130 Mich. 248 | Mich. | 1902
This is certiorari to review proceedings of the circuit court in which a mandamus was issued requiring respondent to reduce its fare. It appears that the respondent was organized as a corporation on the loth of July, 1896, under the railway law then in
The contention that a statute fixing unreasonable rates-would constitute an impairment of the property rights of the old company, is based upon numerous decisions of the federal supreme court and of this court. The subject was discussed in Smith v. Railway Co., 114 Mich. 460 (72 N. W. 328), and the rule was recognized in both opinions in that case that legislation, the effect of which is to deprive a corporation of its property, cannot be sustained under the power to alter, amend, or repeal. See, also, Attorney General v. Looker, 111 Mich. 498 (69 N. W. 929); City of Detroit v. Plank-Road Co., 43 Mich. 140 ( 5 N. W. 275). And that the fixing of unreasonable rates is an infringement of the property rights of an existing corporation, within the meaning of the fourteenth amendment, appears to have been determined by the federal supreme court in Chicago, etc., R. Co. v. Wellman, 143 U. S. 339 (12 Sup. Ct. 400); Reagan v Trust Co., 154 U. S. 362
2 Comp. Laws, § 6224, provides that:
“In case of the foreclosure and sale of any railroad, or part of any railroad, under any trust deed or mortgage, * * * it shall be competent and lawful for the parties who may become the purchasers, and such others as they may associate with themselves, to organize a corporation for the management of the same, and issue stock in the same in shares of one hundred dollars each, to represent the property in said railroad; and such corporation, token organized, shall have the same rights, powers, and privileges as are or may be secured to the original company whose property may have been sold under and by virtue of such mortgage or trust deed.”
The section then provides for a declaration or certificate
“And, being filed and recorded in his office, the said corporation shall become complete, with all the powers and rights secured to railroad companies under this act, to all the provisions of which, and amendments thereto, it shall be subject.”
When the mortgage in question was given, the section fixing the rates contained no limitation except that they should not exceed three cents per mile. It is contended that the legislature could not, by the amendment of 1889, enacted after the mortgage was made, withdraw from the bondholders the right to reorganize except on condition of submitting to the rates fixed by the statute. This question would seem to depend upon whether the legislation affected the bondholders’ remedy simply, or affected the right of property. It may be urged with some force that, if the legislature might prohibit any incorporation except on the terms of acceptance of unreasonable rates, the bondholders would be remediless, and that the right to reorganize is, in effect, a part of the mortgage contract, and that the rights and franchises of the debtor corporation vest in the purchaser on reorganization. If this view be adopted, and particularly if it be said that the purchaser 'could not, except through the instrumentality of a corporation, conduct the business of the corporation, it would be difficult to say that the amendment affects the remedy merely. Its effect would be, under such construction, to cut off the remedy, pro tanto at least; and, if the rates are so far unreasonable as to make the operation of the road a burden, the effect would be to cut off the remedy wholly, thus rendering the franchise valueless. This would be beyond the power of the legislature. Mundy v. Monroe, 1 Mich. 68; Cargill v. Power, Id. 369.
But is this the effect of the amendment ? May it not be said that the rights and property of this corporation vested
We think the legislation was not. unconstitutional, and the order of the circuit court is affirmed, with costs.