for consideration, and are to be given such weight as may be just and right in each case. What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience; and, on the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth.14 In another case it is held that a state statute, fixing at three cents a mile the maximum fare that any railroad corporation may take for carrying a passenger within the State, is not, as applied to a corporation reorganized by the purchasers at the sale of a railroad under a decree of foreclosure, shown to be a taking of property without due process of law, in contravention of the Fourteenth Amendment, by evidence that under that restriction, and with its existing traffic, its net yearly income will pay less than one and a half per cent on the original cost of the road, and only a little more than two per cent on the amount of the bonded debt, without any proof of the cost of the bonded debt, or the amount of the capital stock of the reorganized corporation, or the price paid by the corporation for the road; and it was also decided that a statute, classifying the railroad corporations in the State by the length of their lines, and fixing a different limit of the rate of passenger fares in each class, does not deny to any corporation the equal protection of the laws. 15 Again, a tariff fixed by a commission for coal in carload lots is not proved to be unreasonable, by showing that if such tariff were

14 Smyth v. Ames, 169 U. S. 819, 18 Sup. Ct. 418. Examine Stanislaus County v. San Joaquin Canal & Irrig. Co., 192 U. S. 201, 213, 48 L. ed. 406, 24 Sup. Ct. 241, per Peckham, J.; San Diego Land & Town Co. v. National City, 174 U. S. 739, 754, 757, 43 L. ed. 1154, 19 Sup. Ct. 804, per Harlan, J.; Covington & Lex. Turnpike Co. v. Sandford, 164 U. S. 578, 596, 597, 17 Sup. Ct. 198, 41 L. ed. 560; Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, 412, 14 Sup. Ct. 1047, 38 L. ed.

1014; New Memphis Gas Light Co. v. City of Memphis, 72 Fed. 952, 955. See, upon point 2 in the above text, Seaboard Air Line Ry. Co. v. Railroad Commissioners of Ala., 155 Fed. 192.

Method of valuation-Rates-Gas companies. See § 392, herein.

Rates fixed by company-Reasonableness of Basis of computation. See §§ 412, 413, herein.

15 Dow v. Beidelman, 125 U. S. 680, 8 Sup. Ct. 1028, 31 L. ed. 841.

applied to all freight the road would not pay its operating expenses, since it might well be that the existing rates upon other merchandise, which were not disturbed by the commission, might be sufficient to earn a large profit to the company, though it might earn little or nothing upon coal in carload lots.16 In still another case the facts were as follows: The State of South Dakota having passed an act providing for the appointment of a board of railroad commissioners, and authorizing that board to make a schedule of reasonable maximum fares and charges for the transportation of passengers, freight and cars on the railroads within the State, provided that the maximum charge for the carriage of passengers on roads of the standard gauge should not be greater than three cents per mile; and that board having acted in accordance with the statute, and having published its schedule of maximum charges, the Chicago, St. Paul and Milwaukee Railway company filed the bill in this case in the Circuit Court of the United States for the District of South Dakota, seeking to restrain the enforcement of the schedule. The railroad commissioners answered fully, and testimony was taken before an examiner upon the issues made by the pleadings. This testimony was reported without findings of fact or conclusions of law. The case went to hearing, the judge, without the aid of a master, examined the pleadings and the mass of proof. He made findings of fact and conclusions of law; delivered an opinion; and rendered a decree dismissing the bill. The Federal Supreme Court was of opinion that neither the findings made by the court, nor such facts as were stated in its opinion, were sufficient to warrant a conclusion upon the question whether the rates prescribed by the defendants were unreasonable or not, and that the process by which the court came to its conclusion was not one which could be relied upon; that there was error in the failure to find the cost of doing the local business, and that only by a comparison between the gross receipts and the cost of doing the business, ascertaining 16 Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 22 Sup. Ct. 900, 46 L. ed. 1151.

thus the net earnings, could the true effect of the reduction of rates be determined; that the better practice would be to refer the testimony, when taken, to the most competent and reliable master, general or special, that could be found, to make all needed computations, and find fully the facts; so that the Federal Supreme Court, if it should be called upon to examine the testimony, might have the benefit of the services of such master.17

§ 410. Regulation of Rates-Railroad in Two or More States-Continuous Line-Consolidation-Test of Reasonableness of Rate-Penalties-Defense.-A railroad forming a continuous line in two or more States, and owned and managed by a corporation whose corporate powers are derived from the legislature of each State in which the road is situated, is, as to domestic traffic in each State, a corporation of that State, subject to state laws not in conflict with the Constitution of the United States. 18 And when, by legislation and consolidation, a railroad which was originally all in one State becomes consolidated with other roads in other States, and the State originally incorporating it enacts laws to regulate the rates of the consolidated road within its. borders, the proper test as to the reasonableness of these rates is as to their effect upon the consolidated line as a whole. And when a State prescribes rates for a railroad only a part of which is within its borders, the company may raise the question of their reasonableness by way of defense to an action for the recovery of penalties for violating the directions. 19

§ 411. Railroad—Arbitrary Regulation of Rates-Mileage Tickets-Discrimination-Due Process of Law-Equal Protection of the Laws.-While a State may make reasonable regulations for the government of public service corporations, and

17 Chicago, Milwaukee & St. Paul Ry. Co. v. Tompkins, 176 U. S. 167, 20 Sup. Ct. 336, 44 L. ed. 417.

18 Railroad Commission Cases (Stone v. Farmers' Loan & Tr. Co.),

116 U. S. 307, 29 L. ed. 636, 6 Sup. Ct. 334.

19 St. Louis & S. F. Ry. Co. v. Gill, 156 U. S. 649, 15 Sup. Ct. 484, 39 L. ed. 567.

to that end may fix a reasonable maximum rate for the transportation of passengers, it cannot arbitrarily fix a maximum passenger rate of two cents a mile on mileage books of five hundred miles or over and require the carrier always to keep the same on sale to all who apply therefor, and to redeem them at a later period than they have theretofore redeemed mileage books. Such legislation is class legislation, and it is not for the protection of all the people, but of the favored few. It discriminates in favor of the wholesale buyer, and also invades the right of the carrier to conduct and manage its own affairs. It denies to the carrier the equal protection of the laws, and deprives him of his property without due process of law, and is, therefore, unconstitutional.20 So the provision in the act of the legislature of Michigan,21 amending the general railroad law, that one thousand mile tickets shall be kept for sale at the principal ticket offices of all railroad companies in that State or carrying on business partly within and partly without the limits of the State, at a price not exceeding twenty dollars in the Lower Peninsula and twenty-five dollars in the Upper Peninsula; that such one thousand mile tickets may be made non-transferable, but whenever required by the purchaser they shall be issued in the names of the purchaser, his wife and children, designating the name of each on such tickets, and in case such ticket is presented by any other than the person or persons named thereon, the conductor may take it up and collect fare, and thereupon such one thousand mile ticket shall be forfeited to the railroad company; that each one thousand mile ticket shall be valid for two years only after date of purchase, and in case it is not wholly used within the time, the company issuing the same shall redeem the unused portion thereof, if presented by the purchaser for redemption within thirty days after the expiration of such time, and shall on such redemption. be entitled to charge three cents per mile for the portion thereof used, is a violation of that part of the Constitution of the Uni11 Act 1891, No. 90.

20 Commonwealth v. Atlantic Coast Line Ry. Co., 106 Va. 61, 55 S. E. 572, 7 L. R. A. (N. S.) 1086.

ted States which forbids the taking of property without due process of law, and requires the equal protection of the laws. In so holding the court is not thereby interfering with the power of the legislature over railroads, as corporations or common carriers, to so legislate as to fix maximum rates, to prevent extortion or undue charges, and to promote the safety, health, convenience or proper protection of the public; but it only holds that the particular legislation in review in this case does not partake of the character of legislation fairly or reasonably necessary to attain any of those objects and that it does violate the Federal Constitution as above stated.22

§ 412. Right of Carrier to Fix Rates-To What Extent Legislative Power Affected Thereby-Exemptions-Right to Create Railroad Commission-Power to Amend, etc., Successor Company-Obligation of Contracts.23-The right of a State to reasonably limit the amount of charges by a railroad company for the transportation of persons and property within its jurisdiction, cannot be granted away by the legislature unless by words of positive grant, or words equivalent in law.24 And an exemption of a common carrier from legislative control in respect to its rates of fare must clearly appear from the language used, which must plainly and unmistakably evidence an intent inconsistent with the exercise of such control.25 If a statute grants to a railroad company the right "Lake Shore & M. S. Ry. Co. v. 24 Sup. Ct. 756, considered in § 398, Smith, 173 U. S. 486, 19 Sup. Ct. 565, herein. See also § 399, herein. 43 L. ed. 858, rev'g Smith v. Lake Shore & M. S. Ry. Co., 114 Mich. 460, 72 N. W. 328, 4 Det. L. N. 662, 8 Am. & Eng. R. Cas. (N. S.) 496.

23 See § 409, herein, as to test of reasonableness of rates in connection with right of company to fix rates.

25 Indianapolis v. Navin, 151 Ind. 139, 47 N. E. 525, 41 L. R. A. 337, 14 Nat. Corp. Rep. 774. Rehearing denied in 151 Ind. 156, 41 L. R. A. 344, 5 Det. Leg. N., No. 19, 30 Chic. Leg. N. 414, 51 N. E. 80. See § 327, herein.

Examine also the following cases: United States: Metropolitan St. Ry. Co. v. New York Board of Tax

24 Railroad Commission Cases (Stone v. New Orleans & Northeastern Rd. Co.), 116 U. S. 352, 29 L. ed. 651, 6 Sup. Ct. 349, 391. Com- Commissioners, 199 U. S. 1, 50 L. ed. pare Cleveland, City of, v. Cleveland 65, 25 Sup. Ct. 705; Citizens' Bank v. Ry. Co., 194 U. S. 517, 48 L. ed. 1102, Parker, 192 U. S. 73, 48 L. ed. 346, 24