COTTING v. GODARD(1901)
In March, 1897, Charles U. Cotting, a citizen of the state of Massachusetts, filed in the circuit court of the United States for the district of Kansas a bill of complaint against the Kansas City Stock-Yards Company, a corporation of the state of Kansas, and certain officers of that company, and Louis C. Boyle, attorney general of the state of Kansas. A few days later Francis Lee Higginson, a citizen of the state of Massachusetts, filed a bill of complaint in the same court and against the same parties.
These suits were subsequently ordered by the court to be consolidated, and were thereafter proceeded in as one.
The plaintiffs respectively alleged that they were stockholders of the Kansas City Stock-Yards Company, and that the suits were brought in their own behalf and that of other stockholders having a like interest, who might thereafter join in the prosecution thereof. The main purpose of the suits was to have declared invalid a certain act of the legislature of the state of Kansas approved March 3, 1897, entitled 'An Act Defining What shall Constitute Public Stock Yards, Defining the Duties of [183 U.S. 79, 80] the Person or Persons Operating the Same, and Regulating All Charges thereof, and Removing Restrictions in the Trade of Dead Animals, and Providing Penalties for Violations of This Act.'
A temporary restraining order was granted, and subsequently a motion for a preliminary injunction was made. Pending that motion the court appointed a special master, with power to take testimony and report the same, with his findings, as to all matters and things in issue upon the hearing of the preliminary injunction prayed for. 79 Fed. 679. On August 24, 1897, the special master filed his report. On October 4, 1897, the motion for a preliminary injunction was heard on affidavits, the master's report, exceptions thereto on behalf of both parties, and arguments of counsel. The motion was refused and the restraining order, which had remained in force in the meantime, was set aside. 82 Fed. 839.
A stipulation was thereupon entered into that the defendants should forthwith file their answers to the bills; that replications thereto should be immediately filed; and that the cases thus put at issue should be heard on final hearing, upon the pleadings, proofs, master's report, and exhibits, without further testimony from either party.
On October 28, 1897, after argument, the court dismissed the bills of complaint. 82 Fed. 850. In the opinion of Circuit Judge Thayer there was the following order, which was also embodied in the final decree:
On November 4, 1897, an appeal was duly taken and allowed to this court.
Subsequently, Louis C. Boyle's term of office as attorney general having expired, his successor, A. A. Godard, was substituted as a party defendant.
The act of the legislature of the state of Kansas is in the following terms:
Messrs. A. H. Horton, Wm. D. Guthrie, and B. P. Waggener for appellants.
Messrs. A. A. Godard, B. H. Tracy, David Martin, and L. C. Boyle for appellees.
Mr. Justice Brewer, after making the above statement, delivered the following opinion, and announced the conclusion and judgment of the court:
The learned circuit judge, in deciding the case, appreciated the importance of the questions involved, and, although denying the relief sought by the plaintiffs, exercised his power of continuing the restraining order until such time as these ques- [183 U.S. 79, 84] tions could be determined. Twice has this case been argued before us. We have had the benefit of able arguments and elaborate briefs of distinguished counsel. That the questions are difficult of solution no one reading the following statement will, we think, doubt.
It has been wisely and aptly said that this is a government of laws, and not of men; that there is no arbitrary power located in any individual or body of individuals; but that all in authority are guided and limited by those provisions which the people have, through the organic law, declared shall be the measure and scope of all control exercised over them.
We shall not attempt to determine all the questions presented, and yet it is fitting that we should state them, and some of the reasons urged in support of their decision one way or the other.
The first we notice is the principal matter in respect to which testimony was offered, which has been most largely discussed by counsel on both sides, and that is the validity of the reduction in the charges of the stock-yards company made by the act in question. Has the state the power to legislate on this matter, and, if so, can its legislation be upheld?
In Munn v. Illinois, 94 U.S. 113 , 24 L. ed. 77, it was held that the state had power to fix the maximum charges for the storing of grain in warehouses in Chicago, the court saying (p. 126, L. ed. p. 84):
While there was a division of opinion in the court, yet the doctrine thus stated received the assent of a majority of its members, and has been reaffirmed since, although accompanied by a constant dissent. Budd v. New York, 143 U.S. 517 , 36 L. ed. 247, 4 Inters. Com. Rep. 45, 12 Sup. Ct. Rep. 468; Brass v. North Dakota ex rel. Stoeser, 153 U.S. 391 , 38 L. ed. 758, 4 Inters. Com. Rep. 670, 14 Sup. Ct. Rep. 857. See also the following cases in state courts: People v. Budd, 117 N. Y. 1, 5 L. R. A. 559, 22 N. E. 670; Lake Shore & [183 U.S. 79, 85] M. S. R. Co. v. Cincinnati, S. & C. R. Co. 30 Ohio St. 604; State ex rel. Atty. Gen. v. Columbus Gaslight & Coke Co. 34 Ohio St. 572, 32 Am. Rep. 390; Davis v. State, 68 Ala. 58, 44 Am. Rep. 128; Baker v. State, 54 Wis. 368, 12 N. W. 12; Nash v. Page, 80 Ky. 539, 44 Am. Rep. 490; Girard Point Storage Co. v. Southwark Foundry Co. 105 Pa. 248; Sawyer v. Davis, 136 Mass. 239, 49 Am. Rep. 27; Brechbill v. Randall, 102 Ind. 528, 52 Am. Rep. 695, 1 N. E. 362; Delaware, L. & W. R. Co. v. Central Stock-Yard & Transit Co. 45 N. J. Eq. 50, 6 L. R. A. 855, 17 Atl. 146.
These decisions go beyond, but are in line with, those in which was recognized the power of the state to regulate charges for services connected with any strictly public employment, as, for instance, in the matter of common carriage, supply of water, gas, etc. Spring Valley Waterworks v. Schottler, 110 U.S. 347 , 28 L. ed. 173, 4 Sup. Ct. Rep. 48; Railroad Commission Cases, 116 U.S. 307 , sub nom. Stone v. Farmers' Loan & T. Co. 29 L. ed. 636, 6 Sup. Ct. Rep. 334, 388, 1191; Wabash, St. L. & P. R. Co. v. Illinois, 118 U.S. 557 , 30 L. ed. 244, 1 Inters. Com. Rep. 31, 7 Sup. Ct. Rep. 4; Dow v. Beidelman, 125 U.S. 680 , 31 L. ed. 841, 2 Inters. Com. Rep. 56, 8 Sup. Ct. Rep. 1028; Chicago, M. & St. P. R. Co. v. Minnesota, 134 U.S. 418 , 33 L. ed. 970, 3 Inters. Com. Rep. 209, 10 Sup. Ct. Rep. 462, 702; Chicago & G. T. R. Co. v. Wellman, 143 U.S. 339 , 36 L. ed. 176, 12 Sup. Ct. Rep. 400; Reagan v. Farmers' Loan & T. Co. 154 U.S. 362 , 38 L. ed. 1014, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047; St. Louis & S. F. R. Co. v. Gill, 156 U.S. 649 , 39 L. ed. 567, 15 Sup. Ct. Rep. 484; Covington & L. Turnp. Road Co. v. Sandford, 164 U.S. 578 , 41 L. ed. 560, 17 Sup. Ct. Rep. 198; Smyth v. Ames, 169 U.S. 466 , 42 L. ed. 819, 18 Sup. Ct. Rep. 418; San Diego Land & Town Co. v. National City, 174 U.S. 739 , 43 L. ed. 1154, 19 Sup. Ct. Rep. 804; Chicago, M. & St. P. R. Co. v. Tompkins, 176 U.S. 167 , 44 L. ed. 417, 20 Sup. Ct. Rep. 336.
Tested by the rule laid down in Munn v. Illinois, it may be conceded that the state has the power to make reasonable regulation of the charges for services rendered by the stock-yards company. Its stock yards are situated in one of the gateways of commerce, and so located that they furnish important facilities to all seeking transportation of cattle. While not a common carrier, nor engaged in any distinctively public employment, it is doing a work in which the public has an interest, and therefore must be considered as subject to governmental regulation.
But to what extent may this regulation go? Is there no limit beyond which the state may not interfere with the charges for services, either of those who are engaged in performing some public service, or of those who, while not engaged in such service, have yet devoted their property to a use in which the pub- [183 U.S. 79, 86] lic has an interest? And is the extent of governmental regulation the same in both of these classes of cases?
In Munn v. Illinois, one of the latter class, in which the power of governmental regulation was affirmed, it was said (p. 125, L. ed. p. 84):
In Budd v. New York it was not charged or shown that the rates prescribed by the legislature were unreasonable, and the only question was the power of the legislature to interfere at all in the matter. The same is true of Brass v. North Dakota ex rel. Stoeser in which nothing was presented calling for any consideration of the test of reasonableness or of a limit to the legislative power.
As to those cases in which governmental regulation of charges was in respect to parties doing some public service the following is a resume of the decisions. In Spring Valley Waterworks v. Schottler it was said (p. 354 L. ed. p. 176, Sup. Ct. Rep. p. 51):
In Railroad Commission Cases (p. 331, L. ed. p. 644, Sup. Ct. Rep. p. 345):
In Wabash, St. L. & P. R. Co. v. Illinois nothing was said affecting [183 U.S. 79, 87] the question of the extent of the power of the legislature. In Dow v. Beidelman the quotation heretofore made from the Railroad Commission Cases was quoted with approval. In Chicago, M. & St. P. R. Co. v. Minnesota the same passage was quoted, and it was added (p. 458, L. ed. p. 981, Inters. Com. Rep. p. 220, Sup. Ct. Rep. p. 467):
In Chicago & G. T. R. Co. v. Wellman it was said (p. 344, L. ed. p. 179, Sup. Ct. Rep. p. 402):
In Reagan v. Farmers' Loan & T. Co. (p. 399, L. ed. p. 1024, Inters. Com. Rep. p. 570, Sup. Ct. Rep. p. 1055):
And again (p. 412, L. ed. p. 1028, Inters. Com. Rep. p. 514, Sup. Ct. Rep. p. 1059):
In St. Louis & S. F. R. Co. v. Gill is this language (p. 657, L. ed. p. 570, Sup. Ct. Rep. p. 487):
In Covington & L. Turnp. Road Co. v. Sandford (p. 597, L. ed. p. 567, Sup. Ct. Rep. p. 205):
In Smyth v. Ames, after an elaborate discussion of the question of rates and the power of the legislature in respect thereto, it was said (pp. 546, 547, L. ed. p. 849, Sup. Ct. Rep. p. 434):
In San Diego Land & Town Co. v. National City (p. 757, L. ed. p. 1161, Sup. Ct. Rep. p. 811):
And also affirming the limits of judicial interference with legislative action (p. 754, L. ed. p. 1160, Sup. Ct. Rep. p. 810):
Nothing was said in Chicago, M. & St. P. R. Co. v. Tompkins throwing any light upon the questions heretofore referred to.
In the light of these quotations, this may be affirmed to be the present scope of the decisions of this court in respect to the power of the legislature in regulating rates: As to those individuals and corporations who have devoted their property to a use in which the public has an interest, although not engaged in a work of a confessedly public character, there has been no further ruling than that the state may prescribe and enforce reasonable charges. What shall be the test of reasonableness in those charges is absolutely undisclosed.
As to parties engaged in performing a public service, while the power to regulate has been sustained, negatively the court has held that the legislature may not prescribe rates which if enforced would amount to a confiscation of property. But it has not held affirmatively that the legislature may enforce rates which stop only this side of confiscation, and leave the property in the hands and under the care of the owners without any remuneration for its use. It has declared that the present value of the property is the basis by which the test of reasonableness is to be determined, although the actual cost is to be considered, and that the value of the services rendered to each individual is also to be considered. It has also ruled that the determination of the legislature is to be presumed to be just, and must be upheld unless it clearly appears to result in enforcing unreasonable and unjust rates.
In this case, as heretofore indicated, a volume of testimony has been taken, mainly upon the question of the cost and value of the stock yards, and the effect upon the income of the company by reason of the proposed reduction. This testimony was taken before a master, with instructions to report the cost of the stock yards, the present value of the property, the receipts and expenditures thereof, the manner of operation, and such other matters as might be pertinent for a determination of the case. Stated in general terms, his findings were that the value of the property used for stock-yard purposes, including the value [183 U.S. 79, 92] of certain supplies of feed and materials which were on hand December 31, 1896, is $5,388,003.25; that the gross income realized by the stock-yards company during the year 1896, which was taken as representing its average gross income, was $1,012,271.22. The total expenditures of the company for all purposes during the same period amounted to $535,297.14,-thus indicating a net income for the year of $476,974.08. The court, however, increased the estimate of the net income by adding to the expenditures the sum of $113,584.65, expended in repairs and construction, thus placing the net income at the amount of $590,558.73. If the rates prescribed by the Kansas statute for yarding and feeding stock had been in force during the year 1896 the income of the stock-yards company would have been reduced that year $300,651.77, leaving a net income of $289,916.96. This would have yielded a return of 5.3 per cent on the value of property used for stock-yard purposes, as fixed by the master. Or if the capital stock be taken after deducting therefrom such portion thereof which represents property not used for stock-yard purposes, the return would be 4.6 per cent.
Counsel for appellants challenge the correctness of these findings, and seek to show by a review of the testimony that no such per cent of return on the real value of the investment would be received by the company in case the proposed reduction is put into effect. But, without stopping to enter into the inquiry suggested by their contention, it is enough for our present purpose to state in general the conclusions of the master and the court.
On the other hand, it is shown by the findings, approved by the court, that the prices charged in these stock yards are no higher, and in some respects lower, than those charged in any other stock yards in the country, and finding 37 is--
Now, in the light of these decisions and facts, it is insisted that the same rule as to the limit of judicial interference must apply in cases in which a public service is distinctly intended and rendered and in those in which, without any intent of public service, the owners have placed their property in such a position that the public has an interest in its use. Obviously there is a difference in the conditions of these cases. In the one the owner has intentionally devoted his property to the discharge of a public service. In the other he has placed his property in such a position that, willingly or unwillingly, the public has acquired an interest in its use. In the one he deliberately undertakes to do that which is a proper work for the state. In the other, in pursuit of merely private gain, he has placed his property in such a position that the public has become interested in its use. In the one it may be said that he voluntarily accepts all the conditions of public service which attach to like service performed by the state itself. In the other, that he submits to only those necessary interferences and regulations which the public interests require. In the one he expresses his willingness to do the work of the state, aware that the state in the discharge of its public duties is not guided solely by a question of profit. It may rightfully determine that the particular service is of such importance to the public that it may be conducted at a pecuniary loss, having in view a larger general interest. At any rate, it does not perform its services with the single idea of profit. Its thought is the general public welfare. If in such a case an individual is willing to undertake the work of the state, may it not be urged that he in a measure subjects himself to the same rules of action, and that if the body which expresses the judgment of the state believes that the particular services should be rendered without profit he is not at liberty to complain? While we have said [183 U.S. 79, 94] again and again that one volunteering to do such services cannot be compelled to expose his property to confiscation, that he cannot be compelled to submit its use to such rates as do not pay the expenses of the work, and therefore create a constantly increasing debt which ultimately works its appropriation, still is there not force in the suggestion that as the state may do the work without profit, if he voluntarily undertakes to act for the state he must submit to a like determination as to the paramount interests of the public?
Again, wherever a purely public use is contemplated, the state may and generally does bestow upon the party intending such use some of its governmental powers. It grants the right of eminent domain, by which property can be taken, and taken, not at the price fixed by the owner, but at the market value. It thus enables him to exercise the powers of the state, and, exercising those powers and doing the work of the state, is it wholly unfair to rule that he must submit to the same conditions which the state may place upon its own exercise of the same powers and the doing of the same work? It is unnecessary in this case to determine this question. We simply notice the arguments which are claimed to justify a difference in the rule as to property devoted to public uses from that in respect to property used solely for purposes of private gain, and which only by virtue of the conditions of its use becomes such as the public has an interest in.
In reference to this latter class of cases, which is alone the subject of present inquiry, it must be noticed that the individual is not doing the work of the state. He is not using his property in the discharge of a purely public service. He acquires from the state none of its governmental powers. His business in all matters of purchase and sale is subject to the ordinary conditions of the market and the freedom of contract. He can force no one to sell to him, he cannot prescribe the price which he shall pay. He must deal in the market as others deal, buying only when he can buy and at the price at which the owner is willing to sell, and selling only when he can find a purchaser and at the price which the latter is willing to pay. If under such circumstances he is bound by all the conditions [183 U.S. 79, 95] of ordinary mercantile transactions he may justly claim some of the privileges which attach to those engaged in such transactions. And while by the decisions heretofore referred to he cannot claim immunity from all state regulation he may rightfully say that such regulation shall not operate to deprive him of the ordinary privileges of others engaged in mercantile business.
Pursuing this thought, we add that the state's regulation of his charges is not to be measured by the aggregate of his profits, determined by the volume of business, but by the question whether any particular charge to an individual dealing with him is, considering the service rendered, an unreasonable exaction. In other words, if he has a thousand transactions a day, and his charges in each are but a reasonable compensation for the benefit received by the party dealing with him, such charges do not become unreasonable because by reason of the multitude the aggregate of his profits is large. The question is not how much he makes out of his volume of business, but whether in each particular transaction the charge is an unreasonable exaction for the services rendered. He has a right to do business. He has a right to charge for each separate service that which is reasonable compensation therefor, and the legislature may not deny him such reasonable compensation, and may not interfere simply because out of the multitude of his transactions the amount of his profits is large. Such was the rule of the common law, even in respect to those engaged in a quasi-public service, independent of legislative action. In any action to recover for an excessive charge, prior to all legislative action, who ever knew of an inquiry as to the amount of the total profits of the party making the charge? Was not the inquiry always limited to the particular charge, and whether that charge was an unreasonable exaction for the services rendered? As said by Mr. Justice Bradley in Parkersburg & O. River Transp. Co. v. Parkersburg, 107 U.S. 691, 699 , 27 S. L. ed. 584, 587, 2 Sup. Ct. Rep. 732:
In Canada Southern R. Co. v. International Bridge Co. (L. R. 8 App. Cas. 723, 731) Lord Chancellor Selborne thus expressed the decision of the House of Lords:
The authority of the legislature to interfere by a regulation of rates is not an authority to destroy the principles of these decisions, but simply to enforce them. Its prescription of rates is prima facie evidence of their reasonableness. In other words, it is a legislative declaration that such charges are reasonable compensation for the services rendered, but it does not follow therefrom that the legislature has power to reduce any reasonable charges because by reason of the volume of business done by the party he is making more profit than others in the same or other business. The question is always, not, What does he make as the aggregate of his profits? but, What is the value of the services which he renders to the one seeking and receiving such services? Of course, it may sometimes be, as suggested in the opinion of Lord Chancellor Selborne, that the amount of the aggregate profits may be a factor in considering the question of the reasonableness of the charges, but it is only one factor, and is not that which finally determines the question of reasonableness. Now, the controversy in the circuit court proceeded upon the theory that the aggregate of profits was the pivotal fact. To that the testimony was adduced, upon it the findings of the master were made, and in recognition of that fact the opinion of the court was announced. Obviously, as we think, in all this the lines of inquiry were too narrowly pursued.
It may be said that the conclusion of the court was directly against the plaintiffs, and therefore was a decision against all their contentions. It was found, however, that the charges made by the defendant were no greater (and in many instances, less) than those of any other stock yards in the country. Nothing is stated to outweigh the significance of that finding. While custom is not controlling, for there may be a custom on [183 U.S. 79, 98] the part of all stock-yards companies to make excessive charges, yet in the absence of testimony to the contrary a customary charge should be regarded as reasonable and rightful. In Gunning, Law of Tolls, the author says (p. 61): 'Long usage and acquiescence in one uniform payment for toll is undoubtedly cogent evidence that it is reasonable.' In Shephard v. Payne, 12 C. B. N. S. 414, 433, Willes, J., said:
In Louisville, E. & St. L. R. Co. v. Wilson, 119 Ind. 352, 358, 4 L. R. A. 244, 247, 21 N. E. 341, 343, is this language:
Again, the findings show that the gross receipts for the year 1896 were $1,012,271.22; that the total number of stock received during the same time was 5,471,246. In other words, the charge per capita was 18 cents and 5 mills. So that one shipping to the stock yards 100 head of stock was charged $18.50 for the privileges of the yard, the attendance of the employees, and the feed furnished. While from these figures alone we might not say that the charges were reasonable or unreasonable, we cannot but be impressed with the fact that the [183 U.S. 79, 99] smallness of the charge suggests no extortion. Further, as heretofore noticed, the findings show that the establishment of these yards has operated to secure to the shippers during a single year $1,500,000 more than they would have realized in case of their nonexistence and a consequent shipment to Chicago, the other great stock market of the country.
It is not to be wondered that the trial court, in deciding the case, observed:
But inasmuch as the inquiry in that court proceeded upon lines which we have indicated were too narrow, it might well be that if there were no other questions we ought to simply send back the case for further investigation upon the true lines of inquiry. There are, however, other questions which compel notice, and one is that suggested by the 7th section in the statute, which provides a punishment for the first offense of not more than $100, for the second offense not less than $100 nor more than $200, for the third offense not less than $200 nor more than $500 and imprisonment in the county jail not exceeding six months, and for each subsequent offense a fine of not less than $1,000 and imprisonment not less than six months. The language of this section, taken in connection with the balance of the statute, is not entirely clear. The previous prescriptions of the statute are of a certain charge per head. Now, does this section contemplate a separate offense with a separate penalty for each excessive charge per head, or does it contemplate a single penalty for a violation of the statute in respect to the entire number of stock received in one shipment? The difference is significant. Taking the total number shipped to these stock yards in the year 1896, it amounted to an average of about 15,000 head per day. Would that, in case of an excessive charge for each head, mean 15,000 violations of the statute? If so, as after the third offense the fine could not be less [183 U.S. 79, 100] than $1,000 for each offense, a single day's penalties would aggregate at least $15,000,000. While the fact is not clearly disclosed by the testimony, doubtless the shipments were made by separate shippers in bunches all the way from 50 to 500 in number. If the penalty attaches simply to the charge for each shipment as a single act, the burden, though large, might not be deemed excessive; but if it attaches to that for each particular head of stock the penalties become enormous. It may be said that this is a penal statute, and therefore it is to be construed in favor of the delinquent, and that we have a right to expect that the state courts will construe the penalty as not attaching to the charge for each head of stock, but only to that upon the separate bunches shipped by different individuals. But is the language so clear that there is no doubt as to the construction? Is there not enough in it to justify a construction which may be accepted by the trial courts and approved by the supreme court of the state? And the construction of a state statute by the supreme court of the state is in a case like this conclusive upon us. Must the party upon whom such a liability is threatened take the chances of the construction of a doubtful statute? If the one construction is placed upon it, then obviously, even accepting the largest estimate of value placed by any witness upon the property of the company, a single day's violation of the statute would exhaust such entire value in satisfaction of the penalties incurred. In this feature of the case we are brought face to face with a question which legislation of other states is presenting. Do the laws secure to an individual an equal protection when he is allowed to come into court and make his claim or defense subject to the condition that, upon a failure to make good that claim or defense, the penalty for such failure either appropriates all his property, or subjects him to extravagant and unreasonable loss? Let us make some illustrations to suggest the scope of this thought.
Suppose a law were passed that if any laboring man should bring or defend an action and fail in his claim or defense, either in whole or in part, he should in the one instance forfeit to the defendant half of the amount of his claim, and in the other be punished by a fine equal to half of the recovery against him, [183 U.S. 79, 101] and that such law by its terms applied only to laboring men, would there be the slightest hesitation in holding that the laborer was denied the equal protection of the laws? The mere fact that the courts are open to hear his claim or defense is not sufficient, if upon him, and upon him alone, there is visited a substantial penalty for a failure to make good his entire claim or defense. Take another illustration: Suppose a statute that every corporation failing to establish its entire claim, or make good its entire defense, should as a penalty therefor forfeit its corporate franchise, and that no penalty of any kind except the matter of cost was attached to like failures of other litigants, could it be said that the corporations received the equal protection of the laws? Take still another illustration: Suppose a law which, while opening the doors of the courts to all litigants, provided that a failure of any plaintiff or defendant to make good his entire claim or entire defense should subject him to a forfeiture of all his property or to some other great penalty; then, even if, as all litigants were treated alike, it could be said that there was equal protection of the laws, would not such burden upon all be adjudged a denial of due process of law? Of course, these are extreme illustrations, and they serve only to illustrate the proposition that a statute (although in terms opening the doors of the courts to a particular litigant) which places upon him as a penalty for a failure to make good his claim or defense a burden so great as to practically intimidate him from asserting that which he believes to be his rights is, when no such penalty is inflicted upon others, tantamount to a denial of the equal protection of the laws. It may be said that these illustratios are not pertinent because they are of civil actions, whereas this statute makes certain conduct by the stock-yards company a criminal offense, and simply imposes punishment for such offense; that it is within the competency of the legislature to prescribe the penalties for all offenses, either those existing at common law or those created by statute; and, further, that although the penalties herein imposed may be large, yet obedience to a statute like this can only be secured by large penalties; for otherwise the company, being wealthy and powerful, might defiantly disregard its mandates, [183 U.S. 79, 102] trusting to the manifold chances of litigation to prevent any serious loss from disobedience. A penalty of a dollar on a large corporation, whose assets amount to millions, would not be very deterrent from disobedience. It is doubtless true that the state may impose penalties such as will tend to compel obedience to its mandates by all, individuals or corporations; and if extreme and cumulative penalties are imposed only after there has been a final determination of the validity of the statute, the question would be very different from that here presented. But when the legislature, in an effort to prevent any inquiry of the validity of a particular statute, so burdens any challenge thereof in the courts that the party affected is necessarily constrained to submit rather than take the chances of the penalties imposed, then it becomes a serious question whether the party is not deprived of the equal protection of the laws.
But it is not necessary to rest our decision upon this consideration, which was not fully discussed by counsel, but pass to a question which is of a kindred nature, and in which there is presented no matter of the doubtful construction of a statute.
The act in terms applies only to those stock yards within the state 'which for the preceding twelve months shall have had an average daily receipt of not less than 100 head of cattle, or 300 head of hogs, or 300 head of sheep.'
It appears affirmatively from the testimony that there are other stock yards in the state, one at Wichita and one at Jamestown, and it is stated by counsel for appellants that there are many others scattered through the state, each doing a small business. Neither the yard at Wichita nor that at Jamestown, so far as the testimony shows, comes within the scope of this act. So it may be assumed from the record that the legislature of Kansas, having regard simply to the stock yards at Kansas City and the volume of business done at those yards, passed this act to reduce their charges. Undoubtedly the act is general in its terms, and we may not, therefore, stop to inquire whether it conflicts with the constitutional prohibition contained in article 2, 17, of the Constitution of Kansas:
It may be assumed, for the purposes of the question now to be considered, that so far as the Constitution of Kansas is concerned its legislature may enact a law general in its terms, and yet so phrased as necessarily to have operation only upon a single individual or corporation; but while making that concession we cannot shut our eyes to the fact that this act is precisely the same in its effect as though the legislature had said in terms that the Kansas City stock yards alone shall be subjected to its provisions. Accepting, however, the full force of the general language in which the statute is couched, it appears that a classification is attempted between stock yards doing a large and those doing a small business. The express and only basis of classification is in the amount of business done by the two classes. As evidence that we are right in our construction, we may refer to the brief of the learned attorney general, in which he says:
... * *
If the average daily receipts of a stock yard are more than 100 head of cattle, or more than 300 head of hogs, or more than 300 head of sheep, it comes [183 U.S. 79, 104] within the purview of this statute. If less than that amount it is free from legislative restriction. No matter what yards it may touch to-day or in the near or far future, the express declaration of the statute is that stock yards doing a business in excess of a certain amount of stock shall be subjected to this regulation, and that all others doing less business shall be free from its provisions. Clearly the classification is based solely on the amount of business done, and without any reference to the character or value of the services rendered. Kindred legislation would be found in a statute like this: requiring a railroad company hauling ten tons or over of freight a day to charge only a certain sum per ton, leaving to other railroad companies hauling a less amount of freight the right to make any reasonable charge; or, one requiring a railroad company hauling 100 or more passengers a day to charge only a specified amount per mile for each, leaving those hauling 99 or less to make any charge which would be reasonable for the service; or if we may indulge in the supposition that the legislature has a right to interfere with the freedom of private contracts, one which would forbid a dealer in shoes and selling more than ten pairs a day from charging more than a certain price per pair, leaving the others selling a less number to charge that which they deemed reasonable; or forbidding farmers selling more than ten bushels of wheat to charge above a specified sum per bushel, leaving to those selling a less amount the privilege of charging and collecting whatever they and the buyers may see fit to agree upon. In short, we come back to the thought that the classification is one not based upon the character or value of the services rendered, but simply on the amount of the business which the party does, and upon the theory that although he makes a charge which everybody else in the same business makes, and which is perfectly reasonable so far as the value of the services rendered to the individuals seeking them is concerned, yet if by the aggregation of business he is enabled to make large profits his charges may be cut down.
The question thus presented is of profoundest significance. Is it true in this country that one who by his attention to business, [183 U.S. 79, 105] by his efforts to satisfy customers, by his sagacity in discerning the probable courses of trade, and by contributing of his means to bring trade into those lines, succeeds in building up a large and profitable business, becomes thereby a legitimate object of the legislative scalping knife? Having created the facilities which the many enjoy, can the many turn around and say, you are making too much out of those facilities, and you must divide with us your profits? We cannot shut our eyes to wellknown facts. Kansas is an agricultural state. Its extensive and fertile prairies produce each year enormous crops of corn and other grains. While portions of theses crops are shipped to mills to be manufactured into meal and flour, it is found by many that there is a profit in feeding them to stock, so that the amount of stock which is raised and fattened in Kansas is large, and makes one of the great industries of the state. Now, shall they whose interests are all along the line of production, having by virtue of their numerical majority the control of legislation, be permitted to say to one who acts as an intermediary between transportation and sale, that while we permit no interference with the prices which we put upon our products, nevertheless we cut down your charges for intermediate services; and this, not because any particular charge is unreasonable, but because you are making by the aggregate of those charges too large a sum, and ought therefore to divide with us. The possibility of such legislation suggests the warning words of Judge Catron, afterwards Mr. Justice Catron, of this court, when in Vanzant v. Waddel, 2 Yerg. 262, 270, he said:
The 14th Amendment forbids any state to 'deny to any person within its jurisdiction the equal protection of the laws.' The scope of this prohibition has been frequently considered by this court.
In Barbier v. Connolly, 113 U.S. 27, 31 , 28 S. L. ed. 923, 924, 5 Sup. Ct. Rep. 357, 359, it was said: [183 U.S. 79, 106] 'The 14th Amendment, in declaring that no state 'shall deprive any person of life, liberty, or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws,' undoubtedly intended, not only that there should be no arbitrary deprivation of life or liberty, or arbitrary spoliation of property, but that equal protection and security should be given to all under like circumstances in the enjoyment of their personal and civil rights; that all persons should be equally entitled to pursue their happiness and acquire and enjoy property; that they should have like access to the courts of the country for the protection of their persons and property, the prevention and redress of wrongs, and the enforcement of contracts; that no impediment should be interposed to the pursuits of anyone except as applied to the same pursuits by others under like circumstances; that no greater burdens should be laid upon one than are laid upon others in the same calling and condition, and that in the administration of criminal justice no different or higher punishment should be imposed upon one than such as is prescribed to all for like offenses.'
And in Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 237 , 33 S. L. ed. 892, 895, 10 Sup. Ct. Rep. 533, 535:
In Gulf, C. & S. F. R. Co. v. Ellis, 165 U.S. 150, 159 , 41 S. L. ed. 666, 669, 17 Sup. Ct. Rep. 255, 258, in which was presented solely the question of classification, we said, referring to many cases, both state and national:
These authorities are referred to again with approval in Magoun v. Illinois Trust & Sav. Bank, 170 U.S. 283 , 42 L. ed. 1037, 18 Sup. Ct. Rep. 594. [183 U.S. 79, 108] But we may, perhaps, come closer to the particular statute when we consider the decisions of the supreme court of Kansas, the state by whose legislature this act was passed. In State v. Haun, 61 Kan. 146, 47 L. R. A. 369, 59 Pac. 340, there was presented for consideration a statute providing for the payment of the wages of laborers in money, coupled with this provision in 4:
The act was held unconstitutional. After referring to an alleged defect in the title, the court said (p. 152, L. R. A. p. 372, Pac. p. 342):
Again on pp. 153, 154, L. R. A. p. 372, Pac. p. 343:
And in support of these views the court quoted from Cooley's Constiutional Limitations, 5th ed. 484, 486:
So we have the clear declaration of the supreme court of Kansas that legislation by which one individual, or even one set of individuals, is selected from others doing the same business in the same way, and subjected to regulations not cast upon them, is a discrimination forbidden by the constitutional provision which obtains both in the Constitution of Kansas and in that of the United States, to the effect that the equal protection of the laws is guaranteed to all.
May we not rightfully accept this declaration of law by the highest tribunal of the state by whose legislature the act in question was passed, and, accepting the reasoning of that decision, does it not follow that, if an act which provides certain regulations for corporations employing ten or more laborers, and leaving corporations employing less than that number free from such regulations, is an unjust discrimination and a denial of the equal protection of the laws, an act which imposes regulations upon corporations doing business over a certain amount, and leaving all corporations doing a like business less than that amount free from such regulations, is equally obnoxious to constitutional prohibition?
[183 U.S. 79, 110] The significance of the question thus clearly stated and forcibly answered by the supreme court of Kansas cannot be overestimated. It is not the province of this or any other court to consider its purely economic features. It may or it may not be wise, looking at it from such standpoint, to say to every citizen that his industry, ability, activity, and foresight may be rewarded up to a certain extent, and that beyond that he may not go. But whether it is wise or unwise is not for the courts to determine. Their limits of inquiry are purely judicial. And the single matter for our present consideration is whether in the restraint which the legislature of Kansas has attempted to impose upon this stock-yards company it has trespassed upon those rights which by the Constitution of the United States are secured to every individual against state action. It has been more than once said judicially that one of the principles upon which this government was founded is that of equality of right. It is emphasized in that clause of the 14th Amendment which prohibits any state to deny to any individual the equal protection of the laws. That constitutional provision does not, it is true, invalidate legislation on the mere ground of inequality in actual result. Tax laws, for instance, in their nature are and must be general in scope, and it may often happen that in their practical application they touch one person unequally from another. But that inequality is something which it is impossible to foresee and guard against, and therefore such resultant inequality in the operation of a law does not defeat its validity. As was said in this court in Merchants' & Mfrs. Nat. Bank v. Pennsylvania, 167 U.S. 461, 463 , 42 S. L. ed. 236, 237, 17 Sup. Ct. Rep. 829, 830:
So, again, exercising the undoubted right of classification it may often happen that some classes are subjected to regulations, and some individuals are burdened with obligations which do not rest upon other classes or other individuals not similarly situated. License taxes are imposed on certain classes of business while others are exempt. It would practically defeat legislation if it was laid down as a rule that a statute was necessarily adjudged invalid if it did not bring all within its scope, or subject all to the same burdens. It would strip the legislature of its inherent power to determine generally what is for the general interests, which interests may often be promoted by certain regulations affecting one class which do not affect another, certain burdens imposed on one which do not rest upon another.
But while recognizing to the full extent the impossibility of an imposition of duties and obligations mathematically equal [183 U.S. 79, 112] upon all, and also recognizing the right of classification of industries and occupations, we must nevertheless always remember that the equal protection of the laws is guaranteed, and that such equal protection is denied when upon one of two parties engaged in the same kind of business and under the same conditions burdens are cast which are not cast upon the other. There can be no pretense that a stock yard which receives 99 head of cattle per day a year is not doing precisely the same business as one receiving 101 head of cattle per day each year. It is the same business in all its essential elements, and the only difference is that one does more business than the other. But the receipt of an extra 2 head of cattle per day does not change the character of the business. If once the door is opened to the affirmance of the proposition that a state may regulate one who does much business, while not regulating another who does the same but less business, then all significance in the guaranty of the equal protection of the laws is lost, and the door is opened to that inequality of legislation which Mr. Justice Catron referred to in the quotation above made. This statute is not simply legislation which in its indirect results affects different individuals or corporations differently, nor with those in which a classification is based upon inherent differences in the character of the business, but is a positive and direct discrimination between persons engaged in the same class of business, and based simply upon the quantity of business which each may do. If such legislation does not deny the equal protection of the laws, we are unable to perceive what legislation would. We think, therefore, that the principle of the decision of the supreme court of Kansas in State v. Haun, 61 Kan. 146, 47 L. R. A. 369, 59 Pac. 340, is not only sound, but is controlling in this case, and that the statute must be held unconstitutional as in conflict with the equal protection clause of the 14th Amendment.
There yet remains a question of jurisdiction. The two suits which were consolidated were each brought by a stockholder in behalf of himself and all other stockholders against the corporation, its officers, and also the attorney general of the state of Kansas. The object of the suits was to restrain the attorney general from putting in force the statute, and the [183 U.S. 79, 113] defendants from reducing the funds of the corporation, and therefore the dividends to the stockholders, by yielding compliance to the mandates of the statute, and failing to charge reasonable rates.
Of the jurisdiction of the court over the consolidated suit as one involving a controversy between the stockholders and the corporation and its officers, no serious question is made. Dodge v. Woolsey, 18 How. 331, 15 L. ed. 401; Hawes v. Oakland, 104 U.S. 450 , Sub nom. Hawes v. Contra Costa Water Co. 26 L. ed. 827; Pollock v. Farmers' Loan & T. Co. 157 U.S. 429 , 39 L. ed. 759, 15 Sup. Ct. Rep. 673; Smyth v. Ames, 169 U.S. 466 , 42 L. ed. 819, 18 Sup. Ct. Rep. 418, seem conclusive on the question. There is no force in the suggestion that the officers of the corporation agreed with the stockholders as to the unconstitutionality of the statute, and that therefore the suit is a collusive one. That was the condition in Dodge v. Woolsey, 18 How. 331, 15 L. ed. 401, and it only emphasizes the fact that the officers were refusing to protect the interests of the stockholders, not wantonly, it is true, but from prudential reasons.
But the serious contention is that the court had no jurisdiction over the suit as against the attorney general of the state, and this on two grounds: First, because it is in effect a suit against the state, and therefore forbidden by the 11th Amendment to the Federal Constitution; and, secondly, because it is an attempt on the part of a court of equity to restrain criminal proceedings. It is contended on the other hand that it is not a suit against the state, because it does not in any was involve its pecuniary interest, and is only an effort to prevent an officer of the state from putting in force an unconstitutional statute; that it does not attempt to interfere with criminal proceedings, because none have been commenced and none are pending, but involves simply a challenge of the constitutionality of the statute. It is also urged that the attorney general when served with process did not raise either defense; did not suggest that this was in effect a suit against the state, or that it was an attempt to interfere with criminal proceedings; that he pleaded several defenses and went into a trial of the merits on a motion for permanent injunction; took part in the taking of an immense amount of testimony and in an argument before the trial judge upon the question of the validity of the [183 U.S. 79, 114] statute, and when its validity had been adjudged, then, for the first time and as a preliminary to a final decree to be entered without further testimony, filed an answer containing a formal plea that the suit was one in effect against the state. It is further contended that by the statutes of Kansas (Kan. Comp. Laws 1879, p. 901, 5589) the governor may require the attorney general to appear for the state in any court and prosecute or defend therein any cause or matter, civil or criminal, in which the state may be a party or interested, and that while no request from the governor was shown the trial court was justified, in the absence of some challenge of its jurisdiction, in assuming that such request had been given, and that it would be grossly inequitable, after a full inquiry upon the merits in such court and an adjudication in favor of the validity of the statute, to permit the attorney general by a formal plea of jurisdiction to prevent any review of the merits in this court.
Without expressing any opinion as to the jurisdiction of the court if it had been properly and seasonably challenged, we think the true solution of this matter will be found in reversing the decree upon the merits, and directing a dismissal of the suit as to the attorney general, without prejudice to any other suit or action. It is therefore ordered that the decree of the Circuit Court be reversed, and the case remanded to that court, with instructions to enter a decree in favor of the plaintiffs and against the corporation and its officers, in accordance with the prayer of the bills, and also a decree dismissing the suit as to the attorney general of Kansas, without prejudice to any further suit or action.
Mr. Justice Harlan, with whom concurred Mr. Justice Gray, Mr. Justice Brown, Mr. Justice Shiras, Mr. Justice White and Mr. Justice McKenna:
We assent to the judgment of reversal-so far as the merits of this case are concerned-upon the ground that the statute of Kansas in question is in violation of the 14th Amendment of the Constitution of the United States in that it applies only to the Kansas City Stock-Yards Company, and not to [183 U.S. 79, 115] other companies or corporations engaged in like business in Kansas, and thereby denies to that company the equal protection of the laws. Upon the question whether the statute is unconstitutional upon the further ground that, by its necessary operation, it will deprive that company of its property without due process of law, we deem it unnecessary to express an opinion.