U.S. Supreme Court
Dow v. Beidelman, 125 U.S. 680 (1888)
Dow v. Beidelman
Submitted November 21, 1887
Decided April 16, 1888
125 U.S. 680
A statute of a state 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 chanrobles.com-red
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 to the Constitution of the United States by evidence that, under that restriction, and with its existing traffic, its net yearly income will pay less than one and a half percent on the original cost of the road, and only a little more than two percent 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 this corporation for the road.
A statute of a state classifying its railroad corporations 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 within the Fourteenth Amendment to the Constitution of the United States.
The original action was brought in an inferior court of the State of Arkansas by Beidelman against Dow, Matthews, and Moran, Trustees, alleging that the defendants were the legal owners and in possession of the Memphis and Little Rock Railroad in that state, more than a hundred miles long, and charged and took of the plaintiff more than three cents a mile for a ticket between two stations twenty-three miles apart on that road, in violation of a statute of the state of April 4, 1887, the material provisions of which were as follows:
"SEC. 1. The maximum sum which any corporation, officer of court, trustee, person or association of persons operating a line of railroad in this state shall be authorized to charge and collect for carrying each passenger over such line within this state in the manner known as first class passage is hereby fixed at the following named rates: on lines of railroad fifteen miles or less in length, eight cents per mile; on lines over fifteen miles in length and less than seventy-five miles in length, five cents; on lines over seventy-five miles in length, three cents per mile."
"SEC. 3. Any of the persons or corporations mentioned in section one that shall charge, demand, take or receive from any person or persons aforesaid any greater compensation for the transportation of passengers than is in this act allowed or prescribed shall forfeit or pay for every such offense any sum not less than fifty dollars nor more than three hundred dollars, and costs of suit, including a reasonable attorney's fee, to be
taxed by the court where the same is heard, on original action, by appeal or otherwise, to be recovered in a suit at law by the party aggrieved in any court of competent jurisdiction."
Acts of 1887, p. 227.
At the trial before the court, a jury having been waived, the parties agreed upon the following statement of facts:
"The Memphis and Little Rock Railroad Company was incorporated under the Act of the General Assembly of the State of Arkansas approved January 11, 1853, which act is taken as a part hereof. See acts of 1852, p. 130."
"On May 1, 1860, it mortgaged its property to Samuel Tate, Robert C. Brinckley, and George C. Watkins, trustees. On March 1, 1871, it executed a second mortgage on its property and charter to Henry F. Vail, as trustee. On March 17, 1873, this second mortgage was foreclosed by sale under the power, and the purchasers, on November 17, 1873, organized a new company under the charter which they called the Memphis and Little Rock Railway Company."
"On December 1, 1873, the Memphis and Little Rock Railway Company mortgaged its charter and property to certain trustees. This mortgage not being paid at maturity, the trustees thereunder brought suit in the United States Circuit Court for the Eastern District of Arkansas for its foreclosure, and the trustees in the mortgage of May 1, 1560, were, on their own application, made parties complainant, and on November 21, 1876, a final decree was entered in the cause directing the foreclosure of both mortgages and a sale for their satisfaction."
"On April 27, 1877, the mortgaged property was sold under the decree, including the charter, and the purchasers at the sale organized under the charter and called the new company the Memphis and Little Rock Railroad Company, as reorganized. On May 1 and 2, 1877, the said last-named company issued bonds and executed to the defendants its mortgage upon its property and charter, and, default having been made in their payment, the defendants are in possession as trustees for the mortgage bondholders."
"The legal right of the successive companies to organize under the old charter is not admitted. "
"The railroad was built, prior to 1868, from Memphis to Madison and from Little Rock to Du Vall's Bluff. It was built through the intervening distance in 1869. The expense of constructing the Memphis and Little Rock Railroad was $4,000,000, and the railroad company has a bonded indebtedness of $2,850,000, bearing interest at eight per cent per annum, and the defendants are in possession as the representatives of the mortgage bondholders, default having been made in the payment of interest on the bonds. The net income of the road for the year 1886 was $162,000, earned principally from passenger traffic, the charge for transportation having been five cents per mile, and this has been about the average for recent past years. With the same traffic that the road has now, and charging for transportation at the rate of three cents per mile, the net income will only be $58,000, which will pay less than one and one-half per cent on the cost of the road, and only a little over two per cent on its bonded indebtedness. The defendants do not anticipate any increase of traffic on account of the reduction, for the reason that the St. Louis, Iron Mountain and Southern Railway, from which the Memphis and Little Rock Railroad derives nearly all of its through business, is building a parallel branch from Bald Knob in the State of Arkansas to the City of Memphis, and, being a hostile and rival line to that of these defendants, will carry over that branch the through passengers who would otherwise go over the road of the defendants. The most profitable traffic has been the through traffic, and the defendants anticipate a great diminution in their present traffic when said branch is completed, and it will, to all appearances, be completed during the summer of 1887."
"The length of the defendant's road is one hundred and thirty-five miles. Forty miles of that distance, from Madison to Memphis, is through a swamp in which there are virtually no inhabitants and which is subject to overflow."
"Either party may refer to the statements in reference to the railroads in Arkansas contained in Poor's Railroad Manual for 1886, and the same shall be taken as evidence of the facts therein stated. "
"The cost of constructing the Batesville and Brinkley Railroad from Brinkley to Newport, a distance of sixty miles, has been $375,000. Its rate of transportation before the act of 1887 was five cents per mile. Its length is sixty miles. The Arkansas and Louisiana Railroad is twenty-five miles long, and its cost is $180,000."
"It is further agreed that in Arkansas, money is now and has been for twenty years past lending currently at interest from six to ten per cent per annum."
Some statements in Poor's Railroad Manual for 1886 were introduced in evidence under the agreed statement of facts, and are copied in the margin. * No other evidence was introduced. The court therefore found the facts to be as above agreed and as shown in the extracts from Poor's Manual. The defendants asked the court to make the following declarations of law:
"First. The Act of the General Assembly of the State of Arkansas approved April 4, 1887, insofar as it relates to the present proceeding, is unconstitutional, null and void because, under the guise of regulating charges for the carriage of passengers on railroads, it amounts virtually to the confiscation of the property of the railroad in the hands of said defendants,
and is an unreasonable, unjust, and oppressive taking of private property for public uses without compensation in violation of the Constitution of the State of Arkansas and that of the United States."
"Second. The said act of the General Assembly is unconstitutional because it is special legislation and makes arbitrary discriminations between different railroads not based either upon their value, their earnings, or other valid grounds, but based simply on the respective lengths of the several railroads."
The court refused to make either of those declarations of law, and gave judgment for the plaintiff for a penalty of fifty dollars and a counsel fee of twenty-five dollars. The defendants excepted to the refusal and appealed to the supreme court of the state, which affirmed the judgment.
The defendants sued out this writ of error and assigned for error that the court erred in holding that the statute of Arkansas of April 4, 1887, was not repugnant to the clause of the Fourteenth Amendment to the Constitution of the United States which provides that no State shall deprive any person of life, liberty or property without due process of law and in holding that that statute was not repugnant to the clause of that Amendment which declares that no state shall deny to any person within its jurisdiction the equal protection of the laws. chanrobles.com-red