Jack v. Williams.

this enterprise is one of disaster. The construction company
which undertook the contract for building the road became
insolvent, and was placed in the hands of a receiver. The
railway company itself was also placed in the hands of a
receiver, being utterly insolvent. Soon after his appoint-
ment the receiver of the railway company applied to the court
for leave to issue certificates to be used in completing the
road toward Marietta, a distance of three miles. At the time
of this application the road had no other terminus except
Greenville, the other terminus being in the woods, and it was
hoped that should it be extended to Marietta its business
would be improved and its profits increased, and perhaps
means could be provided for extending the road into territory
which would serve the purposes of the contemplated enter-
prise and induce prosperity. Leave was granted, and the
town of Marietta was reached. So low, however, were the
credit and prospects of the railway that but for the efforts of
the receiver and his personal friends the certificates could not
have been placed. The railway under the receivership was
conducted with the greatest economy. Every unnecessary
expense was cut off. The receiver himself received no salary,
notwithstanding that he gave his personal attention to the
management. As a result, however, whether owing to the
poverty of the territory or to the indifference of the people,
the part of the railway so constructed scarcely met its operat-
ing expenses. Finally, the services of a superintendent could
not be provided for, and the receiver had to fill the place
himself. The roadbed of the other parts of the road and the
railway on this small section had been constructed entirely
from the proceeds of bonds secured by a mortgage of the whole
road.
Not a dollar of interest had been paid on any of these
bonds, the amount of the total issue being $200,000. The
right of way contracted for and secured had not been paid
for. The road ran through a territory requiring many trestles,
and these and the roadbed itself were fast decaying, requiring
immediate repair, their condition endangering life and prop-
erty. Under these circumstances, the creditors applied for
a sale of the road. No organization could be effected for its
purchase, and a sale was ordered on 17th August, 1892, at an
upset price of $50,000. At the sale under this order no bids
were received. Another sale was ordered 16th March, 1895,
the upset price having been fixed at $30,000. No bids were
made at this sale. Then the upset price of $25,000 was fixed
at another sale ordered 23d September, 1895, and again no bids
were made. Finally, on 24th June, 1896, a sale was ordered,
and the highest bid, $15,000, was received and accepted.
At this sale James T. Williams became the purchaser. At the
date of this purchase the road, roadbed, and rolling stock of
the railway were in such a dilapidated condition that the
railway could not have been operated without putting on
many and expensive repairs. Williams did not operate it at

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2

Jack v. Williams

all. Thereupon proceedings were instituted before one of the state judges, by way of mandamus, to compel him to operate the road. These proceedings failed because of an irregularity in them, the rule for the mandamus having been issued by one judge, and the return heard and mandamus issued by another judge, who was without jurisdiction. At the date of the purchase of this road the law of South Carolina gave the privilege to any purchaser of a railroad sold under foreclosure, of or under a provision in a mortgage, to organize a corporation to own and operate the same. Rev. St. S. C. § 1610.

In 1897, March 5th, the legislature passed an act requiring any person then owning any line of railroad in this state to reorganize, under section 1610, within 60 days after the passage of that act, under a penalty of $50 per day for each day of failure to operate said road, unless reasonable cause be shown to the contrary, and, in addition to the penalty he should forfeit all the franchises, powers, and privileges granted to the railroad purchased. Williams did not accept the provisions of this act. Soon after the passage of the act, D. F. Jack filed his bill in this court, stating the purchase of this road by Williams; that the purchase was made by him for the benefit of himself, D. F. Jack, and H. C. Beattie; that he was not willing to organize a corporation under the requirements of the act of 1897; that it was impossible to rebuild the road, except at great expense, and with no prospect of gain; and praying an injunction against his co-tenants from making any effort in that direction; praying also for the appointment of a receiver to take charge of the property. Answers were filed, the injunction issued, and the receiver appointed. It is well to say here that this court in granting this order had no notice whatever of the mandamus proceeding in the state court. An inspection of the railroad property was had by a skillful railroad supervisor, under the instructions of the receiver, who reported that there were 22 trestles on the road, all of which but 2 needed extensive repairs; that 12,000 crossties were needed; that in many places the roadbed was covered with dirt two feet deep; and that it would cost over $10,000 to put the road in proper condition to run one year. The case thus presented to the court was this: This section of the railway had been built with borrowed money; had been operated for several years; had not, even when it was new and without need of repairs, earned more than its operating expenses, paying nothing on its debt by way of interest or principal, and paying nothing to the receiver. Its business had not increased. Its road had run down, requiring large additional expenditure. Its right of way had not been paid for, and the claims on this head were a first lien. It paid nothing on its first cost. It could pay nothing on the increased outlay which was imperatively demanded. Any one, natural person or corporation, attempting to operate it, would meet certain loss. It could not be operated except by a corpora

Jack v. Williams

tion, and the purchasers had lost the privilege of incorporation, and the right to exercise the franchises, under the provisions of the act of 1897. Under these circumstances, the court authorized the sale of the rails on the road, and the taking them up. The sale was made, and the rails brought $28,000, the Charleston & Western Carolina Railway Company being the purchaser. After the order of sale the present relators filed their petition for leave to intervene, the prayer of which was granted, and leave was also given to review the previous action of the court in ordering the sale. They filed their answer to the original bill, and asked and obtained leave to file this cross bill. This has been answered. The main issue in the case is: Can the court authorize the taking up and the sale of the rails on this railroad, which has been under operation, thus practically authorizing its abandonment?

If

A railroad is in a sense a public concern. To its construction and operation the action of the sovereign is needed. a corporation is created, the franchise to be a corporation can be given only by the sovereign. Its franchise as a common carrier for hire of passengers and freight comes from the sovereign. Its right to exercise the right of eminent domain can come only from the sovereign. And, as its road is in a sense a highway, the sovereign grants that also. The consideration for these acts of the sovereign is the utility of the enterprise to the public. To be thus useful to the public, the road must be kept up in such a condition that life and property both must be made as safe as practicable. The rates of transportation of persons and freight must be reasonable. And the reasonable number of trains must be kept up, dependent upon the circumstances surrounding the railway. Whilst thus serving the public, however, no corporation or private person is obliged to continue the service without a reasonable remuneration. No one can be compelled to serve the public for nothing. Private property of no kind, including railroad property, can be used for public purposes without compensation. Smith v. Ames, 169 U. S. 467, 18 Sup. Ct. 418, 42 L. Ed. 819, 10 Am. & Eng. R. Cas., N. S., 1; Road Co. v. Sandford, 164 U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560; Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970; Railway Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed. 858. All these cases determine that a railroad company, in the full enjoyment and use and capacity to use its franchises, cannot be compelled to exercise its franchises without reasonable remuneration. A fortiori a railroad corporation, or a person owning a railroad, cannot be compelled to operate that road, not only without remuneration, but at a loss. And this not by any means because such corporation or person is insolvent. If a citizen has the wealth of the Rothschilds, he cannot be compelled to use a dollar of his wealth for public purposes without compensation. What, then, is a person to do who becomes pos

Jack v. Williams

sessed of wholly unproductive railroad property? Sell it? But in the case at bar several distinct efforts to sell had been made, and made in vain. No bid whatever had been made except by these purchasers. The public-even that portion of the public on the line of the road-could not be induced to make a bid on it. Repair it and put it in condition? But experience had shown that even when it was a new road, requiring no expense for repairs, it barely paid operating expenses. Could the state or the public, in the face of the fourteenth amendment, compel such an expenditure, involving certain loss? Evidence has been introduced of persons who are of the opinion that the road would pay. Can such testimony override the result of actual experience? It appears also in evidence that, notwithstanding the existence of this road, dealers in cotton and farmers preferred to carry their cotton to market in wagons, rather than to ship it by rail. The difference of cost must have been small. But, small as it was, the people about the road evidently estimate the general advantage of the road at a sum still smaller. Under these circumstances, what other course could have been pursued? The roadbed was in such a condition that it could not be operated. The expenses attending its repair held out no hope of remuneration. The purchasers had lost the privilege of incorporation and retention of the franchise. They owned the property. Was it to be kept idle and useless, or could they dismantle it?

This question is somewhat of novel impression,-at least, there is no decision exactly on all fours with it. The leading case on this subject is Kansas v. Dodge City, M. & T. R. Co. (Kan.) 36 Pac. 755, 24 L. R. A. 564, and this clearly resembles the case at bar. In that case a mandamus was refused. This is the headnote:

"Where a railroad company owning a short line of railroad, 26 miles only, is wholly insolvent, and such company has no cars or engines with which to operate it, and no funds or property to be applied to the payment of expenses of the company or the road, and the road has been abandoned for several months, and the road cannot be operated except at a great loss by any corporation or person, not taking into account the repairs of the road and the taxes thereon, the supreme court, having discretion in the granting of a writ of mandamus, will not compel by a peremptory writ the railway company to replace or put in repair its track, a part of which has been torn up, as such an order would be futile and of no public benefit.

The facts of that case show that the road had been sold, and that a private person had bought it, and had sold to another person, who had removed the rails. Among other things the court says:

"The order prayed for should only be issued in the interest of the public. If the track is replaced there is no reasonable

Jack v. Williams

probability that the road will be or can be operated. If a railway will not pay its mere operating expenses, the public has very little interest in the operation of the road or in its being kept in repair."

Several cases are quoted in the note to this case, the annotator admitting that they leave the question uncertain. One of these cases (Talcott v. Pine Grove, 1 Flip. 120, Fed. Cas. No. 13.735) says that a railroad cannot be abandoned after it has become one of the great thoroughfares of the country. But this is clearly an obiter dictum, having no bearing on the case whatever, the question in which was the validity of certain municipal bonds. See Pine Grove Tp. v. Talcott, 19 Wall. 666, 22 L. Ed. 227. State v. Sioux City & P. R. Co., 7 Neb. 357, was the case compelling a railroad company to keep up its entire line because of a contract growing out of land grants toward its construction. People v. Albany & V. R. Co., 24 N. Y. 261, 82 Am. Dec. 295, went off on a question as to the remedy. In Rex v. Railway Co., 2 Barn. & Ald. 648, the company was ordered to restore an abandoned tramway, designed for the use of others besides itself, but the court refused to order the maintenance of the tram road. In State v. Hartford & N. H. R. Co., 29 Conn. 538, a part of the track of the railroad was abandoned in order to prevent competition by steamboats. This was held unlawful. And so with all the other cases quoted in this note. The question is incidentally touched upon in Railroad Co. v. Dustin, 142 U. S. 499, 12 Sup. Ct. 285, 35 L. Ed. 1095, and there the courts say:

"If, as in Railroad Co. v. Hall, 91 U. S. 343, 23 L. Ed. 428, the charter of a railroad corporation expressly requires it to maintain its railroad as a continuous line, it may be compelled to do so by mandamus. So, if the charter requires the corporation to construct its road and to run its cars to a certain point on tidewater (as was held to be the case in State v. Hartford & N. H. R. Co., 29 Conn. 538), and it has so constructed its road, and used it for years, it may be compelled to continue to do so. And mandamus will lie to compel a corporation to build a bridge in accordance with an requirement of statute. New Orleans, M. & T. R. Co. v. Mississippi, 112 U. S. 12, 5 Sup. Ct. 19, 28 L. Ed. 619; People v. Boston & A. R. Co., 70 N. Y. 569. But if the charter of a railroad corporation simply authorizes the corporation, without requiring it, to construct and maintain a railroad to a certain point, it has been held that it cannot be compelled by mandamus to complete or maintain its road to that point, when it would not be remunerative. Railway Co. v. The Queen, I El. & Bl. 858; Railway Co. v. The Queen, I El. & Bl. 874; Com. v. Fitchburg R. Co., 12 Gray, 180; State v. Southern Minnesota R. Co., 18 Minn. 40 (Gil. 21). In Com. v. Fitchburg R. Co., 12 Gray, 180, mandamus was refused to compel the running of passenger trains over a branch road on