Court Opinion

ID: 7970058
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:19.682039+00
Date Added: 2024-06-11T16:34:44.973755
License: Public Domain

MITCHELL, J.
I concur in the result arrived at in the foregoing opinion, and in most of the grounds upon which it is based; but, in view of the importance of the case, I wish to emphasize a few principles which I think should govern this class of cases in the courts. I will do this in the form of a statement of certain propositions; without entering into any extended argument in their support:
1. It must noiy be accepted as the settled law that, when rates of charges by railway companies have been fixed by the legislature or a commission, the determination of the question whether such rates are “reasonable” or “unreasonable” is a judicial function. But this is so, not because the fixing of rates is a judicial function (for all the authorities agree that it is a legislative one), but solely by virtue of the constitutional guaranty that no one shall be de*410prived of his property without due process of law. Therefore the only function of the courts is to determine whether the rates fixed violate this constitutional principle.
Courts should be very slow to interfere with the deliberate judgment of the legislature or a legislative commission in the exercise of what is confessedly a legislative or administrative function. To warrant such interference, it should clearly appear that the rates fixed are so grossly inadequate as to be confiscatory, and hence in violation of the constitution. It is not enough to justify a court in holding a .rate “unreasonable,” and hence unconstitutional, that, if it was its province to fix rates, it would, in its judgment, have fixed them somewhat higher. Any such doctrine would result, in effect, in transferring the power of fixing rates from the legislature to the courts, and making it a judicial, and not a legislative, function. When there is room for a reasonable difference of opinion, in the exercise of an honest and intelligent judgment, as to the reasonableness of a rate, the courts have no right to set up their judgment against that of the legislature or of a legislative commission. In my opinion, it is only when a rate is manifestly so grossly inadequate that it could not have been fixed in the exercise of an honest and intelligent judgment that the courts have any right to declare it to be confiscatory. This seems to be substantially the doctrine suggested in Spring v. Schottler, 110 U. S. 347-354, 4 Sup. Ct. 48, which, so far as I can discover, is the first case in which that court sugested any modification or limitation of the doctrine of the so-called “Granger Cases.” And I think it is thq doctrine which the courts must finally settle down on, unless they are prepared to assume the function of themselves fixing rates.
2. What is a reasonable rate is a most difficult question, and it is doubtful whether any single rule for determining it can be laid down that would be complete, and alike applicable to all cases. But as good a general rule as I have found is that stated by counsel for the Northern Pacific Railway Company in this case, to wit:
“If a railroad is built and operated wisely and economically; if it is located where public need requires it, where there is business to justify its existence, and constructed so as to be fit and well adapted for'the business which it aims to accommodate&wkey;it should *411be entitled to return as good interest [on tbe cost of tbe reproduction of the road] as capital invested in the average of other lines of enterprise.” ■
It seems to me that it follows, as corollaries from this rule, that— First, the cost of reproduction must be estimated on a present cash basis, and that it can make no difference whether a road was originally built with cash capital paid in by the stockholders, or with borrowed money secured by mortgage on the property; and, second, a rate may be reasonable during times of general financial and business depression, when capital invested in all lines of enterprise is yielding a small return, which would be unreasonable in prosperous times, when capital invested in business enterprises is yielding a much larger return. There is no constitutional principle which guaranties the capital invested in railroads immunity from business vicissitudes to which capital invested in all other enterprises is subject. These propositions are fully discussed in the opinion. The courts should take notice of the general depression in business prevailing in .1894.
3. Where capital (including labor) invested in the production of any article or commodity is comparatively unremunerative, yielding but a small return, a rate for the transportation of such article or ^commodity may be reasonable, although, if the carrier was required to do all -his business at rates fixed on a corresponding basis, such rates would be unreasonable, to the extent of being confiscatory. .This is but an enlarged application of a principle already suggested. It is a principle upon which railroads themselves act every day in fixing rates, recognizing as they do that rates are largely dependent upon competition among producérs or shippers. Of course, this proposition has its limitations, but it is unnecessary to discuss them here. The courts, I think, should take notice of the small profit in raising grain in Minnesota in and about 1894, owing to the •comparatively low prices then prevailing.
I will not go into any discussion of the evidence, or any analysis of the labyrinth of figures and estimates presented in the testimony. That has been very exhaustively, and, 'as I think, correctly, done by Justice CANTY. Applying the rules I have suggested to the evidence, I do not think any court would be justified in holding that • *412the railroad company has satisfactorily proved that the rates fixed by the commission for the transportation of grain are “unreasonable” ; that is, if enforced, they would be confiscatory.
Two propositions, however, are advanced in the foregoing opinion, to the entire correctness of which I do not care to commit myself. I refer to the propositions — First, that a railway company is entitled to a much less percentage on the value of its terminals than it is on the cost of reproducing the rest of its road; and, second, that, in determining wdiat are reasonable rates on the rest of a line or system of railway, a state has a right to reject from the calculation such portions of the line or system as are not self-supporting. While it is doubtless true that, rightly understood and rightly applied, there is at least an element of truth in both of these propositions, yet they open up such a vast and difficult field for discussion, and would, at best, be subject to so many limitations and qualifications, depending upon the facts and circumstances of each particular case, that I do not now wish either to affirm or deny the correctness of what is said on those points, especially as they are not discussed by counsel, and are not, in my judgment, necessary to the determination of the present case.