The statute of Kansas of March 3, 1897, entitled
"An act defining what shall constitute public stockyards,
defining the duties of the person or persons operating the same,
and regulating all charges thereof, and removing restrictions in
the trade of dead animals, and providing penalties for violations
of this act"
is in violation of the Fourteenth Amendment of the Constitution
of the United States in that it applies only to the Kansas City
Stock Yards Company, and not to other companies or corporations
engaged in like business in Kansas, and thereby denies to that
company the equal protection of the laws.
In March, 1897, Charles U. Cotting, a citizen of the State of
Massachusetts, filed in the Circuit Court of the United States for
the District of Kansas a bill of complaint against the Kansas City
Stockyards Company, a corporation of the State of Kansas, and
certain officers of that company, and Louis C. Boyle, Attorney
General of the State of Kansas. A few days later Francis Lee
Higginson, a citizen of the State of Massachusetts, filed a bill of
complaint in the same court and against the same parties.
These suits were subsequently ordered by the court to be
consolidated, and were thereafter proceeded in as one.
The plaintiffs respectively alleged that they were stockholders
of the Kansas City Stockyards Company, and that the suits were
brought in their own behalf and that of other stockholders having a
like interest, who might thereafter join in the prosecution
thereof. The main purpose of the suits was to have declared invalid
a certain act of the Legislature of the State of Kansas approved
March 3, 1897, entitled
"An Act Defining What shall Constitute Public Stock Yards,
Defining the Duties of
Page 183 U. S. 80
the Person or Persons Operating the Same, and Regulating All
Charges thereof, and Removing Restrictions in the Trade of Dead
Animals, and Providing Penalties for Violations of This Act."
A temporary restraining order was granted, and subsequently a
motion for a preliminary injunction was made. Pending that motion
the court appointed a special master, with power to take testimony
and report the same, with his findings, as to all matters and
things in issue upon the hearing of the preliminary injunction
prayed for. 79 F. 679. On August 24, 1897, the special master filed
his report. On October 4, 1897, the motion for a preliminary
injunction was heard on affidavits, the master's report, exceptions
thereto on behalf of both parties, and arguments of counsel. The
motion was refused and the restraining order, which had remained in
force in the meantime, was set aside. 82 F. 839.
A stipulation was thereupon entered into that the defendants
should forthwith file their answers to the bills; that replications
thereto should be immediately filed, and that the cases thus put at
issue should be heard on final hearing, upon the pleadings, proofs,
master's report, and exhibits, without further testimony from
either party.
On October 28, 1897, after argument, the court dismissed the
bills of complaint. 82 F. 850. In the opinion of Circuit Judge
Thayer, there was the following order, which was also embodied in
the final decree:
"The great importance of the questions involved in these cases
will doubtless occasion an appeal to the Supreme Court of the
United States, where they will be finally settled and determined.
If, on such appeal, the Kansas statute complained of should be
adjudged invalid for any reason, and in the meantime the statutory
schedule of rates should be enforced, the Stockyards company would
sustain a great and irreparable loss. Under such circumstances, as
was said in substance by the Supreme Court in
Hovey v.
McDonald, 109 U. S. 161, it is the
right and duty of the trial court to maintain, if possible, the
status quo pending an appeal, if the questions at issue
are involved in doubt, and Equity Rule 93 was enacted in
recognition of that right. The court is of opinion that the cases
at bar are
Page 183 U. S. 81
of such moment and the questions at issue so balanced with doubt
as to justify and require an exercise of the power in question.
Therefore, although the bills will be dismissed, yet an order will
at the same time be entered restoring and continuing in force the
injunction which was heretofore granted for the term of ten days,
and if in the meantime an appeal shall be taken, such injunction
will be continued in force until the appeal is heard and determined
in the Supreme Court of the United States; provided that, in
addition to the ordinary appeal bond, the Kansas City Stockyards
Company shall make and file in this court its bond in the penal sum
of $200,000, payable to the clerk of this court and his successors
in office, for the benefit of whom it may concern, conditioned that
in the event the decree dismissing the bills is affirmed it will,
on demand, pay to the party or parties entitled thereto all
overcharges for yarding and feeding livestock at its stockyards in
Kansas City, Kansas, and Kansas City, Missouri, which it may have
enacted in violation of sections 4 and 5 of the Kansas statute
relative to stockyards, approved March 3, 1897, since an injunction
was first awarded herein, to-wit, on April __, 1897, and that it
will in like manner pay such overcharges, if any, as it may
continue to exact in violation of said statute during the pendency
of the appeal; said obligation to become void if the statute in
question shall be pronounced invalid by the Supreme Court."
82 F. 857.
On November 4, 1897, an appeal was duly taken and allowed to
this Court.
Subsequently, Louis C. Boyle's term of office as Attorney
General having expired, his successor, A. A. Godard, was
substituted as a party defendant.
The act of the Legislature of the State of Kansas is in the
following terms:
"SEC. 1. Any stockyards within this state into which livestock
is received for the purpose of exposing or having the same exposed
for sale or feeding, and doing business for a compensation, and
which for the preceding twelve months shall have had an average
daily receipt of not less than one hundred head
Page 183 U. S. 82
of cattle, or three hundred head of hogs, or three hundred head
of sheep, are hereby declared to be public Stockyards."
"SEC. 2. Any person, company, or corporation owning or operating
any public stockyard or stockyards in this state is hereby declared
to be a public stockyards operator, whether living or being within
this state or not."
"SEC. 3. Every such public stockyards operator or operators
shall annually, on the 31st day of December of each year, file with
the secretary of state an itemized statement certified and sworn
to, setting forth the number of head of cattle, calves, sheep,
hogs, horses, and mules received in his or their public stockyards
during the year next preceding."
"SEC. 4. It shall be unlawful for the owners, proprietors, or
the employees of the owners or proprietors of any such public
stockyards within this state to charge for driving, yarding,
watering, and weighing of stock, greater prices than the following:
for driving, yarding, watering, and weighing of cattle, 15 cents
per head; calves, 8 cents per head; hogs, 6 cents per head; sheep,
4 cents per head, and there shall be but one yardage charged."
"SEC. 5. It shall be unlawful for the owner, owners, or
proprietors, or their employees, of any such stockyards within this
state to sell and deliver at the rate of less than two thousand
pounds for a ton of hay, or any part thereof, the same to be of
good quality, or to charge for or to sell the same at more than one
hundred percent above the average market price or value of such hay
upon the markets of the towns or cities wherein such stockyards are
located, upon the day preceding such sale and delivery, and it
shall also be unlawful for any such owners or proprietors or
employees to sell and deliver less than seventy pounds of corn in
the car for a bushel, or less than fifty-six pounds of shelled corn
for a bushel, or to charge for or to sell the same at more than one
hundred percent above the average market price or value of such ear
corn or shelled corn on the markets of the towns or cities wherein
said stockyards are located on the day next preceding such sale and
delivery. All feed not above named shall be sold for no greater
percent of profit than hereinbefore provided. "
Page 183 U. S. 83
"SEC. 6. It shall be unlawful for the owners or proprietors of
any stockyards to prohibit the owner or owners, or the
representatives of any owner or owners, of any dead stock in such
yard or yards from selling such dead stock to any person or
persons."
"SEC. 7. That any person or persons violating any of the
provisions of this act shall be deemed guilty of a misdemeanor, and
upon conviction thereof shall be fined for the first offense not
more than one hundred dollars; for the second offense not less than
one hundred dollars nor more than two hundred dollars, and for the
third offense not less than two hundred dollars nor more than five
hundred dollars and by imprisonment in the county jail not
exceeding six months for each offense, and for each subsequent
offense he or they shall be fined in any sum not less than one
thousand dollars and by imprisonment in the county jail not less
than six months."
"SEC. 8. It is hereby made the duty of the Attorney General to
prosecute all violations of the provisions of this act."
"SEC. 9. All acts or parts of acts in conflict with this act are
hereby repealed."
"SEC. 10. This act shall take effect and be in force from and
after its publication in the official state paper."
Laws of Kansas 1897, c. 240, p. 448.
MR. JUSTICE BREWER, after making the above statement, delivered
the following opinion, and announced the conclusion and judgment of
the Court:
The learned circuit judge, in deciding the case, appreciated the
importance of the questions involved, and, although denying the
relief sought by the plaintiffs, exercised his power of continuing
the restraining order until such time as these questions
Page 183 U. S. 84
could be determined. Twice has this case been argued before us.
We have had the benefit of able arguments and elaborate briefs of
distinguished counsel. That the questions are difficult of solution
no one reading the following statement will, we think, doubt.
It has been wisely and aptly said that this is a government of
laws, and not of men; that there is no arbitrary power located in
any individual or body of individuals; but that all in authority
are guided and limited by those provisions which the people have,
through the organic law, declared shall be the measure and scope of
all control exercised over them.
We shall not attempt to determine all the questions presented,
and yet it is fitting that we should state them, and some of the
reasons urged in support of their decision one way or the
other.
The first we notice is the principal matter in respect to which
testimony was offered, which has been most largely discussed by
counsel on both sides, and that is the validity of the reduction in
the charges of the stockyards company made by the act in question.
Has the state the power to legislate on this matter, and, if so,
can its legislation be upheld?
In
Munn v. Illinois, 94 U. S. 113, it
was held that the state had power to fix the maximum charges for
the storing of grain in warehouses in Chicago, the Court saying (p.
94 U. S.
126):
"Property does become clothed with a public interest when used
in a manner to make it of public consequence and affect the
community at large. When, therefore, one devotes his property to a
use in which the public has an interest, he in effect grants to the
public an interest in that use, and must submit to be controlled by
the public for the common good to the extent of the interest he has
thus created. He may withdraw his grant by discontinuing the use,
but so long as he maintains the use, he must submit to the
control."
While there was a division of opinion in the Court, yet the
doctrine thus stated received the assent of a majority of its
members, and has been reaffirmed since, although accompanied by a
constant dissent.
Budd v. New York, 143 U.
S. 517;
Brass v. Stoeser, 153 U.
S. 391.
See also the following cases in state
courts:
People v. Budd, 117 N.Y. 1;
Lake Shore
&
Page 183 U. S. 85
Michigan Southern Railway v. Cincinnati, Sandusky &c.
Railway, 30 Ohio St. 604;
State v. Columbus Gaslight &
Coke Co., 34 Ohio St. 572;
Davis v. State, 68 Ala.
58;
Baker v. State, 54 Wis. 368;
Nash v. Page, 80
Ky. 539;
Girard Point Storage Co. v. Southwark Co., 105
Pa. 248;
Sawyer v. Davis, 136 Mass. 239;
Brechbill v.
Randall, 102 Ind. 528;
Delaware, Lackawanna &c.
Railroad Co. v. Central Stockyard Co., 45 N.J.Eq. 50.
These decisions go beyond, but are in line with, those in which
was recognized the power of the state to regulate charges for
services connected with any strictly public employment, as, for
instance, in the matter of common carriage, supply of water, gas,
etc.
Spring Valley Waterworks v. Schottler, 110 U.
S. 347;
Railroad Commission Cases, 116 U.
S. 307;
Wabash, St. Louis & Pacific Railway v.
Illinois, 118 U. S. 557;
Dow v. Beidelman, 125 U. S. 680;
Chicago, Milwaukee &c. Railway v. Minnesota,
134 U. S. 418;
Chicago & Grand Trunk Railway v. Wellman, 143 U.
S. 339;
Reagan v. Farmers' Loan & Trust
Co., 154 U. S. 362;
St. Louis & San Francisco Railway v. Gill,
156 U. S. 649;
Covington &c. Turnpike Co. v. Sandford, 164 U.
S. 578;
Smyth v. Ames, 169 U.
S. 466;
San Diego Land Co. v. National City,
174 U. S. 739;
Chicago, Milwaukee & St. Paul Railway v. Tompkins,
176 U. S. 167.
Tested by the rule laid down in
Munn v. Illinois, it
may be conceded that the state has the power to make reasonable
regulation of the charges for services rendered by the stockyards
company. Its stockyards are situated in one of the gateways of
commerce, and so located that they furnish important facilities to
all seeking transportation of cattle. While not a common carrier
nor engaged in any distinctively public employment, it is doing a
work in which the public has an interest, and therefore must be
considered as subject to governmental regulation.
But to what extent may this regulation go? Is there no limit
beyond which the state may not interfere with the charges for
services, either of those who are engaged in performing some public
service or of those who, while not engaged in such service, have
yet devoted their property to a use in which the public
Page 183 U. S. 86
has an interest? And is the extent of governmental regulation
the same in both of these classes of cases?
In
Munn v. Illinois, one of the latter class, in which
the power of governmental regulation was affirmed, it was said (p.
94 U. S.
125):
"From this it is apparent that down to the time of the adoption
of the Fourteenth Amendment, it was not supposed that statutes
regulating the use, or even the price of the use, of private
property necessarily deprived an owner of his property without due
process of law. Under some circumstances they may, but not under
all."
In
Budd v. New York, it was not charged or shown that
the rates prescribed by the legislature were unreasonable, and the
only question was the power of the legislature to interfere at all
in the matter. The same is true of
Brass v. Stoeser, in
which nothing was presented calling for any consideration of the
test of reasonableness or of a limit to the legislative power.
As to those cases in which governmental regulation of charges
was in respect to parties doing some public service, the following
is a resume of the decisions. In
Spring Valley Waterworks v.
Schottler, it was said (p.
110 U. S.
354):
"What may be done if the municipal authorities do not exercise
an honest judgment, or if they fix upon a price which is manifestly
unreasonable, need not now be considered, for that proposition is
not presented by this record. The objection here is not to any
improper prices fixed by the officers, but to their power to fix
prices at all."
In
Railroad Commission Cases (p.
116 U. S.
331):
"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."
In
Wabash, St. Louis & Pacific Railway v. Illinois,
nothing was said affecting
Page 183 U. S. 87
the question of the extent of the power of the legislature. In
Dow v. Beidelman, the quotation heretofore made from the
Railroad Commission Cases was quoted with approval. In
Chicago, Milwaukee &c. Railway v. Minnesota, the same
passage was quoted, and it was added (p.
134 U. S.
458):
"If the company is deprived of the power of charging reasonable
rates for the use of its property, and such deprivation takes place
in the absence of an investigation by judicial machinery, it is
deprived of the lawful use of its property, and thus, in substance
and effect, of the property itself, without due process of law and
in violation of the Constitution of the United States, and insofar
as it is thus deprived, while other persons are permitted to
receive reasonable profits upon their invested capital, the company
is deprived of the equal protection of the laws."
In
Chicago & Grand Trunk Railway v. Wellman, it was
said (p.
143 U. S.
344):
"The legislature has power to fix rates, and the extent of
judicial interference is protection against unreasonable
rates."
In
Reagan v. Farmers' Loan & Trust Co. (p.
154 U. S.
399):
"The equal protection of the laws which, by the Fourteenth
Amendment, no state can deny to the individual, forbids
legislation, in whatever form it may be enacted, by which the
property of one individual is, without compensation, wrested from
him for the benefit of another, or of the public. This, as has been
often observed, is a government of law, and not a government of
men, and it must never be forgotten that, under such a government,
with its constitutional limitations and guaranties, the forms of
law and guaranties, the forms of law their reach and power, must in
their actual workings stop on the hither side of the unnecessary
and uncompensated taking or destruction of any private property
legally acquired and legally held."
And again (p.
154 U. S.
412):
"It is unnecessary to decide, and we do not wish to be
understood as laying down as an absolute rule, that in every case,
a failure to produce some profit to those who have invested their
money in the building of a road is conclusive that the tariff is
unjust and unreasonable. And yet justice demands that everyone
should receive some compensation for the use of his money
Page 183 U. S. 88
or property if it be possible without prejudice to the rights of
others. There may be circumstances which would justify such a
tariff; there may have been extravagance and a needless expenditure
of money; there may be waste in the management of the road;
enormous salaries, unjust discrimination as between individual
shippers, resulting in general loss. The construction may have been
at a time when material and labor were at the highest price, so
that the actual cost far exceeds the present value; the road may
have been unwisely built, in localities where there is no
sufficient business to sustain a road. Doubtless, too, there are
many other matters affecting the rights of the community in which
the road is built, as well as the rights of those who have built
the road."
In
St. Louis & San Francisco Railway v. Gill is
this language (p.
156 U. S.
657):
"This Court has declared in several cases that there is a remedy
in the courts for relief against legislation establishing a tariff
of rates which is so unreasonable as to practically destroy the
value of property of companies engaged in the carrying
business."
In
Covington &c. Turnpike Co. v. Sandford (p.
164 U. S.
597):
"The legislature has the authority in every case where its power
has not been restrained by contract, to proceed upon the ground
that the public may not rightfully be required to submit to
unreasonable exactions for the use of a public highway established
and maintained under legislative authority. If a corporation cannot
maintain such a highway and earn dividends for stockholders, it is
a misfortune for it and them which the Constitution does not
require to be remedied by imposing unjust burdens upon the public.
So that the right of the public to use the defendant's turnpike
upon payment of such tolls as in view of the nature and value of
the service rendered by the company are reasonable is an element in
the general inquiry whether the rates established by law are unjust
and unreasonable. That inquiry also involves other considerations,
such, for instance, as the reasonable cost of maintaining the road
in good condition for public use, and the amount that may have been
really and necessarily invested in the enterprise. In short,
each
Page 183 U. S. 89
case must depend upon its special facts, and when a court,
without assuming itself to prescribe rates, is required to
determine whether the rates prescribed by the legislature for a
corporation controlling the public highway are, as an entirety, so
unjust as to destroy the value of its property for all the purposes
for which it was acquired, its duty is to take into consideration
the interests both of the public and of the owner of the property,
together with all other circumstances that are fairly to be
considered in determining whether the legislature has, under the
guise of regulating rates, exceeded its constitutional authority
and practically deprived the owner of property without due process
of law."
In
Smyth v. Ames, after an elaborate discussion of the
question of rates and the power of the legislature in respect
thereto, it was said (pp.
169 U. S.
546-547):
"We hold, however, that the basis of all calculations as to the
reasonableness of rates to be charged by a corporation maintaining
a highway under legislative sanction must be the fair value of the
property being used by it for the convenience of the public. And in
order to ascertain that value, the original cost of construction,
the amount expended in permanent improvements, the amount and
market value of its bonds and stock, the present as compared with
the original cost of construction, the probable earning capacity of
the property under the particular rates prescribed by statute, and
the sum required to meet operating expenses are all matters for
consideration, and are to be given such weight as may be just and
right in each case. We do not say that there may not be other
matters to be regarded in estimating the value of the property.
What the company is entitled to ask is a fair return upon the value
of that which it employs for the public convenience. On the other
hand, what the public is entitled to demand is that no more be
exacted from it for the use of a public highway than the services
rendered by it are reasonably worth."
In
San Diego Land & Town Co. v. National City (p.
174 U. S.
757):
"The contention of the appellant in the present case is that, in
ascertaining what are just rates, the court should take into
consideration the cost of its plant; the cost per annum of
operating
Page 183 U. S. 90
the plant, including interest paid on money borrowed and
reasonably necessary to be used in constructing the same; the
annual depreciation of the plant from natural causes resulting from
its use, and a fair profit to the company over and above such
charges for its services in supplying the water to consumers,
either by way of interest on the money it has expended for the
public use, or upon some other fair and equitable basis.
Undoubtedly all these matters ought to be taken into consideration,
and such weight be given them when rates are being fixed as under
all the circumstances will be just to the company and to the
public. The basis of calculation suggested by the appellant is,
however, defective in not requiring the real value of the property
and the fair value in themselves of the services rendered to be
taken into consideration. What the company is entitled to demand in
order that it may have just compensation is a fair return upon the
reasonable value of the property at the time it is being used for
the public. The property may have cost more than it ought to have
cost, and its outstanding bonds for money borrowed and which went
into the plant may be in excess of the real value of the property.
So that it cannot be said that the amount of such bonds should in
every case control the question of rates, although it may be an
element in the inquiry as to what is, under all the circumstances
considered, just both to the company and to the public."
And also affirming the limits of judicial interference with
legislative action (p.
174 U. S.
754):
"But it should also be remembered that the judiciary ought not
to interfere with the collection of rates established under
legislative sanction unless they are so plainly and palpably
unreasonable as to make their enforcement equivalent to the taking
of property for public use without such compensation as under all
the circumstances is just both to the owner and to the public --
that is, judicial interference should never occur unless the case
presents, clearly and beyond all doubt, such a flagrant attack upon
the rights of property under the guise of regulations as to compel
the court to say that the rates prescribed will necessarily
Page 183 U. S. 91
have the effect to deny just compensation for private property
taken for the public use."
Nothing was said in
Chicago &c. Ry. Co. v. Tompkins
throwing any light upon the questions heretofore referred to.
In the light of these quotations, this may be affirmed to be the
present scope of the decisions of this Court in respect to the
power of the legislature in regulating rates: as to those
individuals and corporations who have devoted their property to a
use in which the public has an interest, although not engaged in a
work of a confessedly public character, there has been no further
ruling than that the state may prescribe and enforce reasonable
charges. What shall be the test of reasonableness in those charges
is absolutely undisclosed.
As to parties engaged in performing a public service, while the
power to regulate has been sustained, negatively the court has held
that the legislature may not prescribe rates which if enforced
would amount to a confiscation of property. But it has not held
affirmatively that the legislature may enforce rates which stop
only this side of confiscation, and leave the property in the hands
and under the care of the owners without any remuneration for its
use. It has declared that the present value of the property is the
basis by which the test of reasonableness is to be determined,
although the actual cost is to be considered, and that the value of
the services rendered to each individual is also to be considered.
It has also ruled that the determination of the legislature is to
be presumed to be just, and must be upheld unless it clearly
appears to result in enforcing unreasonable and unjust rates.
In this case, as heretofore indicated, a volume of testimony has
been taken, mainly upon the question of the cost and value of the
stockyards and the effect upon the income of the company by reason
of the proposed reduction. This testimony was taken before a
master, with instructions to report the cost of the stockyards, the
present value of the property, the receipts and expenditures
thereof, the manner of operation, and such other matters as might
be pertinent for a determination of the case. Stated in general
terms, his findings were that the value of the property used for
stockyard purposes, including the value
Page 183 U. S. 92
of certain supplies of feed and materials which were on hand
December 31, 1896, is $5,388,003.25; that the gross income realized
by the stockyards company during the year 1896, which was taken as
representing its average gross income, was $1,012,271.22. The total
expenditures of the company for all purposes during the same period
amounted to $535,297.14 -- thus indicating a net income for the
year of $476,974.08. The court, however, increased the estimate of
the net income by adding to the expenditures the sum of
$113,584.65, expended in repairs and construction, thus placing the
net income at the amount of $590,558.73. If the rates prescribed by
the Kansas statute for yarding and feeding stock had been in force
during the year 1896, the income of the stockyards company would
have been reduced that year $300,651.77, leaving a net income of
$289,916.96. This would have yielded a return of 5.3 percent on the
value of property used for stockyard purposes, as fixed by the
master. Or if the capital stock be taken after deducting therefrom
such portion thereof which represents property not used for
stockyard purposes, the return would be 4.6 percent
Counsel for appellants challenge the correctness of these
findings, and seek to show by a review of the testimony that no
such percent of return on the real value of the investment would be
received by the company in case the proposed reduction is put into
effect. But, without stopping to enter into the inquiry suggested
by their contention, it is enough for our present purpose to state
in general the conclusions of the master and the court.
On the other hand, it is shown by the findings, approved by the
court, that the prices charged in these stockyards are no higher,
and, in some respects, lower, than those charged in any other
stockyards in the country, and finding 37 is --
"The other stockyards heretofore enumerated are operated
generally in the same manner as those at Kansas City, and there is
and was for a long time prior to March 12, 1897, active and growing
competition among their owners to attract and secure to each the
shipment of livestock from competitive territories. Kansas City is
the greatest stocker and feeder market in the world, and while
Chicago exceeds it as a general market,
Page 183 U. S. 93
yet, because of the expense of transportation from Kansas City
there, and the loss in weight by shrinkage during such
transportation, the livestock shipped to and sold at Kansas City in
1896 realized for its owners more than $1,500,000 in excess of the
amount which would have been realized if forwarded from Kansas City
to and sold on the Chicago market."
Now, in the light of these decisions and facts, it is insisted
that the same rule as to the limit of judicial interference must
apply in cases in which a public service is distinctly intended and
rendered and in those in which, without any intent of public
service, the owners have placed their property in such a position
that the public has an interest in its use. Obviously there is a
difference in the conditions of these cases. In the one, the owner
has intentionally devoted his property to the discharge of a public
service. In the other, he has placed his property in such a
position that, willingly or unwillingly, the public has acquired an
interest in its use. In the one, he deliberately undertakes to do
that which is a proper work for the state. In the other, in pursuit
of merely private gain, he has placed his property in such a
position that the public has become interested in its use. In the
one, it may be said that he voluntarily accepts all the conditions
of public service which attach to like service performed by the
state itself. In the other, that he submits to only those necessary
interferences and regulations which the public interests require.
In the one, he expresses his willingness to do the work of the
state, aware that the state, in the discharge of its public duties,
is not guided solely by a question of profit. It may rightfully
determine that the particular service is of such importance to the
public that it may be conducted at a pecuniary loss, having in view
a larger general interest. At any rate, it does not perform its
services with the single idea of profit. Its thought is the general
public welfare. If in such a case an individual is willing to
undertake the work of the state, may it not be urged that he in a
measure subjects himself to the same rules of action, and that, if
the body which expresses the judgment of the state believes that
the particular services should be rendered without profit, he is
not at liberty to complain? While we have said
Page 183 U. S. 94
again and again that one volunteering to do such services cannot
be compelled to expose his property to confiscation, that he cannot
be compelled to submit its use to such rates as do not pay the
expenses of the work, and therefore create a constantly increasing
debt which ultimately works its appropriation, still is there not
force in the suggestion that, as the state may do the work without
profit, if he voluntarily undertakes to act for the state, he must
submit to a like determination as to the paramount interests of the
public?
Again, wherever a purely public use is contemplated, the state
may and generally does bestow upon the party intending such use
some of its governmental powers. It grants the right of eminent
domain, by which property can be taken, and taken not at the price
fixed by the owner, but at the market value. It thus enables him to
exercise the powers of the state, and, exercising those powers and
doing the work of the state, is it wholly unfair to rule that he
must submit to the same conditions which the state may place upon
its own exercise of the same powers and the doing of the same work?
It is unnecessary in this case to determine this question. We
simply notice the arguments which are claimed to justify a
difference in the rule as to property devoted to public uses from
that in respect to property used solely for purposes of private
gain, and which only by virtue of the conditions of its use becomes
such as the public has an interest in.
In reference to this latter class of cases, which is alone the
subject of present inquiry, it must be noticed that the individual
is not doing the work of the state. He is not using his property in
the discharge of a purely public service. He acquires from the
state none of its governmental powers. His business in all matters
of purchase and sale is subject to the ordinary conditions of the
market and the freedom of contract. He can force no one to sell to
him, he cannot prescribe the price which he shall pay. He must deal
in the market as others deal, buying only when he can buy and at
the price at which the owner is willing to sell and selling only
when he can find a purchaser and at the price which the latter is
willing to pay. If under such circumstances he is bound by all the
conditions
Page 183 U. S. 95
of ordinary mercantile transactions, he may justly claim some of
the privileges which attach to those engaged in such transactions.
And while by the decisions heretofore referred to he cannot claim
immunity from all state regulation, he may rightfully say that such
regulation shall not operate to deprive him of the ordinary
privileges of others engaged in mercantile business.
Pursuing this thought, we add that the state's regulation of his
charges is not to be measured by the aggregate of his profits,
determined by the volume of business, but by the question whether
any particular charge to an individual dealing with him is,
considering the service rendered, an unreasonable exaction. In
other words, if he has a thousand transactions a day, and his
charges in each are but a reasonable compensation for the benefit
received by the party dealing with him, such charges do not become
unreasonable because, by reason of the multitude, the aggregate of
his profits is large. The question is not how much he makes out of
his volume of business, but whether, in each particular
transaction, the charge is an unreasonable exaction for the
services rendered. He has a right to do business. He has a right to
charge for each separate service that which is reasonable
compensation therefor, and the legislature may not deny him such
reasonable compensation, and may not interfere simply because, out
of the multitude of his transactions, the amount of his profits is
large. Such was the rule of the common law even in respect to those
engaged in a
quasi-public service, independent of
legislative action. In any action to recover for an excessive
charge, prior to all legislative action, who ever knew of an
inquiry as to the amount of the total profits of the party making
the charge? Was not the inquiry always limited to the particular
charge, and whether that charge was an unreasonable exaction for
the services rendered? As said by Mr. Justice Bradley in
Transportation Co. v. Parkersburg, 107 U.
S. 691,
107 U. S.
699:
"It is also obvious that, since a wharf is property and wharfage
is a charge or rent for its temporary use, the question whether the
owner derives more or less revenue from it, or whether more or less
than the cost of building and maintaining it, or what
disposition
Page 183 U. S. 96
he makes of such revenue, can in no way concern those who make
use of the wharf, and are required to pay the regular charges
therefor; provided, always, that the charges are reasonable, and
not exorbitant."
In
Canada Southern Railway Co. v. International Bridge
Co., 8 App.Cas. 723, 731, Lord Chancellor Selborne thus
expressed the decision of the House of Lords:
"It certainly appears to their lordships that the principle must
be, when reasonableness comes in question, not what profit it may
be reasonable for a company to make, but what it is reasonable to
charge to the person who is charged. That is the only thing he is
concerned with. They do not say that the case may not be imagined
of the results to a company being so enormously disproportionate to
the money laid out upon the undertaking as to make that of itself
possibly some evidence that the charge is unreasonable with
reference to the person against whom it is charged. But that is
merely imaginary. Here we have got a perfectly reasonable scale of
charges in everything which is to be regarded as material to the
person against whom the charge is made. One of their lordships
asked counsel at the bar to point out which of these charges were
unreasonable. It was not found possible to do so. In point of fact,
every one of them seems to be, when examined with reference to the
service rendered and the benefit to the person receiving that
service, perfectly unexceptionable according to any standard of
reasonableness which can be suggested. That being so, it seems to
their lordships that it would be a very extraordinary thing indeed,
unless the legislature had expressly said so, to hold that the
persons using the bridge could claim a right to take the whole
accounts of the company, to dissect their capital account, and to
dissect their income account, to allow this item and disallow that,
and, after manipulating the accounts in their own way, to ask a
court to say that the persons who have projected such an
undertaking as this, who have encountered all the original risks of
executing it, who are still subject to the risks which from natural
and other causes every such undertaking is subject to, and who may
possibly, as in the case alluded to by the learned judge in the
court below, the case of
Page 183 U. S. 97
the Tay Bridge, have the whole thing swept away in a moment, are
to be regarded as making unreasonable charges not because it is
otherwise than fair for the railway company using the bridge to pay
those charges, but because the bridge company gets a dividend which
is alleged to amount at the utmost, to 15 percent. Their lordships
can hardly characterize that argument as anything less than
preposterous."
The authority of the legislature to interfere by a regulation of
rates is not an authority to destroy the principles of these
decisions, but simply to enforce them. Its prescription of rates is
prima facie evidence of their reasonableness. In other
words, it is a legislative declaration that such charges are
reasonable compensation for the services rendered, but it does not
follow therefrom that the legislature has power to reduce any
reasonable charges because, by reason of the volume of business
done by the party, he is making more profit than others in the same
or other business. The question is always not what does he make as
the aggregate of his profits? but what is the value of the services
which he renders to the one seeking and receiving such services? Of
course, it may sometimes be, as suggested in the opinion of Lord
Chancellor Selborne, that the amount of the aggregate profits may
be a factor in considering the question of the reasonableness of
the charges, but it is only one factor, and is not that which
finally determines the question of reasonableness. Now the
controversy in the circuit court proceeded upon the theory that the
aggregate of profits was the pivotal fact. To that the testimony
was adduced, upon it the findings of the master were made, and in
recognition of that fact the opinion of the court was announced.
Obviously, as we think, in all this the lines of inquiry were too
narrowly pursued.
It may be said that the conclusion of the court was directly
against the plaintiffs, and therefore was a decision against all
their contentions. It was found, however, that the charges made by
the defendant were no greater (and in many instances, less) than
those of any other stockyards in the country. Nothing is stated to
outweigh the significance of that finding. While custom is not
controlling, for there may be a custom on
Page 183 U. S. 98
the part of all stockyards companies to make excessive charges,
yet in the absence of testimony to the contrary, a customary charge
should be regarded as reasonable and rightful. In Gunning, Law of
Tolls, the author says (p. 61): "Long usage and acquiescence in one
uniform payment for toll is undoubtedly cogent evidence that it is
reasonable." In
Shephard v. Payne, 12 C.B. (N.S.) 414,
433, Willes, J., said:
"A fee need not be of a fixed and ascertained, but may be of a
reasonable, amount, and, exercising the power conferred upon us by
the case to draw inferences of fact, we may conclude that if the
claim can be sustained in point of law, it was in fact for a
reasonable fee. If so, then, looking to the amount established for
similar services by other officers, and remembering what fees have
been paid and received within the memory of us all in the Courts of
Westminster Hall and at the Assizes, we think there can be little
doubt that the fees in question, so far as amount is concerned, are
in fact reasonable."
In
Louisville, Evansville &c. Railroad Co. v.
Wilson, 119 Ind. 352, 358, is this language:
"The law makes it the duty of every common carrier to receive
and carry all goods, . . . and authorizes a reasonable reward to be
charged for the service. The amount to be paid is, in a measure,
subject to the agreement of the parties; but when the amount is not
fixed by contract, the law implies that the carrier shall have a
reasonable reward, which is to be ascertained by the amount
commonly or customarily paid for other like services.
Johnson
v. Pensacola &c. Railroad Co., 16 Fla. 623; Angell,
Carriers, section 392; Lawson, Contracts of Carriers, section
125."
Again, the findings show that the gross receipts for the year
1896 were $1,012,271.22; that the total number of stock received
during the same time was 5,471,246. In other words, the charge per
capita was 18 cents and 5 mills. So that one shipping to the
stockyards one hundred head of stock was charged $18.50 for the
privileges of the yard, the attendance of the employees, and the
feed furnished. While from these figures alone we might not say
that the charges were reasonable or unreasonable, we cannot but be
impressed with the fact that the
Page 183 U. S. 99
smallness of the charge suggests no extortion. Further, as
heretofore noticed, the findings show that the establishment of
these yards has operated to secure to the shippers during a single
year $1,500,000 more than they would have realized in case of their
nonexistence and a consequent shipment to Chicago, the other great
stock market of the country.
It is not to be wondered that the trial court, in deciding the
case, observed:
"Conceding, as we must, that the legislation complained of was
radical in its nature and effect, that it reduced the company's
income about fifty percent, and that it prevents it from realizing
on the capital invested in its plant such a percent as is
ordinarily realized on capital invested in other mercantile and
business enterprises, still,"
etc.
But, inasmuch as the inquiry in that court proceeded upon lines
which we have indicated were too narrow, it might well be that if
there were no other questions, we ought to simply send back the
case for further investigation upon the true lines of inquiry.
There are, however, other questions which compel notice, and one is
that suggested by the seventh section in the statute, which
provides a punishment for the first offense of not more than $100,
for the second offense not less than $100 nor more than $200, for
the third offense not less than $200 nor more than $500 and
imprisonment in the county jail not exceeding six months, and for
each subsequent offense a fine of not less than $1,000 and
imprisonment not less than six months. The language of this
section, taken in connection with the balance of the statute, is
not entirely clear. The previous prescriptions of the statute are
of a certain charge per head. Now does this section contemplate a
separate offense with a separate penalty for each excessive charge
per head, or does it contemplate a single penalty for a violation
of the statute in respect to the entire number of stock received in
one shipment? The difference is significant. Taking the total
number shipped to these stockyards in the year 1896, it amounted to
an average of about 15,000 head per day. Would that, in case of an
excessive charge for each head, mean 15,000 violations of the
statute? If so, as after the third offense, the fine could not be
less
Page 183 U. S. 100
than $1,000 for each offense, a single day's penalties would
aggregate at least $15,000,000. While the fact is not clearly
disclosed by the testimony, doubtless the shipments were made by
separate shippers in bunches all the way from 50 to 500 in number.
If the penalty attaches simply to the charge for each shipment as a
single act, the burden, though large, might not be deemed
excessive; but if it attaches to that for each particular head of
stock, the penalties become enormous. It may be said that this is a
penal statute, and therefore it is to be construed in favor of the
delinquent, and that we have a right to expect that the state
courts will construe the penalty as not attaching to the charge for
each head of stock, but only to that upon the separate bunches
shipped by different individuals. But is the language so clear that
there is no doubt as to the construction? Is there not enough in it
to justify a construction which may be accepted by the trial courts
and approved by the supreme court of the state? And the
construction of a state statute by the supreme court of the state
is in a case like this conclusive upon us. Must the party upon whom
such a liability is threatened take the chances of the construction
of a doubtful statute? If the one construction is placed upon it,
then obviously, even accepting the largest estimate of value placed
by any witness upon the property of the company, a single day's
violation of the statute would exhaust such entire value in
satisfaction of the penalties incurred. In this feature of the
case, we are brought face to face with a question which legislation
of other states is presenting. Do the laws secure to an individual
an equal protection when he is allowed to come into court and make
his claim or defense subject to the condition that, upon a failure
to make good that claim or defense, the penalty for such failure
either appropriates all his property, or subjects him to
extravagant and unreasonable loss? Let us make some illustrations
to suggest the scope of this thought.
Suppose a law were passed that, if any laboring man should bring
or defend an action and fail in his claim or defense, either in
whole or in part, he should in the one instance forfeit to the
defendant half of the amount of his claim, and in the other be
punished by a fine equal to half of the recovery against him,
Page 183 U. S. 101
and that such law, by its terms, applied only to laboring men,
would there be the slightest hesitation in holding that the laborer
was denied the equal protection of the laws? The mere fact that the
courts are open to hear his claim or defense is not sufficient if
upon him, and upon him alone, there is visited a substantial
penalty for a failure to make good his entire claim or defense.
Take another illustration: suppose a statute that every corporation
failing to establish its entire claim or make good its entire
defense should as a penalty therefor forfeit its corporate
franchise, and that no penalty of any kind except the matter of
cost was attached to like failures of other litigants, could it be
said that the corporations received the equal protection of the
laws? Take still another illustration: suppose a law which, while
opening the doors of the courts to all litigants, provided that a
failure of any plaintiff or defendant to make good his entire claim
or entire defense should subject him to a forfeiture of all his
property or to some other great penalty; then, even if, as all
litigants were treated alike, it could be said that there was equal
protection of the laws, would not such burden upon all be adjudged
a denial of due process of law? Of course, these are extreme
illustrations, and they serve only to illustrate the proposition
that a statute (although in terms opening the doors of the courts
to a particular litigant) which places upon him as a penalty for a
failure to make good his claim or defense a burden so great as to
practically intimidate him from asserting that which he believes to
be his rights is, when no such penalty is inflicted upon others,
tantamount to a denial of the equal protection of the laws. It may
be said that these illustrations are not pertinent because they are
of civil actions, whereas this statute makes certain conduct by the
stockyards company a criminal offense, and simply imposes
punishment for such offense; that it is within the competency of
the legislature to prescribe the penalties for all offenses, either
those existing at common law or those created by statute; and,
further that, although the penalties herein imposed may be large,
yet obedience to a statute like this can only be secured by large
penalties, for otherwise the company, being wealthy and powerful,
might defiantly disregard its mandates,
Page 183 U. S. 102
trusting to the manifold chances of litigation to prevent any
serious loss from disobedience. A penalty of a dollar on a large
corporation, whose assets amount to millions, would not be very
deterrent from disobedience. It is doubtless true that the state
may impose penalties such as will tend to compel obedience to its
mandates by all, individuals or corporations, and if extreme and
cumulative penalties are imposed only after there has been a final
determination of the validity of the statute, the question would be
very different from that here presented. But when the legislature,
in an effort to prevent any inquiry of the validity of a particular
statute, so burdens any challenge thereof in the courts that the
party affected is necessarily constrained to submit rather than
take the chances of the penalties imposed, then it becomes a
serious question whether the party is not deprived of the equal
protection of the laws.
But it is not necessary to rest our decision upon this
consideration, which was not fully discussed by counsel, but pass
to a question which is of a kindred nature, and in which there is
presented no matter of the doubtful construction of a statute.
The act in terms applies only to those stockyards within the
state
"which for the preceding twelve months shall have had an average
daily receipt of not less than one hundred head of cattle, or three
hundred head of hogs, or three hundred head of sheep."
It appears affirmatively from the testimony that there are other
stockyards in the state, one at Wichita and one at Jamestown, and
it is stated by counsel for appellants that there are many others
scattered through the state, each doing a small business. Neither
the yard at Wichita nor that at Jamestown, so far as the testimony
shows, comes within the scope of this act. So it may be assumed
from the record that the Legislature of Kansas, having regard
simply to the stockyards at Kansas City and the volume of business
done at those yards, passed this act to reduce their charges.
Undoubtedly the act is general in its terms, and we may not
therefore stop to inquire whether it conflicts with the
constitutional prohibition contained in article 2, section 17, of
the Constitution of Kansas:
"SEC. 17. All laws of a general nature shall have a uniform
Page 183 U. S. 103
operation throughout the state, and in all cases where a general
law can be made applicable, no special law shall be enacted."
It may be assumed, for the purposes of the question now to be
considered, that, so far as the Constitution of Kansas is
concerned, its legislature may enact a law general in its terms,
and yet so phrased as necessarily to have operation only upon a
single individual or corporation; but while making that concession
we cannot shut our eyes to the fact that this act is precisely the
same in its effect as though the legislature had said in terms that
the Kansas City stockyards alone shall be subjected to its
provisions. Accepting, however, the full force of the general
language in which the statute is couched, it appears that a
classification is attempted between stockyards doing a large and
those doing a small business. The express and only basis of
classification is in the amount of business done by the two
classes. As evidence that we are right in our construction, we may
refer to the brief of the learned Attorney General, in which he
says:
"The legislature has by this act classified the stockyards of
the state into two classes, and has adopted the most natural and
reasonable basis for such purposes that could be used -- namely,
the volume of business done. The reason for this is obvious -- the
stockyards doing a large volume of business are necessarily more of
monopolies than those doing a smaller business. The public has
greater interest in the business of large stockyards than it has in
the business of smaller ones."
"
* * * *"
"Another reason why the classification should be based upon the
volume of business done is that rates which are reasonable and
proper and furnish a sufficient return upon the capital invested
can very properly be made lower and different in a plant where the
volume of business is large, while in a smaller plant doing a
smaller volume of business, higher rates may be necessary in order
to afford adequate returns."
If the average daily receipts of a stockyard are more than one
hundred head of cattle, or more than three hundred head of hogs, or
more than three hundred head of sheep, it comes
Page 183 U. S. 104
within the purview of this statute. If less than that amount, it
is free from legislative restriction. No matter what yards it may
touch today or in the near or far future, the express declaration
of the statute is that stockyards doing a business in excess of a
certain amount of stock shall be subjected to this regulation, and
that all others doing less business shall be free from its
provisions. Clearly the classification is based solely on the
amount of business done, and without any reference to the character
or value of the services rendered. Kindred legislation would be
found in a statute like this: requiring a railroad company hauling
ten tons or over of freight a day to charge only a certain sum per
ton, leaving to other railroad companies hauling a less amount of
freight the right to make any reasonable charge; or, one requiring
a railroad company hauling one hundred or more passengers a day to
charge only a specified amount per mile for each, leaving those
hauling ninety-nine or less to make any charge which would be
reasonable for the service; or, if we may indulge in the
supposition that the legislature has a right to interfere with the
freedom of private contracts, one which would forbid a dealer in
shoes and selling more than ten pairs a day from charging more than
a certain price per pair, leaving the others selling a less number
to charge that which they deemed reasonable; or forbidding farmers
selling more than ten bushels of wheat to charge above a specified
sum per bushel, leaving to those selling a less amount the
privilege of charging and collecting whatever they and the buyers
may see fit to agree upon. In short, we come back to the thought
that the classification is one not based upon the character or
value of the services rendered, but simply on the amount of the
business which the party does, and upon the theory that, although
he makes a charge which everybody else in the same business makes,
and which is perfectly reasonable so far as the value of the
services rendered to the individuals seeking them is concerned, yet
if, by the aggregation of business, he is enabled to make large
profits, his charges may be cut down.
The question thus presented is of profoundest significance. Is
it true in this country that one who by his attention to
business,
Page 183 U. S. 105
by his efforts to satisfy customers, by his sagacity in
discerning the probable courses of trade, and by contributing of
his means to bring trade into those lines, succeeds in building up
a large and profitable business becomes thereby a legitimate object
of the legislative scalping knife? Having created the facilities
which the many enjoy, can the many turn around and say, you are
making too much out of those facilities, and you must divide with
us your profits? We cannot shut our eyes to well known facts.
Kansas is an agricultural state. Its extensive and fertile prairies
produce each year enormous crops of corn and other grains. While
portions of theses crops are shipped to mills to be manufactured
into meal and flour, it is found by many that there is a profit in
feeding them to stock, so that the amount of stock which is raised
and fattened in Kansas is large, and makes one of the great
industries of the state. Now shall they whose interests are all
along the line of production, having by virtue of their numerical
majority the control of legislation, be permitted to say to one who
acts as an intermediary between transportation and sale that, while
we permit no interference with the prices which we put upon our
products, nevertheless we cut down your charges for intermediate
services, and this not because any particular charge is
unreasonable, but because you are making by the aggregate of those
charges too large a sum, and ought therefore to divide with us. The
possibility of such legislation suggests the warning words of Judge
Catron, afterwards Mr. Justice Catron, of this Court, when, in
Vanzant v. Waddel, 2 Yerg. 262, 270, he said:
"Every partial or private law which directly proposes to destroy
or affect individual rights, or does the same thing by affording
remedies leading to similar consequences, is unconstitutional and
void. Were this otherwise, odious individuals and corporate bodies
would be governed by one rule, and the mass of the community, who
made the law, by another."
The Fourteenth Amendment forbids any state to "deny to any
person within its jurisdiction the equal protection of the laws."
The scope of this prohibition has been frequently considered by
this Court.
In
Barbier v. Connolly, 113 U. S.
27,
113 U. S. 31, it
was said:
Page 183 U. S. 106
"The Fourteenth Amendment, in declaring that no state 'shall
deprive any person of life, liberty, or property without due
process of law, nor deny to any person within its jurisdiction the
equal protection of the laws,' undoubtedly intended not only that
there should be no arbitrary deprivation of life or liberty, or
arbitrary spoliation of property, but that equal protection and
security should be given to all under like circumstances in the
enjoyment of their personal and civil rights; that all persons
should be equally entitled to pursue their happiness and acquire
and enjoy property; that they should have like access to the courts
of the country for the protection of their persons and property,
the prevention and redress of wrongs, and the enforcement of
contracts; that no impediment should be interposed to the pursuits
of anyone except as applied to the same pursuits by others under
like circumstances; that no greater burdens should be laid upon one
than are laid upon others in the same calling and condition, and
that in the administration of criminal justice no different or
higher punishment should be imposed upon one than such as is
prescribed to all for like offenses."
And in
Bell's Gap Railroad v. Pennsylvania,
134 U. S. 232,
134 U. S.
237:
"The provision in the Fourteenth Amendment that no state shall
deny to any person within its jurisdiction the equal protection of
the laws was not intended to prevent a state from adjusting its
system of taxation in all proper and reasonable ways. It may, if it
chooses, exempt certain classes of property from any taxation at
all, such as churches, libraries, and the property of charitable
institutions. It may impose different specific taxes upon different
trades and professions, and may vary the rates of excise upon
various products; it may tax real estate and personal property in a
different manner; it may tax visible property only, and not tax
securities for payment of it may allow deductions for indebtedness,
or not allow them. All such regulations, and those of like
character, so long as they proceed within reasonable limits and
general usage, are within the discretion of the state legislature,
or the people of the state in framing their constitution. But clear
and hostile
Page 183 U. S. 107
discriminations against particular persons and classes,
especially such as are of an unusual character, unknown to the
practice of our governments, might be obnoxious to the
constitutional prohibition. It would, however, be impracticable and
unwise to attempt to lay down any general rule or definition on the
subject that would include all cases."
In
Gulf, Colorado & Santa Fe Railway Co. v. Ellis,
165 U. S. 150,
165 U. S. 159,
in which was presented solely the question of classification, we
said, referring to many cases, both state and national:
"But arbitrary selection can never be justified by calling it
classification. The equal protection demanded by the Fourteenth
Amendment forbids this. No language is more worthy of frequent and
thoughtful consideration than these words of Mr. Justice Matthews,
speaking for this Court, in
Yick Wo v. Hopkins,
118 U. S.
356,
118 U. S. 369:"
"When we consider the nature and the theory of our institutions
of government, the principles upon which they are supposed to rest,
and review the history of their development, we are constrained to
conclude that they do not mean to leave room for the play and
action of purely personal and arbitrary power."
"The first official action of this nation declared the
foundation of government in these words:"
"We hold these truths to be self-evident, that all men are
created equal, that they are endowed by their Creator with certain
unalienable rights, that among these are life, liberty, and the
pursuit of happiness."
"While such declaration of principles may not have the force of
organic law, or be made the basis of judicial decision as to the
limits of right and duty, and while in all cases reference must be
had to the organic law of the nation for such limits, yet the
latter is but the body and the letter of which the former is the
thought and the spirit, and it is always safe to read the letter of
the Constitution in the spirit of the Declaration of Independence.
No duty rests more imperatively upon the courts than the
enforcement of those constitutional provisions intended to secure
that equality of rights which is the foundation of free
government."
These authorities are referred to again with approval in
Magoun v. Illinois Trust & Savings Bank, 170 U.
S. 283.
Page 183 U. S. 108
But we may, perhaps, come closer to the particular statute when
we consider the decisions of the Supreme Court of Kansas, the state
by whose legislature this act was passed. In
State v.
Haun, 61 Kan. 146, there was presented for consideration a
statute providing for the payment of the wages of laborers in
money, coupled with this provision in sec. 4:
"SEC. 4. This act shall apply only to corporations or trusts, or
their agents, lessees, or business managers, that employ ten or
more persons."
The act was held unconstitutional. After referring to an alleged
defect in the title, the court said (p. 152):
"We have no hesitation in saying that, if this statute had,
without defect as to title, clearly and in express terms amended
corporate charters, retaining the section classifying corporations
to which it was applicable by the number of men in their employ, it
would be obnoxious to the Fourteenth Amendment to the Constitution
of the United States."
Again on pp. 153-154:
"The obvious intent of the act is to protect the laborer, and
not to benefit the corporation. Why should not the nine employees
who work for one corporation be equally protected with the eleven
engaged in the same line of employment for another corporation? If
such law is beneficial to wage earners in the one instance, why not
in the other? The nine men lawfully paid for their labor in goods
at a truck store might with much reason complain that the
protection of the law was unequal as to them when they saw eleven
men paid in money for the same service performed for another
corporation engaged in a like business. Such inequality destroys
the law. In the instance cited, two of the eleven men might quit
the employment of the company for which they worked, and by this
act alone make a method of payment by the corporation lawful which
was unlawful while the eleven were employed. The criminality or
innocence of an act done ought not to depend on the happening of
such a circumstance. Equal protection of the laws means equal
exemption with others of the same class from all charges and
burdens of every kind. . . . A classification of the kind attempted
makes a distinction between corporations identically
Page 183 U. S. 109
alike in organization, capital, and all other powers and
privileges conferred by law. It is arbitrary and wanting in reason.
The act in question is class legislation of the most pronounced
character."
And in support of these views, the court quoted from Cooley's
Constitutional Limitations, 5th ed. 484, 486:
"Everyone has a right to demand that he be governed by general
rules, and a special statute which, without his consent, singles
his case out as one to be regulated by a different law from that
which is applied in all similar cases would not be legitimate
legislation, but would be such an arbitrary mandate as is not
within the province of free governments. Those who make the
laws"
"are to govern by promulgated, established laws, not to be
varied in particular cases, but to have one rule for rich and poor,
for the favorite at court and the countryman at plow."
"This is a maxim in constitutional law, and by it we may test
the authority and binding force of legislative enactments."
So we have the clear declaration of the Supreme Court of Kansas
that legislation by which one individual, or even one set of
individuals, is selected from others doing the same business in the
same way, and subjected to regulations not cast upon them, is a
discrimination forbidden by the constitutional provision which
obtains both in the Constitution of Kansas and in that of the
United States, to the effect that the equal protection of the laws
is guaranteed to all.
May we not rightfully accept this declaration of law by the
highest tribunal of the state by whose legislature the act in
question was passed, and, accepting the reasoning of that decision,
does it not follow that, if an act which provides certain
regulations for corporations employing ten or more laborers, and
leaving corporations employing less than that number free from such
regulations, is an unjust discrimination and a denial of the equal
protection of the laws, an act which imposes regulations upon
corporations doing business over a certain amount, and leaving all
corporations doing a like business less than that amount free from
such regulations, is equally obnoxious to constitutional
prohibition?
Page 183 U. S. 110
The significance of the question thus clearly stated and
forcibly answered by the Supreme Court of Kansas cannot be
overestimated. It is not the province of this or any other court to
consider its purely economic features. It may or it may not be
wise, looking at it from such standpoint, to say to every citizen
that his industry, ability, activity, and foresight may be rewarded
up to a certain extent, and that beyond that he may not go. But
whether it is wise or unwise is not for the courts to determine.
Their limits of inquiry are purely judicial. And the single matter
for our present consideration is whether, in the restraint which
the Legislature of Kansas has attempted to impose upon this
stockyards company, it has trespassed upon those rights which by
the Constitution of the United States are secured to every
individual against state action. It has been more than once said
judicially that one of the principles upon which this government
was founded is that of equality of right. It is emphasized in that
clause of the Fourteenth Amendment which prohibits any state to
deny to any individual the equal protection of the laws. That
constitutional provision does not, it is true, invalidate
legislation on the mere ground of inequality in actual result. Tax
laws, for instance, in their nature are and must be general in
scope, and it may often happen that, in their practical
application, they touch one person unequally from another. But that
inequality is something which it is impossible to foresee and guard
against, and therefore such resultant inequality in the operation
of a law does not defeat its validity. As was said in this Court in
Merchants' Bank v. Pennsylvania, 167 U.
S. 461,
167 U. S.
463:
"If it be said that a lack of uniformity renders the statute
obnoxious to that part of the Fourteenth Amendment to the federal
Constitution which forbids a state to 'deny to any person within
its jurisdiction the equal protection of the laws,' it becomes
important to see in what consists the lack of uniformity. It is not
in the terms or conditions expressed in the statute, but only in
the possible results of its operation. Upon all bank shares,
whether state or national, rests the ordinary state tax of four
mills. To every bank, state and national, and all alike, is given
the privilege of discharging all tax obligations
Page 183 U. S. 111
by collecting from its stockholders and paying eight mills on
the dollar upon the par value of the stock. If a bank has a large
surplus, and its stock is in consequence worth five or six times
its par value, naturally it elects to collect and pay the eight
mills, and thus in fact it pays at a less rate on the actual value
of its property than the bank without a surplus, and whose stock is
only worth par. So it is possible, under the operation of this law,
that one bank may pay at a less rate upon the actual value of its
banking property than another; but the banks which do not make this
election, whether state or national, pay no more than the regular
tax. The result of the election under the circumstances is simply
that those electing pay less. But this lack of uniformity in the
result furnishes no ground of complaint under the federal
Constitution. Suppose, for any fair reason affecting only its
internal affairs, the state should see fit to wholly exempt certain
named corporations from all taxation. Of course, the indirect
result would be that all other property might have to pay a little
larger rate percent in order to raise the revenue necessary for the
carrying on of the state government, but this would not invalidate
the tax on other property, or give any right to challenge the law
as obnoxious to the provisions of the federal Constitution."
So again, exercising the undoubted right of classification it
may often happen that some classes are subjected to regulations,
and some individuals are burdened with obligations which do not
rest upon other classes or other individuals not similarly
situated. License taxes are imposed on certain classes of business,
while others are exempt. It would practically defeat legislation if
it was laid down as a rule that a statute was necessarily adjudged
invalid if it did not bring all within its scope, or subject all to
the same burdens. It would strip the legislature of its inherent
power to determine generally what is for the general interests,
which interests may often be promoted by certain regulations
affecting one class which do not affect another, certain burdens
imposed on one which do not rest upon another.
But while recognizing to the full extent the impossibility of an
imposition of duties and obligations mathematically equal
Page 183 U. S. 112
upon all, and also recognizing the right of classification of
industries and occupations, we must nevertheless always remember
that the equal protection of the laws is guaranteed, and that such
equal protection is denied when upon one of two parties engaged in
the same kind of business and under the same conditions burdens are
cast which are not cast upon the other. There can be no pretense
that a stockyard which receives 99 head of cattle per day a year is
not doing precisely the same business as one receiving 101 head of
cattle per day each year. It is the same business in all its
essential elements, and the only difference is that one does more
business than the other. But the receipt of an extra two head of
cattle per day does not change the character of the business. If
once the door is opened to the affirmance of the proposition that a
state may regulate one who does much business, while not regulating
another who does the same but less business, then all significance
in the guaranty of the equal protection of the laws is lost, and
the door is opened to that inequality of legislation which Mr.
Justice Catron referred to in the quotation above made. This
statute is not simply legislation which in its indirect results
affects different individuals or corporations differently, nor with
those in which a classification is based upon inherent differences
in the character of the business, but is a positive and direct
discrimination between persons engaged in the same class of
business, and based simply upon the quantity of business which each
may do. If such legislation does not deny the equal protection of
the laws, we are unable to perceive what legislation would. We
think, therefore, that the principle of the decision of the Supreme
Court of Kansas in
State v. Haun, 61 Kan. 146, is not only
sound, but is controlling in this case, and that the statute must
be held unconstitutional as in conflict with the equal protection
clause of the Fourteenth Amendment.
There yet remains a question of jurisdiction. The two suits
which were consolidated were each brought by a stockholder in
behalf of himself and all other stockholders against the
corporation, its officers, and also the Attorney General of the
State of Kansas. The object of the suits was to restrain the
Attorney General from putting in force the statute, and the
Page 183 U. S. 113
defendants from reducing the funds of the corporation, and
therefore the dividends to the stockholders, by yielding compliance
to the mandates of the statute, and failing to charge reasonable
rates.
Of the jurisdiction of the court over the consolidated suit as
one involving a controversy between the stockholders and the
corporation and its officers, no serious question is made.
Dodge v.
Woolsey, 18 How. 331;
Hawes v. Oakland,
104 U. S. 450;
Pollock v. Farmers' Loan & Trust Co., 157 U.
S. 429;
Smyth v. Ames, 169 U.
S. 466, seem conclusive on the question. There is no
force in the suggestion that the officers of the corporation agreed
with the stockholders as to the unconstitutionality of the statute,
and that therefore the suit is a collusive one. That was the
condition in
Dodge v.
Woolsey, 18 How. 331, and it only emphasizes the
fact that the officers were refusing to protect the interests of
the stockholders, not wantonly, it is true, but from prudential
reasons.
But the serious contention is that the court had no jurisdiction
over the suit as against the Attorney General of the state, and
this on two grounds: first, because it is in effect a suit against
the state, and therefore forbidden by the Eleventh Amendment to the
federal Constitution, and secondly because it is an attempt on the
part of a court of equity to restrain criminal proceedings. It is
contended, on the other hand, that it is not a suit against the
state, because it does not in any was involve its pecuniary
interest, and is only an effort to prevent an officer of the state
from putting in force an unconstitutional statute; that it does not
attempt to interfere with criminal proceedings, because none have
been commenced and none are pending, but involves simply a
challenge of the constitutionality of the statute. It is also urged
that the Attorney General, when served with process, did not raise
either defense; did not suggest that this was in effect a suit
against the state, or that it was an attempt to interfere with
criminal proceedings; that he pleaded several defenses and went
into a trial of the merits on a motion for permanent injunction,
took part in the taking of an immense amount of testimony and in an
argument before the trial judge upon the question of the validity
of the
Page 183 U. S. 114
statute, and when its validity had been adjudged, then, for the
first time and as a preliminary to a final decree to be entered
without further testimony, filed an answer containing a formal plea
that the suit was one in effect against the state. It is further
contended that, by the statutes of Kansas (Comp.Laws, Kans. 1879,
p. 901, sec. 5589) the Governor may require the Attorney General to
appear for the state in any court and prosecute or defend therein
any cause or matter, civil or criminal, in which the state may be a
party or interested, and that, while no request from the governor
was shown the trial court was justified, in the absence of some
challenge of its jurisdiction, in assuming that such request had
been given, and that it would be grossly inequitable, after a full
inquiry upon the merits in such court and an adjudication in favor
of the validity of the statute, to permit the Attorney General by a
formal plea of jurisdiction to prevent any review of the merits in
this Court.
Without expressing any opinion as to the jurisdiction of the
court if it had been properly and seasonably challenged, we think
the true solution of this matter will be found in reversing the
decree upon the merits, and directing a dismissal of the suit as to
the Attorney General, without prejudice to any other suit or
action. It is therefore
Ordered that the decree of the Circuit Court be reversed,
and the case remanded to that court, with instructions to enter a
decree in favor of the plaintiffs and against the corporation and
its officers, in accordance with the prayer of the bills, and also
a decree dismissing the suit as to the Attorney General of Kansas,
without prejudice to any further suit or action.
MR. JUSTICE HARLAN, with whom concurred MR. JUSTICE GRAY, MR.
JUSTICE BROWN, MR. JUSTICE SHIRAS, MR. JUSTICE WHITE and MR.
JUSTICE McKENNA:
We assent to the judgment of reversal -- so far as the merits of
this case are concerned -- upon the ground that the statute of
Kansas in question is in violation of the Fourteenth Amendment of
the Constitution of the United States in that it applies only to
the Kansas City stockyards Company, and not to
Page 183 U. S. 115
other companies or corporations engaged in like business in
Kansas, and thereby denies to that company the equal protection of
the laws. Upon the question whether the statute is unconstitutional
upon the further ground that, by its necessary operation, it will
deprive that company of its property without due process of law, we
deem it unnecessary to express an opinion.