Omaha daily bee., 1897-06-22
KANSAS STOCK YARDS LAW
status of SUIT tn Prevent enforcement
of NuNtuum Rates.

status of SUIT tn Prevent Enforcement
of Maximum Rates.
Kansas city Journal
The taking Of testimony in the stock
yards case having been completed. it is
now possible to follow the lines OF con-
tention in the suit with some degree Of ac-
curacy and intelligence. At the start off il
may be said that the litigation involves
legal points that have not yet been passed
upon by the courts, at least to the extent
of covering the precise conditions presented
here. The contention of the stock wards
company is that it is entitled to earn far
interest upon the amount of its outstanding
stock and the present value of the property
regardless Of how that sock may have been
Issued or how much actual money went into
the investment. The right Of the state to
20 back of conditions as they existed at
the time the legislature assumed control Of
the stock yards business and made the in
stitution quas-public one iH disputed. 1t
has been the effort Of the company to show
that its plant, good will and business is
worth today even more than the amount Of
outstanding stock. and the court will be
asked to decree that interest may be earned
upon this value Independent of the manner
in which it may have been created
From the companys standpoint, it is Of
no use for the state to show that much of
the outstanding stock was issued in the
form of gifts and profit dividends. Even
If all the stock had been issued in such
a manner it could not be assailed so long
as legal form had been observed. The gifts
were necessary to the development of the
company's business, it maintains, and there
| fore they represent an actual investment
now standing in what might be called the
good will of the enterprise. In short, 1t is
the contention of the company that in such
a suit rs this the state cannot go back of
the present property values, tangible and
intangible, and the stocks that have been
issued as their representative.
On the other hand. the state is resting
upon it's ability to show that the great values
| claimed by the stock yards company and
the stocks outstanding are fictitious n the
sense that they were created and are main
| tanned by the eXorbiant charges which
the company has been privileged to exact
and that they neither represent o legitimate
| investment nor are entitled to be considered
| in figuring what reasonable returns might
be. II these intangible values, created by
| eXorbitant charges are to be considered in
| estimating the Understanding limit Of the
| plant, says the state, then it is obvious that
| 1t forms an endless chain that can neVeH be
| broken by law While 1t is admitted that
| the stock of the company is worth in the
| market its full par value. it is claimed that
| this value is maintained by the immoderate
| charges and is not due to the value and
| good viii of the plant as an ordinary bust
| ness enterprise.
We have said that this case presents
| several points that have never been passed
| upon by higher courts. While this is true
| 1t IS also true that some of the most inn
| pOrtant issues involved have been passed
| upon very recently. Along the contention
that no inquiry can be made into the man
ner in which stockholder secured his
| stock, Associate Justice Brewer said in
| the now famous Nebraska railroad case
| In condemnation proceedings no inquiry
| is permitted as to how the owners have
acquired the property provided only that
| it be legally held by them II farm be-
| longs to an individual, and the public seeks
| to take it, it must pay its value, and is
not permitted to diminish the price by prov
| ing the owner acquired the means of pur-
| chase by immoral or disreputable practices.
| He may have made his fortune dealing. in
| slaves, as a lobbyist or in any other way
| obnoxious to public veal but if he has ac-
| qured legal title to the property he is
| protected in its possess ion. and cannot be
| disturbed until the receipt of its actual
| cash value. No inquiry is open to
| whether the owner has received gifts from
| state or individuals, whether he has, as
| owner, managed the property well i'll.
| or so as to acquire large fortune there
, from. 1t is enough that he owns the prop
erty-has the legal title: and, so owning,
! he must be paid the actual value of that
| property. = The value of property cannot
be destroyed by legislation deprivng the
| owner of adequate compensation"
| If Justice Brewer has enunciated a rule of
| law that will stand, 1t would seem that every
stockholder in the stock yards company is
| entitled to interest upon the face of his
stock, regardless of whether it was issued as
a gift or in the form of profit dividends.
| In the United States circuit court of ap-
| peals, sitting in New York, decision was
last week handed down that seems to bear
out the contention of the stock yards people
that they have right to estimate the good
| will or intangible quality of their property
| in determining its value. The court held
| that such a value is susceptible of proof and
that it may at times exceed the value of the
| real property many times over. In this con-
| necton it is the contention of the state that
cutting down rates does not impair the good
| will of the stock yards. 1t will in man
ner decrease its business or injure it in the
estimation of its patrons, though 1t is con-
sented that it will decrease its profits.
Thus, hurriedy, are sketched the main
features of case that is certain to go to
the supreme court of the United States. 1t
is important as involving the relative rights
of the people and corporations and bids faiI
to determine much more clearly than has
ever been done before the length to which
a legislature may go in controlling corporate
institutions.
ELI PERKINS AS TRUTH TELLER