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the option of the state in the first instance to permit complainants to come only as its tenants at will, as to domestic business, or to permit them to contract for the enjoyment of property rights inconsistent with the exercise of this arbitrary prerogative of expulsion at pleasure. When the state consented to complainants' making contracts inconsistent with this prerogative, which contracts, if made, necessarily involved the acquisition of a vested right in the foreign corporation to use railroad property here, upon the terms and for the time and for the uses provided in the statute, the state consented to waive and abandon this right, and it is now estopped to withdraw its consent, to the prejudice of any one who acted upon that consent. Walker v. United States (C. C.) 139 Fed. 413.
Besides, acts the state suggested and desired the foreign corporations to do, under its own proposal, contained in its own laws, have resulted in contracts vesting in the foreign corporation the title to property and the right to use it, for the very purpose which the state now seeks to prevent. The Constitution of Alabama, § 95, forbids the state from now interfering with that use. Rights like these the Constitution of the United States also protects, in their integrity, against all hostile action of the state, except for forfeiture for cause, for misuser, or nonuser, prescribed by the law of the land, and applicable alike to all other corporations and natural persons similarly situated, and by judgment of the courts, after hearing, and not by statutory edict. Sinking Fund Cases, 99 U. S. 719, 25 L. Ed. 496; New Jersey v. Yard, 95 U. S. 105, 24 L. Ed. 352; Home of the Friendless v. Rouse, 8 Wall. (U. S.) 430, 19 L. Ed. 495; Steamship Company v. Joliffe, 2 Wall. (U. S.) 450, 17 L. Ed. 805; Farrington v. Tennessee, 95 U. S. 680, 24 L. Ed. 558; Powers v. Detroit Railway Company, 201 U. S. 543, 26 Sup. Ct. 556, 50 L. Ed. 860; American Smelting Company v. Colorado, 204 U. S. 103, 27 Sup. Ct. 198, 51 L. Ed. 393; Edwards v. Williamson, 70 Ala. 145; Missouri v. Lewis, 101 U. S. 22, 25 L. Ed. 989; Wilburn v. McCalley, 63 Ala. 436.
Complainants took, and now hold, the leased and purchased railroads, and the right to enjoy their use in local commerce, subject to no other restriction or ground of forfeiture than the laws of the state prescribed at the time of the leases, purchases and contracts, or as might thereafter be lawfully enacted under the police power. The police power of the state extends to the protection of its peace, good order, morals, welfare, and the health, lives, and limbs of its people. If the doing of an act cannot militate against the enjoyment of these rights, the state is without authority to forbid such act. Const. Ala. 35;
Const. Ala. Š 35; Joseph v. Randolph, 71 Ala. 506, 46 Am. Rep. 347.
The bringing of a suit by a foreign corporation in a federal court, to prevent the infringement of any right, given by the supre:ne law of the land, cannot imperil any interest or right of which the police power is the guardian. To attempt to support such an exercise of power under the police power of the state is to assert that the operation of the Constitution and laws, and the exercise of rights thereunder in the courts of the United States, are an attack upon the welfare of the state, or in some way menaces their well being and happiness. The acceptance of such a doctrine would finally carry with it the overthrow of our institutions. Complainants Entitled to Injunction Against Attempts to Prevent
Their Doing Intrastate Business. The state no longer has any arbitrary, sovereign, prerogative to prevent complainants at pleasure from carrying on intrastate commerce. It has parted with the power to expel complainants for bringing their suits here, not only by incorporating section 240. in its Constitution, but because contracts its laws authorized have ripened into vested rights, and also because the proposal made in its laws to a particular class of persons as regards the corporate rights they might enjoy as to a peculiar species of property, and their acceptance and acts under that proposal, have ripened into a “legislative contract.” American Smelting Co. v. Colorado, supra. Such a contract needs no consideration outside of the object sought to be effected by it. The object in this case was the development of the state. The coming of foreign corporations here to engage in railroad business was deemed by the Legislature to be beneficial to the state. “That benefit constitutes the consideration for the contract and no other is required to support it.” Home of the Friendless v. Rouse, 8 Wall. (U. S.) 437, 19 L. Ed. 495.
No arbitrary power of expulsion remaining, and the reasons assigned in this statute not constituting any legal cause for the forfeiture and confiscation of complainants' property which would be effected by its expulsion from local business, the execution of the statute must necessarily be enjoined. Its enforcement would violate the Constitution of Alabama, as well as infringe those provisions of the Constitution of the United States, which forbid a state to deprive any one of property without due process, or to deny the equal protection of the laws, or to impair the obligations of contracts. In Fixing Rates, Justice to Both Railroad and Public Must Be
Considered. The remaining question is whether, in the posture of these cases at this time, the court should grant a preliminary injunction against the enforcement of the statutes which prescribe 21/2 cents per mile as the maximum rate for the carriage of intrastate passengers, and fix the maximum intrastate freight rate upon 110 specific commodities which the statute classifies, no preliminary relief being now asked as to the act which makes the freight rate in force on the 1st of January, 1907, the maximum freight rate thereafter to be charged for all other intrastate freight.
The most important of the principles of law which must govern these questions have been settled by the Supreme Court, though the bills raise some grave questions which have not been determined by that court, and which, on the present hearing, it is needless to consider. The court is now concerned only with an order which, while settling no equities in advance of final decree, may best preserve the status quo pending final hearing.
A railroad carrier not only engages in a public calling, but discharges a state function in building and maintaining highways, upon which, as the state does not, it transports persons and things for a reward. Its rates are therefore subject to legislative regulation. In fixing rates the rights both of the corporation and of the public are to be considered. A corporation may not be required to use property for the benefit of the public without just compensation for the services which it renders. As is said by the Supreme Court:
“Each case must depend upon its special facts, and when the court, without assuming to itself to prescribe rates, is required to determine whether the rates prescribed by the Legislature for a corporation controlling public highways are, as an entirety, so unjust as to destroy the value of its property, for all the purposes for which it was acquired, its duty is to take into consideration the interest, both of the public and of the owners of the property, together with all the other circumstances that are fairly to be considered, in determining whether the Legislature, under the guise of regulating rates, exceeded its constitutional authority and practically deprived the owner of the property or its use without due process of law.” Covington Turnpike v. Sandford, 16+ U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560; Smyth v. Ames, 169 U. S. 465, 18 Sup. Ct. 418, 42 L. Ed. 819.
It is also the settled doctrine of the Supreme Court that “the basis of all calculations as to the reasonableness of the rates charged by the corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public,” and that, where the rates are prescribed for the transportation of persons and property only within the limits of the state, “their reasonableness or unreasonableness must be determined without reference to the interstate business done by the carrier, or to the profits derived from that business. A state cannot justify unreasonably low rates for domestic transportation considered alone upon the ground that the carrier is earning large profits upon interstate business, over which, so far as the rates are concerned, the state has no control, nor can the carrier justify unreasonably high rates on domestic business on the ground that it will be able, in that way, to meet the losses on its intrastate business." Domestic and interstate commerce, and the value of the property so devoted, must be kept separate in determining reasonableness of rates for domestic commerce.
It has been further ruled by the Supreme Court that, "in order to ascertain the value of the property devoted to the convenience of the public, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present, as compared with the original, cost of construction, and the probable earning capacity of the property, under the particular rates prescribed by the statute, and the sum required to meet operating expenses, are all matters for consideration, and can be given such weight as may be just and right in each case.” These matters, however, serve only as guides in ascertaining the real value of the property; and it is upon this value, in most cases at least, that calculations must be made as to the reasonableness of rates fixed by law. Prima facie the rates fixed by law are reasonable. It devolves upon those who contest such rates to show that they are unreasonable. Ordinarily the constitutionality of a statute presents a pure question of law on the face of the statutes. In this class of cases, however, the Constitution forbidding rates to be fixed unreasonably low, a court, when it is averred that the Constitution has been violated in this respect, must ascertain the facts upon which the reasonableness of the rates depends before it can finally pronounce upon the validity of the statute.
The question before the court on this preliminary hearing, therefore, is not what the final proof will show, but whether complainants by the state of facts now presented, in view of any opposing evidence, show such a probability that the rates will be held to be unreasonable on the final hearing, as justifies the court, in view of all the circumstances, in suspending the operation of the statute until the final decree, and, that appearing, whether the relative harm which may befall the adverse interest by restraining the operation of the statute requires the granting or withholding of the injunction.
Facts Shown by the Bills. Each of the bills show the number of miles of railroad operated in this state, and the amount of business both domestic and interstate, the gross income derived from each kind of business, the expenses of carrying on the business, the net income derived from each, and the value of their property devoted to domestic commerce.
They insist that the rates charged prior to the passage of the acts complained were reasonably low, fair, and just, and increased the prosperity of the country through which the roads ran, and that their lines of road have been economically and skillfully administered, the expense being reduced to a minimum consistent with proper service, and the discharge of their duties to the public, and that they have charged and received for the transportation of intrastate traffic rates which, though just and reasonably low, were as high as allowed by law or by the competitive conditions and other circumstances affecting traffic on each of said lines.
It is alleged that equipment, material, and nearly every kind of supplies used in their business and wages are higher now than in 1905 and 1906, which were the most profitable years in complainants' history; that taxes have been increased; that complainants have been adding to and improving their depot and terminal facilities and track equipments, but they are not adequate to meet the rapidly increasing demands upon the service; that business is congested for lack of facilities; that they have not the necessary money to meet these wants, and cannot borrow it unless they are permitted to earn a fair and just return. Each of the bills contains a detailed array and statement of figures showing the effect upon their business, if the rates complained of had been in force during their best years. These statements show, assuming that their business will be as good hereafter as in the years mentioned, and conducted at about the same cost, and consisting of same volume, that under the operation of the rates fixed by the statutes some of the complainants would not earn operating expenses, some a little above operating expenses, while the net earnings which any of the bills show, under the reduced rates, judging by past experience, will be 112 per cent. per annum upon the value of property devoted to domestic commerce. Each of these bills is sworn to by the chief officers of the complainants.
Sufficient Showing Made. Making due allowance for errors in bookkeeping, and that items may have been charged to operating expenses which should go to capital, and for motives to overestimate the value of the property used in complainants' business, the court finds no reason to doubt that the figures furnish prima facie a fairly safe measure for estimating at this time the value of the property devoted to domestic commerce, and the amount of such business which may be expected to be done in the future, and thereby of measuring the effect of the reduced rates, if put into operation.
The court can know, as every other well-informed person in the jurisdiction knows, that their taxes will be greater in consequence of increased assessments and the imposition of new taxes, and that the tendency of wages, supplies, and equipments is upward. The complainants could not well misstate the actual amount of their income and business. Their property has been given in for taxation under the prevailing custom in Alabama, and is probably worth more than double the amount at which it is taxed. The income under the operation of the former laws is shown to have been moderate. Under these circumstances sufficient is shown to overcome the burden on the part of complainants as to the unreasonableness of the rates. No answers have been filed, and no affidavits presented, impugning the accuracy of the figures and statements of the value, or in any way denying the statements of facts in the bills.
Under well-settled principles of law, under such circumstances, preliminary injunction follows as of course. The eminent counsel for defendants could not, and did not, resist the issue of the preliminary injunctions. Not a Case for Experimenting with the Property of Complainants.
The court has not overlooked the rule that there are situations where the result of the operations of reduced rates, whether beneficial or otherwise, cannot well be ascertained, except by their actual operation, in which event courts may order such test. But the scant earnings and the probable deficiencies shown in the present posture of the cases cannot bring any of them within the influence of the rule. For the court, on this showing, to order the reduced rates to be put in force to ascertain their effect upon the revenues of complainants, would be as reckless as for a physician to deny a sufficient amount of nourishment to a man in order to ascertain whether it would harm liis health.
Not a Suit Against the State. It has been settled beyond controversy by the decisions of the Supreme Court that a suit against individuals, who are state officers, to prevent their enforcing an unconstitutional statute which deprives a person of property rights, is not a suit against the state, within the meaning of the eleventh amendment to the Constitution. These decisions also uphold the right of complainants to go into equity, which alone can give them any adequate relief in cases of this kind. Osborn v. Bank, 9 Wheat. (U. S.) 738, 6 L. Ed. 204; Smythe v. Ames, 169