St. Louis & San Francisco R. Co. v. Gill, 156 U.S. 649 (1895)

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Filed: 1895-03-04Precedential Status: PrecedentialCitations: 156 U.S. 649Docket: Nos. 173-176

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156 U.S. 649
15 S.Ct. 484
156 U.S. 667
39 L.Ed. 567
39 L.Ed. 573

ST. LOUIS & S. F. RY. CO.
v.
GILL. SAME v. STEVENSON. SAME v. TRIMBLE.
SAME v. CARTER.
Nos. 173-176.
March 4, 1895.

On the 16th day of August, 1880, under the general laws of the state of
Arkansas, a company was incorporated under the name and style of the St.
Louis, Arkansas & Texas Railway Company, and authorized to construct a
railway from the northern boundary of the state of Arkansas to
Fayetteville, in that state. This railroad was connected at its northern
terminus with the railroad of the St. Louis, Arkansas & Texas Railway
Company, a corporation of the state of Missouri, and at its southern
terminus with the railroad of the Missouri, Arkansas & Southern Railway
Company, a corporation of the state of Arkansas.
Under provisions of the laws of the states of Arkansas and Missouri, on
the 10th day of June, 1881, the three companies mentioned were
consolidated into a single corporation, under the style of the St. Louis,
Arkansas & Texas Railway Company, Consolidated.

On and previous to the 21st day of February, 1882, it was provided by the
laws of the states of Arkansas and Missouri that any railroad company
incorporated under the laws of the state of Missouri might lease or
purchase any part of a railroad, with all its rights, privileges, immunities,
real estate, and other property, the whole or a part of which was in the
state of Missouri, and constructed, owned, or leased by any other
company, if the lines of the roads of said companies were connected and
continuous, and that any railroad company incorporated under the laws of
the state of Arkansas whose road was wholly or in part constructed and in
operation was authorized to sell, lease, or otherwise dispose of the whole
or any part of its railroad, with all the rights, privileges, franchises, and
immunities thereunto belonging, to any connecting railroad or any railroad
corporation then or thereafter organized under the laws of the state of
Missouri, or of the United States, or of both.
In the manner provided by those laws, the St. Louis, Arkansas & Texas
Railway Company, Consolidated, on the 21st day of February, 1882, sold
and conveyed all of its railway in the states of Arkansas and Missouri,
together with all its rights, privileges, franchises, and immunities, to the
St. Louis & San Francisco Railway Company, a corporation organized
under the general laws of the state of Missouri and under several acts of
the congress of the United States.
By an act of the legislature of Arkansas, approved April 14, 1887, the
maximum rate of passenger fares to be charged in that state was fixed at
three cents per mile, and a penalty of $300 was given the passenger for
each overcharge. At the fall term of 1887 of the Washington county circuit
court, John B. Gill brought an action against the St. Louis & San
Francisco Railway Company, alleging that said company, operating a
railroad within the state of Arkansas more than 75 miles in length, had on
five distinct occasions charged and received from the plaintiff more than
three cents per mile, and demanding judgment for the penalties prescribed
in the said statute.

The St. Louis & San Francisco Railway Company filed several pleas or
special answers to the complaint, two of which are alleged to raise federal
questions. To these special pleas the plaintiff demurred, and the demurrers
were sustained. The defendant then made several offers tending to show
that the rate of three cents per mile for each passenger carried was
unreasonable, and did not enable the defendant to pay its interest or to earn
anything on its capital st ck. These offers were ruled out, on plaintiff's
objection, as incompetent and irrelevant. Due exceptions were taken by
the defendant to the action of the court in sustaining the demurrers, and in
excluding plaintiff's evidence. Judgment went for the plaintiff, which was
on appeal affirmed by the supreme court of Arkansas, to whose judgment
a writ of error was sued out to this court.
Geo. R. Peck, E. D. Kenna, A. T. Britton, and A. B. Browne, for plaintiff
in error.
A. H. Garland and D. W. Jones, for defendants in error.
Mr. Justice SHIRAS, after stating the facts in the foregoing language,
delivered the opinion of the court.

1

By the act of April 14, 1887, the legislature of Arkansas prescribed a maximum
rate of three cents per mile for each passenger carried by the railroads of that
state, and a penalty of $300 for each overcharge, payable to the passenger from
whom such overcharge had been exacted.

2

It was found by the trial court, adjury having been waived, that John B. Gill,
the plaintiff, had on several occasions, while traveling on the railroad of the St.
Louis & San Francisco Railway Company, between points within the territory
of the state of Arkansas, been charged a rate in excess of that allowed by the
statute. The defendant company set up, by way of defense, that it operated that
portion of the railroad on which the plaintiff traveled as a purchaser and
assignee of the St. Louis, Arkansas & Texas Railway Company, a corporation
organized under the laws of the state of Arkansas; that, under the laws of
Arkansas in force at the time of the incorporation of said last-mentioned
company, in April, 1880, it had the right to fix and regulate the rate of charge
for carrying passengers, not to exceed the sum of five cents per mile; that the
legislature might, from time to time, reduce the rates, but that the same should
not be so reduced as to produce, as profits for the railroad company, less than
15 per cent. per annum on the capital actually paid in; and that, until such
profits did annually accrue to said company, it and its successors and assigns
were entitled, without limitation, restriction, or control, to the right to fix such
rates of fares as to it should seem proper, not exceeding the rate of five cents
per mile; that such provisions of the law constituted a contract between the St.
Louis, Arkansas & Texas Railway Company and the state, and that the St.
Louis & San Francisco Railway Company, having become, in a manner and
form provided by the laws of the state, the assign of the St. Louis, Arkansas &
Texas Railway Company, and the owner of its road, franchise, and privileges,
had succeeded to its right to charge passenger rates not in excess of five cents
per mile, so long as its profits did not exceed 15 per cent. per annum on the
capital actually paid in; that the said railroad, although completed for about
five years, had never earned in profits an amount equal to 3 per cent. on the
capital actually paid in; that the net earnings or profits for the next ensuing two
years will not exceed 3 per cent. on the capital actually paid in, or on the
amount actually expended in the construction of said railroad; that the
consolidation of the St. Louis, Arkansas & Texas Railway Company of
Arkansas with the company of the same name, incorporated in Missouri, and
the sale by the company so formed of its railroad to the defendant, each
severally became and were compacts made between the states of Missouri and
Arkansas with each other, with the consolidated company, and with the
defendant company, respectively; that the act of April, 1887, of the legislature
of Arkansas, attempting to fix passenger rates at less than five cents per mile, in
so far as it relates to the defendant's line of railway, never received the assent of
the state of Missouri or of the defendant company; and that such enactment was
an alteration and impairment of a contract, and as such null and void, under the
provisions of the constitution of the United States.

3

To this plea or special answer, the plaintiff demurred.

4

As a further plea or special answer, the defendant company alleged, in
connection with a history of the formation of the original companies, their
consolidation, and the purchase of the consolidated railroad by the defendant,
that by a provision of the constitution of the state of Arkansas, in force at the
time of the transactions narrated, it was provided that no charter of any
corporation should be altered, annulled, or repealed in such a manner as to do
injustice to the corporators; that the owners of the capital stock of the St. Louis,
Arkansas & Texas Railway Company are the same and identical persons who
own the capital stock of the defendant company; and that if the rates of fare
prescribed by the act of April, 1887, are enforced, the defendant company will
not be able to earn a reasonable rate of interest on its indebtedness, or to meet
the actual cost of transporting passengers and maintaining said division of its
road; and that, therefore, said act of April, 1887, as far as it is applicable to the
said railroad, is in violation of the constitution of Arkansas, and is
unreasonable, and a taking of private property for public use without
compensation, and is therfore in violation of the fifth and fourteenth
amendments to the constitution of the United States.

5

The plaintiff demurred likewise to this plea, and, the demurrers having been
sustained, the defendant then offered to show that the St. Louis, Arkansas &
Texas Railway Company had on December 31, 1880, executed bonds to the
amount of $600,000, and secured the same by a mortgage of all its property,
franchises, and immunities to the United States Trust Company of New York,
which bonds were yet wholly due and unpaid, and upon which the defendant
was required to annually pay the sum of $36,000 as interest; that the defendant
company has never since the construction of said lines been able to earn, from
all sources, an amount which, after paying for the actual expenditures, would
yield to the defendant or to the original incorporators a profit equal to 1 per
cent. upon the capital stock actually paid in cash, and used in the construction
of such lines of railroads; that the actual cost of transporting each passenger
over that portion of the defendant's railway in the plaintiff's petition mentioned
exceeded the sum of 3 cents per mile; that, at the times in plaintiff's petition
mentioned, the defendant could not actually perform the service of carrying the
plaintiff or any other passenger over its railway for the sum of 3 cents per mile,
but that the sum in cash which it was actually required to expend in the carriage
of said plaintiff and other passengers was equal to 3 3-10 cents for each and
every mile such passenger was carried, and that, if defendant was required to
perform the service at the rate of 3 cents per mile, it would be required to
expend more money in cash for the performance of such service than it would
receive from the passenger, and that the revenue or income which it would
receive from all sources of profit other than the passenger traffic would not be
sufficient to enable it to make good the amount which it would lose on its
passenger business; that 3 cents per mile for the service rendered by the
defendant in carrying passengers, at the times in plaintiff's petition mentioned,
over the line of railroad therein described, was not reasonable compensation,
and that no less than 5 cents per mile would be a reasonable sum, or one that
would be just to the defendant; that defendant never had, since the construction
or completion of said lines of railway, been able to earn from all its sources of
revenue an amount which, after paying for the actual cash expenditures
necessary for the operation of its road, would yield a profit equal to 1 per cent.
upon the actual cash cost of said road, which amounted to over $40,000 for
every mile of railway constructed.

6

To this evidence the plaintiff objected as incompetent and irrelevant. The
objection as sustained, and the defendant excepted to the action of the court in
sustaining the demurrers and in rejecting the said offers of evidence. There was
judgment for the plaintiff, from which the defendant appealed to the supreme
court of Arkansas, from whose judgment, affirming that of the court below, a
writ of error was allowed to this court.

7

The plaintiff in error bases its demand that the judgment of the supreme court
of Arkansas should be reversed on two propositions: First, that the act of April,
1887, as applied to the defendant's railroad, was a violation of a contract
between the state of Arkansas and the various corporations which constructed
or subsequently acquired the line of railway in question; and, second, that as the
act, as applied to the defendant's railroad, requires the defendant to do business
at a positive loss, it therefore constitutes a taking of defendant's property
without just compensation or due process of law.

8

The first proposition requires the plaintiff in error to show that there existed a
contract between the state of Arkansas and the St. Louis, Arkansas & Texas
Railway Company which, under the existing facts, forbade the application of
the act of 1887 to the business of that company, and that the plaintiff in error,
the St. Louis & San Francisco Railway Company, succeeded to such contract
right.

9

As already stated, the constitution of Arkansas contained, when the St. Louis,
Arkansas & Texas Railway Company was organized, a provision that the
general assembly should have the power to alter, revoke, or annual any charter
of incorporation then existing, or that might thereafter be created, whenever, in
their opinion, it may be injurious to the citizens of the state, in such manner,
however, that no injustice shall be done to the corporators. The law under
which the St. Louis Arkansas & Texas Railway Company was organized
provided that the legislature might, when any such railroad shall be opened for
use, from time to time, alter or reduce the rates of toll, fare, freights, or other
profits upon such road; but the same shall not, without the consent of the
corporation, be so reduced as to produce with said profits less than 15 per cent.
per annum on the capital actually paid in; nor unless, on an examination of the
amounts received and expended, to be made by the secretary of state, he shall
ascertain that the net income derived by the company, from all sources, for the
year then last past, shall have exceeded an annual income of 15 per cent. upon
the capital of the corporation actually paid in.

10

The contention is that, if the facts show that the company has not earned 15 per
cent. per annum on the capital actually paid in, the state is precluded,
notwithstanding the power reserved in the constitution, from reducing the rates
or charges.

11

The supreme court of the state (54 Ark. 101, 15 S. W. 18), as we learn from the
record in this case, was of the opinion that the power to alter and amend
charters, reserved to the state in its constitution, was not parted with or
controlled by the subsequent act of the legislature incorporating the railroad
company, and authorizing it to establish rates, and that accordingly the passage
of a subsequent general law, prescribing rates, could not be deemed an
infringement of a contract between the state and the company.

12

We do not find it necessary to express an opinion on this view of the case, but
prefer to base our judgment on another ground, which will bring us to the same
result. It has been frequently decided by this court that a special statutory
exemption or privilege, such as immunity from taxation or a right to fix and
determine rates of fare, does not accompany the property in its transfer to a
purchaser, in the absence of express direction to that effect in the statute.
Morgan v. Louisiana, 93 U. S. 217; Wilson v. Gaines, 103 U. S. 417; Railway
Co. v. Miller, 114 U. S. 176, 5 Sup. Ct. 813.

13

We find here no such express statutory direction, nor is there any equiva ent
implication by necessary construction. As is said in the decision of the supreme
court of Arkansas in the present case: 'The corporations owning the several
parts of the road as to which it is charged that the act operates unjustly were
dissolved years before it was passed. As to them it could not operate unjustly,
and in their behalf no cause of complaint can exist.'

14

These considerations dispose of the proposition that the act of April, 1887, if
made to apply to the railroad of the plaintiff in error, would operate as a
violation of a contract subsisting between the state of Arkansas and the St.
Louis & San Francisco Railway Company.

15

We are thus brought to the second proposition relied on by the plaintiff in error,
—that as the act, when applied to the defendant's railroad, requires the
company to do business at a positive loss, it therefore constitutes a taking of
defendant's property without due process of law.

16

Whether, if the power of the state to fix and regulate the passenger and freight
charges of railroad corporations has not been restricted by contract, there can be
found, by judicial inquiry, a limit to such power in the practical effect its
exercise may have on the earnings of the corporations, presents a question not
free from difficulty. Given the case of a general law prescribing rates to all
companies, can the curts inquire whether such rates are reasonable, and may
they find that as to one company the prescribed rates permit it to do business at
a profit, and as to another, whose facilities are inferior, or where expenditures
are greater, the rates afford no profit? And will the fate of the law, as to its
validity, depend in each case on the result of such an inquiry?

17

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, and that especially may the courts of the United States treat
such a question as a judicial one, and hold such acts of legislation to be in
conflict with the constitution of the United States, as depriving the companies
of their property without due process of law, and as depriving them of the equal
protection of the laws. Railroad Commission Cases, 116 U. S. 331, 6 Sup. Ct.
334, 348, 349, 388, 391, 1191; Dow v. Beidelman, 125 U. S. 681, 8 Sup. Ct.
1028; Railway Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 702; Railway
Co. v. Wellman, 143 U. S. 339, 12 Sup. Ct. 400; Reagan v. Trust Co., 154 U.
S. 362, 14 Sup. Ct. 1047.

18

The so-called 'Railroad Commission Cases' (116 U. S. 307, 6 Sup. Ct. 334, 348,
349, 388, 391, 1191) arose under an act of the state of Mississippi passed
March 11, 1884, which created a railroad commission, and charged it with the
duty of supervising railroads, and particularly with the duty of revising the
tariff of charges. The Mobile & Ohio Railroad Company had been theretofore
incorporated by a charter which granted to it 'the right from time to time to fix,
regulate, and receive the tolls and charges by them to be received for
transportation.' A bill was filed by the Farmers' Loan & Trust Company, a New
York corporation, to enjoin the railroad commission from enforcing against the
Mobile & Ohio Railroad Company the provisions of the railroad commission
act, and averring that the complainants were the trustees in a mortgage that had
been executed prior to said act, and that the enforcement of the latter would
impair their security.

19

The court held, two justices dissenting, that the statute incorporating the
company did not deprive the state of its power, within the limits of its general
authority, to act upon the reasonableness of the tolls and charges so fixed and
regulated, and reversed the decree of the circuit court which had granted an
injunction as prayed for in the bill. We now refer to this case for the purpose of
calling attention to the facts that the act provided that proceedings to en orce its
provisions were to be instituted by the commission, and that the suit was in
form a bill in equity to restrain the commission from applying the terms of the
act to the Mobile & Ohio Railroad Company.

20

The case of Railway Co. v. Minnesota was a writ of error to review a judgment
of the supreme court of Minnesota, awarding a writ of mandamus against the
railway company. The state of Minnesota, by an act approved March 7, 1887,
had established a railroad and warehouse commission, providing that the rates
of charge for the transportation of property published by the commission
should be final and conclusive as to what are equal and reasonable charges, and
that there should be no judicial inquiry as to the reasonableness of such rates;
and the railroad company contended that the rates prescribed by the
commission were unreasonable, and that, as the company was not permitted to
put in testimony as to the reasonableness of such rates, the act was in conflict
with the constitution of the United States, as depriving the company of its
property without due process of law, and by depriving it of the equal protection
of the laws. As heretofore stated, the company's position was sustained, and the
decree of the Minnesota court awarding the writ of mandamus was reversed.
But it will be observed that the state was represented by the commission, and
that the remedy went to the validity of the legislation as affecting the railroad
company's business as a whole. It was not a suit between the company and an
individual customer. Mr. Justice Miller, in his concurring opinion, said: 'Until
the judiciary has been appealed to, to declare the regulation made, whether by
the legislature or by the commission, voidable for unreasonableness, the tariff
of rates so fixed is the law of the land, and must be submitted to both by the
carrier and the parties with whom he deals; that the proper, if not the only,
mode of judicial relief against the tariff of rates established by the legislature or
by its commission is by a bill in chancery asserting its unreasonable character
and its conflict with the constitution of the United States, and asking a decree
of the court forbidding the corporation from exacting such fare as excessive, or
establishing its rights to collect the rates as being within the limits of just
compensation for the service rendered; that until this is done it is not competent
for each individual having dealings with the carrying corporation, or for the
corporation with regard to each individual who demands its services, to raise a
contest in the courts over the questions which ought to be settled in this general
and conclusive method; and that in the present case, where an application is
made to the supreme court of the state to compel the railroad companies to
perform the services which their duty requires them to do for the general
public, which is equivalent to establishing by judicial proceedings the
reasonableness of the charges fixed by the commission, I think the court has the
same right and duty to inquire into the reasonableness of the tariff of rates
established by the commission before granting such relief that it would have if
called upon so to do by a bill in chancery.'

21

Railway Co. v. Wellman, 143 U. S. 339, 12 Sup. Ct. 400, was a contest over
the validity of an act of the legislature of Michigan, passed in June, 1889, fixing
the amount per mile to be charged by railways for the transportation of
passengers. On the very day the law took effect, to wit, October 2, 1889, one
Wellman went to the railroad company's office in Prot Huron, and tendered for
a ticket from that place to Battle Creek the sum of $3.20, instead of $4.80,
which had been the regular fare. This was refused, and Wellman immediately
brought an action for damages, and recovered a judgment for $101, an amount
sufficient to take the case to a higher court; and ultimately the supreme court of
Michigan affirmed the judgment sustaining the vafidity of the law. 47 N. W.
489. But the observations of this court by Mr. Justice Brewer are very pertinent
to the present case. After stating the facts of the case, he said: 'Can it be, under
these circumstances, that the court erred in peremptorily refusing to instruct the
jury that an act fixing a maximum rate at two cents per mile is unconstitutional?
Is the validity of a law of this nature dependent upon the opinion of two
witnesses, however well qualified to testify? Must court and jury accept their
opinion as a finality? Must it be declared, as a matter of law, that a reduction of
rates necessarily diminishes income? May it not be possible, indeed does not all
experience suggest the probability, that a reduction of rates will increase the
amount of business, and therefore the earnings?' And, referring to the following
observation made by the supreme court of Michigan in passing upon the case:
'In the stipulation of facts or in the taking of testimony in the court below,
neither the attorney general nor any other person interested for or employed in
behalf of the people of the state took any part. What difference there might
have been in the record had the people been represented in the court below,
however, in our view of the case, is not of material inquiry,'—Mr. Justice
Brewer added: 'We think there is much in the suggestion. The theory upon
which, apparently, this suit was brought, is that parties have an appeal from the
legislature to the courts, and that the latter are given an immediate and general
supervision of the constitutionality of the acts of the former. Such is not true.
Whenever, in pursuance of an honest and actual antagonistic assertion of rights
by one individual against another, there is presented the validity of any act of
any legislature, state or federal, and the decision necessarily rests on the
competency of the legislature so to enact, the court must, in the exercise of its
solemn duties, determine whether the act be constitutional or not; but such an
exercise of power is the ultimate and supreme function of courts. It is legitimate
only in the last resort, and as a necessity in the determination of real, earnest,
and vital controversy between parties. It was never thought that, by means of a
friendly suit, a party beaten in the legislature could transfer to the courts an
inquiry as to the constitutionality of the legislative act. * * * One suggestion is
only to indicate how easily courts may be misled into doing grievous wrong to
the public, and how careful they should be not to declare legislative acts
unconstitutional upon agreed and general statements, and without the fullest
disclosure of all material facts.'

22

Similar observations may be found in Dow v. Beidelman, 125 U. S. 690, 8 Sup.
Ct. 1028, a case wherein the validity of the very act now in question was
assailed, and where this court affirmed the judgment of the supreme court of
Arkansas sustaining the act. 5 S. W. 297. In that case the action had been
brought by a passenger claiming penalties because he was charged more than
the statutory rates, and the case went off on an agreed statement of facts, and it
was said in this court, by Mr. Justice Gray: 'The plaintiffs in error do not
contend that it is always or generally unreasonable to restrict the rate for
carrying each passenger to three cents a mile. They argue that it is in this case,
by reason of the admitted facts, that with the same traffic that their road now
has, and charging for transportation at the rate of three cents per mile, the net
yearly income will pay less than one and a half per cent. on the original cost of
the road, and only a little more than two per cent. on the amount of its bonded
debt. But there is no evidence whatever as to how much money the bonds cost,
or as to the amount of the capital stock of the company as reorganized, or as to
the sum paid for the road by that corporation or its trustees. It certainly cannot
be presumed that the price paid at the sale under the decree of foreclosure
equaled the original cost of the road or the amount f outstanding bonded debt.
Without any proof of the sum invested by the reorganized corporation or its
trustees, the court has no means, if it would under any circumstances have the
power, of determining that the rate of three cents a mile fixed by the legislature
was unreasonable. Still less does it appear that there has been any such
confiscation as amounts to a taking of the property without due process of law.'

23

Reagan v. Trust, Co., 154 U. S. 362, 14 Sup. Ct. 1047, is the last case to which
we deem it necessary to refer. The principal facts of the case were these: In
April, 1891, the legislature of Texas passed an act establishing a railroad
commission with power to classify and regulate rates. After the commission
was organized, it proceeded to establish certain rates for the transportation of
goods over the railroads in the state. Thereafter, in April, 1892, the Farmers'
Loan & Trust Company of New York filed a bill in the circuit court of the
United States for the Western district of Texas, making as defendants the
railroad commissioners, the attorney general, and the International & Great
Northern Railroad Company. The bill alleged that the complainant was the
trustee in a mortgage on said railroad to secure a series of bonds, and averred
generally that the rates fixed by the commission were unreasonable and unjust,
and set forth certain specific facts which it claimed established the injustice and
unreasonableness of those rates, and prayed a decree restraining the
commission from enforcing those rates or any other rates, and also restraining
the attorney general from instituting any suits to recover penalties for failing to
conform to such rates. The International & Great Northern Railroad Company
appeared, filed an answer, and also a cross bill similar in its scope and effect to
the bill filed by the plaintiff, and praying substantially the same relief. The
commission and the attorney at first filed answers, which they subsequently
withdrew, and filed demurrers; leave being given at the same time to the
complainant and cross complainant to amend the bill and cross bill before the
filing of the demurrer. The amendments contained allegations in considerable
detail of the losses in revenue sustained by the company through the
enforcement of the statutory rates, and the average reduction caused thereby in
the rate theretofore existing.

24

The circuit court entered a decree granting the injunctions as prayed for,
restraining and forbidding the commission from enforcing the established rates,
and from making or publishing any other or further rates.

25

The opinion of this court on appeal was that while it was within the power of a
court of equity in such case to decree that the rates so established by the
commission were unreasonable and unjust, and to restrain their enforcement, it
was not within its power to establish rates itself, or to restrain the commission
from again establishing rates.

26

After recognizing the previous cases as establishing the proposition that, while
it is not the province of courts to enter upon the merely administrative duty of
framing a tariff of rates for carriage, it is within the scope of judicial power and
a part of judicial duty to restrain anything which, in the form of a regulation of
freights, operates to deny to the owners of property invested in the business of
transportation that equal protection which is the constitutional right of all
owners of other property, the court proceeded to consider and discuss the
question whether the rates prescribed by the commission were unjust and
unreasonable. Upon reading the opinion, it is obvious that the principal
difficulty encountered was whether the facts alleged in the bill and cross bill,
conceded by the demurrers to be true, furnished the court sufficient evidence to
enable it to find, as a judicial conclusion, that the statutory rates were
unreasonable; and Mr. Justice Brewer, who delivered the opinion of the court,
after reciting a broad allegation in the bil , said: 'It may not be just to take this
as an allegation of a mere matter of fact, the truthfulness of which is admitted
by the demurrer, and which, as thus admitted, eliminates from consideration all
questions as to the true character and effect of the rates; yet it is not to be
ignored. There are often in pleadings general allegations of mixed law and fact,
such as the ownership of property and the like, which standing alone, are held
to be sufficient to sustain judgments and decrees, and yet are always regarded
as qualified, limited, or even controlled by particular facts stated therein. It
would not, of course, be tolerable for a court of equity to seize upon a
technicality for the purpose or with the result of entrapping either of the parties
before it. Hence we should hesitate to take the filing of the demurrers to these
bills as a direct and explicit admission on the part of the defendants that the
rates established by the commission are unjust and unreasonable. It must be
noticed that at first answers were filed, tendering issue upon the matters of fact,
and testimony was taken, the extent of which, however, is not disclosed by the
record. After that the defendants applied for leave to withdraw their answers
and file demurrers. It is not to be supposed that this was done thoughtlessly. But
one conclusion can be drawn from that action, and that is that, upon the taking
of the testimony, defendants became satisfied that the particular facts were as
stated in the bills, and that the conclusions to be drawn from such facts could
not be overthrown by any other matters. Hence, if it appears that the facts stated
in detail tend to prove that the rates are unreasonable and unjust, we must
assume, as against the demurrers, that the general allegation heretofore quoted
is true, and that there are no other and different facts which, if proved, might
induce a different conclusion, and compel a different result.'

27

As already stated, the defendant's railway was composed by consolidation of
one incorporated in Missouri and of two incorporated in the state of Arkansas.
The allegations contained in the fourth answer of the railroad company have
reference to that part of the defendant's railroad that originally belonged to the
St. Louis, Arkansas & Texas Railway Company, incorporated under the laws of
the state of Arkansas. Those allegations were to the effect that such portion of
the railroad was traversed by the plaintiff below, and was highly expensive to
construct and maintain, and that the cost of transporting passengers over said
division and the maintenance thereof exceed the maximum fixed by the act of
1887. The offers of evidence we also understand, notwithstanding their general
terms, to have been intended to sustain the allegations contained in the fourth
answer, and not to be applicable to the company's entire railroad. Thus, one of
the offers was to show that the actual cost of carrying each passenger over that
portion of defendant's railway in plaintiff's petition mentioned, and over all its
railway therein referred to, did and does now exceed the sum of three cents per
mile for each and every passenger so carried,' and another was to show that
'three cents per mile for the service rendered by defendant in carrying
passengers, at the times in plaintiff's petition mentioned, over the line of
railroad therein mentioned, was not reasonable compensation, and that no less
than five cents per mile would be a reasonable sum.'

28

It therefore appears that the allegations made and the evidence offered did not
cover the company's railroad as an entirety even in the state of Arkansas, but
were made in reference to that portion of the road originally belonging to the St.
Louis, Arkansas & Texas Railway, and extending from the northern boundary
of Arkansas to Fayetteville, in said state. In this state of facts we agree with the
views of the supreme court of Arkansas, as disclosed in the opinion contained
in the record, and which were to the effect that the correct test was as to he
effect of the act on the defendant's entire line, and not upon that part which was
formerly a part of one of the consolidating roads; that the company cannot
claim the right to earn a net profit from every mile, section, or other part into
which the road might be divided, nor attack as unjust a regulation which fixed a
rate at which some such part would be unremunerative; that it would be
practically impossible to ascertain in what proportion the several parts should
share with others in the expenses and receipts in which they participated; and,
finally, that, to the extent that the question of injustice is to be determined by
the effects of the act upon the earnings of the company, the earnings of the
entire line must be estimated as against all its legitimate expenses under the
operation of the act within the limits of the state of Arkansas.

29

Sometimes, in acting on this subject, the state legislatures have created
commissions or boards of public works, with power to establish rates for the
transportation of passengers and freight; and in such instances the course
recommended by Mr. Justice Miller, already cited, may well be followed,—
that the remedy for a tariff alleged to be unreasonable should be sought in a bill
in equity or some equivalent proceeding, wherein the rights of the public as
well as those of the company complaining can be protected.

30

But there are other cases, and the present is one, where the legislatures choose
to act directly on the subject by themselves establishing a tariff of rates, and
prescribing penalties. In such cases there is no opportunity to resort to a
compendious remedy, such as a proceeding in equity, because there is no public
functionary or commission which can be made to respond, and therefore, if the
companies are to have any relief, it must be found in a right to raise the question
of the reasonableness of the statutory rates by way of defense to an action for
the collection of the penalties.

31

However, we have seen that it the present case the evidence failed, in that it
was restricted to a part only of the railroad, and that, even if the evidence could
be understood as applicable to the entire line in Arkansas, there was no finding
of the facts necessary to justify the courts in overthrowing the statutory rates as
unreasonable, but that, on the contrary, the company's case depended on
allegations admitted by the demurrer of a party who, in no adequate sense,
represented the public; and, upon the whole, we do not feel warranted, by all
that appears in this record, in declaring invalid an act of the legislature of
Arkansas which on its face appears to be a legitimate exercise of power, and
which has not been shown by clear and satisfactory evidence to operate unjustly
and unreasonably, in a constitutional sense, against the plaintiff in error.

32

The judgment of the supreme court of Arkansas is accordingly affirmed.

33

The cases of The St. Louis & San Francisco Railway Company, Plaintiff in
Error, v. John Stevenson (No. 174, October term, 1894), The Same v. M. H.
Trimble (No. 175, October term, 1894), and The Same v. A. H. Carter (No.
176, October term, 1894), are similar in their facts to the case of The St. Louis
& San Francisco Railway Company v. John B. Gill (No. 173, October term,
1894), just decided, and are to be similarly disposed of. An additional fact,—
that a portion of the road traveled over consisted of a bridge, built under
authority of an act of congress is made to appear; but as no point is made or
argued in the brief the plaintiff in error, and as we see in such fact nothing that
would affect the result, the judgments of the supreme court of Arkansas in
those cases are affirmed.

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