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This precise question was discussed at length, by Chief Justice Marshall, in Osborne vs. United States Bank, 9 Wheaton, pages 846 to 859. The conclusion that he arrived at is as follows:
“It may, we think, be laid down as a rule, which admits of no exception, that in all cases where jurisdiction depends on the party, it is the party named in the record. Consequently the 11th amendment, which restrains the jurisdiction granted by the constitution over suits against States, is of necessity, limited to those suits in which a State is a party on the record. The amendment has its full effect, if the constitution be construed as it would have been construed had the jurisdiction of the court never been extended to suits brought against a State, by the citizens of another State, or by aliens.
The case of Mayor of Baltimore vs. Pittsburgh and Connellsville R. R. Co., 1 Abbotts, U. S. C. C. Rep.-9., was a case where the city of Baltimore, had advanced money to the railroad and the charter was subsequently in part repealed and route changed. The city filed its bill in the western district of Pennsylvania, before Judge Grier, to restrain the railroad company from accepting or acting under the charter as amended, and to have the amendment declared unconstitutional. The jurisdiction was sustained and the relief grantel.
The jurisdiction of the court both as to the parties and subject matter being settled, we are now to inquire whether the relief prayed can be granted.
The allegations of the bill are fully supported by the affidavits. The interest of the complainants is manifest. The danger apprehended eminent and threatening. Unless the relief prayed can be granted, great and irreparable injury will result. Can this danger be averted?
The defendants claim to be acting under and in pursuance of the law (chapter 273, of 1874) set out in the complaint, and that all their proposed action is based upon, and enjoined upon them by that act, and that, however injurious it may be to the iuterest of the complainants, their action is authorized and lawful, and that said act is a full justification to them in all courts and places. Such an act has been passed, and if valid as a law, authorizes all that is claimed for it. We are therefore brought to the consideration of the constitutionality of that enactment. If constitutional and valid, then the defendants are justified in their proceedings, and the complainants are remediless. But, if that act is unconstitutional and void, then the defendants are not justified in their proceedings, and the complainants are entitled to the relief prayed in the bill of complaint.
The said act (chapter 273, of the laws of 1874) among other things, assumes arbitrarily, to determine the compensation which the defendant Railway Company may charge for the transportation of freight and passengers over its line of road, and necessarily assumes, to that extent, the control over, and the appropriation and disposition of the use of the property of the defendant company, without their consent. We therefore insist
That said act, so for as it attempts to fix the rates of compensation to be charged by the defendant company, for the transportation of freight and passengers, is unconstitutional amd roid.
The right to control one's property and fix the price for its use, is an attribute of ownership, and the right to fix and determine the compensation, for which any one will render his personal services, and incur risks and dangers in transacting the business of another, is a personal right necessary to man's freedom and independence. This pretended law ignores those rights, and thereby violates both the constitution of this State and of the United States.
1st. It is repugnant to section 13 of the Declaration of Rights of Wisconsin. "The property of no person shall be taken for public use without just compensation therefor," 2d. It is in violation of section 1, of article 14, of amendments of the Constitution of the United States. "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States. Nor shall any State deprive any person of life, liberty, or property, without due process of law, nor deny to any person within its jurisdietion the equal protections of the laws."
The law in question assumes to take property now in possession of the company, and which the shareholders of the company claim to own, and exercise over it such control as only the owner can exercise. To that extent the owner is deprived of his property. The most important and valuable function connected with the ownership of property, is the right to determine the compensation to be paid for its use. Property is chiefiy valuable to the owner on account of the income it yields. This law takes this right from the owner, and without it the property may be entirely worthless. All right of control is taken from him, and the authors and advocates of this law claim that it has been enacted for the public benefit; hence, if this be true, the property and rights of the owner, so far as he has been deprived of them, have been devoted or subjected, to public use. The same is true of the labor, the mind and talent or capacity for transacting the business of a common carrier, of the owner himself. If, therefore, we are the owners of this property. and of the labor, mind and capacity necessary to transact the business of a common carrier, we are, pro tanto, deprived of our property and rights, and under pains and penalties, fine and imprisonment, compelled to use our property, contribute our time and labor, and incur the risks and hazards attendant on the business of a common carrier, for the compensation prescribed in this act, and are thereby deprived not only of our property, but of our just rights and the equal protection of the laws. It is denied, however, that we are the owners of this property, and hence not entitled to invoke the protection of the constitution, but that the railroad is the property of the State, farmed out to the company during the State's pleasure; that it can at any time take possession, not only of the corporate franchises, but of the property itself, without compensation to the company or its shareholders.
Were we to admit this proposition, monstrous as it is, still on what principle could this law be sustained, for not only is the railroad and all the property of the company confiscated by it, but the business of a common carrier as well. Certainly, the labor, mind and capacity, necessary to carry it on, does not belong to the State. Admitting, for the moment, that the State owns the railroad, or has the right to fix the compensation for its use, still that would give it no right to fix the compensation of a common carrier doing business on it. The road is one thing, the business of a common carrier quite another. In some instances railroad companies simply furnish cars and haul them for a given compensation, for parties. who are engaged as common carriers, as in the case of express companies. In other cases they simply haul the cars of other parties for a given compensation. In the last report of the Massachusetts commissioners, they express the opinion that the time is coming when railroads will cease to transact the business of common carriers, as at present, and confine themselves simply to the business of hauling cars over their respective roads for a given compensation. Whether such a result is to happen time alone will determine, but certain it is, the two things are not the same, nor are they, in the nature of things, necessarily connected. Whether they can be practically separated need not now be determined. We insist however, under this head,
1st. That the shareholders of the company are the absolute owners of the railroad and all the property of the company.
This proposition is so plain and elementary, and has been so of ten and uniformly asserted by the courts, that it seems a work of supererogation to adduce authorities to substantiate it. But as the opposite doctrine has been asserted, and would seem to be a necessary foundation for such a structure as the Potter-law of last winter, I will ask the indulgence of the court, while I cite a few of the many authorities of our courts to show that the above proposition is correct.
The company is chartered by the State, and is endowed with the privilege of exercising the power of eminent domain, so far as it may be necessary to procure the right of way for its road, but in fact more than ninety-nine hundredths of all its grounds of every description are acquired by negotiation and purchase, and the title conveyed to the company by warranty deed in fee-simple. The remaining hundredth part is generally acquired, after proceedings to condemn have been instituted, by purchase, and the title conveyed by deed, the commissioners only naming the amount which the company must pay. Hardly any of the grounds of the company are held by judgment entered in proceedings authorized by the charter for acquiring land by the exercise of the right of eminent domain. All the lands, however acquired, are paid for wholly by the company. The road is constructed by the company, and at its sole expense. All the property of every description belonging to the company, and used in operating the railroad, is purchased and paid for by the company. Applying the rules of law to such a case,
the ordinary mind would naturally come to the conclusion that the company, or its shareholders, owned the road and the property of the company. It would seem to need no argument or authority to prove it, and that it would require a sort of sublime impudence to assert, before an intelligent court or public, that the state, under such circumstances, and not the company, was the owner of the property.
Angell and Ames, section 40, class railroads as private corporations, and in section 31 they say "railroads are private corpora tions.' Both the property and the sole object.
of every such corporation are essentially private."
In Whiting vs. the Sheboygan and Fond du Lac Railroad Company 25 Wis. 167, the supreme court of this State decided that railroad companies are private corporations and the owners of their property. And the Supreme Court of the United States, in reversing this case on another point expressly affirm it on this, and say: "That railroads, though constructed by private corporations and owned by them, &c.' Again they say: The owners (of a railroad) may be private companies," &c., full recognizing the doctrine that a railroad company owns its road.
In the people ex. rel., vs. Salem, 20 Mich. 447, Judge Cooley says: "The road, when constructed, is nevertheless to be exclusively private property, owned, controlled and operated by a private corporation for the benefit of its own members, and to be subject to the supervision and control of the State only as private property." Again he says, page 478: "They are private property whose owners make it their business to transport persons and merchandise in their own carriages, over their own land, for such pecuniary compensation as may be stipulated."
In People vs. Batchellor,, 53 N. Y. 140, the court, speaking of railroads, says: "But it is equally clear that property acquired by the corporation, belongs to it exclusively, and its ownership is as absolute as that of any private individual of property belonging to him. It is also clear that so far as the road is operated for the benefit of its stockholders, the corporation is private. We have then an artificial being created by the legislature, endowed with public franchises, the absolute owner of property of which it cannot be deprived by legislation except for public purposes, carrying on business for the private emolument of its stockholders."
"The roadway of a railroad, however, is but a small part, comparatively, of the property of a company. The grades, ties and track, the buildings, bridges, and other works, with the shops, machinery, and equipments, together with the roadway and the outlaying lands, represent the outlay and property of the corporation. These are all recognized and declared, by every elementary work relating to railroad corporations, to be private property, owned, operated, and used by the company as a private corporation for the benefit and advantage of the stockholders; and I am not aware of any decision of any court that announces its judgments in the English tongue, to the contrary."-Judge Swan's pamphlet. Donher vs. State of Miss., 8 Smedes and M., 649, 661; Trustees, etc., vs.
Auburn and Roch. R. R., 3 Hill, 570; Ohio, etc., R. R. vs. Ridge, Blackt., 78; Bonaparte vs. Camden and Amboy R. R., 1 Bald. C. C., 205, 222; Dearborn vs. Boston and Montreal R. R., 4 Fos., 179; Tinsman vs. Belv. and Del. R. R. Co., 2 Dutch., 148.
The same doctrine is maintained by Redfield.
1 Redfield on railways, 53. and many cases cited in its support. We therefore say that the company, or more properly its shareholders, are the owners of the railroad property.
It being settled that we are the owners of this property, the next question to be considered is:
2. Does this law take our property, or any part thereof, or deprice us of its beneficial use and enjoyment?
The value of a railroad to its owners, is the right to operate it so as to make what is commonly know as net earning. This is the beneficial use; without it the road is of no benefit or value to the owner. Hence, if this law deprives us of the right and ability to make net earnings from its operation, our rights are evaded, our property confiscated and taken from us without due process of law. The taking of the beneficial use of the property, is a taking of the property just as effectually as though we were deprived of the actual possession.
Prior to the passage of this law, we, as owners, were entitled to fix the compensation to be paid to us for the transportation of freight and passengers over our road.
In the case of the State freight tax, 15 Wallace 227 and 8, Judge Strong says: we concede the right of the owners of artificial highways, whether such owners be the State, or grantees of franchises from the State, to exact what they please for the use of their ways. That right is an attribute of ownership." But there is no necessity to cite authority to show that the owner of property has the absolute right of disposition, not only of the property but of its use. It is an elementary principle, and axiomatic even. We possess this right as owners of the railroad and its appurtenances. By the exercise of that right a scale of prices was fixed for the business of 1873, by which some net revenue was realized, but less than four per cent. upon the capital invested. The total cost of the property in Wisconsin was $28,074,317.35. The total gross earnings in Wisconsin for 1874 is $3,190,523.64. The total net revenue applicable to in terest and dividend is less than thirty per cent. of the gross earnings, (Record, pp. 14 and 15.) This act assumes to fix our rates nearly thirty per cent. below the rates fixed by the company, on which the business of last year was transacted. Hence, if this law is enforced, we have this result: This property operated under the control and direction of the company, and as they lawfully might do, yielded a net revenue to the company of nearly four per cent. on its cost. About the sum of one million of dollars, and very nearly thirty per cent. of its gross receipts. The same business transacted on the same road this year under the rates fixed by the Potter-law, yields a gross income thirty per cent. less than was received in 1873. and no net revenue is realized. And as the net in