common carriers to regulate them was vested in the city whose ordinance was in question, it was upheld. § 115. Summary.-It seems evident that the rule of legislative power, either acting directly or mediately to fix rates through boards, commissions or inferior courts, has been practiced in this country from the earliest days, where a property or business was of a nature for this power to be exercised. It would appear altogether too late now to make objection thereto. It forms and has formed a part of our domestic policy, and anyone coming into a situation where the right to such exercise might be claimed, could be judicially noticed as acting or investing, subject to such powers, whether there were clear right back of such exercise or not. The right has, so to speak, been woven into our system, as we inherited that from our common law origin. Its adoption to our new conditions has passed beyond theory and has become a part of our legislative and practical experience. As new things arise out of the nature of the old in public character or the use of public property, we still see in abundant legislation our course running on the ancient lines.

§ 116.

117.

CHAPTER XXIV.

MAXIMUM RATES MUST BE REASONABLE RATES.

Rule of reasonableness in fixing rates.

Extent of regulation of business devoted to public use. 118. Extent of regulation in other than railroad cases. Regulation of business taking on public use.

119.

120. Imposing excessive penalties unconstitutional.

§ 116. Rule of Reasonableness in Fixing Rates.— The reasoning in Munn v. Illinois does not appear at all to touch upon the question of the right to regulate being referable to the police power of the state. It is significant, too, that the right of the legislature to regulate is predicated upon an immemorial practice "in countries where the common law prevails." But, arguendo, the opinion speaks of the power to regulate the weight and price of bread, the licensing of tavernkeepers and "the regulation of mills, ferries, bridges, turnpike roads and other kindred subjects coming under this practice." It is not very clear how a baker, a tavern-keeper or a mill owner departs in any way from the exercise of a lawful trade or calling or that he devotes his property to a use that makes it cease to be juris privati only. It does not seem to "fall out," as Sir Matthew Hale says as to a newly and only erected wharf in a port, that a newly and only erected bake shop or tavern or mill in a town or county should be deemed to be juris privati only. The new wharf is connected with property in which there is common right, but the baker, the tavern-keeper and the mill owner do not use any such property. If these persons may be classed with a wharfinger, why might rot the only vendor of merchandise in a town or the

only physician, or blacksmith or any other person pursuing a vocation or trade of reasonable necessity in a community? The power to regulate them would seem to be referable to the police power of the state. The rule of reasonableness, therefore, as applied to regulation of property, which has ceased to be juris privati, may not be a rule of limitation on the legislature in regulation under the police power. Here again, however, we may have to distinguish as to the character of the regulation. If regulation under the police power is of rates or charges, as such, it may be considered to concede to a lawful calling the right to earn fair compensation for labor and property employed therein. The outstanding fact, however, in the Munn case, is that from devotion to a public use property is clothed with a public interest or trust, and this clothing subjects it to regulation.

It is readily seen how a ferry, a bridge, a wharf and the business of a common carrier are clothed with a public interest. And so where a charter or franchise is conferred or where the right of eminent domain is exercised. What, however, is necessary of property of common right as for a baker or a tavern-keeper or a miller to use or acquire for his business? And might it be claimed that either subserved a public purpose, so that a statute could authorize him to take the property of another in invitum by the power of condemnation? In view, however, of what is said ante1 in discussion of German Alliance Ins. Co. v. Lewis, supra, this question is asked somewhat hesitantly. But that case, at all events, declares that po

1 Ch. 18.

2

2 233 U. S. 389, 34 Sup. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915 C 1189.

lice power, as well as clothing a business with a public interest, is a secure basis for the regulation of its rates. Admitting that the rule of reasonableness is applicable in the regulation of the latter, is it in the former and is the limitation the same in both?

§ 117. Extent of Regulation of Business Devoted to Public Use. While we get from the immemorial practice at common law the fact of legislature fixing of rates and also the general principle that rates imposed on customers shall be reasonable and the corresponding right to recover for the reasonable compensation, there is not to be found in common law decision any case where it has been ruled that an act of parliament was void for prescribing an unreasonable rate. The fact that parliament was not restricted in its powers, as our legislative bodies are, may serve to account for this absence of ruling. But had it been otherwise the era of diverse and insistent regulation had not come into English policy nor for many years after we separated from the mother country. It is, indeed, only in the volume in which we find published the Munn case, that we find discussed for the first time the constitutional rights of the owner of property devoted to public use as a limitation upon the right of the legislature to fix the charges it may impose for its services. Thus in the Munn case itself3 there is an allusion to constitutional restriction in the court saying: "If it be admitted that the legislature has any control over the compensation, the extent of that compensation becomes a mere matter of legislative discretion. The amount fixed will operate as a partial destruction of the value of the property, if it fall be

3 Munn v. Illinois, 94 U. S. 113, 143, 24 L. Ed. 77.

low the amount which the owner would obtain by contract, and, practically, as a complete destruction, if it be less than the cost of retaining its possession. There is, indeed, no protection of any value under the constitutional provision, which does not extend to the use and income of the property, as well as its title and possession."

Also, in another case it was said: "Where property has been clothed with a public interest, the legislature may fix a limit to that which shall in law be reasonable for its use. This limit binds the courts as well as the people. If it has been improperly fixed, the legislature, not the courts, must be appealed to for the change." But it was not said that the limit improperly fixed could not be restrained by the courts from enforcement. Parliament could not fix the limit that anyone could say was improper.

More directly, however, the Supreme Court said in a later case by Chief Justice Waite, who wrote the opinion in 94 U. S., just alluded to, that: "It is not to be inferred that the power of limitation or regulation is itself without limit. This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under the pretense of regulating fares and freights, the state cannot require a railroad corporation to carry persons or property without reward; neither can it do that which in law amounts to a taking of private property for public use without just compensation or without due process of law. ''5

Peik v. Chicago & N. W. R. Co., 94 U. S. 164, 178, 24 L. Ed. 97.

5 Railroad Commission Cases, 116 U. S. 307, 331, 6 Sup. Ct. 334, 29 L. Ed. 636. See also Dow v. Beidelman, 125 U. S. 680, 689, 8 Sup. Ct. 1028, 31 L. Ed. 841.