Source: https://supreme.justia.com/cases/federal/us/173/404/
Timestamp: 2019-04-24 19:53:06+00:00

Document:
The act of the Legislature of Arkansas of March 25, 1889, entitled an act to provide for the protection of servants and employs of railroads, is not in conflict with the provisions of the Constitution of the United States.
objection that the act was unconstitutional and void. To this paragraph plaintiff demurred, and the demurrer was sustained. The case was then heard by the court, the parties having waived a trial by jury, and the court found that the plaintiff was entitled to recover the sum claimed and the penalty at the rate of daily wages from the date of the discharge until the date of the commencement of the suit, and entered judgment accordingly. Defendant appealed to the Supreme Court of the State of Arkansas, which affirmed the judgment, 64 Ark. 83, and this writ of error was then brought.
"Section 1. Whenever any railroad company or any company, corporation, or person engaged in the business of operating or constructing any railroad or railroad bridge, or any contractor or subcontractor engaged in the construction of any such road or bridge shall discharge, with or without cause, or refuse to further employ any servant or employee thereof, the unpaid wages of any such servant or employee, then earned at the contract rate, without abatement or deduction, shall be and become due and payable on the day of such discharge or refusal to longer employ, and if the same be not paid on such day, then, as a penalty for such nonpayment, the wages of such servant or employee shall continue at the same rate until paid, provided such wages shall not continue more than sixty days unless an action therefor shall be commenced within that time."
"SEC. 2. That no such servant or employee who secretes or absents himself to avoid payment to him or refuses to receive the same when fully tendered shall be entitled to any benefit under this act for such time as he so avoids payment."
"SEC. 3. That any such servant or employee whose employment is for a definite period of time and who is discharged without cause before the expiration of such time may, in addition to the penalties prescribed by this act, have an action against any such employer for any damages he may have sustained by reason of such wrongful discharge, and such action may be joined with an action for unpaid wages and penalty. "
"SEC. 4. That this act shall take effect and be in force from and after its passage."
"Corporations may be formed under general laws, which laws may from time to time be altered or repealed. The General Assembly shall have the power to alter, revoke, or annul any charter of incorporation now existing and revocable at the adoption of this constitution, or any that may hereafter the created, whenever in their opinion, it may be injurious to the citizens of this state, in such manner, however, that no injustice shall be done to the corporators."
"The General Assembly shall pass no special act conferring corporate powers. Corporations may be formed under general laws, and all such laws may from time to time be altered or repealed."
In Leep v. Railway Co., 58 Ark. 407, section one of the Act of March 25, 1889, was considered by the Supreme Court of Arkansas and was held unconstitutional so far as affecting natural persons, but sustained in respect of corporations, as a valid exercise of the right reserved by the constitution "to alter, revoke, or annul any charter of incorporation."
but adjudged that it could regulate that right by amendment when demanded by the public interest, though not to such an extent as to render it ineffectual or substantially impair the object of incorporation.
"If the legislature, in its wisdom, seeing that their employees are and will be persons dependent on their labor for a livelihood, and unable to work on a credit, should find that better servants and service could be secured by the prompt payment of their wages on the termination of their employment, and that the purpose of their creation would thereby be more nearly accomplished, it might require them to pay for the labor of their employees when the same is fully performed at the end of their employment. If it be true that in doing so it would interfere with contracts which are purely and exclusively private, and thereby limit their right to contract with individuals, it would nevertheless, under such circumstances, have the right to do so under the reserved power to amend."
But the court added that it did not follow that the legislature could, by amendment, fix or limit the compensation of employees, and particularly not as the right to amend was to be exercised so "that no injustice shall be done to the corporators;" that, however, this act was not obnoxious to that objection, as it left "to the corporations the right of making contracts with their employees on advantageous terms."
"require the corporation to pay the employee all the wages to which he would have been entitled had he fully performed his contract up to the time of his discharge, notwithstanding he had failed to do so and had damaged the corporation thereby,"
"that the unpaid wages earned at the contract rate at the time of the discharge shall be paid without discount on account of the payment thereof before the time they were payable according to the terms of the contract of employment."
The scope of the power to amend and the general subject of the lawfulness of limitations on the right to contract were considered at length, with full citation of authority, in both these decisions.
The contention is that, as to railroad corporations organized prior to its passage, the act was void because in violation of the Fourteenth Amendment. Corporations are the creations of the state, endowed with such faculties as the state bestows and subject to such conditions as the state imposes, and if the power to modify their charters is reserved, that reservation is a part of the contract, and no change within the legitimate exercise of the power can be said to impair its obligation, and as this amendment rested on reasons deduced from the peculiar character of the business of the corporations affected and the public nature of their functions, and applied to all alike, the equal protection of the law was not denied. Missouri Pacific Railway v. Mackey, 127 U. S. 205.
The question, then, is whether the amendment should have been held unauthorized because amounting to a deprivation of property forbidden by the federal Constitution.
possession, of contracts lawfully made,"
"that will not defeat or substantially impair the object of the grant, or any rights which have vested under it, and that the legislature may deem necessary to secure either that object or other public or private rights,"
Gray, J., Commissioners v. Holyoke Water Power Company, 104 Mass. 446, 451; Greenwood v. Freight Co., 105 U. S. 13; Spring Valley Water Works v. Schottler, 110 U. S. 347.
In view of the fact that these corporations were clothed with a public trust and discharged duties of public consequence affecting the community at large, the supreme court held the regulation, as promoting the public interest in the protection of employees to the limited extent stated, to be properly within the power to amend reserved under the state constitution.
Inasmuch as the right to contract is not absolute, but may be subjected to the restraints demanded by the safety and welfare of the state, we do not think that conclusion, in its application to the power to amend, can be disputed on the ground of infraction of the Fourteenth Amendment. Insurance Co. v. Daggs, 172 U. S. 557; Holden v. Hardy, 169 U. S. 366; St. Louis & San Francisco Railway v. Mathews, 165 U. S. 1.
statute arbitrarily singles out one class of debtors and punishes it for a failure to perform certain duties -- duties which are equally obligatory upon all debtors; a punishment not visited by reason of the failure to comply with any proper police regulations, or for the protection of the laboring classes, or to prevent litigation about trifling matters, or in consequence of any special corporate privileges bestowed by the state."
The conclusion was that the subjection of railroad companies only to the penalty was purely arbitrary, not justifiable on any reasonable theory of classification, and that the statute denied the equal protection of the law demanded by the Fourteenth Amendment. In this case, the act was passed "for the protection of servants and employees of railroads," and was upheld as an amendment of railroad charters, such exercise of the power reserved being justified on public considerations, and a duty was specially imposed, for the failure to discharge which the penalty was inflicted. The penalty was sustained because the requirement was valid.

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