Covington Turnpike Road Co v. Sandford

• Decision Date: 14 December 1896
• Docket Number: No. 50,50
• Parties: COVINGTON & L. TURNPIKE ROAD CO. et al. v. SANDFORD et al
• Court: U.S. Supreme Court

164 U.S. 578

17 S.Ct. 198

41 L.Ed. 560

COVINGTON & L. TURNPIKE ROAD CO. et al.

v SANDFORD et al.

No. 50.

December 14, 1896.

J. W. Bryan and W. W. Mackoy, for plaintiffs in error.

William Goebel, for defendants in error.

Mr. Justice HARLAN delivered the opinion of the court.

The general assembly of Kentucky, by an act approved May 24, 1890, made it unlawful to demand, charge, collect, or receive tolls in excess of the rates specified in that act for travel on that portion of the Covington & Lexington Turnpike Road which was then maintained.

The company announced its purpose to disregard the provisions of the act and to charge such tolls as were prescribed by the prior statutes. Thereupon the appellees living on or near the line of the turnpike road, and accustomed to travel on it daily with animals and vehicles, brought this suit for an injunction restraining the appellant from exacting tolls in excess of those fixed by the act of 1890.

A temporary injunction, in accordance with the prayer of the petition, was granted, and the company filed its answer. A demurrer to the answer was sustained. An amended answer was then tendered by the defendant, but the court would not allow it to be filed, and by final order made the injunction perpetual. That judgment was affirmed by the court of appeals of Kentucky. 20 S. W. 1031.

The principal questions are: (1) Whether the act of 1890 impairs the obligation of any contract that the turnpike company had with the state touching the matter of tolls. (2) Whether, independently of any question of contract, the act made such a reduction in tolls as to amount to a deprivation of the company's property without due process of law, in violation of the fourteenth amendment to the constitution of the United States. (3) Whether the act is repugnant to the clause of the federal constitution forbidding the denial by the state to any person within its jurisdiction of the equal protection of the law.

As these questions were properly raised by the pleadings, and were decided adversely to the company, the jurisdiction of this court to review the final judgment of the court of appeals of Kentucky cannot be doubted.

It is necessary to a clear understanding of the issues presented that reference be made to the enactments preceding the statute of 1890.

The Covington & Lexington Turnpike Road Company was incorporated by an act approved February 22, 1834, with authority to construct and permanently maintain a turnpike road from Covington, Ky., through Williamstown and Georgetown, to Lexington, in that state.

By the nineteenth section of that act the company was authorized to collect certain specified tolls. It is contended that the twenty-sixth section is a part of the defendants' contract with the state. That section provided: 'That if at the expiration of five years after the said road has been completed, it shall appear that the annual net dividends for the two years next preceding of said company upon the capital stock expended upon said road and its repairs, shall have exceeded the average of fourteen per cent. per annum thereof, then and in that case, the legislature reserves to itself the right, upon the fact being made known, to reduce the rates of toll, so that it shall give that amount of dividends per annum, and no more.' Acts Ky. 1833, pp. 544, 548.

By an act approved February 23, 1839, amendatory of the act of 1834,—the road then having been constructed from Covington to Williamstown,—it was provided:

'Section 1. That the stockholders is the Covington and Lexington Turnpike Road Company, residing south of Williamstown, in Grant county, and anywhere between that place and Georgetown, may elect a separate board of directors, to consist of the same number as authorized by the original charter; and the directors chosen by them shall have the control and shall superintend the construction of that part of the road to be located and constructed between Georgetown and Williamstown.

'Sec. 2. That the stockholders in said road, residing north of Williamstown, shall have power, also, to elect a separate board of directors, for the purpose of controlling and superintending that portion of the road extending from Williamstown to Covington; and each board so chosen shall exercise separate control over its own portion of the road; but nothing herein shall be construed to divide and separate the stock in said road, but the same shall continue joint and common to all the stockholders, after the completion of said road.' Acts Ky. 1838-1839, p. 371.

This amendment, it is admitted, was accepted by the turnpike company.

Subsequently, by the second section of an act approved March 22, 1851, it was provided:

'Sec. 2. That so much of the second section of said act to amend the charter of the Covington and Lexington Turnpike Road Company [meaning the act of 1839] as declares that the stock in said road shall continue joint and common to all the stockholders, after the completion of said road, is hereby repealed; and the stockholders whose stock is now under the control and management of the board of directors having control of the road north of Williamstown shall be and are hereby constituted a separate and independent company, under the name and style of the Covington and Lexington Turnpike Road Company, who shall be and forever remain separate and independent of that portion of said company owning the stock in the road now constructed south of Williamstown; and the stockholders whose stock is now under the control and management of the board of directors having the control and construction of the road south of Williamstown, shall be and are hereby constituted a separate and independent company, under the name and style of the Georgetown and Dry Ridge Turnpike Road Company, who shall be and forever remain separate and independent of that part of said company owning the stock in the road north of Williamstown; and that neither of said companies, thus formed, shall be held as in anywise responsible for the doings or actions of the other; but each shall have the exclusive ownership and control of that portion of road which they have respectively made, or, under the provisions of this act shall make, and shall have full power and authority to elect its own president and directors, to declare its own dividends, and pay the same to its own stockholders, each company possessing and retaining all the powers, rights and capacities in severalty granted by the act of incorporation, and the amendments thereto, to the original company, and subject to all the restrictions to which said company is subject, not inconsistent with the provisions of this act; and that neither company shall be in any wise liable for the debts or contracts of the other now in existence, or which may be hereafter made or contracted.' Acts Ky. 1850-51, p. 479.

It is claimed that the words in this section, 'possessing and retaining all the powers, rights and capacities in severalty granted by the act of incorporation and the amendments thereto, to the original company,' embraced, or carried into the charters of the two corporations created by this act, the immunity or exemption, given by the twenty-sixth section of the above act of 1834, from legislation that would preclude the company from earning as much as 14 per cent. upon its capital stock.

The separate and independent company created by the last-named act as the Covington & Lexington Turnpike Road Company is the defendant in this suit. To it was committed the control of that portion of the road lying north of Williamstown. The act of 1851 further provided that it should be in force as soon as a majority of the stockholders of each company assented to its provisions. Such assent was duly given by the stockholders.

The next statute, in point of time, relating to the Covington & Lexington Turnpike Road Company was that of December 11, 1865, amending the charter of that company. That act provided that the company might charge tolls on their road as prescribed in that act, 'instead of the rates now allowed by law.' Priv. Acts Ky. 1865, p. 2. The rates so prescribed were, it is alleged, different from and lower than those prescribed by the original charter of 1834.

The petition alleged that the defendant submitted to the regulation of its tolls, as indicated by the act of 1865, 'and consented to and accepted said act, and has ever since acted thereunder, and exacted the rates of toll therein specified.' The answer, touching this point, avers: 'It [the defendant] admits, also, the passage of the act by the general assembly of the commonwealth of Kentucky, mentioned in said petition as having been approved December 11, 1865, and entitled 'An act to amend the charter of the Covington and Lexington Turnpike Road Company,' which provided other and different rates of toll from those authorized to be collected by the act of February 22, 1834, above mentioned, which act of December 11, 1865, this defendant accepted and has acted under; but it denies that it submitted to the regulation of its tolls by the general assembly of the commonwealth of Kentucky then or at any time, but says that it accepted said act and has acted thereunder of its own volition, and that the acceptance of said act was voluntary on the part of said corporation, its stockholders, and directors.'

By the sixth section of an act of the general assembly of Kentucky, approved February 13, 1872, it was provided that the trustees of the Cincinnati Southern Railway, whose line extended across Kentucky, might 'also, for the purpose of constructing and maintaining said line of railway, occupy of use any turnpike or plank road, street or other public way or ground, or any part thereof, upon such terms and conditions as may be agreed upon between said trustees and the municipal or other corporations, persons or public authorities owning or having charge thereof. * * * If no agreement can be made for the right to use...