lowing enumerations: "(1) To railroads and street railroads lying within this state, and to the person or corporation owning, leasing, operating, or controlling the same. (3) To such portion of the lines

service commission of this state, acting un- |§ 3 of the act, and, so far as this case is der the provisions of § 28 of the public concerned, must come under one of the folservice act of 1910, filed a bill in the circuit court No. 2 of Baltimore city, praying for an injunction restraining the railroad company from issuing the proposed bonds, or any of them, "until such time as there shall have been secured from the public of any other railroad as lie within this service commission an order authorizing such issue."

state, and to the person or corporation owning, leasing, operating, and controlling the Two days after the bill was filed, the rail- same, so far as concerns the construction, road company answered fully, setting up maintenance, equipment, terminal facilities, the various provisions of its charter, deny- and local transportation facilities, and local ing that it was a corporation subject to transportation of persons or property withthe provisions of the public service com- in the state. (4) To any common carrier

mission act, setting out the act of the leg-operating or doing business within the islature of Virginia of 1827, confirming the state." Through all of these runs the same act of incorporation passed by the general fundamental idea that the power and conassembly of this state, averring that it trol of the commission exists as to matters. owned and operated 281 miles of railroad of service, transportation, and rates within this state, 996 in the state of West Vir- in the state, and full power over that is ginia, and through the other lines form- expressly given to the commission. This ing its system and extending through a num-necessarily includes many matters which ber of states, a total mileage of 4,450. The are not the subject-matter of an exercise answer further sets out that the issue of of the police power. Thus, questions of the bonds was necessary for the acquisition tariffs or fares, or the adequacy or inadeof property, the construction, completion, quacy of service, or facilities with regard extension, improvement, and maintenance to business conducted wholly within the of its facilities and its service, and the dis-state, may properly come within the jurischarge and lawful refunding of its obliga- | diction of the commission. In this connections; that the balance of the moneys raised [tion the three opinions by the late Chief by the said issue of bonds, after the refund- Justice Waite in the cases of Chicago, B. & ing of such obligations as were to be re- Q. R. Co. v. Iowa (Chicago, B. & Q. R. Co. funded, was to be expended largely in West v. Cutts) 94 U. S. 155, 24 L. ed. 94; Peik Virginia. This answer was sworn to, and v. Chicago & N. W. R. Co. 94 U. S. 164, the case was heard in the first instance upon 24 L. ed. 97; and Chicago, M. & St. P. R. the bill, answer, and exhibits. The case thus presents two subjects for consideration: First, whether the Baltimore & Ohio Railroad Company is subject in any respect to the jurisdiction of the public service commission of Maryland; and, secondly, if it is, how far or to what extent does that jurisdiction extend?

Co. v. Ackley, 94 U. S. 179, 24 L. ed. 99, are directly in point. In the first case the Chicago, Burlington, & Quincy Railroad was operating as lessee the Missouri River Railroad Company, which latter was operated solely within the state of Iowa. The legis lature of Iowa passed an act establishing a maximum rate for railroads in that state. The decision held that the statute was applicable to that portion of the Chicago, Burlington, & Quincy Railroad located in Iowa, upon the principle enunciated in Munn v.. Illinois, 94 U. S. 113, 24 L. ed. 77, which dealt with the rates to be charged for storage of grain in a warehouse situate in Illinois. And it is the same doctrine which is involved in the two other cases cited. It. therefore follows that the Baltimore & Ohio Railroad Company is subject to the jurisdic

It is not attempted to be denied that, both before and after the passage of the public service commission act in 1910, the company was subject to the police power of the state. This might be, as was the case prior to 1910, exercised directly by the state, and, in so far as the exercise of those powers was by the act conferred upon the public service commission, might be exercised by it. Many of the cases cited in the brief filed on behalf of the commission, and especially those from Massachusetts, illustion of the public service commission of trate this aspect of the case.

this state, both in respect to those matters which, coming under the police power of the state, have been confided to the commission, and to business conducted wholly within this state.

In addition to this power derived from the police power of the state, the commission has conferred on it, in the interest of the general public, certain other powers in connection with the conduct of public The present bill of complaint claims for service corporations doing business within the commission a far wider jurisdiction. These will be found collected in By reason of the location of the home office

the state.

a

of the company in Maryland, it claims to contracts as it may deem of importance in possess a right to control the expenditure enabling it to reach a determination. Such of moneys, the creating and issue of evi- common carrier may issue notes for proper dences of indebtedness, the prices at which corporate purposes, and not in violation of such bonds or debentures shall be mar- any provision of this or any other act, par keted, the necessity and expediency of the able at periods of not more than twelve creation of this indebtedness; in general, months, without such consent; but no suel to direct the entire physical and fiscal policy notes shall, in whole or in part, directly of one of the great common carriers of this or indirectly, be refunded by any issue of country over its entire system of 4,450 miles stock or bonds, or by any evidence of in of railroad, of which but 281 are within the debtedness running for more than twelve state and 4,169 located without the state, months, without the consent of the commisand one of which other states (West Vir- sion." This section is almost a verbatim ginia) might with equal propriety, by rea- copy of § 55 of the similar act passed in son of the confirmatory act of Virginia of New York to regulate public service cor1827 and the far greater amount of mileage porations (Consol. Jaws 1910, chap. 48. in that state, make a similar claim. The It was given its fullest effect and scope in statement of the claim, taken with the the case of the People ex rel. Binghamten terms of the act of 1910, would seem to af- Light, Heat, & P. Co. v. Stevens, 203 N. ford a conclusive answer to the proposition. Y. 7, 96 N. E. 114, where all of the prop When the act is carefully limited by its erty to be affected by the proposed bond isvery terms to operations within this state, sue, and the expenditure of the money so any line of reasoning which aims to extend raised, and the conduct of the business of it beyond is alike in flat contradiction of the corporation, were all within the state the act and entirely beyond the power of of New York; yet even there it was said the state to adopt. The commission makes "The discretion of a public service commisthis extraordinary claim of power under sion cannot override the discretion of the the following provisions of § 27 of the act: officers of a corporation in the management "§ 27. And be it further enacted, that of its affairs, or the provisions of the statcommon carrier, railroad corporation, ute in which securities are perstreet railroad corporation, or other corpo-mitted to be issued." ration subject to the provisions of this act, The evils which this section was intended organized or existing, or hereafter incor- to correct are perfectly well recognized and porated, under or by virtue of the laws of understood. That issues of stocks and bonds the state of Maryland, may issue stocks, have been made fraudulently and palmed bonds, notes, or other evidence of indebted-off on a credulous public to their ultimate ness, payable at periods of more than twelve serious loss is matter of common knowledge. months after the date thereof, when neces- Facts in relation to such issues, especially sary for the acquisition of property, the with regard to local public utilities, have construction, completion, extension, or im- been difficult, if not impossible, to obtain. provement of its facilities, or for the im- leaving it to the stimulated imagination of provement or maintenance of its some broker or syndicate who, actuated by service, or the discharge or lawful refunding a heavy commission to be realized by ere of its obligations: Provided, and not other-ating a market until such stock or bonds wise, that there shall have been secured could be unloaded, have reaped a reward in from the commission an order authorizing dollars and cents at the cost of those who such issue, and the amount thereof, and were induced to give full faith and credit stating that, in the opinion of the com- to their representations. The legislatures mission, the use of the capital to be secured of many states have therefore, through the by the issue of such stocks, bonds, or other media of public service commissions, seen evidence of indebtedness is reasonably re- fit to establish a quasi guardianship over quired for the said purposes of the comprospective investors. It is, of course, true mon carrier, railroad corporation, street that in such a condition many legitimate railroad corporation, or such corporations; enterprises should come under the same sort but this provision shall not apply to any of suspicion which attaches to the more lawful issue of stock, to the lawful execu-hazardous schemes devised and carried on tion and delivery of any mortgage, or to for the improper enrichment of a few inthe lawful issue of bonds thereunder, be- dividuals. As a check upon such wild fore the time when this act becomes a law. financing it is entirely proper, even upon For the purpose of enabling it to determine the basis of the exercise of the police power, whether it should issue such an order the to require all corporations conducting pubcommission shall make such inquiry or in-lic utilities to lay before the local public vestigation, hold such hearings, and examine service commission the facts relating to such witnesses, books, papers, documents, or any such issue of stocks and bonds or de

bentures or certificates of indebtedness, thus the phraseology of the statute why the placing such facts where they will be read-determination of the fiscal policy of the ily obtainable by anyone who has an interest railroad company should be wrenched away therein other than mere idle curiosity. Such from the officers of the company in whom statements as indicated in the acts passed it was vested by the charter, and confided should include the amount of the issue, in to such a body as the public service commisa general way the purposes for which it is sion. desired to be made, and, where the enterprice is one to be conducted wholly within a single state, it may well be, as the decisions seem to indicate, that the commission may sanction or disapprove of the proposition.

The case of People ex rel. Delaware & II. Co. v. Stevens, 197 N. Y. 1, 90 N. E. 60, presents many points of similarity to the questions now under consideration, and in some of its aspects a far stronger case to support the jurisdiction of the commission. Is now the case the same when we come In that case it was proposed to issue bonds. to deal with an interstate carrier? It may, of a railroad company for the purpose of as laid down by Chief Justice Waite, be completion of the purchase of an electric made subject to the control of each state as line and of a tract of coal land, but the to matters affecting the operations of the properties thus to be purchased were not company in such state, but, beyond that, to be included in the mortgage about to be state legislation is powerless without strik- given to secure the proposed bond issue. ing at the very fundamentals of rights as The public service commissioners of New recognized in our government. So far as York had refused to sanction the issue, but the issue of securities is concerned, the upon appeal the rule to control in such state may, by virtue of its police power, cases was laid down as follows: "The pararequire such applications, reports, and mount purpose of the enactment of the statements to be filed as have a tendency public service commissions law was the to show whether the proposed issues are protection and enforcement of the rights of bona fide and for value; but the determina- the public. . . For a generation or tion of the aggregate capitalization or more the public has been frequently imposed bonded indebtedness is a power which was upon by the issues of stocks and bonds of in terms conferred on the Baltimore & Ohio public service corporations for improper Railroad by its charter (Acts 1826, chap. purposes, without actual consideration 123), § 13, and the act of 1845 (Acts 1845, therefor, by company officers seeking to enchap. 313), and which the state has not rich themselves at the expense of innocent the power to detract from or annul. The and confiding investors. One of the legislarules for our guidance in thus treating the tive purposes in the enactment of this statcharter are fully set forth in Baltimore v. ute was to correct this evil by enabling the Baltimore & O. R. Co. 6 Gill, 297, 48 Am. commission to prevent the issue of sucia Dec. 531, and Baltimore v. Baltimore & O. stock and bonds, if, upon an investigation R. Co. 21 Md. 50. For acts fraudulent in of the facts, it is found that they were not. their nature, the state may intervene to for the purposes of the corporation enumerthe same extent and no further. In this ated by the statute and reasonably required case there is no pretense that the company therefor. We do not think the legislation either perpetrated or contemplated the com- alluded to was designed to make the com-mission of a fraud. The answer of the commissioners the financial managers of the pany distinctly alleges the purposes for corporation, or that it empowered them to which the proposed issue was intended, and substitute their judgment for that of the they are only such as are included as proper board of directors or stockholders of the purposes by the act. These come mainly corporation as to the wisdom of a transacunder two heads: The refunding of out- tion, but that it was designed to make the standing obligations of the company, or the commissioners the guardians of the public maintenance, extension, or improvement of by enabling them to prevent the issue of its facilities or terminals located for the stock and bonds for other than the statumost part in other states. So far as the tory purposes. . . . If . . . the purfunds to be raised by the proposed bond pose and intent of the statute" was to subissue are to be applied to the refunding of stitute the commissioners for the directors existing indebtedness now due or about to as financial managers, "a doubt might arise mature, the question of its extinguishment with reference to its constitutionality; for by payment or its extension by refunding ordinarily the ownership of property caris, in the absence of fraud, a matter calling ries with it the right of occupancy and peculiarly for the exercise of the discretion management; and, should a statute deprive of the directors. The bill of complaint the owner of the right to manage, it would, neither alleges nor suggests any taint of under ordinary circumstances, undermine fraud or any equitable ground other than his right to protect and make his property.

remunerative. Lord v. Equitable Life As-making power may do, the extent of what sur. Soc. 194 N. Y. 212, 22 L.R.A. (N.S.) it can do, is to say that the public service 420, 87 N. E. 443. It was there-commission shall have presented to it the fore evidently the legislative intent in the price at which bonds about to be issued enactment of this provision that the com- have been agreed to be disposed of, or have missioners should have supervision over been disposed of, so that the investing pubthe issuing of long-time bonds to the extent lic may know the value that has gone into of determining whether they were issued the company for the furtherance of its under and in conformity with the provisions operations, and that the bonds which they of the statute for the purposes mentioned are being asked to purchase represent a therein, or whether they were issued for bona fide, honest transaction in which the the discharge of the actual, and not the company has received value instead of a fictitious, debts of the company, or whether doubtful, diluted issue not created and put they were issued for the refunding of its forth in good faith. actual obligations, and not for the inflation of its stocks or bonds. Beyond this it appears to us that the power of the com- Commerce Commission will be so broadened missioners does not extend."

It may well be that the time will come when the jurisdiction of the Interstate

as to confer upon it a power to regulate It appears from the answer in the present in some measure the fiscal management of case, which is supported by affidavit, that the great interstate carriers of this counsome or a considerable portion of the mon- try, and enable them to prevent in the fueys now to be raised are to be expended ture some of the ill-advised and unfortunate beyond the limits of the state of Maryland policies of the past. But the fact that in the acquisition, extension, improvement, such a power has not yet been conferred or maintenance of the facilities or terminals cannot authorize a state to grasp a jurisof the railroad. Manifestly the public serv-diction it was never intended it should exerice commission of this state is not and cise. As was well said in People ex rel. could not be invested by the legislature of New York, N. H. & H. R. Co. v. Willcox, this state with any supervisory powers over 200 N. Y. 431, 94 N. E. 215, in speaking the expenditure of moneys in other states, generally of the power of public service nor the apportionment of the expenditure commissions: "The commissions were given of its moneys as between different states, extensive powers, but they should not be nor could it pass upon to approve or con- extended by implication beyond what may demn the wisdom or unwisdom of construc- be necessary for their just and reasonable tion work to be performed in Virginia, execution. They are not without limits. West Virginia, Ohio, Indiana, Illinois, Mis- when directed against the management or souri, Delaware, and other states. These the operations of railroads, and the comare questions upon which the most experi- missions cannot enforce a provision of law. enced engineers frequently differ,-honestly unless the authority to do so can be found differ in their judgment. The final decision in the statute." of matters of this nature must rest with By the decree of the circuit court No. 2. the officers and directors of the corporation. from which the appeal in the present case Nor is there any warrant to be found in the was taken, it was provided that the railact for the maintenance in other states of road company should file with the public a corps of engineers and inspectors of the service commission "an application or republic service commission of Maryland, as-port stating fully the facts in relation to suming, ex gratia, that the other states the proposed issues of bonds and stock would permit it.

mentioned in the proceedings, and the purWhat has been said already applies equal- poses of the same, together with such other ly well to the increase of capital stock or facts as the commission may require, so as the convertibility of bonds into stock upon to enable the commission to know or ascer stipulated terms and conditions and need tain whether the said issue of bonds and not be further discussed. The same gen-stock are or are not made in accordance eral principles apply to the price at which with § 27 of the public service commission the securities are to be marketed. The law as interpreted in said opinion herein." abundance or scarcity of money in the great The form was somewhat unfortunate, for financial centers, a prevailing public senti- the reason that it was apparently the pur ment as to business conditions, act closely pose thereby to incorporate some portion akin to the law of supply and demand in or portions of the opinion in the decree, and regulating the rate at which a large loan yet what portions were not definitely incan be effected. Many elements enter into dicated. For that reason, in the per curiam such a matter, of fluctuating importance at opinion heretofore filed [— Md. —, 88 Atl. different times. It is a condition beyond [347] it was said: "It is proper to require the control of legislation. What the law-'the Baltimore & Ohio Railroad Company

OKLAHOMA CRIMINAL COURT OF supported by other evidence, and the ques

tion whether or not the party charged has purged himself of the contempt is for the determination of the court, upon the consideration of all the evidence adduced for and against him; and if, upon such hearing, the court is satisfied that it is within the power of the contemner to comply with its order, the court should enforce the order

(8 Okla Crim. Rep. 639, 129 Pac. 1110.) by appropriate punishment.

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