property was tied up, and no one would take LEGISLATIVE INTERFERENCE WITH I the title with the litigation pending. The guarantee companies would not issue a guarantee policy, and the owners, some of whom were lawyers, had to clear their title through a purifying process of twenty years' litigation, which was finally attained after all these years of delay, and a large outlay for costs and lawyers' fees, not one dime could be recovered from the worthless prosecutors. Did you ever try to get security for costs from any of those worthless claimants? If you did, I venture to say you never succeeded. Without exception, the defendant who asks for security for costs from a worthless plaintiff, no matter how unfounded his claim, is at once regarded by the court as an avaricious persecutor, and the request as an attempt to throttle litigation and cheat an honest man of his constitutional right to law it with you at your own expense. have known the filing of a bill on a trumped-up claim to practically operate as an injunction restraining the transfer of valuable real estate for years, the final decree demonstrating the claim to have been unfounded. I know of a bill pending to-day, which is simply an attempt to cast a cloud upon the title of a very valuable down-town corner, in which perjury already has been freely indulged in an attempt to extort a money settlement rather than suffer the delays and uncertainties of a trial, and the indefinite tying up of the property, as it was thought that a ninety-nine year lease on advantageous terms was about to be made. An attempt to do more than place the case upon the trial calendar of a learned chancellor, who but infrequently tries cases from his calendar, has met with the usual judicial frown of disapproval. I think that a system which admits of such injustice and oppression needs reforming." In re Commissioners of Circuit Court, decided in the United States Circuit Court, district of North Carolina, it was held that while commissioners of the Circuit Court have no fixed tenure of office, and the appointing court has power to remove them at pleasure, the exercise of this power should be governed by a sound. legal discretion, and if there are charges against a commissioner, full opportunity should be given him for a hearing. THE FREEDOM OF RAILROAD CORPORATION CONTRACTS. WHE WHEN England was mainly a pastoral and agricultural country, with her trade and commerce in their infancy, all sorts of burdensome restrictions were imposed upon the individual by a paternal theory of government for the supposed benefit of trade; but in the latter part of the eighteenth century there was a general awakening to the falsity of the theories which had permitted these impositions. In England, Adam Smith's great work was followed by many repeals of vicious regulations and cessation of new restraints. In France, the edict of Louis XVI liberated trade from corresponding restrictions. In America, the Declaration of Independence set forth the inalienable right of all men to life, liberty and the pursuit of happiness. Our whole commercial history shows that our Constitution fixes a great and wide gulf between the old and the new, between mediæval darkness, which permitted every detail of one's life to be regulated, the modern freedom of action. But a distinction has always been made between private property of individuals and that put to public use. The distinctions between public and private carriers were known of old. The railroad, in fact, existed in the minds of the legislators of both England and the United States, as improved turntion for themselves or their goods, in their own or pikes, all persons should have a right of transportathe company's carriages, and supplying, if need be, their own motive power, upon their compliance with certain rules and regulations. And from this early legislation to the present time, it has been held that the property of railroad corporations which have been invested with the right of eminent domain, and are common carriers of persons or mer"devoted to a public use," chandise, is property and subject to legislative control. But as to how far State legislation may interfere in the control of these corporations is a controverted question. There are those who stand up boldly for individual liberty to the greatest possible extent consistent with good government, while there are others who also believe in individual librather than in too little freedom. erty, but declare that our danger lies in too much The great landmarks of reason, legislation and adjudication, by which one must be guided in a discusion of this subject are: 1. The object of the Legislature. 2. The inherent powers of the State, especially the power of public police. 3. The constitutional limitations upon the power of the State. THE OBJECT OF THE LEGISLATURE. The object of the Legislature and of civil government we assert to be the protection of the general good and the prosperity, peace and happiness of the greatest number as against the few, when that law respects the rights of the few, according to those principles of justice and right characterized by the comprehensive term, equity. Any other theory of government must, from the nature of the case, be false in principle and false to the interest of the people, in whom, according to the theory of American politics, the supreme sovereignty resides. THE INHERENT POWERS OF THE STATE. Then, there is inherent in the people, represented in their State Legislature, sufficient power and authority to control any and all corporations subject to the jurisdiction of their laws. Especially is this the case when such regulative legislation looks to the correction of abuses of such corporate franchises as exist by authority of the laws of the State. The presumption of railroads that they are beyond the reach of the Legislature, would prove that the States can divest themselves of sovereignty, a proposition which, if allowed, would reduce government to an absurdity. LIMITATION OF STATE POWER. The States, under our system of government, are said to be sovereign, to have sovereign rights resting in the people; and this is true, except as they have parted with their sovereignty as evidenced by the Constitution of the United States or by their own State Constitutions. If the question of control or regulation of corporations is not by implication or by express prohibition of the Constitution of the State or Federal government, excluded from the inherent powers of the State the right to control a railroad corporation is a power of its prerogative. To each State Constitution, therefore, subject to the provisions of the Federal Constitution, the inquirer must go in order to determine the extent of the legislative power of control or regulation. It is my purpose in this inquiry to discuss but one question regarding this control-that of the extent of the legislative authority to interfere with the freedom of contract by these corporations. CONTRACT WITH THE STATE. First, let us consider the contract of a railroad corporation with the State to which it owes its existence. As early as 1806 the Supreme Court of Massachusetts made the declaration "that the rights legally vested in all corporations cannot be 1 Thorpe v. Rutland & Burlington R. Co., 37 Vt. 142. controlled or destroyed by any subsequent statute, unless a power for that be reserved to the Legislature in the act of incorporation. In the case of Dartmouth College v. Woodward,3 decided in 1819, the Supreme Court of the United States announced principles on the subject of protection that the charters of private corporations were entitled to claim under the clause of the Fed eral Constitution against impairing the obligation. of contracts. The opinion of this case carried the protection of the constitutional provision somewhat in advance of what had been decided in the preceding cases, and held that it applied not only to contracts between individuals and to grants of property made by the State to individuals or to corporations, but that the rights and franchises conferred upon private, as distinguished from public, corporations, by the legislative acts under which their existence was authorized, and a right to exercise the functions conferred upon them by the statute were, when accepted by the corporation, contracts which the State could not impair. It became obvious at once that the effect of this decision was to make it impossible for a legislative body to amend or repeal any prior rights conferred upon a corporation without the consent of the corporate body. Mr. Justice Story, in his concurring opinion, however, suggested that, when a Legislature was enacting a charter for a corporation, a provision in the statute reserving to the Legislature the right to amend or repeal it, must be held to be ercise of the right would be in accordance with the a part of the contract itself, and the subsequent excontract, and could not, therefore, impair its obligation. In order to avoid the consequences laid down in the Dartmouth College case, many States have Massachusetts all acts of incorporation passed since availed themselves of Judge Story's suggestion. In March 11, 1831, are, by statute law of the State, subject to amendment, alteration or repeal, at the Mr. Justice Gray, in pleasure of the Legislature. delivering the opinion of the court in Commissioner in Inland Fisheries v. Holyoke Water Power Co., a case arising in that State, says: "Railroad corporations may be compelled, by general or special laws, to make changes in the levee, grade the surface of the road bed, erect new structures at crossings of other railroads, or of highways or stations at particular places, in a manner, and to be enforced by forms of process, different from those provided for or contemplated by the original charter or the Wales v. Stetson, 2 Mass. 143. 3 Dartmouth College v. Woodward, 4 Wheat. 518. Com. of Inland Fisheries v. Holyoke Water Power Co., 104 Mass. 451. the carriage of passengers and freight, and, in substance, to make all necessary contracts in conducting and managing their business. And it cannot be said that the Legislature can, by way of ameudment, fix or limit this right so as to operate unjustly to the corporation. An amendment to that general laws in force when that charter was granted." And in the Sinking Fund Cases' the question was whether Congress had the constitutional right or power to enact a law compelling the Union Pacific Railroad Companies to set aside a portion of their current earnings as a sinking fund for the purpose of meeting a very large indebted-extent would violate the Constitution, which, while ness secured by mortgage upon the roads, and payable at a future day. The majority of the court held that the legislation was valid as an exercise of the general legislative powers of the government, and also because the right to alter or amend the charters of the companies had been expressly reserved to Congress. it grants the right to amend them when, in the opinion of the Legislature, the charter is injurious to the citizens, it limits the rights to do so to amendments that are just to the corporators. But what are just and what are unjust to such corporators is a question upon which the courts widely differ. The first section of the Fourteenth Amendment cess of law, nor deny to any person within its jurisdiction the equal protection of the laws." The rights to acquire and possess property necessarily include the right to contract, for it is the principal mode of acquisition, and is the only way by which a person can rightly acquire it by his own exertion. Of all the "rights of persons" it is the most essential to human happiness. Thus, it is seen, that although the Dartmouth College case has not been expressly overruled, its to the United States Constitution provides: "No doctrine has been greatly weakened. The courts State shall make or enferce any law which shall have evidently labored to overthrow its effects, and abridge the privileges or immunities of citizens of in my opinion, justly. There is good reason, I the United States; nor shall any State deprive any think, for saying that, although right of amend-person of life, liberty or property without due proment or repeal be not reserved in the charter, the Legislature should have such right of appeal or amendment notwithstanding the omission. If not, it seems that corporations have a vested right in any and all advantages they may obtain by omissions on the part of the Legislature. But this right they cannot have. Can the Legislature, by a mere omission on its part, so bind up legislation as to disable it or its successor from correcting abuses of corporate franchises? The Legislature could not, if it were to try, divest itself of the right and duty to pass laws regulating and controlling the rights of individuals, so that in the use and enjoyment of their own they shall not injure that of others. If, therefore, in the judgment of the law-making department of the goverment, the public good will be subserved by statute regulating or controlling corporations, when such regulations will not conflict with the Constitution of the Federal government or of the State Constitutions, such regulations must be sustained by the courts as the law of the land. CONTRACTS WITH INDIVIDUALS. But the right to contract is not uniimited. The conflicting interests of individuals make this impossible. Rights in conflict with each other cannot be unlimited. Duties to persons, to society, the public and the government are imposed upon every individual. To conserve and enforce these rights and duties, the government can impose such restrictions upon the actions of the individual as may be appropriate for that purpose. It is upon these principles that the Legislature can control, to some extent the rights of a railroad corporation to contract in reference to its property, which is said to be "devoted to a public use." By devoting its property to a use in which the public has an inter the use, and subjects itself to the control of the Legislature, for the common good, to the extent of the interest it has thus created. Let us look now to its contract rights with indi-est, it, in effect, grants to the public an interest in viduals. There are always two controlling considerations in the granting by the State of corporate franchises, and of the acceptance of such franchises by the corporators. First. The public good is to be considered the leading and controlling motive with the Legislature, for the public good is what the Legislatures are instituted for by the people. Second. The benefit of the individuals composing such corporations. This privilege, given to the corporation, gives to it the right to contract with individuals privately, to engage employes, and to contract with them in regard to their wages, to fix rates for 'Sinking Fund Cases, 99 U. S. 706. Upon this principle, it has been held that the Legislature can fix the maximum of charges for the carriage of freight and passengers. If otherwise, the corporations of the country could levy such exorbitant rates as to tend to the stagnation of business and travel, and thereby cripple the prosperity of the State. But this regulation must be reason Chicago, Burlington & Quincy R. Co. v. Iowa, 94 U. S. 155; Peik v. Chicago & Northwestern R. Co., id. 180. of the great dangers, and even the destruction of life and property which might result from the attempt of men, who have become enfeebled by pro able. It is not to be inferred that this power of limitation or regulation is itself without limit. Under pretense of regulating fares or freights the State cannot require a railroad corporation to carry pas-longed and exhausting effort, to control engines sengers without reward; neither can it do that which in law amounts to a taking of private property for public use without compensation or without due process of law.1 Whether it is for the courts or for the Legislature to decide upon the reasonableness of certain acts is somewhat doubtful. In the case of Chicago, etc., R. Co. v. Minnesota,' it was held that the Legislature's power to control does not empower a commission established by the Legislature to fix rates finally, without opportunity for a judicial hearing on the question of their reasonableness, which, in effect, makes the question one for the court, and not for the Legislature. This, in my opinion, is the better view, because if otherwise, it would be giving to the Legislature the authority of deciding the constitutionality of their own acts, a right clearly beyond its power. It is this same principle from which comes the power of the Legislature to regulate millers, bakers, hackmen, ferriers, wharfingers, innkeepers and the like, "and in so doing fix a maximum of charge to be made for services rendered, accommodations furnished and articles sold." 3 In all of these cases the legislation is based upon some reasonable condition, and not on the absolute right to control. It is obvious that the right to contract cannot be limited by arbitrary legislation which rests upon no reason on which it can be defended. The question as to whether the regulation is just or unjust to the corporation depends upon the question whether or not the limitation or restriction upon its right to contract, is reasonable. In other words, the corporation should always be allowed the privilege of making reasonable contracts for the purpose of carrying out the object of its incorporation. But if the results of the contract of a railroad corporation interfere with the interests of the public at large and with the police power of the State, then the Legislature may intervene. It was upon this principle that the legislative act in New York which declares that no railroad shall permit or require trainmen who have worked twenty-four hours to again go on duty until they have had at least eight hours' rest, was held constitutional. In view and cars when in motion, it seems reasonable to claim that the passing of such an act is within the province of the Legislature. Another limitation to the right to contract by railroad corporations is that of their being unable by contract to limit their liability for negligence. By the common law of both England and America, the common carrier was an insurer for the safety of all goods placed in its hands for transportation; the fundamental principle upon which this law was based being to secure the utmost care and diligence in the performance of its duties. But the later American rule is that the common carrier may by special contract with the shipper exempt itself from responsibility for losses happening from accident. and from dangers that no human skill or diligence can guard against. This, however, is as far as the rule goes, and it does not allow the carrier to secure absolute exemption from liability. This rule is followed in the United States and in a majority of the State courts; but the New York courts ignore this rule, and hold that a common carrier may, by an express contract with the shipper, exempt itself from liability for loss or damage occasioned by the negligence of its servants. The New York rule appears to me the more feasible; it is only by express contract with the shipper that the company can thus exempt itself, and if the shipper does not wish to make such a contract, the company is bound to carry the property under the full common-carrier liability. As long as the shipper can insist that the carrier shall carry his property under the common-carrier responsibility, I can see no reason why he may not voluntarily enter into a contract founded upon a sufficient consideration exempting the carrier from all responsibility for any degree of negligence. A most interesting case upon this question of the freedom of contract of railroad corporations is the "Mileage Case," recently decided by the Supreme Court of Massachusetts, wherein the court dismissed an information brought by the attorneygeneral against the Old Colony Railroad Company to compel it to sell mileage tickets to all who apply for them, and to redeem all such tickets presented by any other railroad corporation. By statute of 1892, chapter 389, it was the duty of a railroad company to issue mileage tickets, which must be accepted as fare by all other railroad companies in the State; and, conversely, it was the duty of all railroad companies to accept mileage books issued by all other railroads. ac The grounds upon which the majority of the court hold the statute unconstitutional are, first, that it seeks to compel the transportation of passengers by one railroad on the credit of another, to which money for the payment of the fare has been advanced by the purchaser of a mileage ticket; and, secondly, that a mileage ticket is to be " cepted and received for fare and passage" upon other railroads, "under like conditions as upon the line or lines of the corporation issuing such ticket." Thus, requiring one railroad company to transport a passenger on the credit of another, and authorizing one railroad company to determine the conditions on which another company must carry passengers. To this opinion there were two dissenting judges -Judge Knowlton, who writes the dissenting opinion, and in which Judge Holmes concurs. The questions involved in the arguments of the learned judges are very near the dividing line, and to distinguish whether the legislative interference is valid or not is, to say the least, difficult. The first question which we have is: Can a State Legislature require one railroad to carry passengers on the credit of another railroad? This I would answer in the negative, because it seems to me an interference with the rights of a railroad corporation to make reasonable and proper contracts in carrying on their business, and so interferes with their right of property. At common law a common carrier of passengers could demand prepayment of the fare before he could be compelled to receive and transport passengers. The fare, we have seen, must be reasonable; if it is reasonable, and as the carrier can have no lien upon the passenger to secure the payment of the fare, it is no more than just that the company be allowed to collect the fare in advance, and not be obliged to trust to the credit of the passenger or of some other person. In the statute in question there was no fund provided for the redemption of the ticket, and no tangible property on which there was a lien. It is a known and conceded fact that some of the railroads of the State are not on the best financial basis, and as the statute did not prohibit a railroad from selling the mileage books for less than $20 each, although it must redeem them at that price, there is no reason for not believing that a railroad in low financial standing would resort to enormous sales of such tickets as a mode of raising money, and when presented for use on another railroad be unable to redeem them. This, in effect, is the taking of property which is consumed in the use, with only a right of action as compensation, with the risk of never obtaining satisfaction; and it appears to me a very inadequate security. The railroad is "devoted to a public use," and the Legislature has power to make reasonable acts regarding the companies' dealings with the public; but is it reasonable to say that this extends into the internal arrangements of different companies as between themselves, simply because it will be the more convenient for a small part of the public? If this is not true, it is as reasonable to say that statutes to be extended, not only to the internal arrangements of railroad corporations, but all the corporations of the State could be thus controlled and made to accept paper of third parties for the payment of their goods. This would, if allowed, not only be unjust to the corporators, but it would injure the trade and industry of the country, and be thus detrimental to both producer and consumer alike. The second argument upon which the question is made to turn is, to my mind, a very strong one, and sufficient alone to decide the case. The inquiry is this: Can a State Legislature authorize one railroad to determine the conditions on which another railroad must carry passengers? This is, in effect, allowing one railroad the authority of making the contracts of another, which is clearly unjust. In my opinion, it is legally impossible to legislate a contract into existence. The founders of this government incorporated into the Federal Constitution a provision that no State should pass any law impairing the obligation of contracts. Had they a full conception of the problems which have arisen since, they would have undoubtedly added to that constitutional limitation a further provision that no State should pass a law which created a contract that had not been entered into. But, be that as it may, if it is a part of the duty of a common carrier to carry goods or passengers, for whose carriage he has not been paid, unless he has specifically waived such payment, then the law can be upheld as a proper regulation of the duty of a carrier. But before any of the liabilities of a common carrier attach, the duty of the specific case must be imposed upon him by compliance with the law which applies to this peculiar business. The first requisite of this is, that the price which is either agreed upon or that which is a reasonable price demanded by the carrier shall be paid. Until that is done, the legal duties of the carrier do not arise, and no amount of legislation can impose upon the carrier any of his duties or liabilities. It is the first principle of contract that there must be assent |