In Indiana a statute requiring express companies to deliver all express matter to the consignee in cities having a population of twenty-five hundred or more was held constitutional.59 An order of a commission requiring an express company to establish and maintain an uptown office for the transaction of its business, and to collect and deliver express packages anywhere in the corporate limits of the city, is prima facie reasonable.60 § 4461. Regulation of mining companies. The regulations of mining companies which have been upheld are so numerous and so peculiar to mining law, that reference to textbooks on mining law and to statutes should be made. Most of these regulations are upheld as enacted for the health and safety of the miners, including regulations for mine inspections, ventilation, timbering, lighting, blasting, signalling, medical aid, and the like.61 § 4462. Regulation of insurance companies. Insurance companies have been subjected to many kinds of statutory regulation and because of the nature of the business such regulations have generally been upheld as proper exercises of the police power. The business is held to be one affected with a public interest and hence the power of regulation is very broad.62 For instance, a statute requiring insurance companies to make returns to certain state officers of their business condition, liabilities, losses, premiums, taxes, dividends, expenses, etc., is held a proper exercise of the police power.63 Likewise statutes have been upheld which forbid discriminations by insurance companies between policyholders of the same class,64 or which forbid agreements between companies to fix premium rates.65 And the Su 59 United States Exp. Co. v. State, 164 Ind. 196, 73 N. E. 101. See also Adams Exp. Co. v. State, 161 Ind. 328, 67 N. E. 1033. This statute is now superseded by the Interstate Commerce Act as amended in 1906 which regulates the transportation and delivery of goods by express, so far as interstate shipments are concerned. State v. Adams Exp. Co., 171 Ind. 138, 19 L. R. A. (N. S.) 83, 85 N. E. 337. 60 United States Exp. Co. v. State, 33 Okla. 370, 125 Pac. 448. 61 See 8 Labatt, Master and Servant (2nd Ed.), § 2858. 62 See German Alliance Ins. Co. v. Lewis, 233 U. S. 389, 58 L. Ed. 1011, L. R. A. 1915 C 1189; McCarter v. Firemen's Ins. Co., 74 N. J. Eq. 372, 29 L. R. A. (N. S.) 1194, 135 Am. St. Rep. 708, 18 Ann. Cas. 1048, 73 Atl. 80, 414. 63 Eagle Ins. Co. v. Ohio, 153 U. S. 446, 38 L. Ed. 778. 64 Leonard v. American Life & Annuity Co., 139 Ga. 274, 77 S. E. 41; People v. Commercial Life Ins. Co., 247 Ill. 92, 93 N. E. 90. 65 Carroll v. Greenwich Ins. Co., 199 U. S. 401, 50 L. Ed. 246, and see § 4377, supra. preme Court of the United States has even gone so far in a late case as to hold that the government may regulate the rates of insurance companies.66 § 4463. Regulation of banks. Banking companies are engaged in business of a public nature and are properly subjected to extensive legislative regulation in the exercise of the police power. As illustrating the extent to which regulation of banks has been upheld, the Supreme Court of the United States, in 1911, held constitutional an Oklahoma statute which created a board and directed it to levy upon every bank existing under the laws of the state an assessment of one per cent of the bank's average daily deposits, with certain deductions, for the purpose of creating a depositors' guaranty fund.67 Further illustrations as to legislative power over banks will be found in textbooks on the law of banking. VII. REGULATION OF RATES A. Right to Regulate and General Considerations § 4464. Nature of business as test of power to regulate-In general. În 1876, the first of the federal decisions as to the power to regulate rates of corporations was rendered by the Supreme Court of the United States, and this decision remains the law of this country to-day except in so far as it held that the courts could not review the reasonableness of the rates. This decision is that of Munn v. Illinois, 68 which has often been referred to as one of the most important decisions ever rendered by the Supreme Court of the United States. "The question to be determined in this case," said Chief Justice Waite who delivered the opinion of the court, "is whether the general assembly of Illinois can, under the limitations upon the legislative power of the States imposed by the Constitution of the United States, fix by law the maximum of charges for the storage of grain in warehouses at Chicago and other places in the state having not less than one hundred thousand inhabitants." It was contended that the statute was repugnant to the federal power to regulate commerce, and that it deprived persons of property without due process of law and denied the equal protection of the laws. As herein considered, however, the only point to be noted is the due process of law limitation. The court accepted as the basis of its decision the statement of Lord 66 See § 4464, infra. 67 Noble State Bank v. Haskell, 219 U. S. 104, 55 L. Ed. 112, 32 L. R. A. (N. S.) 1062, Ann. Cas. 1912 A 487. 68 94 U. S. 113, 24 L. Ed. 77. Chief Justice Hale made some two hundred years before that when private property is "affected with a public interest, it ceases to be juris privati only," and then made this statement which is the groundwork of all the law of to-day as to the power to regulate rates, viz.: "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." In conclusion the court held that the warehouse business was clothed with a "public interest" so that the rates were subject to regulation by the-state.69 This decision has been regarded as marking an advance upon prior notions as to the extent of the police power.70 So far as the regulation of rates of warehouses is concerned, this case was followed a few years later, in 1889, by the New York Court of Appeals." This Munn decision has also been cited as applying to, and authorizing the regulation of rates of, railroad, street railroad, steamboat, telegraph and telephone, etc., companies, as to which there is no question at the present time. The fundamental question, however, is when can a business be said to be "affected with a public interest?" It is conceded, at the present time, that the business of a common carrier or a public utility is so affected, and that hence the rates of such companies may be regulated. But the question has lately arisen as to whether the rule extends beyond so-called public service companies and authorizes the regulation of rates of a company such as an insurance company. In 1913, a decision was rendered by the Supreme Court of the United States which, in importance, so far as rates are concerned, is second only to the Munn case. In this later case, the question was as to the power of a state to regulate the rates of fire insurance companies, and it was answered in the affirmative. In discussing the question of "public interest," the following rules are set forth: (1) The public interest meant "is a broad and definite public interest"; (2) there may be a "public interest," within this rule, 69 For a valuable discussion of this case and of the decisions which have followed or cited it, see Rose's Notes on United States Reports. 70 See People v. Ewer, 141 N. Y. 129, 132, 25 L. R. A. 794, 797, 38 Am. St. Rep. 788, 789, 36 N. E. 4, 5. 71 People v. Budd, 117 N. Y. 1, 5 L. R. A. 559, 566, 15 Am. St. Rep. 460, 472, 22 N. E. 670, 682, aff'd 143 U. S. 517, 547, 36 L. Ed. 247, 256. although the right to demand and receive service does not exist in the public, as in the case of carriers and public utilities; (3) there may be a public interest although there is no public use; (4) the nature of the business is the fundamental thing rather than the nature of the property employed in the business; (5) a business "by circumstances and its nature, may rise from private to be of public concern and be subject, in consequence, to governmental regulation;" (6) the right of public regulation cannot "be placed upon the ground of special privilege conferred by the public on those affected" nor on the ground that the business is a monopoly or has a monopolistic character.72 The argument against the right to regulate the business of a corporation which is not a quasi public corporation, nor obliged to serve all the public as are common carriers, and public utilities, is nowhere set forth at greater length nor with more ability than in the dissenting opinion of Justice Lamar in this case wherein he contended that not only must the business be affected with a public interest but the property employed in such business must be devoted to a public use.73 § 4465. - Power to regulate not dependent upon monopolistic character of business or upon grant of special privilege. There are some cases which put the right to regulate upon the ground that the business regulated is practically a monopoly.74 But this test of the power. to regulate was rejected by the Supreme Court of the United States in 1893 in upholding a North Dakota statute declaring all grain warehouses in the state to be public warehouses and establishing a maximum rate for storing and handling grain, and this decision was said by the Supreme Court of the United States, in 1913, in the fire insurance rate case, to extend the principle of Munn v. Illinois and it "of the limiting element that was supposed to beset itjustify regulation of a business the business must have a monopolistic character."' 76 denud e that to In New York in 1889, in connection with this question, the Court of Appeals said: "The control which, by common law and by statute, is exercised over common carriers is conclusive upon the point that the right of the legislature to regulate the charges for services in con 72 German Alliance Ins. Co. V. Lewis, 233 U. S. 389, 58 L. Ed. 1011, L. R. A 1915 C 1189. 73233 74Spring Valley Water Works V. Schottler, 110 U. S. 347, 354, 28 L. Ed. 173, 176; Zanesville v. Gas-Light Co., 47 Ohio St. 1, 19, 23 N. E. 55. 75 Brass v. North Dakota, 153 U. S. 391, 38 L. Ed. 757, 760, aff'g 2 N. D. 482, 52 N. W. 408. 76 German Alliance Ins. Co. V. Lewis, 233 U. S. 389, 410, 58 L. Ed. 1011, L. R. A. 1915 C 1189. * nection with the use of property does not in every case depend upon the question of legal monopoly," since "the business of common carriers, until recent times, was conducted almost exclusively by individuals for private emolument, and was open to everyone who chose to engage in it" and "the state conferred no franchise and extended to common carriers no benefit or protection, except that general protection which the law affords to all persons and property within its jurisdiction. The conceded power of legislation over common carriers is adverse to the claim that the police power does not in any case include the power to fix the price of the use of private property, and of services connected with such use, unless there is a legal monopoly, or special governmental privileges or protection has been bestowed." Continuing, the court said: "The attempts made to place the right of public regulation in these cases upon the ground of special privilege conferred by the public on those affected cannot, we think, be supported. The underlying principle is that business of certain kinds holds such a peculiar relation to the public interests that there is superinduced upon it the right of public regulation.’ And in commenting on an earlier New York case, the court said: "In that case the owner of the skating rink derived no special privilege or protection from the state. The public had no right in any legal sense to resort to his premises. His permission, except for the public interest involved, was revocable as to the whole community or any individual citizen. But it was held that so long as he devoted his place to purposes of public entertainment, he subjected it to police regulation."77 This New York case is approved, in this view, by the 1913 decision of the Supreme Court of the United States already referred to.78 At the same time, there is no doubt that the fact of monopoly may be considered as an item in determining the right to regulate, and in the very New York case quoted from, the court thereafter states that "the third element of publicity which tends to distinguish the business of elevating grain from general commercial pursuits is the practical monopoly which is or may be connected with its prosecution.” 79 § 4466. -Power to regulate not confined to regulation of corporations. So far as this rule as to the power to regulate rates is People v. Budd, 117 N. Y. 1, 5 L. R. A. 559, 15 Am. St. Rep. 460, 22 N. E. 670, 682. 78 German Alliance Ins. Co. V. Lewis, 233 U. S. 389, 411, 58 L. Ed. 1011, L. R. A. 1915 C 1189. 79 People v. Budd, 117 N. Y. 1, 24, 5 L. R. A. 559, 15 Am. St. Rep. 460, 22 N. E. 670, 682. |