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sons urged in support of their decision one | 134 U. S. 418, 33 L. ed. 970, 3 Inters. Com. way or the other.

Rep. 209, 10 Sup. Ct. Rep. 462, 702; ChiThe first we notice is the principal matter cago & G. T. R. Co. v. Wellman, 143 U. S. in respect to which testimony was offered, 339, 36 L. ed. 176, 12 Sup. Ct. Rep. 400; which has been most largely discussed by Reagan v. Farmers' Loan & T. Co. 154 U. counsel on both sides, and that is the validi. S. 362, 38 L. ed. 1014, 4 Inters. Com. Rep. ty of the reduction in the charges of the 560, 14 Sup. Ct. Rep. 1047; St. Louis & s. stock-yards company made by the act in F. R. Co. v. Gill, 156 U. S. 649, 39 L .ed. question. Has the state the power to legis. 567, 15 Sup. Ct. Rep. 484; Covington & L. late on this matter, and, if so, can its legis- Turnp. Road Co. v. Sandford, 164 U. S. 578, lation be upheld ?

41 L. ed. 560, 17 Sup. Ct. Rep. 198; Smyth In Munn v. Illinois, 94 U. S. 113, 24 L. ed. v. Ames, 169 U. S. 466, 42 L. ed. 819, 18 Sup. 77, it was held that the state had power to ct. Rep. 418; San Diego Land & Town Co. v. fix the maximum charges for the storing of National City, 174 Ú. S. 739, 43 L. ed. grain in warehouses in Chicago, the court 1154, 19 Sup. ct. Rep. 804; Chicago, M. & saying (p. 126, L. ed. p. 84):

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 Tested by the rule laid down in Munn v. it of public consequence and affect the com- Illinois, it may be conceded that the state munity at large. When, therefore, one de- has the power to make reasonable regulation votes his property to a use in which the of the charges for services rendered by the public has an interest, he in effect grants stock-yards company. Its stock yards are to the public an interest in that use, and situated in one of the gateways of commerce, must submit to be controlled by the public and so located that they furnish important for the common good to the extent of the facilities to all seeking transportation of interest he has thus created. He may with cattle. While not a common carrier, nor draw his grant by discontinuing the use, engaged in any distinctively public employ, but so long as he maintains the use he must ment, it is doing a work in which the pubsubmit to the control.”

lic has an interest, and therefore must be While there was a division of opinion in considered as subject to governmental regu. the court, yet the doctrine thus stated relation. ceived the assent of a majority of its mem But to what extent may this regulation bers, and has been reaffirmed since, although go? Is there no limit beyond which the accompanied by a constant dissent. Budd state may not interfere with the charges for v. New York, 143 U. S. 517, 36 L. ed. 247, 4 services, either of those who are engaged in Inters. Com. Rep. 45, 12 Sup. Ct. Rep. 468; performing some public service, or of those Brass v. North Dakota ex rel. Stoeser, 153 who, while not engaged in such service, have U. S. 391, 38 L. ed. 758, 4 Inters. Com. Rep. yet devoted their property to a use in which 670, 14 Sup. Ct. Rep. 857. See also the fol. the public has an interest? And is the exlowing cases in state courts: People v. tent of governmental regulation the same in Budd, 117 N. Y. 1, 5 L. R. A. 559, 22 N. E. both of these classes of cases ? 670; Lake Shore &*M. S. R. Co. v. Cincin In Munn v. Illinois, one of the latter class, nati, s. & C. R. Co, 30 Ohio St. 604; State in which the power of governmental regula. ex rel. Atty. Gen. v. Columbus Gaslight & tion was affirmed, it was said (p. 125, L. Coke Co. 34 Ohio St. 572, 32 Am. Rep. 390; ed. p. 84): Davis v. State, 68 Ala. 58, 44 Am. Rep. 128; "From this it is apparent that down to the Baker v. State, 54 Wis. 368, 12 N. W. 12; time of the adoption of the 14th Amendment Yash v. Page, 80 Ky. 539, 44 Am. Rep. 490; it was not supposed that statutes regulating Girard Point Storage Co. v. Southwark the use, or even the price of the use, of Foundry Co. 105 Pa. 248; Sawyer v. Davis, private property, necessarily deprived an 136 Mass. 239, 49 Am. Rep. 27; Brechbill v. owner of his property without due process Randall, 102 Ind. 528, 52 Am. Rep. 695, 1 of law. Under some circumstances they N. E. 362; Delaware, L. & W. R. Co. v. Cen- may, but not under all.” tral Stock-Yard & Transit Co. 45 N. J. Eq. In Budd v. New York it was not charged 50, 6 L. R. A. 855, 17 Atl. 146.

or shown that the rates prescribed by the These decisions go beyond, but are in line legislature were unreasonable, and the only with, those in which was recognized the question was the power of the legislature to power of the state to regulate charges for interfere at all in the matter. The same services connected with any strictly public is true of Brass v. North Dakota em rel. employment, as, for instance, in the matter Stoeser in which nothing was presented of common carriage, supply of water, gas, calling for any consideration of the test of etc. Spring Valley Waterworks v. Schot reasonableness or of a limit to the legisla tler, 110 U. S. 347, 28 L. ed. 173, 4 Sup. Ct. tive power. Rep. 48; Railroad Commission Cases, 116 As to those cases in which governmental U.S. 307, sub nom. Stone v. Farmers' Loan regulation of charges was in respect to par. & T. Co. 29 L. ed. 636, 6 Sup. Ct. Rep. 334, ties doing some public service the following 388, 1191; Wabash, St. L. & P. R. Co. v. is a résumé of the decisions. In Spring Illinois, 118 U. S. 557, 30 L. ed. 244, 1 In- Valley Waterworks v. Schottler it was said ters. Com. Rep. 31, 7 Sup. Ct. Rep. 4; Dow (p. 354 L. ed. p. 176, Sup. Ct. Rep. p. 51): V. Beidelman, 125 U. S. 680, 31 L. ed. 841, “What may be done if the municipal au. 2 Inters. Com. Rep. 56, 8 Sup. Ct. Rep. 1028; thorities do not exercise an honest judg. Chicago, M. & st. P. R. Co. v. Minnesota,' ment, or if they fix upon a price which is

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manifestly unreasonable, need not now be And again (p. 412, L. ed. p. 1028, Inters. considered, for that proposition is not pre- Com. Rep. p. 614, Sup. Ct. Rep. p. 1059): sented by this record. The objection here "It is unnecessary to decide, and we do is not to any improper prices fixed by the not wish to be understood as laying down officers, but to their power to fix prices at as an absolute rule, that in every case a fail. all.”

ure to produce some profit to those who have In Railroad Commission Cases (p. 331, L invested their money in the building of a ed. p. 644, Sup. Ct. Rep. p. 345):

road is conclusive that the tariff is unjust "From what has thus been said it is not and unreasonable. And yet justice de to be inferred that this power of limitation mands that everyone should receive somos or regulation is itself without limit. This compensation for the use of his money or power to regulate is not a power to destroy, property, if it be possible without prejudice and limitation is not the equivalent of con- to the rights of others. There may be cir. fiscation. Under pretense of regulating cumstances which would justify such a tarfares and freights the state cannot require iff; there may have been extravagance and a railroad corporation to carry persons or a needless expenditure of money; there may property without reward; neither can it do be waste in the management of the road; that which in law amounts to a taking of enormous salaries, unjust discrimination as private property for public use without just between individual shippers, resulting in compensation or without due process of general loss. The construction may have law."

been at a time when material and labor were In Wabash, St. L. & P. R. Co. v. Illinois at the highest price, so that the actual cost nothing was said *affecting the question of far exceeds the present value; the road may the extent of the power of the legislature. have been unwisely built, in localities where In Dow v. Beidelman the quotation hereto- there is no sufficient business to sustain a fore made from the Railroad Commission road. Doubtless, too, there are many other Cases was quoted with approval. In Chi- matters affecting the rights of the commu. cago, M. & St. P. R. Co. v. Minnesota the nity in which the road is built, as well as same passage was quoted, and it was added the rights of those who have built the road." (p. 458, L. ed. p. 981, Inters. Com. Rep. p. In St. Louis de 8. F. R. Co. v. Gill is this 220, Sup. Ct. Rep. p. 467):

language (p. 657, L. ed. p. 570, Sup. Ct. Rep. "If the company is deprived of the power p. 487): of charging reasonable rates for the use of "This court has declared, in several cases, its property, and such deprivation takes that there is a remedy in the courts for replace in the absence of an investigation by lief against legislation establishing a tariff judicial machinery, it is deprived of the of rates which is so unreasonable as to praclawful use of its property, and thus, in sub- tically destroy the value of property of comstance and effect, of the property itself, panies engaged in the carrying business." without

due process of law and in violation In Covington & L. Turnp. Road Co. v. of the Constitution of the United States; Sandford (p. 597, L. ed. p. 567, Sup. Ct. and in so far as it is thus deprived, while Rep. p. 205): other persons are permitted to receive rea "The legislature has the authority in sonable profits upon their invested capital, every case where its power has not been rethe company is deprived of the equal pro- strained by contract, to proceed upon the tection of the laws."

ground that the public may not rightfully In Chicago & G. T. R. Co. v. Wellman it be required to submit to unreasonable exacwas said (p. 344, L. ed. p. 179, Sup. Ct. Rep. tions for the use of a public highway estabP. 402):

lished and maintained under legislative au"The legislature has power to fix rates, thority. If a corporation cannot maintain and the extent of judicial interference is such a highway and earn dividends for protection against unreasonable rates.” stockholders, it is a misfortune for it and

In Reagan v. Farmers' Loan & T. Co. (p. them which the Constitution does not re399, L. ed. p. 1024, Inters. Com. Rep. p. 570, quire to be remedied by imposing unjust Sup. Ct. Rep. p. 1055):

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 & government, with its constitutional limi- amount that may have been really and nectations and guaranties, the forms of law essarily invested in the enterprise. and the machinery of government, with all short, each case must depend upon its spe their 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 control. quired and legally held."*

ling the public highway are, as an entirety,

80 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 into the plant may be in excess of the real rates, exceeded its constitutional authority, value of the property. So that it cannot and practically deprived the owner of prop- be said that the amount of such bonds should erty without due process of law.”.

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 “We hold, however, that the basis of all interference with legislative action (p. 754, calculations as to the reasonableness of L. ed. p. 1160, Sup. Ct. Rep. p. 810): 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 up. statute, 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 use. of the property. What the company is en Nothing was said in Chicago, M. & St. P. titled to ask is a fair return upon the value R. Co. v. Tompkins throwing any light upon of that which it employs for the public con. the questions heretofore referred to. venience. On the other hand, what the pub In the light of these quotations, this may lic is entitled to demand is that no more be affirmed to be the present scope of the debe exacted from it for the use of a public cisions of this court in respect to the power highway than the services rendered by it of the legislature in regulating rates: As are reasonably worth.”

to those individuals and corporations who In San Diego Land & Town Co. v. Nations have devoted their property to a use in al City (p. 757, L. ed. p. 1161, Sup. Ct. Rep. which the public has an interest, although p. 811):

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 confiscation, and leave the property in the fair and equitable basis. Undoubtedly, all hands and under the care of the owners these matters ought to be taken into consid- without any remuneration for its use. It eration, and such weight be given them, has declared that the present value of the when rates are being fixed, as under all the property is the basis by which the test of circumstances will be just to the company reasonableness is to be determined, although and to the public. The basis of calculation the actual cost is to be considered, and that suggested by the appellant is, however, de- the value of the services rendered to each infective in not requiring the real value of dividual is also to be considered. It has the property and the fair value in them- also ruled that the determination of the leg selves of the services rendered to be taken islature is to be presumed to be just, and into consideration. What the company is must be upheld unless it clearly appears to

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result in enforcing unreasonable and unjust, general market,«yet, because of the expense rates.

of transportation from Kansas City there, In this case, as heretofore indicated, a and the loss in weight by shrinkage during volume of testimony has been taken, mainly such transportation, the live stock shipped upon the question of the cost and value of to and sold at Kansas City in 1896 realized the stock yards, and the effect upon the in- for its owners more than $1,500,000 in excome of the company by reason of the process of the amount which would have been posed reduction. This testimony was taken realized if forwarded from Kansas City to before a master, with instructions to report and sold on the Chicago market.”. the cost of the stock yards, the present Now, in the light of these decisions and value of the property, the receipts and ex- facts, it is insisted that the same rule as penditures thereof, the manner of operation, to the limit of judicial interference must and such other matters as might be perti. apply in cases in which a public service is nent for a determination of the case. Stat distinctly intended and rendered and in

ed in general terms, his findings were that those in which, without any intent of pubthe value of the property used for stock. lic service, the owners have placed their

yard purposes, including the value* of cer property in such a position that the public tain supplies of feed and materials which has an interest in its use. Obviously there were on hand December 31, 1896, is $5,388,- is a difference in the conditions of these 003.25; that the gross income realized by cases. In the one the owner has intentionthe stock-yards company during the year ally devoted his property to the discharge 1896, which was taken as representing its of a public service. In the other he has average gross income, was $1,012,271.22. placed his property in such a position that, The total expenditures of the company for willingly or unwillingly, the public has acall purposes

during the period quired an interest in its use. In the one amounted to $535,297.14,-thus indicating he deliberately undertakes to do that which a net income for the year of $476,974.08. is a proper work for the state. In the The court, however, increased the estimate other, in pursuit of merely private gain, he of the net income by adding to the expendi- has placed his property in such a position tures the sum of $113,584,65, expended in that the public has become interested in its repairs and construction, thus placing the use. In the one it may be said that he vol. net income at the amount of $590,558.73. untarily accepts all the conditions of public If the rates prescribed by the Kansas stat- service which attach to like service perute for yarding and feeding stock had been formed by the state itself. In the other, in force during the year 1896 the income of that he submits to only those necessary inthe stock-yards company would have been terferences and regulations which the pubreduced that year $300,651.77, leaving a net lic interests require. In the one he ex. income of $289,916.96. This would have presses his willingness to do the work of the yielded a return of 5.3 per cent on the value state, aware that the state in the discharge of property used for stock-yard purposes, as of its public duties is not guided solely by a fixed by the master. Or if the capital stock question of profit. It may rightfully deterbe taken after deducting therefrom such mine that the particular service is of such portion thereof which represents property importance to the public that it may be connot used for stock-yard purposes, the return ducted at a pecuniary loss, having in view would be 4.6 per cent.

a larger general interest. At any rate, it Counsel for appellants challenge the cor does not perform its services with the sin. rectness of these findings, and seek to show gle idea of profit. Its thought is the gen. by a review of the testimony that no such eral public welfare. If in such a case an per cent of return on the real value of the individual is willing to undertake the work investment would be received by the company of the state, may it not be urged that he in case the proposed reduction is put into ef- in a measure subjects himself to the same fect. But, without stopping to enter into rules of action, and that if the body which the inquiry suggested by their contention, expresses the judgment of the state believes it is enough for our present purpose to state that the particular services should be ren. in general the conclusions of the master and dered without profit he is not at liberty to the court.

complain? While we have said* again and On the other hand, it is shown by the find again that one volunteering to do such serings, approved by the court, that the prices vices cannot be compelled to expose his propcharged in these stock yards are no higher, erty to confiscation, that he cannot be comand in some respects lower, than those pelled to submit its use to such rates as do charged in any other stock yards in the not pay the expenses of the work, and therecountry, and finding 37 is

fore create a constantly increasing debt "The other stock yards heretofore enumer- which ultimately works its appropriation, ated are operated generally in the same still is there not force in the suggestion that manner as those at Kansas City, and there as the state may do the work without profit, is and was for a long time prior to March if he voluntarily undertakes to act for the 12, 1997, active and growing competition state he must submit to a like determination among their owners to attract and secure as to the paramount interests of the public? to each the shipment of live stock from com Again, wherever a purely public use is petitive territories. Kansas City is the contemplated, the state may and generally greatest stocker and feeder market in the does bestow upon the party intending such world, and while Chicago exceeds it as al use some of its governmental powers.

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grants the right of eminent domain, by tions the amount of his profits is large. which property can be taken, and taken, not Such was the rule of the common law, even at the price fixed by the owner, but at the in respect to those engaged in a quasi-public market value. It thus enables him to exer- service, independent of legislative action. cise the powers of the state, and, exercising In any action to recover for an excessive those powers and doing the work of the charge, prior to all legislative action, who state, is it wholly unfair to rule that he ever knew of an inquiry as to the amount must submit to the same conditions which of the total profits of the party making the the state may place upon its own exercise charge? Was not the inquiry always limof the same powers and the doing of the ited to the particular charge, and whether same work? It is unnecessary in this case that charge was an unreasonable exaction to determine this question. We simply no for the services rendered? As said by Mr. tice the arguments which are claimed to jus- Justice Bradley in Parkersburg & 0. River tify a difference in the rule as to property Transp. Co. v. Parkersburg, 107 U. S. 691, devoted to public uses from that in respect 699, 27 L. ed. 584, 587, 2 Sup. Ct. Rep. 732: to property used solely for purposes of pri "It is also obvious that, since a wharf vate gain, and which only by virtue of the is property and wharfage is a charge or rent conditions of its use becomes such as the for its temporary use, the question whether public has an interest in.

the owner derives more or less revenue from In reference to this latter class of cases, it, or whether more or less than the cost of which is alone the subject of present in- building and maintaining it, or what*dispoquiry, it must be noticed that the individual sition he makes of such revenue, can in no is not doing the work of the state. He is way concern those who make use of the not using his property in the discharge of a wharf, and are required to pay the regular purely public service. He acquires from the charges therefor; provided, always, that the state none of its governmental powers. His charges are reasonable, and not exorbitant.” business in all matters of purchase and sale In Canada Southern R. Co, v. Internationis subject to the ordinary conditions of the al Bridge Co. (L. R. 8 App. Cas. 723, 731) market and the freedom of contract. He Lord Chancellor Selborne thus expressed the can force no one to sell to him, he cannot decision of the House of Lords: prescribe the price which he shall pay. He "It certainly appears to their lordships must deal in the market as others deal, buy that the principle must be, when reasonable ing only when he can buy and at the price ness comes in question, not what profit it at which the owner is willing to sell, and may be reasonable for a company to make, selling only when he can find a purchaser but what it is reasonable to charge to the and at the price which the latter is willing person who is charged. That is the only to pay. If under such circumstances he is thing he is concerned with. They do not bound by all the conditions of ordinary mer say that the case may not be imagined of cantile transactions he may justly claim the results to a company being so enor: some of the privileges which attach to those mously disproportionate to the money laid engaged in such transactions. And while out upon the undertaking as to make that by the decisions heretofore referred to he of itself possibly some evidence that the cannot claim immunity from all state regu- charge is unreasonable with reference to the lation he may rightfully say that such regu- person against whom it is charged. But lation shall not operate to deprive him of that is merely imaginary. Here we have the ordinary privileges of others engaged in got a perfectly reasonable scale of charges mercantile business.

in everything which is to be regarded as maPursuing this thought, we add that the terial to the person against whom the state's regulation of his charges is not to charge is made. One of their lordships be measured by the aggregate of his profits, asked counsel at the bar to point out which determined by the volume of business, but of these charges were unreasonable. It was by the question whether any particular not found possible to do so. In point of charge to an individual dealing with him fact, every one of them seems to be, when is, considering the service rendered, an un- examined with reference to the service renreasonable exaction. In other words, if he dered and the benefit to the person receiving has a thousand transactions a day, and his that service, perfectly unexceptionable accharges in each are but a reasonable com-cording to any standard of reasonableness pensation for the benefit received by the par. which can be suggested. That being so, it ty dealing with him, such charges do not seems to their lordships that it would be a become unreasonable because by reason of very extraordinary thing indeed, unless the the multitude the aggregate of his profits legislature had expressly said so, to hold is large. The question is not how much he that the persons using the bridge could makes out of his volume of business, but claim a right to take the whole accounts of whether in each particular transaction the the company, to dissect their capital accharge is an unreasonable exaction for the count, and to dissect their income account, services rendered. He has a right to do to allow this item and disallow that, and, business. He has a right to charge for each after manipulating the accounts in their separate service that which is reasonable own way, to ask a court to say that the percompensation therefor, and the legislatı sons who have projected such an undertak may not deny him such reasonable compen- ing as this, who have encountered all the sation, and may not interfere simply be original risks of executing it, who are still cause out of the multitude of his transac.subject to the risks which from natural and

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