97 Ky. 675 | Ky. Ct. App. | 1895
DELIVERED THE OPINION OF. THE COURT.
The Commonwealth of Kentucky brought this action December 11, 1893, against Louisville & Nashville Railroad Company, Chesapeake, Ohio & Southwestern Railroad Company, Ohio Valley Railroad Company, Owensboro, Falls of Rough & Green River Railroad Company, Short Route Railway Transfer Company, and Paducah Union Depot Company, all-corporations created hv statute of this State, for an injunction, nature -and extent of which is shown by the
It is stated, substantially, in plaintiffs petition, as cause of action, that Louisville & Nashville Company owns and controls many railroads in this State, as respects which, railroads owned or controlled by the other companies named are parallel and competing. Yet, that defendants have made a contract and arrangement whereby Louisville & Nashville Company is about to, and unless enjoined will, become owner and acquire possession and control of capital stock, franchises and properties of the other companies to the great and irreparable injury of plaintiffs, and in violation of section 201of the constitution of this State asfollows: “No railroad, telegraph, telephone, bridge or common carrier company shall consolidate its capital stock, franchises or property, or pool its earnings, in whole or in part, with any other railroad, telegraph, telephone, bridge or common carrier company owning a parallel or competmg line or structure, or acquire by purchase, lease or otherwise, any parallel or competmg line or structure or operate the same; nor shall any railroad' company or other common carrier combine or make any contracts with the owners of any vessel that leaves or makes port in this State, or with any common carrier, by which combination or contract the earnings of one doing the carrying are to be shared by the other not doing the carrying.”
In an amended petition it is stated, in substance, that Louisville & Nashville Company was endeavoring to acquire capital stock and interest in real property of and mortgage securities against the other companies, defendants, so as to obtain control and ultimately purchase at judicial sale and become owner of their franchises and property.
Section 201, in plain terms, makes.it unlawful for any two or more railroad companies owning parallel or competing lines or structures to consolidate their capital stock, franchises or property, or to pool their earnings in whole or in part, or for one of them to acquire by purchase or lease property or franchises of the other, it matters not whether the purchase be made at a voluntary or judicial sale, it being the manifest purpose to inhibit one such company acquiring, controlling or operating the road of another in any
The Louisville & Nashville Company was chartered about 1850, and constructed a road from Louisville by way of Elizabethtown and Bowling Green, Kentucky, to Nashville, Tennessee, which was completed about 1859, and still is one of the main or trunk lines of the vast system since ácquired by that company. About the same time was constructed a branch road from a point about seven miles south of Bowling Green, to the State line, that has been since extended and is now owned and operated by it to Memphis, Tennessee. Subsequently, it purchased and now owns a road called Evansville, Henderson & Nashville railroad, that extends from Edgeville, Tennessee, on its main line, ten miles north of Nashville by way of Hopkinsville, Kentucky, to Henderson, thence across Ohio river to Evansville, Indiana, and to St. Louis, Missouri. Still later it purchased and now owns what is called Owensboro, Russellville & Nashville Railroad, completed and in operation, not wholly, but from Owensboro to Adairsville, south of Russellville. It also owns and operates various branches in this State that diverge from the main line eastwardly, as well as Kentucky' Central road extending from Cincinnati southward and
Of roads constituting what may be properly called the-Chesapeake, Ohio & Southwestern system, because owned or controlled by the corporation of that name, the first one-built extends from Paducah, Kentucky, to Elizabethtown, and for several years the company owning it was dependent for transportation of its passengers and freight, between. Elizabethtown and Louisville, upon the Louisville & Nashville road. But another road was finally built from Louisville to Cecilia Junction, six miles northwest of Elizabeth-town, the city of Louisville subscribing and paying one million dollars for that purpose, whereby was secured a continuous line therefrom to Paducah, independent of the Louisville & Nashville road. It is, however, proper to state the-entire line was afterwards sold under judgment of the district court of the United States, and that part between. Louisville and Cecilia Junction purchased from bidders at, that sale by the Louisville & Nashville Company. But by a subsequent lease, amounting practically to purchase of it, acquisition of the road from Elizabethtown to- Paducah and acquisition of a road from Paducah to Memphis, the Chesapeake, Ohio & Southwestern Company became, about 1881, ■ owner of a connected, continuous and independent-railroad from Louisville by way of Cecilia Junction and Paducah to Memphis.
It has controlling interest in and controls the following-railroads, although each still bears the name and is nominally held by the company that built it: 1. bhio Valley-road that extends from a point on the Ohio River, opposite-Evansville, Indiana, by way of Henderson and Princeton, Kentucky, where it crosses main line of Chesapeake, Ohio & Southwestern, to Hopkinsville. 2. Owensboro, Falls of
It is thus made apparent that if Louisville & Nashville Company be permitted to purchase the railroads and adjuncts mentioned, it will at once become owner and have control of: First, the Union Depot at Seventh and Water streets, a competitor of its own at Tenth and Broadway streets, and thereby acquire, virtually, a monopoly of depot privileges in Louisville. Second, main line of Chesapeake, Ohio & Southwestern system, extending from Louisville, by way of Cecilia Junction and Paducah, a distance of three hundred and ninety-two miles, to Memphis, which, in meaning of section 201 of the constitution, is a line parallel to its own line, extending from Louisville, by way of Elizabeth-town and Bowling Green, a distance of three hundred and seventy-seven miles, to Memphis,, and thereby would be stifled and destroyed active competition for railroad business not only to and from the two terminal points, but also for that originating and done wholly within limits of this State that does, and as long as the two roads are owned by distinct corporations will con tinue to, exist for the public good, except where earnings are, in violation of the constitution, pooled. Third, Ohio Valley Road, lying wholly within limits of this State and that competes with Evansville, Henderson and Nashville road for business between Hopkinsville and Evansville and intermediate points. Fourth, .Owensboro, Falls of Rough
The effect of acquisition by Louisville & Nashville Company of these roads, will be absorption of an entire system of parallel and competing lines between four hundred and six hundred miles in length, and substitution of a monopoly 15 of railroad transportation. And in view of the enormous sum of $4,500,000 paid, or agreed to be paid, by Louisville & Nashville Company for the capital stock of- the other companies, being major part thereof, -and for the mortgage securities mentioned, it would be idle to say it does not in
We need not say more in regard to the transaction than that, if consummated, an express provision of the constitution would be violated, and great injury to the public be done. The judgment in this case must therefore be affirmed, unless the grounds of defense are sufficient to defeat the action.
1. It is contended injunction is not the proper remedy. But it seems to us if the Commonwealth of Kentucky can sue at all for an act of ultra vires by a corporation, there is .no room for disputing its right to a preventive injunction in this case. For, according to very respectable authority, and, we think, upon principle, a court of equity has jurisdiction, and may, in an action by the State, enjoin a corporation from exceeding its chartered powers or doing acts otherwise illegal and injurious to the public. (Pomeroy’s Equity Jurisprudence, sec. 1093; Thomas v. West Jersey R. Co., 101 U. S., 71; Coosaw Mining Co. v. South Carolina, 144, U. S., 564; Langdon v. Branch, 37 Fed. Rep., 449; Stockton v. Central R. Co., 50 N. J., 52; Attorney-General v Railroad Co., 35 Wis., 524.)
As said in the last case, it may better serve the public interest to restrain a corporation than to proceed by indictment or by ordinary action to forfeit its charter. ■ In this action, however, the relief is asked upon equitable grounds that the remedy at law is> not plain and adequate, and that vexatious litigation will be prevented.
Under section 480, Civil Code, an action ordinary inav be brought to vacate or repeal charters. But when this action was commenced Louisville & Nashville Company had not done anything in relation to the matter of litigation, for
The Commonwealth had then either to bring this action or await commission of one of the acts mentioned, and then commence tedious and vexatious litigation, under section 180, with Louisville & Nashville Company in full possession of the roads in question, and probably armed with a deed as purchaser of the franchises and properties at a judicial sale.
It is too plain for further discussion tile Commonwealth had the right to bring this action.
2. It is contended that by section 3 of a statute of this State, approved January 17, 1856, right was given to .Louisville & Nashville Company to purchase and hold any and all railroads that then were, or might ever be, constructed within limits of Kentucky, whether parallel and competing lines or not; and that in virtue of section 10, article .1, of the Constitution of the United States, providing “no State shall pass any law impairing the obligation of contracts,” the right still exists, and may be exercised without hindrance or limit, notwithstanding both the State Constitution and public policy forbid. That section reads as follows: “That said company may, under provisions of the 13th section of this act, from time to time, extend any branch road and may purchase and hold any road constructed by another company or may agree on terms to receive the cars of other
When the language of a statute is clear, unequivocal and capable of but one meaning, there is no room for construction, nor choice for a court but to enforce it as written. But when looking to the subject-matter and object of a statute, intention of a. legislature can be collected, words may be modified, altered or supplied so as to obviate any repugnancy or inconsistency with such intention. (Sutherland on Construction of Statutes, sec. 218.) And “all words, if they be general and not express and precise, are to be restricted to the fitness of the matter. They are to be construed as particular, if the intention be particular; that is, they must be understood as used in reference to the subject-matter in the mind of the legislature, and strictly limited to it.” Endlich on Interpretation of Statutes, sec. 86.)
Louisville & Nashville Company was authorized by its charter to construct a railroad from Louisville to the State line in direction of Nashville, but, without authority of Tennessee Legislature, subsequently given, could not have continued it farther.
Counsel refer us to an amendment of the charter passed by the legislature of this State in 1854, making it lawful for ■the company to “unite their said road with any oth^er road connecting therewith.” But as it does not appear to have been re-enacted by the legislature of Tennessee, nor to give authority to purchase or hold parallel or competing lines, we need not consider it. It was, however, followed by a statute of Tennessee, containing sixteen sections', and embodied in the statute of January 17, 1856, mentioned and described in first section thereof as follows: “That an act passed by the legislature of Tennessee, at the session of 1855, entitled an act to charter the Louisville & Nashville
It will be observed that the subject matter of sec. 13 of the Tennessee statute is branch roads that Louisville & Nashville Company was thereby authorized to admit to connect with the main stem; but as State aid was to be furnished by Tennessee for building it, there was a special provision it should not be incumbered with cost of constructing such branch roads.
The subject matter in mind of the legislature'of Kentucky
That the legislature then regarded it contrary to the public good and did not intend to give the power in question is made further manifest by “An act to authorize railroad companies to make certain contracts with each other,” approved January 22, 1858, which provides that all railroad companies in this State shall have power and authority to make with each other, contracts of the following character: 1. For the consolidation of either the management, profits or stock of any two or more companies, the roads of which are or shall be so connected as to form a continuous road. 2. For leasing of the road of one company to another; provided the roads so leased shall be so connected as to form a ■continuous line.
The construction of that act was involved in the case of Hancock v. Louisville & Nashville Railroad Company, 145 U. S., 409, the Supreme Court using this language: “The evil which was intended to be guarded against by this limitation was the placing of parallel and competing lines under one management, and the control by one company of the general railroad affairs of the State through the leasing of roads remote from its own, and with which it has no¡ physical or direct business connection.
Though, thirty-eight years since the passage of the act of 1856 and thirty-six years since the act of 1858 had elapsed when this action ’was commenced, Louisville & Nashville Company never before claimed or attempted to exercise the right to purchase and hold parallel and competing lines, except about 1878, when it purchased the road from Louisville to Cecilia Junction, which was held only a short time and then sold to Chesapeake, Ohio & Southwestern Company.
But there is an obstacle to the proposed purchase, even if Louisville & Nashville Company had statutory power. The charter of Chesapeake, Ohio & Southwestern Company prohibits consolidation of its capital stock with that of any company whose lines are parallel and competing, as those of Louisville & Nashville Company are. And for the latter to purchase and hold the road of the former would be as much an unlawful act as if done in violation of an express provision of its own charter.
But it is contended the question of right involved in this-case is controlled by that clause of the constitution of the United States which provides that “congress shall have power to regulate commerce arising among the States.” The power of a State by proper enactments to foster competition and prevent monopoly within its own limits of the business of railroad transportation, has never been made a question in the Supreme Court of the United States, notwithstanding nearly two-thirds of the States have, and for years have had, provisions on the subject of the same character, and quite as stringent and comprehensive as that of section 201. Moreover, in several of them, the validity of such provision has been directly adjudicated and sustained. That there should be such consensus of opinion and hitherto
In our opinion they are not in a proper sense regulations of interstate commerce, nor does their enforcement infringe, upon the power of congress to regulate commerce between the States. Whether Louisville & Nashville Company does or not acquire the roads in question, will not affect traffic or business on those roads that are now in operation and will continue so irrespective of its right to purchase and hold them, that the legislature of this State only can give.
The purpose and effect of section 201 is simply to prohibit, because against public policy, the acquisition and control of those roads by any company that will use and operate them so as to hurt the public.
It was not intended to regulate the commerce of which these roads are mere vehicles, nor to prescribe rules by which that commerce is to be carried on.
Judgment affirmed.