1

functions of such bodies in determining and fixing reasonable rates are administrative rather than legislative. The authority conferred on them relates merely to the administration in practice of the general rules laid down by the common law and by the legislature. So in the Railroad Commission Cases 1 the legality of the action of the Mississippi Legislature in creating a railroad commission with power to fix rates was involved. The rate so fixed could be enforced in the courts, unless the courts should find it unjust. The delegation of the rate fixing power to a commission in this way was held to be constitutional. this question, Mr. Justice Brewer said in Chicago & Northwestern Railway v. Dey:2 "There is no inherent vice in such a delegation of power; nothing in the nature of things which would prevent the State by constitutional enactment, at least, from intrusting these powers to such a board; and nothing in such constitutional action which would invade any rights guarantied by the Federal Constitution. So that, after all, the question is one more of form than of substance. The vital question with both shipper and carrier is that the rates shall be just and reasonable, and not by what body they shall be put in force."

On

§ 1320. Delegation of power without appeal to the courts. In Chicago, Milwaukee & St. Paul Railway v. Minnesota,3 the court had to pass upon the Minnesota act, which conferred upon the Railroad Commission the power to fix rates without appeal to the courts. In the opinion of the court, this was not due process of law," and for that reason was obnoxious to the Constitution. Mr. Justice Blatchford's words show clearly that the lack of appeal to the courts on the question whether the rate fixed by the Commission was reasonable was the sole ground on

1116 U. S. 307, 29 L. Ed. 636, 6 Sup. Ct. 334 (1886).

2 35 Fed. 866, 874 (1888).

3 134 U. S. 418, 33 L. Ed. 970, 10 Sup. Ct. 462 (1889).

"with

which the statute was held void. "It conflicts," he says, 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 court, cannot be regarded as clothed with judicial functions or possessing the machinery of a court of justice."

§ 1321. Temporary interruption of appeal to the courts.

In Reagan v. Farmers' Loan & Trust Company, it was provided that the rate established by the Commission should be conclusive in actions between private individuals and the companies, so that a rate fixed by the Commission would in fact be binding until declared unreasonable by the courts in a suit specially instituted for the purpose. The court plainly intimated that this was constitutional, but did not find it necessary to decide the question.

§ 1322. Action of the rate-making body as evidence of reasonableness.

It is commonly provided, as in the Interstate Commerce Act, that the rate as fixed by the Commission shall be taken as reasonable until the contrary is shown, or that the action of the Commission shall be prima facie evidence of the reasonableness of the rate as found. This is not unconstitutional; the legislature has power over the weight of evidence, and this provision is merely an exercise of that power.5

4154 U. S. 362, 38 L. Ed. 1014, 14 Sup. Ct. 1047 (1894).

5 Chicago, B. & Q. R. R. v. Jones, 149 Ill. 361, 37 N. E. 247, 41 Am. St. Rep. 278, 24 L. R. A. 141 (1894); Burlington, C. R. & M. R. R. v. Dey, 82 Ia. 312, 48 N. W. 98, 31 Am. St. Rep. 477, 12 L. R. A. 436 (1891).

66

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).