Covington Bridge Co v. Commonwealth of Kentucky

• Citation: 14 S.Ct. 1087,154 U.S. 204,38 L.Ed. 962
• Decision Date: 26 May 1894
• Docket Number: No. 1,025,1,025
• Parties: COVINGTON & C. BRIDGE CO. v. COMMONWEALTH OF KENTUCKY
• Court: United States Supreme Court

154 U.S. 204

14 S.Ct. 1087

38 L.Ed. 962

COVINGTON & C. BRIDGE CO.

v COMMONWEALTH OF KENTUCKY.

No. 1,025.

May 26, 1894.

This was an indictment in a court of the state of Kentucky against the Covington & Cincinnati Bridge Company for violation of a statute of that state regulating tolls on defendant's bridge. A demurrer to the indictment was sustained, but the judgment thereon was reversed on appeal by the court of appeals of the state (21 S. W. 1042), and, on trial, defendant was adjudged guilty, and the conviction was affirmed on appeal by the court of appeals (22 S. W. 851). Defendant brought error.

This was an indictment found by the grand jury of Kenton county, Ky., against the defendant bridge company for demanding and collecting illegal tolls, refusing to sell tickets at the rates required by law, and for failing to keep an office for the sale of tickets at its bridge in said county.

The Covington & Cincinnati Bridge Company was incorporated under an act of the legislature of Kentucky, approved February 17, 1846, the third section of which required the confirmation of the act by the state of Ohio before the corporation should open its books for subscription and the eighth section of which declared that 'the president and directors shall have the right to fix the rates of toll for passing over said bridge, and to collect the same from all and every person or persons passing thereon, with their goods, carriages, or animals of every description or kind: provided, however, that the said company shall lay before the legislature of this state a correct statement of the cost of said bridge, and an annual statement of the tolls received for passing the same, and also the cost of keeping the said bridge in repair, and of the other expenses of the company; and the said president and directors shall, from time to time, reduce the rates of toll, so that the net profits of the said bridge shall not exceed fifteen per cent. per annum, after the proper deductions are made for repairs and charges of other descriptions.'

By an act of the legislature of Ohio, enacted March 9, 1849, this company was made a body corporate and politic of that state, 'with the same franchises, rights, and privileges, and subject to the same duties and liabilities,' as were specified in its original incorporation; and with a further proviso that 'nothing herein contained shall be construed to take away the jurisdiction of this state to the center of the said bridge, nor in anywise to acknowledge the jurisdiction of the commonwealth of Kentucky this side of the said center.'

On March 20, 1850, this act of confirmation was amended by the legislature of Ohio by granting the company 'power to enter upon any lands in the city of Cincinnati, from low-water mark in the Ohio river north-wardly, not exceeding one hundred feet in width, to Front street, and appropriate the same' for passageways and abutments, etc.

The original act of incorporation was amended by the legislature of Kentucky by the following among other subsequent acts:

(1) By act of February 23, 1856, authority was given to increase the capital stock from $300,000 to $700,000, with power in the city of Covington to subscribe for and purchase $100,000.

(2) By act of February 6, 1858, the company was authorized to issue preferred stock under certain restrictions, such stockholders to receive dividends of 6 per cent.

(3) By act of February 5, 1861, the capital stock was increased to $1,000,000, one-half of such amount in preferred stock, and to pledge the revenues of the company for the payment of dividends upon such preferred stock to the extent of 15 per cent. per annum.

(4) By act of January 21, 1865, the capital stock was increased to $1,250,000, the additional $250,000 being preferred stock, the holders of which should enjoy all the benefits, privileges, and immunities to which the holders of the existing stock were entitled.

By the sixth section of this act the legislature reserved the right to change, alter, or amend the original charter, 'but not so as to abridge or injure legal or equitable rights acquired thereunder.'

(5) By act of February 25, 1865, the above sixth section was repealed.

(6) By act of congress of February 17, 1865, the bridge was declared to be a lawful structure and post road for the conveyance of the mails of the United States. 13 Stat. 431.

The bridge was completed and opened for travel January 1, 1867.

On April 9, 1890, the legislature of Kentucky passed another act amendatory of the act of incorporation, and out of which this prosecution arose, providing that it should be unlawful for any person or corporation to charge, collect, demand, or receive for passage over the bridge spanning the Ohio river, constructed under such act of incorporation, any toll, fare, or compensation greater than, or in excess of, certain rates prescribed by the act, which were much less than the directors had fixed upon under the eighth section of the act of incorporation. The second section provided that the company should sell passage tickets over their bridge at these rates, entitling the holder to passage either way over said bridge; and, by the third section, the company was required to keep an office within the county of Kenton constantly open for the sale of such tickets, and keep conspicuously posted a schedule of the tolls fixed in pursuance of the act.

The company failing to conform to this last-mentioned act, this indictment was filed May 9, 1890. Defendant demurred thereto, and the case was submitted upon this demurrer and a statement of facts, showing the cost of the bridge structure and offices to have been $1,855,462.36; the per cent. of net earnings on cost for first 23 years, 4.82; the per cent. of net earnings on cost for the year 1889, 6.14; the estimated per cent. of net earnings on cost for 1890, 4.09, under the charges fixed by the directors; the estimated percentage of net earnings on cost for the year 1890, under the act of which complaint was made, 1.06. The court sustained the demurrer and dismissed the indictments upon the ground that the act of 1890 impaired the obligation of the contract contained in the eighth section of the original act. The commonwealth appealed to the court of appeals, by which the judgment of the court below was reversed, and the case remanded, with directions to overrule the demurrer, and for further proceedings. The case was thereupon remanded to the lower court and submitted without a jury. The court adjudged the defendant guilty, and imposed a fine of $1,000, from which judgment the defendant again appealed to the court of appeals, which affirmed the judgment of the court below, and certified, at the request of the appellant, the following questions as arising under the constitution and laws of the United States:

(1) Whether the act of 1890 was within the constitutional inhibition of laws impairing the obligation of contracts.

(2) Whether such acts were in violation of the exclusive power of congress to regulate commerce among the states.

(3) Whether said act was in violation of the fourteenth amendment, prohibiting the taking of private property without due process of law.

Defendant thereupon sued out a writ of error from this court.

Lawrence Maxwell, Jr., Wm. M. Ramsey, James W. Bryan, John F. Fisk, and Chas. H. Fish, for plaintiff in error.

Wm. J. Hendrick, Atty. Gen. Ky., and Wm. Goebel, for defendant in error.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.

This case involves the power of a state to regulate tolls upon a bridge connecting it with another state, without the assent of congress, and without the concurrence of such other state in the proposed tariff.

The right of the commonwealth of Kentucky to prescribe a schedule of charges in this instance is contested, not only upon the ground that such regulation is an interference with interstate commerce, but upon the further ground that it impairs the obligation of the contract contained in the original charter of the company.

The power of congress over commerce between the states, and the corresponding power of individual states over such commerce, have been the subject of such frequent adjudication in this court, and the relative powers of congress and the states with respect thereto are so well defined, that each case, as it arises, must be determined upon principles already settled, as falling on one side or the other of the line of demarcation between the powers belonging exclusively to congress, and those in which the action of the state may be concurrent. The adjudications of this court with respect to the power of the states over the general subject of commerce are divisible into three classes: First, those in which the power of the state is exclusive; second, those in which the states may act in the absence of legislation by congress; third, those in which the action of congress is exclusive, and the states cannot interfere at all.

The first class, including all those wherein the states have plenary power, and congress has no right to interfere, concern the strictly internal commerce of the state, and, while the regulations of the state may affect interstate commerce indirectly, their bearing upon it is so remote that it cannot be termed in any just sense an interference. Under this power, the states may authorize the construction of highways, turnpikes, railways, and canals between points in the same state, and regulate the tolls for the use of the same (Baltimore & O. R. Co. v. Maryland, 21 Wall. 456), and may authorize the building of bridges over nonnavigable streams, and otherwise regulate the navigation of the strictly internal waters of the state,—such as do not, by themselves or by connection with other waters, form a continuous highway over which commerce is or may be carried on with other states or foreign countries (Veazie v. Moor, 14 How. 568; The Montello, ...