rnconstitutional as construed by the state court in its application to a long and short haul, where the short haul was wholly within 'he state and the long haul was partly within and partly without the state. The court said that the direct effect of the statute so construed was to regulate the interstate rate, for it was imposible for the carrier to do any interstate business at the local rate, and so it must give up its interstate business, or else reduce the 'ocal rate in proportion. The result therefore was a direct interference with commerce between the states, carried on though it may be by a single company.

The fact which vitiated the provision, the court said, was that it compelled the carrier to regulate, adjust or fix his interstate rates within the state, thus enabling the state to directly affect, and in that way to regulate to some extent, the interstate commerce of the carrier, which power of regulation the constitution of the United States gives to the federal congress.

§ 110. Competitive effect of intrastate rates upon interstate rates. It is the effect and not the terms or declared purpose of state regulation of intrastate rates, that determines whether or not such state imposed rates so substantially burden interstate commerce as to violate the commerce clause of the constitution. While the reduction of state rates of carriers, doing both an interstate and an intrastate business with the same tracks and equipment does not as a matter of law interfere with interstate rates,1 it has been held in the circuit court in Minnesota that it may so interfere as a matter of fact under certain conditions of state and interstate business. In the Minnesota rate case 2 the reduction of

1 Brewer, J., said, in the Nebraska rate case, in circuit court, 64 Fed. Rep. 172 (1894): "The statute of the state does not work a change in interstate rates any more than an act of congress, prescribing interstate rates, would work a change in local rates. Railroads cannot plead their own convenience, or the effect of competition between themselves and other companies in restraint of the otherwise undeniable power of the state." See also to the same

effect McPherson, J., in Missouri rate case, 168 Fed. Rep. 1. c. 343 (1909), pending on appeal in su preme court (1911). Woodside v. Tonopah R. R. Co., 184 Fed. Rep. 358 (1911) Nevada.

2 Sanborn, J. in Shepard V. Northern Pacific R. Co., 184 Fed. Rep. 765 (1911). The question of the effect of intrastate rate reduction upon interstate rates through necessary effect of competitive influence, has not been directly passed upon by the su

the state imposed local rates was found to compel a reduction of interstate rates to cities in adjoining states, located on the state boundaries, and thus was held directly to burden interstate traffic. The state rates were therefore condemned, irrespective of the further finding that they were confiscatory and violative of the fourteenth amendment.

1

On the other hand a different view was taken in the circuit court of Kentucky where there were similar conditions of contiguous cities in bordering states, and the court held that the fact that a railroad company in making out its schedule of rates filed with the Interstate Commerce Commission had taken the sum of its local rates in each state did not remove such local rates from the jurisdiction of the state for the purpose of regulation, and that the fact that a reduction of local rates by the state may incidentally place the company under the business necessity of reducing its interstate rates affect the legality of such reduction; the court said that the logic of the company's contention would release its local rates from governmental regulation; as the United States could not fix the local rates, because

preme court; but it was said in earlier proceeding in the Minnesota case, ex parte Young, 209 U. S. 1. c. 145, that "the question was not at any rate frivolous."

See also Eubank case supra.

In the Arkansas rate cases, 187 Fed. Rep. p. 290 (May, 1911), the court, Trieber, J., held that in that case the facts which controlled the decision in the Minnesota case did not exist, and, therefore, it was ruled that the incidental effect of the state rates upon interstate rates was not sufficient to warrant a finding against the rates on that ground.

In Oregon R. & Nav. Co. v. Campbell, D. of Oregon, 173 Fed. Rep. 957 (1909), in sustaining a demurrer to a bill enjoining the state board of railroad commis sioners for putting in operation

the state schedule of rates and denying the temporary injunction, the court said that the fact that such an order fixing rates and limited by its terms to intrastate shipments incidentally induce a change in interstate rates did not render it nor the statute unconstitutional as a regulation of interstate commerce. Same court in So. Pac. Co., et al, v. Campbell, 189 Fed. 696 (1911).

1 L. & N. R. R. Co. v. Siler, 186 Fed. 176 (1911), C. C. E. D. of

Ky., per curiam. Opinion of

three judges sitting (under act of June 18, 1910) (infra, § 119) on an application for temporary injunction. This case and the Minnesota and the Arkansas cases supra, have been appealed to and are now (Oct. 1911), pending in the supreme court.

they are local and the state could not, because it would thereby cast a burden on interstate commerce.

It is difficult to see how any reasonable, i. e. non-confiscatory regulation of intrastate rates can be held, on account of business or competitive reasons, whatever the practical embarrassment to the railroad, a direct burden upon interstate commerce, and therefore unlawful, consistently with the limitation of the federal constitutional power of regulation, the express declarations of the supreme court in repeated cases, or with the express reservation of section 1 of the Interstate Commerce Act, that the provisions of the act shall not apply to the transportation of persons or property wholly within a state.

§ 111 (94). The fourteenth amendment.-Prior to the adop tion of the fourteenth amendment in 1868 there was no appeal to the federal courts against any violation by state power of due process of law or of the equal protection of the laws, which did not involve an interference with national authority or a violation of some provision of the federal constitution. The federal courts administered the state laws and followed, as they still do, the decision given by the state courts as to the construction of the state statutes.

The fourteenth amendment provided in its first clause, that no state should deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws. Corporations are persons under this amendment and are therefore entitled to due process of law and to the equal protection of the laws,' and a state has no more power to deny due process of law or the equal protection of the laws to a corporation than it has to individual citizens.2

This far-reaching change in our judicial system, whereunder the fundamental rights of property are protected by the federal power against state invasion, was adopted shortly before the judicial declaration of the freedom of interstate commerce against state interference opened the way for the direct exercise of the federal regulating power.

1 Santa Clara County v. Southern Pacific R. Co., 118 U. S. 394 (1886), 30 L. Ed. 118.

2 Railroad Co. v. Ellis, 165 U. S. 1. c. 154 (1897), 41 L. Ed. 667.

§ 112 (95). Federal review of state regulation of railroads.— The comprehensive power of the state in the regulation of the intrastate traffic of carriers, whether exercised directly under legislative act of the state or through a commission of the state, is subject to the jurisdiction of the courts of the United States under the provisions of the fourteenth amendment guaranteeing due process of law and the equal protection of the laws to all persons against any invasion by state authority.1

The jurisdiction of the courts of the United States in such cases does not depend upon the unconstitutionality of the state statute, as a valid law may be wrongfully administered by the officers of the state. If the statute of the state, as construed by the highest court of the state having jurisdiction-and this construction by the state courts is conclusive-denies due process of law or equal protection of the laws, the federal jurisdiction under the fourteenth amendment may be invoked."

While the construction by the state court of its own constitution or statute is accepted as conclusive by the federal court as a local question, in the absence of any such construction by the state court the federal court must construe the state law for itself. Thus where the validity of an order of the state commission was assailed not only on distinctly federal grounds under the fourteenth amendment, but also under the further ground that the commission was not authorized under the state statute to make the order complained of, the supreme court held that the circuit court obtained jurisdiction over the case by virtue of the federal questions; and as the court usually decided a case without reference to questions arising under the federal constitution, where it could be so decided, and in the absence of a definite construction of the statute by the state court, the supreme court concluded that the statute did not grant the com

1 Chicago, Milwaukee & St. Paul R. Co. v. Becker, 35 Fed. 883 (1888); Reagan v. Farmers Loan & Trust Co., supra; So. Ry. Co. v. Greensboro Ice & Coal Co., 134 Fed. Rep. 82 (1904).

2 Reagan v. Farmers Loan & Trust Co., supra; Symthe V. Ames, supra; Barrow S. S. Co. v. v. Kane, 170 U. S. 111, 42 L. Ed.

964 (1898). As to the powers conferred upon the commission by the state, the supreme court will follow the ruling of the state court; if the question has not been passed upon by the state court, the supreme court will decide it for itself. Siler v. L. & N. R. R., 213 U. S. 175, 53 L. Ed. 753 (1909).

mission the power to make a general schedule of rates and affirmed the decree against the enforcement of the commission's order on that ground.1

A state statute providing for the establishment of railroad rates, without giving the corporation an opportunity to be heard, which fixes penalties for disobedience of its provisions by fine so enormous and imprisonment so severe as to intimidate the corporations and their officers from resorting to the courts to test the validity of the rates, is unconstitutional as depriving the corporation of the equal protection of the laws.2

§ 113. The federal jurisdiction must be invoked on substantial grounds.-The circuit court of the United States has jurisdiction irrespective of diverse citizenship in a case when the constitution of law of a state is claimed to violate the constitution of the United States, but the claim must be real and substantial. The state may act through different agencies, through its legislative, executive or judicial authority, and a municipal corporation may be such an agency, when it acts as a political subdivision of the state. A municipal ordinance passed pursuant to the authority of the state, abridging the privileges or immunities of the citizen or depriving a person or a corporation of property without due process of law, would be an act of the state prohibited by the constitution. When the federal jurisdiction is therefore invoked on the ground that the suit arises under the constitution and laws of the United States, it must appear that the suit really and substantially involves such a controversy. A mere claim in words is not enough. Thus if it appears that the real controversy between the parties is whether a municipal ordinance was enacted in conformity with the state constitution, the federal jurisdiction cannot be sustained. Under this principle the circuit court of appeals of the ninth circuit dismissed a bill

1 Siler v. L. & N. R. Co., supra. 2 Ex parte Young, supra.

This original jurisdiction of the circuit court is vested in the district court of the United States under the revised judiciary act taking effect Jan. 1, 1912.

4 Western Union Tel. Co. v. Ann Arbor R. R. Co., 178 U. S. 239, 44 L. Ed. 1032 (1900); City of

6

Memphis v. Cumberland Tel. & Tel. Co., 218 U. S. 624, 54 L. Ed. 1185 (1910).

5 Hamilton Gas Light Co. v. Hamilton City, 146 U. S. 258, 36 L. Ed. 963 (1892); Barney v. City of New York, 193 U. S. 430, 48 L. Ed. 737 (1904).

Seattle Electric v. Seattle R. & S. Co., 185 Fed. 365 (1911).