Statement of the Case.

LOUISVILLE AND NASHVILLE RAILROAD COMPANY v. KENTUCKY.

ERROR TO THE COURT OF APPEALS OF THE STATE OF KENTUCKY.

No. 7. Argued November 9, 1900.- Decided January 6, 1902.

The question of the validity of the constitution and laws of Kentucky, under which these proceedings were had, is properly before the court, whose consideration of it must, however, be restricted to its Federal aspect. This court must accept the meaning of the State enactments to be that found in them by the state courts.

A state railroad corporation, voluntarily formed, cannot exempt itself from the control reserved to the State by its constitution, and, if not protected by a valid contract, cannot successfully invoke the interposition of Federal courts, in respect to long haul and short haul clauses in a state constitution, simply on the ground that the railroad is property.

A contract of exemption from future general legislation unless it is given expressly or follows by implication equally clear with express words, cannot be deemed to exist.

A railroad charter is taken and held subject to the power of the State to regulate and control the grant in the interest of the public.

Interference with the commercial power of the general government to be unlawful must be direct.

Ar the January term, 1895, of the Marion County circuit court of the State of Kentucky, an indictment was found against the Louisville and Nashville Railroad Company, a corporation of the State of Kentucky, for an alleged violation of section 218 of the constitution of the State, and section 820 of the Kentucky statutes, in charging more for the transportation of coal from Altamont, Kentucky, to Lebanon, Kentucky, than to Louisville and Elizabethtown, Kentucky, over railroads which the company were operating under its charter. The indictment ileged that it was filed upon the recommendation of the state railroad commission. The trial resulted in a judgment of conviction.and a fine of $300, which, on appeal, was, on May 20, 1899, affirmed by the Court of Appeals. From that judgment of the Court of Appeals a writ of error was allowed by the Chief Justice of that court on June 28, 1899, and the case was brought to this court.

Opinion of the Court.

Mr. William Lindsay for plaintiff in error. Mr. Walker D. Hines and Mr. H. W. Bruce were on his brief.

Mr. H. W. Rives filed a brief for defendant in error.

MR. JUSTICE SHIRAS, after making the above statement, delivered the opinion of the court.

This case is here on a writ of error to a judgment of the Court of Appeals of the State of Kentucky, affirming a judgment of the circuit court of Marion County, Kentucky, sentencing the Louisville and Nashville Railroad Company to a fine of $300 for an alleged violation of a statute of that State, which declares, among other things, that it shall be unlawful for any person or corporation owning or operating a railroad in the State to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of property of like kind, under substantially similar circumstances and conditions, for a shorter than for longer distance, over the same line, in the same direction, the shorter being included in the longer distance.

This statute is based upon section 218 of the constitution of the State of Kentucky, adopted in 1891. The statute which is section 820 of the Kentucky statutes and section 218 of the constitution are set forth in full in the report of the case of McChord and others v. Louisville & Nashville Railroad, and cognate cases, ante 483, and need not be here copied at length.

Those cases were here on appeal from final decrees of the Circuit Court of the United States for the District of Kentucky, enjoining the railroad commission of the State from enforcing against the complainants, of which the Louisville and Nashville Railroad Company, the plaintiff in error in the present case, was one, the provisions of an act of the Commonwealth of Kentucky, approved March 10, 1900, entitled "An act to prevent railroad companies or corporations owning and operating a line or lines of railroad, and its officers, agents and employés, from charging, collecting, or receiving extortionate freight or passenger rates in this commonwealth, and to further increase and define the duties and powers of the railroad commission in ref

Opinion of the Court.

erence thereto, and prescribing the manner of enforcing the provisions of this act and penalties for the violation of its provisions."

The occasion of the passage of this act of March 10, 1900, was a decision of the Court of Appeals of Kentucky holding that section 816, which declared that any railroad company which should charge and collect more than a just and reasonable rate of toll or compensation for the transportation of passengers or freight in that State, was guilty of extortion, could not be enforced as a penal statute for want of certainty. Louisville & Nashville Railroad v. Commonwealth, 99 Ky. 132.

The effort was made in the Circuit Court of the United States, and successfully, to have it held that by the said act of March 10, 1900, section 819, in so far as it provided an action by way of information, and for liability in damages, and that indictments should be made only on the recommendation or request of the railroad commission, was repealed by necessary implication; and that accordingly the order of the commission, fixing the rate, toll or compensation they may charge, was selfexecuting, and that no duty to enforce it was imposed on the commission; that the railroad companies were shut up by the act to the final determination of the commission that they have charged more than a just and reasonable rate; that on the trial indictments for failure to observe the rates made by the commission, the courts cannot entertain any inquiry as to the reasonableness of rates so fixed, because such inquiry is unwarranted by the statute, and therefore illusory and worthless; and that even if the question of constitutionality could be raised in defence, yet that if the order of the commission were permitted to be entered of record, the companies, if they did not comply, would be at once exposed to innumerable prosecutions and to financial ruin by the accumulation of penalties before a judicial decision as to the validity of the statute could be had, if it should then happen that the statute was upheld.

It was, however, held by this court that it was not the intent or effect of the act of March 10, 1900, to repeal those provisions of section 819, requiring indictments to be found only on the recommendation of the commission, nor to circumscribe,

Opinion of the Court.

in this particular, the general duty of the commission to see that the law relating to railroads should be faithfully executed. This view of the meaning and effect of the legislation was that taken by the Court of Appeals of Kentucky in the case of Illinois Central Railroad Company v. Commonwealth, decided while the appeals from the decrees of the Circuit Court of the United States were pending in this court. In that case the railroad company was indicted under section 820, and fined for charging more for a shorter than a longer haul. The indictment was returned before the railroad commission had determined whether the railroad company should be exonerated as provided in that section, and the Court of Appeals held that "to allow the carrier to be indicted in advance of any action by the railroad commission under this section would be to deprive it of all opportunity for exoneration. The long and short haul matter is only another form of undue discrimination and preference, which are provided for by section 819, and indictments under this section can only be had upon the recommendation of the railroad commission. This has been a settled legislative policy, as shown by the act of April 6, 1882, (see General Statutes, 1021,) which was in force at the time of the adoption of the constitution and the present statutes. In other words, the legislature has always acted upon the idea that the interests of the entire people of the State should be looked to in these matters, and that the railroad commission must first determine them before the grand juries of the State should find indictments."

The conclusion reached by this court, therefore, was that the duty of enforcing its rates rests on the commission, and that there was no basis for interposition by a court of equity before the rates were fixed at all; and that whether, after the rates have been determined by the commission, their enforcement could be restrained, was a question not necessarily presented for decision in those cases; and, accordingly, the decrees of the Circuit Court were reversed with a direction to sustain the demurrer and dismiss the bills.

In the case now in hand, the indictment was found, not in advance of any action by the railroad commission, but on its

Opinion of the Court.

recommendation. Hence, the question of the validity of the provisions of the constitution and laws of the State of Kentucky under which these proceedings were had, is properly before us. Of course, our consideration of it must be restricted to its Federal aspect; in other words, we are to inquire whether the state enactments, constitutional and statutory, in the particulars involved in this controversy, and under the construction given them by the Court of Appeals, are in conflict with the Fourteenth Amendment of the Constitution of the United States.

At the trial of the indictment it was not seriously disputed that the defendant company had, at the time and place alleged, charged and received, for the carriage and transportation of coal over its line of road, a greater compensation for a shorter than for a longer distance, over the same line in the same direction, the shorter being included within the longer distance, without having been authorized by the railroad commission so to charge, and after the commission, upon investigation, had refused so to do.

But certain facts, which were alleged to show that the circumstances and conditions, under which the charges in question were made and received, were not substantially similar with those ordinarily obtaining, and thus to show that the charges objected to were just and reasonable, were offered in evidence by the railroad company, and excluded from the jury by the trial court, which gave to the jury what amounted, in legal effect, to a peremptory instruction to find the defendant company guilty as indicted. The jury accordingly returned a verdict of guilty, fixing the fine at $300, for which judgment was rendered, and an appeal was taken by the defendant company from that judgment to the Court of Appeals.

It was contended, in the courts below and here, that as section 218 of the constitution of the State of Kentucky, regulating charges for transportation over different distances, is in terms a copy of the provision on the same subject in the interstate.commerce act, it should be assumed that it was the intention of the constitutional convention of Kentucky to adopt the construction put upon that provision in the interstate commerce