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Timestamp: 2019-04-25 05:02:28+00:00

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[161 U.S. 677, 679] This was a bill in equity, styled a 'petition,' originally filed by the commonwealth of Kentucky against the Louisville & Nashville Railroad Company (hereinafter called the 'L. & N. Co.'), the Chesapeake, Ohio & Southwestern Railroad Company (hereinafter called the 'Chesapeake Co.'), and several subordinate corporations tributary to the latter, to enjoin the L. & N. Co. (1) from acquiring the control of, or operating, the parallel and competing lines of railroad known as the 'Chesapeake, Ohio & Southwestern System'; (2) from acquiring or operating the Short Route Railway Transfer Company, a belt line in Louisville, and the Union Depot in Louisville, connected therewith; and also (3) to enjoin the Chesapeake, Ohio & Southwestern System from selling out to, or permitting its roads to be operated by, its competitor, the L. & N. Co.
In an amended petition, it was stated, in substance, that the [161 U.S. 677, 680] L. & N. Co. was endeavoring to acquire the capital stock, interest in real property and mortgage securities of the other defendant companies, in order to obtain control, and ultimately purchase at judicial sale, and become the owner of, their franchises and property.
The answer denied the allegation in the form as made, but contained an affirmative statement that the purchase of the stock and securities referred to had already been consummated, and, in effect, admitted that the L. & L. Co. intended to purchase the franchises and properties at judicial sale.
At this time and up to September, 1856, the L. & N. Co. owned only a short piece of road, 31 miles in length, extending from Louisville, southwardly, to Lebanon Junction. Up to September, 1857, it owned only 45 miles; to September, 1858, 72 miles; in 1859, only 110 miles; and not till 1860 did it carry its road to Nashville, 180 miles. About the same time was constructed a branch road from a point about 7 miles south of Bowling Green to the state line, which has since been extended, and is now owned and operated by it, to Memphis, Tenn. Subsequently it purchased, and now owns, a road known as the 'Evansville, Henderson & Nashville Railroad,' which extends from Edgefield, Tenn., on its main line, 10 miles north of Nashville, by way of Hopkinsville, Ky., to Henderson, and thence across the Ohio river, to Evansville, Ind. It also owns and operates various branches in the state of Kentucky that diverge from the main line eastwardly, as well as the Kentucky Central Railroad, extending from Cincinnati southward, and certain branches thereof. [161 U.S. 677, 683] Of the roads constituting the Chesapeake, Ohio & Southwestern System, the first one extended from Paducah to Elizabethtown, and was subsequently extended from Cecilia Junction, six miles from Elizabethtown, to Louisville, whereby a continuous line was formed from Louisville to Paducah, independent of the L. & N. road. But by a subsequent lease, amounting practically to a purchase of a road from Paducah to Memphis, the Chesapeake Co. became, about 1881, the owner of a connected, continuous, and independent railroad from Louisville, by way of Cecilia Junction and Paducah, to Memphis. It also has an interest in and control of several other railroads, bearing the name of, and nominally held by, the companies that built them, one of which is termed the 'Short Route Railway,' extending from Preston street, in Louisville, through the depot at Seventh and Water streets, to Twelfth street, where it connects with the main line.
Upon a hearing of the case upon pleadings and proofs, a decree was entered by the Jefferson circuit court in favor of the commonwealth, enjoining the proposed agreement for consolidation, which decree was subsequently affirmed by the court of appeals of Kentucky, 31 S. W. 476.
Whereupon the L. & N. Co. sued out a writ of error from this court.
Helm Bruce, Ed. Baxter, and James P. Helm, for plaintiff in error.
Geo. M. Davie and Alex. Pope Humphrey, for defendants in error.
This case turns to a certain extent upon the principles just announced in Pearsall v. Railway Co., 16 Sup. Ct. 705, although it differs from that case in the fact that the charter of the L. & N. Co. contains no reserved power to alter or amend, as well as in several other minor particulars.
1. The original charter of the L. & N. Co., granted in 1850, [161 U.S. 677, 684] was limited in its character, and authorized the company only to construct a railroad from Louisville to the Tennessee line, in the direction of Nashville, with as many tracks as might be deemed necessary, but with no power to extend its lines, or to purchase, lease, or consolidate with other roads.
By the act of March 7, 1854, the company was given power to unite their road with any other road connecting therewith, upon such conditions as the two companies might agree upon. As we have frequently held that a power to connect or unite with another road refers merely to a physical connection of the tracks, and does not authorize the purchase or even the lease of such road, or any union of their franchises, it is evident that this act is no authority for the proposed consolidation. Atchison, T. & S. F. R. Co. v. Denver & N. O. R. Co., 110 U.S. 667 , 4 Sup. Ct. 185; Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U.S. 290 , 6 Sup. Ct. 1094; Oregon Ry. & Nav. Co. v. Oregonian Ry. Co., 130 U.S. 1 , 9 Sup. Ct. 409; St. Louis, V. & T. H. R. Co. v. Terre Haute & I. R. Co., 145 U.S. 393 , 12 Sup. Ct. 953; Board of Com'rs of Tippecanoe Co. v. Lafayette, M. & B. R. Co., 50 Ind. 85, 110. The important power to purchase or consolidate with another line cannot be inferred from any such indefinite language as 'to unite or connect with such road.' The union referred to in this act is also limited to a union with a road already connected with the L. & N. Co. by running into the same town, and could have no possible relation to the acquirement of a parallel or competing line. We ordinarily speak of two roads as connecting when they have stations in the same city, in which case authority is given by this act to make a mechanical union between the tracks of the two companies.
Upon the other hand, the company insists that the power to purchase and hold other roads is not only unlimited and extends to all other roads built or to be built, although parallel and competing lines, but that it constitutes an irrevocable contract, which a subsequent legislature is powerless to impair.
In construing this section, we are bound to bear in mind the general rule, so often affirmed by this court, that all doubts with regard to the authority granted in a corporate charter are to be resolved against the corporation, and that a surrend r of the power of the legislature in any matter of public concern must never be presumed from uncertain or equivocal expressions. Railroad Co. v. Litchfield, 23 How. 66, 88; Delaware Railroad Tax, 18 Wall. 206, 225; [161 U.S. 677, 686] Bailey v. Magwire, 22 Wall. 215; Slidell v. Grandjean, 111 U.S. 412 , 4 Sup. Ct. 475; Wheeling & B. Bridge Co. v. Wheeling Bridge Co., 138 U.S. 287 , 11 Sup. Ct. 301.
At this time (January, 1856) the only railroads in the state of Kentucky in operation were from Louisville, eastwardly to Lexington, and one from Lexington, northwardly by way of Paris, to Covington. There was no road running into southern or western Kentucky, or southwardly from Lousiville, except the L. & N. Co.'s road, as far as it had gone. While the general assembly was not only willing but anxious that this company should have liberal and broad powers to aid it, the question of parallel or competing lines had probably not entered into the minds of the legislators as a contingency to be provided against.
There are two reasons why, in our opinion, the third section of the act of 1856 was never intended to confer a general power to purchase roads constructed by other companies, regardless of their relations or connections with the L. & N. road.
(1) The language of the section is that the 'company may, under the provisions of the 13th section of this act' (referring to the thirteenth section of the Tennessee act, re-enacted), 'from time to time extend,' by its own construction, 'any branch road.' Now, as before observed, the thirteenth section of the Tennessee act refers only to branch roads, the cost of which was to be a charge or mortgage upon the branch line, and not upon the main stem; and it seems reasonable to infer that the cost of whatever roads were built or purchased under it were intended to be a charge upon the branch only, and not upon the main line. If the limitation 'under the thirteenth section' were held to be applicable only to that part of the third section which allows extensions of branch lines, it would result that, if the company constructed a branch road, its cost would be a charge on the branch line, and not upon the main line; but, if it should purchase an independent line, the cost could be made a charge upon the main line.
(2) It is hardly possible to suppose that the legislature intended to allow the company to 'extend'-that is, to construct any extension-of a branch road, and at the same time to confer an unlimited power to purchase and hold any road con- [161 U.S. 677, 687] structed by another company. The rule, 'Noscitur a sociis,' applied to this case, would undoubtedly limit the power to purchase, under the general clause, to such roads as the company was authorized to build under the preceding and more special clause. There is no reason why a power to build should be limited to branch roads, while the power to purchase should be so unlimited as to authorize the company to absorb parallel or competing lines, either within or without the state. Additional support for this construction is also found in the concluding words of the section empowering the company 'to agree on terms to receive the cars of other roads on their said road.' This would indicate an intention to permit the company to receive upon its main line the cars of other roads constructed or purchased as feeders to that line, but would scarcely be applicable to the cars of competing or parallel roads, which would seldom be required to be taken upon their line.
That the general assembly could have intended to grant the broad powers claimed is also highly improbable in view of an act passed a little more than two years thereafter (June 22, 1858), by which all railroad companies were declared to have power and authority to make with each other contracts of the following character: First, for the consolidation of either the management, profits, or stock of any two or more companies, the roads of which are or shall be so connected as to form a continuous road; second, for the leasing of the road of one company to another, provided the roads so leased shall be so connected as to form a continuous line. This act is a general one, and the possibility of consolidating parallel or competing lines was evidently considered and reprobated.
Defendant, however, further urges, in support of its assumed rights under the third section of the charter of 1856, a contemporaneous construction by the parties in interest, under which several lines were purchased which ran parallel to some of its own branches, and one of which, known as the 'Cecilia Branch,' about 50 miles in length, running substantially parallel to its main line, which it purchased and held for a short time, and then sold to the Chesapeake Co. These, however, were local lines, which either ran parallel to the branches of the L. & N., such as the Owensburg & Nashville, and the Bardstown Branch, or an extension of its main line, such as the Louisville, Cincinnati & Lexingt n, running from Louisville to Cincinnati, or a short line like the Cecilia Branch, running parallel to the main line; yet, as the terminus at one end or the other was in most cases different, it can hardly be said that any of these were competing lines, or that their purchase showed such an acquiescence on the part of the state as to estop it from opposing the purchase of a through line from Louisville to Memphis, by the way of Paducah,-a line which connects the principal termini of the L. & N. Co. by a road substantially parallel, and no part of which is more than 50 miles from the corresponding part of the L. & N. Putting the broadest construction upon what was actually done, it amounts to no more than that the company made several purchases of local lines, in which the state acquiesced. That the state may have seen fit, in particular cases, to ratify the acquisition of local lines parallel to certain branch lines of the main road, does not argue that it intended to approve the purchase of parallel and competing through lines, especially in view of the act of June 22, 1858, which limited the power to consolidate or lease to roads so connected as to form a continuous line. [161 U.S. 677, 690] Indeed, these acquisitions appear to have been deemed so little in contravention of the public policy of the state that the general assembly did not hesitate to confirm them by special acts, and to receive taxes upon them as part of the L. & N. system.
That the lines proposed to be consolidated are parallel and competing is evident from an inspection of the map, since both connect the two important cities, Louisville and Memphis, which constitute their termini, and are natural competitors for the traffic from the Southwestern to the Northeastern states, by way of Cincinnati, as well as that in the opposite direction. The object of the consolidation is obviously to e able the L. & N. to obtain a complete monopoly of all the traffic through the western half of the state, Conceding that that part of the Chesapeake line which ran from Elizabethtown to Paducah was originally a branch line of the L. & N., and might have been acquired as such under section 3 of the act of 1856, it ceased to be such after the Cecilia Branch was acquired, and the line was extended from Paducah to Memphis. It then became a parallel and competing line, within the meaning of the constitution.
In reply to the argument that millions of dollars have been invested in the securities of the company upon the faith of what was supposed to be its admitted powers, and that its capital stock of $1,500,000 in 1856 has expanded to $51,000,000, it is sufficient to say that, in making such investments, capitalists were bound to know the authority of the company under its charter, and to put the proper interpretation upon it; and that we are not at liberty to presume that investments were made upon the faith of powers that do not exist, and, if they were, the commonwealth is not bound to respect investments made under a misapprehension of the law. Indeed, the argument proves too much, and would justify the inference that capitalists put their money into the road upon the assumption that it had been given irrevocable right to absorb to itself every road which might thereafter be constructed within the limits of the commonwealth.
2. Besides this, however, in order to support the proposed consolidation of these two systems, the parties are bound to show, not only that the L. & N. Co. was competent to buy, but [161 U.S. 677, 692] that the Chesapeake Co. was also vested with power to sell. To make a valid contract, it is necessary to show that both parties are competent to enter into the proposed stipulations. It is a fundamental principle in the law of contracts that, to make a valid agreement, there must be a meeting of minds; and, obviously, if there be a disability on the part of either party to enter into the proposed contract, there can be no valid agreement. As was said by this court in St. Louis, V. & T. H. R. Co. v. Terre Haute & I. R. Co., 145 U.S. 393, 404 , 12 S. Sup. Ct. 953: 'It is unnecessary, however, to express a definitive opinion upon the question whether a contract between these parties was beyond the corporate powers of the plaintiff, because, as held by the decisions of this court already cited, a contract beyond the corporate power of either party is as invalid as if beyond the corporate powers of both, and the contract in question was clearly beyond the corporate powers of the defendant.' See, also, Thomas v. Railroad Co., 101 U.S. 71 ; Oregon Ry. & Nav. Co. v. Oregonian Ry. Co., 130 U.S. 1 , 9 Sup. Ct. 409; Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U.S. 290 , 6 Sup. Ct. 1094; Central Transp. Co. v. Pullman's Palace Car Co., 139 U.S. 24 , 11 Sup. Ct. 478.
The Chesapeake Co. was incorporated under an act of the general assembly of Kentucky, passed in 1881 (Acts 1881, p. 258), the ninth section of which declares that the corporation should be 'governed by any general law enacted by the legislature of this state in regard to consolidation with parallel or competing lines.' So that, although organized prior to the adoption of the constitution of 1891, it became subject at once, and as soon as said constitution was adopted, to its provision declaring that no railroad should consolidate its capital stock, franchise, or property with that of any other owing a parallel or competing line or structure.
The only answer atempted to this proposition is that the cases above cited in support of the doctrine that, to make a valid there must be power both in the seller to sell and in the buyer to buy, refers only to private, voluntary sales, arranged between the companies, and dependent upon their respective corporate powers; and that the doctrine has no [161 U.S. 677, 693] application to judicial or involuntary sales, where the property is seized upon to satisfy a debt f the corporation.
We do not understand, however, that the fact that a purchase is made at a judicial sale confers upon the purchaser any right he is forbidden to acquire, if the purchase had been made at private sale. If, from reasons of public policy, the legislature declares that a railway shall not become the purchaser of a parallel or competing line, the purchase is not the less unlawful, because the parties choose to let it take the form of a judicial sale. A person who, by reason of any statutory disability, such as infancy, lunacy, marriage, or otherwise, is incompetent to buy at private sale, is not less incompetent from becoming the purchaser at a judicial sale. The prohibition is not upon the power of the court foreclosing the morgage to order a judicial sale of the property, but upon its power to cnfirm a sale made to a parallel or competing road. The allegation of the bill in this connection is that suits have been filed upon claims against the several companies interested, with the object of having a judicial sale of their property, so that the L. & N. Co. may purchase the property in its own name, or in the name of some new company or companies organized by it, or in which it shall have a controlling interest. It is true, as was observed in Pearsall v. Railway Co., 16 Sup. Ct. 705, that the stockholders of the L. & N. Co. may individually become the purchasers of the Chesapeake Co. at a judicial sale, and may organize a new corporation; but it would still be a corporation separate and distinct from that of the L. & N. Co. The inhibition of the constitution is not against the sale to individuals, though they may chance to be stockholders in a competing line, but against the acquisition by a railway, in any form, of a parallel or competing line. If this could be evaded by going through the form of a judicial sale, the constitutional provision would be of no value.
3. But conceding that the L. & N. Co. was vested by the act of January 17, 1856, with the right to purchase all railroads constructed by other companies, whether parallel or competing or not, and that, by virtue of such power, it might become the purchaser of the Chesapeake System, it is still [161 U.S. 677, 694] insisted on behalf of the commonwealth that this act was subject to an act approved February 14, 1856, the first section of which enacted that 'all charters and grants of or to corporations, or amendments thereof, and all other statutes, shall be subject to amendment or appeal at the will of the legislature, unless a contrary intent be therein plainly expressed.' The third section of this to 'charters that the act should apply only to 'charters and acts of incorporation to be granted hereafter; and that this act shall take effect from its passage.' The argument is that as this act was given immediate effect, while the former act, under a general law of the state, did not take effect until two months from the time it was approved by the governor, the act of February 14th was in reality the prior act, and the charter of January 17th was in fact granted thereafter, within the meaning of the third section of the act of February 14th.
The answer of the defendant to this was that the thirteenth section of the Tennessee act of 1855, which was re-enacted in the first section of the Kentucky act of January 17th, provided 'that this act shall take effect from and after its passage.' If the adoption verbatim of this Tennessee act by the Kentucky legislature was sufficient to give the Kentucky act immediate effect, then, undoubtedly, the act of February 14th was a subsequent act, and did not apply to the charter of January 17th. Upon the other hand, if the re-enactment of the thirteenth section of the Tennessee act was not intended to give the Kentucky charter immediate effect, then this charter did not become operative until March 17th, and thereby became subject to the reservation statute of February 14th, which did take immediate effect. This question was elaborately argued at the bar, but, for the reasons herea ter stated, we do not consider it necessary to express a decided opinion upon the point.
4. Whatever be the disposition of this question, and however broad the powers of the L. & N. Co. under its charter of 1856, we are still confronted with the proposition that the proposed consolidation of these two railway systems is a clear violation of section 201 of the constitution, which forbids the [161 U.S. 677, 695] consolidation of the stock, franchises, or property, as well as the purchase and lcase of parallel and competing lines. Unless this section impairs the obligation of the contract contained in the charter, it operates as a repeal of any power that may possibly be deduced from such charter to purchase, lease, or consolidate with any parallel or competing line. In this particular the case differs from that of Pearsall v. Railway Co. (just decided) only in the fact that the charter of the Great Northern, while conferring a power to consolidate with other roads in much clearer and more explicit language than was used in the L. & N. charter, also contained, in section 17, the reservation of a power to amend in any manner not destroying or impairing the vested rights of the corporation. The opinion in that case dealt largely with the question whether a subsequent act of the legislature taking away this power so long as it was unexecuted, and so far as it applied to parallel or competing lines, impaired a vested right. Our conclusion was that it did not.
There was a difference of opinion in the court as to whether this language applied to elevators in such manner as to empower the legislature to fix their charges; but it has been too often held that railways were public highways, and their functions were those of the state, though their ownership was private, and that they were subject to control for the common good, to be now open to question. It was so expressly stated in Olcott v. Supervisors, 16 Wall. 678, 694. This power was held to extend, in the City of New York v. Miln, 11 Pet. 102, to a law requiring the masters of emigrant vessels to report an account of their passengers; in the Railroad Commission Cases, 116 U.S. 307 , 6 Sup. Ct. 334, 348, 349, 388, 391, 1191, to the right of a state to reasonably limit the am unt of charges by a railway company for the transportation of persons and property within its jurisdiction, notwithstanding a statute which granted to it the right 'from time to time to fix, regulate, and receive the tolls and charges by them to be received for transportation'; In Mugler v. Kansas, 123 U.S. 623 , 8 Sup. Ct. 273, to legislation which prohibited the manufacture of intoxicating liquors within the limits of the state, even as to persons who at the time happened to own property whose chief value consisted in its fitness for such manufacturing purposes; in Railroad Co. v. Smith, 128 U.S. 174 , 9 Sup. Ct. 47, to the prevention of extortion by railways, by unreasonably charges, and favoritism by discriminations; in Railroad Co. v. Gibbes, 142 U.S. 386 , 12 Sup. Ct. 255, to a requirement that the salaries and expenses of a state railroad commission be borne by the railroad corporations within the state; in Railroad Co. v. Bristol, 151 U.S. 556 , 14 Sup. Ct. 437, to statute com- [161 U.S. 677, 697] pelling the removal of grade crossings; in Com. v. Alger, 7 Cush. 53, to the establishment of harbor lines, beyond which landowners shall not extend their wharves; and in Eagle Insurance Co. v. Ohio, 153 U.S. 446 , 14 Sup. Ct. 868, to a requirement that insurance companies make returns to the proper state officers of their business conditions, etc., notwithstanding the company be organized under a special charter, which did not in terms require it to make such return.
Indeed, it was broadly held in Insurance Co. v. Needles, 113 U.S. 574 , 5 Sup. Ct. 681, that the grant of a corporate franchise is necessarily subject to the condition that the privileges and franchises conferred shall not be abused, or employed to defeat the ends for which they were conferred; and that, when abused or misemployed, they may be withdrawn by proceedings consistent with law. It was said in this case that an insurance corporation was subject to such reasonable regulations as the legislature might from time to time prescribe for the general conduct of its affairs, serving only to secure the ends for which it was created, and not materially interfering with the privileges granted to it. 'It would be extraordinary,' said the court (page 580, 113 U. S., and page 681, 5 Sup. Ct.), 'if the legislative department of a government, charged with the duty of enacting such laws as may promote the health, the morals, and the prosperity of the people, might not, when unrestrained by constitutional limitations upon its authority, provide, by reasonable regulations, against the misuse of special corporate privileges which it has granted, and which could not, except by its sanction, express or implied, have been exercised at all.' It was further held that the establishment against such a corporation before a judicial tribunal that it was insolvent, or that its condition was such as to render its continuance in business hazardous to the public or that it had exceeded its corporate powers, or that it had violated the rules, restrictions, or conditions prescribed by law, constituted a sufficient reason for the state which created it to reclaim the franchises and privileges granted to it.
We think that the principle of these cases applies to the power of the legislature to forbid the consolidation of parallel [161 U.S. 677, 698] or competing lines whenever, in its opinion, such consolidation is calculated to affect injuriously the public interests. Not only is the purchase of stock in another company beyond the power of a railroad corporation in the absence of an express stipulation in the charter, but the purchase of such stock in a rival and competing line is held to be contrary to public policy and void. Cook, Stock. & S. 315; Railroad Co. v. Collins, 40 Ga. 582; Hazelhurst v. Railroad Co., 43 Ga. 13; Elkins v. Railway Co., 36 N. J. Eq. 5. The doctrine is peculiarly applicable to this case, in which is shown that the Chesapeake Co. was largely aided in its construction by contributions from municipalities along its line for he very purpose of obtaining competition with the L. & N. C.,-a purpose which would, of course, be defeated by a combination with it. This restriction upon the unlimited power to consolidate with other roads is not, as the plaintiff in error suggests, called for by any new view of commercial policy, but in virtue of a settled policy which has obtained in Kentucky since 1858, in Minnesota since 1874, in Ohio since 1851, in New Hampshire since 1867, and by more recent enactments in some dozen other states,-a policy which has not only found a place in the statute law of such states as apprehended evil effects from such consolidations, but has been declared by the courts to be necessary to protect the public from the establishment of monopolies. Indeed, the unanimity with which the states have legislated against the consolidation of competing lines shows that it is not the result of a local prejudice, but of a general sentiment that such monoplies are reprehensible. The fact that, in certain cases, the legislature has seen fit to sanction the consolidation of parallel roads, does not militate against the general principle that the consolidation of competing lines is contrary to public policy. Parallel lines are not necessarily competing lines, as they not infrequently connect entirely different termini, and command the traffic of distinct territories. For instance, a line from Toledo to Cincinnati is substantially parallel with another from Chicago to Cairo; but they could scarcely be called competing, since one is dependent upon the traffic of [161 U.S. 677, 699] the Northwest, while Cincinnati is the southern outlet of the traffic of the Northeastern states and the lower Lakes. Another familiar instance is that of the three north and south railways through the state of Connecticut,-one from Bridgeport to Pittsfield, in Massachusetts; another from New Haven to Springfield; and another from Norwich to Worcester. These are strictly parallel lines, but in only a limited sense competing, since they are between different termini, and each is required for the trade of its own section of the state. Even in the present case the competition is mostly confined to the through traffic. Considerations of this kind may induce legislatures, in particular instances, to permit the consolidaton of parallel roads, without intending thereby to relinquish their right to forbid the consolidation of such parallel lines as are in fact competing.
Permission to consolidate such roads is no more to be taken as an approval of a general policy of consolidation than are the laws which have been repeatedly upheld by this court, granting corporations exclusive privileges to supply municipalities with the comforts of life for a certain number of years, of which class of monopolies the one upheld in New Orleans Gaslight Co. v. Louisiana Light & Heat Producing & Manuf'g Co., 115 U.S. 650 , 6 Sup. Ct. 252, is a distinguished example. Such cases are, however, exceptional, and rest upon the theory of an authority expressly vested in the corporation for a limited time, in consideration of benefits likely to accrue to the public from the establishment of a particular industry. Even in such cases, however, we have held that the monopoly may be modified or abrogated, if it proved to be prejudicial to the public health or public morals. Butchers' Union Slaughterhouse Co. v. Crescent City Live-Stock Landing Co., 111 U.S. 746 , 4 Sup. Ct. 652. In this case, Mr. Justice Miller, in delivering the opinion of the court, observed (page 750, 111 U. S., and page 652, 4 Sup. Ct.): 'While we are not prepared to say that the legislature can make valid contracts on no subject embraced in the largest definition of the police power, we think that, in regard to two subjects so embraced, it cannot, by any contract, limit the exercise of such powers to the prejudice of the general welfare. These are the public health and public morals. The preservation of these is so necessary to the best interests of social organi- [161 U.S. 677, 700] zation that a wi e policy forbids the legislative body to divest itself of the power to enact laws for the preservation of health and the repression of crime.' To the same effect are Boyd v. Alabama, 94 U.S. 645 ; Beer Co. v. Massachusetts, 97 U.S. 25 .
There are, doubtless, cases where the police power has been invoked to justify acts of the legislature which were dictated to a certain extent by local interests, or with the effect of unduly burdening or interfering with foreign or interstate commerce. Within this category are laws levying taxes upon alien passengers arriving from foreign ports, for the use of hospitals (The Passenger Cases, 7 How. 283); requiring a bond to be given for every such passenger to indemnify the state against expense for the relief of support of the person named in the bond (Henderson v. Mayor, 92 U.S. 259 ), even though such bonds be limited to lewd and debauched women ( Chy Lung v. Freeman, Id. 275); prohibiting the driving or conveying of foreign cattle into the state between certain dates (Railroad Co. v. Husen, 95 U.S. 465 ); taxing persons from other states engaged in selling or soliciting the sale of liquors, to be shipped into the state from places without it, without imposing a tax upon similar agents for manufacturers within the state (Walling v. Michigan, 116 U.S. 446 , 6 Sup. Ct. 454; Welton v. Missouri, 91 U.S. 275 ); statutes requiring inspection, before slaughtering, of cattle, sheep, and swine designed for slaughter for human food, so far as they apply to foreign meats (Minnesota v. Barber, 136 U.S. 313 , 10 Sup. Ct. 862); a similar statute prohibiting the sale of meat from animals slaughtered 100 miles or more from the place at which it was offered for sale, unless previously inspected by local inspectors (Brimmer v. Rebman, 138 U.S. 78 , 11 Sup. Ct. 213); and, finally, to statutes requiring a license, under onerous conditions, from the agents of foreign express companies (Crutcher v. Kentucky, 141 U.S. 47 , 11 Sup. Ct. 851).
These cases, however, do not infringe upon the general principle, so frequently declared, that, where the police power is invoked in good faith for the prohibition of a practice which the legislature has declared to be detrimental to the public interests, it will be sustained, wherever it can be done without the impairment of vested rights. Notwithstanding these [161 U.S. 677, 701] cases, the general rule holds good that whatever is contrary to public policy or inimical to the public interests is subject to the police power of the state, and within legislative control; and in the exertion of such power the legislature is vested with a large discretion, which, if exercised bona fide for the protection of the public, is beyond the reach of judicial inquiry.
5. But little need be said in answer to the final contention of the plaintiff in error, that the assumption of a right to forbid the consolidation of parallel and competing lines is an interference with the power of congress over interstate commerce. The same remark may be made with respect to all police regulations of interstate railways. All such regulations interfere indirectly, more or less, with commerce between the states, in the fact that they impose a burden upon the instruments of such commerce, and add something to the cost of transportation, by the expense incurred in conforming to such regulations. These are, however, like the taxes imposed upon railways and their rolling stock, which are more or less, according to the policy of the state within which the roads are operated, but are still within the competency of the legislature to impose. It is otherwise, however, with respect to taxes upon their franchises and receipts from interstate commerce, which are teated as a direct burden. There are certain intimations in some of our opinions which might, perhaps, lead to an inference that the police power cannot be exercised over a subject confined exclusively to congress by the federal constitution. But, while this is true with respect to the commerce itself, it is not true wit respect to the instruments of such commerce.
It has never been supposed that the dominant power of congress over interstate commerce took from the states the power of legislation with respect to the instruments of such commerce, so far as the legislation was within its ordinary police powers. Nearly all the railways in the country have been constructed under state authority, and it cannot be supposed that they intended to obandon their power over them as soon as they were finished. The power to construct them involves necessarily the power to impose such regulations upon their operation as a sound regard for the interests of the public may seem to render desirable. In the division of authority with respect to interstate railways, congress reserves to itself the superior right to control their commerce, and forbid interference therewith; while to the states remains the power to create and to regulate the instruments of such commerce, so far as necessary to the conservation of the public interests.
If it be assumed that the states have no right to forbid the consolidation of competing lines, because the whole subject is within the control of congress, it would necessarily follow that congress would have the power to authorize such consolidation in defiance of state legislation,- a proposition which only needs to be stated to demonstrate its unsoundness. As we have already said, the power of one railway corporation to purchase the stock and franchises of another must be conferred by express language to that effect in the charter; and hence, if the charter of the L. & N. Co. had been silent upon that point, it will be conceded that it would have no power to make the proposed purchase in this case. As the power [161 U.S. 677, 703] to purchase, then, is derivable from the state, the state may accompany it with such limitations as it may choose to impose. It results, then, from the argument of the appellant, that, if there by any interference with interstate commerce, it is in imposing limitations upon the exercise of a right which did not previously exist; and hence, if the state permits such purchase or consolidation, it is bound to extend the authority to every possible case, or expose itself to the charge of interfering with commerce. This proposition is obviously untenable.
While the constitutional power of the state in this particular has never been formally passed upon by this court, the power of state legislatures to impose this restriction upon the general authority to consolidate has been recognized in a number of cases. Railroad Co. v. Maryland, 21 Wall. 456, 470; Shields v. Ohio, 95 U.S. 319 ; Wallace v. Loomis, 97 U.S. 146 , 154; New Buffalo v. Iron Co., 105 U.S. 73 ; Leavenworth Co. Com'rs v. Chicago, R. I. & P. Ry. Co., 134 U.S. 688, 699 , 10 S. Sup. Ct. 708; Livingston Co. v. First Nat. Bank of Portsmouth, 128 U.S. 102 , 9 Sup. Ct. 18; Keokuk & W. R. Co. v. Missouri, 152 U.S. 301 , 14 Sup. Ct. 592; Ashely v. Ryan, 153 U.S. 436 , 14 Sup. Ct. 865. In the last case t was broadly held that a state, in permitting railway companies to consolidate, might impose such conditions as it deemed proper, and that the acceptance of the franchise implied a submission to the conditions, without which it could not have been obtained.
The power to forbid such purchase or consolidation with competing lines has been directly upheld in a large number of cases in the state courts, in some of which cases a violation of the commerce clause was suggested, and in others it was not. Hafer v. Railraod Co., 29 Wkly. Law Bull. 68; State v. Atchison & N. R. Co., 24 Neb. 143, 38 N. W. 43; Gulf, C . & S. F. Ry. Co. v. State, 72 Tex. 404, 10 S. W. 81; Railway Co. v. Rushing, 69 Tex. 306, 6 S. W. 834; Pennsylvania R. Co. v. Com. (Pa. Sup.) 7 Atl. 368; Montgomery's gomery's Appeal, 136 Pa. St. 96, 20 Atl. 399; Courrier v. Railroad Co., 48 N. H. 325; Texas & P. Ry. Co. v. Southern Pac. Ry. Co., 41 La. Ann. 970, 6 South. 888. See, also, langdon v. Branch, 37 Fed. 449; Hamilton v. [161 U.S. 677, 704] Railway Co., 49 Fed. 412; Clarke v. Railroad Co., 50 Fed. 338; Kimball v. Railroad Co., 46 Fed. 888.
(1) That a general right to purchase or consolidate with other roads was never conferred upon the L. & N. Co.
(2) That the Chespaeake Co. was never vested with the power to consolidate its capittal stock, franchises, or property with that of any other road owning a parallel or competing line.
(3) That, conceding that the requisite power existed in both the above companies, section 201 of the constitution of 1891 was a legitimate exercise of the police power of the state, and forbade such consolidation, at least so far as such power remained unexecuted.
The decree of the court of appeals of Kentucky is therefore affirmed.
Mr. Justice BREWER and Mr. Justice WHITE concurred in the result.

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