The Louisville & Nashville Railroad Company, hereinafter called the company, filed its bill July 25, 1906, in the circuit court of the United States for the eastern district of Kentucky, to enjoin the enforcement of a certain order made by the railroad commission of Kentucky (hereafter called the commission), providing what are termed maximum rates on the transportation of all commodities upon the railroad of the company to and from all points within the state. In its bill the company contended that the order as to rates of transportation was void, because it was, upon several stated grounds, in violation of certain named provisions of the Constitution of the United States, among them being the claim that the rate were so low as to be confiscatory. It was also contended that the statute was an interference, in its results, with interstate commerce. The company also contended (among other objections not of a Federal nature) that the commission had no power to make the order in question under a correct and proper construction of the state statute of March 10, 1900, under which the commission assumed to exercise the power to fix the rates provided for in its order.
The circuit court decided that such act, hereinafter fully set forth, and called the 'McChord act,' and also the order of the railroad commission of Kentucky, complained of, irrespective of any claim that such order was confiscatory, violated the provisions of § 1 of the 14th Amendment to the Constitution of the United States, prohibiting any state from depriving any person of property without due process of law, and from denying to any person within its jurisdiction the equal protection of the laws, and that the order of the commission, so far as it was applicable to the company, was, therefore, null and void, and the special commissioner who had been appointed to take evidence in the case as to the character of the rates, and other matters, was directed to so report. (The court decided the case upon the authority of Louisville & N. R. Co. v. McChord, 103 Fed. 216, reversed on other grounds in 183 U.S. 483, 46 L. ed. 289, 22 Sup. Ct. Rep. 165.)
A final decree having been made pursuant to the decision of the court, the commission appealed directly to this court from such decree. The proceedings which led up to the decree from which the commission has appealed, without the court passing upon the allegation of the confiscatory nature of the rates, were by means of a stipulation made in order to facilitate matters by reason of which the court decided, as matter of law, the order and act were both invalid, and it perpetually enjoined the enforcement of the order as to rates as well as the procuring of indictments against the officers of the company or the company itself.
The appellants disputed the jurisdiction of the circuit court upon grounds which are particularly stated in the opinion herein, and they took issue on many of the material allegations contained in the bill of complaint.
The facts upon which the questions in this case arise are as follows: The company was duly incorporated under an act of the general assembly of the state of Kentucky, approved March 5, 1850. It has a large mileage, amounting to over 1,200 miles within the state, and it operates its road within the state in connection with other portions of its road in other states, having altogether, in Kentucky and such other states, a mileage of over 4,000 miles. It claims to have a contract right to fixrates as provided in its charter, and it contends that the order of the commission violates that right as well as other rights protected by the Federal Constitution.
The state adopted a new constitution on the 28th day of September, 1891, by § 209 of which the present railroad commission of the state was established.
It is asserted by the company, though such assertion is denied, that up to March 10, 1900, the commission or its predecessors had not been empowered by constitutional or statutory provision to regulate or fix the rate of compensation which a railroad company might charge for the service of transporting freight or passengers over its lines in the state. On the above-mentioned date the general assembly enacted what is generally called the 'McChord act,' which is set forth in full in the margin.