Turnpike Company Vs. the State

Turnpike Company v. The State

70 U.S. (3 Wall.) 210

ERROR TO THE COURT OF

APPEALS OF MARYLAND

SYLLABUS

1. If a state grant no exclusive privileges to one company which it has incorporated, it impairs no contract by incorporating a second one which itself largely manages and profits by to the injury of the first.

2. In such a case, it is no defense to a scire facias against the first for nonuser or abuser of its franchises that the state had incorporated the second, was in part managing it and largely profiting by it, and in consequence of all this that the revenues of the first company were so far lessened that it could observe its charter no better than it did.

3. If a state injure one incorporated company by the unlawful grant of a charter to another and rival one, the remedy of the first company is by proper proceedings to restrain the second from getting into operation, and not by neglecting its own duties.

In 1812, the State of Maryland incorporated a company to

Page 70 U. S. 211

build a turnpike road between Baltimore and Washington. The company by its charter had power to take tolls and was bound to erect bridges and keep them and the road in good repair. In regard to its privileges generally, there was nothing special about it.

In 1831, the same state granted a charter to a railroad company to make a railroad between the same cities, the line of which ran near to and parallel with the track of the turnpike.

The turnpike company not having kept its road and bridges in repair, while it yet demanded tolls, the legislature of the state, in 1860, directed their attorney general to issue a scire facias against it to forfeit its charter; which writ was issued accordingly.

It was set up as a defense to the sci. fa. that the state had, in disregard of the Constitution of the United States, passed laws "impairing the obligation of contracts" in that, with the grant of a charter to the turnpike company in force, it had incorporated a company to make a railroad right alongside of it, which second road had every year been transporting great numbers of persons and large amounts of property that, but for it, would have been carried on the turnpike, and had now by statute directed the sci. fa.; that the turnpike company being by the charter to the railroad corporation deprived of much of the income which but for this they would have received, it had become

"impracticable for them, with all the income that they received from such persons and property as pass upon the turnpike road, to maintain and keep it in any better order and repair than it was kept in."

The turnpike company further set up that the railroad had been made not only under the authority of the state, but to a considerable extent with the state's own money, the state in addition managing it largely and getting from it one-fifth of the whole amount received for the transportation of passengers.

The Court of Appeals of Maryland, where the case finally got, considered the defense insufficient, and gave judgment

Page 70 U. S. 212

of ouster of the franchise. The charter of the turnpike company was thus annulled. The case was now here on error. *

Page 70 U. S. 213

MR. JUSTICE NELSON delivered the opinion of the Court.

The difficulty of the argument in behalf of the turnpike company and which lies at the foundation of the defense is that there is no contract in the charter of the turnpike company that prohibited the legislature from authorizing the construction of the rival railroad. No exclusive privileges had been conferred upon it either in express terms or by necessary implication, and hence whatever may have been the general injurious effects and consequences to the company from the construction and operation of the rival road, they are simply misfortunes which may excite our sympathies but are not the subject of legal redress.

It might have been very proper for the state, when chartering the railroad, to have provided for compensation for the prospective loss to the turnpike company, as has frequently been done in other states under similar circumstances, but this was a question resting entirely with the legislature of the state, and their action is conclusive on the subject.

There is another answer to the defense in this case, even assuming that the charter of the turnpike company contained exclusive privileges that forbade the legislature of the state incorporating the railroad company.

Page 70 U. S. 214

The remedy was not in neglecting to repair the road and at the same time collect the tolls. It was in restraining, by the proper proceedings, the railroad company from constructing their road. The breach of the contract on the part of the state furnished no excuse for the turnpike company in disregarding their part of it which was a burden, to-wit, the repairs, while at the same time insisting upon the observance of the part beneficial, to-wit, the collection of the tolls.

Judgment affirmed.

* Under the 25th section, of course, of the Judiciary Act of 1789. See supra, p. 70 U. S. 57 .