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other States, during succeeding years charters were granted by the legislature which are as long and involved as if no general laws had been in existence. Iowa (consult Dixon, State Railroad Control in Iowa) passed an incorporation law, providing for the incorporation of railroads, at the first session of its general assembly, and in most of the earlier legislation of that State interference with railway management is foreshadowed. A law of 1856 contains the significant provision that “railroad companies accepting the provisions of this act shall at all times be subject to such rules and regulations as may from time to time be enacted." In 1860, maximum rates were prescribed, and 2 years later railways were required to maintain offices within the State and to submit annual reports. Another law provided for the periodical publication of rates and certain provisions relating to safety.
The active regulation of rates was attempted in 1866, but most of the restrictive laws enacted up to this time were rarely enforced. Kansas, after most prolific crops of private charters, passed an elaborate general law in 1857, but within 3 days after this law had been passed a special charter was granted without reference to the act in question, although covering in its provisions matters which the general law treated very elaborately. The contents of this rather èlaborate law are essentially like those of the Illinois law.
Taking North Carolina and Alabama as representatives of another section of the country, it may be said that their general laws, while fairly comprehensive, are not as complete as the best laws of States farther north. The North Carolina law of 1871 embraces 70 sections, in one of which a maximum rate of 5 cents for passengers is prescribed; another calls for an annual report of 105 items, and another prohibits consolidation with parallel or competing lines. The Alabama law of 1850 reserves to the legislature the right to alter or repeal any certificate of incorporation; it places a limit upon the indebtedness which the company may assume; and contains furthermore the very novel provision that no railroad shall be constructed through an orchard without the owner's consent. In 1853 all railway companies were made subordinate to general laws.
California was one of the few States which began to legislate on railway matters in general rather than special acts, beginning with 1850. In 1853 a law was passed which enabled any 25 persons to form a railway company. The life of the franchise was limited to 50 years. While section 2 of the law specified that the capital stock of the company shall exactly equal the actual cost of the road, section 16 empowered the company to increase its capital stock "to any amount which may be deemed sufficient and proper for the purpose of the corporation." This law was amended in 1853, 1856, and 1857, but in 1861 the whole of it was repealed and another law, supplementary to the original general act of 1850, was adopted. An important provision of this last law is found in section 1, which specifies that at least $1,000 per mile shall be subscribed, and 10 per cent actually paid in before the articles of incorporation can be filed. The form of the articles of the association is prescribed, and the period of its existence limited to 50 years. A sinking fund for the redemption of bonds is provided for and the unusual liberty of laying out its road, "not exceeding 9 rods ide," is given to the company. There are elaborate sections on eminent domain, arbitration, tolls, and so on. By a vote of three-fourths of the constituents of the companies, consolidated railway corporations may be organized. Maximum rates of 10 cents per passenger-mile and 15 cents per ton-mile are prescribed, although the company can not be compelled to undertake the transportation of a small quantity of freight for less than 25 cents. The maximum rates of the California law are in part exceeded by those prescribed in a Washington charter granted in 1862, which are 10 cents per passenger-mile and 40 cents per ton-mile. It is also a significant fact that the first general law enacted by the legislature of Washington, in 1873, relates to "extortion and unjust discrimination in the rates charged for the transportation of passengers and freight on railroads in this Territory." Montana, Colorado, Arizona (Territory), and Idaho are other States which, like California, began with general laws.
PART III. CONSTITUTIONAL PROVISIONS.
General considerations.-Constitutional provisions probably represent the more fundamental and permanent features of railway legislation. It may be assumed that the provisions incorporated in the constitutions of the various States of the Union were thought to represent those matters respecting railways which the people of the different States, represented in their respective legislatures, considered most important and least likely to require changes in the future. The history of American constitutions does not reveal an undue readiness on the part of the people to change or modify their organic laws; and in view of this slowness in bringing about constitutional changes an element of fixity and rigidity is infused into the legislative control of railways.
The constitutions of the older States, as a class, contain fewer and less comprehensive provisions relating to railways; and two of them, Massachusetts and New Hampshire, embody no direct provisions of this kind, while Rhode Island is saved from being classified with these two States by a brief and rather unimportant constitutional provision. In addition, there is an absence of clauses relating to railways in the organic codes of the Territories of Arizona and New Mexico. With these exceptions, every State in the Union contains more or less elaborate provisions on this subject, varying from the less comprehensive and incomplete sections of many of the constitutions of the older States to those much wider in their scope and stringent in their nature, as in the recently adopted constitution of Montana.
By far the greater part of the contents of all the constitutional provisions may be grouped under three general heads: First, those relating to incorporation; second, those relating to public aid; and, third, to direct regulation and control, the latter having in view the correction of abuses and the establishment of equitable rates. While a few of these provisions are negative in their character, a good many of them are positive, empowering legislatures to establish rates and to do other things calculated to subordinate the agencies of transportation to the public good.
Acceptance of the constitution.-Fifteen State constitutions contain provisions to the effect that no railway, canal, or other transportation company in existence at the time of the ratification of the constitution shall have the benefit of any future legislation by general or special laws, other than in execution of a trust created by law or by a contract, except on the condition of complete acceptance of all the provisions of the section or article of the constitution in question. In a few instances the further provision is embodied that whenever existing charters are revised or amended, the same shall become subject to the constitution. (The constitutions incorporating such provisions are found in Alabama, Arkansas, Colorado, Delaware, Idaho, Kentucky, Louisiana, Mississippi, Montana, North Dakota, Pennsylvania, South Dakota, Texas, Utah, Wyoming.)
Corporations organized under general laws.-In the first section of this report it was noted that great crops of special charters were produced in all sections of the country, and it was perhaps a reaction against those excesses in special and local legislation which led to the adoption of constitutional provisions prohibiting the organization of railway and similar companies under special charters. One method of avoiding these constitutional and statutory provisions was observed in the case of the Northern Pacific Railway; but Section XXI of the original charter of the Superior and St. Croix Railroad Company declared “that in the judgment of the legislature of this State the objects of the corporation hereby created can not be attained under the general laws." The later constitutions of the Western States are very stringent in this respect, and the organization of a large class of corporations, of which railways are an important member, under special acts, is rigidly prohibited. (The following States have incorporated
such prohibitions in their constitutions: Arkansas, California, Colorado, Delaware, Florida, Illinois, Idaho, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York, North Carolina, South Carolina, Utah, West Virginia, Wisconsin, Wyoming.)
Previously granted charters.-Closely allied to the last type of constitutional provisions is another, found in only 6 Štates, which invalidates all charters and special or exclusive privileges granted before the adoption of the constitution, unless organization had been actually effected. Organization thereafter could not be effected without a full acceptance of the new constitution. (This is found in the constitutions of Arkansas, California, Colorado, Kentucky, Idaho, Wyoming.)
Special charters. In addition to the positive provision that railway companies shall be organized under general laws, 19 constitutions contain the negative clause that no special charters shall be granted, except for charitable, educational, and certain other purposes, when the same shall remain under State control. A few constitutions specify that special charters may be granted to corporations and organizations not having in view financial gain. (The following are the States whose constitutions contain such provisions: Arkansas, Colorado, Idaho, Kentucky, Kansas, Minnesota, Mississippi, Missouri, Nevada, New Jersey, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming.)
Railways public carriers.-The analogy of railways to common roads and other public highways is expressed in constitutional provisions declaring all railway and canal companies to be common carriers. While provisions bearing on this topic are differently worded in the different constitutions, sometimes a separate section being devoted to it, and in other instances only a phrase or sentence embodied in another section, the meaning is usually the same; namely, the declaration that the railway is a public highway and that railway companies are common carriers. (The following constitutions contain such provisions: Alabama, Arkansas, Colorado, Idaho, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, South Dakota, Texas, Utah, Washington, West Virginia, Wyoming.)
Eminent domain and public use.-Ever since the Supreme Court of the United States handed down the decision of Munn v. Illinois, declaring that whenever a person devotes his property to a use in which the public has an interest, he must grant, to the extent of that interest, the right of the State to control that property, no one could consistently question the public nature of railways. This fact has found common expression in the term "quasi public," which is now generally applied to railway corporations. A large number of State constitutions declare that the respective legislatures may take the franchise and property of railway companies and subject the same to public use, when the general welfare requires it, in the same manner in which the property of individuals is taken. In other words, these States reserve in their constitutions the power to exercise the right of eminent domain over all the corporate property of a railway company. (The following States have this provision: Arkansas, California, Colorado, Idaho, Illinois, Kentucky, Mississippi, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, South Dakota, Washington, West Virginia, and Wyoming.)
Power to annul charters.-Sixteen States reserve constitutional power to alter, amend, revoke, or annul charters granted under special or general laws, whenever in the opinion of the legislature it may be injurious to the citizens of the State in question to continue the same. Usually the additional clause is incorporated that in case of such repeal or revocation no injustice shall be done to the members of the corporation. (Found in the constitutions of Arkansas, California, Colorada, Idaho, Iowa, Kansas, Mississippi, Montana, New York, North Carolina, Oregon, South Dakota, Utah, Washington, Wisconsin, and Wyoming.)
Public aid.-Even after the downfall of the national system of internal improvements, together with the failure of individual States to make such works a success, subordinate political units-counties, towns, cities, villages, etc.-extended aid to railway companies in a variety of ways, the most common among which were granting the right of way, making cash donations, purchasing bonds, or becoming stockholders, loaning the public credit, etc. Provisions relating to subscriptions to stock are found in 14, and to loaning of the public credit in 15 constitutions. (The former including the following States: Arkansas, Connecticut, Delaware, Florida, Idaho, Louisiana, Kentucky, Mississippi, Missouri, Oregon, Pennsyl vania, Virginia, Washington, Wyoming; the latter, Connecticut, Florida, Maine, Mississippi, Nevada, New York, North Carolina-excepting a few specified casesOregon, Pennsylvania, Texas, Utah, Virginia, Washington, Wisconsin, Wyoming. Idaho breaks the monotony of this rule, in that it prohibits certain political units
from becoming stockholders in all joint stock companies, except "railroad corporations, companies, or associations.")
Intersections, junctions, and consolidations.-Varying somewhat in the number of subjects specified in the constitution, 11 States make provision for the connection, crossing, and intersection of railways and interchange of traffic. In one form or another, it is prescribed that every railway shall have the right to intersect, cross, or connect with any other railway, and that it shall receive and transport the freight and coaches, loaded or empty, of every other railway, without delay or discrimination. Closely allied to the subject of connections and the interchange of traffic is the question of consolidations, and constitutional provisions dealing with both subjects are found in several States. The most common form in which the traffic arrangements of the different roads is expressed is that which permits one railway to lease, control, purchase, or consolidate with any other railway, provided that the other is not a parallel or competing line. To what extent provisions relating to mere interchange of traffic would permit the consolidation of competing lines is not clear. Isolated provisions prohibiting the holding of stock of other railway companies may be found. (Among the States prohibiting the consolidation of competing lines are: Arkansas, Colorado, Illinois, Kentucky, Missouri, Montana, North Dakota, South Dakota, Texas, Utah, Washington, West Virginia. The following provide for junctions, connections, etc.: Alabama, Kentucky, Idaho, Louisiana, Mississippi, Missouri, Montana, Pennsylvania, South Dakota, Texas, Wyoming.)
Vote of shareholders.-Only 9 States provide for some system of suffrage on the part of shareholders, and for these the constitution of Illinois appears to have served as a model. * The general assembly shall provide, by law, * * the right of every stockholder to vote, in person or by proxy, for the number of shares of stock owned by him, for as many persons as there are directors or managers to be elected, or to cumulate such shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute them on the same principle among as many candidates as he shall think fit." (Found in the following constitutions: Delaware, Illinois, Idaho, Kentucky, Mississippi, Missouri, Montana, Nebraska, West Virginia.
Free transportation.-The granting of free passes to members of the legislature, State, municipal, and other officers, or the selling of tickets at a discount, is constitutionally prohibited in Alabama, Arkansas, California, Florida, Kentucky. Mississippi, Missouri, New York, Pennsylvania, Washington. The constitution of Wyoming also treats of the sale of unused tickets or parts of tickets.
Regulation. The establishment of tariff schedules and the regulation of rates are treated in the constitutions of Georgia, Mississippi, Missouri, Utah, Washington, and West Virginia. The legislature expressly reserves full power of control, in addition to reservations expressed in other sections of the constitutions of Alabama, Florida, Idaho, Illinois, Louisiana, Nebraska, South Dakota, Wyoming. Discriminations against persons and places or industrial sections are occasionally directly prohibited in the constitution. The form in which the prohibitions are expressed varies, but they all have in view the equal treatment of all the interests affected by the railway service. (The following constitutions contain more or less complete provisions on the subject of discrimination: Arkansas, Colorado, Florida, Georgia, Idaho, Illinois, Kentucky, Missouri, Montana, Nebraska, Pennsylvania, Texas, Utah, Washington, Wyoming.)
Pooling. The formation of trusts or combinations and the making of contracts restricting competition or having in view the control of prices is prohibited in ten constitutions (California, Kentucky, Idaho, Mississippi, Montana, North Dakota, South Dakota, Utah, Washington, and Wyoming).
Miscellaneous.-Only a few States provide in their constitutions for the organi zation of administrative bodies, such as railway commissions, and the powers and duties of the same. The California constitution not only prescribes the organization of the commission, but enumerates the more important powers of this commission, specifies the manner in which the commission shall be elected by the districts into which the State is constitutionally divided, and fixes fines for violations of the law on the part of railway agents or employees. Analogous provisions are found in the constitutions of Kentucky and Louisiana. The constitutions of Arkansas, Missouri, and Pennsylvania make it unlawful for railway officials to be interested in the purchase of materials and supplies for the construction of a railway. The constitutions of Arkansas, Kentucky, and Indiana prohibit the charging of a greater sum for a shorter distance over the same line in the same direction under similar conditions. Four constitutions-Colorado, Kentucky, Mississippi, and Montana-make it unlawful for a corporation to require its
servants or employees, as a condition of their employment, to sign a contract limiting the liability of the company in case of suits for damage, or precluding the possibility of bringing such suits altogether, by contract. About ten constitutions expressly limit the activities of a chartered corporation to the business which is expressly provided for in the charter. In a few cases the constitutions specify that no railway company can become a foreign corporation by consolidation; and, in a small number, a provision common in many of the earlier laws is enacted, compelling railway companies to establish stations or depots whenever they pass within a certain distance of towns and villages, frequently the county seat. The constitution of Washington stands alone, in that it expressly prohibits discriminations against express companies. Idaho and Wyoming demand the appointment of legal representatives of railway companies in those States. (This provision is common in general laws but not in constitutions.) The Missouri constitution provides for the payment into the State treasury of specified sums of money proportionate to the amount of capital stock, before a charter can be issued.
This analysis presents the leading features of the constitutional provisions of the several States. None of importance have here been omitted and only a few of the less important ones have not received mention. An examination of the appendix containing these constitutional provisions will show the great similarity which exists among many of the constitutions with respect to certain clauses, and the manner in which constitutional provisions were copied in one State from the constitution of another.