protection of the laws by Kan. act March 3, | ing that motion the court appointed a spe1897, which limits the amount of the charges cial master, with power to take testimony to be made by that corporation, without lim- and report the same, with his findings, as Iting the charges to be made by other similar to all matters and things in issue upon the corporations doing a smaller amount of business, and without any reference to the char- hearing of the preliminary injunction acter or value of the services rendered, al- prayed for. 79 Fed. 679. On August 24, though the statute is general in its terms and 1897, the special master filed his report. is made applicable to any corporation doing On October 4, 1897, the motion for a prebusiness of a certain amount, and notwith- liminary injunction was heard on affidavits, standing the fact that by virtue of the great the master's report, exceptions thereto on amount of business done by the corporation behalf of both parties, and arguments of affected by the statute it may make a reasonable income, since the statute makes a counsel. The motion was refused and the positive and direct discrimination between restraining order, which had remained in persons engaged in the same class of business, force in the meantime, was set aside. 82 and bases it simply upon the quantity of busi- Fed. 839. ness which each may do. 2. A suit will not be dismissed as collusive when brought by stockholders against the corporation and its officers and the attorney gen eral to restrain the enforcement of a statute, merely because the officers of the corporation agree with the stockholders as to the unconstitutionality of the statute. These suits were subsequently ordered by the court to be consolidated, and were thereafter proceeded in as one. 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 Fed. 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 occa sion 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 stock-yards com Statement by Mr. Justice Brewer: In March, 1897, Charles U. Cotting, a citi-pany would sustain a great and irreparable zen of the state of Massachusetts, filed in in substance by the Supreme Court in Hovey loss. Under such circumstances, as was said the circuit court of the United States for. McDonald, 109 U. S. 161, 27 L. ed. 891, the district of Kansas a bill of complaint 3 Sup. Ct. Rep. 136, it is the right and duty against the Kansas City Stock-Yards Com- of the trial court to maintain, if possible, pany, a corporation of the state of Kansas, the status quo pending an appeal, if the and certain officers of that company, and Louis C. Boyle, attorney general of the state questions at issue are involved in doubt, and of Kansas. A few days later Francis Lee equity rule 93 was enacted in recognition of Higginson, a citizen of the state of Massa- that right. The court is of opinion that the chusetts, filed a bill of complaint in the cases at bar are of such moment and the questions at issue so balanced with doubt same court and against the same parties. 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 conheretofore granted for the term of ten days, tinuing in force the injunction which was and if in the meantime an appeal shall be force until the appeal is heard and detertaken such injunction will be continued in mined 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 A temporary restraining order was for yarding and feeding live stock at its granted, and subsequently a motion for a stock yards in Kansas City, Kansas, and preliminary injunction was made. Pend-' Kansas City, Missouri, which it may have The plaintiffs respectively alleged that they were stockholders of the Kansas City Stock-Yards 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 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." 82 enacted in violation of §§ 4 and 5 of the Kansas statute relative to stock yards, ap. proved 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 Fed. 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 stock yards within this state, into which live stock 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 100 head of cattle, or 300 head of hogs, or 300 head of sheep, are hereby declared to be public stock-yards. "Sec. 2. Any person, company, or corporation owning or operating any public stockyard or stock-yards in this state is hereby declared to be a public stock-yards operator, whether living or being within this state or not. "Sec. 3. Every such public stock-yards 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 stock-yards 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 stock-yards 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. the same at more than 100 per cent above the average market price or value of such ear corn or shelled corn on the markets of the towns or cities wherein said stock yards are located, on the day next preceding such sale and delivery. All feed not above named shall be sold for no greater per cent of profit than hereinbefore provided. "Sec. 6. It shall be unlawful for the owners or proprietors of any stock yards 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 vio lating 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 $100; for the second offense not less than $100 nor more than $200; and for the third offense not less than $200 nor more than $500 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 $1,000 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 con. flict 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, chap. 240, p. 448. Messrs. A. H. Horton, Wm. D. Guthrie, and B. P. Waggener for appellants. Messrs. A. A. Godard, B. H. Tracy, David Martin, and L. C. Boyle for appellees. Mr. Justice Brewer, after making the above statement, delivered the following opinion, and announced the conclusion and judgment of the court: tinguished counsel. That the questions are difficult of solution no one reading the fol lowing statement will, we think, doubt. The learned circuit judge, in deciding the case, appreciated the importance of the ques tions involved, and, although denying the relief sought by the plaintiffs, exercised his power of continuing the restraining order until such time as these questions could be determined. Twice has this case been ar"Sec. 5. It shall be unlawful for the own- gued before us. We have had the benefit of er, owners, or proprietors, or their employ-able arguments and elaborate briefs of disees, of any such stock yards within this state, to sell and deliver at the rate of less than 2,000 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 100 per cent above the average market price or value of such hay upon the markets of the towns or cities wherein such stock yards 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 70 pounds of corn in the car for a bushel, or less than 56 pounds of shelled corn for a bushel, or to charge for or to sell 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 rea 88. sons urged in support of their decision one | 134 U. S. 418, 33 L. ed. 970, 3 Inters. Com. 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 stock-yards 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, 24 L. ed. 77, 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. 126, L. ed. p. 84): Rep. 209, 10 Sup. Ct. Rep. 462, 702; Chicago & G. T. R. Co. v. Wellman, 143 U. S. 339, 36 L. ed. 176, 12 Sup. Ct. Rep. 400; Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 38 L. ed. 1014, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047; St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 39 L .ed. 567, 15 Sup. Ct. Rep. 484; Covington & L. Turnp. Road Co. v. Sandford, 164 U. S. 578, 41 L. ed. 560, 17 Sup. Ct. Rep. 198; Smyth v. Ames, 169 U. S. 466, 42 L. ed. 819, 18 Sup. Ct. Rep. 418; San Diego Land & Town Co. v. National City, 174 U. S. 739, 43 L. ed. 1154, 19 Sup. Ct. Rep. 804; Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 44 "Property does become clothed with a pub-L. ed. 417, 20 Sup. Ct. Rep. 336. lic 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, 36 L. ed. 247, 4 Inters. Com. Rep. 45, 12 Sup. Ct. Rep. 468; Brass v. North Dakota ex rel. Stoeser, 153 U. S. 391, 38 L. ed. 758, 4 Inters. Com. Rep. 670, 14 Sup. Ct. Rep. 857. See also the following cases in state courts: People v. Budd, 117 N. Y. 1, 5 L. R. A. 559, 22 N. E. 670; Lake Shore &*M. S. R. Co. v. Cincinnati, S. & C. R. Co. 30 Ohio St. 604; State ex rel. Atty. Gen. v. Columbus Gaslight & Coke Co. 34 Ohio St. 572, 32 Am. Rep. 390; Davis v. State, 68 Ala. 58, 44 Am. Rep. 128; Baker v. State, 54 Wis. 368, 12 N. W. 12; Nash v. Page, 80 Ky. 539, 44 Am. Rep. 490; Girard Point Storage Co. v. Southwark Foundry Co. 105 Pa. 248; Sawyer v. Davis, 136 Mass. 239, 49 Am. Rep. 27; Brechbill v. Randall, 102 Ind. 528, 52 Am. Rep. 695, 1 N. E. 362; Delaware, L. & W. R. Co. v. Central Stock-Yard & Transit Co. 45 N. J. Eq. 50, 6 L. R. A. 855, 17 Atl. 146. 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, 28 L. ed. 173, 4 Sup. Ct. Rep. 48; Railroad Commission Cases, 116 U. S. 307, sub nom. Stone v. Farmers' Loan & T. Co. 29 L. ed. 636, 6 Sup. Ct. Rep. 334, 388, 1191; Wabash, St. L. & P. R. Co. v. Illinois, 118 U. S. 557, 30 L. ed. 244, 1 Inters. Com. Rep. 31, 7 Sup. Ct. Rep. 4; Dow v. Beidelman, 125 U. S. 680, 31 L. ed. 841, 2 Inters. Com. Rep. 56, 8 Sup. Ct. Rep. 1028; Chicago, M. & St. P. R. Co. v. Minnesota, 22 S. C.-3. 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 stock-yards company. Its stock yards 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 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 regula tion was affirmed, it was said (p. 125, L. ed. p. 84): "From this it is apparent that down to the time of the adoption of the 14th 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. North Dakota ex rel. Stoeser in which nothing was presented calling for any consideration of the test of reasonableness or of a limit to the legisla tive power. As to those cases in which governmental regulation of charges was in respect to parties doing some public service the following is a résumé of the decisions. In Spring Valley Waterworks v. Schottler it was said (p. 354 L. ed. p. 176, Sup. Ct. Rep. p. 51): "What may be done if the municipal au. thorities do not exercise an honest judg ment, 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. 331, L. ed. p. 644, Sup. Ct. Rep. p. 345): "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. L. & P. R. Co. v. Illinois nothing was said "affecting 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, M. & St. P. R. Co. v. Minnesota the same passage was quoted, and it was added (p. 458, L. ed. p. 981, Inters. Com. Rep. p. 220, Sup. Ct. Rep. p. 467): "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 in so far 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 & G. T. R. Co. v. Wellman it was said (p. 344, L. ed. p. 179, Sup. Ct. Rep. p. 402): "The legislature has power to fix rates, and the extent of judicial interference is protection against unreasonable rates." In Reagan v. Farmers' Loan & T. Co. (p. 399, L. ed. p. 1024, Inters. Com. Rep. p. 570, Sup. Ct. Rep. p. 1055): And again (p. 412, L. ed. p. 1028, Inters. Com. Rep. p. 514, Sup. Ct. Rep. p. 1059): "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 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 & S. F. R. Co. v. Gill is this language (p. 657, L. ed. p. 570, Sup. Ct. Rep. p. 487): "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 prac tically destroy the value of property of companies engaged in the carrying business." In Covington & L. Turnp. Road Co. v. Sandford (p. 597, L. ed. p. 567, Sup. Ct. Rep. p. 205): "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 "The equal protection of the laws which, of the public to use the defendant's turnby the 14th Amendment, no state can deny pike upon payment of such tolls as in view to the individual, forbids legislation, in of the nature and value of the service renwhatever form it may be enacted, by which dered by the company are reasonable is an the property of one individual is, without element in the general inquiry whether the compensation, wrested from him for the rates established by law are unjust and unbenefit of another, or of the public. This, reasonable. That inquiry also involves as has been often observed, is a government other considerations, such, for instance, as of law, and not a government of men, and the reasonable cost of maintaining the road it must never be forgotten that under such in good condition for public use, and the a government, with its constitutional limi- amount that may have been really and nectations and guaranties, the forms of law essarily invested in the enterprise. In and the machinery of government, with all short, each case must depend upon its spetheir reach and power, must in their actual cial facts; and when a court, without asworkings stop on the hither side of the un-suming itself to prescribe rates, is required necessary and uncompensated taking or de- to determine whether the rates prescribed struction of any private property legally ac- by the legislature for a corporation controlquired and legally held." ling the public highway are, as an entirety, 28. so unjust as to destroy the value of its prop-entitled to demand, in order that it may erty for all the purposes for which it was have just compensation, is a fair return up acquired, its duty is to take into considera- on the reasonable value of the property at tion the interests both of the public and of the time it is being used for the public. the owner of the property, together with all The property may have cost more than it other circumstances that are fairly to be ought to have cost, and its outstanding considered in determining whether the leg-bonds for money borrowed and which went islature has, under the guise of regulating rates, exceeded its constitutional authority, and practically deprived the owner of property without due process of law." 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, In Smyth v. Ames, after an elaborate dis- although it may be an element in the incussion of the question of rates and the pow-quiry as to what is, under all the circumer of the legislature in respect thereto, it stances considered, just both to the company was said (pp. 546, 547, L. ed. p. 849, Sup. and to the public." Ct. Rep. p. 434): And also affirming the limits of judicial interference with legislative action (p. 754, L. ed. p. 1160, Sup. Ct. Rep. p. 810): "We hold, however, that the basis of all calculations as to the reasonableness of rates to be charged by a corporation main- "But it should also be remembered that taining a highway under legislative sanc- the judiciary ought not to interfere with the tion must be the fair value of the property collection of rates established under legisbeing used by it for the convenience of the lative sanction, unless they are so plainly public. And in order to ascertain that and palpably unreasonable as to make their value, the original cost of construction, the enforcement equivalent to the taking of amount expended in permanent improve- property for public use without such comments, the amount and market value of its pensation as under all the circumstances bonds and stock, the present as compared is just both to the owner and to the public; with the original cost of construction, the that is, judicial interference should never probable earning capacity of the property occur unless the case presents, clearly and under the particular rates prescribed by beyond all doubt, such a flagrant attack upstatute, and the sum required to meet on the rights of property under the guise of operating expenses, are all matters for con-regulations as to compel the court to say sideration, and are to be given such weight that the rates prescribed will necessarily as may be just and right in each case. We have the effect to deny just compensation do not say that there may not be other mat- for private property taken for the public ters 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. 757, L. ed. p. 1161, Sup. Ct. Rep. p. 811): use.' Nothing was said in Chicago, M. & St. P. R. 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 pub"The contention of the appellant in the lic character, there has been no further rulpresent case is that in ascertaining what are ing than that the state may prescribe and just rates the court should take into consid-enforce reasonable charges. What shall be eration the cost of its plant; the cost per the test of reasonableness in those charges annum of operating the plant, including in- is absolutely undisclosed. terest paid on money borrowed and reason- As to parties engaged in performing a ably necessary to be used in constructing public service, while the power to regulate the same; the annual depreciation of the has been sustained, negatively the court has plant from natural causes resulting from its held that the legislature may not prescribe use; and a fair profit to the company over rates which if enforced would amount to a and above such charges for its services in confiscation of property. But it has not supplying the water to consumers, either by held affirmatively that the legislature may way of interest on the money it has expend-enforce rates which stop only this side of ed 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 It confiscation, and leave the property in the 06. |