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guilty of extortion, and fined not less than five or more than twenty-five hundred dollars, either party being entitled to a jury.
Both of these acts are printed as an appendix to this argument.*
We have endeavored to show, in the preceding pages, the invalidity of the act of the Wisconsin legislature under the Federal Constitution. With the impolicy or immorality of such legislation the court has little concern. Still, if it be dishonest in principle, and unwise in policy, even in the lowest sense of that term, it is certainly not entitled to a favorable consideration from this tribunal in the settlement of doubtful questions.
The State of Wisconsin has some thousands of miles of railway, built by foreign capital. These roads were indispensable to the development of the great material resources of the State. To secure them, it held out every inducement within its power to the citizens of other States and countries to invest their fortunes under the protection of Wisconsin laws. Not a dollar of this capital would ever have been furnished, if it had been supposed the railways when built, were to be managed by State commissioners invested with power to determine the rates of fare and freight. But the sentiment of the State, no doubt, was as expressed by its supreme court, through Chief Justice Dixon, in the following words:
"This obligation and promise, which sprang from the act of incorporation and invitation by the State to persons to invest their money in the stock, it is presumed no legislative body would disregard, except when the company, by gross and wanton abuse of its privileges had forfeited its rights, and then, instead of legislative action, it is also presumed the regular course of judicial proceedings would be preferred." Whiting vs. S. & F. R. R. Co., 25 Wis., 167.
These were just words, and honestly uttered. But the legislation of the session, which gave birth to the act under consideration, was inspired by a different spirit. One of those gusts of popular passion, to which all communities are liable, has swept over the West. While the principle which underlies this movement is hostility to accumulated wealth in any form, it has aimed its first blows at corporate and especially railway property. Under the wretched sophistry embodied in the cry that "the creature is not greater than the creator," the leaders of this mad crusade have blinded the judgment even of honest men. Railway corporations unavoidably commit occasional injustices in their vast business, and by skillfully inflaming the prejudice or passion thus excited, it was easy for the net work of farmers' clubs and granges which cover the State, to send members to the legislature, to whom argument and explanation were addressed in vain. They not only passed the obnoxious law now under consideration, but at the same session they increased the rate of taxation against the railway company from three per cent. of its gross earnings, which it had previously been, to four per cent., adding thereby sixty thousand dollars to its annual taxation, and thus exacting for the coffers of the State thirteen per cent. of the net income of the road.
* See pp. 1-9 of Appendix “A” to this Volume.
And what has been the result of this interference with the rates? We copy the following paragraph from the annual report, made to the stockholders in August, 1875, by Mr. Keep, the president of the Chicago and Northwestern Railway Company:
* An examination of the business of the year shows that more than one-half the decrease in gross earnings was caused by a reduction of passenger and freight rates, mainly induced by the operation of the Potter-Law,' and by the enforcement of other kindred statutes 'regulating' transportation on railroads in the States of Illinois, Wisconsin, Iowa, and Minnesota.
** There was an average reduction of 100'06 cents per passenger per mile, amounting to $216,267.96; and a reduction on freight of 1
70%*% cents per ton per mile, amounting to $791,819.95; giving a total of $1,008,087.91, taken from the revenue by reduction of rates, and not by reduction of business."
This sum, more than a million of dollars, has been taken for the benefit of the public, from the annual income of a railway company which has never paid the legal rate of interest upon the money invested in its construction, and which, since the year 1872, has not been able to pay any dividend whatever to the luckless owners of its common stock. Yet we are gravely toid by the supreme court of the State, that "their rights in their material property are inviolate and shall never be violated with the sanction of this court." And that court virtually censures counsel because they characterize. such a legislative proceeding as "confiscation,” and says "the people of Wisconsin are too intelligent, too staid, too just, too busy, too prosperous for any such horror of doctrine; for any leaning towards confiscation or communism." That the people of Wisconsin are prosperous we do not donbt. The railways have made them so. That they are as just as men in general is probably true. We trust, however, that the holders of the bonds and stocks of Wisconsin railroads may be pardoned the opinion, that the justice shown in the recent railway legislation is best expressed in the words which a great poet has put into the mouth of a Highland chieftain who lived two centuries ago:
“ The good old rule suíliceth me; the simple plan,
That he should take who hath the power
The act in question has overthrown the most sacred rights of property. It has checked the growth of the State by substantially putting an end to the construction of railways. It has tarnished the reputation of the State and that of the country at large, in every community in the world where American railway bonds are bought and sold. We submit the case, relying upon the wisdom and justice of this great tribunal for the protection of rights secured, as we believe, by the solemn guarantees of the Federal Constitution.
C. B. LAWRENCE,
Of Counsel for Appellants. 20 -R RC-APP.
BRIEF OF ARGUMENT OF JOHN W. CARY,
OF COUNSEL FOR THE APPELLANTS AND PLAINTIFFS IN ERROR.
The bill of complaint states, in substance, that the defendant railway company has executed several mortgages or trust-deeds, upon portions of its line of railway in Wisconsin, to secure its negotiable bonds. The complainants, Farmers' Loan and Trust Company, and Union Trust Company, are trustees named in two of said deeds, and the other complainants are holders of bonds secured by those trust-deeds. The complainants are not residents or citizens of Wisconsin. The defendants are all citizens of that State
. The bonds were negotiated in good faith, the purchasers relying solely upon the net income to be derived from the operation of the mortgaged property, for the payment of the principal and interest of said bonds. The railway company has no other means of paying the same.
The State of Wisconsin has passed an act, set out at length in the bill of complaint, on pages 16 to 21 of record, * which assumes arbitrarily to fix the rates of compensation to be hereafter charged by said railway company for the transportation of freight and passengers. The rates so prescribed, if adopted by the railway company, and the road operated in pursuance thereof, will yield no net revenue, and in consequence neither principal nor interest of said bonds will be paid.
The said act is claimed to be unconstitutional and void, the said defendants, Paul, Osborn and Hoyt, who have been appointed Commissioners under said act, and are by its terms authorized to reduce said rates, even below the figures named therein and are especially charged with its execution and enforcement, and the said defendant, A. Scott Sloan, who is attorney-general of State, thereafter to enforce said law, and to bring a multitude of suits against said railway company, its officers and agents, to compel said company to adopt the rates of compensation named in said act, and otherwise oppress said company, and that if not rectified, will compel said railway company to operate its road under said rates, so as to produce no net revenue; and that in consequence said bonds will be come worthless, and great and irreparable injury result to said complainants. An injunction against all the defendants is praved restraining them from enforcing said act. The great question. however, involved in these suits and this controversy, is whether
See pages 1 to 6 of Appendix to this vol.
the legislature has the right and power to assume not only the management and control of the railroads of the State, but also of the whole business of common carriers by railroad, to fix their compensation, regulate the manner and mode of transacting their business, and prescribe the number, time and speed of trains. Said chapter 273, of the laws of 1874, of Wisconsin-either directly or through its commissioners assumes all these functions, and practically takes possession of the business transacted over them. The people instead of calling upon the officers and managers of the company for accommodations and railroad facilities, are directed to look to the railroad commissioners, not only to redress their grievances, but to order and direct the management of the ordinary business of the company, and letters are received notifying superintendents that they propose to apply to the attorney-general for orders compelling the delivery of cars off the line of the company's road, if they are not furnished at such points, when and as often as desired for the accommodation of parties requesting them.
The State of Wisconsin, through its legislature, claims all these powers. Its supreme court, after a full hearing, has adjudged the claim well founded, and has hastened, by a preliminary injunction to enforce obedience to it. The average politician and granger within its borders are now jubilant over the prospect open to their view of enjoying other people's property without compensation, or if any is to be paid, then only such as they may choose to dictate, and the grave question comes before this court to determine whether such claims are to be recognized as law-whether, in fact, we are gravit:ating towards barbarism, or whether our course is still onward in the march of civilization and progress. The court has jurisdiction and can grant the relief prayed.
1st. It has jurisdiction of the parties.
The complainants are all citizens of foreign states or countries, and therefore entitled to sue citizeus of the State of Wisconsin in this court.
The defendants are all citizens of the State of Wisconsin, and may be sued in this court by persons not citizens.
T'he fact that some of the defendants hold State offices, and that the suit is against them in that character, or rather for their acts done or threatened, by virtue of, or in colore offici, does not exempt them from the process and jurisdiction of this court. Their office clothes them with no sanctity. Their acts are either legal or illegal. If legal, they will be protected in this tribunal ; but if illegal, the fact that they were State officers is no justification for the injury which they threaten to commit. It is their individual action that is complained of, and it is claimed that such action is wrong and not justified by law.
In U. S. Bank vs. Osborn et al., 8 Wheaton 738, the defendants were State officers, auditor, treasurer and collector, their acte official acts, in collecting a tax assessed by the State against the bank. The State was sole party interested in the subject matter of the suit. Yet the supreme court held the action properly brought, that the State was not a party, and that the court had jurisdictio
In Dodge vs. Woolsey, 18 Howard 331, the complainant was a citizen of Connecticut, a stockholder in a bank, and filed his bill against the directors of the bank, the bank itself, and George C. Dodge, the treasurer, and colleetor of Cuyahoga County, to restrain the collection of a tax levied by the State of Ohio on the bank, in violation of its charter, and the injunction was granted. See also Gordon vs. Hobart, 2 Sumner, C. C. Rep. 401.
2d. This Court has jurisdiction of the subject matter of the action.
The complaint sets forth that an injury is threatened by the citizens of this State, against the property and rights of the complainants, and this court is asked to restrain the threatened injury. But it is claimed that the persons threatening the injury are state officers, and the acts charged, which they are about to commit, are authorized and enjoined upon them by a State law. Therefore, that it is the State that is acting, and that the restraint of her officers is a restraint upon the State, and that the granting of the complainant's prayer, would in effect be an injunction against the State, and prevent her from carrying out and executing her laws.
Suppose we admit it, what then? Is the court ousted of jurisdiction, and the complainants deprived of a remedy from the threatened injury? If so, upon what principle? The nature of the injury threatened is such that the court may be properly invoked to prevent it. The State has no more right to commit an injury against the rights of the complainants, than any other person or corporation. It has no right to enact a law in vlolation of the constitution, either State or Federal. Such a law if enacted, is no protection to the State or its officers, and all attempts to enforce it may be lawfully resisted. All acts and attempts in that direction are unlawful. And all persons whose property or rights are invaded and injured by such unlawful acts, are entitled to protection and indemnity. Prior to the adoption of the 11th article of amendments to the Constitution of the United States, the State itself might have been made a party in its corporate name, in any action to redress or prevent a wrong done or threatened to citizens of a foreign state or country. This right would still remain, but for that 11th article of the amendments. That article provides, that; " the judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced, or prosecuted. against one of the United States, by citizens of another State, or by citizens or subjects of any foreign State.
This amendment simply forbids making a State a formal party to the record-nothing more. It does not prohibit the making i the persons holding State offices such parties. They are amenah: to the process of this court, and liable for all the consequences of their acts. The judgment in this case will not bind the State. The injunction will not restrain it, but will operate oaly upont parties named as defendants. They are individually responsible their acts, and the injunction will operate to restrain their indiss ual. personal, action only. It is not, therefore, an action agains the State, or in violation of the 11th article of amendments to th: Constitution of the United States.