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State v. the Richmond and Danville R.R. Co. et al

Supreme Court of North Carolina
Jun 1, 1875
73 N.C. 527 (N.C. 1875)


June Term, 1875.

An indictment under the Act 1874-'75, Chap. CLIX, against the Richmond Danville Railroad Company, (changing the gauge of railroads,) cannot be sustained, because that act impairs the obligation of the contract between the State and the defendant Railroad Company, as assignee of the North Carolina Railroad Company.

This was an INDICTMENT under the act of 1874-'75, for changing the gauge of the North Carolina Railroad, tried before Watts, J., at June Term, 1875, of WAKE Superior Court.

Attorney General Hargrove, for the State.

Merrimon, Fuller Ashe, Strong, Fowle and Badger for the defendant.

BYNUM, J., dissenting.

The jury returned the following special verdict:

1. That the North Carolina Railroad Company was formed and organized by virtue of an act of the General Assembly of North Carolina, entitled "An act to incorporate the North Carolina Railroad Company," ratified the 27th day of January, 1849, and other subsequent acts amendatory thereof.

2. That said company did soon thereafter construct its railroad from Charlotte to Neuse river, and operate the same with steam power. That the track of the said railroad so constructed was of the uniform gauge and width of four feet, eight inches and one half of an inch, throughout its entire length and has so remained until the day hereinafter mentioned.

3. That the Richmond Danville Railroad Company, a corporation formed, organized and existing under the laws of the State of Virginia, came into the possession on the 11th day of September, 1871, of the tract, road bed, engines, locomotives, coaches, c., belonging to the said North Carolina Railroad Company, and of its rights, franchises and other property of the said company, under a contract of lease entered into between said corporations.

4. That the Richmond Danville Railroad Company claimed by said contract to have the right to change the gauge of the said North Carolina Railroad tract, and being about to do so, were enjoined from so doing in an action wherein the State of North Carolina was plaintiff and the said railroad companies were defendants, which said suit was ultimately determined at January Term, 1875, of the Supreme Court of North Carolina, the record of which is to be considered as a part of this verdict.

5. That the North Carolina Railroad Company is a corporation existing by virtue of the laws of North Carolina, with a President and Board of Directors, but that the officers of said corporation had nothing to do with the change of the gauge of the North Carolina Railroad Company and had no control over the management of running trains over said road.

6. That Algernon S. Buford is the President of the said Richmond Danville Railroad Company, and William H. Green is an officer of said company.

7. That said A. S. Buford, President as aforesaid, and William H. Green, officer as aforesaid, acting by and through (the order) of said Richmond Danville Railroad Company as aforesaid, did on the 1st day of June, 1875, cause the gauge of the said North Carolina Railroad, situated, lying and being in the county of Wake, and being of the length of thirty miles in said county, to be widened and changed from four feet, eight inches and the half of one inch, to five feet, and the gauge of the said track has since remained of the width of five feet.

8. That the gauge of the North Carolina Railroad, throughout the whole extent from Charlotte to Goldsboro', on the Neuse river, has been changed by the Richmond Danville Railroad Company from four feet, eight inches and the half of one inch, to five feet, a part of the gauge of said railroad, between Charlotte and Greensboro', having been changed by the Richmond Danville Railroad Company, prior to the act of March the 4th, 1875.

If the Court shall be of opinion upon this statement of facts that the law is with the State, then and in that case we find the defendants guilty, otherwise we find the defendants not guilty."

By agreement of counsel the record of the action entitled State of North Carolina v. The Richmond Danville Railroad Company, and the papers in said action and all acts of the General Assembly incorporating railroad companies, and other acts amendatory thereof was to be used in this court as a part of the case, without being attached hereto as exhibits.

His Honor being of the opinion that the facts found by the jury would not warrant a conviction gave judgment accordingly, whereupon the State appealed.

It must be assumed in considering this case, that the matters decided in the case of the State against the same company which is now a defendant, 72 N.C. 634 are the settled law of this State, and admit of no question.

Two things were decided in that case:

1. That the lease of its road, c., by the North Carolina Railroad Company to the Richmond and Danville Railroad Company was lawful and valid.

2. That the lessees by virtue of the lease, had up to the passage of the Act of 1874-'75 a right to change the gauge of the North Carolina road.

With respect to the lease thus declared to be lawful, it must be observed that the State of North Carolina owned at its date, and still owns two-thirds of the capital stock of the Company which made the lease, and the Governor by and with the advice and consent of his counsel had power to appoint a proportionate number of the Directors of the Company, who are removable in like manner. (Sec's. 36 and 43 of charter ratified 27th January, 1849.) In short, the State as a stockholder, through its lawfully appointed officers, had the supreme control over every act and contract of the Company, and the lease could not have been made without the express consent of the State. The lease expressly stipulated that the gauge might be changed, and the power to change it, must be considered an inducement to the Richmond and Danville Railroad Company to take the lease.

The lease also contains the following provision: "And the said party of the first part (the North Carolina Railroad Company) for the consideration aforesaid, for itself, its successors and assigns, doth covenant with, and oblige itself unto the said party of the second part, its successors and assigns, that its stockholders and directors will not do any thing, or take any action as such stockholders and directors, that may or can interfere in any way whatsoever with the free use and operation and convenience of said railroad, and other property so hired, let, "farmed out" and delivered, by the said party of the second part, according to the terms and intent of these presents." Notwithstanding this, the State through its Attorney General, shortly after the execution of the lease, commenced a suit against the Richmond and Danville Railroad Company, praying among other things, for an injunction against a change of gauge intended to be made by that Company as lessees. This suit pended for over eighteen months, and soon after it was decided as above set forth, and after the Richmond and Danville Company had begun to change the gauge, as it was held it had a right to do: and as it had a right to have done long before; and after the Company had completed the change over a large part of the road: the General Assembly enacted the Act of 1874-'75, ch. 159, which (what ever may be its construction upon the language used) intended to prevent any further change, and to prohibit it, as well as a continuance of the change made just before, by penalties and punishments of unusual severity. It is contended for the defendants, that this legislation is a violation by the State of the contract made with the North Carolina Railroad Company in its charter, the rights and powers under which are held by the defendant Company as a lawful assignee for value: and also of the contract made by the State as the governing power in the North Carolina Railroad Company with the defendant Company.

It is also suggested that it appears from the records of the United States Courts within this State, that ever since the making of said lease, the State through its creditors, to whom its stock in the North Carolina Railroad Company was pledged, has claimed and received its share of the rent payable under the lease. As this fact, (if it be one,) does not appear in the special verdict, it cannot be permitted to weigh with us.

Whether the act in question is open to the objection that it impairs the obligation of either of these contracts, is the important question presented to us. In considering it this Court disclaims any power to avoid an act of the Legislature upon an idea of protecting the honor or good faith of the State against any violations real or supposed of either by that body, except so far as that duty is expressly enjoined upon it by the higher law of the Constitution, which its members have sworn to support.

It is seen that the proposition of the defendants is that the act violates:

1. The charter to the North Carolina Company, of whose rights and powers the defendant company is the lawful assignee; and

2. The contract of lease made by the North Carolina Company and by the State, as its chief stockholder and governing power, under the laws of the State, to the defendant Company.

These two propositions, though supported mainly by the same arguments, require to be noted, are not identical, for some observations which are applicable to the second proposition are not applicable to the first.

It is too late to question that a charter to a railroad company is a contract between the State and the company, which the State cannot violate. When a corporation has franchises and powers which it may lawfully assign, (as the North Carolina Railroad Company had,) the assignee takes the place of the assignor, and is equally entitled to the protection of the law. The defendant Company, at the passage of the act, held an admitted right to change the gauge as it thought proper. The act prohibited the use of that right and apparently impaired the obligation of the charter. The burden is upon those who defend the act to find some recognized principle of law and reason on which it can be supported.

The counsel for the State have undertaken to find this principle in the general police power of the State, and we agree with them that it is to be found there if anywhere, for a right to regulate internal traffic over railroads and navigable waters is but a part of the police power of the State, and is subject to the same limitations and restrictions as that power is. Admittedly, this power is very extensive, and I am not aware that any jurist has yet undertaken to circumscribe and define its limits by any continuous line. All that the Courts have done or can as yet attempt to do, is to make a dot here and there by the decision of a particular case as being within or without the line and leave it to our successors to connect them by a well defined line when they are able to do so. The nearest approach to an attempt of this sort which I have seen is in chapter 16 of Cooley on Constitutional Limitations, and especially on pages 572 and 577. The learned author cites probably all the cases having any direct bearing on the subject of discussion. From these we conclude that the Legislature has power to impose all such regulations on railroad companies in the use of their roads as may be reasonably proper for the safety, and perhaps the comfort and convenience of passengers and of all others entitled to use the road, and for the protection from injury of the inhabitants and property of the country through which the roads pass. A railroad company, like all other owners of property, is subject to the maxim, "Sic utere tuo ut alienum non laedas." Within that limit it has the same control over its property that an individual has, to use it as it may suit its ideas of its interest. A railroad company, although created in part for the advantage of the public, is not a public corporation in the sense that a county is. It is created also for private benefit, and in respect to those purposes it is a private corporation and its charter is a contract.

The rights of owners of adjoining coal mines are similar in some respects to those of railroad companies whose roads connect. On this subject see the valuable case of Smith v. Kewrick, 7 Man. Gr. and Scott. 515, (62 E. C. L. R.)

This police power, however extensive, must have reasonable limits. In some places it is said to extend to everything "necessary for the welfare and prosperity of the State." But that would be to remove all limits. Such loose and ill considered expressions mean nothing definite. The limit of the power is the nature of the purpose to be accomplished, having due regard to conflicting rights. A State cannot violate its contract under a pretended exercise of its police power. The act must be bona fide intended to relieve some evil within the reach of that power, and strictly applicable to that end. Among the instances held not to be embraced in it are these. In Pengrief v. Washburn, 1 Aiken 268, the legislature undertook to say that certain person might go toll free over a road authorized by its charter to take toll generally. Miller v. New York Erie Railroad Company, 21 Bart. 513, where the act required the company to make the preparation for a street to cross its track at its own expense. Bailey v. Philadelphia c., Railroad Company, 4 Harr. 389, and Washington Bridge Co. v. The State, 18 Conn. 53, where statutes infringing the chartered powers of certain bridge companies were held void. In State v. Jersey City, 5 Dutch. 170, it was held that the Legislature had no right to regulate the speed of railway carriages except in the streets of cities, the necessity extending no further.

The act of 1874'-75, (chap. 159, p. 185,) does not appear to us to present the features of a police regulation. A gauge of five feet does not hazard the safety or convenience of persons using the road, or living along it. The act does not profess to be made for any of the purpose embraced within the police power. The purpose avowed is to compel an uniform gauge of 4 feet 8 1/2 inches on the North Carolina Railroad and on certain other railroads connecting with it, which at that time had that gauge. It may be a wise and convenient policy to require an uniformity of gauge on all the railroads in the State, and it may be convenient to the roads connecting with the North Carolina road, that its lessees should be prevented from changing its gauge from one uniform with theirs, to a different one. But if the lessees of the North Carolina road had a right to change its gauge according to their ideas of their own interests, (as in view of the decision of this Court at the last term, must be admitted), no newly adopted policy of uniformity, or regard for the interests of other roads, will authorize the State to deprive the lessees of this right, except by virtue of its power of eminent domain, and upon compensation. Much less had the State the power to compel the lessees to restore to its former gauge, that portion of the road which, at some expense, it had changed before the act was passed.

This conclusion is strengthened by an anticipation of the consequences of a different one.

If the Legislature can now lawfully establish the gauge of the North Carolina Railroad at 4 feet 8 1/2 inches, it can equally establish it at a greater or less width, and can at any time hereafter compel or forbid a change. On the same principle it may at pleasure require or forbid the company to alter its route once adopted, in any particular, its station houses once located, and its rates of fare and freight. In short it may regulate in every detail the economic management of the road. Such a power would be practically despotic, and might be indirectly but effectually used to destroy the value of the charter and compel its surrender. The claim is new in principle, and no authority, or at least no direct authority can be found to support it.

We are asked to distinguish this case from the State v. Matthews, 3 Jones, 451. I may not be able to show the distinction to the satisfaction of others. But I think there is a solid one. For whatever reasons, the State had adopted a policy against the issue of Bank bills under $3, before it chartered the Bank of Fayetteville, this policy was apparent to all on its legislation. Prior to that charter, no Bank, then existing, was allowed to issue bills under that denomination. The omission of such a prohibition in the charter of that Bank was apparently an accident. The case was evidently covered (independently of any contract excluding it) by the general police power of the State, and no injury was done to the Bank in relieving the people from the ill consequences of the accident.

The above remarks it will be seen, apply particularly to the act of 1874-'75, in respect to its bearing on the rights created by the charter to the N.C. R. R. Co., and our conclusion on that will dispose of this case. It will not be inappropriate however briefly to consider the act in reference to the provisions of the lease made by that Company, in which the State as a stockholder had the controlling power, assuming for that purpose that in the absence of such lease, the act would be a legitimate exercise of the police power. A State may undoubtedly contract away some portion of its sovereign rights, as this State was held to have done, its right to tax, in the charters of the Raleigh Gaston Railroad Company, and of the Wilmington Weldon Railroad Company. Whether a State can abridge its police power, or any other of its sovereign rights, by a contract made by it, not in the exercise of its legislative power, but through its authorized officers as the controlling or only stockholder in an incorporated trading company, is a question which I have never seen discussed. We do not propose to express any opinion on this question. But it certainly seems contrary to the ordinary principles of justice, that a State, through its authorized officers, should in one capacity make a contract conferring certain rights, (to change the gauge,) and therein expressly contract to do nothing to hinder the use of that right; and immediately afterwards, in its sovereign capacity as legislator, enact a law to make any use of that right highly penal. The State appears in the attitude of receiving with one hand rent from its tenant, and with the other expelling him from the possession.

If the contract had been procured from the officers of the State by fraud or corruption, it could undoubtedly be avoided on that ground. But so far as appears, there is no allegation of that sort. No legal proceedings to avoid the lease have been had on any such ground.

It is unnecessary also to consider the criticisms of the counsel for the defendants upon the language of the act which is admitted by the counsel for the State to be very loose and uncertain.

PER CURIAM. Judgment below affirmed.

Summaries of

State v. the Richmond and Danville R.R. Co. et al

Supreme Court of North Carolina
Jun 1, 1875
73 N.C. 527 (N.C. 1875)
Case details for

State v. the Richmond and Danville R.R. Co. et al

Case Details


Court:Supreme Court of North Carolina

Date published: Jun 1, 1875


73 N.C. 527 (N.C. 1875)

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