DAYTON-GOOSE CREEK RAILWAY COMPANY v. UNITED STATES 263 U.S. 456 (1924)

A unanimous Supreme Court here sustained the constitutionality of the recapture provision of the esch-cummings transportation act of 1920. The Dayton-Goose Creek Railway earned a return exceeding six percent of its property value, prompting the Interstate Commerce Commission to ask what arrangements it had made to contribute to the fund for which the act had provided. The railroad then sought an injunction against enforcement of the act, alleging the provision's unconstitutionality. Sixteen railroads, including some of the most powerful of the day, filed amicus curiae briefs.

Chief Justice william howard taft asserted that Congress's power over interstate commerce was not limited to prescribing reasonable rates and voiding unjust ones. Its regulatory power was "intended … to foster, protect, and control the commerce with appropriate regard to the welfare of those who are immediately concerned, as well as the public at large, and to promote its growth and insure its safety." Because private railroads offered a public service, Congress might regulate them in order to assure performance of that function. After considering the necessity and justification for the recapture provisions, Taft concluded that the railroad's obligation to serve the public limits it to only "fair or reasonable profit." Reducing a carrier's income to what the Court deemed a fair return did not constitute a taking of property without compensation because the act made the carrier only a trustee of any "excess." The government was entitled to appropriate that amount for "public uses because the appropriation takes away nothing which equitably belongs either to the shipper or to the carrier."

David Gordon
(1986)