THE RIGHT TO REGULATE RAILWAY CHARGES.

A VAGUE notion prevails, even among educated men, that a corporation is in some sort an instrumentality of the Government,. and is by its very nature possessed of certain undefined attributes of sovereignty, by virtue of which it has immunities, and may do many acts entirely beyond the reach of an individual. Every day we see railroads commit wrongs that the private citizen would not dare attempt, while the officers of the law, dazzled by the stupendous proportions of the property and labor wielded by these corporations, perform their duty with the cringing servility of a constable who serves a writ upon his king. It is within bounds to say that our modern railroad president, operating three thousand miles of track and working twenty thousand men, all in uniform, labors under the mischievous hallucination that he is part and parcel of the Government, and represents in his person no inconsiderable part of the sovereignty of the State. We propose to correct this pernicious mistake. A simple illustration will remove a wide-spread misapprehension: Suppose that two companies are formed to build a hotel; twenty men associated as a partnership, and twenty other men associated as a corporation,-what is the difference between the powers of the two? It is imperatively necessary to dispel the wild notions prevalent among laymen, and to popularize an accurate conception of what is imported by this term.

Corporate association is simply an improvement upon, and a substitute for, partnership. A corporation is "a body consisting of one or more natural persons, established by law, and continued by a succession of members." The charter is simply a statute, which invests a person with certain six powers called "the corporate faculties "-namely, the power to act by a corpo

rate name, to have succession, a common seal, etc. As the ancient contentions between the Crown and certain English cities inculcated many principles respecting the immunities and powers of governmental corporations, which principles are entirely foreign to this discussion, it will relieve the confusion to discriminate between public and private corporations. A public corporation is an instrumentality of the Government, as a city or town, and every corporation which is not public is private, as lyceums, factories, railroads, etc. It is unnecessary to examine the powers and immunities of a public corporation, because we are only concerned with private bodies, such as lyceum companies, railroad companies, etc.

As soon as we attain a clear-cut idea of what is imputed by the term corporation; as soon as we comprehend that it means simply a body endowed with certain six faculties, not possessed by a natural person, and with these faculties only; as soon as we understand that the mere possession of these six powers constitutes that legal entity called "a corporation," then we are prepared to recognize the bearing and full force of the proposition that if a railroad company has any other immunity or power not possessed by a lyceum, such other immunity or power is due solely to the fact that the legislature has given to it some particular right which is in addition to the corporate faculties. Hence, these private corporations, such as lyceums and factories, which have only the six faculties, are easily separated from those other private corporations, such as bridges, railroads, and ferries, which have the faculties and also certain additional powers. The charter of a company of the first class contains a single clause-a grant of the six faculties; the charter of a company of the second class consists of two distinct parts: (1) a grant of the faculties-namely, a clause creating the corporation; and (2) a clause giving the body so created power to do certain specified acts, which cannot be lawfully done without legislative authority.

It is familiar knowledge that there are many things that the private citizen may not do. He cannot obstruct the highway of a river or blockade a street; but the Government may, and, in fact, often does, give to an individual a right to do one or the other of these acts. Suppose the legislature authorizes a bridge from Washington city to the Virginia shore; as ships could not pass, the Georgetown wharf-owner would be ruined, and ruined VOL. CXXXII.-NO. 295.

40

simply as a corporation; but when it changes the law, or regulates the use of an item of public property which is in the hands of a citizen, it acts as a sovereign. If this dual existence of the Government be fairly comprehended, if its functions in the one capacity be properly distinguished from its functions in the other, we shall not be embarrassed by the proposition that the state, acting as a corporation, may stipulate in regard to its future conduct. In fact, if the subject matter of the stipulation be an item of individual property, the questions which arise are entirely foreign to the present discussion.

We come, then, to inquire which items of public property have been given to railroads, and it is sufficient for our purpose to observe only two of them: (1) the eminent domain and (2) the right to take toll. These estates are entirely distinct and have very different metes and bounds; they have only two characteristics in common: neither can be exercised by a citizen without a special and express grant from the Government, and they are both under the continuing control of the sovereign.

In respect to the eminent domain, it is sufficient to remark that a railroad cannot possibly claim under this franchise any other power than simply a right to acquire for the use of the community, against the will of the owner, such private property as is demanded by the public convenience. But let it be always remembered, as a fundamental canon, that not even the sovereign himself can take private property for private use.

This discussion, then, must turn upon an analysis of that ancient and well-known item of public property called the franchise of charging toll-namely, the right to exact a price for the use of property which belongs to the community.

The vulgar mistake is to suppose that a railroad may regulate its charges upon those "business principles " practiced by a citizen in the conduct of his personal affairs. These corporations, of late years, proceed on the radically false assumption that, in exercising this franchise, they are dealing with an item of individual property which is to be managed with an eye single to the pecuniary advancement of the stockholders; whereas, in fact, the road must be conducted and the charges regulated in such a manner as will, in the judgment of the sovereign, best promote the purposes for which it was created-to furnish a convenient means of transportation. The emolument of the corporation must be subordinated to this consideration. The

modern railroad rule is to make the freight as high as the traffic will bear; the legal rule is to make the toll reasonable. It would seem that the railroad officials have an idea that they have purchased from the sovereign a right to distress, oppress-to ruin the community-if, in their judgment, such distress and ruin will enrich the corporation, and that the price paid for this most stupendous right was their obligation to furnish a new (private) road. But this view is based upon two theories, both fundamentally wrong: (1) That the money paid by a customer is a remuneration for the use of private property (whereas it is strictly and emphatically a toll), and (2) that the amount of their charge is to be fixed by stipulation between the corporation and its customer, as individuals bargain about the price of private property. The fallacy of these theories is apparent. It will be carefully remembered that, as regards the matter under discussion, the company stands upon precisely the same footing as an individual common carrier, to whom the Government has given the two franchises of charging toll and eminent domain.

But, to separate each step of this analysis, we observe that a railroad corporation acts in a double capacity. The term railroad involves and presents to the mind two very different things-it is both a highway and a common carrier. A vast deal of confusion has arisen from overlooking this double function of a railroad. As a road, it is subject to the same principles of law as a street or river, and its functions as a highway must be distinguished from its obligations as a carrier. No embarrassment arises from the fact that the same thing is both road and carrier. A turnpike company may run a stage-coach, and we may imagine a turnpike which is not used except by vehicles owned by the company, and in such case the coach and the road taken together would constitute the highway. It is this uniting in one thing (person ?) two distinct functions that makes up the railroad. For, be it observed, the first scheme was that one company would furnish the road and another the cars.

Now, long before the invention of railroads, the principles of law applicable to carriers, and to highways, and to the franchise of charging toll, were firmly settled and well understood. Not

* An inventor proposes to substitute for pavements "the moving sidewalk." A platform, attached to an endless chain, is to extend the length of a square and be kept in constant motion. This contrivance is both highway and carrier.

only so, but these principles had been frequently applied to canals, bridges, ferries, turnpikes, etc. And we say that it is abso lutely impossible to distinguish between those principles and the rules of law which should be applied to railroads. The applica tion is new, but the principles are the same, and the effect of those principles must be the same on railroads that it was on canals, bridges, etc.

A common carrier-viz., a person who prosecutes the business of transportation-is bound to carry, for a reasonable price, every one who offers. He has no more right than his customer to decide what is reasonable, because, if he may make his charge unreasonable, the effect is the same as to give him a right to refuse to carry. The law is, that the carrier shall name his price at his peril; if unreasonable, the customer is entitled to damages precisely as if he captiously refused to carry.* Whether a charge be reasonable is emphatically a judicial question; but, as it is competent for the legislature to furnish to the courts rules of evidence, statutes prescribing the maximum charges for common carriers are regarded simply as a legislative declaration of the amount to be considered as reasonable; namely, the schedule of rates is a mere rule of evidence, and, as a matter of course, subject to the future discretion of the sovereign, † but obligatory upon the courts as a rule of evidence. It is evident that such legislation does not make a contract between the carrier and state that the tariff shall not be changed.

Toll is a charge exacted for the use of property which belongs to the community. A road-bed acquired (taken from its owner) by an exercise of eminent domain belongs to the community. A street which has been dedicated is owned by the public, and every one has precisely the same right to use it that he has to travel, in his own boat, upon a navigable river. We are not perplexed about our right to travel the river, because it was never the subject of private ownership; and yet, after the dedication, as respects the ownership of the community, there is no difference between the river and the street. When he has made a dedication, the original owner has no more interest in the street than a stranger to the title; and this is so, although he acquired the land

* See subject discussed by Green, J. Brown v. Adams, 15 West Virginia. + Such statutes are frequent. Bac. Abr. Carriers, D. Munn v. Illinois, 4 Otto.

A