The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-06-20
AGAINST THE VANDALIA
SUPERIOR COURT HOLDS Tu.c
STATES COMPLAINT is GOOD.
The Railroad Company Must Now E,,.
an Answer in the School
Fund Suit.

complaint good in the suit of the State Of
Indiana against the Vandalia RAILWAY Corn
pany to recover $2,0 coo, 600 alleged to be due
the state school fund.
The opinion of the court overrulinr the
demurrer to the attorney generals com
plant was read in Room yesterday morn
ing by Judge Carter. The two other Su-
perior judges, Lawson M Harvey and John
L. McMaster, sat beside Judge Carter The
effect of the decision is that the comnanx,
is ruled to answer which action viii nut
the case at issue. The opinion was heard
by many lawyers aside from those inter-
ested in the litigation. When the answer
Of the company is filed the court NAV either
appoint master to take testimony or hear
evidence itself. The full text of the courts
opinion follows:
Action by the State on the relation of
the attorney general against the defendant
T. H & /. Railroad Company for an ac
counting as to certain profits earned by the
defendant and to recover whatever portion
thereof might be found due to the stat
under the provisions of the defendants
cnarter: The defendant demurs to the com
plant Tor lnSuthciency of facts A num-
Der OF questions are thus presented and
have been discussed by counsel in briefs
and by oral argument.
1t is contended on the part of the state
that the provisions of Section % of the de-
tendant charter constitute a Limitation on
was eHtIleq 10 retain out of the earnings
OF the road to be constructed under tRe
provisions OF the charter; that the com
pany could retain the following sums but
no more: First, sum sufficient to paw to
the stockholders the amount of PRINCIPAL
invested by them in the construction of tba
road; second, sum sufficient to pay to said
stockholders 10 per cent. per annum on the
principal OF said capital invested; third
to pay thereafter dividend on the amount
OF such capital of 10 per cent. per annum;
I Itt a reasonable sum to meet future
contingencies: me surplus, if any remain
ing, 10 be paid 10 the State for the benefit
OF the common school fund.
On the part OF the defendant it is con-
tended that the payment of the sums men
toned IN Items |, 2, 3 and simply OPP
Assembly to regulate the tolls and freights
thereafter; that the right of the State to
the surplus profits would not accrue until
AFTER the General Assembly had regulated
the Tolls ana treights, and then only as to
such surplus pronts as might accrue after
such regulation, and that no such regula-
ton having been ever made by the Gen
erai Assembly, the right of the State to
surplus prohts never attached. And fur
i ther, mat the company, having surrendered
never can be any profits to which the
state may lay claim Sections %, % and "A
must be construed together, and in natural
order Section "A should precede Section %
WAY TO CONSTITUTE THE CHARTER,
The charter is contract between the
State and the defendant and must be con-
srued as are contracts between individuals
except that in cases of ambiguity it must
be construed more strongly against the rail-
road corporation, it being well-established
principle that a corporation created by spe-
clal charter possesses only such rights as
are clearly and distinctly granted. If there
be doubt as to power right, the doubt
must be solved against the corporation.
Counsel assert, both in argument and
In brief, with apparent confidence, that the
state right 10 surplus profits could only
accrue after the Legislature had exercised
Its right TO regulate tolls and freight. The
confidence with which this position is as
sumed has caused US to give special con-
sideration thereto. We have also read the
opinion given in the former case in this
court. No authority is cited either in the
former opinion or in the briefs of counsel,
and we are RENTED for our conclusion to
the language of the act itself.
The contention that the right of the State
to surplus profits is dependent upon the ex-
ercise by the State of its right to regulate
tolls, IL seems TO us is not well founded in
reason, and is the result of a mistaken the
DRY 10 the relations of the parties. 1t is
now. settled principle of law, that the
Legislature has the power, whether re-
served in the charter or not, to regulate
the tolls freghts and fares to be charged
by a common carrier. This power is not
acquired by virtue of some concession of
the corporation, but is originally inherent
in the State. This principle has in the re-
cent case of NaVin VS.. The State (the three
Cent-fare case) been reasserted and de-
clared by our own Supreme Court.
The words of the charter, TO wit, may
so regulate the tolls and freights,' it must
be conceded, imply the granting of right,
and if the controversy were between two in
divduals as to the rights acquired under
q contract there would be reason for con-
tending that the concession of right on
one side was conditioned upon performance
of obligation the other; but this charter
must receive a construction in the-Llght or
the peculiar relations and conditions sur
rounding the parties at and prior to the
MI era
We have on the one side the State, with
penary powers to regulate fares OF common
such regulation may not amount to confis-
cation On the other hand we have the
corporation. a creature OF Lne otate1 anu ~
dependent upon the State for its rlght 10
exist The corporation could acquire only
such rights as the State was pleased TO
grant The potter hath power over the cray
to make the vessel either unto nonor or
dshOnor 1t is illogical ana lnconslsteht
under Such circumstances 10 say tnat tile
State first surrendered or transferred 10 the
corporation its sovereign right to regulate
tolls and then received back from the cor
poration a limited portion of such rlght:
This is not what was done. me words tt,s,4 "a
the charter above quoted were not lnLendeu
and cannot be construed as an enlargeulenl
of the rights of the State over What tney
had previously been. but, Whatever the
form of the words in the charter may De,
they must be construed as RESTRICTION OF
Unitarian nnon the rights of the State as
they previously existed, and not right
granted by the corporation
THE STATE ARGUMENT
If we are right in this conclusion then
1t follows that the agreement on the part
of the State in consideration of which 1t
was to receive surplus profits, was not thal
it would regulate tolls and freights, out
that il would refrain from regulating theIn
No benefit could accrue TO the corporation
from the States regulation of tolls. ouch
regulation is the very thing the corpora
ton did not want. Will it be SAID thal
when the corporation had the right TO
charge tolls at its pleasure, without unit,
that the taking from it by the state OF lhe
right to charge over fixed sum was OIL
such large value and beneht 70 the cor
poration that it would be willing 10 pay
therefor sum equal to all OF the prontS
of its business over Is per cent. on the
capital invested. - s ,,;4t
By the act of 1S47 the State agreed with
the defendant that it would surrender us
right to regulate tolls altogether until the
stockholders should receive PACK from
earnings the capital invested with ~ per
cent per annum thereon, and after tnaI
time to surrender it's right TO regulate SaId
tolls to any lower rate than tnat WouIu
leave sufficient earnings TO make olVl-
deud of 10 per cent. per annum upon the