TOPIC C.-THEORY OF LAISSEZ FAIRE.

§ 20. Freedom of individual effort limiting the application of the principle.

As individual freedom of action is encouraged by law and the practice of laissez faire prevails in the business world, the occasions for the application of the principles of law regulating public callings become fewer. This condition of affairs prevailed to a remarkable extent in the United States during the first half of the nineteenth century. The English system of excessive legislative regulation by Parliament having become distasteful, the constitutions of the original States and of the United States carefully limited the power of legislatures to interfere with the ordinary affairs of business. Regulation of private affairs by the law may be said to have been at a minimum in the United States in the first half of the nineteenth century. At the same time there was in the business world a condition of almost absolutely free competition. As a result, the law of public callings had a very narrow application.

The principles of State regulation were not altogether forgotten; even at this period it was recognized that there were some lines of business activity over which the public had some control. Common carriers, a least, must furnish carriage to everyone who applied; must charge for the carriage only a reasonable rate; and could not, even by a contract freely entered into, escape liability for negligence. Innkeepers, also, have always been recognized as subject to legal control. But as late as a quarter of a century ago it was a generalization often made, and made not without justification, that all of the common callings were related in one way or another to carriage. That canals and waterways, as also turnpikes and toll-bridges were facilities for carriage was held to be obvious. Even the inns, it could be said, were connected with travel just as the warehouses were connected with shipment; and in this way the

generalization was kept true. The introduction of the telegraph did not disturb the classification, it was held in so many words to be a carrier of intelligence.

§ 21. Early decisions as to gas supply an illustration.

When the first gas works were constructed, therefore, they had no place in this classification, for it was not possible to think of them as public carriers. And although those who dealt with them soon began to feel the need of the protection of the law, the courts at first refused to interfere in behalf of the public. Thus in Paterson Gas Light Company v. Brady,1 where the plaintiff complained that although his buildings were located upon the lines of the main pipes of the defendant company, it refused to furnish him with gas although he was willing to pay the fixed price, the upper court held that the action should have been dismissed, Mr. Justice Elmer saying: "The language of the charter is throughout permissive, and not compulsory. The company may organize, may make and sell gas, or not, at their pleasure; and I see no more reason to hold that the duty of doing so is meant to be imperative, than to hold that other companies incorporated to carry on manufactures, or to do any other business, are bound to serve the public any further than they find it to be to their interest to do so. It was earnestly insisted, on the argument, that the community have a great interest in the use of gas, and that companies set up to furnish it ought to be treated like innkeepers and common carriers, and that, if no precedent can be found for such a decision, this court ought to make one. But that there is no authority for so holding in England or America, where companies have been so long incorporated for supplying water and gas to the inhabitants of numerous towns and cities, affords a

13 Dutch (N. J. Law), 245, 72 Am. Dec. 360 (1858).

strong presumption that there is no principle of law principle of law upon which it can be supported." 2

§ 22. Early decisions as to waterworks an illustration.

But already the courts were showing an inclination to protect the public in their relations with these public companies. In a case3 regarding the constitutionality of the grant of eminent domain to a waterworks company, decided about the middle of the nineteenth century by Chief Justice Shaw, he worked out a duty to supply the public by reason of the enabling clauses in the charter of the company in a way which would be plainly unjustifiable unless there were an underlying public duty. He said: "The supply of a large number of inhabitants with pure water is a public purpose. But it is urged, as an objection to the constitutionality of the act, that there is no express provision therein requiring the corporation to supply all families and persons who should apply for water on reasonable terms; that they may act capriciously and oppressively; and that by furnishing some houses and lots and refusing supply to others, they may thus give a value to some lots, and deny it to others. This would be a plain abuse of their franchise. By accepting the act of incorporation, they undertake to do all the public duties required by it. When an individual or a corporation is guilty of a breach of public duty by misfeasance or non-feasance, and the law has provided no other specific punishment for its breach, an indictment will lie. Perhaps, also, in a suitable case, a process to revoke and annul the franchise might be maintained."

2 Accord were: McCune v. Norwich Gas Co., 30 Conn. 521, 79 Am. Dec. 278 (1862); Com. v. Lowell Gas Co., 12 Allen, 75 (1866). The modern decisions establishing that the gas companies are in public calling are discussed in § 59, infra.

3 Lumbard v. Stearns, 4 Cush. 60 (1849). The modern cases establishing that the water companies are in public calling are discussed in § 57, infra.

§ 23. Cotton press as a modern illustration.

The conservative attitude in dealing with public employment is to consider all doubtful cases as private businesses, free to conduct their affairs as they please. But of course in such cases, if the legislature acts, the courts must accept the legislative declaration unless that is so unreasonable as to be unconstitutional. The courts that take the conservative view upon this general problem of State regulation of the industries. go no further than this, after all. Ladd v. Cotton Press Company is one such case. There the company refused to treat its patrons alike, charging some more than others.

Mr. Chief Justice Moore held that so far as the common law of Texas went the company might do what it pleased: "The business of warehousing and compressing cotton is free to every one who wishes to engage in it. No grant or franchise need be obtained from the State to authorize those desiring to do so to embark in this character of business. It is not one of the employments which the common law declares public. Nor is it claimed to have been made so by statute. And we know of no authority, and none has been shown us, for saying that a business strictly juris privati will become juris publici merely by reason of its extent. If the magnitude of a particular business is such, and the persons affected by it so numerous, that the interest of society demands that the rules and principles applicable to public employments should be applied to it, this would have to be done by the legislature if not restrained from doing so by the constitution before the demand for such an use could be enforced by the courts."

24. Stockyards as a modern illustration.

This same conservative attitude is shown by some courts in dealing with the stockyards, another rather doubtful case, In a

453 Texas, 172 (1880).

recent decision by the United States Supreme Court, Cotting v. Kansas City Stock Yards Company,5 a variety of reasons were urged to show that the legislation of Kansas regulating stock yards and fixing their prices was unconstitutional, and the point upon which the legislation was finally declared to be void seems to be because it was discriminatory. But the suggestion is thrown out by Mr. Justice Brewer that although stock yards may be regulated by the State, perhaps the regulation ought not to be pressed so far as in the case of railways. To quote from his own language: "Tested by the rule laid down in Munn v. Illinois, it may be conceded that the State has the power to make reasonable regulation of the charges for services rendered by the stockyards company. Its stockyards are situated in one of the gateways of commerce, and so located that they furnish important facilities to all seeking transportation of cattle. While not a common carrier, nor engaged in any distinctively public employment, it is doing a work in which the public has an interest, and therefore must be considered as subject to governmental regulation. But to what extent may this regulation go? Is there no limit beyond which the State may not interfere with the charges for services of those who while not engaged in such service have yet devoted their property to a use in which the public has an interest? . . . And while in the present case by the decisions heretofore referred to he cannot claim immunity from all State regulation, he may rightfully say that such regulation shall not operate to deprive him altogether of the ordinary privileges of others in mercantile business." 6

5 183 U. S. 79, 46 L. Ed. 92, 22 Sup. Ct. 30, B. & W. 316 (1901).

6 Acc. Delaware, L. & W. Ry. v. Central S. Y. Co., 46 N. J. Eq. 280, 19 Atl. 185 (1890).