Angeles, Pasadena, Santa Barbara, Bakersfield, Hollister, Paso Robles, Latrobe, and Porterville. In all of the above-named places regular meetings were held. Complaints were received and witnesses were examined touching the question of freights and fares, and in every instance relief was granted the shipper to his entire satisfaction.

During the first year this Board heard thirty-seven cases, and in nearly every case relief was given to the complainant. It is true in many cases the differences were adjusted by the carrier when the subject was properly presented to it by the shipper, through the medium of this Commission, without an order from this Board; but in many cases wide differences existed where an amicable adjustment could not be reached between the carrier and shipper; then it became the duty of this Commission to set in motion the machinery given it by the Constitution, by commanding all interested parties to appear at a time fixed, and both shipper and carrier were given an impartial hearing.

One of the most important cases that came before the Commission and which was resisted by the carrier, that affected the general question as to the reasonableness of rates, was that of J. W. Gilman et al. vs. The Southern Pacific Company.

The plaintiff together with one hundred and sixty-five shippers petitioned this Board for a reduction of freight and passenger rates over that portion of the line of the Southern Pacific Company known as the Porterville Division. Petitioners claimed that the carrier's rates were excessive and unreasonable, and asked for a general reduction to conform to the rates in use on the main line. The Southern Pacific Company, through Mr. Richard Gray, the General Traffic Manager, answered said petition and denied that the Southern Pacific Company's rates were discriminative, unjust, and unreasonable, but on the contrary were manifestly just and reasonable, and at the same time claiming that it costs more to handle a limited amount of tonnage on a branch line than it does a large volume of business on a trunk line, and further, that if the road between Porterville and Fresno had been built and operated by an independent company, no such rates as were then in force would have been possible or could have been secured by the producers at Porterville. Thus the issue was joined. The Commission met at Porterville on February 5, 1891. The Southern Pacific Company was duly notified to be in attendance, and after a fair and full hearing, both shipper and carrier being ably represented, the Commission adopted the following resolution:

Resolved, That the Southern Pacific Company be required to show cause why its freight rates to and from points on its Fresno Division, commonly known as the Porterville Branch, should not be revised with a view to modification, on the basis charged to other communities similarly situated.

That thereafter and on the 30th day of March, 1891, the Board made the following order:

The above case was called, and argument having been made before this Board in defense of said Southern Pacific Railroad Company's present rates, and full and fair consideration given same, it is now ordered that the rates as per schedules "A," "B," "C," and "D" annexed, be substituted for those now in use and force; same to take effect not later than fifteen days from date.

The schedules referred to are published in full in our twelfth annual report, and made a general reduction of about 10 per cent, which was satisfactory to the shippers.

Many cases of like importance have been determined by the Commission, and in nearly every instance favorable to the shippers, but which we do not deem necessary to specially mention. There is one case, however, that deserves more than a passing notice. This was the case of R. O. Shively vs. The Southern Pacific Company.

Mr. Shively was a merchant doing business in the city of San José, and as such was engaged in shipping large quantities of merchandise of various kinds over the lines of the Southern Pacific Company. He alleged among other things that the rates of passenger fares in this State were much higher than those on roads in other portions of the United States similarly circumstanced as to cost of construction, cost of operation, grades, etc., and that the fare schedules as then in force in this State should be reduced at least 10 per cent over the lines of the Southern Pacific Company. He further alleged that the freight rates charged by said company and approved by the Railroad Commissioners previous to the organization of this Board on January 5, 1891, were unjust, and that grave discrimination existed between classes of produce shipped from various points throughout the State, and that the freight schedules should be revised so as to affect every class of merchandise and every point of shipment within the State, and asked that a general reduction of 20 per cent on the then existing freight schedules be made.

The filing of a complaint so general, and at the same time sweeping in its character, resulted in a disagreement between this body and an organization known as the Traffic Association of California, by whom it was contended that the State Board of Railroad Commissioners was not a judicial body; that it was within their power, and it was their duty, to establish and arbitrarily fix passenger and freight rates, without giving the railroad company notice or an opportunity to be heard; but when the rates were once established by the Board, the company would then be granted a hearing, for the purpose of disproving the unjustness of these rates, should the Commission err in its judgment in the adjustment of the schedules.

The Commission did not accept this view of the question. Section 22 of Article XII of the Constitution declares that:

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Said Commissioners shall have the power, and it shall be their duty, to establish rates of charges for transportation of passengers and freight by railroad and other transportation companies, and publish the same from time to time, with such changes as they may make."

This same section provides that such rates, when established, shall be deemed conclusively just and reasonable, thus having the same effect as a final judgment in a court of law.

We therefore held that if the decisions of this Commission are to be conclusive on the subject, and to have the same effect as a judgment in a court of law, they should be of judicial impartiality.

An Act of the Legislature of this State, entitled "An Act to organize and define the powers of the Board of Railroad Commissioners," approved April 15, 1880, expressly provides: "That this Board shall have power to issue writs of summons and subpoena in like manner as courts of record. The summons shall direct the defendant to appear and answer within fifteen days from date of service," and it further provides that "complaints before said Board shall be in writing and under oath," and that "the process issued by the Board shall extend to all parts of the State." This statute defining the powers of the Board clearly

requires a notice, and an opportunity to be heard on part of the defendants against any complaint made before this Board.

It is apparent that the Traffic Association was in error when it insisted that this Commission should, without notice to the railroad company, or an opportunity for it to be heard, proceed to establish a schedule of freights and fares, which schedule, when so established, is by the Constitution declared to be conclusively just and reasonable.

The general rule of law is, "that the method pursued should be appropriate to the case; adapted to the end to be attained, just to the parties, with notice, and an opportunity to be heard before an appropriate and impartial tribunal." This is the doctrine laid down by that eminent jurist and writer on constitutional law, Judge Cooley, in his work on Constitutional Limitations (6th ed.), page 694; and many other writers have adopted this rule on this subject. Argument is unnecessary to show that railroad commissions are appropriate tribunals to fix and establish rates. But the rates of freights and fares must be reasonable and just, and should yield a fair return on the money invested; otherwise the order fixing those rates would be declared null and void when brought before the proper tribunal. This has been decided in many cases before the Supreme Court of the United States.

The question whether rates are reasonable is a judicial one, subject to review by the courts. This doctrine has been upheld in every case where the subject has been presented to the courts for consideration, and especially in the case of Budd vs. New York, 143 U. S. Reports, pp. 517 et seq.; and again in the 4th Interstate Commerce Commission Reports, p. 45; also in the case of Chicago and Grand Trunk Railroad vs. Wellman, 143 U. S. Reports, p. 339.

This doctrine was also upheld by the Supreme Court of the United States in the case of Chicago, Milwaukee, and St. Paul Railway Company vs. Minnesota. This was a writ of error to review a judgment of the Supreme Court of the State of Minnesota, awarding a writ of mandamus against the Chicago, Milwaukee, and St. Paul Railway Company, and the Court decided that:

"The Act of the Legislature of Minnesota, establishing a railroad and warehouse commission, being interpreted by the Supreme Court of that State as providing that the rates of charges for the transportation of property, recommended and published by the Commission, shall be final and conclusive as to what are equal and reasonable charges, and that there can be no judicial inquiry as to the reasonableness of such rates, and a railroad company, in answer to an application for a mandamus, contending that such rates, in regard to it, are unreasonable, and not being allowed by the State court to put in testimony on the question of unreasonableness of such rates, held that the Act is in conflict with the Constitution of the United States, as depriving the company of its property without due process of law, and depriving it of the equal protection of the laws.

"That the company, as the owner of its railroad, franchises, equipment, and appurtenances, is entitled to the possession and beneficial use thereof, was authorized to establish rates for the transportation of freight and passengers, subject only to the provision that such rates. should be fair and reasonable; that the establishing of such rates by the State, against the will of the company, was pro tanto a taking of its property, and depriving it thereof, without due process of law, in viola

tion of Section 1, Article XIV of the amendments of the Constitution of the United States; and that the making of the order of October 13, 1887, was pro tanto a taking and depriving the company of its property, without due process of law, in violation of said section, and therefore void and of no effect.

"The Granger cases, so called, reported in 94 U. S., arose on statutes passed in Illinois in 1873, and in Wisconsin, Iowa, and Minnesota in 1874. The Wisconsin and Iowa Acts were statutes fixing a maximum tariff. The Illinois and Minnesota statutes provided that commissioners should make schedules which should be prima facie reasonable rates. * * * From what has been said it is not to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and freights the 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 the due process of law. The Supreme Court authoritatively declares that it is the expressed intention of the Legislature of Minnesota, by the statute, that the rates recommended and published by the Commission, if it proceeds in the manner pointed out by the Act, are not simply advisory, not merely prima facie equal and reasonable, but final and conclusive as to what are equal and reasonable charges; that the law neither contemplates nor allows any issue to be made, or inquiry to be had, as to their equality or reasonableness in fact; that under the statute the rates published by the Commission are the only ones that are lawful and therefore, in contemplation of law, the only ones that are equal and reasonable; and that in a proceeding for a mandamus under the statute there is no fact to traverse except the violation of law in not complying with the recommendations of the Commission. In other words, although the railroad company is forbidden to establish rates that are not equal and reasonable, there is no power in the courts to stay the hands of the Commission, if it chooses to establish rates that are unequal and unreasonable.

"This being the construction of the statute by which we are bound in considering the present case, we are of opinion that, so constructed, it conflicts with the Constitution of the United States in the particulars complained of by the railroad company. It deprives the company of its right to a judicial investigation, by due process of law, under the forms and with the machinery provided by the wisdom of successive ages, for the investigation, judicially, of the truth of a matter in controversy, and substitutes therefor, as an absolute finality, the action of a Railroad Commission, which in view of the powers conceded to it by the State Legislature, cannot be regarded as clothed with judicial functions or possessing the machinery of a court of justice.

"Under Section 8 of the statute which the Supreme Court of Minnesota says is the only one which relates to the matter of the fixing by the Commission of general schedules of rates, and which section, it says, fully and exclusively provides for that subject, and is complete in itself, all that the Commission is required to do is, on the filing with it by a railroad company of copies of its schedules of charges, to 'find' that any part thereof is in any respect unequal or unreasonable, and then it is authorized and directed to compel the company to change the

same and adopt such charge as the Commission 'shall declare to be equal and reasonable,' and, to that end, it is required to inform the company in writing in what respect its charges are unequal and unreasonable. No hearing is provided for, no summons or notice to the company before the Commission has found what it is to find, and declare what it is to declare, no opportunity provided for the company to introduce witnesses before the Commission; in fact, nothing which has the semblance of due process of law; and although, in the present case, it appears that, prior to the decision of the Commission, the company appeared before it by its agent, and the Commission investigated the rates charged by the company for transporting milk, yet it does not appear what the character of the investigation was, or how the result was arrived at."

In concurring with the above decision, Mr. Justice Miller laid down the following general rules that should govern the establishing of rates. by Railroad Commissioners, viz.:

"1. In regard to the business of common carriers, limited to points within a single State, that State has the legislative power to establish the rates of compensation for such carriage.

"2. The power which the Legislature has to do this can be exercised through a Commission, which it may authorize to act in the matter, such as the one appointed by the Legislature of Minnesota by the Act now under consideration.

"3. Neither the Legislature nor such Commission, acting under the authority of the Legislature, can establish, arbitrarily and without regard to justice and right, a tariff of rates for such transportation, which is sounreasonable as to practically destroy the value of property of persons engaged in the carrying business on the one hand, nor so exorbitant and extravagant as to be in utter disregard of the rights of the public for the use of such transportation, on the other.

"4. In either of these classes of cases there is an ultimate remedy by the parties aggrieved, in the courts, for relief against such oppressive legislation, and especially in the courts of the United States, where the tariff of rates established, either by the Legislature or by the Commission, is such as to deprive a party of his property without due process of law.

"But when the question becomes a judicial one, and the validity and justice of these rates are to be established or rejected by the judgment. of a court, it is necessary that the railroad corporations interested in the rate to be considered should have notice and have a right to be heard on the question relating to such rate, which I have pointed out as judicial questions. For the refusal of the Supreme Court of Minnesota to receive evidence on this subject, I think the case ought to be reversed, on the ground that this is a denial of due process of law in a proceeding which takes the property of the company, and if this be a just construction of the statute of Minnesota it is for that reason void." The language used by the statute of Minnesota is that the rates of charges for the transportation of property, recommended and published by the Commission, shall be FINAL and CONCLUSIVE as to what are equal and reasonable charges, and that there can be no JUDICIAL INQUIRY as to the REASONABLENESS of such rates.

Section 22 of Article XII of our Constitution has granted to the