less per pound per mile for transportation to a
distant point which can be reached by water than it does to an
inland station, it makes a discrimination against the latter
station and is guilty of extortion, although the transportation
would otherwise not be given to the company. If it charges more per
pound per mile for local than through freights, it makes a
discrimination, and may be punished for extortion. If it charges
more per pound per mile for silks than for cotton goods, or for
gold bullion than for cast iron, or for tea than for coal, it is
guilty of a like discrimination and extortion. If it attempts to
encourage the cultivation of fruits, or the manufacture of cotton,
woolen, or silken fabrics, or any other industry along its line of
road by a reduction of rates until the business is established, it
makes a discrimination, and if higher rates are charged to others,
the exaction of the difference is to them extortion. As well said
by counsel, it makes no difference whether the discrimination be
founded on value, volume, distance carried, return haul,
competition, regularity of shipment, or whether the article
transported is perishable or not, it is prohibited, and if made, is
extortion, and thus, as he well observes, the act of Mississippi
pays no attention to the common sense of the world, to the laws of
commerce, or to universal custom. Reductions of rates made in the
interests of charity and benevolence, for the poor, sick, or
infirm, if not also extended to others, would, under it, be
criminal. Indeed, under the law, no cause can exist which would
justify any discrimination.
I am aware that this Court has held that unless restrained by
express contract, the legislature of a state has the right to
Page 116 U. S. 346
prescribe a maximum for charges for transportation of persons
and freight over railways within her limits; but it has not been
generally supposed that different rates, under certain
circumstances, may not be made within the maximum in the interest
both of the company and of the public. And the right itself must
necessarily be subject to the qualification that the prescribed
maximum shall at least equal the cost of the service required.
Again, the right of the company to appoint all necessary
officers, agents, or servants would seem to be essential to secure
competent and efficient men for the successful management of its
business. Few individuals or companies would undertake an
enterprise requiring skill, experience, and large expenditures if
those who were to conduct it were not to be selected and controlled
by them, but by parties appointed, perhaps, under political
influences and possibly without the requisite knowledge and
experience. The efficiency and fidelity of employees would be
better assured by leaving their appointment to those interested in
the judicious management of the business of the company. Indeed,
their usefulness and fidelity would seldom be secured in any other
way. No one, therefore, can believe that the original stockholders
would have accepted the charter and undertaken the work if this
right of appointing those who were to carry out and manage it, when
completed, was to be withdrawn from them. The act of Mississippi is
so plain an impairment of this essential right that I should not
have supposed there could be any question on the point did I not
find that a majority of my associates are of opinion that it is an
entirely constitutional proceeding on the part of the legislature,
in no wise interfering with the contract of the company.
I have no doubt that commissioners may for many purposes be
appointed by the legislature, but I am not prepared to say that the
direction and control of the business of the company can, unless a
cause of forfeiture or repeal of its charter exists, be taken from
it and confided to them, any more than its business can be changed
from transportation to manufacturing or banking. The right to elect
officers to direct and control its affairs, and to pursue the same
kind of business for which it was
Page 116 U. S. 347
formed, must be maintained in any regulations prescribed for its
government, or we must admit that the power of the legislature over
the corporation is, in spite of constitutional limitations, as
absolute as that of the Parliament of Great Britain. Indeed, the
argument which supports the statute of Mississippi seems to proceed
upon the ground that such is the legitimate outcome of the
decisions of this Court with respect to the control which the
legislature may exercise over such corporations, irrespective of
any stipulation in their charters. If such be the result of the
decisions, it is important that it should be known in order that
parties interested in railway property may see that their
protection against unreasonable and vindictive measures is not by
appeal to the courts, but by efforts to secure wise and intelligent
action from the legislature.
* This dissent applies also to the judgment and opinion of the
Court in
Stone v. Illinois Central Railroad Co., post,
116 U. S. 347.
