Southwest Utility Ice Co. v. Liebmann

Citation52 F.2d 349
Decision Date20 August 1931
Docket NumberNo. 405,406.,405
PartiesSOUTHWEST UTILITY ICE CO. v. LIEBMANN. NEW STATE ICE CO. v. SAME.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

J. B. Dudley, of Oklahoma City, Okl., and Guy L. Andrews, of McAlester, Okl. (J. H. Everest and Phil D. Brewer, both of Oklahoma City, Okl., Andrews & Aston, of McAlester, Okl., and Rainey, Flynn, Green & Anderson and E. S. Ratliff, all of Oklahoma City, Okl., on the brief), for appellants.

Geo. M. Nicholson and Thos. H. Owen, both of Oklahoma City, Okl. (M. A. Looney, of Oklahoma City, Okl., on the brief), for appellee.

Before COTTERAL, PHILLIPS, and McDERMOTT, Circuit Judges.

PHILLIPS, Circuit Judge.

These suits involve the constitutionality of chapter 147, Okla. Sess. Laws 1925, the provisions of which are set forth in marginal note.1

The Southwest Utility Ice Company and the New State Ice Company, hereinafter called plaintiffs, are engaged in the manufacture, sale, and distribution of ice at Oklahoma City under licenses issued by the Corporation Commission pursuant to chapter 147, supra. The last license in the record expired June 30, 1930. Renewals of such licenses are neither pleaded nor proven. This alone would justify an affirmance of the decree below 42 F.(2d) 913, but, in view of the statement of plaintiffs' counsel at the oral argument that such licenses were in fact renewed, we proceed to a consideration of the merits.

If the statute is valid, a license issued thereunder is a property right in the nature of a franchise granted in consideration of the performance of a public service and is within the protection of the Fourteenth Amendment. Frost v. Corporation Commission of State of Oklahoma, 278 U. S. 515, 519, 520, 49 S. Ct. 235, 73 L. Ed. 483.

In February, 1930, Liebmann, hereinafter called defendant, commenced the construction of an ice manufacturing plant in Oklahoma City and was about to engage in the manufacture, sale, and distribution of ice in that city without first having obtained the license required by chapter 147, supra. Plaintiffs brought separate suits to enjoin defendant from so doing. The two suits were consolidated for trial.

These cases present the single question: Is the business of manufacturing and selling ice of such a character that it is subject to regulation to the extent of requiring a certificate of convenience and necessity before a person may engage in such business? Or, to put it another way, may the state prohibit one man from manufacturing ice on his own property and selling it to his neighbor at a price they mutually agree upon? The trial court answered these questions in the negative, and entered a decree dismissing the bills.

Prior to the enactment of chapter 147, supra, the Corporation Commission from time to time by order had regulated the price of ice, and its authority so to do had been upheld by the Supreme Court of Oklahoma in Oklahoma L. & P. Co. v. Corporation Commission, 96 Okl. 19, 220 P. 54. The Corporation Commission, under powers granted by prior statutes, had also made and enforced regulations governing the manufacture and sale of ice, to insure honest weights, pure and wholesome ice, and adequate delivery service. By chapter 147, supra, the Legislature undertook to grant the additional power to regulate by limiting the number of persons who might engage in the ice business in a given territory.

While there is no such thing as absolute freedom of the citizen to engage in a lawful business, to make lawful use of his property, or to contract with respect thereto, and such rights are subject to a great variety of restraints, freedom in respect thereto is the general rule, and restraint thereof the exception; and the exercise of legislative authority to abridge such rights can be justified only by the existence of exceptional circumstances. Adkins v. Children's Hospital, 261 U. S. 525, 546, 43 S. Ct. 394, 67 L. Ed. 785, 24 A. L. R. 1238; Ribnik v. McBride, 277 U. S. 350, 356, 48 S. Ct. 545, 72 L. Ed. 913, 56 A. L. R. 1327.

In Williams v. Standard Oil Co., 278 U. S. 235, 49 S. Ct. 115, 116, 73 L. Ed. 287, 60 A. L. R. 596, the court said:

"It is settled by recent decisions of this court that a state Legislature is without constitutional power to fix prices at which commodities may be sold, services rendered, or property used, unless the business or property involved is `affected with a public interest.' * * * That phrase, however it may be characterized, has become the established test by which the legislative power to fix prices of commodities, use of property, or services, must be measured. As applied in particular instances, its meaning may be considered both from an affirmative and a negative point of view. Affirmatively, it means that a business or property, in order to be affected with a public interest, must be such or be so employed as to justify the conclusion that it has been devoted to a public use and its use thereby in effect granted to the public. * * * Negatively, it does not mean that a business is affected with a public interest merely because it is large or because the public are warranted in having a feeling of concern in respect of its maintenance."

In Tyson & Bro. v. Banton, 273 U. S. 418, 47 S. Ct. 426, 428, 71 L. Ed. 718, 58 A. L. R. 1236, the court said:

"The authority to regulate the conduct of a business or to require a license, comes from a branch of the police power which may be quite distinct from the power to fix prices. The latter, ordinarily, does not exist in respect of merely private property or business, Chesapeake & Potomac Tel. Co. v. Manning, 186 U. S. 238, 246, 22 S. Ct. 881, 46 L. Ed. 1144, but exists only where the business or the property involved has become `affected with a public interest.' * * *

"A business is not affected with a public interest merely because it is large or because the public are warranted in having a feeling of concern in respect of its maintenance. Nor is the interest meant such as arises from the mere fact that the public derives benefit, accommodation, ease, or enjoyment from the existence or operation of the business; and, while the word has not always been limited narrowly as strictly denoting `a right,' that synonym more nearly than any other expresses the sense in which it is to be understood.

"The characterizations in some decisions of businesses as `quasi public' (People v. King, 110 N. Y. 418, 428, 18 N. E. 245, 1 L. R. A. 293, 6 Am. St. Rep. 389), `not "strictly" private' (Aaron v. Ward, 203 N. Y. 351, 356, 96 N. E. 736, 38 L. R. A. N. S. 204), and the like, while well enough for the purpose for which they were employed, namely, as a basis for upholding police regulations in respect of the conduct of particular businesses, cannot be accepted as equivalents for the description `affected with a public interest,' as that phrase is used in the decisions of this court as the basis for legislative regulation of prices. The latter power is not only a more definite and serious invasion of the rights of property and the freedom of contract; but its exercise cannot always be justified by circumstances which have been held to justify legislative regulation of the manner in which a business shall be carried on. * * *

"The significant requirement is that the property shall be devoted to a use in which the public has an interest, which simply means, * * * that it shall be devoted to `a public use.' Stated in another form, a business or property, in order to be affected with a public interest, must be such or be so employed as to justify the conclusion that it has been devoted to a public use and its use thereby in effect granted to the public."

However, the fact that a business is "affected with a public interest" does not subject it to unlimited regulation. In Wolff Packing Co. v. Court of Industrial Relations, 262 U. S. 522, 43 S. Ct. 630, 634, 67 L. Ed. 1103, 27 A. L. R. 1280, the court said:

"To say that a business is clothed with a public interest is not to determine what regulation may be permissible in view of the private rights of the owner. The extent to which an inn or a cab system may be regulated may differ widely from that allowable as to a railroad or other common carrier. It is not a matter of legislative discretion solely. It depends on the nature of the business, on the feature which touches the public, and on the abuses reasonably to be feared. To say that a business is clothed with a public interest is not to import that the public may take over its entire management and run it at the expense of the owner. The extent to which regulation may reasonably go varies with different kinds of business. The regulation of rates to avoid monopoly is one thing. The regulation of wages is another. A business may be of such character that only the first is permissible, while another may involve such a possible danger of monopoly on the one hand, and such disaster from stoppage on the other, that both come within the public concern and power of regulation."

In Tyson & Bro. v. Banton, supra, the court further said:

"The right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself, Case of the State Freight Tax, 15 Wall. 232, 278, 21 L. Ed. 146, and, as such, within the protection of the due process of law clauses of the Fifth and Fourteenth Amendments. See City of Carrollton v. Bazzette, 159 Ill. 284, 294, 42 N. E. 837, 31 L. R. A. 522. The power to regulate property, services, or business can be invoked only under special circumstances; and it does not follow that because the power may exist to regulate in some particulars it exists to regulate in others or in all."

A state may not, under the guise of protecting the public, arbitrarily prohibit a person from engaging in a lawful, private business, or impose unreasonable and unnecessary restrictions upon such a business. Burns Baking Co. v. Bryan, 264 U. S. 504, 513, 44 S. Ct. 412, 68 L. Ed....

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    ...Wolff Packing Co. v. Kansas, 43 S.Ct. 630, 262 U.S. 522, 67 L.Ed. 1103, 27 A. L. R. 1280; New State Ice Co. v. Liebmann, 76 L.Ed. 479, 52 F.2d 349; Alliance Ins. Co. v. Barnes, 189 F. 769; German Alliance Ins. Co. v. Lewis, 34 S.Ct. 612, 233 U.S. 389, 58 L.Ed. 1011, L. R. A. 1915C, 1189; St......
  • Duncan v. City of Des Moines
    • United States
    • United States State Supreme Court of Iowa
    • July 31, 1936
    ...... guaranteed by the federal Constitution.". . .          . Southwest Utility Ice Co. v. Liebmann, 52 F.2d 349,. 352, a decision by the Circuit Court of Appeals of the ......
  • Russell v. Walker
    • United States
    • Supreme Court of Oklahoma
    • October 11, 1932
    ...of prohibition is denied." ¶43 The Circuit Court of Appeals of the Tenth Circuit, in Southwest Utility Ice Co. v. Liebmann, New State Ice Co. v. Same, 52 F.2d 349, had before it the provisions of chapter 147, Session Laws 1925 (sections 3684 to 3691, inclusive, O. S. 1931). That court said:......

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