CHAPTER XIX. RATE MAKING BASED ON PUBLIC INTEREST IN PROPERTY § 98. Preliminary remarks. 99. Property affected with a public interest. 100. Enumeration in Funn case of business affected with public interest. 101. Virtual and legal monopoly same in effect. § 98. Preliminary Remarks.-In Munn v. Illinois1 the question turned principally upon the validity of a state statute imposing a maximum charge for the storage and handling of grain in what was declared by statute to be a public warehouse. In arriving at the conclusion that this statute, insofar as it provided for reasonable compensation for the use of private property, was not opposed to the due process of law clause of our constitution, the court spoke of the police power of the state as follows: "When one becomes a member of society, he necessarily parts with some rights or privileges, which as an individual not affected by his relations to others, he might retain." But it was said that: "This does not confer power upon the whole people to control rights which are purely and exclusively private but it does authorize the establishment of laws requiring each citizen to so conduct himself and so use his own property, as not unnecessarily to injure another. This is the very essence of government, and has found expression in the maxim, sic utere tuo ut alienum non laedas. From this source came the police powers. Under these powers the government regulates the conduct of its citizens one to 194 U. S. 113, 24 L. Ed. 77. 2 wards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good." By the German Alliance Insurance case, as seen, supra, this power under enlarged definitions as to its reach was declared to subject to a rate making statute a very different class of property than that considered in the Munn case. In that case the police power was declared not "to control rights which are purely and exclusively private." The question was waived, whether a warehouse business, though by statute declared to be a public business, really was so or not. If it was not, a statutory declaration, or one made by virtue of a state constitution, plainly could not take it from under the protection of the Federal Constitution. If this were not so, nothing would be easier than to avoid its guarantees. By going further, however, in the purpose of showing that such a business was not protected, as to rate making by public authority, there is a very strong implication that of itself this business was so "exclusively private" that the police power could not justify regulation of its earning power, in other words, limiting profits from the use of its property. In going further the court stated reasons why such a business could have maximum rates imposed on the business of the particular warehouse for the use of its property. 99. Property Affected With a Public Interest.The Chief Justice, delivering the opinion in the Munn case, premised by declaring that: "Looking to the common law, from whence came the right (under Four 2 German Alliance Ins. Co. v. Lewis, 233 U. S. 389, 34 Sup. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915 C 1189. Chapter XVIII ante. teenth Amendment) which the constitution protects, we find that when private property is 'affected with a public interest, it ceases to be juris privati only.' It often has been said that there is no common law of the United States, but the Fourteenth Amendment is a limitation upon the states, and the states having a common law for their citizens, their rights are governed thereby, in the absence of statutes changing the common law. Proceeding, the court referred to Lord Chief Justice Hale as having announced more than two hundred years ago the above principle and its having been "accepted without objection as an essential element in the law of property ever since." Therefore, "property does become clothed with a public interest when used in a manner to make it of public consequence and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest he, in effect, grants to the public an interest in that use and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but, so long as he maintains the use, he must submit to the control." The principle is, as seen, very guardedly stated. Thus, though the property becomes so "clothed" it must be so as to make its use "of public consequence and affect the community at large." Why is it not true that, if property is "clothed with a public interest" it necessarily is used, when used at all, so as to "make it of public consequence and affect the community at large?" There would seem to be no question of degree or manner of use in such a case. The next sentence appears to admit that this is so, and this is followed by calling devotion to "a use in which the public has an interest" a "grant" of property, all of which is controlled "to the extent" of the grant, that is to say, as to all of the property granted. The language in the last two sentences of the excerpt is very comprehensive, and as the statement of a principle it appears to have been accepted in American law, as said above, in regard to its original enunciation by Lord Hale "without objection as an essential element in the law of property (devoted to a public use) ever since." Possibly the best method of showing this agreement is to cite particular businesses in which the principle has been applied, particularly in state cases. It is to be remembered that this principle is one rather of state than national law, as the Munn case impliedly admits by saying that it looks to the common law to ascertain rights under the Fourteenth Amendment; that is the rights of citizens of the states and the right of the states as to the property affected with a public interest. The opinion, therefore, while conclusive so far as interpretation of that amendment is concerned, is not binding on states as to guaranties under their own constitutions, nor as to whether this part of the common law was as stated, nor as to its being a part of the inheritance from our English ancestors. Neither is it binding on states as to the classes of business enumerated in Munn v. Illinois, nor as to those to which any such principle might be claimed to extend. 100. Enumeration in Munn Case of Businesses Affected With Public Interest.-It is not stated in the Munn case, that prior to 1810 it ever had been held that a warehouse came under the principle formulated by Lord Hale. Our Supreme Court merely approved the reasoning of the King's bench that it did. In fortification of this view it quoted Lord Hale in regard to "a common ferry," as to wharves, wharfingers, cranage and pesage. It spoke of common carriers and the regulation of their charges as having been made in England as long ago as the third year of William and Mary, the preamble to the statute in that year referring to their "excessive rates to the great injury of the trade," and making them subject to regulation. There was then instanced in our own history the fact that the principle of a public interest in business had been recognized in regulating "the weight and price of bread," settling the rates of innkeepers, "mills, ferries, bridges, turnpike roads and other kindred subjects." The general right to regulate at all was deduced from "the common law rule which requires the charge to be reasonable," which "is itself a regulation as to price." This is the rule stated by Lord Hale in declaring that when a wharf and crane and other conveniences cease to be juris privati only, "the duties must be reasonable and moderate, though settled by the King's license or charter." The same was said as to the rights of "a common ferry for all passengers" under prescriptive right or charter. The establishment of a common ferry was said to "tend to a common charge, and is become a thing of public interest and use," and "ought to be under a public regulation." These words import, in the connection in which they are used, a public regulation of charges. 4 Allnut v. Inglis, 12 East. 527. 5 Mobile v. Yuille, 3 Ala. 140. |