CHAPTER XV. STATUTORY REGULATION OF RATES OF TRANSPORTATION. § 228. Introductory. 229. Statutory Enactments Subject to Judicial Investigation. 230. Right of Railroad Corporations to Legal Protection. § 231. Right of Railway Compa nies to Discriminate in Rates of Transportation. 232. Rule for Determining what are Reasonable Rates. § 228. Introductory.-It is now well settled that a State legislature has the power to regulate the rates of transportation of persons and property by railways, subject to its authority, unless it has parted with its inherent right by a special contract with a railway corporation in granting its charter. But this power is not absolute. It is subject to certain constitutional and legal limitations. A legislature has power to protect the people of a State by prohibiting the collection of unjust and oppressive rates of transportation, but it may not itself act the part of an oppressor by compelling a railway company to carry persons or property at a rate so low as to deprive it of a fair compensation for the use of its property, and thus practically to deprive it of the capital invested by it, without due process of law and without consideration. Statutory regulations of railway charges must not be in contravention of the constitutional rights of railway corporations, and they must be within the bounds of justice and reason. The recent decision of the Supreme Court of the United States in the leading and very important case of Smyth v. Ames, pre sents a number of points which involve a new application of legal principles, and which are of special interest and importance. § 229. Statutory Enactments Subject to Judicial Investigation. So far as relates to questions of legality, the enactments of legislatures are subject to investigation by the courts. While a legislature may fix the rates of transportation by railways, subject to its authority, it must not exceed its powers in that direction, and the question of the extent of its powers is a matter for judicial investigation and decision. In the case of Smyth v. Ames, it was held by the Supreme Court of the United States that a suit against individuals for the purpose of preventing them, as officers of a State, from enforcing an unconstitutional statute to the injury of plaintiff's rights, is not a suit against the State, within the meaning of the Eleventh Amendment to the Federal Constitution. While rates for the transportation of persons and property within the limits of a State are, primarily, for its determination, the question whether they are so unreasonably low as to deprive the carrier of its property without such compensation as the constitution secures, and, therefore, without due process of law, cannot be so conclusively determined by the legislature of the State, or by regulations adopted under its authority, that the matter may not become the subject of judicial inquiry.1 1 Smyth v. Ames, 18 Sup. Ct. by reason of his being allowed to Rep. 418. "The adequacy or inadequacy of a remedy at law for the protection of the rights of one entitled upon any ground to invoke the powers of a Federal court, is not to be conclusively determined by the statutes of the particular State in which the suit may be brought. One who is entitled to sue in the Federal court may invoke its jurisdiction in equity whenever the established principles and rules of equity permit such a suit in that court; and he cannot be deprived of that right sue at law in a State court in the same cause of action. It is true that an enlargement of equitable rights, arising from the statutes of a State, may be administered by the circuit courts of the United States. Case of Broderick's Will, 21 Wall. 503, 520; Holland v. Challen, 110 U. S. 1524; s. c., 3 Sup. Ct. Rep. 495; Dick v. Foraker, 155 U.S. 404, 415; s. C., 15 Sup. Ct. Rep. 124; Barden v. Improvement Co., 157 U. S. 327, 330; s. c., 15 Sup. Ct. Rep. 650; Rich v. Braxton, 158 U.S. 375, 405; s. c., 15 Sup. Ct. Rep. 1006 § 230. Right of Railroad Corporations to Legal Protection. In organizing themselves into a corporation for the construction and operation of a railway, individuals do not lose their rights as citizens. As a corporation, no less than as individuals, they have an unquestionable right to the equal protection of the law. As a railway corporation, to all legal intents and purposes, is a person, and as the law knows nothing of distinctions of classes among persons, a railway corporation has the same right as an individual to legal protection. In the leading case of Smyth v. Ames, it was held that a railroad corporation is a person, within the meaning of the Fourteenth Amendment declaring that no But if the case, in its essence, be one cognizable in equity, the plaintiff, the required value being in dispute, may invoke the equity powers of the proper circuit court of the United States, whenever jurisdiction attaches by reason of diverse citizenship, or upon any other ground of Federal jurisdiction. Payne v. Hook, 7 Wall. 425, 430; McConihay v. Wright, 121 U. S. 201, 205; s. c., 7 Sup. Ct. Rep. 940. A party, by going into a National court, does not, this court has said, lose any right or appropriate remedy of which he might have availed himself in the State courts of the same locality; that the wise policy of the constitution gives him a choice of tribunals. Davis v. Gray, 16 Wall. 203, 221; Cowley v. Railroad Co., 159 U. S. 569, 583; s. C., 16 Sup. Ct. Rep. 127. So, whenever a citizen of a State can go into the courts of a State to defend his property against the illegal acts of its officers, a citizen of another State may invoke the jurisdiction of the Federal courts to maintain a like defense. A State cannot tie up a citizen of another State, having property rights within its territory, invaded by unauthorized acts of its own officers, to suits for redress in its own courts. Regan v. Trust Co., 154 U. S. 362, 391; s. C., 14 Sup. Ct. Rep. 1047; Mississippi Mill v. Cohn, 150 U. S. 202, 204; s. c., 14 Sup. Ct. Rep. 75; Cowles v. Mercer Co., 7 Wall. 118; Lincoln Co. v. Luning, 133 U. S. 529; s. c., 10 Sup. Ct. Rep. 363; Scott v. Neely, 140 U. S. 106; s. C., 11 Sup. Ct. Rep. 712; Chicot Co. v. Sherwood, 148 U. S. 529; s. C., 13 Sup. Ct. Rep. 695; Cates v. Allen, 149 U. S. 451; s. c., 13 Sup. Ct. Rep. 883, 977. It is the settled doctrine of this court that a suit against individuals for the purpose of preventing them, as officers of a State, from enforcing an unconstitutional enactment to the injury of the rights of the plaintiff, is not a suit against the State within the meaning of that amendment. Pennoyer v. McConnaughy, 140 U. S. 1, 10; s. c., 11 Sup. Ct. Rep. 699; In re Tyler, 149 U. S. 164, 190; s. c., 13 Sup. Ct. Rep. 785; Scott v. Donald, 165 U. S. 58, 68; s. C., 17 Sup. Ct. Rep. 265; Tindal v. Wesley, 167 U. S. 204, 220; s. c., 17 Sup. Ct. Rep. 770." Harlan, J., in Smyth v. Ames, 18 Sup. Ct. Rep. 418, 423. State shall deprive any person of property without due process of law, nor deny to any person within its jurisdiction the equal protection of the law. A State enactment, or regulations made under the authority thereof, establishing rates for the transportation of persons or property by railroads, that will not admit of the carrier earning such compensation as, under all the circumstances, is just to it and to the public, would deprive such carrier of its property without due process of law and deny to it the equal protection of the laws, and would, therefore, be repugnant to the Fourteenth Amendment to the Constitution of the United States. 1 In the opinion in this case the court said: "By the fourteenth amendment it is provided that no State shall deprive any person of property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws. That corporations are persons within the meaning of this amendment, is now settled. What 1 Smyth v. Ames, 18 Sup. Ct. matters,-was 'subject to the limRep. 418. itation that the carriage is not required without reward, or upon conditions amounting to the taking of property for public use without just compensation; and that what is done does not amount to a regulation of foreign or interstate commerce.' In Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, 458; s. c., 10 Sup. Ct. Rep. 462, 702, it was said: 'If the company is deprived of the power of charging reasonable rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in substance and effect, of the property itself, without due process of law, and in violation of the constitution of the United States; and in so far as it is thus injured, while other persons are permitted to receive reasonable profits upon their invested capital, 2 Santa Clara Co. v. So. Pac. R. Co., 118 U. S. 394, 396; s. C., 6 Sup. Ct. Rep. 1132; Railroad Co. v. Gibbes, 142 U. S. 386, 391; s. C., 12 Sup. Ct. Rep. 255; Railway Co. v. Ellis, 165 U. S. 150, 154; s. c., 17 Sup. Ct. Rep. 255. "Railroad Commission Cases, 116 U. S. 307, 325, 331; s. c., 6 Sup. Ct. Rep. 334, 348, 349, 388, 391, 1191. This principle was recognized in Dow v. Beidelman, 125 U. S. 680, 689; s. c.. 8 Sup. Ct. Rep. 1028, and has been re-affirmed in other cases. In Banking Co. v. Smith, 128 U. S. 174. 179; s. C., 9 Sup. Ct. Rep. 47, it was said that the power of the State to prescribe the charges of a railroad company for the carriage of persons and merchandise within its limits.—in the absence of any provision in the charter of the company constituting a contract, vesting it with authority over those amounts to deprivation of property without due process of law, or what is a denial of the equal protection of the laws, is often difficult to determine, especially when the question relates to the property of a quasi public corporation, and the extent to which it may be subjected to public control. But this court, speaking by Chief Justice Waite, has said that while the State has power to fix the charges by railroad companies for the transportation of persons and property within its own jurisdiction, unless restrained by a valid contract, or unless what is done amounts to a regulation of foreign or interstate commerce, such power is not without limit; and that 'under pretense of regulating fares and freights, the State cannot require a railroad corporation to carry persons or property without reward, neither can it do that which in law amounts to the taking of private property for public use without just compensation or without due process of law.' ''1 § 231. Right of Railway Companies to Discriminate in Rates of Transportation.—It is now held by the highest authority that where lines of railroad extend through more than one State, the management is not bound to make uniform rates of transportation. It may have one rate for domestic or local business, and another and a different rate the company is deprived of the equal protection of the laws.' In Railway Co. v. Wellman, 143 U. S. 339, 344; s. C., 12 Sup. Ct. Rep. 400, the court, in answer to the suggestion that the legislature had no authority to prescribe maximum rates for railroad transportation, said that the legislature has power to fix rates, and the extent of judicial interference is protection against unreasonable rates.' In Budd v. New York, 143 U. S. 517; s. c., 12 Sup. Ct. Rep. 468, the court, while sustaining the power of New York by statute to regulate charges to be exacted at grain elevators and warehouses in that State, took care to state, as a result of former decisions, that See such power was not one 'to destroy |