Court Opinion

ID: 6249239
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:09:26.636532+00
Date Added: 2024-06-11T08:59:22.690772
License: Public Domain

Mr. Justice Stewart,
dissenting :
In expressing my dissent from the conclusion reached by the majority of the court, I shall not attempt any discussion of the very serious and important question which was given such prominence on the argument of the case, namely, whether a corporation having by the terms of its charter the right to *130fix and determine within certain defined limits its charges for transportation, the charter containing no provision for its repeal, alteration or amendment, can be required by legislative enactment to observe a rate lower than the maximum charge allowed by the charter. I avoid the question for the reason that in my opinion it is in nowise involved in the present case. ISTor do I think it necessary to attempt a vindication of the right generally of the legislature to regulate the charges of railroad companies for transportation. Whatever difference of opinion there may be as to the policy of such legislation, there can be none as to the power of the legislature in this regard, when exercised within constitutional limitations. If anything can be regarded as settled by multiplied uniform decisions, both federal and state, this power ought to stand clear of impeachment. I shall assume it. The contention of the plaintiff in the court below, and repeated here, is that the particular enactment, the subject of present inquiry, the act of April 5, 1907, entitled “ An act to regulate the maximum rate and minimum rate to be charged for transportation of passengers by railway companies,” etc., transgresses constitutional limitations so far as it is made to apply to the plaintiff, in that it violates a contract between the state and the corporation, by which the right was granted to the latter to charge, at the discretion of its president and board of directors, as much as three and one-half cents per mile for each passenger carried ; and again, in that the rate fixed by the act for such transportation would be unremunerative to the company, with the result that to compel its observance would in effect be a taking of the company’s property without making just compensation. These are the questions, and the only questions, involved in the case. I shall consider them briefly.
That a charter constitutes a contract between a state and the corporation erected thereunder is no longer an open question, and it may be conceded, for present purposes, that if the charter of this company, granted in 1846, contains no reservation to the state of the right to alter or amend it, it is such a contract as is protected by the constitution against legislative impairment. But I am of opinion that no such contract has been shown in this case. The act of April 13, 1846, which it is insisted is the plaintiff company’s charter, is but a part of *131that charter. Before the conditions on which the right of the parties named in the act to become incorporate depended could have been complied with, indeed, on the very same day the act was approved, a supplement thereto was likewise approved. Upon the argument of the case this supplementary act was called to the attention of counsel, but for some unexplained reason it was passed over as of no importance in the inquiry. The fact that counsel chose to ignore it does not relieve us from the duty of considering it, except as we concur in the finding by the court below to the effect that the prescribed rate is less than compensatory. Holding to the view that such finding is without warrant, there can be no proper determination of the case except as it is considered. Its consideration is thus forced upon us. I cannot but regard the supplement as essential a part of the charter as the original act. When it was passed the corporation had no existence; the original act did not create it, but merely indicated a mode or manner by which it might thereafter be created. When subsequently letters patent were issued creating the corporation, the acceptance of these letters was the voluntary subjection by the corporation of itself to the provisions of both acts. The corporation had no right of election as between them ; both together constituted the law of its organization. It was under no contract obligation to accept the letters patent, was at perfect liberty to refuse them, but, having accepted them, it must be held to have accepted them with full knowledge of and acquiescence in whatever restrictive legislation then existed. By this supplement the right of amendment and alteration is reserved in unmistakable language. It provides : “ That nothing in the act to which this is a supplement can be so construed as in anywise to impair the right of the legislature to pass such additional laws as may be deemed expedient in furtherance of the objects contemplated by said act, and for the better enforcement of the provisions thereof.” How can it be asserted in the face of this distinct and unqualified reservation of power that the act of April 5, 1907, violates the terms of the contract between the state and the corporation ? As I have already pointed out, when the supplement became a law the corporation did not exist. If it be said that the contract was with the parties named in the act for the benefit of the corporation *132thereafter to succeed, the answer to that is, that before their assent or acceptance could have been expressed in anyway, before they did anything under the act, or paid a dollar on the faith of it, the supplement was in force. Not only so, but a reading of the act makes it very clear that the act committed the state to nothing except as the preliminary conditions prescribed were complied with. Until these conditions were met no contract relation could arise ; until then the act was nothing more than an offer to incorporate on certain conditions which the parties named could accept or reject as they pleased. Certainly, in a dispute between individuals no contract could be inferred except as mutual agreement was shown ; a proposition made by one to another is wholly within the control of the one making it, for withdrawal or amendment, until the moment of its acceptance by the other. Why should not the same rule apply where the effort is to hold the state bound by a contract ? The construction I contend for does no injustice either to the corporation or the parties named in the act. The latter entered upon the woi’k of securing subscriptions of stock as required, knowing that the supplement had passed; and every individual subscriber is held to knowledge of the same fact.
With quite as little reason can it be argued that the reservation of power as expressed in the supplement is not ample to warrant the act of April 5, 1907. The power reserved is the power to pass such additional laws as may be deemed expedient in furtherance of the objects contemplated by the act.. Can there be any question as to what these objects were? It will not be contended that the object of the act was to confer benefit or advantage on the corporation. That it would derive' profit was contemplated of course; but this was an inducement, not to the passage of the act, but to enlist the corporation in the work of accomplishing the objects the legislature had in view. These objects were purely of a public character, the building of a great highway across the state for the advancement of the interests of the state in manifold ways, not the least of these being the rapid and convenient transportation of persons and goods at reasonable cost. To secure these ends to the general public for all time, the legislature reserved to .itself the power to pass such additional laws as might there*133after be required. The act of April 5, 1907, is a legislative conclusion, which' we have no right to disturb, that in order to secure to the public transportation at reasonable cost, an additional law was required. The act itself is clearly within the scope of the reservation. This course of argument may not be as convincing to others as to myself; but if it be enough to raise a doubt as to the correctness of the plaintiff’s contention, the doubt is to be resolved in favor of the state, not against it. This rule will not be questioned.
I am unable to see in the evidence any sufficient support for the finding of the court below with respect to the other branch of plaintiff’s contention. In an issue such as this, the burden of proving that the maximum rate fixed by the act would not yield what the law regards as just compensation for the service rendered, rests upon the plaintiff; and this burden is not discharged except as the evidence adduced to prove the fact alleged is strong enough to support a judicial determination in favor of the plaintiff, not on the overcoming of an adverse presumption, nor yet on a preponderance of proof, but on the ground that the facts alleged have been established beyond reasonable doubt. I do not state it too strongly, for upon this one'fact rests this contention. If the fact be as averred by the plaintiff, the unconstitutionality of the act follows necessarily ; and, therefore, it is that the proof required to establish the fact must measure up to-this high standard before it can. avail. Speaking of the power and duty of the court to declare a law void when it violates the constitution, Tilghmak, O. J., in Bank v. Smith, 3 S. & R. 63, says, “It is a point on which I am well satisfied; but at the same time it is certain that it is a power of high responsibility, and not to be exercised but in cases free from doubt.”
In Sharpless v. City of Philadelphia, 21 Pa. 117, Black, C. J., uses this language, “There is another rule which must govern in cases like this; namely, that we can declare an act of assembly void, only when it violates the constitution clearly, palpably,plainly, and in such manner as to leave no doubt, or hesitation on our minds.” The italics in neither citation are mine.
In Railroad Company v. Casey, 26 Pa. 287, the same eminent judge says: “ The party who wishes us to pronounce a *134law unconstitutional takes upon himself the burden of proving, beyond a reasonable doubt, that it is so.”
In Penna. R. R. Co. v. Riblet, 66 Pa. 164, Sharswood, J., says : “ Nothing but a clear violation of the constitution — a clear usurpation of power prohibited — will justify the judicial department in pronouncing an act of the legislative department unconstitutional and void.”
But why multiply authorities in support of a rule so long established and universally allowed ? I would not have burdened this opinion even to the extent of the above citations, but to put in stronger light the impotence and insufficiency of the finding of fact by the court below to sustain the plaintiff’s contention. Written across the very face of the court’s finding is an admission that it is based, not on facts ascertained, but upon a mere probability. I quote the finding : “ 2. Since the reduction to the rate of two cents per mile fixed by the act of April 5, 1907, of all fares now established on a higher basis would probably have the effect of reducing the profits of the plaintiff from the interstate passenger business to a sum equivalent to less than two per cent on its investment in the facilities necessary for carrying that business on; and since a return so small is not fair remuneration for the use and risk of its property: Brymer v. Butler Water Co., 179 Pa. 231, the regulation attempted by the Legislature in that Act must, so far as it relates to the plaintiff, and for so long as the present conditions continue, be adjudged to be unreasonable.”
To make it absolutely conclusive that the court intended that it should be so understood, I quote from the discussion leading up to the finding above : “ In our opinion, thé approximation and probabilities worked out upon the broad foundation of established facts by men of experience and sound judgment, testifying under oath, may properly be considered a safe ground on which to base judicial action.” Not only was the high power of the court to declare an act of the legislature void, here exercised to this end on a mere probability that it violated the constitution, but even this probability admittedly is not an inference derived from facts judicially determined, but from facts which witnesses in the case say they determined for themselves, by methods of investigation which they themselves approved. How indifferent this ruling is to the *135rights of a co-ordinate branch of government, contrasted with the jealous regard for such rights shown in the cases I have cited, and what a departure it is from those settled principles governing judicial determination in questions of this character universally recognized, need not be here remarked upon, except to say, that receiving the sanction of this court the case will establish a precedent fraught with extreme danger. Others may see their way clear to sustain this finding by the court and the nullifying decree based thereon, but for myself I cannot. An examination of the evidence in the case will show that it but feebly supports the finding even as to the probability. To me it is not convincing in any degree, for the reason that the calculation by which it is sought to establish the probability is based, not on ascertained facts, but upon arbitrary assumptions and apportionments, the fairness and accuracy of which cannot in the nature of things be established with any degree of certainty. A common capital has supplied common facilities for the transportation of passengers and freight. How can it be determined, with any degree of exactness, how much of that capital is invested for the carriage of passengers and how much for the carriage of freight ? Both are carried on the same roadbed, over the same bridges, the same rails, and in many cases are discharged at the same stations. How can there be any apportionment of expenses, for service, insurance, taxes, and a dozen others things which have been met out of the common fund, except an arbitrary one to suit the purposes and convenience of the company in connection with its accounts ? Any calculation by such method must start with and proceed on the assumption of facts which, as I have said, cannot in the nature of things be established. If it be said that the plaintiff is shut up to such method of proving the fact it complains of, and that unless it be allowed to show it in this way, it is helpless against legislative injustice, a sufficient answer would be — show this to be so, and the company will at least be in better position to insist upon the method adopted. I think it quite evident that it is not so. The question whether a given passenger rate will yield a compensatory return for the particular service rendered, may be curious and interesting, but the fact, however it be, can be of no practical value in determining the larger question of whether the state is con*136fiscating the company’s property by compelling it to observe such rates. If the rate be less than compensatory in itself, yet if the entire net income of the company derived from both branches of its business in the operation of its road, is sufficient to yield to the company a reasonably fair return on its capital, is the company in any position to claim that injustice is being done it ? Let us see — If the whole income derived from both branches of the company’s business yields a compensatory retürn on the whole capital, and one branch be shown to have been conducted at the loss, it would seem to follow necessarily that in conducting the other branch, the company had exacted from the public rates which were more than compensatory, and, therefore, unreasonable and unjust. If the fact be so — I do not say that it is — then the plaintiff company is here with one outstretched hand appealing to a court of equity to protect it against legislative injustice, while with the other it is working injustice like unto that of which it is complaining, against the people whose servant the legislature is. If it be not so, it is within the power of the company, at no inconvenience to itself, and by the simplest process, to acquit itself of all suspicion in this regard. Were a court of equity, dealing only with conscionable demands, to insist that the company at least make a reasonable effort to do so, would it be requiring too much ? Certainly not; it is the judicial conscience that is to be satisfied before the relief asked for can be given. I have said that it was in the power of the company to demonstrate, if it chose to do so, that the prescribed passenger rate is not compensatory, if indeed such be the fact. Let us assume the freight rates of the company to be compensatory and nothing more — the only assumption that is required to be made, and the plaintiff will certainly not insist that it is an unwarranted one. Let the total net income from both sources of revenue for a given period, be reduced by whatever sum will represent the difference between the net passenger income on the basis of the company’s rates and the rate prescribed by the act. If the result be a reduction of the total net income below what would be compensatory to the plaintiff, it wül show unmistakably that the fault is in the prescribed rate. If the working hypothesis employed for this solution be established as the fact, namely, that the freight *137rates were simply compensatory and nothing more, the plaintiff will have made out a case upon which no court of equity would turn its back. Until this is done, it would be the extremest indulgence to allow that the plaintiff’s evidence establishes even a case of reasonable probability.
It is impossible to avoid these necessary conclusions except as we apply to the case the doctrine asserted in the majority opinion, and which, I venture to say, is here for the first time advanced, namely, that legislation, having for its purpose the regulation of corporations, may reach the point of injustice, within the constitutional intendment, and, therefore, the point where there may be- judicial interference, short of actual confiscation of the corporate property or corporate rights. The position here taken is to my mind wholly untenable. By express constitutional provision the right is conferred upon the general assembly to alter, revoke or annul any charter of incorporation whenever, in their opinion, it may be injurious to the citizens of the commonwealth. The power here given subjects every corporation to legislative regulation and control, even to extinguishment, and the legislature is made the sole judge as to when occasion arises for its exercise. The provision that the power is to be so exercised that no injustice shall be done the corporators, in no way qualifies the right of the legislature to determine for itself when and to what extent', in any given case, it shall exercise the power. The injustice the constitutional provision avoids, is confiscation, — the forfeiture of the property and property rights of the corporation to the public without due compensation ; it contemplates something that can be judicially determined by settled principles, and measured by established legal standards, with a view to reimbursement or indemnity. Under the provision referred to, the power of the legislature to pass such' legislation as it may deem necessary to protect the people of the commonwealth from corporate oppression, can never become a judicial question where provision is made for full compensation for any injury that may result. The position taken in the majority opinion is away in advance of anything asserted by the plaintiff.. Its contention, upon the argument of the case, was that the act of April 5, 1907, was confiscatory, in that it would require the company, without indemnity from the state, to ren*138der a public service at less than compensatory rates. This contention gave it a standing in court; on the bare contention that the legislation was unjust to it in any other sense, it could have none. As I have tried to show, its proof failed to make good its contention, and it is, therefore, not entitled to the relief prayed for.
But this opinion has grown beyond the limits I intended it to have. My purpose was simply to indicate the grounds on which I would sustain this appeal, and the reasons therefor. Beyond these I have not gone. For the passage of the law in question we have no responsibility and I express no opinion in regard to its policy, or the wisdom of its provisions. I recognize the duty resting on the court in every case where the power of the legislature to enact a law is called in question, to maintain the supremacy of the constitution, and declare void the act of assembly that violates it. But this high power invested in the court, as has been said, is attended with high responsibility. It is to be exercised only when the legislation transgresses an expressed constitutional restriction, or one necessarily implied, “ palpably, plainly, and in such maimer as to leave no doubt or hesitation on our minds.”
Aside from the narrow held from which legislative power is excluded, there is a vast domain in which legislative discretion is supreme, subject to no review except the repealing power which abides in the people. Into this domain we may not enter with our nullifying decrees. Any invasion of it by us would be nothing more or less than an attempt to subject legislative discretion to arbitrary judicial power.
For the reasons given I would sustain this appeal.