The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1874-07-10
An Important Decision.

An Important Decision.
On many accounts, the decision of the U.
S. Court sitting at Madison, Wisconsin, con-
firming the constitutionality of the "Potter"
railroad bill, is one OF the most important
legal opinions promulgated for many years.
The interest in this decision is not confined
to Wisconsin or this country; and, if sus-
tanned, its results cannot be estimated upon
the development of this country, for there is
no class more deeply interested in this matter
than the European investors who have con-
triouted to the building Of every extensive
railway line in the country.
The history of this case is undoubtedly IA
mar to the Elost of our readers. Last year
incensed by asense of wrong-a large part Of
which in this particular case appears to be i'm
aginary-the legislature of Wisconsin made
law of measure called the ssPotter bill,''
which fixed the rates both of passenger and
freight tariffs for every railroad in the state.
The effect of this law upon the Northwestern
Railroad was to reduce its rates twenty-five
per cent. In view of this fact, certain credit
ors of the corporation asked the intervention
of the Court to protec. them from the ire
forcement of the law. Briefly stated, their
case is as follows: The railroad company fix
ed rates which were reasonable and just. in
which, since 1867 there has been a reduction
of over rs per cent, being over 80 per cent.
on freight. The revenues from all sources
have never been sufficient to pay running ex-
penses, interest on bonds and dividends on the
capital actually invested, equal to the lawful.
interest in the state, and no dividend has
been made on common stock since 1872, and
none on preferred stock since 1873. The net
earnings of the road for 1873 were 81, $40,
of which, after paying interest on bonds and
leased roads, only $553,305 remained to pay
000 BY the application of the Potter law,
the receipts would be reduced 25 per cent,
consequently leaving only S747,752 to meet
the ANIMAL interest on its bonds, and nothing
for dividends. The petitioners claimed that
the money loaned for the construction and
equipment of the road was loaned under the
laws OF the state, which laws secured to the
company the right to operate its road as SO to
derive revenue sufficient to pay the interest
upon the money thus borrowed and provide
for sinking fund for the payment Of the
same.
The question proposed to the Court uas
whether the legislature of Wisconsin had
constitutional right to pass an act which
would make it impossible for a railway com
pany to pay the interest ON its debts or any
dividends to stockholders. To this question
the Court replies as follows:
The charters of railroad corporations under
the constitution of Wisconsin may be altered
or repealed at any time after their passage:
therefore there was in legal effect Incorporated
"a 10 an the numerous grants under which the
Northwcstern Railroad claims property
and franchise in the state the foregoing provis-
ions OF the constitution. 1t became legal part
OF every contract or mortgage made by the
company or any OF its predecessors. The share
and bondholders took their stock subject to this
paramount condition, of which in law they had
notice. Ii the corporation, by making con-
tract or deed, could clothe its creditors with an
absolute right and title, it would aorogate one
OF the PROVISIONS OF the fundamental laws of
the State.
In other words, three judg es of the United
States Courts say that und er the constitution
OF Wisconsin, the legislature has right to
fix the rates of transportation regardless of
charters and franchises.
The Changers, who have allowed them
selves to be unduly worked up on this sub
ject, are reported to be greatly elated over the
decision, and Gov. Taylor of Wisconsin, who
had no powder to burn over Union victories,
had hundred guns fired in honor of this VIC
tory. The victory, however, is not complete,
for the decision, in the first place, only refers
to traffic wholly within the state, and conse-
quently does not affect the great bulk of grain
transportation. Secondly, the decision is
based upon clause in the constitution of the
state of Wisconsin, and can only apply to
such states as have a similar provision in
their organic law, which is the case with sew
eral, New York, for instance, but not in the
constitution of this state. In third the place,
the whole question goes to the Supreme Court
of the United States and may not be sustain
ed.
Meantime a conductor has been arrested |
for carrying out the instructions of the IA H. /
road company employing him, and on trial by
jury they failed to agree and in some way, not
clearly indicated by the despatch, the presid-
ing judge pronounced the Potter law uncon-
stitutionaL
The history of railroad management in This
country as whole, is not without reproach.
Stock has been so watered that many roads
have fictitious value, and any attempt on
the part of some of them to secure a revenue
upon their pretended cost or estimated value
may be questioned. 1t is the feeling that
railroad companies have been unjust and ex-
orbitant in their demands that has led to the
enactment of the Potter law in Wisconsin.
Both state and corporations are not entirely
without blame for this serious difficulty which |
will not be settled until both recognize the
fact of mutual dependence.
The immediate result will be to check rail-
road enterprise in the West, if not all over
the country, for capitalists will not place their
money in the hands of those who assume to
be their foes, 20 control
The st. John Telegraph, discussing the
management of New Brunswick timber lands.
says that one-haif of the best timber lands in |
that province have been utterly DESTROYED by |
fire, wind and axe, while nine-teptbs of tho
remainder have been worked on so much that
they have been largely deprived of their most
valuable soft woods I'm Tho G. IL n,