[84] until such time as these questions *could be | tral Stock-Yard & Transit Co. 45 N. J. Eq. determined. Twice has this case been ar- 50, 6 L. R. A. 855, 17 Atl. 146. gued before us. We have had the benefit of able arguments and elaborate briefs of distinguished counsel. That the questions are difficult of solution no one reading the following statement will, we think, doubt.

In Budd v. New York it was not charged | 399, L. ed. p. 1024, Inters. Com. Rep. p. 570, or shown that the rates prescribed by the Sup. Ct. Rep. p. 1055): legislature were unreasonable, and the only question was the power of the legislature to interfere at all in the matter. The same is true of Brass v. North Dakota ex rel. Stoeser in which nothing was presented calling for any consideration of the test of reasonableness or of a limit to the legislative power.

As to those cases in which governmental regulation of charges was in respect to parties doing some public service the following is a résumé of the decisions. In Spring Valley Waterworks v. Schottler it was said (p. 354, L. ed. p. 176, Sup. Ct. Rep. p. 51): "What may be done if the municipal authorities do not exercise an honest judgment, or if they fix upon a price which is manifestly unreasonable, need not now be considered, for that proposition is not presented by this record. The objection here is not to any improper prices fixed by the officers, but to their power to fix prices at all."

In Railroad Commission Cases (p. 331, L. ed. p. 644, Sup. Ct. Rep. p. 345):

"From what has thus been said it is not to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and freights the state cannot require a railroad corporation to carry persons or property without reward; neither can it do that which in law amounts to a taking of private property for public use without just compensation or without due process of

law."

In Wabash, St. L. & P. R. Co. v. Illinois [87]nothing was said affecting the question of the extent of the power of the legislature. In Dow v. Beidelman the quotation heretofore made from the Railroad Commission Cases was quoted with approval. In Chicago, M. & St. P. R. Co. v. Minnesota the same passage was quoted, and it was added (p. 458, L. ed. p. 981, Inters. Com. Rep. p. 220, Sup. Ct. Rep. p. 467) :

"The equal protection of the laws which, by the 14th Amendment, no state can deny to the individual, forbids legislation, in whatever form it may be enacted, by which the property of one individual is, without compensation, wrested from him for the benefit of another, or of the public. This, as has been often observed, is a government of law, and not a government of men, and it must never be forgotten that under such a government, with its constitutional limitations and guaranties, the forms of law and the machinery of government, with all their reach and power, must in their actual workings stop on the hither side of the unnecessary and uncompensated taking or destruction of any private property legally acquired and legally held."

And again (p. 412, L. ed. p. 1028, Inters. Com. Rep. p. 514, Sup. Ct. Rep. p. 1059): "It is unnecessary to decide, and we do not wish to be understood as laying down as an absolute rule, that in every case a failure to produce some profit to those who have invested their money in the building of a road is conclusive that the tariff is unjust and unreasonable. And yet justice demands that everyone should receive some compensation for the use of his money *or[88] property, if it be possible without prejudice to the rights of others. There may be circumstances which would justify such a tariff; there may have been extravagance and a needless expenditure of money; there may be waste in the management of the road; enormous salaries, unjust discrimination as between individual shippers, resulting in general loss. The construction may have been at a time when material and labor were at the highest price, so that the actual cost far exceeds the present value; the road may have been unwisely built, in localities where there is no sufficient business to sustain a road. Doubtless, too, there are many other matters affecting the rights of the community in which the road is built, as well as the rights of those who have built the road.”

In St. Louis & S. F. R. Co. v. Gill is this language (p. 657, L. ed. p. 570, Sup. Ct. Rep. p. 487):

"If the company is deprived of the power of charging reasonable rates for the use of "This court has declared, in several cases, its property, and such deprivation takes that there is a remedy in the courts for replace in the absence of an investigation by lief against legislation establishing a tariff judicial machinery, it is deprived of the of rates which is so unreasonable as to praclawful use of its property, and thus, in sub-tically destroy the value of property of comstance and effect, of the property itself, panies engaged in the carrying business." without due process of law and in violation In Covington & L. Turnp. Road Co. v. of the Constitution of the United States; Sandford (p. 597, L. ed. p. 567, Sup. Ct. and in so far as it is thus deprived, while Rep. p. 205): other persons are permitted to receive reasonable profits upon their invested capital, the company is deprived of the equal protection of the laws."

In Chicago & G. T. R. Co. v. Wellman it was said (p. 344, L. ed. p. 179, Sup. Ct. Rep. p. 402):

"The legislature has power to fix rates, and the extent of judicial interference is protection against unreasonable rates."

In Reagan v. Farmers' Loan & T. Co. (p.

"The legislature has the authority in every case where its power has not been restrained by contract, to proceed upon the ground that the public may not rightfully be required to submit to unreasonable exactions for the use of a public highway established and maintained under legislative authority. If a corporation cannot maintain such a highway and earn dividends for stockholders, it is a misfortune for it and them which the Constitution does not re

quire to be remedied by imposing unjust|terest paid on money borrowed and reasonburdens upon the public. So that the right ably necessary to be used in constructing of the public to use the defendant's turn the same; the annual depreciation of the pike upon payment of such tolls as in view plant from natural causes resulting from its of the nature and value of the service ren- use; and a fair profit to the company over dered by the company are reasonable is an and above such charges for its services in element in the general inquiry whether the supplying the water to consumers, either by rates established by law are unjust and un- way of interest on the money it has expendreasonable. That inquiry also involves ed for the public use, or upon some other other considerations, such, for instance, as fair and equitable basis. Undoubtedly, all the reasonable cost of maintaining the road these matters ought to be taken into considin good condition for public use, and the eration, and such weight be given them, amount that may have been really and nec- when rates are being fixed, as under all the essarily invested in the enterprise. In circumstances will be just to the company [89] short, each *case must depend upon its spe- and to the public. The basis of calculation cial facts; and when a court, without as- suggested by the appellant is, however, desuming itself to prescribe rates, is required fective in not requiring the real value of to determine whether the rates prescribed the property and the fair value in themby the legislature for a corporation control- selves of the services rendered to be taken ling the public highway are, as an entirety, into consideration. What the company is so unjust as to destroy the value of its prop- entitled to demand, in order that it may erty for all the purposes for which it was have just compensation, is a fair return upacquired, its duty is to take into considera- on the reasonable value of the property at tion the interests both of the public and of the time it is being used for the public. the owner of the property, together with all The property may have cost more than it other circumstances that are fairly to be ought to have cost, and its outstanding considered in determining whether the leg bonds for money borrowed and which went islature has, under the guise of regulating into the plant may be in excess of the real rates, exceeded its constitutional authority, value of the property. So that it cannot and practically deprived the owner of prop- be said that the amount of such bonds should erty without due process of law." in every case control the question of rates, In Smyth v. Ames, after an elaborate dis- although it may be an element in the incussion of the question of rates and the pow-quiry as to what is, under all the circumer of the legislature in respect thereto, it stances considered, just both to the company was said (pp. 546, 547, L. ed. p. 849, Sup. and to the public." Ct. Rep. p. 434):

"We hold, however, that the basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under the particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that there may not be other matters to be regarded in estimating the value of the property. What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth."

In San Diego Land & Town Co. v. National City (p. 757, L. ed. p. 1161, Sup. Ct. Rep. p. 811):

"The contention of the appellant in the present case is that in ascertaining what are just rates the court should take into consideration the cost of its plant; the cost per [90] annum of operating *the plant, including in

And also affirming the limits of judicial interference with legislative action (p. 754, L. ed. p. 1160, Sup. Ct. Rep. p. 810):

"But it should also be remembered that the judiciary ought not to interfere with the collection of rates established under legislative sanction, unless they are so plainly and palpably unreasonable as to make their enforcement equivalent to the taking of property for public use without such compensation as under all the circumstances is just both to the owner and to the public; that is, judicial interference should never occur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property under the guise of regulations as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation[91] for private property taken for the public use."

Nothing was said in Chicago, M. & St. P. R. Co. v. Tompkins throwing any light upon the questions heretofore referred to.

As

In the light of these quotations, this may be affirmed to be the present scope of the decisions of this court in respect to the power of the legislature in regulating rates: to those individuals and corporations who have devoted their property to a use in which the public has an interest, although not engaged in a work of a confessedly public character, there has been no further ruling than that the state may prescribe and enforce reasonable charges. What shall be the test of reasonableness in those charges is absolutely undisclosed.

the inquiry suggested by their contention, it is enough for our present purpose to state in general the conclusions of the master and the court.

On the other hand, it is shown by the findings, approved by the court, that the prices charged in these stock yards are no higher, and in some respects lower, than those charged in any other stock yards in the country, and finding 37 is

As to parties engaged in performing a public service, while the power to regulate has been sustained, negatively the court has held that the legislature may not prescribe rates which if enforced would amount to a confiscation of property. But it has not held affirmatively that the legislature may enforce rates which stop only this side of confiscation, and leave the property in the hands and under the care of the owners without any remuneration for its use. It "The other stock yards heretofore enumerhas declared that the present value of the ated are operated generally in the same property is the basis by which the test of manner as those at Kansas City, and there reasonableness is to be determined, although is and was for a long time prior to March the actual cost is to be considered, and that 12, 1897, active and growing competition the value of the services rendered to each in- among their owners to attract and secure dividual is also to be considered. It has to each the shipment of live stock from comalso ruled that the determination of the leg-petitive territories. Kansas City is the islature is to be presumed to be just, and greatest stocker and feeder market in the must be upheld unless it clearly appears to world, and while Chicago exceeds it as a result in enforcing unreasonable and unjust general market, *yet, because of the expense [93] of transportation from Kansas City there, and the loss in weight by shrinkage during such transportation, the live stock shipped to and sold at Kansas City in 1896 realized for its owners more than $1,500,000 in excess of the amount which would have been realized if forwarded from Kansas City to and sold on the Chicago market."

rates.

In this case, as heretofore indicated, a volume of testimony has been taken, mainly upon the question of the cost and value of the stock yards, and the effect upon the income of the company by reason of the proposed reduction. This testimony was taken before a master, with instructions to report the cost of the stock yards, the present Now, in the light of these decisions and value of the property, the receipts and ex- facts, it is insisted that the same rule as penditures thereof, the manner of operation, to the limit of judicial interference must and such other matters as might be perti- apply in cases in which a public service is nent for a determination of the case. Stat distinctly intended and rendered and in ed in general terms, his findings were that those in which, without any intent of pubthe value of the property used for stock- lic service, the owners have placed their [92]yard purposes, including the value of cer- property in such a position that the public tain supplies of feed and materials which has an interest in its use. Obviously there were on hand December 31, 1896, is $5,388,- is a difference in the conditions of these 003.25; that the gross income realized by cases. In the one the owner has intentionthe stock-yards company during the year ally devoted his property to the discharge 1896, which was taken as representing its of a public service. In the other he has average gross income, was $1,012,271.22. placed his property in such a position that, The total expenditures of the company for willingly or unwillingly, the public has acall purposes during the same period quired an interest in its use. In the one amounted to $535,297.14,-thus indicating he deliberately undertakes to do that which a net income for the year of $476,974.08. is a proper work for the state. In the The court, however, increased the estimate of the net income by adding to the expenditures the sum of $113,584,65, expended in repairs and construction, thus placing the net income at the amount of $590,558.73. If the rates prescribed by the Kansas statute for yarding and feeding stock had been in force during the year 1896 the income of the stock-yards company would have been reduced that year $300,651.77, leaving a net income of $289,916.96. This would have yielded a return of 5.3 per cent on the value of property used for stock-yard purposes, as fixed by the master. Or if the capital stock be taken after deducting therefrom such portion thereof which represents property not used for stock-yard purposes, the return would be 4.6 per cent.

Counsel for appellants challenge the correctness of these findings, and seek to show by a review of the testimony that no such per cent of return on the real value of the investment would be received by the company in case the proposed reduction is put into effect. But, without stopping to enter into

other, in pursuit of merely private gain, he has placed his property in such a position that the public has become interested in its use. In the one it may be said that he voluntarily accepts all the conditions of public service which attach to like service performed by the state itself. In the other, that he submits to only those necessary interferences and regulations which the public interests require. In the one he expresses his willingness to do the work of the state, aware that the state in the discharge of its public duties is not guided solely by a question of profit. It may rightfully determine that the particular service is of such importance to the public that it may be conducted at a pecuniary loss, having in view a larger general interest. At any rate, it does not perform its services with the single idea of profit. Its thought is the general public welfare. If in such a case an individual is willing to undertake the work of the state, may it not be urged that he in a measure subjects himself to the same rules of action, and that if the body which

expresses the judgment of the state believes | charge to an individual dealing with him that the particular services should be ren- is, considering the service rendered, an undered without profit he is not at liberty to reasonable exaction. In other words, if he [94] complain? While we have said *again and has a thousand transactions a day, and his again that one volunteering to do such ser- charges in each are but a reasonable comvices cannot be compelled to expose his prop-pensation for the benefit received by the parerty to confiscation, that he cannot be com- ty dealing with him, such charges do not pelled to submit its use to such rates as do become unreasonable because by reason of not pay the expenses of the work, and there- the multitude the aggregate of his profits fore create a constantly increasing debt is large. The question is not how much he which ultimately works its appropriation, makes out of his volume of business, but still is there not force in the suggestion that whether in each particular transaction the as the state may do the work without profit, charge is an unreasonable exaction for the if he voluntarily undertakes to act for the services rendered. He has a right to do state he must submit to a like determination business. He has a right to charge for each as to the paramount interests of the public? separate service that which is reasonable Again, wherever a purely public use is compensation therefor, and the legislature contemplated, the state may and generally may not deny him such reasonable compendoes bestow upon the party intending such sation, and may not interfere simply beuse some of its governmental powers. It cause out of the multitude of his transacgrants the right of eminent domain, by tions the amount of his profits is large. which property can be taken, and taken, not Such was the rule of the common law, even at the price fixed by the owner, but at the in respect to those engaged in a quasi-public market value. It thus enables him to exer- service, independent of legislative action. cise the powers of the state, and, exercising In any action to recover for an excessive those powers and doing the work of the charge, prior to all legislative action, who state, is it wholly unfair to rule that he ever knew of an inquiry as to the amount must submit to the same conditions which of the total profits of the party making the the state may place upon its own exercise charge? Was not the inquiry always limof the same powers and the doing of the ited to the particular charge, and whether same work? It is unnecessary in this case that charge was an unreasonable exaction to determine this question. We simply no- for the services rendered? As said by Mr. tice the arguments which are claimed to jus- Justice Bradley in Parkersburg & O. River tify a difference in the rule as to property Transp. Co. v. Parkersburg, 107 U. S. 691, devoted to public uses from that in respect 699, 27 L. ed. 584, 587, 2 Sup. Ct. Rep. 732: to property used solely for purposes of private gain, and which only by virtue of the conditions of its use becomes such as the public has an interest in.

In reference to this latter class of cases, which is alone the subject of present inquiry, it must be noticed that the individual is not doing the work of the state. He is not using his property in the discharge of a purely public service. He acquires from the state none of its governmental powers. His business in all matters of purchase and sale is subject to the ordinary conditions of the market and the freedom of contract. He can force no one to sell to him, he cannot prescribe the price which he shall pay. He must deal in the market as others deal, buying only when he can buy and at the price at which the owner is willing to sell, and selling only when he can find a purchaser and at the price which the latter is willing to pay. If under such circumstances he is [95]bound by all the conditions *of ordinary mercantile transactions he may justly claim some of the privileges which attach to those engaged in such transactions. And while by the decisions heretofore referred to he cannot claim immunity from all state regulation he may rightfully say that such regulation shall not operate to deprive him of the ordinary privileges of others engaged in 'mercantile business.

Pursuing this thought, we add that the state's regulation of his charges is not to be measured by the aggregate of his profits, determined by the volume of business, but by the question whether any particular

"It is also obvious that, since a wharf is property and wharfage is a charge or rent for its temporary use, the question whether the owner derives more or less revenue from it, or whether more or less than the cost of building and maintaining it, or what disposition *he makes of such revenue, can in no[96] way concern those who make use of the wharf, and are required to pay the regular charges therefor; provided, always, that the charges are reasonable, and not exorbitant."

In Canada Southern R. Co. v. International Bridge Co. (L. R. 8 App. Cas. 723, 731) Lord Chancellor Selborne thus expressed the decision of the House of Lords:

"It certainly appears to their lordships that the principle must be, when reasonableness comes in question, not what profit it may be reasonable for a company to make, but what it is reasonable to charge to the person who is charged. That is the only thing he is concerned with. They do not say that the case may not be imagined of the results to a company being so enormously disproportionate to the money laid out upon the undertaking as to make that of itself possibly some evidence that the charge is unreasonable with reference to the person against whom it is charged. that is merely imaginary. Here we have got a perfectly reasonable scale of charges in everything which is to be regarded as material to the person against whom the charge is made. One of their lordships asked counsel at the bar to point out which of these charges were unreasonable. It was not found possible to do so. In point of

But