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We insist that the provisions of section 9, authorize the companies to charge and receive a reasonable rate of compensation for transporting of freight and passengers, that it abolishes so much of the Potter-law as fixes arbitrary rates for such transportation, and operates a repeal thereof; that extortion is the taking of more than a fair and reasonable compensation, and that taking more than is allowed by the act of March 11 would not be an extortion or a crime unless the amount taken exceeded a fair and reasonable compensation, and that the penalties are those prescribed in the act of March 12, instead of those named in the act of March 11; that the provisions of the last act, that no more than a fair and reasonable compensation should be charged or received, was a revision of the former law, and inconsistent with it, and that chapter 273 was repealed by implication, and, in addition to that the repealing clause expressly repeals the former act, inasmuch as the first contravened and conflicted with the last.

It is impossible that both acts can stand together. The first makes it a crime to charge or receive more than the amount prescribed in the first act. The latter makes it a crime only in case you receive more than a fair and reasonable compensation, and the latter affixes different penalties from the former. The prohibition to receive more than a fair and reasonable compensation is a tacit permission to charge and receive what is reasonable, and the maxim of expressio unius exclusio alterius, applies and authorizes all companies to charge and receive a fair and reasonable compensation without regard to the terms of the law, approved on the 11th of March. There is no saving clause in the last act, making the schedule of rates contained in the first prima facie evidence, even of fair and reasonable rates. Hence, in all prosecutions and actions, the fact must be shown affirmatively that the rates charged are more than fair and reasonable compensation, or the prosecution fail. Burlander vs. Mil. & St. Paul Railway Company, 26 Wis. 76. We therefore insist that chapter 273, of the laws of 1874, is unconstitutional and void.

1st. For the several reasons above stated; and,
2d. That it is repealed by an act of March 12, 1874.

Of Counsel.



These two appeals present the same questions, and may properly be discussed and considered together as one action. The suit first entitled is by the plaintiffs Piek, Pierson and Taylor, as the holders of sundry interest or coupon bonds issued or guaranteed by the defendant, the Chicago & Northwestern Railway Company.

The plaintiff, The Farmers' Loan and Trust Company, sues as the representative of the holders of bonds secured by two mortgages executed to it as trustee, by the defendant railway company, which mortgages were executed and bonds issued respectively April 1, 1871, and June 1, 1871. The mortgage dated April 1, 1871, is of that part of the railway company's road extending from the city of Madison, in the State of Wisconsin, to a junction near the city of La Crosse, in said State, with the La Crosse, Trempealeau and Prescott Railroad, a distance of about 126 miles, and given to secure, in the aggregate, the sum $3,150,000 bonds, known as the "Madison Extension First Mortgage Sinking Fund Bonds." The mortgage dated June 1, 1871, is of that part of the railway company's road constructed from the town of Fort Howard, in Wisconsin, northerly to the State line, being about 120 miles, to a junction with the line of railroad in Michigan owned by the defendant railway company, and given to secure $2,700,000 bonds known as "Menominee Extension First Mortgage Sinking Fund Gold Bonds."

The plaintiff, The Union Trust Company, sues as the representative of the holders of bonds secured by a mortgage executed to it as trustee by the railway, on the 30th day of November, 1872. This mortgage is of all the railway company's lines of road in several states, and was given to secure what are known as the "General Consolidated Gold Bonds" of the railway company, amounting in all to $48,000,000, only a small portion of which have as yet been issued.

The plaintiff, Piek, is the holder of $12,000" Madison Extension" bonds, $120,000 "Menominee Extension" bonds, and $217,000 "General Consolidated" bonds.

The plaintiff Pierson holds $25,000 "Menominee Extension" bonds.

The plaintiff Taylor holds $101,000 of the bonds of the La Crosse, Trempealeau and Prescott Railroad Company, a corporation created by act of the legislature of the State of Wisconsin, approved

March 6, 1857, the payment of which bonds has been guaranteed by the defendant, The Chicago and Northwestern Railway Company, under authority of an act of the legislature of the same State, approved March 10, 1871. Taylor is also the holder and owner of bonds of the Winona & St. Peter Railroad Company to the amount of $115,000, the payment of which is alleged to have been guaranteed by the defendant railway company under and by virtue of the same act of March 10, 1871. In addition to these Taylor holds and owns $157,000 of the "Consolidated Sinking-fund Bonds" issued by the defendant railway company, and bearing date February 1, 1865.

The bill contains a history of the Chicago & Northwestern Railway Company and of the various corporations out of which it has arisen, and with which it has been consolidated or become connected in business, since its inception in the charter of The Madison and Beloit Railroad Company, passed in 1848; and appended to the bill, in the form of exhibits, are copies of all the acts of the legislature of Wisconsin pertaining to corporate rights and franchises of the company. Active operations on the part of the company or its predecessors, in the way of building roads and incurring indebtedness, were commenced about the year 1855 or 1856.

The object of the bill is to restrain by injunction the public authorities of the State of Wisconsin from executing the provisions of an act of the legislature of said State passed and approved March 11, 1874, to take effect April 28, 1874. The act is popularly known as the "Potter Law," and is set forth at length in the bill of complaint, on pages 16 to 21 of the printed record.

The defendants, Paul, Osborn and Hoyt, are the railroad commissioners of the State of Wisconsin, appointed by the governor of the State under and in pursuance of the provisions of the act, and who are charged by the act with the performance of certain important functions made necessary by it.

The defendant, A. Scott Sloan, is the attorney-general of the State, upon whom, by the constitution and laws thereof, devolves the duty of representing the State and its people, in their sovereign capacity, in all judicial proceedings of a public nature, and the obligation of seeing that the laws of the State are judicially enforced.

The act of the legislature complained of, and against which relief by injunction is thus sought, is an act regulating the rates and charges at which passengers and freights are to be carried by railroad companies in the State of Wisconsin, and reducing such rates and charges in some particulars below those fixed by the railway companies themselves, prior to the passage of the act, and when no such statutory regulations existed.

The ground of objection to the act, is, that it so reduces the prices at which the defendant railway company is required to transport passengers and freights, that the income and revenues of the company, after defraying the necessary expenses of operating and maintaining its road, will be insufficient to pay the interest upon the bonds held and owned by the plaintiffs and those whom the plaintiffs represent. This is an apprehended grievance merely, and

not one which was or could be known at the time of filing the bill as actually existing, or which would exist or certainly follow as one of the consequences of enforcing the act of the legislature complained of.

The theory of the bill is that the several acts of the legislature of the State of Wisconsin, under and by virtue of which the defendant railway company has its existence, and from and through which it derives all its corporate rights, franchises and privileges, became and were contracts between the State and the railway company, protected by the Constitution of the United States against change or modification by the State; and that the act in question contravenes that clause of the constitution, and is void on that ground. The bill charges that the legislature of Wisconsin had no constitutional power to pass the act, and that it is without any binding force upon the railway company.

A further theory of the bill is, that, although the act may be valid and obligatory as against the railway company, yet it is unconstitutional and void as against the plaintiffs, who are creditors of the company, because the effect of it is, or may be, to diminish or destroy the ability of their debtor to pay the debts due to them. This, it is charged, is a violation of the obligation of the contracts between the plaintiffs and the railway company, within the meaning of the clause of the Federal Constitution above referred to.

The bill likewise states other and minor grounds of objection to the validity of the act, some of which may hereafter be noticed, but it is conceived that the action of the complainants must stand or fall according as the two foregoing principal propositions upon which it is founded may or may not be found to be correct. If either be found correct the action may be maintained. If both are incorrect it must fail.

The action secondly above entitled, is like the first, except that it is instituted by the plaintiffs as holders and owners of stock in the railway company defendant. These stockholders complain in like manner, and upon like grounds, that the act in question is invalid. They say it violates the charter of the company as a contract between the State and the company, and likewise that it violates the obligation of the contracts entered into between them and the company when they became stockholders, by diminishing or taking away the ability of the company to pay expected dividends or profits upon their stock, thus rendering their stock less valuable, or, by possibility, reducing it to a nominal value.

Such are the chief questions presented on these appeals, of which the first, namely, as to the contract relation between the State and the railway company, is the primary and most important one; for if it be found that no such relation exists, then it is believed that the court will experience very little difficulty in disposing of the second question.


Section 1, of Art. XI, of the constitution of the State of Wiscon

sin, adopted prior to the passage of any of the laws under which the railroad company was incorporated, and holds its franchises and privileges, and which was in force as part of the fundamental law of the State at the time when those laws were severally enacted, declares: "Corporations without banking powers or privileges may be formed under general laws, but shall not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws and special acts enacted under the provisions of this section, may be altered or repealed at any time after their passage,'

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We propose first to consider the effect of this reserved power of the State, in the light of authority. Afterwards it will be examined on principle. The question is not a new one in this court, nor in the courts of Wisconsin, as well as the courts of several of the States.

In Wisconsin, it was judicially considered and determined years before any of the contracts relied upon by the complainants were entered into, and a considerable time anterior to the building of any of the roads now owned and operated by the defendant railway company, and anterior to the incurring of any indebtedness by that company, or by any of its predecessors.

As early as the June term, 1854, the supreme court of the State held, in The Madison, Watertown & Milwaukee Plankroad Company v. Reynolds, 3 Wis, 287, 293-6, that a subsequent act of the legislature restricting the amount of tolls which the Plankroad Company, plaintiff in that case, was entitled to charge and receive under its original charter, was valid, obligatory upon the company. The question in that case arose, not upon the language of the constitution, but upon a reservation of power contained in the charter, which was one granted by the Territory of Wisconsin before the formation of a State government. The reservation was in these words; "This act may be amended by any future legislature of the territory or State of Wisconsin."

Again at the same term of court, in Pratt v. Brown. 3 Wis., 603, 611-13, the court had occasion to consider the reservation as contained in the constitution, and used the following explicit language: "The doctrine that a charter of incorporation, conferring franchises upon a company or individual, was in the nature of a grant, and hence protected from encroachment or attack by the shield of the federal constitution, which prohibits the States from passing laws impairing the obligation of contracts, was established, after elaborate argument and on full consideration, by the Supreme Court of the United States in the Dartmouth College case. This doctrine has, since that decision, been generally acquiesced in by nearly, if not all the state courts in the Union. It is competent, nevertheless, for each State, by constitutional regulation or specific legislative enactment, to reserve the power to modify or repeal all such acts of incorporation.

"Where the power of modification or repeal is reserved, either in the one mode or the other, it is obvious that the grantees must

23- RRC APP.

(Doc. 15)

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