Court Opinion

ID: 9417413
Source: CourtListenerOpinion
Date Created: 2023-08-02 20:14:40.293339+00
Date Added: 2024-06-11T17:20:40.900306
License: Public Domain

Mr. Justice Field,
dissenting.*
I concur with Mr. Justice Harlan, that the act of Mississippi impairs the obligation of the contract contained in the charter originaily granted to the Mobile and Ohio Railroad Company *343by Alabama, and soon afterwards adopted by Mississippi. At that time it was a matter of great public interest to have railway communication between the Gulf of Mexico and the Ohio River, passing through Alabama, Mississippi, Tennessee, and Kentucky, and to secure it these States, by legislative' acts passed in February, 1848, incorporated the company, to construct, equip, and operate a railroad from Mobile, in Alabama, to a point opposite Cairo, in Illinois, at the junction of the Mississippi and Ohio Rivers. The road was to run, as thus seen, many hundred miles, part of which was in a country sparsely settled and in some places covered by almost irreclaimable swamps. It would require several years and the expenditure of many millions for its construction. The return for the heavy investment was to be in the distant future when the country should become more densely populated, and its resources better developed. It was a difficult matter to secure the necessary capital for an enterprise so costly in its character, so remote in its completion, and so uncertain in its returns. To effect this the several acts of incorporation authorized the president and directors of the company to adopt and establish such a tariff of charges for the transportation of persons and property as they might think proper, and to alter and change the same at pleasure. The bill alleges — and the allegation must be taken as true on the demurrer — that it was also understood by all parties, that when the road was completed it should be managed by officers selected by the stockholders; and adds that this right of selecting its officers and of charging and receiving what it should fix as its tariff, was not only a material part of the contract, but was the sole inducement or consideration upon which it was entered into by the company.
Certainly no one will deny that the right to adopt a rate of charges, subject, as such rate always is, to the condition that they shall be reasonable, was of vital importance to the company. Without that concession no one acquainted with the difficulties, expenses, and hazards of the projected enterprise, can believe that it would have been undertaken. It was certainly the expectation of the constructors of the road that *344they should be allowed to receive compensation having some relation to its cost. But the act of Mississippi allows only such compensation as parties appointed by the legislature, not interested in the property, nor required to possess any knowledge of the ‘ intricacies and difficulties of the business, shall determine to be a fair return on the value of the road and its appurtenances, though that may be much less than the original cost. Within the last few years, such have been the improvements in machinery, and such the decline in the cost of materials, that it is probably less expensive by one-third to. build and equip the road now than it was when the constructors completed it. Does anybody believe that they would have undertaken the work or proceeded with it, had they been informed that, notwithstanding their vast outlays, they should only be allowed, when it was finished, to receive a fair return upon its value, however much less than cost that might be ?
Under the charter the company con Id make such reasonable discriminations in its charges dependent upon the amount of business done, the character of the material transported, the 'existence of competitive lines or points, as its interest, might suggest, and which, to some extent, are indispensable to the successful management of the business of every railway company. Differences in the bulk-of property of the same weight, differences in value and in liability to breakage or decay, exact different degrees of care and speed in its transportation, and consequently require and justify different charges. And- all 'experience shows that, where competition by water or otherwise exists, variations in charges must be made from time to time to secure any portion of the business. These considerations must have had their influence with the stockholders when they accepted the charter and undertook the' construction of the road. The act of Mississippi, which the court says is the exercise of a lawful right to interfere with the affairs of the company, never relinquished nor qualified by any stipulation, declares that no discrimination shall be made in the charges of the company in any case. Its language is, that “ any person or corporation engaged in transporting passengers or freight over any railroad in this State, . . . who for his or its *345advantage, or for the advantage of any connecting line, or for any person or locality, shall make any discrimination against any individual, locality, or corporation, shall be guilty of extortion.” And in such cases the injured party can recover double the amount of damages sustained by him, and the offending1" party is declared to be guilty of misdemeanor and subject t6 a fine from ten to five hundred dollars. The harshness and impolicy of such legislation are -well shown by illustrations mentioned by counsel. If, for instance, where its .road touches a navigable stream, the company charges less per pound per mile for transportation to a distant point which can be reached by water, than it does to an inland station, it makes a discrimination against the latter station, and is guilty of extortion, .although the transportation would otherwise not be given to the company: If it charges more per po,und per mile for local than through freights, it makes a discrimination and may be punished for extortion. If it charges more per pound per mile for siiks than for cotton goods, or for gold bullion than for cast iron, or for tea than for coal, it is guilty of a like discrimination- and extortion. If it attempts to- encourage the cultivation of fruits, or the manufacture of cotton, woolen, or silken fabrics, or any other industry along its line of road by a reduction of rates until the business is established, it makes a discrimination, and if higher rates are charged to others the exaction of the difference is to them extortion. As Avell said by counsel, it makes no- difference whether the discrimination be founded on value, volume; distance carried, return haul, competition, regularity of shipment, or Avhether the article transported^' is perishable or not, it is prohibited, and if made is extortion; and thus, as he Avell observes, the act of Mississippi pays no attention to the common sense of the Avorld, to the laws of commerce, or to universal custom. Reductions of rates made in the interests of charity and benevolence, for the poor, sick, or infirm, if not also extended to others, Avould under it be criminal. Indeed, under the Iuav no cause can exist Avhich would justify a/riy discrimination.
I am aware that this court has held that, unless restrained by expressOontract, the legislature of a State has the right to *346prescribe a maximum for charges for transportation of persons and freight over railways within her limits; but it has not been generally supposed that different rates, under certain circumstances, may not be made within the maximum in the interest both of the company and of the public. And the right itself must necessarily be subject to the qualification, that the prescribed maximum shall at least equal the cost of the service required.
Again, the right of the company to appoint all necessary officers, agents, or servants would seem to be essential to secure competent and efficient men for the successful management of its business. New individuals or companies would undertake an enterprise requiring skill, experience, and large expenditures, if those who were to conduct it were not to be selected and controlled by them, but by parties appointed, perhaps, under political influences, and possibly without the requisite knowledge and experience. The efficiency and fidelity of employees would be better assured by leaving their appointment to those interested in the judicious management of the business of the company. Indeed, their usefulness and fidelity would seldom be secured in any other way. No one, therefore, can believe that the original stockholders would have accepted the charter and undertaken the work, if this right of appointing those who were to carry out and .manage it when completed was to be withdrawn from them. The act of 'Mississippi is'SO plain an impairment of this essential right, that I should not have supposed there could be any question on the point, did I not find that a majority of my associates are of opinion that it is an entirely constitutional proceeding on the part of the legislature, in no wise interfering with the contract of the company.
I have no doubt that commissioners may, for many purposes, be appointed by the legislature; but I am not prepared to say that the direction and control of the business of the company can, unless a cause of forfeiture or repeal of its charter exists, be taken from it and confided to them, and more than its business can be changed from transportation to manufacturing or banking. The right to elect officers to direct and control its affairs, and to pursue the same kind of business for n hich it was *347formed, must be maintained in any regulations prescribed for its government, or we must admit that the power of the legislature over the corporation is, in spite of constitutional limitations, as absolute as that of the Parliament of Great Britain. Indeed, the argument which supports the statute of Mississippi seems to proceed upon the ground that such is the legitimate outcome of the decisions of - this court with respect to the control which the legislature may exercise over such corporations, irrespective of any stipulation in their charters. If such be the result of the decisions, it is important that it should be known, in order that parties interested-in railway property may see that their protection against unreasonable and vindictive measures is not by appeal to the courts, but by efforts to secure wise and intelligent action from the legislature.
Mr. Justice Blatchford did not sit in this case or take any part in its decision.

This dissent applies also to the opinion and judgment of the court in Stone v. Illinois Central Railroad Co., post, 347.