285 U.S. 262 (1932), New State Ice Co. v. Liebmann

Citation:285 U.S. 262, 52 S.Ct. 371, 76 L.Ed. 747
Party Name:New State Ice Co. v. Liebmann
Case Date:March 21, 1932
Court:United States Supreme Court
 
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285 U.S. 262 (1932)

52 S.Ct. 371, 76 L.Ed. 747

New State Ice Co.

v.

Liebmann

United States Supreme Court

March 21, 1932

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE TENTH CIRCUIT

Syllabus

1. The business of manufacturing ice and selling it is essentially a private business and not so affected with a public interest that a legislature may constitutionally limit the number of those who may engage in it in order to control competition. Pp. 273 et seq.

2. An Oklahoma statute, declaring that the manufacture, sale and distribution of ice is a public business, forbids anyone to engage in it without first having procured a license from a state commission; no license is to issue without proof of necessity for the manufacture, sale or distribution of ice in the community or place to which the application relates, and if the facilities already existing and licensed at such place are sufficient to meet the public needs therein, the commission may deny the application. Held, repugnant to the due process clause of the Fourteenth Amendment. P. 278.

3. A state law infringing the liberty guaranteed to individuals by the Constitution can not be upheld upon the ground that the State is conducting a legislative experiment. P. 279.

52 F.2d 349, affirmed.

Appeal from a decree sustaining the dismissal by the District Court, 42 F.2d 913, of a bill by the appellant, a licensed ice company, to enjoin the defendant from engaging in the ice business at a place in Oklahoma without having first procured a license.

Page 271

SUTHERLAND, J., lead opinion

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The New State Ice Company, engaged in the business of manufacturing, selling, and distributing ice under a license or permit duly issued by the Corporation Commission of Oklahoma, brought this suit against Liebmann in the federal District Court for the Western District of Oklahoma to enjoin him from manufacturing, selling, and distributing ice within Oklahoma City without first having obtained a like license or permit from the commission. The license or permit is required by an act of the Oklahoma Legislature, chapter 147, Session Laws 1925. That act declares that the manufacture, sale, and distribution of ice is a public business; that no one shall be permitted to manufacture, sell, or distribute ice within the State without first having secured a license for that purpose from the commission; that whoever shall engage in such business without obtaining the license shall be guilty of a misdemeanor, punishable by fine not to exceed $25, each day's violation constituting a separate offense, and that, by general order of the commission, a fine not to exceed $500 may be imposed for each violation.

Section 3 of the act provides:

That the Corporation Commission shall not issue license to any persons, firm or corporation for the manufacture, sale and distribution of ice, or either of them, within this State, except upon a hearing had by said Commission at which said hearing, competent testimony and proof shall be presented showing the necessity for the manufacture, sale or distribution of ice, or either of them,

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at the point, community or place desired. If the facts proved at said hearing disclose that the facilities for the manufacture, sale and distribution of ice by some person, firm or corporation already licensed by said Commission at said point, community or place, are sufficient to meet the public needs therein, the said Corporation Commission may refuse and deny the applicant [application] for said license. In addition to said authority, the said Commission shall have the right to take into consideration the responsibility, reliability, qualifications and capacity of the person, firm or corporation applying for said license and of the person, firm or corporation already licensed in said place or community, as to afford all reasonable facilities, conveniences and services to the public, and shall have the power and authority to require such facilities and services to be afforded the public; provided, that nothing herein shall operate to prevent the licensing of any person, firm or corporation now engaged in the manufacture, sale and distribution of ice, or either of them, in any town, city or community of this State, whose license shall be granted and issued by said Commission upon application of such person, firm or corporation and payment of license fee.

The portion of the section immediately in question here is that which forbids the commission to issue a license to any applicant except upon proof of the necessity for a supply of ice at the place where it is sought to establish the business, and which authorizes a denial of the application where the existing licensed facilities "are sufficient to meet the public needs therein." The District Court dismissed the bill of complaint for want of equity, on the ground that the manufacture and sale of ice is a private business which may not be subjected to the foregoing regulation. 42 F.2d 913. The Court of Appeals affirmed. 52 F.2d 349.

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It must be conceded that all businesses are subject to some measure of public regulation. And that the business of manufacturing, selling, or distributing ice, like that of the grocer, the dairyman, the butcher, or the baker, may be subjected to appropriate regulations in the interest of the public health cannot be doubted; but the question here is whether the business is so charged with a public use as to justify the particular restriction above stated. If this legislative restriction be within the constitutional power of the state Legislature, it follows that the license or permit, issued to appellant, constitutes a franchise, to which a court of equity will afford protection against one who seeks to carry on the same business without obtaining from the commission a license or permit to do so. Frost v. Corporation Commission, 278 U.S. 515, 519-521. In that view, engagement in the business is a privilege to be exercised only in virtue of a public grant, and not a common right to be exercised independently (id.) by any competent person conformably to reasonable regulations equally applicable to all who choose to engage therein.

The Frost case is relied on here. That case dealt with the business of operating a cotton gin. It was conceded that this was a business clothed with a public interest, and that the statute requiring a showing of public necessity as a condition precedent to the issue of a permit was valid. But the conditions which warranted the concession there are wholly [52 S.Ct. 373] wanting here. It long has been recognized that mills for the grinding of grain or performing similar services for all comers are devoted to a public use, and subject to public control, whether they be operated by direct authority of the State or entirely upon individual initiative. At a very early period, a majority of the states had adopted general acts authorizing the taking and flowage, in invitum, of lands for their erection and maintenance. In passing these acts, the attention of the Legislatures no

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doubt was directed principally to grist mills; but some of the acts, either in precise terms or in their application, were extended to other kinds of mills. Head v. Amoskeag Manufacturing Co., 113 U.S. 9, 16-19; State v. Edwards, 86 Me. 102, 104-106, 29 Atl. 947. The mills were usually operated by the use of water power, but this method of operation has been said not to be essential. State v. Edwards, supra, 86 Me. at p. 106. It was open to the proprietor of a mill to maintain it as a private mill for grinding his own grain, and this free from legislative control; but if the proprietor assumed to serve the general public, he thereby dedicated his mill to the public use and subjected it to such legislative control as was appropriate to that status. In such cases, the mills were regarded as so necessary to the existence of the communities which they served as to justify the government in fostering and maintaining them and imposing limitations upon their operation for the protection of the public. Id.

In Chickasha Cotton Oil Co. v. Cotton County Gin Co., 40 F.2d 846, three Circuit Judges passed upon the constitutionality of the Oklahoma Cotton Ginning Act. Opinions were delivered seriatim, all to the effect, but for varying reasons, that the business of operating cotton gins in Oklahoma was clothed with a public interest. One of the judges thought that the rule in respect of grist mills should apply by analogy, on the ground of the similarity of service. The rule that mills whose services are open to all comers are clothed with a public interest was formulated in the light, and upon the basis, of historical usage, which had survived the limitations that otherwise might be imposed by the due process clause of the Fourteenth Amendment. While the cotton gin has no such background of ancient usage, and, as the opinion by Judge Phillips points out, there is always danger of our being led afield by relying overmuch upon analogies, the analogy here is not without helpful significance.

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In that connection, we also may consider Clark v. Nash, 198 U.S. 361, and Strickley v. Highland Boy Gold Mining Co., 200 U.S. 527, which dealt with the cognate question of what is a public use in respect of which the right of eminent domain may be exercised. The cases involved a statute of the State of Utah, which declared:

The cultivation and irrigation of the soil, the production and reduction of ores, are of vital necessity to the people of the State of Utah; are pursuits in which all are interested and from which all derive a benefit; and the use and application of the unappropriated waters of the natural streams and water courses of the State to the...

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