The incorporation of a railroad company by a state, the granting
to it of special privileges to carry out the object of its
incorporation, particularly the authority to exercise the state's
right of eminent domain to appropriate private property to its
uses, and the obligation, assumed by the acceptance of the charter,
to transport all persons and merchandise upon like conditions and
for reasonable rates, affect the property and employment with a
public use, and thus subject the business of the company to a
legislative control which may extend to the prevention of extortion
by unreasonable charges and favoritism by discriminations.
In order to exempt a railroad corporation from legislative
interference with its rates of charges within a designated limit,
it must appear that the exemption was made in its charter by clear
and unmistakable language, inconsistent with any reservation of
power by the state to that effect.
Although the general purpose of a proviso in a statute is to
qualify the operation of the statute, or of some part of it, it is
often used in other senses, and is so used in the act of the
Legislature of Georgia of December 21, 1833, incorporating the
Georgia Railroad Company, and that act does not exempt the
corporation created by it or its successors from the duty of
submitting to reasonable requirements concerning transportation
rates made by a railroad commission created by the state.
By an Act of the Legislature of Georgia passed December 21,
1833, the plaintiff in error was incorporated under the name of the
"Georgia Railroad Company," and empowered to construct a "rail or
turnpike road from the City of Augusta," with branches extending to
certain towns in the state, and to be carried beyond those places
at the discretion of the company. Laws 1833, 256.
By an Act of the legislature passed December 18, 1835, certain
amendments to the charter were made, and among others one changing
its corporate name to "The Georgia Railroad and Banking Company,"
its present designation. The twelfth section of the charter, among
other things, declares that
"The said Georgia Railroad Company shall at all
Page 128 U. S. 175
times, have the exclusive right of transportation or conveyance
of persons, merchandise, and produce over the railroad and
railroads to be by them constructed, while they see fit to exercise
the exclusive right: provided, that the charge of transportation or
conveyance shall not exceed fifty cents per hundred pounds on heavy
articles and ten cents per cubic foot on articles of measurement,
for every one hundred miles, and five cents per mile for every
passenger,
provided always that the said company may, when
they see fit, rent or farm out all or any part of their exclusive
right of transportation or conveyance of persons, on the railroad
or railroads, with the privilege to any individual or individuals,
or other company, and for such term as may be agreed upon, subject
to the rates above mentioned. And the said company, in the exercise
of their right of carriage or transportation of persons or property
or the persons so taking from the company the right of
transportation or conveyance, shall, so far as they act on the
same, be regarded as common carriers."
In pursuance of the authority conferred by this section, the
company, by a deed bearing date on the 7th of May, 1881, leased to
one William M. Wadley, for the term of ninety-nine years, "all its
privileges, general and exclusive," of transporting persons and
property over the lines of railroad owned and controlled by it, to
the full extent that it then enjoyed, or was entitled to enjoy or
might thereafter acquire, subject to the obligations and duties
imposed by its charter. With these privileges the company also
leased to Wadley, for the same term, all its railroads and their
branches, "together with its rights of way, roadbeds, depots,
stations, warehouses, elevators, workshops, wells, cisterns, water
tanks, and other appurtenances." The lessee, on his part,
covenanted to pay the company, as a consideration for the lease,
the sum of $600,000 annually for the full term of ninety-nine
years, in two semiannual payments; also to pay the taxes on the
property and franchises; to return the property on the termination
of the lease in as good condition as it was at its date; to keep
the railroad and its appurtenances and the means of transportation
in first-class condition, and to indemnify the company against any
damages,
Page 128 U. S. 176
losses, or liabilities in the operation of the roads. This
lessee has since died, and in the present case his interests were
maintained in the court below by his executor.
On the 14th of October, 1879, the Legislature of Georgia passed
an act entitled
"An act to provide for the regulation of railroad freight and
passenger tariffs in this state, to prevent unjust discrimination
and extortion in the rates charged for transportation of passengers
and freight, and to prohibit railroad companies, corporations, and
lessees in this state from charging other than just and reasonable
rates, and to punish the same, and prescribed a mode of procedure
and rules of evidence in relation thereto, and to appoint
commissioners, and to prescribe their powers and duties in relation
to the same."
Laws 1879, p. 125.
In pursuance of this act, a board was constituted, designated
the "Railroad Commission," composed of three members, originally
consisting of James M. Smith, Campbell Wallace, and Samuel Barnett;
but to the place of Samuel Barnett the defendant Leander N.
Trammell has succeeded. This commission has prescribed rates for
the transportation of freight and persons by railroad companies in
the state, which are less than the maximum of rates authorized by
the twelfth section of the charter of the company. The act imposes
a penalty of not less than one or more than five thousand dollars
for every violation of the rules and regulations thus prescribed.
The company and the executor of the lessee accordingly filed their
bill in the case before us in the Superior Court of Fulton County,
Georgia, against the railroad commissioners and the Attorney
General of the state, contending, among other things, that the
charter of the company is a contract between it and the State of
Georgia, and that by it the company has the right to charge any
rates for freight and passengers not exceeding those limited in the
twelfth section of its charter, and that the Act of October 14,
1879, is in conflict with the clause of the Constitution of the
United States which prohibits a state from passing any act
impairing the obligation of a contract. They pray in their bill
that the act may be declared null and void and inoperative against
them, and that the commission may
Page 128 U. S. 177
be enjoined from prescribing rates of fare and freight over the
railroad of the company and its branches, or in any manner
enforcing the provisions of the act against them. To this bill the
defendants demurred on the ground that it disclosed no case
entitling the complainants to relief in equity, and that they had
an adequate and complete remedy at law. The court sustained the
demurrer and dismissed the bill. On being taken to the supreme
court of the state, the decree was affirmed, and to review it the
case is brought to this Court by the railroad company.
MR. JUSTICE FIELD, after stating the facts as above, delivered
the opinion of the Court.
As appears from the statement of the case, the contention in the
court below of the company, the plaintiff in error here, so far as
it embraced any federal question, was that the twelfth section of
its charter constituted a grant of a right to charge the rates
therein named; that it built its road and established its business
with this grant as a part of its charter, and that such a grant is
a contract between it and the State of Georgia, the obligation of
which cannot be impaired by its legislation, and this contention is
renewed in this Court.
The Constitution of Georgia, adopted in December, 1877, vested
in the "General Assembly of the state," the designation given to
its legislature, the power to regulate "railroad freights and
passenger tariffs" so as to prevent unjust discriminations and
require reasonable and just rates, and made it the duty of that
body to pass laws from time to time to accomplish this end, and to
prohibit by adequate penalties the charging of other than such
rates. Article IV, ยง 2, Appendix to Code of Georgia, 1882.
Pursuant to this provision of the Constitution, the Act of
October 14, 1879, was passed, providing for the appointment
Page 128 U. S. 178
of three railroad commissioners and authorizing them to
prescribe the rates of fare which railroad companies might charge
for the carriage of persons and merchandise within the limits of
the state. The act does not extend to interstate railroad
transportation. Laws of Georgia, 1878-79, 125.
After authorizing the appointment of the three commissioners by
the governor, the act declares that any railroad company doing
business in the state after its passage which shall charge or
receive more than a fair and reasonable toll or compensation for
the transportation of passengers or freight of any description or
for the use or transportation of any railroad car upon its track or
branches or upon any railroad which it has the right to use shall
be deemed guilty of extortion, and upon conviction thereof shall be
subject to certain penalties prescribed.
The commissioners appointed are required to make reasonable and
just rates of freight and passenger tariffs, to be observed by all
railroad companies doing business in the state on their roads, and
to provide for each of the companies a schedule of just and
reasonable rates of charges for the transportation of passengers
and freight, and the act declares that in suits brought against any
of the companies, involving unjust charges or discriminations, such
schedule shall be taken in the courts of the state as sufficient
evidence that the rates prescribed are just and reasonable.
The commissioners are required from time to time, and as often
as circumstances may call for it, to change and revise the
schedules, and penalties are prescribed for the enforcement of
their regulations.
The supreme court of the state held, on an application for an
injunction in this case, that this delegation of authority by the
legislature to the commissioners to prescribe what shall be
reasonable and just rates for the carriage and transportation of
persons and property over railroads within its limits was a proper
exercise of its own power to provide protection to its citizens
against unjust rates for such transportation and to prevent unjust
discriminations, and that it was expected not that the legislature
would itself make specific regulations as
Page 128 U. S. 179
to what should in each case be a proper charge, but that it
would simply provide the means by which such rates should be
ascertained and enforced.
It has been adjudged by this Court in numerous instances that
the legislature of a state has the power to prescribe the charges
of a railroad company for the carriage of persons and merchandise
within its limits in the absence of any provision in the charter of
the company constituting a contract vesting in it authority over
those matters, subject to the limitation that the carriage is not
required without reward, or upon conditions amounting to the taking
of property for public use without just compensation, and that what
is done does not amount to a regulation of foreign or interstate
commerce.
Stone v. Farmers' Loan & Trust Co.,
116 U. S. 307,
116 U. S. 325,
116 U. S. 331;
Dow v. Beidelman, 125 U. S. 680. The
incorporation of the company, by which numerous parties are
permitted to act as a single body for the purposes of its creation,
or, as Chief Justice Marshall expresses it, by which "the character
and properties of individuality" are bestowed on a collective and
changing body of men,
Bank v.
Billings, 4 Pet. 514,
29 U. S. 562;
the grant to it of special privileges to carry out the object of
its incorporation, particularly the authority to exercise the
state's right of eminent domain that it may appropriate needed
property -- a right which can be exercised only for public
purposes, and the obligation assumed by the acceptance of its
charter, to transport all persons and merchandise, upon like
conditions and upon reasonable rates -- affect the property and
employment with a public use, and where property is thus affected,
the business in which it is used is subject to legislative control.
So long as the use continues, the power of regulation remains, and
the regulation may extend not merely to provisions for the security
of passengers and freight against accidents, and for the
convenience of the public, but also to prevent extortion by
unreasonable charges and favoritism by unjust discriminations. This
is not a new doctrine, but an old doctrine, always asserted
whenever property or business is, by reason of special privileges
received from the government, the better to secure the purposes to
which the property is dedicated
Page 128 U. S. 180
or devoted, affected with a public use. There have been
differences of opinion among the judges of this Court in some cases
as to the circumstances or conditions under which some kinds of
property or business may be properly held to be thus affected, as
in
Munn v. Illinois, 94 U. S. 113,
94 U. S. 126,
94 U. S. 139,
94 U. S. 146;
but none as to the doctrine that, when such use exists, the
business becomes subject to legislative control in all respects
necessary to protect the public against danger, injustice, and
oppression. In almost every case which has been before this Court
where the power of the state to regulate the rates of charges of
railroad companies for the transportation of persons and freight
within its jurisdiction has been under consideration, the question
discussed has not been the original power of the state over the
subject, but whether that power had not been, by stipulations of
the charter or other legislation amounting to a contract,
surrendered to the company or been in some manner qualified. It is
only upon the latter point that there have been differences of
opinion.
The question then arises whether there is in the twelfth section
of the charter of the plaintiff in error a contract that it may
make any charges within the limits there designated. The first
clause would seem to have been framed upon the theory, which
obtained very generally at the date of the charter, that a railroad
was subject, like an ordinary wagon road, to the use of all persons
who were able to place the necessary conveyances upon it. It was
then generally supposed that while the company constructing the
road was the owner of the roadbed, anyone could run cars upon it
upon payment of established tolls, and following the regulations
prescribed for the management of trains, and some charters granted
at that period contained schedules of charges for such use. But
this notion has long since been abandoned as impracticable.
Lake Superior & Mississippi Railroad Co. v. United
States, 93 U. S. 442,
93 U. S.
446-449. The section grants to the company the exclusive
right of transportation of persons and merchandise over its road, a
right which in another part of the act is limited to thirty-six
years and then expires unless renewed by the legislature upon such
terms as may be prescribed by law
Page 128 U. S. 181
and accepted by the company. This period has long since expired,
and we are not informed that any renewal of the privilege has been
made.
The difficulty attending the construction of the clause
following this one arises from the doubt attached to the meaning of
the term "provided." The general purpose of a proviso, as is well
known, is to except the clause covered by it from the general
provisions of a statute, or from some provisions of it, or to
qualify the operation of the statute in some particular. But it is
often used in other senses. It is a common practice in legislative
proceedings, on the consideration of bills, for parties desirous of
securing amendments to them to precede their proposed amendments
with the term "provided," so as to declare that notwithstanding
existing provisions, the one thus expressed is to prevail, thus
having no greater signification than would be attached to the
conjunction "but" or "and" in the same place, and simply serving to
separate or distinguish the different paragraphs or sentences.
Several illustrations are given by counsel of the use of the term
in this sense, showing, in such cases, where an amendment has been
made, though the provision following often has no relation to what
precedes it.
It does not matter in the present case whether the term be
construed as imposing a condition on the preceding exclusive grant
to the company of the privilege of transporting passengers and
merchandise over its own roads or be considered merely as a
conjunction to an independent paragraph, declaring a limitation
upon the charges which the company may make. If considered as a
condition to the enjoyment of the exclusive right designated, then
the section only provides that so long as the maximum of rates
specified is not exceeded, the company or its lessee shall have the
exclusive right to carry passengers and merchandise over its roads.
It contains no stipulation, nor is any implied, as to any future
action of the legislature. If the exclusive right remain
undisturbed, there can be no just ground of complaint that other
limitations than those expressed are placed upon the charges
authorized. It would require much clearer language than this to
justify us in
Page 128 U. S. 182
holding that notwithstanding any altered conditions of the
country in the future, the legislature had, in 1833, contracted
that the company might for all time charge rates for transportation
of persons and property over its line up to the limits there
designated.
It is conceded that a railroad corporation is a private
corporation though its uses are public, and that a contract
embodied in terms in its provisions, or necessarily implied by
them, is within the constitutional clause prohibiting legislation
impairing the obligation of contracts. If the charter in this way
provides that the charges which the company may make for its
services in the transportation of persons and property shall be
subject only to its own control up to the limit designated,
exemption from legislative interference within that limit will be
maintained. But to effect this result, the exemption must appear by
such clear and unmistakable language that it cannot be reasonably
construed consistently with the reservation of the power by the
state. There is no such language in the present case. The
contention of the plaintiff in error therefore fails, and the
judgment must be
Affirmed.
