These were appeals from the State courts of Illinois, Wisconsin, and Minnesota, and from the Federal court in Iowa. In each of these States the legislature had regulated the rates of public service companies; in the first case a grain elevator, in the other cases a railroad. This legislation was attacked as unconstitutional, because a taking of the property without due process of law. The court, however, upheld the acts, on the ground that the property was affected with a public interest, and the rate for the use of it was therefore a subject of legislation. Mr. Chief Justice Waite went very far in supporting the power of the legislature. "We know," he said in Munn v. Illinois, " that this is a power which may be abused; but that is no argument against its existence. For protection against abuses by legislatures the people must resort to the polls, not to the courts." Again in Peik v. Chicago & Northwestern Railway he said: "Where property has been clothed with a public interest, the legislature may fix a limit to that which shall in law be reasonable for its use. This limit binds the courts as well as the people. If it has been improperly fixed, the legislature, not the courts, must be appealed to for the change." And in Chicago, Milwaukee and St. Paul Railroad v. Ackley the court held that the railroad could charge no more than the maximum so fixed, even if the higher rate were reasonable. "If the company should refuse to carry at the prices fixed, and an attempt should be made to forfeit its charter on that account, other questions might arise, which it will be time enough to consider when they are presented. But for goods actually carried, the limit of the recovery is that prescribed by the statute." R. R. v. Iowa, 94 U. S. 155, 24 L. Ed. 94 (1876); Peik v. Chicago & N. W. Ry., 94 U. S. 164, 24 L. Ed. 97 (1876); Chicago, M. & St. P. R. R. v. Ackley, 94 U. S. 179, 24 L. Ed. 99 (1876); Winona & St. P. R. R. v. Blake, 94 U. S. 180, 24 L. Ed. 98 (1876); Stone v. Wisconsin, 94 U. S. 181, 24 L. Ed. 99 (1876). § 1333. Early modification of the doctrine. 5 There is no doubt of the meaning of the court in these cases. The action of the legislature was deemed binding at least as between private parties, without regard to the reasonableness of the rates. This extreme view was, however, soon abandoned. In Ruggles v. Illinois, Mr. Justice Field in a concurring opinion, expressed the view that no unreasonable rate would be legal; and in Spring Valley Waterworks v. Schottler, Mr. Chief Justice Waite spoke in a most conservative fashion, saying: "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." In the Railroad Commission Cases Mr. Chief Justice Waite, however, went further and said, in language which has formed the basis of the rule as it was finally established: "It is not inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a dower 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." The rule was not yet finally settled, however. In Dow v. Beidelman the statute of Arkansas limiting rates of fare on railroads over a hundred miles long to three cents a mile was attacked as unconstitutional. It was shown that the income of the road under that act would not pay the interest on its bonds; but it was not shown what actual expenditure or value the bonds. represented. On this ground the court declined to enter upon the general question presented; Mr. Justice Gray saying that 5 108 U. S. 526, 27 L. Ed. 812, 2 Sup. Ct. 832 (1883). "the court has no means, if it would under any circumstances have the power, of determining that the rate of three cents a mile fixed by the legislature is unreasonable. Still less does it appear that there has been any such confiscation as amounts to a taking of property without due process of law." § 1334. The rule finally established. In Chicago, Milwaukee & St. Paul Railway v. Minnesota the court held for the first time that after a rate is fixed by legislature or commission it is necessarily within the power of the courts to declare the rate illegal if it is unreasonable. "The question of the reasonableness of a rate of charge for transportation by a railroad company, involving, as it does, the element of reasonableness, both as regards the company and as regards the public, is eminently a question for judicial investigation, requiring the process of law for its determination. If the company is deprived of the power of charging reasonable rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in substance and effect, of the property itself, without due process of law, and in violation of the Constitution of the United States; and, in so far as it is thus deprived, while other persons are permitted to receive reasonable profits upon their invested capital, the company is deprived of the equal protection of the laws." That this was regarded as new doctrine at the time of the decision by the judges who had decided the Granger and the Railroad Commission Cases is evident from an examination of the dissenting opinion of Mr. Justice Bradley. The opinion of the majority, he said, "practically overrules Munn v. Illinois," and he reiterated the view that the fixing of rates is for the legislature alone, without interference from the courts. The view of the majority has been accepted, and the present doctrine as to 9 134 U. S. 418, 33 L. Ed. 970. 10 Sup. Ct. 462 (1889). the power of the courts over rates fixed by legislature or commission dates from this decision. In Reagan v. Farmers' Loan & Trust Company 10 the court reiterated this doctrine so strongly that it can no longer be regarded as open to question. Mr. Justice Brewer put the whole doctrine clearly and concisely in a single sentence: "The province of the courts is not changed, nor the limit of judicial inquiry altered, because the legislature, instead of the carrier, prescribes the rates." Later in the same opinion he added: "While it is not the province of the courts to enter upon the merely administrative duty of framing a tariff of rates for carriage, it is within the scope of judicial power, and a part of judicial duty, to restrain anything which, in the form of a regulation of rates, operates to deny to the owners of property invested in the business of transportation that equal protection which is the constitutional right of all owners of other property. There is nothing new or strange in this. It has always been a part of the judicial function to determine whether the act of one party (whether that party be a single individual, an organized body, or the public as a whole) operates to divest the other party of any rights of person or property." In Smyth v. Ames 11 the same doctrine was elaborated, and since the decision of that case the rule has never been questioned. What rates are in fact reasonable has been considered at length in an earlier portion of this work. § 1335. Exceptional rates forbidden. In Lake Shore & Michigan Southern Railway v. Smith, 12 Mr. Justice Peckham said: "If the maximum rates are too high in the judgment of the legislature, it may lower them, provided they do not make them unreasonably low, as that term is under 10 154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894). stood in the law; but it cannot enact a law making maximum rates, and then proceed to make exceptions to it in favor of such persons or classes as in the legislative judgment or caprice may seem proper. What right has the legislature to take from the company the compensation it would otherwise receive for the use of its property in transporting an individual or classes of persons over its road, and compel it to transport them free or for a less sum than is provided for by the general law? Does not such an act, if enforced, take the property of the company without due process of law? We are convinced that the legislature cannot thus interfere with the conduct of the affairs of corporations." The act declared invalid in this decision was an act requiring a railroad to sell mileage books at a reduced rate. The decision was followed in New York;13 but the statute was held valid as to a corporation organized after the passage of the act, since the corporation became bound by its charter to comply with the act.14 TOPIC D- · CONSTITUTIONAL POWER OF CONGRESS OVER INTERSTATE RATES. § 1336. Power to fix rates appears to be given to the Con gress. The power of Congress either directly or through a commission to fix the rates of carriers in interstate carriage has been recently questioned. It would be extraordinary if such power were not granted by the Constitution. We have seen that the power existed at common law, and was exercised in England before the Revolution, as well as in the States. At the time of the adoption of the Constitution the power was lodged in the States. It is a maxim of constitutional law that all power not 13 Beardsley v. New York, L. E. & W. R. R., 162 N. Y. 230, 56 N. E. 488 (1900). 14 Minor v. Erie R. R., 171 N. Y. 566, 64 N. E. 454 (1902). |