Smith v. Lake Shore & Michigan Southern Railway Co.

Montgomery, J. The relator applied to the respondent company for a 1,000-mile mileage book, to be issued in the name of himself and wife, and was refused. He thereupon brought this proceeding in the circuit court, to compel the respondent to issue such a ticket. The circuit judge granted an order that a ticket good upon the lines of the respondent in this State be issued, and this order is the one now under review. The action is based upon the amendment to section 9 of the railroad law, adopted and embodied in Act No. 90 of the Public Acts of 1891, which contains the following provision: “One thousand mile tickets shall be kept for sale at the pi’incipal ticket offices of all railroad companies in this State, or carrying on business partly within and partly without the limits of this State, at a price not exceeding twenty dollars in the Lower Peninsula and twenty-five dollars in the Upper Peninsula. Such one thousand mile tickets may be made nontransferable, but, whenever required by the purchaser, they shall be issued in the names of the purchaser, his wife and children, designating the name of each on each ticket. * * * Each one thousand mile ticket shall be valid for two years only after date of purchase.” In the same section of the statute it is provided that the rates of fare shall not exceed 2 cents a mile for carriage of — 463 — passengers by railroads whose gross earnings are more than $3,000 per mile, 2& for roads whose gross earnings are more than $2,000 and less than $3,000, and for com-, panies whose earnings are less than $2,000 per mile 3 cents per mile, except in the Upper Peninsula, where a higher rate is permitted. It is contended that there was error in the ruling below, and various grounds are alleged, as follows • (1) That the statute is an attempt on the part of the legislature to provide for the sale of mileage which shall be good outside of the State, and that, as this affects interstate commerce, it is unconstitutional. (2) That the charter of the Michigan Southern Railroad Company, passed in 1846 (Act No. 113, Laws 1846), which provided that ‘ ‘ it shall and may be lawful for said company, from time to time, to fix, regulate, and receive the tolls and charges taken for the transportation of property and persons on said railroad as aforesaid: * * * Provided, said company shall charge no greater sum or tolls for the transportation of persons or property than were charged or authorized by the State of Michigan to be taken on the Southern Railroad on the first day of January last,” — is still in force, and, as it was granted prior to the adoption of the Constitution reserving the right to alter or amend charters of corporations organized under the laws of the State, that the legislation in question impairs the obligation of contracts, within the doctrine of the Dartmouth College Case, 4 Wheat. 518, and is, for this reason, invalid. (3) That, independent of this provision, the act is unconstitutional, for the reason that it is an attempt to compel railroad companies to enter into contracts to be performed in the future, at any time within two years,- and is an invasion of the right to the use of property; and, in the same connection, that this is in violation of the fourteenth amendment of the Constitution of the United States, which provides that no person shall be deprived of property without due process of law. (4) That the amendment to the Constitution (article ,19a, § 1) is a limitation upon the power of the legislature to legislate as to rates of charges for transportation, and limits the right in that regard to the fixing of maximum rates, and that the provision for the issuing of a mileage — 464 — book is not a fixing of maximum rates of charge, out is a further regulation. 1. The first contention cannot be allowed, for the reason that the statute, fairly construed, was intended to limit the use of the mileage ticket to the State of Michigan. It fixes the price of the ticket, — not exceeding $20 in the Lower Peninsula, and $25 in the Upper Peninsula. While the language is not very apt, we think it was the clear intention that a ticket, the price of which should be $20 for 1,000 miles of transportation, would be one entitling the purchaser to carriage in the Lower Peninsula of Michigan, and one at $25 to carriage in the Upper Peninsula, and that it was not the intention by this reference to locality to fix the place where the tickets should be placed on sale. Thus construed, the statute cannot be held to be a regulation of interstate commerce. 2. The answer of respondent sets out that in 1846 a special charter, containing the provisions above quoted, was granted to the Michigan Southern Railroad Company; that subsequently the Michigan Southern Railroad Company, under an act of the legislature of the State of Michigan, became consolidated with a corporation of the State of Indiana, known as the Northern Indiana Railroad Company, thereby forming the Michigan Southern & Northern Indiana Railroad Company, which company then, succeeded to all the rights, franchises, property, and powers of the Michigan Southern Railroad Company; and that the Michigan Southern & Northern Indiana Railroad Company afterwards, under due legislative authority in that behalf, entered into consolidation with certain other railroad companies, organized under the laws of Indiana, Ohio, Pennsylvania, and New York, respectively, and thereby formed the said respondent, the Lake Shore & Michigan Southern Railway Company; and that this respondent thereby acquired all the rights, franchises, powers, and property of the Michigan Southern Railroad Company and the Michigan Southern & Northern Indiana Railroad Company, and holdi and is entitled — 465 — to all the rights,.francmses, powers, and privileges granted in and by the charter aforesaid, and by the acts of the legislature of the said State. The last consolidation set up was under Act No. 82 of the Laws of 1855, entitled “An act to provide for the incorporation of railroad companies.” Section 50 provides that— “Any railroad company in this State, forming a continuous or connected line with any other railroad company, may consolidate with such other company, either in or out of this State, into a single corporation. * * * Such new corporation shall possess all the powers, rights, and franchises conferred upon such two or more corporations, and shall be subject to all the restrictions and perform all the duties imposed by the provisions of their respective charters or laws of organization, not inconsistent with the provisions of this act.” By section 52 it is provided that— “Upon the election of the first board of directors of the corporation created by said agreement, all and singular the rights and franchises of each and all of said two or more corporations, parties to such agreement, all and singular their rights and interests in and to every species of property and things in action, shall be deemed to be transferred to, and vested in, such new corporation, without any other deed or transfer; and such new corporation shall hold and enjoy the same, together with all the right of way and all other rights of property, in the same manner, and to the same intent, as if the said two or more corporations, parties to such agreement, should have continued to retain the title and transact the business of such corporations.” It is contended by the respondent that, under this statute, where a consolidation takes place of a corporation organized and existing under a special charter, as did the respondent company, with a corporation or corporations existing under the laws of another State, the effect is not to annihilate the previously-existing Michigan corporation, but that, upon the consolidation, the original corporation — 466 — brings to the new entity the powers and privileges already possessed, and that the consolidated company simply exercises in each jurisdiction the powers the corporation there chartered had possessed, and succeeds there to its privileges. The learned counsel for respondent cite, as sustaining this view, State Treasurer v. Auditor General, 46 Mich. 224; Chicago, etc., R. Co. v. Auditor General, 53 Mich. 79; Nashua, etc., R. Co. v. Boston, etc., R. Co., 136 U. S. 356; People v. New York, etc., R. Co., 129 N. Y. 474. Passing the consideration of these cases for the time, and having reference to the terms of the act under which the consolidation took place, it is to be observed that this act constituted the consolidated entity a “new corporation,” if we regard the terms employed in the statute, in section 50, above quoted, which limits the rights and franchises derived from the old corporations, and to be exercised by the new, to such as are not inconsistent with the provisions of the act; and in section 52, relied upon by respondent as well, the new creation is referred to as “such new corporation.” It is also a corporation created under a general law. At the time of its creation, section 1 of article 15 of the Constitution provided that corporations might be formed under general laws, and that “all laws passed pursuant to this section of the Constitution may be amended, altered, or repealed.” It was said in Muller v. Dows, 94 U. S. 444, of such a corporation, so formed: “The two companies became one, but in the State of Iowa that one was an Iowa corporation, existing under the laws of that State alone.” In State Treasurer v. Auditor General, 46 Mich. 224, and Chicago, etc., R. Co. v. Auditor General, 53 Mich. 79, the question was as to what portion of the earnings of the consolidated company was subject to taxation in this State. In State Treasurer v. Auditor General it was held that the Lake Shore & Michigan Southern Railway was not a corporation formed under the general railroad law, within the meaning of the clause of the statute providing for — 467 — taxing railroad companies so formed. In Chicago, etc., R. Co. v. Auditor General the same doctrine was held. It was said in the latter case: “We appreciate very fully the difficulty of determining under all circumstances in what light we are to regard the anomalous organizations which are formed by the consolidation of two or more corporations which have received their corporate powers from different sovereign-ties.” The case of Peik v. Railway Co., 94 U. S. 164, was cited with approval. In that case it was held that the State in which the road lay might legislate for the consolidated company in that State precisely as before the consolidation. Neither of the two Michigan decisions determined what legislative control the legislature of the State has over that portion of the road which lies within the State, or as to the conduct of business within the State. And this may also be said of People v. New York, etc., R. Co., 129 N. Y. 474. The companies at present forming the respondent derived rights under the law permitting a consolidation, and, while there may be difficulty in subjecting so much of the property of the consolidated company as lies without the State to our jurisdiction, or in controlling the transactions of the corporation itself without the State, or in fixing taxation upon a basis which rests upon its earnings outside the State, it is not apparent why the company, as to its exercise of corporate functions within the State, is not subject to the terms of the act authorizing its consolidation, as limited by the constitutional provision in force at the time, or why it is not subject to local legislation. Counsel also cite the cases of Tomlinson v. Branch, 15 Wall. 460, and Central Railroad & Banking Co. v. Georgia, 92 U. S. 665. In the former case the act provided that, upon the written consent of all the stockholders of the South Carolina Canal & Railroad Company, the said South Carolina Canal & Railroad Company should — 468 — be merged in the said South Carolina Railroad Company. It was held that the South Carolina Railroad Company retained the rights which it had before the merger. The case of Central Railroad & Banking Co. v. Georgia was to the same effect. There the Macon & Western Railroad Company was merged under the name and charter of the said the Central Railroad & Banking Company of Georgia. But in Atlantic, etc., R. Co. v. Georgia, 98 U. S. 359, it was held that, where a consolidation took place, the effect was the creation of a new corporation out of the stockholders of the two previously-existing corporations. It was said: ‘ ‘ The consolidation provided for was clearly not a merger of one into the other, as was the case of Central Railroad & Banking Co. v. Georgia, 92 U. S. 665.” The question was raised in a case where this same respondent was a party in interest, in Shields v. State, 26 Ohio St. 86. In that case the court say: “Among the companies forming this consolidation were two Ohio companies, chartered and organized before the adoption of the present constitution, and whose charters were, therefore, not subject to the provision of the present constitution which gives to the legislature the power of alteration, amendment, and repeal of charters. * * * The consolidation took place in 1869, and was effected in all respects in pursuance of the act of April 10, 1856; and the claim is that a consolidation under that act is to be regarded in law as a surrender or relinquishment of the several individual charters of the companies so uniting, and the acceptance of a charter die novo from the State. ” The court held that the consolidation constituted a new corporation, and the fact that, it was formed out of old defunct corporations did not make it any the less a corporation created by the legislature. It was said: “It is not the material out of which it is formed, but the plastic hand which formed it, that we are to look to for its character and status under the constitution.” This case was affirmed on appeal by the Federal Supreme Court in 95 U. S. 319. The question was again before the federal court in St. — 469 — Louis, etc., R. Co. v. Gill, 156 U. S. 649. In that' case there was a consolidation of two railroads, operating in Missouri and Arkansas. It was claimed that, notwithstanding this legislation, the railroad company, so far as related to its business in Arkansas, was entitled to fix its rates of charges in accordance with the law of its original incorporation. The court said: “It has been frequently decided by this court that a special statutory exemption or privilege, such as immunity from taxation or a right to fix and determine rates of fare, does not accompany the property in its transfer to a purchaser, in the absence of express direction to that effect in the statute;” thus treating the consolidation as a purchase by the new entity. 3. Passing by the third contention, and considering first the effect of article 19 a, § 1, of the Constitution, this section reads as follows: “The legislature may, from time to time, pass laws establishing reasonable maximum fates of charges for the transportation of passengers and freight on different railroads in this State,” etc. The contention is that this section is a limitation upon the authority of the legislature, and that, as to the fixing of rates, the power is exhausted when maximum rates are established, and that the act in question is not a fixing of maximum rates within the constitutional provision. In the opinion of Mr. Justice Cahill in Wellman v. Railway Co., 83 Mich. 592, at page 624, it is said: “Nor do I think that the constitutional amendment of 1870, before cited, which expressly provides that ‘the legislature may, from time to time, pass laws establishing reasonable maximum rates of charges for the transportation of passengers and freight on different railroads in this State,’ is more than declaratory of a power that already existed. * * * The amendment of 1870 was neither a grant nor a limitation of power. It was a declaration of power already reserved in the Constitution, and the amendment served only to put beyond question the right of the legislature, which was before thought to be open to debate.” — 470 — The maxim, Fxpressio unius est exclusio alterius,” is not wholly inapplicable in the interpretation of constitutional provisions. See End. Interp. Stat. § 533; Cooley, Const. Lim. (6th Ed.) 78, 79. Of this rule, as applied to the construction of constitutional provisions, Mr. Justice Green, speaking for the court in Williams v. Mayor, etc., of Detroit, 2 Mich. 563, said: “That certain legal maxims or rules of construction, which have been found generally applicable, afford important aid in arriving at the intention of those who framed the law, every lawyer will admit; but that there are some instruments or laws to which such maxims cannot be strictly applied, without doing manifest violence to the plain intent of the framers of the law, is also a matter of common experience. This is especially true in the construction of state constitutions, as will appear manifest when we consider their character and objects.” See, also, Com. v. Hartman, 17 Pa. St. 118; People v. Wright, 6 Colo. 92; In re Thirty-Fourth St. R. Co., 102 N. Y. 343. The constitution of New York placed certain restrictions' upon street-railway companies. The legislature, by a general act, embodied the constitutional conditions, and annexed a third or additional condition not enjoined by the constitution. In Re Thirty-Fourth St. R. Co., supra, the contention was made that the constitution had prescribed the conditions upon which street railroads might be constructed, and, by implication, thereby enjoined the imposition by the legislature of conditions other than those prescribed therein. The court said: “But the constitution, neither by express language nor by implication, abridges the legislative power over the subject outside of the matters particularly enumerated. It needs no citation of authorities to sustain the postulate that, except as restrained by the constitution, the legislative power is untrammeled and supreme, and that a constitutional provision which withdraws from the cognizance of the legislature a particular subject, or which qualifies or regulates the exercise of legislative power in — 471 — respect to a particular incident of that subject, leaves all other matters and incidents under its control. Nothing is subtracted from the sum of legislative power except that which is expressly or by necessary implication withdrawn. The legislature is prohibited from granting a franchise to construct a street railroad, except upon certain specified conditions. But it is not prohibited from annexing further conditions not inconsistent therewith, and whether other conditions are necessary or proper is a matter resting in the wisdom and discretion of the legislature.” It is said that the statute having fixed the maximum rate at 3 cents as to certain roads earning less than $2,000 per mile, and 2j cents and 2 cents, respectively, for roads earning more than $2,000 per mile, this exhausts the power of the legislature, and that no power exists to provide for a less rate where mileage books are used. In my judgment, the term “maximum rate,” as used in this constitutional provision, means the maximum rate which the company is to be permitted to charge under a given set of circumstances. Under the terms of this act, the company not furnishing mileage books may be compelled to furnish them at the rate of 2¶ or 2 cents a mile, respectively, or it may charge for the single fare 3 cents. By this same act all roads, are entitled to charge 3 cents per mile for a distance not exceeding five miles. It might be said with as much force as the proposition under discussion can be urged that by this provision the legislature has fixed the maximum rate at 3 cents, and thereby exhausted its power. The answer is obvious, viz., that, in fixing the rate at 3 cents for a distance less than five, miles (in the Lower Peninsula), the legislature fixed the maximum rate for that •service to be paid the road by one making just that contract. If this answer is not valid, the court and counsel in the Wellman Case overlooked wholly a controlling question, which would have ruled the case the other way from that in which it was decided. In the case of Interstate Commerce Commission v. Baltimore, etc., R. Co., 145 U. S. 263, section 2 of the — 472 — interstate commerce act was under consideration. That section provides that— “If any common carrier subject to the provisions of this act shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compensation for any service rendered or to be rendered in the transportation of passengers or property subject to the provisions of this act than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful.” The following language of Judge Jackson, of the circuit, was approved: “To come within the inhibition of said sections, the differences must be made under like conditions; that is, there must be contemporaneous service in the transportation of like kinds of traffic under substantially the same circumstances and conditions. In respect to passenger traffic, the positions of the respective persons or classes between whom differences in charges are made must be compared with each other, and there must be found to exist substantial identity of situation and of service, accompanied by irregularity and partiality resulting in undue advantage to one, or undue disadvantage to the other, in order to constitute unjust discrimination.” 4. It is difficult to define the precise limit of power reserved to the legislature under a provision embodied in the fundamental law, or incorporated in the charter of a corporation, reserving the right to the legislature to alter, amend, or repeal. The question has been before this court in numerous cases, the latest being the case of Attorney General, ex rel. Dusenbury, v. Looker, 111 Mich. 498, where the authorities are collated. In the case of City of Detroit v. Detroit, etc., Plank-Road Co., 43 Mich. 140, Mr. Justice Cooley, speaking of the provision of the Constitution of the United States which — 473 — forbids the impairing of the obligation of contracts, says that— “But for this provision, the power to amend and repeal corporate charters would be ample without being expressly reserved. The reservation of the right leaves the State where any sovereignty would be if unrestrained by express constitutional limitations, and with the powers which it would then possess. 'It might therefore do what it would be admissible for any constitutional government to do when not thus restrained, but it could not do what would be inconsistent with constitutional principles. And it cannot be necessary at this day to enter upon a discussion in denial of the right of the government to take from either individuals or corporations any property which they may rightfully have acquired.” We think this is a fair statement of the effect of this reservation, and that, if the legislation in question can be construed as depriving the respondent of its property, it is invalid, as conflicting with other constitutional provisions. But we do not think that such is the effect of this legislation. It cannot be said that the right to use property dedicated to a public use in precisely the manner which the owner may choose to use it is a vested right of property. This question has been put at rest by a long line of decisions, beginning with Munn v. People, 69 Ill. 80, and including Wellman v. Railway Co., 83 Mich. 592. The chief contention is that because this statute requires the company to enter into contracts for future transportation of passengers, covering a period of two years, it is therefore withdrawing from the company the right to manage its own property, and is, for this reason, invalid. It may be said that every attempt to fix rates of .toll, or rates for the carriage of passengers or transportation of property, to some extent involves an interference with the management and control of its. property by the railroad company. Having in mind the common method of conducting railroad business at the present day, the court can take judicial notice of the fact that nearly every railroad in this State does issue, and did, prior to the enactment of this law, issue, mileage books or 1,000-mile tickets. — 474 — The conditions were not precisely the same, but they were contracts good for one year, and issued at a reduced rate j so that, in the usual conduct of business, time contracts for the transportation of passengers are made. In fact, it would be difficult to concéive of a method of conducting a railroad business which did not involve a contract good for some length of time. In the brief of the learned counsel for the respondent we are cited to a large number of cases in which it has been held that it is competent for railway companies to make regulations limiting the time within which a ticket may be used, and this is undoubtedly true, in the absence of legislation; but we think it cannot be successfully contended that it would not be competent for the legislature to provide that a ticket furnished to a passenger should be good for a definite reasonable time, and, when such legislation was adopted, it would of necessity deprive the company of the power to make rules inconsistent therewith. I confess I cannot share the apprehension that such a regulation as the one here involved will deprive the company of the management of its business. Would any one contend that the legislature has not the power to require railroad companies to keep on sale at their stations tickets of any kind? The compulsory requirement of this act may, indeed, be denounced as an attempt to conduct the business of the company, but I apprehend that extended argument is not necessary to defend the right of the legislature to make such requirement. In Elliott on Railroads (section 1598) it is said that “in some States it is provided by statute that tickets shall be good for a certain number of years, notwithstanding any limitation therein.” I am not aware that these statutes have been attacked. If such enactments be within the power of the legislature, where is the line to be drawn short of that fixed by the Federal Supreme Court', which is that legislation of this character must not be so unreasonable as to deprive the company of the use of its property ? — 475 — The only case to which our attention has been called in which the subject of legislation requiring the sale of mileage books has been under consideration. is that of Attorney General v. Old Colony R. Co., 160 Mass. 62. The legislation there under discussion provided for an interchangeable mileage book, good on all the roads of the State. The court divided, a majority of the court holding such legislation to be unconstitutional,, in that it required one company to do business upon the credit of another. The majority of the court distinctly limit the decision to that ground, and apparently did not find a regulation requiring the issue of mileage books to be unreasonable. Mr. Justice Knowlton, with whom Mr. Justice Holmes concurred, reached the opposite conclusion, and of necessity affirmed the power of the legislature to provide for the issuing of mileage books. My conclusions are that the regulation is not unconstitutional as applied to roads within the control of the legislature, and that the respondent road, by its consolidation, —formed, as it is, by a consolidation under an act passed since the enactment of the constitution reserving the power to alter, amend, or repeal, — is subject to the general control of the legislature, and that the judgment of the circuit court should be affirmed. Long, C. J., and Moore, J., concurred with Montgomery, J.