In the Railway Commission Cases31 was involved the question as to the power of the States to bind themselves by charter contracts with reference to the control of the rates legally chargeable by public service corporations, and the circumstances under which they might be held so to have bound themselves. In these cases it was held that the grant of power by the State to directors of a railroad company to make by-laws, rules, and regulations for the management of its affairs did not exempt the company from subsequent statutory regulation of its business, and that the grant to the company of power "from time to time to fix, regulate, and receive the toll and charges" to be received by it for transportation, conferred only the power to fix reasonable charges, leaving the State free to declare what rates should be deemed reasonable. After stating that it was well settled that a State had the general power to limit the charges that might be exacted by railroad companies for the transportation of persons and property within its jurisdiction, the court say: "This power of regulation is a power of government, continuing in its nature, and if it can be bargained away at all, it can only be by words of positive grant or something which is in law equivalent. If there is any reasonable doubt it must be resolved in favor of the existence of the power."

With reference to the power granted to the company in its charter, "from time to time to fix, regulate and receive the toll and charges by them to be received for transportation," the court declare that this authority is necessarily qualified by the common law obligation that all rates shall be reasonable. " Power is granted to fix reasonable charges, but what shall be deemed reasonable in law is nowhere indicated. There is no rate specified nor any limit set. Nothing whatever is said of the way in which the question of reasonableness is to be settled. All that is left as it was. Consequently, all the power which the State had in the matter before the charter, it retained afterwards. The power to charge being coupled with the condition that the charge shall be reasonable, the State is left free to act on the subject of reasonableness within the limits of its general authority as circumstances may require. The right to fix reasonable charges has been granted, but the power of declaring what shall be deemed reasonable has not been surrendered. If there had been any intention of surrendering this power it would have been easy to say so. Not having said so, the conclusive presumption is there was no such intention." 32

30 134 U. S. 418; 10 Sup. Ct. Rep. 462: 33 L. ed. 970. 31 116 U. S. 307; 6 Sup. Ct Rep. 334; 29 L. ed. 636.