Court Opinion

ID: 6249237
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:09:26.623442+00
Date Added: 2024-06-11T08:59:22.685527
License: Public Domain

Mr. Justice Mestrezat,
dissenting :
The plaintiff and the defendant both regard this case as of vital importance, and it certainly goes without saying that the people of the commonwealth whose rights are involved in the contest fully concur with the parties to the litigation that the case is of great importance and of far reaching consequences. As the record discloses, the great and vital question involved in the case is whether the Pennsylvania Railroad Company is under and subject to the constitution of the commonwealth, as every citizen and every corporation is presumed to be, or whether that corporation is over and above the organic law of the state. The plaintiff in this action is the Pennsylvania Railroad Company and in the bill filed by it, it denies the right of the legislature to supervise its action in fixing the rate of compensation it shall receive for the transportation of passengers within the state. In pursuance of an almost unanimous demand of the people of the state, the legislature enacted, the law of 1907, regulating passenger rates of transportation, and the constitutionality of that law is the primal question involved in this litigation.
It will be observed, however, that the majority of the court while conceding generally the power of legislative supervision of rates of common carriers, declines to pass upon the question of the immunity of the plaintiff company .from such supervision, assigning as reasons therefor that the effect of the supplement to the original act was not argued and that the question becomes unimportant in this suit because of the view the majority takes of another question of secondary importance. With deference to the majority, I regard these reasons as wholly inadequate to justify such action, and especially so in view of the fact that there are now pending in the courts of common pleas of the state and awaiting the decision in this case other cases brought against other railroad companies *118with similar charters to restrain the enforcement of the act of 1907. The question is raised at the very threshold of the appeal by the third assignment of error wherein the appellant alleges that the trial court erred in holding that “ by its act of incorporation, April 13, 1846 (P. L. 312), the Pennsylvania Railroad Company received from the commonwealth the right to demand from its passengers such tolls or fares within certain maxima therein specified, as to its president and directors shall seem reasonable, with immunity from interference by any public authority with the rates that it may thus establish.” Roth parties, as the record discloses, regard the question as the most important in the cause and have discussed it at length. It is obvious that if such immunity exists under the charter, the question of reasonableness of the rate fixed by the act of 1907 does not arise and need not be decided. The very first important question, therefore, which confronts this court upon the record is whether the charter act of 1846 gives the plaintiff company immunity from rate legislation or supervision by the state, and I submit that the parties are entitled to an answer by this court, and that the reasons assigned for declining to decide it are entirely insufficient. It is of the utmost importance, both to the people of the common wealth and the plaintiff company, that the question be settled finally by this court and, having been raised by the pleadings and decided by the trial court, it should now be finally adjudicated by this court. The suggestion that counsel did not discuss a part of the charter is no ground for the court not determining the plaintiff’s rights under its charter. The oversight of the defendant’s counsel in this respect cannot defeat the right of the plaintiff or the defendant to have a decision of the vital question in the case. If, however, by reason of this fact, the majority of the court are not prepared to dispose of the question, then the proper course, and the one universally followed, is to order a reargument and direct the counsel to discuss the question. This is the well-established practice in this court, and uniformly adopted in such cases.
Lack of time compels me to state my conclusion on the important questions involved in the case and considered and decided by the court below without quoting from the pertinent authorities which, I think, amply sustain my views.
*119I would hold, contrary to the rulings of the trial court:
1. That the Act of April 13, 1846, ánd its supplement of the same date, P. L. 326, incorporating the plaintiff company, do not give it immunity from the supervision or regulation of rates by .the legislature. The power and authority under this act of assembly, claimed for the plaintiff company by its counsel, is stated by them as follows : “It will be ob-. served that the power conferred was not to establish and receive reasonable rates ; but to establish and receive such rates. ‘ as to the president and directors shall seem reasonable.’ The ascertainment of what were reasonable rates was thus committed to the governing body of the corporation by the legislature, and it necessarily resulted from this, it is submitted, that the legislature, itself, was deprived, by its own act, of any power ór right to itself to undertake to determine what, should be reasonable rates to be established from time to time. Such power from the very nature of things could not exist at one and the same time in two bodies.”
I think this is an accurate statement of the plaintiff’s position, and it was sustained by the court below as to the plaintiff’s line between Harrisburg and Pittsburg. The extent and consequences of such a doctrine are apparent without any extended discussion. I agree that, in the first instance, the power to regulate rates, as suggested in the position of the plaintiff, can “ not exist at one and the same time in two bodies.” I do not, however, concur in the view that the company’s president and directors constitute a body which can control and regulate such rates without being amenable to the supervising power of the state to determine the reasonableness of the rates.
The supplement to the original act of the plaintiff company must be considered as an integrant part of the charter itself,- and it clearly shows that the charter is subject to legislative control. The supplement was- approved on the same day as the original act and hence became operative at the same time as the original act: Brown v. Barry, 3 Dall. 365; Blair v. Chicago, 201 U. S. 400. It is printed immediately after the original act in the pamphlet laws. It provides, inter alia. “That nothing in the act to which this is a supplement shall be so construed as, in anywise to impair the right of the legis*120lature 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.” The plaintiff company accepted this legislation as its charter, and its very language provides for legislative control and shows that such was the intention of the legislature. Every step taken and every act performed by the company have been in pursuance of both acts of assembly. The company, therefore, cannot invoke the original act as authority for exercising its corporate franchises, and deny the power of legislative supervision provided in the supplement, a constituent part of the charter.
But aside from the effect of the supplementary act upon the original act, I do not think the latter confers on the company an unlimited and unrestricted power to regulate passenger rates within the maximum rate named in its twenty-first section. If the president and directors of the company have the power to regulate rates for passenger transportation it is acquired solely through the charter from the state government. The company’s charter is its life, its only source of power, and what power is not clearly delegated therein it does not possess. Did the state by the original act of 1846 confer upon the company’s president and directors absolute and unqualified power, relieved of state supervision, to regulate the rates of passenger transportation, within the limits named in the twenty-first section of the act ? It is so claimed, as we have seen, and the state is now denied the right to interfere in any way whatever with any rate which the president and directors of the company may establish within the limits named in the act.
Immunity from rate regulation will not be presumed, and if a railroad company, a quasi public corporation, avers that it has such right, it must point to language in its charter which explicity and unmistakably confers the right. This principle is supported by reason, and is the doctrine announced in the decisions of the supreme court of the United States. The language employed in the charters of the companies in many of the cases in that court is very much stronger than the language used in the charter of the plaintiff company here, and yet immunity from supervision was denied. See Ruggles v. Illinois, 108 U. S. 526; Georgia Banking Co. v. Smith, 128 U. S. 174; Knoxville Water Co. v. Knoxville, 189 U. S. 434. *121The original act of 1846 authorizes the president and directors of the company to establish “ such rates of toll or other compensation for the use of the said road and of said motive power, and for the conveyance of passengers, the transportation of merchandise and commodities, and the cars or other vehicles containing the same, or otherwise passing over or on said railroad, as to the president and directors shall seem reasonable,” with a maximum rate for through passengers of three cents per mile and for way passengers of three and one-half cents per mile. It will be observed that there is no clear and explicit language in this.provision that shows an intention on the part of the state to deny itself the right to exercise its power of supervision over the rates established by the company. The discretionary power lodged with the president and directors is to establish reasonable rates within the maximum limit, and the plain inference is, in the absence of language declaring the contrary, that the state retains its inherent supervisory power to protect the public against arbitrary and unreasonable rates. We are not dealing with private parties to a contract, but with parties, one of which possesses sovereignty with the right to exercise it over quasi public corporations, unless that party clearly and explicitly disables itself from so doing by its contract. The presumption, as we have seen, is against the abdication of such power and in favor of its retention by the state. To delegate it to a corporation or to refuse to exercise it would be simply an abdication of sovereignty; and that is never presumed : Railroad Co. v. Hecht, 95 U. S. 168. The power to regulate rates is a power of government: Railroad Commission Cases, 116 U. S. 307, 325. The promotion of the public welfare is the purpose of government, and to accomplish the purpose the sovereignty of the state remains with the state itself. The supervision of transportation rates on a railroad is a question which involves the welfare, comfort and convenience of the public, and if these are to be safeguarded and secured, and unquestionably they should be, the power to do so is one of sovereignty and must be exercised by the commonwealth. A public corporation, like a railroad, being a creature of the commonwealth has rights conferred upon it by which it exercises a part of the power of the state under state supervision, and hence it is, that enjoying those rights, it is subject to the commonwealth to the *122extent that the state may control and regulate its affairs so far as the welfare of the public may demand. In the exercise of this authority by the commonwealth, the corporation is amply protected by constitutional provisions which will not permit its property or its corporate rights to be destroyed or invaded. Those provisions require that supervisory action must be taken by the state in a way that will do no injustice to the stockholders of the corporation. It is the imperative duty of the courts to see that the constitutional right of protection of property is as rigidly enforced in favor of a corporation as it is in the case of an individual, and a failure in either instance would be a grave dereliction of judicial duty. It is not to be assumed that any court in the commonwealth will neglect or refuse to perform this duty.
2. I believe the power to supervise rate charges of a quasi public corporation, like a railroad company, is a police power of the state, and that the legislature has no authority to abridge it or to delegate it to a corporation or to any other body. Section 3, article XYI, of the present constitution declares that “ the exercise of the police power of the state shall never be abridged, or so considered as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals or the general well-being of the state.” This section of the constitution is simply declaratory of the implied power of the state as it existed under all former constitutions of the commonwealth. Such power need not be reserved or declared in the written constitution of an American state, because it exists without such declaration. This principle is recognized both by the state and federal courts. See Com. v. Interstate Consolidated Street Railway Co., 187 Mass. 436 ; s. c., 207 U. S. 79, and cases cited in these opinions. The legislature of the state, therefore, had clearly the right to supervise or regulate the passenger traffic on the plaintiff company’s road under the police power inherent in the commonwealth. As we shall hereinafter see, the company, by its formal declaration, expressly made itself subject to the police power of the state.
3. I am clearly of opinion that in determining whether a rate for transportation is reasonable or not, all the revenues of the company should be considered, including receipts from *123freight, expressage, packages and all other sources. This principle is recognized in the adjudications of the Supreme Court of the United States, and by the decisions of the Interstate Commerce Commission : St. Louis & San Francisco Ry. Co. v. Gill, 156 U. S. 649 ; Smyth v. Ames, 169 U. S. 466 ; Board of Comm’rs v. Railway Co., 1 Interst. Com. Rep. 69; Brabham v. Atlantic Coast Line R. R. Co., 11 Interst. Com. Rep. 464. In ascertaining a reasonable rate for the transportation of passengers, the company has no right to segregate the passenger traffic and exclude the other sources of revenue. The railroad is an entity, its being is created by a charter granted by the commonwealth declaring it “ a public highway for the conveyance of passengers and the transportation of freight; ” it acts as a body, its tracks are all owned and used by the corporate entity, and its stockholders receive their dividends from the net proceeds of its entire traffic. Why, then, in ascertaining a reasonable rate for passenger traffic should the revenue from that traffic alone be considered ? The stockholders are the owners of the corporate franchises, as well as of the corporate property generally, and a fair income from the investment is what they are entitled to receive ; hence they have no right to compel the passenger traffic on their road to paj^ a rate of transportation which, when considered with the return from the freight and other traffic, would make an exorbitant or unfair rate to them on their investment. Their investment is in the corporate franchise and property, and the income from that investment necessarily comes from the freight as well as the passenger traffic, and, in determining what is a fair and reasonable return on their investment, it necessarily follows that the receipts or revenues from all sources should be considered. This view is strengthened by the fact that it is impossible to accurately determine what revenue the company receives from each of the several sources. The trackage, the stations, the offices and other property are owned, not by the freight department nor by the passenger department of the road, but by the company itself, and hence, in making a division of the receipts and expenditures, it is wholly impracticable to ascertain accurately and definitely the receipts from either of the several sources of revenue. As the net revenues from all sources go to the stockholders, constituting the return *124on their investment, and the property from which those revenues are derived is the property of the stockholders, the fair rate or recompense for the investment in that property belongs to the stockholders, and should be counted on the entire traffic.
4. The directors of the Pennsylvania Railroad Company passed the following resolution: “ That in order that the fact that this company is under and subject to the constitution of the commonwealth of Pennsylvania of 1874, adopted December 16, 1873, may be formally evidenced, this board does hereby unanimously declare that the Pennsylvania Railroad Company is under and subject to said constitution, and does hereby formally, on behalf of said company, accept all its provisions and particularly the provisions of the sixteenth and seventeenth articles thereof.” This declaration and acceptance of the company was filed on March 8, 1901, in the office of the secretary of the commonwealth.
Among the provisions of the constitution which the company accepted are the following :
Section 2 of article XVI: “ The general assembly shall not remit the forfeiture of the charter of any corporation now existing, or alter or amend the same, or pass any other general or special law for the benefit of such corporation, except upon the condition that such corporation shall thereafter hold its charter subject to the provisions of this constitution.”
Section 10 of article XVI: “ The general assembly shall have the power to alter, revoke or annul any charter or incorporation now existing, and revocable at the adoption of this constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to the citizens of this Commonwealth, in such manner, however, that no injustice shall be done to the corporators.”
Section 10 of article XVII: “ Xo railroad, canal or other transportation company, in existence at the time of the adoption of this article, shall have the benefit of any future legislation, by general or special daws, except on condition of complete acceptance of all provisions of this article.”
The language of the formal acceptance of the constitution by the Pennsylvania Railroad Company would seem to be sufficiently comprehensive to make the company subject to the entire instrument. It is said that a constitution is for the *125millions, and hence should be construed as they understand it. The acceptance declares that the company “ accept all of its provisions and particularly the provisions of the sixteenth and seventeenth articles thereof.” It is difficult to see how any part of the instrument is without this language; or if the language does not include every part of the constitution, how any acceptance could be drawn which would render a corporation subject to all the constitutional provisions. It is said, however, that section 10 of article XYI only authorizes the general assembly to alter, revoke or annul an existing charter revocable at the adoption of the constitution, or any charters that might thereafter be created, and that the charter of the plaintiff company was not revocable when the present constitution was adopted and hence its acceptance of the constitution gives no authority to the legislature to alter, revoke or annul its charter. But this is a very narrow view indeed of the effect of the plaintiff’s acceptance of the constitution. It would permit it to play fast and loose with the instrument which no court of equity, whose assistance the plaintiff now invokes, should tolerate in any corporation. It says broadly: “¥e accept every provision of the constitution,” but when the state proceeds to act upon its acceptance and enact legislation affecting it, it claims that it is not subject to a part of the instrument authorizing such legislation and asks a court of equity to annul the legislation. It is manifest, I think, that if the present contention of the corporation is correct, the action of the directors in accepting the constitution was taken in bad faith, and with an intention to reap the benefits of subjecting itself to the whole constitution while not rendering itself amenable to legislation affecting it adversely. The manifest intention of section 10 of article XYI is, upon the acceptance of the instrument by a corporation, to make the coi’poration subject to all its provisions in the same manner and to the same extent as though the incorporation had taken p]ace subsequent to the adoption of the constitution. The tenth section must be read in connection with the second section, wherein the legislature is prohibited from altering or amending the charter of an existing corporation or legislating for such corporation save upon the condition that the corporation should thereafter hold its charter subject to all the provisions of the constitution. A rail*126road company, existing at the adoption of the constitution, may secure the benefit of future legislation' as pointed out in section ten of article seventeen of the instrument, which provides: “No railroad .... company, in existence at the time of the adoption of this article, shall have the benefit of any future legislation by general or special laws, except on condition of complete acceptance of all the provisions of this article.” Here, as we have seen, if the language of acceptance, filed by the plaintiff company with the state department, is to have its usual and ordinary meaning, the company accepted specifically the provisions of the sixteenth and seventeenth articles and also “ all of its (constitution’s) provisions.” It will therefore be observed that the plaintiff company in order to invoke the protection of the present constitution and secure the benefit of any subsequent legislation was required to declare its complete acceptance of the seventeenth article. It went further, however, and accepted all the provisions of the constitution and specifically the sixteenth article, in section ten of which, the general assembly is authorized to alter, revoke .or annul any charter, then existing, revocable at the adoption of the constitution, or that might thereafter be granted.
5. The formal acceptance of the plaintiff company declares that “ the Pennsylvania Railroad Company is under and subject to said constitution, and .... accepts all its provisions.” The company, therefore, accepted section 3 of article XYI which declares that “the exercise of the police power of the state shall never be abridged, or so construed as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals or the general well-being of the state.” If our position, as stated above, is correct that the regulation of railroad rates is a police power, then it follows that the act of 1901, being the exercise of that power, is, if the rate fixed is reasonable, authorized by the company’s formal acceptance of the constitution.
There can be no injustice to the corporation by making it subject to the entire constitution, as the language of its acceptance declares it is. It will be oberved that the legislature can alter, annul or revoke the charter only when it is done “ in such manner, that no injustice shall be done to the corporators.” This gives ample protection to the corporation and *127its stockholders, while at the same time it makes the constitution of the commonwealth still the supreme law of the land. It leaves the property and the franchises of the corporation fully protected, and still continues sovereignty in the state, and in the state is where it belongs.
Without discussing the reasonableness of the rate fixed by the act of 1907, I think that, under the evidence in the case, the court below was in error in finding that two cents a mile is unreasonable. The company practically concedes that a two-cent rate is reasonable by selling a mileage book for $20.00 which entitles the passenger to travel on its road 1,000 miles, or at the rate of two cents per mile. It is settled law that the burden of showing the rate named in the act to be unreasonable or confiscatory was upon the company, but the burden was not met. The average of all passenger fares, now collected by the company, is 1.907 cents per mile or .093 cents less than the rate specified in the act of 1907. The commutation rate is 1.046 cents per mile, while one way tickets are sold at 2.406 cents per mile and a round trip ticket 2.109 cents per mile. It is clear, I think, that under the evidence in the case, considering only the revenue from the passenger traffic, that the rate as fixed by the act of 1907 is not unreasonable, much less' confiscatory.
I have not referred to the several legal questions raised in the record and ruled by the court below in favor of the defendant. The plaintiff has not appealed, and hence, there is nothing in the record authorizing us to consider those rulings.
The above are some of the reasons why I would reverse the decree of the court below.