Subscribe to Cases that cite 128 U. S. 174 RSS feed for this section

U.S. Supreme Court

Georgia Railroad & Banking Co. v. Smith, 128 U.S. 174 (1888)

Georgia Railroad and Banking Co. v. Smith

No. 28

Argued October 16-17, 1888

Decided October 29, 1888

128 U.S. 174


The incorporation of a railroad company by a state, the granting to it of special privileges to carry out the object of its incorporation, particularly the authority to exercise the state's right of eminent domain to appropriate private property to its uses, and the obligation, assumed by the acceptance of the charter, to transport all persons and merchandise upon like conditions and for reasonable rates, affect the property and employment with a public use, and thus subject the business of the company to a legislative control which may extend to the prevention of extortion by unreasonable charges and favoritism by discriminations.

In order to exempt a railroad corporation from legislative interference with its rates of charges within a designated limit, it must appear that the exemption was made in its charter by clear and unmistakable language, inconsistent with any reservation of power by the state to that effect.

Although the general purpose of a proviso in a statute is to qualify the operation of the statute, or of some part of it, it is often used in other senses, and is so used in the act of the Legislature of Georgia of December 21, 1833, incorporating the Georgia Railroad Company, and that act does not exempt the corporation created by it or its successors from the duty of submitting to reasonable requirements concerning transportation rates made by a railroad commission created by the state.

By an Act of the Legislature of Georgia passed December 21, 1833, the plaintiff in error was incorporated under the name of the "Georgia Railroad Company," and empowered to construct a "rail or turnpike road from the City of Augusta," with branches extending to certain towns in the state, and to be carried beyond those places at the discretion of the company. Laws 1833, 256.

By an Act of the legislature passed December 18, 1835, certain amendments to the charter were made, and among others one changing its corporate name to "The Georgia Railroad and Banking Company," its present designation. The twelfth section of the charter, among other things, declares that

"The said Georgia Railroad Company shall at all

Page 128 U. S. 175

times, have the exclusive right of transportation or conveyance of persons, merchandise, and produce over the railroad and railroads to be by them constructed, while they see fit to exercise the exclusive right: provided, that the charge of transportation or conveyance shall not exceed fifty cents per hundred pounds on heavy articles and ten cents per cubic foot on articles of measurement, for every one hundred miles, and five cents per mile for every passenger, provided always that the said company may, when they see fit, rent or farm out all or any part of their exclusive right of transportation or conveyance of persons, on the railroad or railroads, with the privilege to any individual or individuals, or other company, and for such term as may be agreed upon, subject to the rates above mentioned. And the said company, in the exercise of their right of carriage or transportation of persons or property or the persons so taking from the company the right of transportation or conveyance, shall, so far as they act on the same, be regarded as common carriers."

In pursuance of the authority conferred by this section, the company, by a deed bearing date on the 7th of May, 1881, leased to one William M. Wadley, for the term of ninety-nine years, "all its privileges, general and exclusive," of transporting persons and property over the lines of railroad owned and controlled by it, to the full extent that it then enjoyed, or was entitled to enjoy or might thereafter acquire, subject to the obligations and duties imposed by its charter. With these privileges the company also leased to Wadley, for the same term, all its railroads and their branches, "together with its rights of way, roadbeds, depots, stations, warehouses, elevators, workshops, wells, cisterns, water tanks, and other appurtenances." The lessee, on his part, covenanted to pay the company, as a consideration for the lease, the sum of $600,000 annually for the full term of ninety-nine years, in two semiannual payments; also to pay the taxes on the property and franchises; to return the property on the termination of the lease in as good condition as it was at its date; to keep the railroad and its appurtenances and the means of transportation in first-class condition, and to indemnify the company against any damages, chanrobles.com-red

Page 128 U. S. 176

losses, or liabilities in the operation of the roads. This lessee has since died, and in the present case his interests were maintained in the court below by his executor.

On the 14th of October, 1879, the Legislature of Georgia passed an act entitled

"An act to provide for the regulation of railroad freight and passenger tariffs in this state, to prevent unjust discrimination and extortion in the rates charged for transportation of passengers and freight, and to prohibit railroad companies, corporations, and lessees in this state from charging other than just and reasonable rates, and to punish the same, and prescribed a mode of procedure and rules of evidence in relation thereto, and to appoint commissioners, and to prescribe their powers and duties in relation to the same."

Laws 1879, p. 125.

In pursuance of this act, a board was constituted, designated the "Railroad Commission," composed of three members, originally consisting of James M. Smith, Campbell Wallace, and Samuel Barnett; but to the place of Samuel Barnett the defendant Leander N. Trammell has succeeded. This commission has prescribed rates for the transportation of freight and persons by railroad companies in the state, which are less than the maximum of rates authorized by the twelfth section of the charter of the company. The act imposes a penalty of not less than one or more than five thousand dollars for every violation of the rules and regulations thus prescribed. The company and the executor of the lessee accordingly filed their bill in the case before us in the Superior Court of Fulton County, Georgia, against the railroad commissioners and the Attorney General of the state, contending, among other things, that the charter of the company is a contract between it and the State of Georgia, and that by it the company has the right to charge any rates for freight and passengers not exceeding those limited in the twelfth section of its charter, and that the Act of October 14, 1879, is in conflict with the clause of the Constitution of the United States which prohibits a state from passing any act impairing the obligation of a contract. They pray in their bill that the act may be declared null and void and inoperative against them, and that the commission may chanrobles.com-red

Page 128 U. S. 177

be enjoined from prescribing rates of fare and freight over the railroad of the company and its branches, or in any manner enforcing the provisions of the act against them. To this bill the defendants demurred on the ground that it disclosed no case entitling the complainants to relief in equity, and that they had an adequate and complete remedy at law. The court sustained the demurrer and dismissed the bill. On being taken to the supreme court of the state, the decree was affirmed, and to review it the case is brought to this Court by the railroad company.


ChanRobles Professional Review, Inc.

ChanRobles Professional Review, Inc. : www.chanroblesprofessionalreview.com
ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com
ChanRobles CPA Review Online

ChanRobles CPALE Review Online : www.chanroblescpareviewonline.com
ChanRobles Special Lecture Series

ChanRobles Special Lecture Series - Memory Man : www.chanroblesbar.com/memoryman