Dow

V.

BEIDELMAN.

(125 U.S., 680.)

Fares-Regulation by Statute-Constitutionality. Under a constitutional provision conferring upon the legislature power to alter or revoke charters thereafter granted, and to correct abuses and excessive charges by railroad companies, a statute limiting the maximum fare for the carriage of a passenger within a State to three cents a mile, is not a taking of property without due process of law within the meaning of the prohibition in the Federal constitution, in the case of a corporation reorganized on the sale of a railroad under a decree of foreclosure after the adoption of the State constitution, although the operation of the statute will reduce the net yearly income of the company to less than one and a half per cent on the original cost of the road, and only slightly over two per cent on the bonded debt, there being no evidence to show how much the bonds cost, or the amount of the capital stocks reorganized, or the sum paid for the road at the foreclosure sale.

Same Classification of Companies-Length of Road.-A statute dividing railroad companies into classes, according to the length of the roads operated, and fixing a different limit for passenger fares for each class does not deny a corporation the equal protection of the laws within the meaning of the prohibition in the Federal constitution.

ERROR to the Supreme Court of the State of Arkansas.

Action by Beidelman against Dow, Matthews, and Moran, trustees, alleging that the defendants were the legal owners and in possession of the Memphis and Little Rock Railroad, in that State, more than a hundred miles long, and charged the plaintiff more than three cents a mile for a ticket between two stations twenty-three miles apart on the road, in violation of a statute of the State of April 4, 1887. The provisions of that statute are as follows, viz.:

SEC. 1. "The maximum sum which any corporation, officer of court, trustee, person or association of persons, operating a line of railroad in this State, shall be authorized to charge and collect for carrying each passenger over such line within this State, in the manner known as first class passage, is hereby fixed at the following named rates: On lines of railroad fifteen miles or less in length, eight cents per mile. On lines over fifteen miles in length and less than seventy-five miles in

length, five cents. On lines over seventy-five miles in length, three cents per mile."

SEC. 3. "Any of the persons or corporations mentioned in section one that shall charge, demand, take, or receive, from any person or persons aforesaid, any greater compensation for the transportation of passengers than is in this act allowed or prescribed, shall forfeit or pay for every such offence any sum not less than fifty dollars nor more than three hundred dollars, and costs of suit, including a reasonable attorney's fee, to be taxed by the court where the same is heard, on original action, by appeal or otherwise, to be recovered in a suit at law by the party aggrieved in any court of competent jurisdiction." Acts of 1887, p. 227.

A jury was waived and the case submitted upon the following statement of facts:

The Memphis and Little Rock R. Co. was incorporated under the act of the General Assembly of the State of Arkansas, approved January 11, 1853, which act is taken as a part hereof. See acts of 1852, p. 130.

"On May 1, 1860, it mortgaged its property to Samuel Tate, Robert C. Brinckley, and George C. Watkins, trustees. On March 1, 1871, it executed a second mortgage on its property and charter to Henry F. Vail, as trustee. On March 17, 1873, this second mortgage was foreclosed by sale under the power, and the purchasers, on November 17, 1873, organized a new company under the charter, which they called the Memphis and Little Rock Railway Company.

"On December 1, 1873, the Memphis and Little Rock R. Co. mortgaged its charter and property to certain trustees. This mortgage not being paid at maturity, the trustees thereunder brought suit in the United States circuit court for the Eastern District of Arkansas for its foreclosure, and the trustees in the mortgage of May 1, 1860, were, on their own application, made parties complainant; and on November 21, 1876, a final decree was entered in the cause, directing the foreclosure of both mortgages and a sale for their satisfaction.

"On April 27, 1877, the mortgaged property was sold under the decree, including the charter, and the purchasers at the sale organized under the charter, and called the new company the Memphis and Little Rock Railroad Company, as reorganized. On May 1 and 2, 1877, the said last-named company issued bonds and executed to the defendants its mortgage upon its property and charter, and, default having been made in their payment, the defendants are in possession as trustees for the mortgage bondholders.

"The legal right of the successive companies to organize under the old charter is not admitted.

"The railroad was built, prior to 1868, from Memphis to Madison and from Little Rock to Du Vall's Bluff. It was built through the intervening distance in 1869. The expense of constructing the Memphis and Little Rock railroad was $4,000,000, and the railroad company has a bonded indebtedness of $2,850,000, bearing interest at eight per cent per annum; and the defendants are in possession as the representatives of the mortgage bondholders, default having been made in the payment of interest on the bonds. The net income of the road for the year 1886 was $162,000, earned principally from passenger traffic, the charge for transportation having been five cents per mile; and this has been about the average for recent past years. With the same traffic that the road has now, and charging for transportation at the rate of three cents per mile, the net income will only be $58,000, which will pay less than one and one half per cent on the cost of the road, and only a little over two per cent on its bonded indebtedness. The defendants do not anticipate any increase of traffic on account of the reduction, for the reason that the St. Louis, Iron Mountain, and Southern Railway, from which the Memphis and Little Rock Railroad derives nearly all of its through business, is building a parallel branch from Bald Knob in the State of Arkansas to the city of Memphis, and, being a hostile and rival line to that of these defendants, will carry over that branch the through passengers who would otherwise go over the road of the defendants. The most profitable traffic has been the through traffic, and the defendants anticipate a great diminution in their present traffic when said branch is completed, and it will to all appearances, be completed during the summer of 1887.

The length of the defendant's road is one hundred and thirty-five miles. Forty miles of that distance, from Madison to Memphis, is through a swamp, in which there are virtually no inhabitants, and which is subject to overflow.

"Either party may refer to the statements in reference to the railroads in Arkansas contained in Poor's Railroad Manual for 1886, and the same shall be taken as evidence of the facts therein stated.

"The cost of constructing the Batesville and Brinkley Railroad from Brinkley to Newport, a distance of sixty miles, has been $375,000. Its rate of transportation before the act of 1887 was five cents per mile. Its length is sixty miles. The Arkansas and Louisiana Railroad is twenty-five miles long and its cost is $180,000.

"It is further agreed that in Arkansas money is now and

has been for twenty years past lending currently at interest from six to ten per cent per annum."

"The following statements in Poor's Railroad Manual for 1886 were introduced in evidence under the agreed statement of facts,.viz. :

"Net earnings of Batesville and Brinkley Railroad for 1885, $29.163.25.

"Net earnings of the Arkansas and Louisiana Railroad for 1855, $34.429.88.

66

Length of St. Louis, Iron Mountain, and Southern Railway, 923 miles. Mortgaged for $35,564,352.61; 5, 7, and 8 per cent. Net earnings, $3,619,416.63. Rate of charges has been three cents per mile.

"Length of the Little Rock and Fort Smith Railroad, 165 miles. Mortgaged for $2,379,500; 7 per cent. Net profits, $225,910.31. Rate of charges has been five cents per mile.

66

Length of the Little Rock, Mississippi River, and Texas Railway, 162 miles. Mortgaged for $2,977,500; 7 per cent. Net earnings, $99,604.44. Rate of charges has been five cents per mile.

Net

"Length of the St. Louis, Arkansas, and Texas Railway, 735.21 miles. Mortgaged for $18,375,000; 6 per cent. earnings, $67.644.30.

"Length of St. Louis and San Francisco Railroad, 814.88 miles. Mortgaged for $26,026,000. Net earnings, $2,573,

772.70.

66

Length of Kansas City, Springfield, and Memphis Railway, 281.94 miles. Mortgaged for $7,800,000; 6 per cent. Net earnings, $365,160.88."

No other evidence was introduced.

The defendants asked the court to find as follows:

"First. The act of the General Assembly of the State of Arkansas, approved April 4, 1887, in so far as it relates to the present proceeding, is unconstitutional, null, and void, because under the guise of regulating charges for the carriage of passengers on railroads, it amounts virtually to the confiscation of the property of the railroad in the hands of said defend

ants.

"Second. The said act of the general assembly is unconstitutional, because it is special legislation and makes arbitrary discriminations between different railroads, not based either upon their value, their earnings, or other valid. grounds, but based simply on the respective lengths of the several railroads."

But the court refused to make either of those declarations of law, and gave judgment for the plaintiff for a penalty of fifty dollars and a counsel of fee of twenty-five dollars. The

defendants appealed to the supreme court of the State, which affirmed the judgment, and therefore, the defendants sued out this writ of error.

Mr. U. M. Rose for plaintiff in error.

Mr. John H. Rogers for defendant in error.

GRAY, J.-The general rule of law that governs this case has been clearly stated and developed in opinions of this court, delivered by the late chief justice.

reviewed.

In Munn v. Illinois, 94 U. S. 113, decided at October term, 1876, after affirming the doctrine that by the common law carriers or other persons exercising a public emThe Munn case ployment could not charge more than a reasonable compensation for their services, and that it is within the power of the legislature "to declare what shall be a reasonable compensation for such services, or, perhaps more properly speaking, to fix a maximum beyond which any charge made would be unreasonable," the chief justice said: "To limit the rate of charges for services rendered in a public employment, or for the use of property in which the public has an interest, is only changing a regulation which existed before. It establishes no new principle in the law, but only gives a new effect to an old one.' 94 U. S. 133,

134.

Chicago, B. &

Lowa exam

ined.

V.

In Chicago, Burlington & Quincy Railroad v. Iowa, 94 U. S. 155, decided at the same time, a corporation having a perpetual lease of the railroad of another organized under the general corporation law of Iowa of 1851, c. 43, Q. R. Co. with the same powers as private individuals to make contracts, as well as the power to establish by-laws and make all rules and regulations deemed expedient for the management of its affairs, in accordance with law, was held to be bound by the subsequent statute of Iowa of 1874, c. 68, entitled "An act to establish reasonable maximum rates of charges for transportion of freight and passengers on the different railroads of this State," by which those railroads were classified according to the gross amount of their earnings per mile for the preceding year; and the compensation per mile, which those of each class might receive for the transportation of a passenger with ordinary baggage, was limited to three cents, three cents and a half, and four cents, respectively. Iowa laws of 1874, p. 61. The chief justice said: "Railroad companies are carriers for hire. They are incorporated as such, and given extraordinary powers, in order that they may better serve the public in that capacity. They are, therefore, engaged in a public employment affecting a public interest, and, under the decision