231 U.S.

298
34 S.Ct. 48
58 L.Ed. 229

LOUISVILLE & NASHVILLE RAILROAD COMPANY,

Appt.,
v.
GREEN GARRETT et al., Individually and as Constituting the
Railroad Commission of Kentucky.
No. 23.
Argued April 4, 1912.
Decided December 1, 1913.

[Syllabus from pages 298-300 intentionally omitted]

Messrs. Henry L. Stone, Albert S. Brandeis, William G. Dearing, and
William A. Colston for appellant.
Messrs. Edward W. Hines, James Garnett, Charles C. McChord, J. Van
Norman, John F. Lockett, and Mr. James Breathitt, Attorney General of
Kentucky, for appellees.
Mr. Justice Hughes delivered the opinion of the court:

This is an appeal from an order denying a motion for an interlocutory

injunction. Louisville & N. R. Co. v. Siler, 186 Fed. 176. The motion was
heard by three judges, and the appeal is taken under 17 of the act of June 18,
1910, chap. 309, 36 Stat. at L. 539, 557.

The suit was brought by the Louisville & Nashville Railroad Company, a
corporation organized under the laws of Kentucky, to enjoin the enforcement of
two orders made by the Railroad Commission of that state on August 10, 1910.
One of these orders prescribed maximum freight rates for certain intrastate
traffic; that is, for the transportation of corn, rye, barley, malt, empty barrels,
boxes, etc., from three points of origin,Louisville, Covington, and Newport,
to sixteen points of destination in Kentucky. The second order awarded
specified amounts in reparation for payments previously made to the carrier for

such transportation in excess of the rates found to be reasonable.

3

For many years, the railroad company had given special rates to the owners of
distilleries along its lines in Kentucky for the transportation of the commodities
above mentioned, which constituted their raw materials and supplies. These
rates were withdrawn on March 25, 1910, and what are described as the
standard rates of the company, that is, those which had theretofore been
charged to others than distillers, were substituted. Thereupon, numerous
distillery companies complained to the Railroad Commission of the state,
insisting that the new rates were exorbitant and that the former rates were just
and reasonable. After hearing, the commission sustained the contention of the
petitioners, and fixed the maximum rates in question. These rates were the same
as the special rates which, prior to March 25, 1910, the railroad company had
given to the distillery companies; but, by the commission's order, the rates as
fixed were made applicable to the transportation between the points stated, of
the described commodities, without distinction as to persons or as to the use to
be made of the commodities by the consignees.

The statute under which the commission acted, in establishing these rates, is
that of March 10, 1900, known as the McChord act (Ky. Stat. 820a, Carroll's
ed. 1909). It provides in substance that when complaint shall be made to the
Railroad Commission, accusing any railroad company of charging extortionate
rates, or when the commission shall receive information or have reason to
believe that such rates are being charged, it shall be its duty 'to hear and
determine the matter as speedily as possible.' The commissioners are to give the
company complained of not less than ten days' notice, stating the time and
place of hearing and the nature of the complaint or matter to be investigated.
They 'shall hear such statements, argument, or evidence offered by the parties
as the commission may deem relevant, and should the commission determine
that the company or corporation is, or has been, guilty of extortion, said
commission shall make and fix a just and reasonable rate, toll, or compensation,
which said railroad company or corporation may charge, collect, or receive for
like services thereafter rendered.' The rate so fixed is to be entered as an order
on the record book of the commission; a copy thereof is to be mailed to a
representative of the railroad company

This statute is set forth in full in McChord v. Louisville & N. R. Co. 183 U. S.
483, 485, 46 L. ed. 289, 290, 22 Sup. Ct. Rep. 165, and in Siler v. Louisville &
N. R. Co. 213 U. S. 175, 178-180, 53 L. ed. 753-755, 29 Sup. Ct. Rep. 451.
affected, and it is to be 'in full force and effect at the expiration of ten days
thereafter, and may be revoked or modified by an order likewise entered of
record.' If the railroad company, or any officer, agent, or employee thereof,

charges a greater rate for like services thereafter, 'said company . . . and said
officer, agent, or employee, shall each be deemed guilty of extortion, and upon
conviction shall be fined for the first offense in any sum not less than $500, nor
more that $1,000, and upon a second conviction, in any sum not less than
$1,000 nor more than $2,000, and for a third and succeeding conviction in any
sum not less than $2,000 nor more than $5,000.' The circuit court, in the
appropriate counties as prescribed by the statute, is to have jurisdiction of such
prosecutions, which are to be by indictment.
6

The bill attacked the statute and the action of the commission, as violative of
the rights secured to the complainant by the Federal Constitution. Objections
were also made under the Constitution and statutes of the state. Demurrers were
filed, but upon these no decision was made. The motion for preliminary
injunction was heard upon bill and affidavits. In denying the motion, the court
did not pass upon the validity of the second order, as it was of the opinion that
those in whose favor the award of reparation had been made were 'necessary
parties in interest;' these had not been brought in. 186 Fed. 176, 203.

First. The order fixing rates.

Because of the Federal questions raised by the bill the circuit court had
jurisdiction and was authorized to determine all the questions in the case, local
as well as Federal. Siler v. Louisville & N. R. Co. 213 U. S. 175, 191, 53 L. ed.
753, 757, 29 Sup. Ct. Rep. 451. A similar rule must be deemed to govern the
application for preliminary injunction under the statute which requires a
hearing before three judges, and authorizes an appeal to this court. 36 Stat. at L.
557, chap. 309. This statute applies to cases in which the preliminary injunction
is sought in order to restrain the enforcement of a state enactment upon the
ground of its 'unconstitutionality.' The reference, undoubtedly, is to an asserted
conflict with the Federal Constitution, and the question of unconstitutionality,
in this sense, must be a substantial one. But, where such a question is presented,
the application is within the provision, and this being so, it cannot be supposed
that it was the intention of Congress to compel the exclusion of other grounds,
and thus to require a separate motion for preliminary injunction, and a separate
hearing and appeal, with respect to the local questions which are involved in the
case, and would properly be the subject of consideration in determining the
propriety of granting an injunction pending suit. The local questions arising
under the state Constitution and statutes were therefore before the circuit court
and the appeal brings them here. They may be first considered.

1. It is objected that the act of March 10, 1900, violates 27, 28, 109, and 135
of the state Constitution by under-

The provisions referred to are as follows:

10

'Section 27. The powers of the government of the commonwealth of Kentucky

shall be divided into three distinct departments, and each of them be confined to
a separate body of magistracy, to wit: Those which are legislative to one; those
which are executive to another; and those which are judicial to another.

11

'Section 28. No person, or collection of persons, being of one of those

departments, shall exercise any power properly belonging to either of the
others, except in the instances hereinafter expressly directed or permitted.'

12

'Section 109. The judicial power of the commonwealth, both as to matters of

law and equity, shall be vested in the senate when sitting as a court of
impeachment, and one supreme court (to be styled the court of appeals), and the
courts established by this Constitution.'

13

'Section 135. No courts save those provided for in this Constitution shall be
established.' taking to confer judicial powers upon the commission. By these
sections, provision is explicitly made for three distinct departments of
government; the judicial power of the commonwealth is vested in the courts
established by the Constitution, and no judicial power can be exercised by any
other officer except those thus named unless authorized by some other
provision of that instrument. Roberts v. Hackney, 109 Ky. 265, 268, 58 S. W.
810, 59 S. W. 328; Pratt v. Breckinridge, 112 Ky. 1, 65 S. W. 136, 66 S. W.
405.

14

So far as we are advised, the court of appeals of Kentucky has not passed upon
the validity of the act in question; and this court has often expressed its
reluctance to adjudge a state statute to be in conflict with the Constitution of the
state before that question has been considered by the state tribunals, to which it
properly belongs,unless the case imperatively demands such a decision.
Pelton v. Commercial Nat. Bank, 101 U. S. 143, 144, 25 L. ed. 901; Michigan
C. R. Co. v. Powers, 201 U. S. 245, 291, 50 L. ed. 744, 760, 26 Sup. Ct. Rep.
459. Here, the argument against the statute is not of that compelling character.

15

It has frequently been pointed out that prescribing rates for the future is an act
legislative, and not judicial, in kind. Interstate Commerce Commission v.
Cincinnati, N. O. & T. P. R. Co. 167 U. S. 479, 499, 42 L. ed. 243, 253, 17
Sup. Ct. Rep. 896; McChord v. Louisville & N. R. Co. 183 U. S. 483, 495, 46
L. ed. 289, 295, 22 Sup. Ct. Rep. 165; Prentis v. Atlantic Coast Line Co. 211 U.
S. 210, 226, 53 L. ed. 150, 158, 29 Sup. Ct. Rep. 67; Knoxville v. Knoxville

Water Co. 212 U. S. 1, 8, 53 L. ed. 371, 378, 29 Sup. Ct. Rep. 148. It pertains,
broadly speaking, to the legislative power. The legislature may act directly, or,
in the absence of constitutional restriction, it may commit the authority to fix
rates to a subordinate body. Stone v. Farmers' Loan & T. Co. 116 U. S. 307,
336, 29 L. ed. 636, 646, 6 Sup. Ct. Rep. 334, 388, 1191; Reagan v. Farmers'
Loan & T. Co. 154 U. S. 362, 393, 394, 38 L. ed. 1014, 1022, 4 Inters. Com.
Rep. 560, 14 Sup. Ct. Rep. 1047; Atlantic Coast line R. Co. v. North Carolina
Corp. Cmmission, 206 U. S. 1, 19, 51 L. ed. 933, 941, 27 Sup. Ct. Rep. 585, 11
Ann. Cas. 398; Honolulu Rapid Transit & Land Co. v. Hawaii, 211 U. S. 282,
291, 53 L. ed. 186, 188, 29 Sup. Ct. Rep. 55; Grand Trunk Western R. Co. v.
Railroad Commission, 221 U. S. 400, 403, 55 L. ed. 786, 787, 31 Sup. Ct. Rep.
537. The Railroad Commission of Kentucky was established by 209 of the
Constitution (adopted in the year 1891), which provided that 'the powers and
duties of the railroad commissioners shall be regulated by law,' and that 'until
otherwise provided by law, the commission so created shall have the same
powers and jurisdiction, perform the same duties, be subject to the same
regulations, and receive the same compensation, as now conferred, prescribed,
and allowed by law to the existing railroad commissioners;' and by 218, of
the same instrument (the long and short haul provision) the commission was
authorized 'in special cases, after investigation,' to permit a less charge for
longer than for shorter distances, and to 'prescribe the extent' to which the
common carrier might be 'relieved from the operations' of the section.
Louisville & N. R. Co. v. Com. 106 Ky. 633, 90 Am. St. Rep. 236, 51 S. W.
164, 1012, 183 U. S. 503, 46 L. ed. 298, 22 Sup. Ct. Rep. 95. It is unnecessary
to review the statutes defining the powers of the then-existing commission, to
which 209 refers (Gen. Stat. [Ky.] ed. 1888, pp. 1021 et seq.; act of March 7,
1890, 1 Acts 1889-90, p. 25). For, while the former commission had not been
authorized to fix rates, it can hardly be doubted that the Constitution, in
providing that the powers and duties of the new commission should be
regulated by law, contemplated that it should be available as an appropriate
instrument in the supervision and regulation of railroads, and left the legislature
free to adopt, if it saw fit, a practice already familiar (Interstate Commerce
Commission v. Cincinnati, N. O. & T. P. R. Co. 167 U. S. 479, 495, 496, 42 L.
ed. 243, 251, 252, 17 Sup. Ct. Rep. 896), and to call this agency to its aid in
prescribing reasonable intrastate rates. This authority the legislature granted by
the act of March 10, 1900, empowering the commission where, as in this case,
particular rates were found to be exorbitant, to fix the reasonable rates thereafter
to be charged. Siler v. Louisville & N. R. Co. 213 U. S. 175, 197, 53 L. ed.
753, 760, 29 Sup. Ct. Rep. 451.
16

The contention is that, before the commission makes such an order, it is

required to exercise judicial functions. It is first to determine whether the

carrier has been exacting more than is just and reasonable; it is to give notice
and a hearing; it is to 'hear such statements, arguments, or evidence offered by
the parties' as it may deem relevant; and it is in case it determines that the
carrier is 'guilty of extortion' that it is to prescribe the just and reasonable rate.
Still, the hearing and determination, viewed as prerequisite to the fixing of
rates, are merely preliminary to the legislative act. To this act, the entire
proceeding led; and it was this consequence which gave to the proceeding its
distinctive character. Very properly, and it might be said, necessarily,even
without the express command of the statute,would the commission ascertain
whether the former, or existing, rate, was unreasonable before it fixed a
different rate. And in such an inquiry, for the purpose of prescribing a rule for
the future, there would be no invasion of the province of the judicial
department. Even where it is essential to maintain strictly the distinction
between the judicial and other branches of the government, it must still be
recognized that the ascertainment of facts, or the reaching of conclusions upon
evidence taken in the course of a hearing of parties interested, may be entirely
proper in the exercise of executive or legislative, as distinguished from judicial,
powers. The legislature, had it seen fit, might have conducted similar inquiries
through committees of its members, or specially constituted bodies, upon
whose report as to the reasonableness of existing rates it would decide whether
or not they were extortionate and whether other rates should be established, and
it might have used methods like those of judicial tribunals in the endeavor to
elicit the facts. It is 'the nature of the final act' that determines 'the nature of the
previous inquiry.' Prentis v. Atlantic Coast Line Co. 211 U. S. 210, 227, 53 L.
ed. 150, 159, 29 Sup. Ct. Rep. 67.
17

It is also urged in support of the objection that the order of the commission is to
be 'in full force and effect' at the expiration of ten days after notice, and that this
is the equivalent of a declaration that the order shall be final and conclusive;
but the finality of the act did not change its essential character. So far as it was
final, unless revoked or modified by the commission, it was final as a
legislative act within the commission's authority.

18

2. It is contended that the commission acted arbitrarily. We are referred to the

allegations of the bill that there was 'no testimony' before the commission 'that
did establish or that tended to establish' the unjust or unreasonable nature of any
of the rates maintained by the appellant: that there was 'no evidence' introduced
in the investigation or considered by the commission 'showing or tending to
show' that the appellant's rates were, 'in and of themselves, unjust,
unreasonable, or extortionate;' that the evidence 'had no proper relation' to the
reasonableness of rates for transporting the commodities in question when they
were to be used for distillery purposes; and that 'no evidence whatsoever was

adduced at the hearing and investigation aforesaid, which showed or tended to

show in the slightest degree what was or might be a just or reasonable rate to be
charged' for the transportation described in the commission's order.
19

But it appears that upon receiving the complaint of the distillers with respect to
the rates which the appellant had put into effect, the commission set the matter
for hearing; that the parties were heard; that each party produced a number of
witnesses; and that the appellant, represented by counsel, was permitted to
cross-examine the witnesses of the complainants. The rates as fixed by the
commission were the same as those which for many years had been maintained
by the appellant for the distillers' supplies. The evidence taken by the
commission was not before the court below; and the general allegations of the
bill, which in substance stated the judgment of the pleader as to what such
evidence did not 'establish' or 'tend to establish,' and the statements contained in
the affidavits submitted upon the application for injunction, were utterly
insufficient to justify the court in enjoining the rates upon the ground that the
commission either had denied the hearing which the statute contemplated, or by
its arbitrary action had been guilty of an abuse of power.

20

It is also charged, invoking a doctrine analogous to that declared in Southern P.

Co. v. Interstate Commerce Commission, 219 U. S. 433, 53 L. ed. 283, 31 Sup.
Ct. Rep. 298, that the commission assumed a power which it did not possess by
proceeding upon the theory of a supposed equitable estoppel in favor of the
distillers because they had been induced to erect and extend their plants upon
the faith of the former rates. This contention finds no support in the record. The
commission purported to act under its statutory authority, and, finding the rates
charged by the carrier to be extortionate, fixed other rates which they declared
to be reasonable.

21

Again, it is further said that the enforcement of the rate order should have been
enjoined in order to prevent unjust discriminations and undue preferences in
contravention of 817 and 818 of the Kentucky statutes. Section 817 prohibits
unjust discrimination in charges, as between persons, for like and
contemporaneous service in transportation. Section 818 makes it unlawful to
give any undue or unreasonable preference or advantage to one person or
locality as compared with another. Section 819 prescribes penalties for
violation, the prosecution to be by indictment. The point of this objection is that
obedience to the commission's order with respect to the traffic from the three
places of origin to the sixteen places of destination therein mentioned will bring
about discrimination in intrastate rates, contrary to these statutes, as against
thirty-two other distillery stations on the lines of the appellant, the distillers at
which, so far as appears, have not complained of the appellant's rates.

22

In view of the decision in Com. v. Louisville & N. R. Co. 20 Ky. L. Rep. 491,
46 S. W. 700, to the effect that the provisions of 818 are too uncertain to
support a criminal proceeding under 819, it is not contended by the appellant
that it would be subject to the prescribed penalties so far as 818 is concerned.
And it is urged by the attorney general of the state, on behalf of the appellees,
that 817 does not apply to discrimination as between localities.

23

But, aside from these considerations, we find the objection to be without merit.
The commission dealt with the question before it, and, on complaint as to the
rates to the sixteen points of destination, ordered what it found to be reasonable
rates for that transportation. In so doing, it acted in conformity with the statute.
To give legality to its order as to the particular rates in question, it was not
necessary for the commission to require a reduction in other rates. Certainly,
the fact that the other rates described, which had not yet been passed upon by
the commission, might likewise be open to the objection of unreasonableness,
and that their maintenance by the appellant might lead to unjust discrimination,
would furnish no basis for restraining the enforcement of the commission's
order if that order were otherwise valid.

24

3. The order is further attacked upon the ground that the statute under which it
was made operates to deprive the carrier of its property without due process of
law, and to deny to it the equal protection of the laws, contrary to the 14th
Amendment.

25

It is insisted that the failure to provide for an appeal to any court from the final
order of the commission, or for a judicial review of the reasonableness of the
prescribed rates before they become effective, makes the statute void. But the
statute does not deny to the carrier the right of access to the courts for the
purpose of determining any matter which would be the appropriate subject of
judicial inquiry. We have not been referred to any decision of the state court
holding that the statute should be so construed (Chicago, M. & St. P. R. Co. v.
Minnesota, 134 U. S. 418, 456, 33 L. ed. 970, 980, 3 Inters. Com. Rep. 209, 10
Sup. Ct. Rep. 462, 702). If the commission establishes rates that are so
unreasonably low as to be confiscatory, an appropriate mode of obtaining relief
is by bill in equity to restrain the enforcement of the order. Chicago, M. & St. P.
R. Co. v. Minnesota, 134 U. S. 418, 459, 460, 33 L. ed. 970, 982, 983, 3 Inters.
Com. Rep. 209, 10 Sup. Ct. Rep. 462, 702; St. Louis & S. F. R. Co. v. Gill, 156
U. S. 649, 659, 666, 39 L. ed. 567, 570, 573, 15 Sup. Ct. Rep. 484; Ex parte
Young, 209 U. S. 123, 166, 52 L. ed. 705, 731, 13 L.R.A.(N.S.) 932, 28 Sup.
Ct. Rep. 441, 14 Ann. Cas. 764. Presumably, the courts of the state, as well as
the Federal courts, would be open to the carrier for this purpose (Home Teleph.
& Teleg. Co. v. Los Angeles, 211 U. S. 265, 278, 53 L. ed. 176, 184, 29 Sup.

Ct. Rep. 50) without express statutory provision to that effect. In answer to the
present objection, it is sufficient to say that there is no showing here of an
attempt to preclude such resort to the courts, or to deny to the carrier the
assertion of its rights, unless it can be found in the severity of the penalties
attached to disobedience of the order. And, if it were assumed that these would
be open to objection as operating to deprive the carrier of a fair opportunity to
contest the validity of the commission's action, still, the penal provisions would
be separable, and the force of the remaining portion of the statute would not be
impaired. Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 395, 38 L. ed.
1014, 1022, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047; Willcox v.
Consolidated Gas Co. 212 U. S. 19, 53, 54, 53 L. ed. 382, 400, 29 Sup. Ct. Rep.
192, 15 Ann. Cas. 1034; Grenada Lumber Co. v. Mississippi, 217 U. S. 433,
443, 54 L. ed. 826, 831, 30 Sup. Ct. Rep. 535; Western U. Teleg. Co. v.
Richmond, 224 U. S. 160, 172, 56 L. ed. 710, 717, 32 Sup. Ct. Rep. 449;
Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352, 380, 57 L. ed.
1511, 1534, 33 Sup. Ct. Rep. 729; Southern P. Co. v. Campbell, 230 U. S. 537,
553, 57 L. ed. 1610, 1625, 33 Sup. Ct. Rep. 1027.
26

4. The appellant, however, submits a broader contention which concerns the

scope of the review to which it is entitled in this suit, and the nature of the
judicial function where rates fixed by the legislature, or under its direction, are
assailed as unreasonable.

27

It is urged that so long as a carrier's existing rates are just and reasonable for the
services it performs, it is within its constitutional and statutory rights; that what
constitutes a just and reasonable rate for the services it has performed is a
question of fact upon which the carrier is entitled to a judicial hearing; that even
more clearly is it entitled to such a hearing, if, as a consequence of a decision
by the commission that it has exceeded the limits of just and reasonable
compensation for past services, it 'must forfeit in favor of such statutory body
its rate-making power, and be deprived of that property right with respect to
'like services thereafter rendered,' as provided in the McChord act.' It is said
further, that under the statute the finding from the evidence that the carrier has
charged more than a reasonable compensation is 'the essential jurisdictional
fact' which must exist before the commission can fix rates, and it is insisted that
if, upon a judicial investigation and the evidence adduced by the parties, it
turns out that this jurisdictional fact did not exist, then the commission's entire
action must be regarded as null and ovid, without regard to the question
whether the new rates prescribed by it, in such circumstances, are reasonable or
unreasonable, compensatory or confiscatory. It is therefore contended that the
appellant is now entitled to a judicial hearing upon the questions of fact as to
the reasonableness of the particular rates existing at the time the order was

made, as well as of those fixed by the commission; and that in this view the
jnjunction asked for should have been granted.
28

These arguments are elaborated and earnestly pressed; but the questions
presented have been so frequently dealt with by this court that an extended
discussion is unnecessary. The right of the carrier to make its own intrastate
rates is subject to the law of the state, constitutionally enacted. In the absence of
a legislative rate, it is the province of the courts in deciding cases that arise
between shippers and carriers to pass upon the reasonableness of the
compensation which the carrier has demanded for its services. In so doing, the
courts apply the common law. But it is the province of the legislature to make
the law; and when the legislature, or the body acting under its authority,
establishes the rate to be thereafter charged by the carrier, it is the duty of the
courts to enforce the rule of law so made unless the constitutional limits of the
rate-making power have been transgressed. The rate-making power necessarily
implies a range of legislative discretion; and, so long as the legislative action is
within its proper sphere, the courts are not entitled to interpose and upon their
own investigation of traffic conditions and transportation problems to substitute
their judgment with respect to the reasonableness of rates for that of the
legislature or of the railroad commission exercising its delegated power. It may
be assumed that the statute of Kentucky forbade arbitrary action; it required a
hearing, the consideration of the relevant statements, evidence, and arguments
submitted, and a determination by the commission whether the existing rates
were excessive. But, on these conditions being fulfilled, the questions of fact
which might arise as to the reasonableness of the existing rates in the
consideration preliminary to legislative action would not become, as such,
judicial questions to be re-examined by the courts. The appropriate questions
for the courts would be whether the commission acted within the authority duly
conferred by the legislature, and also, so far as the amount of compensation
permitted by the prescribed rates is concerned, whether the commission went
beyond the domain of the state's legislative power and violated the
constitutional rights of property by imposing confiscatory requirements. Stone
v. Farmers' Loan & T. Co. 116 U. S. 307, 331, 29 L. ed. 636, 644, 6 Sup. Ct.
Rep. 334, 388, 1191; Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 397399, 38 L. ed. 1014, 1023, 1024, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep.
1047; Smyth v. Ames, 169 U. S. 466, 526, 42 L. ed. 819, 842, 18 Sup. Ct. Rep.
418; San Diego Land & Town Co. v. National City, 174 U. S. 739, 754, 43 L.
ed. 1154, 1160, 19 Sup. Ct. Rep. 804; San Diego Land & Town Co. v. Jasper,
189 U. S. 439, 446, 47 L. ed. 892, 896, 23 Sup. Ct. Rep. 571; Knoxville v.
Knoxville Water Co. 212 U. S. 1, 8, 17, 53 L. ed. 371, 378, 381, 29 Sup. Ct.
Rep. 148; Willcox v. Consolidated Gas Co. 212 U. S. 19, 41, 53 L. ed. 382,
395, 29 Sup. Ct. Rep. 192, 15 Ann. Cas. 1034; Minnesota Rate Cases (Simpson

v. Shepard) 230 U. S. 352, 433, 434, 57 L. ed. 1511, 1555, 1556, 33 Sup. Ct.
Rep. 729. Undoubtedly, a state may permit appeals to its courts from the ratemaking orders of its railroad commission, and, upon the review of such orders,
it may expressly authorize its judicial tribunals to investigate and decide
questions which otherwise would not belong to them, or even to act
legislatively (Prentis v. Atlantic Coast Line Co. 211 U. S. 210, 227, 53 L. ed.
150, 159, 29 Sup. Ct. Rep. 67). But the guaranties of the 14th Amendment do
not entitle the carrier to the exercise by the courts of such extrajudicial
authority.
29

5. With respect to the question of confiscation, the circuit court ruled that the
bill did not 'clearly tender an issue that could be said to involve confiscatory
rates.' The court also referred in its opinion to the statement in the brief of
complainant's counsel that the complainant was not bound in this case 'to allege
or prove that the new rates were confiscatory,' and also to an oral disclaimer of
a purpose to rely upon any such contention. 'This concession,' the court said,
'we think, was but natural, in view of the history of the rates which the railroad
company voluntarily maintained for years prior to March 25, 1910, as before
pointed out. No averment is made touching the proportions in volume of
distillers's traffic and of nondistillers' traffic, and it could not be assumed that
the company had been carrying distillers' supplies and products at confiscatory
rates, nor that the extension of those rates to all similar traffic on the lines in
question would amount to the confiscation of property.' 186 Fed. 176, 191.

30

It is explained by the appellant that what was conceded below was that the bill
as amended did not aver that the rates fixed by the commission would result in
the confiscation of appellant's property on its entire intrastate business, but that
it is insisted, and was insisted below, that the rates would not yield a fair or
reasonable compensation for the services performed, and would deprive the
company of the fair and reasonable return which it is entitled to earn upon the
property devoted to such services, with respect to the described traffic.

31

Without passing upon the general propositions advanced in argument, it

suffices to say that we are of the opinion that the bill as amended wholly failed
to make a case entitling the appellant to the relief sought. Apart from the
merely general averments, it is alleged that the rates fixed by the order would
cause an annual loss in revenue on intrastate freight of at least $15,600, and
also that, in consequence of the effect on interstate rates, there would be an
additional annual loss of not less than $3,000; further, that if the carrier were
compelled to put in similar rates to the thirty-two other distillery stations, there
would be a loss of $54,000 a year on shipments to those places; and that there
would be other losses to an amount not specified, on shipments to consignees

other than distillers.

32

But it may be supposed that, other conditions being the same, a reduction in
rates found to be excessive will cause a loss in revenue; and the question is not
simply as to the amount of reduction, but whether the rates as fixed would
allow a fair return. The bill does not show the value of the property employed,
the expenses of operation, or the return which would be permitted under the
rates prescribed.

33

6. It is further objected that the ratemaking order impairs the obligation of the
contract contained in the company's charter in violation of 10, article 1 of the
Federal Constitution. It is alleged in the amended bill that by its charter granted
by the act approved March 5, 1850, and the amendments thereto, the appellant
was authorized transporatation over its lines, and that the transportation over its
lines, and that the rates fixed by the commission's order are less than those
which it was thus empowered to maintain.

34

It is provided by 3 of the Bill of Rights contained in the state Constitution

adopted in 1891, that 'every grant of a franchise, privilege, or exemption, shall
remain subject to revocation, alteration, or amendment. Section 190 of this
Constitution is as follows: 'No corporation in existence at the time of the
adoption of this Constitution shall have the benefit of future legislation without
first filing in the office of the secretary of state an acceptance of the provisions
of this Constitution.'

35

It is set forth in the amended bill that, by resolution of the board of directors of
the appellant, adopted July 11, 1902, it 'duly accepted the provisions of the
present Constitution of the commonwealth of Kentucky, ordained September
28, 1891, and the provisions of chapter 32 of the Kentucky Statutes, being the
act adopted April 5, 1893, with the amendments thereto,' and that a copy of this
resolution was filed with the secretary of the state of Kentucky. Chapter 32 of
the General Statutes is the chapter upon private corporations. One of its
provisions, contained in 573, is that the 'provisions of all charters and articles
of incorporation, whether granted by special act of the general assembly or
obtained under any general incorporation law, which are inconsistent with the
provisions of this chapter concerning similar corporations, to the extent of such
conflict, and all powers, privileges, or immunities of any such corporation
which could not be obtained under the provisions of this chapter, shall stand
repealed on September 28, 1897. . . . After the 28th day of September, 1897, the
provisions of this chapter shall apply to all corporations created or organized
under the laws of this state, if said provisions would be applicable to them if
organized under this chapter.' By another provision of this chapter, in the article

relating to railroads ( 816), a railroad corporation charging more than a just

and reasonable rate of compensation is guilty of extortion; the penalty was a
fine provided for in 819. In Louisville & N. R. Co. v. Com. 99 Ky. 132, 33
L.R.A. 209, 59 Am. St. Rep. 457, 35 S. W. 129, the court of appeals, holding
that 816 was too indefinite, to be sustained as a penal statute, concluded its
opinion by saying: 'It may be observed further, however, that it would seem
singular if such a statute, even if in all respects valid, could be enforced against
a carrier whose rates, as fixed in its charter, are in excess of the rates alleged to
be excessive in the indictment. And this, not because such rates are secured by
an irrepealable contract (a matter not now considered), but simply because they
at least remain the legal rates until changed by law.'
36

It was after the decision in this case that the act of March 10, 1900, was passed,
empowering the railroad commission to fix rates.

37

The amended bill states that, upon the filing of the resolution accepting the
provisions of the Constitution, and the provisions of chapter 32 of the General
Statutes, 'thereby and thereafter the said contract (with respect to the maximum
freight and passenger rates it is entitled to charge and collect on its said lines of
railroad) between complainant and the commonwealth of Kentucky became and
is now no longer irrevocable or irrepealable;' but, it is averred that
'nevertheless, said contract remaius intact, and has never been revoked or
repealed by any act of the legislature,' and that its obligation was in full force
and effect at the time the rate order was made (August 10, 1910). That is, it is
insisted that 573 of the statutes, above quoted, is not applicable for the reason
that on April 5, 1893, when the statute, of which this provision was a part, was
approved, and also on September 28, 1897, when the repeal provided for in that
statute was to take effect, the appellant's charter was not subject to repeal or
amendment, and that it did not become so subject until 1902. It is also
contended that the act authorizing the commission to fix rates does not apply
because that was passed two years before the appellant filed its resolution; in
other words, that its contract contained in its charter is still in force because the
legislature has not enacted a repealing or amending provision since the
resolution was filed.

38

We do not find it necessary to review all the questions that are suggested. Apart
from other considerations, it is manifest that the statute of March 10, 1900, was
a continuing authority to the Railroad Commission. The order of the Railroad
Commission in fixing rates was a legislative act, under its delegated power. It
had 'the same force as if made by the legislature.' Grand Trunk Western R. Co.
v. Railroad Commission, 221 U. S. 400, 403, 55 L. ed. 786, 787, 31 Sup. Ct.
Rep. 537. It is for this reason that it is a 'law' passed by the state, within the

meaning of the contract clause. New Orleans Waterworks Co. v. Louisiana

Sugar Ref. Co. 125 U. S. 18, 31, 31 L. ed. 607, 612, 8 Sup. Ct. Rep. 741; St.
Paul Gaslight Co. v. St. Paul, 181 U. S. 142, 148, 45 L. ed. 788, 791, 21 Sup.
Ct. Rep. 575; Northern P. R. Co. v. Minnesota, 208 U. S. 583, 590, 52 L. ed.
630, 633, 28 Sup. Ct. Rep. 341; Grand Trunk Western R. Co. v. Railroad
Commission, supra; Ross v. Oregon, 227 U. S. 150, 163, 57 L. ed. 458, 463, 33
Sup. Ct. Rep. 220. As it had full legislative effect, the appellant could not assert
against its operation the provision of a contract which had previously become
subject to legislative alteration. Missouri P. R. Co. v. Kansas, 216 U. S. 262,
274, 275, 54 L. ed. 472, 477, 478, 30 Sup. Ct. Rep. 330. Upon the filing of the
resolution, the charter provision as to the maximum rates therein specified
ceased to be an obstacle, if it had been such before, to the exercise by the state
of its rete-making power.
39

7. The remaining questions require only a brief mention. The penalty provisions
of the statute in question are challenged upon the ground that they violate the
provisions of the 14th Amendment. But, as already stated, these provisions are
separable. It is also objected that the order of the commission constitutes an
unwarrantable interference with, and a regulation of, interstate commerce. The
questions thus raised cannot be distinguished from those which were considered
and decided in The Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352,
57 L. ed. 1511, 33 Sup. Ct. Rep. 729.

40

Second. The order for reparation.

41

This order was not made under the statute of March 10, 1900, authorizing the
commission to fix rates. It is conceded on behalf of the appellees that if the
commission was not authorized by 821 or 829 of the Kentucky statutes to
award reparation, it had no authority whatever for that purpose. Section 821
provides that it shall be the duty of the railroad commissioners to see that the
laws relating to railroads are faithfully executed, and to exercise a general
supervision over the railroads of the state. Section 829 authorizes the
commission to 'hear and determine complaints' under 816, 817, and 818, to
the provisions of which we have already referred. It provides that such
complaints shall be in writing, that the company complained of shall have
notice of hearing, that the commission shall hear and reduce to writing all the
evidence adduced, and that it shall render such award as may be proper. If the
award by not satisfied within ten days, the chairman of the commission is to file
a copy of it and the evidence heard, in the office of the clerk of the proper
circuit court, whereupon it is to be docketed for trial, and summons is to be
issued, as in other cases, requiring the party against whom the award has been
made to show cause why it should not be satisfied. If the party fails to appear,

judgment is to be rendered by default; and, if a trial is demanded, the case is to

be tried as other ordinary cases, except that no evidence is to be introduced by
either party save that heard before the commission, unless the court shall be
satisfied by sworn testimony that it could not have been produced before the
commission by the exercise of reasonable diligence.
42

It thus appears that the two proceedings, though they were conducted at the
same time, were distinct in their nature. The one resulted in a legislative rule for
the future; in the other, there was an award of specific sums of money to
particular persons upon the basis of past transactions, and this award, according
to the provisions of the statute, on being filed, could be enforced by
proceedings in the courts of the state. The persons in whose favor the award
was made were not parties to the suit, and we think that the court was right in
declining to determine its validity.

43

The order denying the application for injunction is affirmed.