⚫504

Statement by Mr. Justice Shiras: At the January term, 1895, of the Marion county circuit court of the state of Kentucky, an indictment was found against the Louisville & Nashville Railroad Company, a corporation of the state of Kentucky, for an alleged violation of § 218 of the Constitution of the state, and § 820 of the Kentucky Statutes, in charging more for the transportation of coal from Altamont, Kentucky, to Lebanon, Kentucky, than to Louisville and Elizabethtown, Kentucky, over railroads which the company were operating under its charter. The indict ment alleged that it was filed upon the recommendation of the state railroad commis

sion. The trial resulted in a judgment of conviction and a fine of $300, which, on appeal, was, on May 20, 1899, affirmed by the court of appeals. [21 Ky. L. Rep. 232, 51 S. W. 164, 1012.] From that judgment of the court of appeals a writ of error was allowed by the chief justice of that court on June 28, 1899, and the case was brought to

this court.

This statute is based upon § 218 of the Constitution of the state of Kentucky, adopted in 1891. The statute, which is § 820 of the Kentucky Statutes, and § 218 of the Constitution, are set forth in full in the report of the case of McChord v. Louisville & N. R. Co. 183 U. S. 488, post, 165, 22 Sup. cided by this court, and need not be here Ct. Rep. 165, and cognate cases, recently decopied at length.

Those cases were here on appeal from final decrees of the circuit court of the United States for

joining the railroad commission of the state from enforcing against the complainants, of which the Louisville & Nashville Railroad

Company, the plaintiff in error in the present case, was one, the provisions of an act of the commonwealth of Kentucky approved March 10, 1900, entitled, "An Act to Prevent Railroad Companies or Corporations Owning and Operating a Line or Lines of Railroad, and its Officers, Agents, and Employees, from Charging, Collecting, or Receiving Extortionate Freight or Passenger Rates in This Commonwealth, and to Further In crease and Define the Duties and Powers of thereto, and Prescribing the Manner of Enforcing the Provisions of This Act and Pen

the Railroad

Commission in Reference

alties for the Violation of its Provisions."

The occasion of the passage of this act of March 10, 1900, was a decision of the court of appeals of Kentucky holding that § 816, which declared that any railroad company which should charge and collect more than a just and reasonable rate of toll or compensation for the transportation of passengers or freight in that state was guilty of extortion, could not be enforced Louisville & N. R. Co. v. Com. 99 Ky. 132, as a penal statute for want of certainty. 33 L. R. A. 209, 35 S. W. 129.

The effort was made in the circuit court of the United States, and successfully, to have it held that by the said act of March 10, 1900, § 819, in so far as it provided an

*Messrs. William Lindsay, Walker D. Hines, and H. W. Bruce for plaintiff in er-action by way of information, and to lia

ror.

Mr. H. W. Rives submitted the case for defendant in error.

Mr. Justice Shiras delivered the opinion of the court:

bility in damages, and that indictments should be made only on the recommendation or request of the railroad commission, was repealed by necessary implication; and that, accordingly, the order of the commission, fixing the rate, toll, or compensation they may charge, was self-executing, and that no duty to enforce it was imposed on the commission; that the railroad companies were shut up by the act to the final de

This case is here on a writ of error to a judgment of the court of appeals of the state of Kentucky, affirming a judgment of the circuit court of Marion county, Kentucky, sentencing the Louisville & Nashville Rail-termination of the commission that they road Company to a fine of $300 for an alleged violation of a statute of that state which declares, among other things, that it shall be unlawful for any person or corporation owning or operating a railroad in the state to charge or receive any greater compensation in the aggregate for the transportation of passengers or of property of like kind, under substantially similar circumstances and conditions, for a shorter than for longer distance, over the same line, in the same direction, the shorter being included in the longer distance.

have charged more than a just and reasonable rate; that on the trial of indictments for failure to observe the rates made by the commission, the courts cannot entertain any inquiry as to the reasonableness of rates so fixed, because such inquiry is unwarranted by the statute, and therefore illu sory and worthless; and that, even if the question of constitutionality could be raised in defense, yet that, if the order of the commission were permitted to be entered of record, the companies, if they did not comply, would be at once exposed to innumerable

prosecutions and to financial ruin by the accumulation of penalties before a judicial decision as to the validity of the statute could be had, if it should then happen that the statute was upheld.

whether the state enactments, constitutional and statutory, in the particulars involved in this controversy, and under the construction given them by the court of appeals, are in conflict with the 14th Amendment of the Constitution of the United States.

At the trial of the indictment it was not seriously disputed that the defendant company had, at the time and place alleged, charged and received for the carriage and transportation of coal over its line of road a greater compensation for a shorter than for a longer distance, over the same line in the same direction, the shorter being included within the longer distance, without having been authorized by the railroad commission so to charge, and after the commission, upon investigation, had refused so to do.

It was, however, held by this court that it was not the intent or effect of the act of March 10, 1900, to repeal those provisions of § 819 requiring indictments to be found only on the recommendation of the commission, nor to circumscribe, in this particular, the general duty of the commission to see that the law relating to railroads should be faithfully executed. This view of the meaning and effect of the legislation was that taken by the court of appeals of Kentucky in the case of Illinois C. R. Co. v. Com., decided while the appeals from the decrees of the circuit court of the United States were pending in this court. In that case But certain facts which were alleged to the railroad company was indicted under § show that the circumstances and conditions 820, and fined for charging more for a under which the charges in question were shorter than a longer haul. The indictment made and received were not substantially was returned before the railroad commis- similar with those ordinarily obtaining, sion had determined whether the railroad and thus to show that the charges objected company should be exonerated as provided to were just and reasonable, were offered in that section, and the court of appeals in evidence by the railroad company, and held that "to allow the carrier to be in- excluded from the jury by the trial court, dicted in advance of any action by the rail-which gave to the jury what amounted, in road commission under this section would legal effect, to a peremptory instruction to be to deprive it of all opportunity for ex- find the defendant company guilty as inThe long and short haul dicted. The jury accordingly returned a matter is only another form of undue dis- verdict of guilty, fixing the fine at $300, crimination and preference, which are pro- for which judgment was rendered, and an vided for by § 819, and indictments under appeal was taken by the defendant company this section can only be had upon the rec- from that judgment to the court of appeals. ommendation of the railroad commission. This has been a settled legislative policy, as shown by the act of April 6, 1882 (see Gen. Stat. p. 1021), which was in force at the time of the adoption of the Constitution and the present statutes. In other words, the legislature has always acted upon the idea that the interests of the entire people of the state should be looked to in these matters, and that the railroad commission must first determine them before the general juries of the state should find indictments." [23 Ky. L. Rep. 1162, 64 S. W. 977.]

oneration.

The conclusion reached by this court, therefore, was that the duty of enforcing its rates rests on the commission, and that there was no basis for interposition by a court of equity before the rates were fixed at all; and that whether, after the rates have been determined by the commission, their enforcement could be restrained, was a question not necessarily presented for decision in those cases; and, accordingly, the decrees of the circuit court were reversed with a direction to sustain the demurrer and dismiss the bills.

In the case now in hand the indictment was found, not in advance of any action by the railroad commission, but on its recommendation. Hence the question of the validity of the provisions of the Constitution and laws of the state of Kentucky under which these proceedings were had is properly before us. Of course, our consideration of it must be restricted to its Federal aspect; in other words, we are to inquire 22 S. C.-7.

It was contended in the courts below and here that as § 218 of the Constitution of the state of Kentucky, regulating charges for transportation over different distances, is in terms a copy of the provision on the same subject in the Interstate Commerce Act, it should be assumed that it was the intention of the constitutional convention of Kentucky to adopt the construction put upon that provision in the interstate commerce (law by the Federal courts; and that as those courts had held that the existence of actual competition of controlling force in respect to traffic important in amount might make out a dissimilarity of circumstances and conditions entitling the carrier to charge less for the longer than for the shorter haul, without any necessity to first apply to the commission for authority so to do, that construction should have been followed at the present trial, where evidence was offered tending to show the existence of competition of that character, caused by river transportation of coal from points outside of the state.

Such contention might seem reasonably to have been urged in the state courts, but, as they have seen fit to disregard it, and to put a different construction upon the language employed, this court must accept the meaning of the state enactments to be that found in them by the state courts. The prevailing view in the court of appeals was thus expressed by Judge Hobson:

"Appellant transported coal from Altamont to Louisville at $1.00 per ton, and

209.

to Elizabethtown at $1.30 per ton, while it charged $1.55 per ton from Altamont to Lebanon, an intermediate station on its line of road. Complaint being made to the rail-road commission, upon application of the road commission, it investigated the matter and made an order in writing declining to exonerate appellant from the operation of the provisions of § 820, and thereafter, at the suggestion of the commission, appellant was indicted in the Marion circuit court, as provided in the statute. The case was tried, and appellant having been adjudged guilty, it prosecuted this appeal to reverse the judgment imposing a fine upon it of $300.

carrier may be relieved from operation of the section. In our opinion the court has not jurisdiction to either compel the railcommon carrier or those interested in particular industries or callings, to suspend or relax operation of § 218, or, upon application of individuals or corporations feeling aggrieved, to prohibit such suspension or relaxation in special cases. While the commission is thus, and to that extent, fres from judicial interposition, it cannot of course nullify, or, except in special cases, at all suspend operation of, § 218; and though the railroad commission be invested with this unusual power, it must be treated as a constitutional power with which the

court cannot interfere."

"Appellant justified the difference of the rate on the ground that at Louisville the coal hauled from Altamont came in competition with the coal brought down the With the meaning thus attributed to § Ohio river on boats, and that at Elizabeth-218 of the Constitution, it is strenuously town it came in competition with western contended on behalf of the plaintiff in error Kentucky coal brought there by the Illinois "that said section has no reasonable relaCentral Railroad. It insists that these rates could be made no higher on account of this competition, and that the rates to noncompetitive points like Lebanon were reasonable, and were unaffected by the reductions referred to, which were necessary for the coal to be handled in those markets at all. The evidence offered by it to* sustain this contention was excluded by the court below on the trial, on the ground that competition is not one of the circumstances or conditions exempting the railroad from the operation of § 218 of the Constitution. It is earnestly argued for appellant that the transportation is not under substantially similar circumstances and conditions when competition exists at one point and not in another, and we are referred to numerous decisions of the Federal courts so holding. On the other hand, it is contended for the state that to adopt this construction is to emasculate the section and deprive it of all practical operation and effect.

"The precise question thus presented was determined by this court in the case of Louisville & N. R. Co. v. Com. 20 Ky. L. Rep. 1380, 43 L. R. A. 541, 46 S. W. 707, where the construction of the section adopted by appellee was sustained. We are urged to overrule that case; but it was fully considered, and then reconsidered by the whole court, and we are disinclined, with substantially no new light upon the question, to set aside the conclusion of the court reached then after so mature deliberation." [21 Ky. L. Rep. 234, 51 S. W. 165.]

In order fully to understand the position of the court of appeals it may be well to quote a portion of the opinion of that court in the case of Louisville & N. R. Co. v. Com. 20 Ky. L. Rep. 1380, 43 L. R. A. 541, 46 S. W. 707, referred to in the court's opinion in the present case:

"The railroad commission was therefore created to meet the emergency, and was intended to be invested with full power to authorize or not in special cases less compensation to be charged for the longer than shorter distance, and to prescribe from time to time the extent to which the common

tion to securing for the public reasonable rates or the prevention of extortion or undercharges, or the promotion of the safety, health, convenience, or proper protection to the public; but that it amounts to an arbitrary and wholly unreasonable interference with perfectly legitimate business, and is therefore in conflict with the 14th Amendment of the Constitution of the United States; and since the railroad company has built its railroads in the state of Kentucky, upon the faith of a charter granted it by the state authorizing it to operate those railroads, it has a contract right to engage in such legitimate railroad business, and any such arbitrary interference therewith as results from such a construction of § 218 would impair the obligation of that contract."

To sustain these contentions the learned counsel for the plaintiff in error cite and rely upon those decisions of this court in which it has been held that, under pretense of regulating fares and freights, a 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; that the question of the reasonableness of a rate of charge for transportation by a railroad company, involving as it does the reasonableness both as regards the company and as regards the public, is eminently a question for judicial investigation, requiring due process of law for its determination; and that 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 that 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.

609.

This is a general principle; but it is espe cially true of Federal courts when they are asked to interpose in a controversy between a state and its citizens.

shorter

Railroad Commission Cases, 116 U. S. 345, | do not sit in judgment on the wisdom of sub nom. Stone v. Farmers' Loan & T. Co. legislative or constitutional enactments. 29 L. ed. 649, 6 Sup. Ct. Rep. 334, 388, 1191; Chicago, M. & St. P. R. Ĉo. v. Minnesota, 134 U. S. 418, 33 L. ed. 970, 3 Inters. Com. Rep. 209, 10 Sup. Ct. Rep. 462, 702; Reagan v. Farmers' Loan & T. Co. 154 U. This court, then, is not concerned with S. 362, 38 L. ed. 1014, 4 Inters. Com. Rep. the wisdom of the people of Kentucky when 560, 14 Sup. Ct. Rep. 1047; Smyth v. Ames, they declared in their Constitution that it 169 U. S. 466, 42 L. ed. 819, 18 Sup. Ct. should be unlawful for any person or corRep. 418; Lake Shore & M. S. R. Co. v. poration owning or operating a railroad in Smith, 173 U. S. 684, 43 L. ed. 858, 19 Sup. that state to charge or receive any greater Ct. Rep. 565. compensation in the aggregate for the transWe certainly have no disposition to over-portation of passengers, or of property of rule or disregard cases so recently decided like kind, under substantially similar cirand so elaborately considered. And accord- cumstances and conditions, for a ingly, if it appeared, in the present case, than for a longer distance over the same that the railroad commission had arbitrari-line, in the same direction, the shorter be ly fixed rates of fare and freight, in respect ing included within the longer distance. to which the railroad company was given no Nor, as we have already seen, is it for us opportunity to be heard, and which were to say that the court of appeals of Kentucky confiscatory, and amounted to depriving the erred in so construing that enactment as to plaintiff in error of its property without forbid a railroad company from justifying a due process of law, it would doubtless be our voluntary disregard of its command by duty to furnish the relief asked for. Nor claiming that competition between its road yet are we ready to carry the doctrine of the and other modes of transportation created cited cases beyond the limits therein estab- substantially dissimilar circumstances and lished. For the Federal courts to interfere conditions. with the legislative department of the state government when acting within the scope of its admitted powers is always the exercise of a delicate power,-one that should not be resorted to unless the reason for doing so is clear and unmistakable.

As we understand the condition of the statutes of Kentucky, there was at the time when this case was tried in the circuit court of Marion county, and when the court of appeals disposed of it, no power in the railroad commission to fix or establish rates or tolls which the railroad companies were bound to accept. Such power, however, was given to the commission by the act of March 10, 1900; and it was to restrain the railroad commission from taking action under that act that bills in equity were filed by the Louisville & Nashville Railroad Company and other railroad companies in the circuit court of the United States. But in the present case we have only to do with the question of the validity of the action of the railroad commission's proceeding under § 218 of the Constitution and § 820 of the statutes, which prescribe uniformity of rates e for all distances, long or short, and make penal disregard of such uniformity by railroad companies, except when authorized by the commission to charge less for longer than for shorter distances. As we have seen, this court held, on the appeals from the circuit court of the United States, that it was not competent for courts of equity to interfere with the action of the commission in respect to fixing rates before the rates were fixed at all, and when it could not appear whether the companies would have any reason to complain of them.

Our present duty is to consider only the objections to the validity of the long and short haul clauses in the Constitution and the statutes.

It does not call for argument that railroad companies are incorporated to perform a public service, and that it is for the state to define their powers and to control their exercise of such powers. The question for us, in the present case, is whether the state, by enacting a rule of action for such companies, forbidding a greater rate of charges for a shorter than for a longer distance, and by establishing a railroad commission of the kind and with the functions disclosed in the Constitution and statutes, deprives the plaintiff in error of its property without due process of law, and denies to it the equal protection of the laws.

When the citizens of Kentucky voluntarily seek and obtain a grant from the state of a charter to build and maintain a public highway in the form of a railroad, it would seem to be evident that it takes, holds, and operates its road subject to the constitutional inhibition we are considering, and are without power to challenge its validity. It may be that in a given case a railroad company may be able to show that the state has disabled itself from enforcing the provision by a contract previously made, and it may be that cases may arise in which the provision cannot be enforced because operating as an unlawful interference with commerce be tween the states. Indeed, those very positions are taken by the plaintiff in error in this case, and will receive our attention hereafter. But apart from such contentions, and looking only at the case of a company voluntarily formed to carry on business wholly within a state, we are unable to see how such a company can successfully contend that it can be exempted by the courts from the operation of the Constitution of the state.

It is said that, while it is true that railroad companies receive their rights to exist It is scarcely necessary to say that courts and to maintain their roads from the state,

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