App. Div.] First Department, December, 1920. Legislature could not deprive a party of a vested right to recover damages for prior injuries or the damages or costs awarded by an existing judgment, but that the Legislature might declare for the future "in what manner a man may use his property or carry on a lawful business," subject only to the limitation that the law must be reasonable and for the public welfare, and that the very purpose and object of the exercise of the police power is to change the rights of citizens as they previously existed, and that rights of citizens accruing after the statute are to be governed by it, but not rights which have accrued. The New York Workmen's Compensation Law materially interferes with and regulates the making of and liability under private contracts, and its validity was challenged as in violation of the freedom of contract guaranteed by the Federal Constitution, although the statute was authorized by the State Constitution, but it was sustained as constitutional. (New York Central R. R. Co. v. White, 243 U. S. 188.) In Wilson v. New (243 U. S. 332) an act of Congress fixing temporarily the wages to be paid by carriers to certain classes of employees with whom the carriers had been unable to agree and who threatened to strike, which would have interrupted interstate commerce and might have resulted in public disorder, was sustained notwithstanding the fact that it was conceded that the Congress had no power to regulate such wages permanently. That decision supports anticipatory legislation by holding that it is not necessary for the legislative body to await the crisis which would authorize it to act, but may act in advance to avert a crisis. In German Alliance Insurance Co. v. Kansas (233 U. S. 389) a State statute regulating the rates to be charged for fire insurance under private contracts was sustained as within the police power of the State, on the theory that the business was sufficiently "clothed with a public interest" to subject it "to be controlled by the public for the common good," and although the business was lawful, requiring no license, and the parties were free to contract or not, still the statute was not in violation of the Fourteenth Amendment to the Federal Constitution guaranteeing the liberty of contract. In American Coal Mining Co. v. Special Coal & Food Commission of Indiana (268 Fed. Rep. 563) the United States District Court First Department, December, 1920. [Vol. 194. for the District of Indiana, three judges sitting, on October 2, 1920, sustained a law authorizing a commission to fix reasonable prices to be charged for coal as a valid police power regulation, although it operated on coal theretofore mined as well as coal to be mined in the future, for it affected all sales thereafter made. That case is merely cited to show the trend of modern decisions, but it is unnecessary to go to that extent in the case at bar. That the police power may be exercised with respect to new conditions where the public interests require it, and that a State may itself directly use public funds collected by taxation, or authorize a municipality to use them in a manner encroaching upon what has heretofore been recognized as purely private enterprises, is shown by the decisions in Green v. Frazier (253 U. S. 235), where legislation authorized by the Constitution of North Dakota, by which the State engaged in the banking business, in erecting and operating warehouses, elevators and flour mills, and in constructing and renting homes for its inhabitants, was sustained as not contravening the Fourteenth Amendment, prohibiting the taking of property for taxes without due process of law; and in Laughlin v. City of Portland (111 Maine, 486), and Jones v. City of Portland (113 id. 123; affd., 245 U. S. 217), where it was held that a city could be constitutionally authorized to buy for and sell to its inhabitants wood and coal during an emergency, and in Holton v. City of Camilla (134 Ga. 560), where it was held that a city could be empowered to establish a municipal ice plant for its inhabitants. It is to be borne in mind that there has been no attempt to compel landlords to make leases, and so far as this statute, construed not retrospectively but prospectively, as I am construing it, is concerned, they are at liberty to discontinue using their property for the housing accommodations of others. The Legislature has provided merely that so long as they continue to use their premises during the period of the emergency, they must not take advantage of the houseless and, by leasing to the highest bidder, accommodate non-residents perhaps to the exclusion of citizens of this State, and unduly oppress residents of the State, who by duress of the circumstances may be obligated to agree to unconscionable, oppressive and App. Div.] First Department, December, 1920. extortionate leasing contracts. Doubtless the Legislature apprehended that the legislation enacted at the extraordinary session would be attacked as unconstitutional, and the legislators may have anticipated that possibly some of the other statutes might not be sustained. It did, I think, however, exercise great foresight in framing the statute in question for, if it be sustained as constitutional, it will in its practical operation remedy, if not fully, practically every evil that it was anticipated would follow if the execution of the laws as they theretofore existed were permitted. It is manifest that the legislation was designed to avert the crisis incident to the shortage of housing accommodations that might have been brought on if hundreds of thousands of the inhabitants of this great metropolis were evicted and unable to find living accommodations and also to prevent profiteering landlords from taking advantage of the emergency, which left their business of leasing their property for such uses substantially without competition and left them in a position where they could exact unreasonable and unconscionable and extortionate rentals for the use of their property, while they were protected by the usury laws from having to pay more than six per cent on any loan of money that they had obtained or might obtain on the security of their premises. By restricting landlords to making contracts for reasonable rentals during the period of the emergency, the Legislature left nothing to be accomplished by the substitution of one tenant for another who was evicted, for all agreements for rentals thereafter made whether with tenants in possession or with new tenants were required to be reasonable. Assuming, without now deciding, that the other laws enacted at the same time, which were designed to prevent the wholesale eviction of tenants, were unconstitutional and that the landlords were at liberty to evict at the expiration of the term or to recover possession by electing to terminate the tenancy for a failure to pay the rentals agreed to be paid —there was left to the landlords no incentive to carry out their threats of wholesale evictions, provided the statute now under consideration was sustained as constitutional; and, therefore, even on the assumption stated, the eviction would be reduced to a minimum. In ordinary times, doubtless, the making of leases may well be and should be left to the regulation of the First Department, December, 1920. [Vol. 194. law of supply and demand; but in this emergency there was not freedom of contract on the part of the tenants and they were subject to extortion and oppression by landlords. It is, I think, no extension of the doctrine of the authorities cited with respect to the power of the Legislature to forbid during this emergency the exacting of oppressive agreements for extortionate rentals by prohibiting the recovery of more than reasonable rentals. The statute is also attacked on the ground that it fails to prescribe a standard by which what constitutes a reasonable rental may be decided. The Legislature might have provided that a landlord should not exact a rental by which he would receive more than a specified percentage on his investment, but if that percentage were fixed too low, the statute would be open to attack on the ground that it was confiscatory, and whether it would be sustained as constitutional or annulled as unconstitutional would then have to be determined by the very standard prescribed in this statute, namely, whether it permitted the landlord to receive a reasonable income on his investment. (Willcox v. Consolidated Gas Co., 212 U. S. 19; Des Moines Gas Co. v. Des Moines, 238 id. 153; Municipal Gas Co. v. Public Service Comm., 225 N. Y. 89.) The Federal Lever Food Control Act, so called, declared it to be unlawful for any person to make an unjust or unreasonable rate or charge in handling or dealing in or with any necessaries or to combine with others to effect excessive prices for necessaries and, like the statute in question, it prescribes no other standard. (See 40 U. S. Stat. at Large, 276, chap. 53, as amd. by 41 id. 297, chap. 80; 40 id. 277, § 4, as amd. by 41 id. 298, § 2.) The Circuit Court of Appeals, Second Circuit, on May 26, 1920, in Weed & Co. v. Lockwood (266 Fed. Rep. 785), affirmed the denial of an interlocutory injunction to restrain the prosecution of an indictment under that statute and overruled the point that it prescribed no standard, which is the precise point now made here. It is further contended that the statute is void on the ground that it is unjustly discriminatory, in violation of the provision of the Fourteenth Amendment of the Federal Constitution. The statute is confined to property devoted to the same use and it embraces all such property and applies only to the property, the use of which during the emergency required the App. Div.] First Department, December, 1920. intervention of and regulation by the Legislature, and, therefore, it cannot be said that it is unconstitutional on this ground. (Budd v. New York, supra; People v. Havnor, 149 N. Y. 195, 205; Mutual Loan Co. v. Martell, 222 U. S. 225, 235.) It follows that the order should be affirmed, with ten dollars costs and disbursements. MERRELL and GREENBAUM, JJ., concur; CLARKE, P. J., and DOWLING, J., dissent. CLARKE, P. J. (dissenting) :* Recognizing that the courts have never yet laid down the limitations of the police power, all of the cases which I have been able to examine dealing with the subject make that power subject to the Constitution. In my judgment, the acts under consideration in these cases violate the fundamental principles of the State and Federal Constitutions, in that the result is either to take private property for public use without due compensation, which is not permissible, or to take private property for private use, which has never been allowed. They also, in my judgment, have the effect of depriving the owners of a certain class of property of due process of law, and destroy the fundamental rights of private ownership in property, which has heretofore been sedulously protected by the courts under constitutional provisions, and take away the freedom of contract in regard to specific property within a limited territory, to wit, real estate used for dwelling purposes in the city of New York. Realizing that these questions should be submitted as speedily as possible to the Court of Appeals, and that so much has been written by so many courts, I content myself with this brief expression of dissent, and of my agreement in the views of Mr. Justice BLACKMAR in his more extended discussion of the subject in People ex rel. Rayland Realty Co., Inc., v. Fagan (194 App. Div. 185). DOWLING, J., concurs. Order affirmed, with ten dollars costs and disbursements. *This opinion was also handed down in the case of Clemilt Really Co., Inc., v. Wood (194 App. Div. 508). [REP. |