US SUPREME COURT DECISIONS

A special statutory exemption or privilege (such as immunity from taxation or a right to fix and determine rates of fare) does not accompany the property of a railroad company in its transfer to a purchaser, in the absence of an express direction in the statute to that effect.

When a state legislature establishes a tariff of railroad rates so unreasonable as to practically destroy the value of the property of companies engaged in the carrying business, courts of the United States may treat it as a judicial. question, and hold such legislation to be in conflict with the Constitution of the United States as depriving the company of its property without due process of law and as depriving it of the equal protection of the laws.

Railroad Commission Cases, 116 U. S. 307; Dow v. Beidelman, 125 U. S. 681; Chicago, Milwaukee &c. Railway v. Minnesota, 134 U. S. 418; Chicago & Grand Trunk Railway v. Wellman, 143 U. S. 339, and Reagan v. Farmers' Loan & Trust Co., 164 U. S. 362, examined in detail.

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.

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.

On the 16th day of August, 1880, under the general laws of the State of Arkansas, a company was incorporated under the name and style of the St. Louis, Arkansas and Texas chanrobles.com-red

Page 156 U. S. 650

Railway Company, and authorized to construct a railway from the northern boundary of the State of Arkansas to Fayetteville, in that state. This railroad was connected at its northern terminus with the railroad of the St. Louis, Arkansas and Texas Railway Company, a corporation of the State of Missouri, and at its southern terminus with the railroad of the Missouri, Arkansas and Southern Railway Company, a corporation of the State of Arkansas.

Under provisions of the laws of the states of Arkansas and Missouri, on the 10th day of June, 1881, the three companies mentioned were consolidated into a single corporation under the style of the St. Louis, Arkansas and Texas Railway Company, Consolidated.

On and previous to the 21st day of February, 1882, it was provided by the laws of the states of Arkansas and Missouri that any railroad company incorporated under the laws of the State of Missouri might lease or purchase any part of a railroad, with all its rights, privileges, immunities, real estate, and other property, the whole or a part of which was in the State of Missouri, and constructed, owned, or leased by any other company, if the lines of the roads of said companies were connected and continuous, and that any railroad company incorporated under the laws of the State of Arkansas whose road was wholly or in part constructed and in operation was authorized to sell, lease, or otherwise dispose of the whole or any part of its railroad, with all the rights, privileges, franchises, and immunities thereunto belonging, to any connecting railroad or any railroad corporation then or thereafter organized under the laws of the State of Missouri, or of the United States, or of both.

In the manner provided by those laws, the St. Louis, Arkansas and Texas Railway Company, Consolidated, on the 21st day of February, 1882, sold and conveyed all of its railway in the states of Arkansas and Missouri, together with all its rights, privileges, franchises, and immunities, to the St. Louis and San Francisco Railway Company, a corporation organized under the general laws of the State of Missouri and under several acts of the Congress of the United States. chanrobles.com-red

Page 156 U. S. 651

By an Act of the legislature of Arkansas, approved April 14, 1887, the maximum rate of passenger fares to be charged in that state was fixed at three cents per mile, and a penalty of $300 was given the passenger for each overcharge. At the fall term of 1887 of the Washington County Circuit Court, John B. Gill brought an action against the St. Louis and San Francisco Railway Company, alleging that said company, operating a railroad within the State of Arkansas more than seventy-five miles in length had on five distinct occasions charged and received from the plaintiff more than three cents per mile, and demanding judgment for the penalties prescribed in the said statute.

The St. Louis and San Francisco Railway Company filed several pleas or special answers to the complaint, two of which are alleged to raise federal questions. To these special pleas the plaintiff demurred, and the demurrers were sustained. The defendant then made several offers tending to show that the rate of three cents per mile for each passenger carried was unreasonable, and did not enable the defendant to pay its interest or to earn anything on its capital stock. These offers were ruled out, on plaintiff's objection, as incompetent and irrelevant. Due exceptions were taken by the defendant to the action of the court in sustaining the demurrers and in excluding plaintiff's evidence. Judgment went for the plaintiff, which was on appeal affirmed by the Supreme Court of Arkansas, to whose judgment a writ of error was sued out to this Court.