railroad companies, which are derived from the nature of the road itself as a public highway, and from the public character of the uses to which their property is devoted, there is a very large class of cases where the authority of the public is referrible to the "police powers" inherent in every sovereignty. Such are questions of convenience of stations, speed of trains, safety of bridges, approved danger-signals, appliances for safety in car-heating, and in checking or controlling trains in motion, and a vast number and variety of other matters.

These are scarcely within the range of this discussion, which is intended to apply to the question of transportation in its commercial bearings.

The police powers, properly so called, are undoubtedly applicable wherever the comfort, convenience, and safety of the public may require; and it is probably beyond legislative power to surrender them by contract.

It has been noticed in the preceding pages, however, that the power of the legislature over the "mode of use” of railways may probably be surrendered by granting to a company the exclusive right of transportation over its own road. And the power over the "price of the use" may also be bargained away by charter contracts, and lost to the public, so long as those contracts remain in force.

CHAPTER II.

Limitation on Legislative Power Arising from Charter Contracts -Strictly Construed against the Corporations-Not Binding where Power to Amend, Alter, or Repeal Charters is Reserved to the Legislature-Examples of Application of the Power to Amend, Alter, or Repeal-Dual Character of Railroad Property Considered - Private Ownership Restricted to Public Use-Right of Public Use Paramount to Private Ownership.

THE limitations imposed upon the right of public regulation of railways by the terms of the contracts contained in their charters (or in a general law in force at the time) deserve further consideration; for, as observed by the Supreme Court: "It is now too late to contend that the charter of a corporation is not a contract within the meaning of that clause of the Constitution of the United States which forbids a State from passing any law impairing the obligation of a contract."' The main difficulties under this head of contract exemption from legislative control, consist in determining what language or expressions amount to or constitute a contract between any given railroad company and the public, that the latter will not interfere with or undertake to control the rates or opera

1 C., B., & Q. R. R. vs. Iowa, 94 U. S., 155.

tions of the former. In the case last referred to it was decided that a charter merely authorizing the company to contract in reference to its business of transportation as a natural person might do, and to establish by-laws and make all rules and regulations deemed expedient, does not amount to a contract against a legislative reduction of rates. "This company," it was said, "in the transactions of its business, has the same rights and is subject to the same control as private individuals under the same circumstances. It must carry when called upon to do so, and can charge only a reasonable sum for the carriage. In the absence of any legislative regulations upon the subject, the courts must decide for it, as they do for private persons when controversies arise, what is reasonable; but when the legislature steps in and prescribes a maximum of charge, it operates upon this corporation the same as it does upon individuals engaged in a similar business."

In another case' it was held that a provision in the charter that the company should be "bound to carry freight and passengers upon reasonable terms," added nothing to and took nothing from its general liability as a common carrier, and did not at all affect the right of legislative control over the companies' rates. Even where the charter expressly confers on the company power to fix rates, but does not prescribe any maximum, still no contract against legislative control over its rates is created, and such control may be exercised as freely as if the

1 R, R. Co. vs. Blake, 94 U. S., p. 180.

GOVERNMENT TO REGULATE.

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charges by them to be This would have been

charter did not confer the power.' "This power of regulation is a power of government continuing in its nature, and if it can be bargained away at all, it can only be done by words of positive grant, or something which is equivalent in law. In the words of Chief-Justice Marshall, in Providence Bank vs. Billings, 4 Pet., 514, 561, 'its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon it does not appear.'. . . The case turns consequently on Section 12 [of the charter of the company], which is 'that it shall be lawful for the company from time to time to fix, regulate, and receive the tolls and received for transportation,' etc. implied from the rest of the charter had there been no such provision, and it is argued that unless it had been intended to surrender the power of control over fares and freights, this section would not have been inserted. The argument concedes that the power of the company under this section is limited by the rule of the common law which requires all charges to be reasonable. The claim now is that by Section 12 the State has surrendered the power to fix a maximum for this company, and has declared that the courts shall be left to determine what is reasonable, free of all legislative control. We see no evidence of any such intention. Power is granted to fix reasonable charges, but what shall be deemed reasonable in law is nowhere indicated.

1 R. R. Commission cases, 116 U. S., p. 307.

There is no rate specified nor any limit set. Nothing whatever is said of the way in which the question of reasonableness is to be settled. All that is left as it was. Consequently all the power which the State had in the matter before the charter, it retained afterwards. The power to charge, being coupled with the condition that the charge shall be reasonable, the State is left free to act on the subject of reasonableness, within the limits of its general authority, as circumstances may require. The right to fix reasonable charges has been granted, but the power of declaring what shall be deemed reasonable has not been surrendered. If there had been an intention of surrendering this power, it would have been easy to say so. Not having said so, the conclusive presumption is there was no such intention."

It has recently been decided by the Supreme Court of the United States,' that the fixing of maximum rates (that is, providing either in the charter or in a general law applicable to the charter, that the company may charge not exceeding certain specified rates), does not alone amount to a contract protecting against future reduction of rates, below the maximum, by public authority. "It would require much clearer language than this,” said the Court, "to justify us in holding that notwithstanding any altered conditions of the country in the future the legislature had, in 1833, contracted that the company might, for all time, charge rates for transportation of

1 R. R. Co, vs. Smith, 9 S. Ct. Reporter, 47.