Opinion
Argued January 29, 1900
Decided February 27, 1900
Adelbert Moot and George F. Brownell for appellant. Clarence A. Farnum for respondent.
This action, similar in character to that of Beardsley v. N.Y., L.E. W.R.R. Co., is brought to recover penalties for the refusal of the defendant to issue mileage books, as prescribed by chapter 1027 of the Laws of 1895, as amended by chapter 835 of the Laws of 1896. The record in this case, however, differs materially from that in the Beardsley case, both in its facts and in the objections taken by the counsel to the right of the plaintiff to recover. The complaints (there were originally several actions which were subsequently consolidated into one) allege that the defendant is a railroad corporation organized under the laws of this state, and then set forth the various matters necessary to bring the defendant within the terms of the statute, and the details of the plaintiff's applications for mileage books and the defendant's refusal to issue them. They do not state when the defendant was incorporated. The answers to the several causes of action admitted the incorporation of the defendant and certain other allegations of the plaintiff in reference to the mileage of road operated by the defendant and its rates of fare, and put in issue the other averments of the complaint. They further set up that the defendant owned and operated a railroad extending through several states, and charge that the statute of 1896 "is unconstitutional and void, because it is in violation of the provision of the Constitution of the United States, which commits to Congress the sole power to regulate commerce between the several states, and that it is unconstitutional and void because it is in violation of various other provisions of the Constitution of the United States, and of the Constitution of the state of New York." On the trial of the action the plaintiff put in evidence the certificate of the defendant's incorporation, of which the record contains only the following: "Certificate referred to shows that the Erie Railroad corporation, defendant, was duly organized and incorporated November 14, 1895, under the general laws of the state of New York for the incorporation of railroads." The earliest refusal to issue a mileage book, for which it is sought to recover the penalty, occurred on June 26, 1896. The defendant put in evidence a map showing the various lines of the Erie railroad, extending through this state and others, and "to make the description of the lines of the defendant more certain," as was stated by the counsel in offering them, two deeds, one from Arthur H. Masten, special master, to Charles Caster and others, and the other from Caster and others to the defendant. All the record states of these deeds is that they were "of the New York, Lake Erie Western lines," and that they were delivered and recorded in November, 1895. This is all that appears concerning the original title to defendant's road. There is nothing to show the defendant has succeeded to the rights or franchises of any company antedating the enactment of the statute of 1895. While our personal knowledge may inform us of the history of the railroad lines operated by the defendant, to that we cannot appeal, and we can indulge in no presumption as to the existence of facts not appearing in the record. As the case stands before us we have a railroad company created after the statute of 1895, and whose franchise and property rights must be assumed to have accrued subsequently to that time. The question, therefore, is whether the statute of 1895, though void as to existing railroad companies, is not constitutional and valid as to companies organized and acquiring property and franchises in the future.
That a statute, which is unconstitutional so far as it purports to operate retrospectively, may be upheld as to future cases, is settled by authority. ( People v. O'Neil, 109 N.Y. 251; Cooley Const. Lim. 180.) We do not assent, however, to the broad claim of the learned counsel for the respondent that a corporation cannot object to the constitutionality of any statute enacted by the state prior to the time of its organization. Whether the proposition contended for is true or false depends on the ground on which the validity of the statute is assailed or its invalidity declared. If the state should require, or enact, that railroad companies thereafter organized must subject the management and conduct of any interstate transportation and business they may carry on, to state control, such a statute would be void as in contravention of the Constitution of the United States, which commits to Congress the regulation of interstate commerce. It is probable that there are provisions of the State Constitution, such as those regulating the administration of justice and ordained for the security of persons and property, which the legislature could not require even future corporations to waive as a condition of their charters. But the ground on which the Supreme Court of the United States in the case of Lake Shore M.S. Ry. Co. v. Smith ( 173 U.S. 684) held the Mileage Book Act unconstitutional, was that it was an invasion of the property rights of the railroad company, in that it required the company to transport persons willing and able to purchase thousand-mile books at a less sum than the general or maximum rate allowed by law; in other words, that it compelled the company to surrender, as to such persons, the difference between the special rate of fare and the regular rate. This exaction was illegal, because it was without due process of law. We know of no reason, however, why a railroad company may not agree, upon sufficient consideration, to surrender or transfer any specific pecuniary right. The right to contract as to property is one of the inherent rights of a citizen, of which he cannot be deprived, except as to that class of contracts which are condemned in the exercise of the police power, such as usury and the like. ( People v. Gillson, 109 N.Y. 389.) The same liberty of contract exists in the grant of charters by the legislature. Therefore, a regulation as to the price of transportation, which would be an illegal exaction when sought to be imposed on existing corporations solely by legislative fiat, may, in the case of future corporations, be the mere performance of the obligation of a contract. The authority to construct and operate a railroad is not the natural right of a citizen, but a franchise proceeding from the favor or grant of the state. As a condition of such grant, the legislature might require the company to transport passengers at any prescribed rate of fare; equally, it may require that certain classes of passengers be transported at a particular rate of fare, or that any passenger, under certain circumstances and on compliance with certain requirements, be transported at such rate. In Railroad Co. v. Maryland, (21 Wall. 456) the Supreme Court of the United States said: "This unlimited right of the state to charge, or to authorize others to charge, toll, freight, or fare for transportation on its roads, canals, and railroads, arises from the simple fact that they are its own works, or constructed under its authority. It gives them being. It has a right to exact compensation for their use." So it was held that a reservation by the state to itself of one-fifth of the receipts for transportation of passengers was valid, and it was said that the state might have exacted the whole receipts. (See, also, Ashley v. Ryan, 153 U.S. 436, and L. N. Ry. Co. v. Kentucky, 161 U.S. 677.)
The statute of 1896 was passed subsequently to the incorporation of the defendant, and if the statute increased the burden imposed on the defendant by the act of 1895, as to such additional burden it would be invalid. But a comparison of the two acts shows that all the modifications of the statute of 1895 effected by the statute of 1896 are favorable to the railroad company. By the first act the mileage books entitled the holder, i.e., the bearer or assignee, to transportation; by the second, the use of the book is limited to the purchaser and to certain members of his family and employees. By the act of 1895 there was imposed on the company the general duty to issue mileage books; by that of 1896 the company is required to keep such books for sale only at stations in incorporated villages and cities. By the earlier statute the company was practically required to accept the mileage books from passengers on the train in lieu of tickets; by the latter act, the mileage book can be used only in the purchase at the ticket office of a ticket for the proposed journey. We are of opinion, therefore, that the enactment of 1896 is constitutional and valid in the same cases where the statute of 1895 would be upheld.
While we have discussed, at some length, the constitutionality of the statutes of 1895 and 1896 as applied to future corporations, we doubt very much whether the defendant's objections and exceptions are sufficient to raise the question. So far as the pleadings are concerned the only attack on the validity of the statutes is that already quoted from the defendant's answer. At the opening of the trial the defendant moved to dismiss the complaint because it failed to state facts sufficient to constitute a cause of action for a penalty. No particular ground for the attack on the complaint is stated. At the close of the evidence, the defendant renewed its motion to dismiss the complaint, but the sole ground on which it assailed the validity of the statute itself was that it constituted an interference with the regulation of interstate commerce, and, hence, was in violation of the Constitution of the United States. The objection that the statute was an invasion of the defendant's property rights and contravened, for that reason, either the Constitution of the United States or the Constitution of this state, does not anywhere appear in the record, and the rule seems settled that such an objection, to be available here, must have been raised in the courts below. ( Vose v. Cockcroft, 44 N.Y. 415; Delaney v. Brett, 51 N.Y. 78.)
The objection that the statutes of 1895 and 1896 are regulations of interstate commerce, and, hence, in conflict with the Federal Constitution, is satisfactorily dealt with in the very clear opinion of Mr. Justice MERWIN of the Appellate Division, delivered in the Beardsley Case ( 15 App. Div. 251). That such a statute, if limited in its scope to transportation wholly within the limits of the state, is a valid exercise of state authority, is settled by the decision of the Supreme Court of the United States in Stone v. Farmers' Loan Trust Co. ( 116 U.S. 307) where it was said: "It (the state) may, beyond all question, by the settled rule of decision in this court, regulate freights and fares for business done exclusively within the state." This doctrine has never been overruled or limited; on the contrary, it is fully recognized in the later cases. ( Hennington v. Georgia, 163 U.S. 299; W.U. Tel. Co. v. James, 162 U.S. 650; L.S. M.S.R. Co. v. Ohio, 173 U.S. 285.) In Wabash, S.L. P. Ry. Co. v. Illinois ( 118 U.S. 557) a statute of Illinois regulating fares was held void solely on the ground that the act, as interpreted by the Supreme Court of the state, included cases of transportation partly within and partly without the state. It was there stated: "If the Illinois statute could be construed to apply exclusively to contracts for a carriage which begins and ends within the state, disconnected from a continuous transportation through or into other states, there does not seem to be any difficulty in holding it to be valid." There is nothing in the language of the statutes now before us that shows they were intended to affect any but intra-state transportation; but if their interpretation be doubtful "the courts must so construe a statute as to bring it within the constitutional limits, if it is susceptible of such construction." ( Sage v. City of Brooklyn, 89 N.Y. 189; People ex rel. Sinkler v. Terry, 108 N.Y. 1.) Within this principle these statutes must be construed as applying to transportation wholly within the state, and so construed they do not infringe upon the Constitution of the United States.
The judgment appealed from should be affirmed, with costs.
PARKER, Ch. J., GRAY, BARTLETT, VANN and WERNER, JJ., concur; MARTIN, J., concurs in result.
Judgment affirmed.