ing rates or fares, would be protected by the constitutional provision inhibiting the impairment of contracts. No less an authority than the famous Dartmouth College case1 stands for this proposition. But before a court can be asked to determine whether a statute has impaired the obligation of a contract, it should appear that there was a legal contract susceptible of impairment; a contract which is ultra vires of a corporation, or subject to the will of the legislature, not being subject to impairment by subsequent legislation.2

3

There is ample and high authority holding that the state may not contract away the exercise of its police power. But notwithstanding these precedents, and though it is universally recognized that rate regulation is properly within the sphere of the exercise of the police power, there may be found decisions apparently holding that the state may contract away by specific agreement its right and power to regulate rates. The only satisfactory explanation of this inconsistency would seem to be that the state has not yet awakened to the full realization of its responsibilities and rights concerning this recent development of its police power.

A question more pertinent is whether contracts between municipalities and public utilities, which attempt to fix rates, are so subject to the will of the legislature that they may be changed without unconstitutionally impairing the contracts. The great weight of authority answers in the affirmative, though various reasons are given for reaching this conclusion.

Some cases uphold the public service commissions' rate-making power, as against contracts fixing rates, on the ground that the municipality, being a mere creature and agent of the state, has no more power to contract than has been delegated to it; and any act beyond this delegated power is unauthorized and of no avail against the inherent, undivested powers of the State acting through the commission. All the authorities unite in holding that any delegation of power to fix rates claimed by the municipality must be clearly conferred.6

Another theory, and the one most prevalent, by which the state through its legislature or commissions reserves to itself the power to regulate rates, is based upon the hypothesis that, though the parties may contract as to rates when the municipality gives its consent to construct, yet they must have contracted with a view to, or with the implied stipulation that the state reserves the power to regulate the

14 Wheat. (U. S.) 518 (1819).

"New Orleans v. New Orleans Waterworks Co., 142 U. S. 79 (1891).

Beer Company v. Massachusetts, 97 U. S. 25 (1877); Walla Walla City v. Walla Walla Water Co., 172 U. S. 1 (1898); Northern Pacific Ry. Co. v. State of Minn. ex rel. City of Duluth, 208 U. S. 583 (1908); Texas & New Orleans R. R. Co. v. Miller, 221 U. S. 408 (1911).

"Vicksburg v. Vicksburg Waterworks Co., 206 U. S. 496, 508 (1907); Collection of cases in 33 L. R. A. 186; Reeder, Validity of Rate Regulation, sec. 197. "Tempe v. Mountain States Tel. & Tel. Co., P. U. R. (Ariz.) 1915D, 716, 723; Home Tel. & Tel. Co. v. Los Angeles, 211 U. S. 265 (1908).

"See annotation, P. U. R. 1916C, 492.

"City of Manitowoc v. Manitowoc & N. Traction Co., 145 Wis. 13 (1911).

rates as it shall see fit.8 And this is held to be so whether the contract is executed prior to or subsequent to legislation fixing and declaring the rate-making power of the state."

In Woodburn v. Public Service Commission,10 it was said: "If the franchise is deemed to be a contract between the city and telephone company, then the mere fact that it was made prior to the enactment of the public utility statute and before the state attempted to regulate the rates, does not debar the state from increasing the rates fixed in the contract between the parties, for the reason that the law wrote into it a stipulation by the city that the state could, at any time, exercise its police power and change the rates; and therefore, when the state does exercise its police power, it does not work an impairment of any obligation of the contract. The immediate parties to the franchise must contract with reference to the right of the government to exercise its inherent authority. The governed cannot, by contract, forestall the resuscitation of a dormant police power by the government; and therefore, unless the state actually divested itself of the right to exercise its police power, the agreement by which the city and company specified the rates was made subject to the right of the state to change them."

It has been contended that even though the state may fix the rates to be charged by a public utility by virtue of its police power, yet a contract, valid at its inception, is not subject to abrogation by subsequent legislation. In Raymond Lumber Co. v. Raymond Light and W. Co." it was held that this contention could not be sustained, the court saying: "The rule is that contracts upon subjects which are within the police power, even though valid when made, must be taken to have been entered into in view of the continuing power of the state to control the rates to be charged by public service corporations.

A Washington case, 12 which is regarded as a leading case on this subject, treats an ordinance of a city, granting to a telephone company a franchise which fixes rates not as a binding agreement but in the nature of a license and permissive only, subject to the exercise of the sovereign power of the state.

From these quotations and abstracts which are quite representative of the recent decisions on this subject, a fairly clear deduction of the present law in respect to this topic may be drawn. Generally, it would seem that no contract executed by a municipality and a public service corporation, attempting to regulate rates of a utility, can withstand the power of the legislature, acting itself or through a commission, when exercised to change the rates specified in the contract

Woodburn v. Public Service Commission, 82 Ore. 114, 121 (1916); In re Rhinelander Power Co., P. U. R. (Wis.) 1915A, 652; Hollister v. Hollister Water Co., P. U. R. (Cal.) 1915D, 626; Chicago, B. & Q. R. Co. v. Nebraska, 170 U. S. 57 (1898); Adams v. Dakota Central Tel. Co., P. U. R. (S. Dak.) 1916F, 575; Chicago v. O'Connell (Ill.) 116 N. E. 210 (1917).

"Sausalito v. Marin Water & Power Co., P. U. R. (Cal.) 1916A, 244; Woodburn v. Public Service Commission, supra, note 8; City of Benwood v. Public Service Commission, 75 W. Va. 127 (1914).

10 Supra, note 8.

1192 Wash. 330, 335 (1916), and cases there cited.

12State ex rel. Webster v. Superior Court for King County et al., 67 Wash. 37 (1912); Note, L. R. A. 1915C, 287.

as it sees fit; the basic principle underlying this attitude being that the legislature or commission in so doing is making proper use of a police power from which no unconstitutional impairment of the contract can result, even though the contract is valid when made as between the municipality and the company. An apparent exception to this general rule exists where there has been a clearly expressed delegation of the rate-making power to the municipality. The principal case goes upon the ground that the municipality was never so authorized to enter into a rate-making contract. It is submitted that the correct result was reached, in view of the weight of authority and on principle.

Frederic M. Hoskins, '19.

Constitutional Law: Minimum wage legislation.-The constitutionality of minimum wage legislation has finally been upheld by the Supreme Court of the United States in the case of Stettler v. O'Hara, 37 Sup. Ct. Rep. 475 (1917), though the affirmance of the decision of the Supreme Court of Oregon in Stettler v. O'Hara' was without an opinion, and by an evenly divided court.2 The statute in question was passed in 1913 and provided, among other things, that "it shall be unlawful to employ women in any occupation within the State of Oregon for wages which are inadequate to supply the necessary cost of living and to maintain them in health." The amount of such wage was to be determined by a commission which also had authority to grant licenses permitting under payment in certain cases. The plaintiff Stettler, a paper box manufacturer, refused to obey the order of the commission and brought this suit to enjoin its enforcement. The complaint was denied upon demurrer, and decrees dismissing it were upheld by the Supreme Court of Oregon, whereupon Stettler appealed to the Supreme Court of the United States, claiming chiefly that the statute violated the due process clause of the Fourteenth Amendment. This court upheld the constitutionality of the statute.

There has been considerable dispute as to the constitutionality of any attempt to legislate in respect to wages. Pilot fees have been the subject of regulation for some time. Statutes fixing the time of payment have usually been upheld, while in respect to those determining the method of payment the courts have been by no means harmonious. The fixing of wages for unskilled labor on all public works at not less than a specified sum has been held unconstitutional," but in the case of Atkin v. Kansas, such a statute was upheld, chiefly

5

169 Ore. 519 (1914).

2Mr. Justice Brandeis not voting. He, however, undoubtedly believes in the constitutionality of the statute.

Ex parte McNiel, 13 Wall. (U. S.) 236 (1871).

Shortall v. Puget Sound Bridge and Dredging Co., 45 Wash. 290 (1907); Arkansas Stave Co. v. State, 94 Ark. 27 (1910).

"State v. Minor, 33 W. Va. 179 (1889), where a statute providing that employee must be paid in negotiable funds was held unconstitutional; see also, in accord, State v. Missouri Tie and Timber Co., 181 Mo. 536 (1904); but see, contra, Shortall v. Puget Sound Bridge and Dredging Co., supra, note 4.

'Street v. Varney Electrical Supply Co., 160 Ind. 338 (1903); Mallette v. Spokane, 68 Wash. 578 (1912).

7191 U. S. 207 (1903).

because of the peculiar relation which a municipal corporation bears toward the state. In New York State similar statutes were formerly held unconstitutional, but at present such legislation is provided for by the Constitution."

The chief argument aimed against the minimum wage laws is under that part of the Fourteenth Amendment which prohibits any state from making a law which shall "deprive any person of life, liberty, or property without due process of law." It would seem that such legislation as that under discussion does technically impair the liberty of contract, but statutes have often been upheld where such interference was necessary for the public good, i. e., to protect the life, health, and morals of a community and to prevent fraud.10 As stated by Justice Holmes ""the liberty of the citizen to do as he likes so long as he does not interfere with the liberty of others to do the same * * * * is interfered with by school laws, by the Post Office, by every state or municipal institution which takes his money for purposes thought desirable, whether he likes it or not."

Getting away from technicalities, the real liberty which the statute in question seeks to impair is the liberty of the employer to require the employee to accept less than a living wage. Is such legislation "a fair, reasonable and appropriate exercise of the police power of the State, or is it an unreasonable, unnecessary and arbitrary interference with the right of the individual to his personal liberty or to enter into those contracts in relation to labor which may seem to him appropriate or necessary for the support of himself and his family?"12 In fact, without such legislation is there real freedom of contract when economic conditions compel the laborer to sell his labor for less than the labor costs, measuring such cost by the minimum cost of living? But, as pointed out in the admirable brief for the defendant in error, 13 minimum wage legislation is not passed only for the benefit of employees. A contract which calls for less than a living wage involves not only the employer and the wage-earner but also the state. The deficit, i. e., the difference between the amount paid and that required to sustain the wage-earner, must come from some part of the public. In the words of the defendant's counsel, "a contract for labor below its cost must inevitably rely upon a subsidy from outside. To the extent of this subsidy the public is necessarily concerned; the State has, therefore, a special right to impose conditions upon which the industry or the employee may enjoy the subsidy or even to refuse it absolutely."

* * * **

Finally, it is a fundamental principle that a legislative enactment is never to be disregarded or held invalid unless it be, beyond question,

"People v. Coler, 166 N. Y. 1 (1901); but see Ryan v. New York, 177 N. Y. 271 (1904), where the same statute was held constitutional.

New York State Constitution, Art. 12, sec. I, as amended.

10Health: Charleston v. Werner, 38 S. C. 488 (1892). Morals: Ah Sin v. Wittman, 198 U. S. 500 (1905). Fraud: People v. Freeman, 242 Ill. 373 (1909). "Lochner v. New York, 198 U. S. 45, 75 (1905).

12 Test laid down in Lochner v. New York, supra, note II.

13Compiled by Felix Frankfurter, Counsel for the Industrial Welfare Commission, and Josephine Goldmark, Publication Secretary of the National Consumers' League. Part 2 of the brief was prepared under the direction of Mr. Justice Brandeis before his appointment to the Supreme Court of the United States.

plainly and palpably in excess of legislative power. 14 Maximum hour laws have been upheld,15 chiefly because they aim to preserve the public health. But a living wage is as vital to the health of the wageearner as the number of hours he may work. Inadequate wages were shown to have a pernicious effect upon the health and morals of the community, and it was to remedy these conditions that the legislature of Oregon passed the statute in question. It would seem unreasonable to hold this to be "plainly and palpably in excess of legislative power."

W. J. Gilleran, '18.

Constitutional Law: Scope of the Federal Employers' Liability Act. The uncertainty which has arisen as to the scope of the Federal Employers' Liability Act, which imposes a liability on employers for injuries or death to employees employed in interstate commerce where the employer is at fault, has been considerably cleared away by two decisions of much importance and significance by the Supreme Court of the United States, in the cases of New York Central R. R. Co. v. Winfield, 37 Sup. Ct. Rep. 546 (1917)1, and Erie R. R. Co. v. Winfield, 37 Sup. Ct. Rep. 556 (1917)2. The two cases are similar in their facts, in the former an employee of a common carrier being injured, and in the latter case an employee being killed, while engaged in interstate commerce without causal negligence attributable to either party. The state courts held that the Federal Act was not applicable where there was no negligence on the part of the employer, but applied the state compensation act which awards compensation without regard to negligence, on the ground that the nature and purposes of the two acts are different and that Congress did not intend that the Federal Act should be exclusive. The principal cases, which are the first expressions by the Supreme Court on the particular question, hold that the entire field of employers' liability to employees injured or killed in interstate commerce is so completely covered by the provisions of the Federal Act as to prevent any award under the state acts. The Federal Act, it holds, is as comprehensive of injuries occurring without negligence, as to which class it impliedly excludes liability, as it is of those injuries for which it imposes liability, on the ground that it makes negligence a test, not of the applicability of the act, but of the employers' duty to respond pecuniarily for the injury. The subject of employers' liability and workmen's compensation is comparatively recent and the Federal Act is the answer of Congress to the demand for corrective legislation to remedy some of the injustices of the common law rules of liability between master and servant which have arisen from our complex industrial conditions. That act and the workmen's compensation acts of the various states are so closely related that two conflicting views have arisen as to the

14Patterson v. Kentucky, 97 U. S. 501 (1878); Gundling v. Chicago, 177 U. S. 183 (1900).

15 Wilson v. New, 37 Sup. Ct. Rep. 298 (1917), discussed in 2 CORNELL LAW QUARTERLY 320.

'Decision in Matter of Winfield v. N. Y. C. & H. R. R. R. Co., 216 N. Y. 284 (1915), commented upon in I CORNELL LAW QUARTERLY 272, is reversed. 2Winfield v. Erie R. R. Co., 88 N. J. L. 619 (1916).