CHAPTER XLI CONSTITUTIONAL SUMMARY § 1400. Control of public employment. Topic A. Character of the Power to Regulate § 1401. Nature of the power to regulate. Topic B. Method of Exercising the Power to Regulate § 1407. Fixing rules by legislation. 1408. Delegation of regulating power. 1409. Functions of administrative commissions. 1410. Action by municipal, or other local government. 1411. Function of the courts in declaring regulation void. 1412. When suit is against State official. Topic C. Division Between Federal and State Jurisdiction § 1413. What constitutes interstate commerce. 1414. Continuous carriage under common control. 1415. Continuity of interstate shipment. 1416. Carriage wholly within the State. 1417. State legislation burdening interstate commerce. 1418. Scope for State police power. 1419. Effect of action by Congress. 1420. Power of Congress to regulate. Topic D. Impairing Obligation of Contract § 1421. Contract character of charter privileges. 1422. Express contractual provision necessary. 1423. Conferring powers does not create contract. 1424. Contracts made by municipal ordinance. § 1425. Loss of the privilege. 1426. Assignment of the privilege. Topic E. Confiscation of Property § 1427. The doctrine of the "Granger" cases. 1428. Early modification of the doctrine. 1429. Fair return finally protected. 1430. When rates are confiscatory. 1431. When fair net earnings left. 1432. Reasonable rates not necessarily profitable. Topic F. Due Process of Law § 1433. Imposition of absolute liability. § 1400. Control of public employment. The basis of the right of the state to regulate the public service companies lies in the principle first clearly apprehended and expressed by Lord Hale in his treatise “De Portibus Maris," that when property is affected with a public interest it ceases to be juris privati only. "Property," as Mr. Chief Justice Waite has said, "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." This common law principle has come down to us from time immemorial; and therefore proper legislation regulating such business has always been considered by us as due process of law. Topic A. Character of the Power to Regulate § 1401. Nature of the power to regulate. 3 The simplest form which the power to regulate the conduct of public service can take is that adopted by the common law, that is, the action of the courts, declaring the conduct of the proprietor improper or inexcusable upon suit of the party who has gained thereby. Such power has been exercised by the courts of common law from the beginning of their history. It has always been recognized that if a carrier attempted to charge a shipper an unreasonable sum, the courts had jurisdiction to inquire into that matter, and to award to the shipper any amount exacted from him in excess of a reasonable rate.2 This power, which has aptly been called a visitorial power of the State is only one example of the general power of the State to oversee the acts of those who are engaged in its public service, and to make sure that they really serve the public interests. Thus the power to order the location of stations is within the general jurisdiction of the courts of law. But the power of the State over public service employments is not limited to its power to pass on the reasonableness of their acts after they have been established; the power to initiate action, to lay down rules in the first instance by way of regulating action, is fully recognized at common law and by the general practice of all common law countries. Legislation of this sort has existed from time immemorial and is therefore always due process of law abstractly. It is a special 1 Waite, C. J., in Railroad Commission Cases, 116 U. S. 307, 29 L. ed. 636, 6 Sup. Ct. 334 (1886). Brewer, J., in Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. ed. 1014, 14 Sup. Ct. 1047 (1893). ' Williams, J., in Brymer v. But ler Water Co., 179 Pa. St. 231, 36 Atl. 249, 36 L. R. A. 260 (1897). 4 Doe, C. J., in Concord & M. R. R. Co. v. Boston & M. R. R. Co., 67 N. H. 464; 41 Atl. 463 (1893). 5 Waite, C. J., in Munn v. Illinois, 94 U. S. 113, 24 L. ed. 77 (1876). branch of the general police power inherent in the legislative branch.1 § 1402. Power to regulate not a judicial power. The earliest action of the State in dealing with rates was doubtless the action of the courts in passing upon the reasonableness of rates fixed by the carrier, and in Munn v. Illinois 2 it was insisted that the power over rates was a judicial power, and could not be exercised by the legislature. But the court held otherwise, the line of argument being somewhat as follows. In common law countries this power has been exercised from time immemorial by the legislature, which has fixed a maximum beyond which charges are unreasonable. Granting the power to regulate at all, the power to fix rates follows, since that is one means of regulation. The power of the common law to affect rates by providing that they must be reasonable is admitted; but this is itself a regulation. If, then, rates are and always have been regulated by law, that law, like any other, may be changed by the legislature, since no one has a vested interest in any rule of the common law. A legislative regulation of rates is therefore a mere instance of a change in the common law, which it is entirely within the power of the legislature to make; and in doing so it is not exercising judicial functions. This view of the question has been universally followed. The distinction between legislative and judicial functions is a vital one, and cannot be altered either by legislative act or by judicial decree. Legislation prescribes rules 1 Blatchford, J., in Budd v. New York, 143 U. S. 517, 36 L. ed. 247, 12 Sup. Ct. 468 (1891). 294 U. S. 113, 133, 24 L. ed. 77 (1876). Interstate Commerce Commission v. Cincinnati, N. C. & T. P. R. R. Co., 167 U. S. 479, 42 L. ed. 243, 17 Sup. Ct. 896 (1897); Louisville & N. R. R. Co. v. Brown, 123 Fed. 946 (1903), State v. Wilson, 121 N. C. 650, 28 S. E. 553 (1897). 4 Western Union Tel. Co. v. Myatt, 98 Fed. 335 (1899). for the future; litigation determines rights and wrongs for the past. To prescribe a tariff of rates for the future is therefore not a judicial act; to determine whether existing or prescribed rates and charges are unreasonable, on the other hand, is a judicial act.1 § 1403. Power to regulate not strictly legislative. But while the power to fix rates may be exercised directly by the legislature, it is not, strictly speaking, a legislative power; but rather the so-called administrative function. Mr. Justice Brewer in the Circuit Court, in Chicago & N. W. Ry. v. Dey,2 used on this point language which has often been quoted: "While, in a general sense, following the language of the Supreme Court, it must be conceded that the power to fix rates is legislative, yet the line of demarcation between legislative and administrative functions is not always easily discerned. The one runs into the other. The law books are full of statutes unquestionably valid, in which the legislature has been content to simply establish rules and principles, leaving execution and details to other officers. Here it has declared that rates shall be reasonable and just, and committed what is, partially at least, the mere administration of that law to the railroad commissioners." The difficulty felt in this passage in distinguishing legislative and administrative functions is a real one; but it is usually not necessary to make a sharp distinction, and for the present it is enough to point out that the function, while not judicial, is not in the strict sense legislative.3 1 Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 38 L. ed. 1014, 14 Sup. Ct. 1047 (1894); Smyth v. Ames, 169 U. S. 466, 42 L. ed. 819, 18 Sup. Ct. 418 (1898); Wheeler v. No. Col. Irr. Co., 10 Colo. 582, 17 Pac. 487 (1887); Brush E. I. Co. v. Consolidated T. & E. Co., 15 N. Y. 235 Fed. 866, 874 (1888). See Chicago B. & Q. R. R. Co. v. Jones, 149 Ill. 361, 37 N. E. 247, 41 Am. St. Rep. 278, 24 L. R. A. 141 (1894). |