BANK OF OXFORD and Edward Mayes and Robert B. Mayes, Plffs. in Err.,

V.

J. 8. LOVE, E. F. Anderson, and S. S.
Harris, Bank Examiners of the State of
Mississippi.

(See S. C. Reporter's ed. 603–607.)

Constitutional law tract obligations tions.

impairing conbanking regula

Fletcher v. Peck, 6 Cranch. 87, 3 L. ed. 162; Dartmouth College v. Woodward, 4 Wheat. 518, 4 L. ed. 629; Providence Bank v. Billings, 4 Pet. 514, 7 L. ed. 939; Planters' Bank v. Sharp, 6 How. 301, 12 L. ed. 447; Bank of Commerce v. Tennessee, 161 U. S. 134, 40 L. ed. 645, 16 Sup. Ct. Rep. 456.

While the interest of the public in a business may justify its control, it does not require that the business be regulated, so as to prevent the legislature from granting it immunity.

Georgia R. & Bkg. Co. v. Smith, 128 U. S. 174, 32 L. ed. 377, 9 Sup. Ct. Rep. 47.

The obligation of the state's undertaking in a special act incorporating a bank, that "the business of said bank shall be confided to and controlled by its stockholders under such rules of laws and regulations as said company may see fit to adopt, provided the same be not in conThe power to legislate can be irrevoflict with the Constitution of the United States or of this state," was not unconsti- cably surrendered by contract in those tutionally impaired by the subsequent enact-matters which go merely to the indusment of legislation providing for reasonable trial interests of the community. examinations and reports by duly authorized officers of the state banking department created by such legislation, and for the enforced annual contribution to the expenses of such department of 40 of 1 per cent of

the bank's total assets.
[For other cases. see Constitutional Law,
1379-1449, in Digest Sup. Ct. 1908.]

[No. 9.]

Submitted March 27, 1918. Restored to docket for oral argument April 22, 1918. Argued October 10, 1919. Decided November 10, 1919.

IN
N ERROR to the Supreme Court of
the State of Mississippi to review a
decree which affirmed a decree of the
Chancery Court for Hinds County, in
that state, dismissing on demurrer the
bill in a suit by a state bank to enjoin
the enforcement as to it of the state
banking laws, and to compel repayment
of a sum paid under protest for the
maintenance of the state banking depart-
ment. Affirmed.

See same case below, 111 Miss. 699,

A.L.R. 72 So. 133.

The facts are stated in the opinion. Mr. T. A. Evans argued the cause, and Messrs. B. L. Mayes, George D. Lancaster, and James Stone, filed a brief for plaintiffs in error:

A bank charter is a contract protected by the contract clause of the Constitution of the United States.

Note.-Generally, as to what laws are void as impairing obligation of contracts -see notes to Franklin County Grammar School v. Bailey, 10 L.R.A. 405; Bullard v. Northern P. R. Co. 11 L.R.A. 246; Henderson v. State Soldiers & S. Monument Comrs. 13 L.R.A. 169; and Fletcher v. Peck, 3 L. ed. U. S. 162.

Home of the Friendless v. Rouse, 8 Wall. 430, 19 L. ed. 495; Georgia R. & Bkg. Co. v. Smith, supra; Gulf & S. I. R. Co. v. Adams, 90 Miss. 559, 45 So. 91; Walla Walla v. Walla Walla Water Co. 172 U. S. 1, 43 L. ed. 341, 19 Sup. Ct. Rep. 77; New Orleans Gaslight Co. v. Louisiana Light & H. P. & Mfg. Co. 115 U. S. 650, 29 L. ed. 516, 6 Sup. Ct, Rep. 252; Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, 33 L. ed. 970, 3 Inters. Com. Rep. 209, 10 Sup. Ct. Rep. 462, 702; Detroit v. Detroit Citizens' Street R. Co. 184 U. S. 388, 46 L. ed. 592, 22 Sup. Ct. Rep. 410; Bridge Proprs. v. Hoboken Land & Improv. Co. 1 Wall. 116, 17 L. ed. 571; Binghamton Bridge, 3 Wall. 51, 18 L. ed. 137; West River Bridge Co. v. Dix, 6 How. 531 12 L. ed. 544; Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568; St. Anna's Asylum v. New Orleans, 105 U. S. 362, 26 L. ed. 1128; Gordon v. Appeal Tax Ct. 3 How. 133, 11 L. ed. 529; Farrington v. Tennessee, 95 U. S. 679, 691, 24 L. ed. 558, 561; Mobile & O. R. Co. v. Tennessee, 153 U. S. 486, 38 L. ed. 793, 14 Sup. Ct. Rep. 968; Bank of Commerce v. Tennessee, 161 U. S. 134, 40 L. ed. 645, 16 Sup. Ct. Rep. 456; American Smelting & Ref. Co. v. Colorado, 204 U. S. 103, 51 L. ed. 393, 27 Sup. Ct. Rep. 198, 9 Ann. Cas. 978.

Mr. Earle N. Floyd argued the cause, and, with Mr. Ross A. Collins, Attorney General of Mississippi, and Mr. Robert H. Thompson, filed a brief for defendants in error:

The regulation and control of the banking business are a valid exercise of the police power of the state.

Noble State Bank v. Haskell, 219 U. S. 104, 110, 55 L. ed. 112, 116, 32 L.R.A.

1165

Appellant's charter was granted with reference to limitations of future constitutions, as well as the then-existing one. Freeport Water Co. v. Freeport, 180 U. S. 587, 45 L. ed. 679, 21 Sup. Ct. Rep. 493; Puget Sound Traction, Light & P. Co. v. Reynolds, 244 U. S. 574, 61 L. ed. 1325, 5 A.L.R. 13, P.U.R.1917F, 57, 37 Sup. Ct. Rep. 705; Railroad Commission Cases, 116 U. S. 307, 29 L. ed. 636, 6 Sup. Ct. Rep. 334, 388, 1191.

No injustice is done to stockholders by the regulations imposed by the state banking act.

(N.S.) 1062, 31 Sup. Ct. Rep. 186, Ann., 6 Sup. Ct. Rep. 252; Mugler v. Kansas, Cas. 1912A, 487; State ex rel. Goodsill 123 U. S. 623, 31 L. ed. 205, 8 Sup. Ct. v. Woodmansee, 1 N. D. 246, 11 L.R.A. Rep. 273; Chicago, B. & Q. R. Co. v. 420, 46 N. W. 970; Brady v. Mattern, 125 Chicago, 166 U. S. 226, 41 L. ed. 979, Iowa, 158, 106 Am. St. Rep. 291, 100 N. 17 Sup. Ct. Rep. 581. W. 358; Weed v. Bergh, 141 Wis. 569, 25 L.R.A. (N.S.) 1217, 124 N. W. 664; Com. v. Vrooman, 164 Pa. 306, 25 L.R.A. 250, 44 Am. St. Rep. 603, 30 Atl. 217; Myers v. Irwin, 2 Serg. & R. 368; Myers v. Manhattan Bank, 20 Ohio, 283; Atty. Gen. v. Utica Ins. Co. 2 Johns. Ch. 371; Shallenberger v. First State Bank, 219 U. S. 114, 55 L. ed. 117, 31 Sup. Ct. Rep. 189; Assaria State Bank v. Dolley, 219 U. S. 121, 55 L. ed. 123, 31 Sup. Ct. Rep. 189; Boston Beer Co. v. Massachusetts, | 97 U. S. 25, 24 L. ed. 989; Northern P. R. Co. v. Minnesota, 208 U. S. 583, 52 L. ed. 630, 28 Sup. Ct. Rep. 341; New York & N. E. R. Co. v. Bristol, 151 U. S. 556, 38 L. ed. 269, 14 Sup. Ct. Rep. 437; Chicago, B. & Q. R. Co. v. Illinois, 200 U. S. 561, 50 L. ed. 596, 26 Sup. Ct. Rep. 341, 4 Ann. Cas. 1175; Lake Shore & M. S. R. Co. v. Ohio, 173 U. S. 285, 43 L. ed. 702, 19 Sup. Ct. Rep. 465; Gilman v. Philadelphia, 3 Wall. 713, 18 L. ed. 96; Pound v. Turck, 95 U. S. 459, 24 L. ed. 525; Hannibal & St. J. R. Co. v. Husen, 95 U. S. 470, 24 L. ed. 529; Bacon v. Walker, 204 U. S. 311, 51 L. ed. 499, 27 Sup. Ct. Rep. 289; Barbier v. Connolly, 113 U. S. 31, 28 L. ed. 924, 5 Sup. Ct. Rep. 357; Lawton v. Steele, 152 U. S. 133, 38 L. ed. 385, 14 Sup. Ct. Rep.

499.

Regulation and control of the banking business by a state are not subject to the limitations of the contract clause of the Federal Constitution, since no state can devest itself of this essential police power.

Stone v. Mississippi, 101 U. S. 814, 25 L. ed. 1079; Railroad Commission Cases, 116 U. S. 307, 29 L. ed. 636, 6 Sup. Ct. Rep. 334, 388, 1191; Moore v. State, 48 Miss. 147, 12 Am. Rep. 367; Stone v. Yazoo & M. Valley R. Co. 62 Miss. 607, 52 Am. Rep. 193; Mississippi Railroad Commission v. Gulf & S. I. R. Co. 78 Miss. 761, 29 So. 789; Stone v. Natchez, J. & C. R. Co. 62 Miss. 646; Manigault v. Springs, 199 U. S. 473, 50 L. ed. 274, 26 Sup. Ct. Rep. 127; Boyd v. Alabama, 94 U. S. 645, 24 L. ed. 302; Boston Beer Co. v. Massachusetts, 97 U. S. 25, 24 L. ed. 989; Butchers' Union S. H. & L. S. L. Co. v. Crescent City L. S. L. & S. H. Co. 111 U. S. 746, 28 L. ed. 585, 4 Sup. Ct. Rep. 652; New Orleans Gaslight Co. v. Louisiana Light & H. P. & Mfg. Co. 115 U. S. 650, 29 L. ed. 516,

6 R. C. L. Constitutional Law, ¶¶ 111,

154.

Mr. Justice McReynolds delivered the opinion of the court:

A special act of the Mississippi legisla ture, approved March, 1872, incorporated the Bank of Oxford and authorized it to "exercise the privilege appertaining to a general banking, exchange and brokerage business, with all the power of a body corporate." Section 4 declares: "That the business of said bank shall be confided to and controlled by its stockholders under such rules of laws and regulations as said company may see fit to adopt, provided: the same be not in conflict with the Constitution of the United States or of this state." It was immediately organized, and has continued to carry on business under the charter so granted.

By a comprehensive act containing sixty-nine sections, [605] approved March 9, 1914, the legislature prescribed general regulations concerning banking. Its scope is fairly indicated by the title, copied below.1 Section 23 provides: "Each bank subject to the provisions of this act is hereby assessed for each year

1"An act establishing a banking depart ment for the state of Mississippi, creating a board of bank commissioners, prescrib ing their qualifications, duties and compensation, providing for the election of state bank examiners, prescribing their qualificawhat shall constitute a bank and banking tions, duties and compensation, defining business in the state of Mississippi, fixing the capital required to do a banking business, and providing for the examination, regulation and control of banks and bankother than national banks and postal sav ing business conducted by corporations, ings banks and fixing the assessment for the revenues of the department, fixing qualifications and liability of officers, stockholders

140 of 1 per cent of its total assets, and the money accruing from said assessment shall be used for the maintenance of the banking department."

contained in the Act of March 9, 1914, and for a decree requiring repayment of the sum assessed and paid under protest.

No argument is required to show that the charter of 1872 constitutes a contract protected by the Federal Constitution. But the construction placed upon 8 4 by counsel for plaintiffs in error is not tenable. It really contains nothing which purports to take away commonly recognized power of the state to establish such reasonable and general regulations of banks as may be essential to public safety, and to enforce them through a board supported by moderate assessments upon those engaging in the business.

After paying one assessment under protest, plaintiff bank, May 14, 1914, instituted this proceeding in the chancery court for Hinds county. The original bill sets up and relies upon the charter of 1872 as a contract, protected by the Federal Constitution, which, by confiding control to stockholders, excludes legislative authority in respect thereto. It alleges: "That the said bank examiners are threatening to interfere with the affairs of this bank and to exercise such powers as are provided for by said statute [of 1914] over this bank, and are threatening to [606] make such exami- While the bill proceeds upon the thenations and reports upon and about, ory that the bank's affairs are wholly exand to exercise all the other authori- empt from interference by legislative dities and powers provided for by such rection, the only past or immediately statute, over the affairs of your ora- probable wrongs [607] adequately comtor, said bank. And your orator pleads plained of are enforced contribution to hereby, and invokes for such, its con- expense of the banking department tract immunity from such supervision and threats by defendants to make and control, the said contract clause examinations and reports. And we of the Constitution of the United think it clear that no impairment of States, and claims its right exclusive- the corporate charter has or will rely to control and manage the affairs of its own bank." And further: "Your orator protests and shows that it was not subject to the provisions of said banking law, and by its said contract harter, the whole scheme so devised, as applied to your orator bank, was unconstitutional and void; and your orator shows that for such reason it was not subject to assessment devised and contrived only for the purpose of maintaining such bank department; and your orator was protected against the payment of such assessment, also, by the ALEX. J. GROESBECK et al., Defts. and said contract clause of the Constitution of the United States."

The prayer is

sult from reasonable examinations and reports by duly authorized officers and the small prescribed payments. It is unnecessary to consider other distinct provisions of the statute, and, of course, we intimate no opinion concerning them.

The Supreme Court of the state affirmed a decree of the Chancery Court, dismissing the bill upon demurrer, and its action must be affirmed.

Appts.,

V.

RAILWAY COMPANY.

(See S. C. Reporter's ed. 607–615.)

Appeal

moot case- - repeal of statute. 1. The repeal of a state statute fixing a maximum railway passenger rate at 2 cents per mile does not cause to become moot a suit to enjoin the enforcement of such act as being confiscatory, where, on continuation of a restraining order, the

for an injunction perpetually restraining DULUTH, SOUTH SHORE, & ATLANTIC defendants and their successors from examining or undertaking to enforce as against the complainant any provision and directors of banking corporations; fixing the qualifications and liability of persons, firms and corporations in the banking business; providing for the payment of deposits to minors and other persons under disability and on joint account; prohibiting banking except under the provisions of this act; providing for the liquidation of banks and the distribution of the assets thereof; providing for giving publicity to deposits more than five years old; and prescribing process of law generally-see notes to penalties for the breach of any of the pro- People v. O'Brien, 2 L.R.A. 255; Kuntz visions thereof, and to provide a system for guaranteeing deposits, and for other V. Sumption, 2 L.R.A. 655; Re Gannon, purposes, without expense to the state." 5 L.R.A. 359; Ulman v. Baltimore, 11 [Laws 1914, chap. 124.] L.R.A. 224; Gilman v. Tucker, 13 L.R.A.

Note.-As to what constitutes due

to say that the trial court erred in adopt-
ing the method there pursued.
[For other cases, see Appeal and Error, VIII.
1, 1, in Digest Sup. Ct. 1908.]

[No. 254.]

complaining railway company was required to issue receipts to passengers by which it agreed to refund, if the act should be held valid, the amount paid in excess of a 2-cent fare, and later was required to deposit, subject to order of the court, such amounts thereafter collected, the fund now on deposit exceeding $800,000, and the refund Argued October 15, 1919. Decided Novemcoupons being still outstanding, since, in order to determine the rights of coupon holders and to dispose of this fund, it is necessary to decide whether the act was, as respects this railroad, confiscatory. [For other cases, see Appeal and Error, VII.

i, 3, in Digest Sup. Ct. 1908.] Constitutional law due process of law - state regulation of railway rates confiscation.

2. Every part of the railway system over which a passenger is entitled by a state statute to ride for a fare of 2 cents per mile must, whether profitable or unprofitable, be included in the computation taken to determine whether the prescribed rate is confiscatory, at least in the absence of illegality or mismanagement in the acquisition or operation of the particular part of the system sought to be excluded from such computation, and it is immaterial that an extension of the railway company's service was furnished by acquiring traffic rights rather than by building an independent line. [For other cases, see Constitutional Law, 608628, in Digest Sup. Ct. 1908.] Constitutional law - due process of law -state regulation of railway rates confiscation special services. 3. The passenger service, including sleeping car, parlor car, and dining car service, should be treated as a whole in determining whether a statutory 2 cent per mile maximum passenger rate is confisca tory, notwithstanding the fact that a local statute permits railways to make special charges for these special services in addition to the regular passenger fares allowed by law.

[For other cases, see Constitutional Law, 608628, in Digest Sup. Ct. 1908.]

Appeal review of facts - confiscatory

railway rates — formula.

4. The question what formula for dividing charges and expenses common to railway freight and passenger services, and not capable of direct allocation, the trial court should adopt in determining whether a statutory maximum passenger rate is confiscatory, is at present one of fact, not of law, and the trial court's decision in the matter will not be disturbed by appeal, where the appellate court is unable clearly

304; Pearson v. Yewdall, 24 L. ed. U. S. 436; and Wilson v. North Carolina, 42 L. ed. U. S. 865.

As to reasonableness of state regulation of railway rates-see note to Chicago, M. & St. P. R. Co. v. Tompkins, 44 L. ed. U. S. 417.

ber 10, 1919.

APPEAL from the District Court of the

United States for the Eastern District of Michigan to review a decree which enjoined the enforcement of a state statute fixing maximum railway passenger rates. Affirmed.

The facts are stated in the opinion.

Messrs. Leland W. Carr and Roger I. Wykes argued the cause, and, with Mr. Alex. J. Groesbeck, Attorney General of Michigan, in propria persona, filed a brief for defendants and appellants:

For the purposes of this case the South Line should have been excluded in determining the value of plaintiff's property on the cost of reproduction, less depreciation, theory; and the expenses of maintaining and operating the same should likewise have been excluded from the total expense of maintenance and operation.

San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 443, 47 L. ed. 892, 895, 23 Sup. Ct. Rep. 571; Smyth v. Ames, 169 U. S. 466, 42 L. ed. 819, 18 Sup. Ct. Rep. 418; Covington & L. Turnp. Road Co. v. Sandford, 164 U. S. 578, 41 L. ed. 560, 17 Sup. Ct. Rep. 198.

The intrastate passenger traffic should not be charged in this case with the losses occurring on the Western Division, nor should such division be valued on the cost of reproduction, less depreciation, theory. Plaintiff should have been required to segregate revenues and expenses on such division.

Re Arkansas R. Rates, 168 Fed. 720; Southern P. Co. v. Bartine, 170 Fed. 725; Smyth v. Ames, 169 U. S. 466. 541. 42 L. ed. 819, 847, 18 Sup. Ct. Rep. 418; Reagan v. Farmers Loan & T. Co. 154 U. S. 412, 38 L. ed. 1028, 4 Inters. Com. Rep. 575, 14 Sup. Ct. Rep. 1060.

The expenses of the operation of the Turnp. Road Co. v. Croxton, 33 L.R.A. 177.

On elements entering into determination of reasonableness of railroad rates prescribed by the state for local traffic

-see notes to State ex rel. McCue v. Northern P. R. Co. 25 L.R.A. (N.S.) 1001, On legislative power to fix tolls, rates, and Pennsylvania R. Co. v. Philadelphia, and prices-see note to Winchester & L. | 15 L.R.A. (N.S.) 108.