Argument of Counsel. [18 App. are much in excess of what is necessary to the payment of all expenses of maintaining and operating the plant and the return of fair or even large dividends upon the value of the property to those who hold its bonds and stock. Mr. J. M. Wilson, Mr. A. S. Worthington, Mr. E. W. Van Dyke and Mr. Charles L. Frailey for the appellee: 1. Because the defendant is a foreign corporation its property is not subject to confiscation at the will of Congress. Fifth and Fourteenth Amendments to the Constitution of the United States. The Supreme Court of the United States has several times held that while the legislature of a State may prescribe rates to be charged by any "public-service" corporation, an act fixing such rates will amount to confiscation, and will for that reason be held void by the courts if the rates be insufficient to enable the corporation to pay its expenses and earn a reasonable compensation for the service rendered. Reagan v. Farmers' L. & T. Co., 154 U. S. 362; Railroad Commission Cases, 116 U. S. 307; Smythe v. Ames, 169 U. S. 466; San Diego Land Co. v. National City, 174 U. S. 739; Covington, etc., Turnpike Co. v. Sandford, 164 U. S. 578, 595. Until the present case, so far as we know, a similar question has not arisen as to the powers of Congress as limited by the language of the fifth amendment. But it is manifest that the same effect must be given to the language of the fifth amendment in dealing with acts of Congress that had been given to the corresponding provision in the fourteenth amendment in dealing with the acts of the legislatures of the several States. Counsel for the complainants in their brief in this court for the first time in this case suggest that the property of this defendant may be confiscated by Congress, because it is not incorporated under any act of Congress or under the general incorporation law of the District, but is a New York corporation. They seem to have found no authority in support of this contention. It is asserted in the brief that the defendant "is here by sufferance only." In their bill of complaint the complainants say that the defendant " has, with the assent and under the direction of the Congress of the United States and of the Commissioners of the District of Columbia," established its plant in the District. There are many acts of Congress, some of which expressly and others by necessary implication authorize the defendant to carry on the telephone-exchange business in this District. It does not, however, seem to us that in this respect it can make any difference whether a publicservice corporation organized under the laws of one of the States of this Union, lawfully carrying on its business in the District of Columbia, is doing so by the express consent or merely by the implied acquiescence of Congress. It is a well-known fact that nine-tenths of the corporations doing business in this District are organized under the laws of Virginia or West Virginia, or some of the other States. All our steam railroads in the District are operated by foreign corporations. Nearly all of our street railroads are controlled and practically owned by a Virginia corporation. All these corporations are here "by sufferance" in the same sense in which the defendant may be said to be here. The States undoubtedly have the power to exclude foreign corporations altogether. Doubtless Congress has the same power in this District, but is it not too plain for argument that when a foreign corporation lawfully establishes its business and acquires property in this District it is entitled to the same protection as corporations organized under the laws of the District? Might it not as well be said that a citizen of New York who comes here is without the protection of the Constitution? The only case we have found in which such a question as this has been raised is the case of Chicago & Northwestern Railroad Company v. Dey, 1 L. R. A. 744-752-754. See the opinion in that case. 2. The validity of the act upon which this suit is based depends, not upon whether the average expense of the defendant per subscriber is within the rates fixed, but upon whether Argument of Counsel. [18 App. the most efficient equipment and service, such as are received by the complainants in this case, can be rendered at those rates. 3. The act is void because it impairs existing contracts. This question is presented in two aspects. In the first place, with each of its subscribers the appellee had written contracts, which by their terms were to continue in force until terminated by a ten days' notice given by one party to the other. A number of the complainants brought their suits without giving any such notice, and the contracts are, therefore, still in force, unless terminated by this act of Congress. A clearer attempt to "impair the obligation of a contract " by a legislative act could hardly be imagined. In the second place, the Government itself, through its several departments in Washington, and through its agent, the District of Columbia, entered into a number of such contracts with the defendant. With a large number of its telephones, the Government, like the complainants in this particular case, had extra equipment, and had contracted accordingly to pay an extra rate, the total annual price which the Government agreed to pay for this service with extra equipment in many cases running as high as from $140 to $500, the last-mentioned figure being the rate paid by the Government Hospital for the Insane. Thus, by this legislation, Congress attempts, not only to impair the obligation of contracts between others, but to relieve the Government itself from its own obligations, not as to the past merely, but indefinitely throughout the future. Opposing counsel claim that Congress has the right to impair the obligation of any contract whatsoever in this District and, necessarily, everywhere else under the exclusive jurisdiction of Congress. They say that the power of Congress to impair the obligation of contracts, directly or indirectly, "is now too well settled to admit of further discussion." The cases in the Supreme Court of the United States which they cite in support of this proposition in nowise sustain their contention. Those cases merely hold that where D. C.] Argument of Counsel. Congress is given the power to declare what constitutes a legal tender, or to enact a bankrupt law, or to declare war, or to enact a statute of limitations applicable to suits transferred from the State courts to the courts of the United States, the fact that the payment of a debt in such legal tender, or the discharge of a bankrupt, or the continuance of hostilities, or the expiration of the time within which a suit may be brought, will indirectly prevent a creditor from collecting a debt, and so will, in a certain sense, impair the right to enforce a contract, will not prevent Congress from exercising that power. But the court is careful to place these decisions on the ground that the power to do the thing which so indirectly impairs the obligation of a contract is given to Congress by the Constitution. But the law which is under consideration here directly impairs the obligations of the contracts between the defendant company and each of its subscribers, including the Government itself. If the act had said in so many words, " Telephone subscribers who have agreed to pay $125.00 or $100.00 per annum, shall hereafter, notwithstanding their contracts, pay not more than $50.00," the effect as to contracts in force at the time would be precisely what the effect of the law as it stands will be if the position of the complainants here is sustained by the court. See Legal Tender Cases, 12 Wall. 457; Union Pacific Railroad Company v. United States — the "Sinking Fund Cases," 99 U. S. 700; Calder v. Bull, 3 Dall. 388; Fletcher v. Peck, 6 Cranch, 87; The Territory v. Reyburn, 1 Kan. 551-557. 4. The act is void because the rates were fixed, not only without giving the defendant an opportunity to be heard, but without even any preliminary ex parte investigation as to what would be reasonable rates for the service required of the defendant. See Chicago, etc., Railway Company v. Minnesota, 134 U. S. 418. Surely it must, at least, be admitted that rates fixed without notice to the party affected, and without even a onesided investigation into the matter, are not to be held presumptively reasonable till shown beyond a reasonable doubt to be unjust. Argument of Counsel. [18 App. Counsel for the appellants insist that we are wrong in our contention that the doctrine so often laid down by the Supreme Court, that doubts as to the constitutionality of State legislation or of acts of Congress will be resolved in favor of the validity of such laws, applies where questions of law only are involved. Yet it is to be observed that, of the five cases cited on this point by counsel for the appellants, three the cases in 12 Wall. 531, 19 Wall. 666, and 173 U. S. 615 involve questions of law only. In the other two cases Smyth v. Ames, 169 U. S. 466, and San Diego Land Company v. National City, 174 U. S. 739-the State statutes involved provide for a regular judicial proceeding, and there actually was such a proceeding before the rates complained of in those cases, respectively, were fixed. It may well be that when a legislature has deferred the fixing of rates to a commission or board of some kind, and that tribunal, before fixing them, has fully heard and considered all that the public-service corporation affected can offer by way of evidence or argument, the courts will require a very clear showing that the rates are unjust before they will interfere. But such a doctrine can have no application where the commission or board acts without notice to the party chiefly concerned; and when the legislature itself undertakes to arbitrarily fix the rates, without any investigation or hearing whatever, its act is as void, we submit, as it would be if it undertook to take land for public use and, at the same time, fix the price to be paid for it. 5. A telephone exchange supplying reasonably efficient service to all parts of the District of Columbia cannot be maintained and operated without loss at the rates fixed by the act of June 30, 1898. We do not concede that, in considering the validity of the statute in question, the particular situation of the appellee should be dismissed from consideration. Appellants contend that, even if appellee will necessarily sustain a loss by doing business at the statutory rates, it must accept those rates because it is said that some other company, with different apparatus, could render the service required and make a reasonable profit. If the case required |