*590

$8,000 per annum; that during this and the coming year it will be necessary for it to incur certain extraordinary expenses in the purchase of ground for and building a new tollhouse for the second tollgate from Covington on its road, and in the purchase or condemnation of ground for straightening of its road, and laying out a side road along that portion of its road between that part of the city of Covington known as 'Lewisburg' and the first tollgate on its said turnpike road, which extraordinary expenses will amount to about $4,000; that the act of May 24, 1890, attempts to reduce the tolls on this defendant's road about fifty per cent., and that, if the same were adopted, the income of the company from tolls would not be more than $8,000 per annum, nor more than sufficient to enable defendant to meet the ordinary expenses of its road, and would leave nothing with which to meet said extraordinary expenses, and there would be no income out of which dividends could be paid to stockholders upon the money which they had invested in the stock of said road. This defendant also says that within the last few years the Louisville & Nashville Railroad, which has a station on the line of this company's turnpike, and the Cincinnati Southern Railway, which has several stations on the line of this defendant's turnpike, have diverted a large amount of travel from said turnpike, and have diminished this company's earning capacity very largely, and that other railroads and electric roads, touching defendant's road, and having stations thereon, have been chartered and are in contemplation, the effect and construction of which will be to still further impair the earning capacity of this defendant, and to diminish the dividends of this defendant under the rate of tolls in force by an act of December 11, 1865.

"This defendant further says that the grade of the first two and a half miles of its road leading out of the city of Covington is very steep; that for a portion of said two and a half miles its road is built along the side of a hill; that the entire said two and a half miles is expensive to maintain, especially that portion along the side of the hill, the portion of the road towards the slope of the hill havIng frequently given away, and slipped, and entailed great expense upon the defendant in the repair of the same; and that, from the nature of the soil over and along which said portion of said road is built, said process of sliding and giving away is liable to continue in the future, and to entail still further expense upon the defendant. It says that the adoption of the rate of tolls fixed by the act of May 24, 1830, would disable and prevent this defendant from performing the duties that it owes to the public, and would prevent it from ever hereafter paying any dividends to its stockholders; and that the rate of tolls prescribed in said act of May 24, 1890, is unreasonable and unjust to defendant and its stockholders; and that to permit the same

to be enforced would be to destroy entirely the value of the property of the defendant, and the value of the shares of capital stock of the defendant held by its stockholders, and destroy entirely the dividend-earning capacity of this defendant; and that to permit said act of May 24, 1890, to be enforced, would be to exercise absolute arbitrary power over the property of the defendant and its stockholders, in violation of section 2 of the bill of rights of the constitution of Kentucky, and would be depriving the defendant and its stockholders of their property without due process of law, and the taking of the same for public use without the consent of the defendant and its stockholders, and without just compensation being previously made to them; and that to permit the enforcement of said act of May 24, 1890, is to violate article 5 of the amendments to the constitution of the United States, and sections 3, 12, 14, and 15 of the bill of rights of the constitution of the United States, and the amendments thereto and to the constitution of the state of Kentucky."

It was also alleged, in the original answer, that, under the act of 1890, sufficient income could not be earned "to maintain the road and provide for its ordinary expenses, without taking into consideration any extraordinary expenses."

We have, then, the case of a corporation invested by its charter with authority to construct and maintain a turnpike road, and to collect tolls "agreeable" to certain named rates, and which is required by a subsequent legislative enactment*to conform to a tariff of rates that is unjust and unreasonable, and which also prevents it, out of its receipts, from maintaining its road in proper condition for public use, or from earning any dividends whatever for stockholders. These facts are admitted by the demurrer. Is such legislation forbidden by the clause of the constitution of the United States declaring that no state shall deprive any person of property without due process of law? We are of opinion that, taking, as we must do, the allegations of the answer to be true, this question must be answered in the affirmative.

It is now settled that corporations are persons, within the meaning of the constitutional provisions forbidding the deprivation of property without due process of law, as well as a denial of the equal protection of the laws. Santa Clara Co. v. Southern Pac. Ry. Co., 118 U. S. 394, 6 Sup. Ct. 1132; Pembina Con. Silver Mining & Milling Co. v. Pennsylvania, 125 U. S. 181, 189, 8 Sup. Ct. 737; Railroad Co. v. Beckwith, 129 U. S. 29, 9 Sup. Ct. 207; Railroad Co. v. Gibbes. 142 U. S. 386, 391, 12 Sup. Ct. 255. And, as declared in Railway Co. v. Gill, 156 U. S. 649, 657, 15 Sup. Ct. 484, upon the authority of previous decisions, "there is a remedy in the courts for relief against legislation establishing a tariff of rates which is so unreasonable as to practically destroy the value of the property of companies engaged in the carrying business, and that especially may the courts of the United

States treat such a question as a judicial one, and hold such acts of legislation to be in conflict with the constitution of the United States, as depriving the companies of their property without due process of law, and as depriving them of the equal protection of the laws," citing Railroad Commission Cases, 116 U. S. 307, 331, 6 Sup. Ct. 334, 348, 349, 388, 391, 1191; Dow v. Beidelman, 125 U. S. 681, 8 Sup. Ct. 1028; Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 702; Chicago & G. T. Ry. Co. v. Wellman, 143 U. S. 339, 12 Sup. Ct. 400; Reagan v. Trust Co., 154 U. S. 362, 14 Sup. Ct. 1017.

*

In the Railroad Commission Cases, the court, speaking by Chief Justice Waite, recognized it as settled that "a state has power to limit the amount of charges by railroad companies for the transportation of persons and property within its own jurisdiction, unless restrained by some contract in the charter, or unless what is done amounts to a regulation of foreign or interstate commerce." But it took care, also, to announce that "it is not to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under the pretense of regulating fares and freights, the state cannot require a railroad to carry persons and property without reward. Neither can it do that which, in law, amounts to a taking of private property for public use without just compensation, or without due process of law."

So, in Reagan v. Trust Co., 154 U. S. 362, 397, 399, 410, 412, 14 Sup. Ct. 1047, in which previous decisions were referred to, the court said that, beyond doubt, it was within the power and duty of the courts "to inquire whether a body of rates prescribed by a legislature or a commission is unjust and unreasonable, and such as to work a practical destruction to rights of property, and, if so found to be, to restrain its operation." Again: "These cases all support the proposition that, while it is not the province of the courts to enter upon the merely administrative duty of framing a tariff of rates for carriage, it is within the scope of judicial power, and a part of judicial duty, to restrain anything which, in the form of a regulation of rates, operates to deny to the owners of property invested in the business of transportation that equal protection which is the constitutional right of all owners of other property. There is nothing new or strange in this. It has always been a part of the judicial function to determine whether the act of one party (whether that party be a single individual, an organized body, or the public as a whole) operates to divest the other of any rights of person or property. In every constitution is the guaranty against the taking of private property for public purposes without just compensation. equal protection of the laws which, by the fourteenth amendment, no state can deny to the individual, forbids legislation, in whatever form it may be enacted, by which the property of one individual is, without compensation,

The

wrested from him for the benefit of another, or of the public. This, as has been often ob served, is a government of law, and not a gov. ernment of men; and it must never be forgotten that, under such a government, with its constitutional limitations and guaranties, the forms of law and the machinery of government, with all their reach and power, must in their actual workings stop on the hither side of the unnecessary and uncompensated taking or destruction of any private property legally acquired and legally held. * If the state

were to seek to acquire the title to these roads under its power of eminent domain, is there any doubt that constitutional provisions would require the payment to the corporation of just compensation, that compensation being the value of the property as it stood in the markets of the world, and not as prescribed by an act of the legislature? Is it any less a departure from the obligations of justice to seek to take, not the title, but the use, for the public benefit, at less than its market value? * It is unnecessary to decide, and we do not wish to be understood as laying down, as an absolute rule, that in every case a failure to produce some profit to those who have invested their money in the building of a road is conclusive that the tariff is unjust and unreasonable. And yet justice demands that every one should receive some compensation for the use of his money or property, if it be possible without prejudice to the rights of others."

The cases to which we have referred related to the power of the legislature over rates to be collected by railroad corporations. But the principles announced in them are equally applicable, in like circumstances, to corporations engaged under legislative authority in maintaining turnpike roads for the use of which tolls are exacted. Turnpike roads established by a corporation, under authority of law, are public highways, and the right to exact tolls from those using them comes from the state creating the corporation. California v. Central Pac. R. Co., 127 U. S. 1, 40, 8 Sup. Ct. 1073. And the exercise of that right may be controlled by legislative authority to the same extent that similar rights, connected with the construction and management of railroads by corporations, may be controlled. A statute which, by its necessary operation, compels a turnpike company, when charging only such tolls as are just to the public, to submit to such further reduction of rates as will prevent it from keeping its road in proper repair, and from earning any dividends whatever for stockholders, is as obnoxious to the constitution of the United States as would be a similar statute relating to the business of a railroad corporation having authority, under its charter, to collect and receive tolls for passengers and freight.

It is suggested by counsel for the plaintiffs that neither the original nor the amended answer sufficiently disclosed the facts upon which the company rested its contention as

to the invalidity of the act of 1890, and that, upon the showing made by the company, the court, under the established rule forbidding the annulment of a legislative enactment not clearly and palpably unconstitutional, was not obliged to hold that act to be repugnant to the constitution of the United States. We do not concur in this view. The answer disclosed what had been the average annual receipts of the company under the act of 1865 for a number of years immediately preceding the passage of the act of 1890, and what, during that period, had been the average annual expenses; alleged that the receipts for the several preceding years had not admitted | of dividends greater than 4 per centum on the par value of the company's stock; that the act of 1890 reduced the tolls 50 per cent. below those allowed by the act of 1865; and that such reduction would so diminish the income of the company that it could not maintain its road, meet its ordinary expenses, and earn any dividends whatever for stockhold

ers.

These allegations were sufficiently full as to the facts necessary to be pleaded, and fairly raised for judicial determination the question-assuming the facts stated to be true-whether the act of 1890 was in derogation of the company's constitutional rights. It made a prima facie case of the invalidity of that statute. When a party specially sets up and claims a right or privilege under the constitution or laws of the United States, the question of the sufficiency of allegations to present that issue is not concluded by the view expressed by the state court. In Mitch. ell v. Clark, 110 U. S. 633, 645, 4 Sup. Ct. 170, 312, this court said: "The question whether a plea sets up a sufficient defense, when the defense relied on arises under an act of congress, does present, and that necessarily, a question of federal law; for the question is, and must be, does the plea state facts which, under the act of congress, constitute a good defense?" This principle was approved in Boyd v. Nebraska, 143 U. S. 135, 180, 12 Sup. Ct. 375. We decide, however, nothing more on this hearing than that, upon the facts alleged, the demurrer to the answer should have been overruled; and upon the completion of the pleadings, unless the plaintiffs elected to stand by their demurrer, the parties should be allowed to make their proofs touching the issues involved.

It is proper to say that if the answer had not alleged, in substance that the tolls prescribed by the act of 1890 were wholly inadequate for keeping the road in proper repair and for earning dividends, we could not say that the act was unconstitutional merely because the company (as was alleged, and as the demurrer admitted) could not earn more than 4 per cent. on its capital stock. It cannot be said that a corporation, operating a public highway, is entitled as of right, and without reference to the interests of the public, to realize a given per cent. upon its capital stock. When the question arises wheth

er the legislature has exceeded its constitutional power in prescribing rates to be charged by a corporation controlling a public highway, stockholders are not the only per sons whose rights or interests are to be considered. The rights of the public are not to be ignored. It is alleged here that the rates prescribed are unreasonable and unjust to the company and its stockholders. But that involves an inquiry as to what is reasonable and just for the public. If the establishing of new lines of transportation should cause a diminution in the number of those who need to use a turnpike road, and, consequently, a diminution in the tolls collected, that is not, in itself, a sufficient reason why the corporation operating the road should be allowed to maintain rates that would be unjust to those who must or do use its property. The public cannot properly be subjected to unreasonable rates in order simply that stockholders may earn dividends. The legislature has the authority, in every case where its power has not been restrained by contract, to proceed upon the ground that the public may not rightfully be required to submit to unreasonable exactions for the use of a public highway established and maintained under legislative authority. If a corporation cannot maintain such a highway and earn dividends for stockholders, it is a misfortune for it and them which the constitution does not require to be remedied by imposing unjust burdens upon the public. So that the right of the public to use the plaintiff's turnpike upon payment of such tolls as, in view of the nature and value of the service rendered by the company, are reasonable, is an element in the general inquiry whether the rates established by law are unjust and unreasonable. That inquiry also involves other considerations,such, for instance, as the reasonable cost of maintaining the road in good condition for public use, and the amount that may have been really and necessarily invested in the enterprise. In short, each case must depend upon its special facts; and when a court, without assuming itself to prescribe rates, is required to determine whether the rates prescribed by the legislature for a corporation controlling a public highway 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 interests both of the public and of the owner of the property, together with all other circumstances that are fairly to be considered in determining whether the legislature has, under the guise of regulating rates, exceeded its constitutional authority, and practically deprived the owner of property without due process of law. What those other circumstances may be, it is not necessary now to decide. That can be best done after the parties have made their proofs.

It is further insisted by the company that the rates prescribed for it by the act of 1890 are much less than those imposed by the

869.

General Statutes of Kentucky upon other turnpike companies of the state; consequently, that that act denies to it the equal protection of the laws. The proposition of the defendant is that the constitutional provision referred to requires all turnpike companies in the state to be placed by the legislature, when exercising its general power over the subject of rates to be charged upon highways of that character, upon substantially the same footing. Upon this point the court of appeals of Kentucky said: "A turnpike road leading into and connected with a populous city like that of the city of Covington could afford to charge less toll, by reason of the immense travel upon it, than turnpikes in thinly-settled portions of the county or state; and hence, under former constitutions, the legislature has seen proper to regulate the tolls as the turnpike road may happen to be located." The circumstances of each turnpike company must determine the rates of toll to be properly allowed for its use. Justice to the public and to stockholders may require, in respect of one road, rates different from those prescribed for other roads. Rates on one road may be reasonable and just to all concerned, while the same rates would be exorbitant on another road. The utmost that any corporation operating a public highway can rightfully demand at the hands of the legislature when exerting its general powers is that it receive what, under all the circumstances, is such compensation for the use of its property as will be just both to it and to the public. If the rates prescribed for the defendant in this case were manifestly much lower, taking them as a whole, than the legislature has by general law prescribed for other corporations whose circumstances and location are not unlike those of the defendant, a different question would be presented. At any rate, no case of that kind is properly presented by the pleadings, and there is no ground for holding that the act of 1890 denies to the defendant the equal protection of the laws.

For the reasons we have given, the judgment of the court below is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.

Asst. Atty. Gen. Howry, for appellants. John B. Sanborn, Charles King, and Wm. B. King, for appellee.

Mr. Justice WHITE delivered the opinion of the court.

This appeal was taken from a judgment of the court of claims awarding to the appellees the sum of $750*upon the following state of facts found by the court, to wit:

"(1) The claimant is, and was at the time of the depredation hereinafter mentioned, a corporation created under and by virtue of the laws of the state of Minnesota, and was transacting the business of a common carrier in conveying passengers and freight at the time referred to.

"(2) The claimant, during the year 1879, was engaged in carrying the mails and doing the business of a common carrier from Bismarck, Dakota, to Deadwood and the Black Hills, upon the territorial road from Bismarck to Cook station, in part through the Great Sioux reservation.

"(3) On the 5th of February, 1879, near Cedar Canyon, property belonging to the claimant, consisting of four horses and their harness, was taken or destroyed by Indians of the defendant's tribe, the same being of the value of $750. The defendant Indians were at the time in amity with the United States, and the depredation was committed without just cause or provocation on the part of the claimant or its agents, and the property has not been returned or paid for. The claim has not been approved or allowed by the secretary of the interior."

The court of claims decided on the facts so found, as a conclusion of law, that the claimant, by reason of its incorporation by a state of the Union, must be conclusively presumed to be a citizen of the United States for the purposes of this action.

The act of March 3, 1891 (26 Stat. 851, c. 538), is entitled "An act to provide for the adjudication and payment of claims arising from Indian depredations." By the first section of the act jurisdiction and authority were conferred upon the court of claims, in addition to the jurisdiction already possessed by the court, to inquire into and finally adjudicate "all claims for property of citizens of the United States" taken or destroyed by Indians, under circumstances specified in the act. The sole question presented by the appeal, therefore, is as to whether, under a proper construction of the act referred to, a corporation of a state, for the purpose of the act, is embraced within the designation "citizens of the United States."

* The act was considered in Johnson v. U. S., 160 U. S. 546, 16 Sup. Ct. 377, and we there held that a person who was not a citizen of the United States at the time of an alleged appropriation of his property by a tribe of Indians was not entitled to maintain an action in the court of claims, under the act in question. There was not in that case, how

ever, any assertion that the claimant was a citizen of a state, as distinguished from a citizen of the United States. It was also declared that, as the court of claims had no general jurisdiction over claims against the United States, it could take cognizance only of such matters as by the terms of the act of congress were committed to it. While, undoubtedly, in a purely technical and abstract sense, citizenship of one of the states may not include citizenship of the United States, this does not meet the question which we are to construe, which is, what is the meaning of the words "citizens of the United States," as used in the statute? Unquestionably, in the general and common acceptation, a citizen of the state is considered as synonomous with citizen of the United States, and the one is therefore treated as expressive of the other. This flows from the fact that the one is normally and usually the other, and where such is not the case it is purely exceptional and uncommon. These considerations give rise to an ambiguity which we must solve, not by reference to a mere abstract technicality, but by that cardinal rule which commands that we seek out and apply the evident purpose intended to be accomplished by the law-making power.

Congress has frequently in its legislation, as also the treaty-making power, used the words "citizens of the United States" in the broadest sense, and as embracing corporations created by state law. Thus, in section 2319 of the Revised Statutes, the right to purchase mineral deposits in the public lands was conferred upon "citizens of the United States and those who have declared their intention to become such." Section 2321, however, in regulating the mode by which the fact of citizenship should be established, provided that "in the case of a corporation organized under the laws of the United States, or of any state or territory thereof," the fact should be evidenced by the filing of a certified copy of their charter or certificate of incorporation." By the French spoliation act of January 20, 1885 (23 Stat. 283), authority was conferred on the court of claims to adjudicate upon certain claims of "citizens of the United States or their legal representatives." The court of claims, however, made no distinction in the exercise of jurisdiction between the claims of natural persons or of corporations. It entered upon no inquiry as to whether the stockholders of such corporations were composed in whole or in part of other than citizens of the United States. Congress appropriated for the payment of judg ments thus rendered in favor of corporations. See 26 Stat. 905, 907, where appropriations were made in favor of the receiver of a corporation styled the Baltimore Insurance Company.

In various treaties entered into by the gov ernment, the term "citizens of the United States" has been used in the general sense already referred to. Thus, in the treaty with

Mexico, relative to the adjustment of unsettled claims (15 Stat. 679, 680), jurisdiction is granted to a commission to consider "all claims on the part of corporations, companies or private individuals, citizens of the United States, upon the government of the Mexican republic." Similar language was also employed in the treaties with Venezuela (16 Stat. 713, 714), with Peru (Id. 751, 752), with Great Britain (17 Stat. 863, 867), and with France (21 Stat. 673, 674).

In various decisions of this court, commencing with Railroad Co. v. Letson, 2 How. 497, it has been adjudged that, for the purpose of suing and being sued in the courts of the United States, a corporation of a state should be deemed a citizen of a state, and for the purposes of jurisdiction it would be conclusively presumed that all the stockholders were citizens of the state which, by its laws, created the corporation. Muller v. Dows, 94 U. S. 44, 45; Railway Co. v. James, 161 U. S. 545, 16 Sup. Ct. 621.

With this frequent use by congress of the words "citizens of the United States" as embracing a corporation of a state, it remains only to be ascertained from the nature of the remedy proposed to be effected by the Indian depredation act*whether the words were used* in the act in their general signification.

The act in question was a provision made by the United States as the guardian of the Indians, controlling as well their persons as their property, designed to make provision for the payment of the injuries committed by its wards. It certainly contemplated that citizens of the United States, even strictly speaking, should be made whole for the losses they might have sustained. But it is evident that cases might arise where, in order to make restitution to citizens of the United States, the term in question would require a construction embracing federal and state corporations. For, as the legal title to the property of a corporation is generally in the corporation, claims for damages to such property could not be presented in the names of the several stockholders. To deny relief to such a corporation would be practically, therefore, to refuse redress to citizens of the United States.

It must have been contemplated, therefore, that a corporation thus chartered by congress was to be treated, under the terms of the act herein referred to, as a citizen of the United States for the purposes thereof; and the same reasoning which thus operates to bring a federal corporation within the terms of the act leads also to the necessity of including corporations of the several states of the Union.

It is true, as argued, that in some cases, if corporations were embraced within the terms of the act, an alien, who was a corporator, might be benefited. But the ascertainment of the purposes of congress by this argument of inconvenience on the one hand is completely destroyed by the overwhelming preponder