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It is sometimes provided that the action of the Commission should be sufficient evidence of the reasonableness of the rates established by them." In Richmond & Danville Railroad v. Trammel, it was claimed that this meant conclusive evidence and therefore that the action of the Commission in establishing such a rate was unconstitutional. The court, however, held that this meant merely that the action of the Commission constituted prima facie evidence of reasonableness which in the absence of evidence to the contrary would be sufficient to justify a verdict to that effect.

1323. Confusion of the powers of government.

An attempt has been made to create a commission which should fix rates, and should also have the powers of a court; which should first fix rates, then judicially declare them reasonable, and so fulfil the requirements of law without loss of time or hazard of strange judges. This attempt was made in Kansas, where the legislature established a Court of Visitation, gave it the ordinary constitution and powers of a court, and conferred upon it the right to issue writs and injunctions, to summon witnesses, and to decide between parties; and also conferred upon it the power to fix railroad rates. This legislation was held unconstitutional, as violating the constitutional separation of powers, since the body was to exercise both legislative and judicial functions. "Concisely stated," said District Judge Hook,8 "the Court of Visitation may make laws, sit judicially upon their own acts, and then enforce their enactments which have received their judicial sanction. Can this be done? Can there be vested in one body such a union of powers of the different departments or branches of government, to be exercised respecting the same subject-matter and in the same proceeding?"

7

653 Fed. 196 (1892).

7 Western Union Tel. Co. v. Myatt, 98 Fed. 335 (1899); State v. Johnson, 61 Kan. 843, 60 Pac. 1060, 49 L. R. A. 662 (1900).

8 Western Union Tel. Co. v. Myatt, 98 Fed. 335, 347 (1899).

The fact, however, that the Commission is given not merely the power to fix rates, but also (as is the case with the Interstate Commerce Commission) the power to hear controversies between parties, does not make its organization unconstitutional, provided the power of passing on the validity of its rates is not withdrawn from the ordinary courts. That was in fact the case with the commissions whose acts have been upheld by the Supreme Court of the United States.10

SUB-TOPIC 3—OBLIGATION OF CONTRACTS.

§ 1324. Charter of corporation as contract against rate-fixing. A State may be disabled from fixing the rates of a railroad company by reason of some provision in its charter which constitutes a contract with the State.1 Such a contract is made by a provision in a charter allowing a certain maximum charge to be made by the railroad; the charter having been accepted, the legislature cannot subsequently reduce the maximum rate.2 So where the charter provided that rates should not be so reduced that the company should earn less than twelve per cent., this constituted a contract.3

9 Louisville & N. R. R. v. Brown, 123 Fed. 946 (1903).

10 See, for instance, the provisions of the Mississippi Act, upheld in Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886). cases cited, the following: Philadelphia, W. & B. R. R. v. Bowers, 4 Houst. Del. 506 (1873); Hamilton v. Keith, 5 Bush (Ky.) 458 (1869); American Coal Co. v. Consolidation Coal Co., 46 Md. 15 (1877); Owen v. St. Louis & S. F. R. R., 83 Mo. 454 (1884); Camden & A. R. R. v. Briggs, 22 N. J. Law 623 (1850); Iron R. R. v. Lawrence Furniture Co., 29 Ohio St. 208 (1876); State v. Southern Pac. Co., 23 Or. 424, 31 Pac. 960 (1893); Attorney-General v. Chicago & N. W. Ry., 35 Wis. 425 (1874).

1 On what constitutes contract with State, see, in addition to the other 2 Pingree v. Michigan Cent. R. R., 118 Mich. 314, 76 N. W. 635 (1898); Stone v. Yazoo & Miss. R. R., 62 Miss. 607, 52 Am. Rep. 193 (1883).

3 Ball v. Rutland R. R., 93 Fed. 513 (1899).

81325. No contract without express provision.

A charter provision will not be construed as limiting the power of the legislature over rates unless there is an express provision to that effect; the presumption is against such limitation. Thus in Georgia Railroad and Banking Company v. Smith, the charter provided that the charge for transportation should not exceed a certain amount. The court held that this provision did not constitute a contract limiting the power of the legislature to reduce rates. Mr. Justice Field said: “If the charter in this way provides that the charges which the company may make for its service in the transportation of persons and property shall be subject only to its own control up to the limit designated, exemption from legislative interference within that limit will be maintained. But to effect this result, the exemption must appear by such clear and unmistakable language that it cannot be reasonably construed consistently with the reservation of the power by the State. There is no such language in the present case."

§ 1326. Conferring ordinary powers does not create contract. The ordinary clauses in railroad charters do not constitute a contract by the State not to regulate rates. Thus no such contract is created either by the grant of power to carry persons and property, or by the power to make by-laws rules and regulations, or by the power to fix, regulate and receive the tolls and charges. This is merely conferring on the corporation the powers that an individual carrier would have, and it leaves the corporation, like the individual carrier, subject to the regulation of the State.

4 Chicago, M. & S. P. Ry. v. Minnesota, 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 (1889).

5 128 U. S. 174, 32 L. Ed. 377, 9 Sup. Ct. 47 (1888).

6 Railroad Commission Cases, 116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886).

In Ruggles v. Illinois" the point was made that the legislature was restrained by contract from regulating the rates of fare by reason of a provision in the charter of the railroad giving the company the right to make by-laws, provided they were not repugnant to law; and to establish such rates of toll as they. should by their by-laws establish. The court held that immunity from legislative control is not to be presumed, and the charter would not constitute a contract exempting the company from the power of the legislature to regulate rates unless it were expressly so provided. In this case, on the other hand, it was provided that the fixing of rates by the company must be by by-law not repugnant to law; and it therefore left the legislature free to

act.

In Stanislaus County v. San. Joaquin and King's River Canal and Irrigation Company,8 the charter gave the company power to fix rates, subject to regulation by a board of supervisors, who, however, were not to reduce the rates below a certain maximum; it was held that this did not prevent the legislature itself from affecting the rates. "There is no promise made in the act that the legislature would not itself subsequently alter that authority."

§ 1327. Contracts made by municipal ordinance.

A contract limiting the power over rates may be made between a city and a public service company. Before holding that such a contract exists, a court must first determine whether the city has power to make such a contract. Such power may be conferred on a city.10

7 108 U. S. 526, 27 L. Ed. 872, 2 Sup. Ct. 832 (1883).

8 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903).

9 Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 (1901).

10 Los Angeles v. Los Angeles City Water Co., 177 U. S. 558, 44 L. Ed. 886, 20 Sup. Ct. 736 (1900). See, also, Walla Walla v. Walla Walla Water Co., 172 U. S. 7, 43 L. Ed. 344, 19 Sup. Ct. 77 (1898).

A city ordinance, accepted by a public service company, which defines the duties of the company and names a maximum rate of compensation, constitutes a contract, and the rate named in such an ordinance cannot thereafter be diminished.11 There is, however, a constant tendency to find that the ordinance did not constitute a contract and that the power over rates continues. 12

§ 1328. Charter by Congress.

The grant of a charter by Congress does not remove a railroad from the power of a State to regulate rates within the State.13 Even though it is expressly provided in the charter that Congress may reduce rates, this does not constitute a contract by implication that the State shall not do so.14

14

§ 1329. Non-user and waiver of the privilege of exemption. The contractual exemption from regulation of rates may, it would seem, be lost by a company by long-continued non-user (as evidence of rescission of the contract), or by waiver. In San Joaquin and King's River Canal and Irrigation Company v. Stanislaus County, 15 it appeared that by a provision in its charter the company's revenues should not be reduced so as to yield a profit of less than 1 1-2 per cent. a month. This provi

11 Detroit v. Detroit Citizens' St. Ry., 184 U. S. 368, 46 L. Ed. 592, 22 Sup. Ct. 410 (1902); Cleveland v. Cleveland City Ry., 194 U. S. 517, 48 L. Ed. 1102, 24 Sup. Ct. 756 (1904), affirming 94 Fed. 385; Crosby v. City Council, 108 Ala. 498, 18 So. 723 (1895); State v. Laclede Gas-Light Co., 102 Mo. 472, 14 S. W. 974 (1890); Columbus v. Columbus Street Ry., 45 Ohio St. 98, 12 N. E. 651 (1886).

12 Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. Ed. 679, 21 Sup. Ct. 493 (1901); Rogers Park Water Co. v. Fergus, 180 U. S. 624, 45 L. Ed. 702, 21 Sup. Ct. 490 (1901).

13 Reagan v. Mercantile Trust Co., 154 U. S. 413, 14 Sup. Ct. 1060 (1894). 14 Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898). 15 113 Fed. 930 (1902). On appeal the Supreme Court held that there was no contract. Stanislaus County v. San Joaquin & K. R. C. & I. Co., 192 U. S. 201, 48 L. Ed. 406, 24 Sup. Ct. 241 (1903).

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