Arkansas Railroad Commission v. Castetter

• Decision Date: 23 December 1929
• Docket Number: 73
• Citation: 22 S.W.2d 993,180 Ark. 770
• Parties: ARKANSAS RAILROAD COMMISSION v. CASTETTER. CAP. F. BOURLAND ICE COMPANY v. FRANKLIN UTILITIES COMPANY
• Court: Arkansas Supreme Court

22 S.W.2d 993

180 Ark. 770

ARKANSAS RAILROAD COMMISSION v. CASTETTER.

CAP. F. BOURLAND ICE COMPANY v. FRANKLIN UTILITIES COMPANY

No. 73

Supreme Court of Arkansas

December 23, 1929

Appeal from Craighead Chancery Court, Western District; J. M Futrell, Chancellor; affirmed

Appeal from Sebastian Chancery Court, Fort Smith District; J. V Bourland, Chancellor; affirmed.

Decree affirmed.

G E. Garner, for appellant.

Horace Sloan and Joe C. Barrett, for appellee.

Rowell & Alexander, amici curiae.

Robinson House & Moses, Pryor, Miles & Pryor and Harry E. Meek, for appellant.

Dan W. Bryan, George F. Youmans and Geo. W. Dodd, for appellee.

Paul McKennon, amicus curiae.

Jno. W. Stayton, amicus curiae.

OPINION

BUTLER, J.

At the 47th session of the General Assembly of the State of Arkansas, act No. 55 was enacted for the purpose, as stated in the title, of "regulating the sale, delivery and distribution of ice, and vesting the Railroad Commission with jurisdiction over the same." The question to be determined in this case is whether the General Assembly, under the limitations upon the legislative power in the State imposed by the Constitutions of the United States and of Arkansas, can fix by law the price of manufacturing ice and provide regulations for the delivery and distribution of the same; and also whether those engaged in the manufacture and distribution of ice may be limited in number in any given territory.

It is claimed by the appellee that said act contravenes (a) the due process of law and the equal protection clauses of the Fourteenth Amendment to the Constitution of the United States, and that it is also invalid because it is in contravention of the Constitution of the State of Arkansas and of §§ 2, 3, 18 and 19 of article 2 of the Constitution of the State of Arkansas, because said act deprives the appellees of the right to engage in lawful business, and is a denial of equality of privileges, and authorizes the creation of a monopoly; and (b) that the provisions of the act authorizing the Railroad Commission to fix the price of ice is in contravention of the due process of law and the equal protection clauses of the Federal Constitution and similar clauses of the State Constitution, in that the ice business is not a business affected with a public interest.

1. There has of late years come into being a school of political science, numbering some of the leading thinkers of this country, which affirms that the aphorism, "competition is the life of trade," is illusory and false, and that the best method of protecting the public in the prices it must pay for commodities is that those commodities be manufactured and distributed by monopolies. It is argued that by this means excessive investments and expenses will be eliminated, and therefore an article may be produced and distributed to the consumer at a far less cost than by an unregulated competition. It has been said that "competition is at once an expensive and absolutely ineffective ultimate method of regulating either the rates or the service of the modern municipal public utility, and that the objection to competition is the economic one of the unnecessary duplication of the investment and expense of maintenance and operation of two parallel systems, where one could render adequate service at practically half the cost of the installation, maintenance, and even of operation." Our Legislature evidently had this idea in mind when it provided, by § 15 of the act under consideration, that the Railroad Commission should not issue certificates to any person, firm or corporation authorizing the manufacture, sale or delivery of ice at any point where the facilities for the manufacture, sale and distribution of ice already existing are sufficient to meet the public needs therein and in § 16 providing the procedure for carrying its provisions into effect; and also when, in § 17 of said act, it provided that in any city, * * * place or community where more than one person * * * is engaged in the manufacture, sale or distribution of ice, and the expenses of such may be decreased, or the business conducted in a satisfactory or economical manner, joint operation of the facilities used for the purposes aforesaid may be authorized, and where it is shown that any one or more of the separate businesses cannot be operated at a profit, or that it would be to the public benefit, then one or more of the parties might acquire the property of the others, or that the parties might consolidate their businesses, "it being the purpose to prevent the duplication of unnecessary plants, facilities and service, and to afford the public prompt and continuous service at just and reasonable prices."

This may be a sound economic policy, but we cannot consider the expediency of these provisions, for the question for our determination is not that of policy, but of power. In our opinion, these provisions run counter to the genius and policy of our organic law, because the virtual effect of the provisions in the statute adverted to is the creation of monopolies, which are abhorrent to the principles of common law and which are expressly inhibited by the framers of our Constitution, in the Bill of Rights contained in article 2 of the Constitution of 1874. By § 2 of said article, the right to acquire and possess property is recognized and its protection guaranteed. By § 3 of the article the declaration is made that no citizen shall be deprived of any right, privilege or immunity. By § 18 the General Assembly is prohibited from making any grant to any citizen or class of citizens of privileges or immunities which upon the same terms shall not equally belong to all citizens. Section 19 declares that "perpetuities and monopolies are contrary to the genius of the republic, and shall not be allowed." By § 29 the declaration is made "that everything in this article is excepted out of the general powers of the government, and shall forever remain inviolate, and all laws contrary thereto or to the other provisions herein contained shall be void."

A monopoly is said to be "an exclusive right granted to one person or class of persons of something which was before of common right." 41 C. J. 82. Bouvier's Law Dict. defines monopoly as "a grant by the sovereign power of the State, by commission or otherwise, by which the exclusive right of buying, selling, making, working or using anything is given." In Seattle v. Dencker, 58 Wash. 501, 108 P. 1086, it is said: "A monopoly exists when the sale or manufacture is restrained to one or to a certain number." The power to create exclusive privileges by legislative grant has long been recognized, but in all instances where this power is exercised the individual citizen had no inherent or natural right to engage in the occupation or to use the thing granted. Legislatures have from earliest times granted exclusive ferry, turnpike and wharfage rights, but this was because the thing granted was the exclusive property of the sovereign of which it might have exclusive use, or which it might grant to any designated agency. This is also true of what has now come to be designated as public utilities, such as railroads, municipal lighting and water plants, and the like. The reason for the right to make the exclusive grant was because the one to whom the grant was made could not operate without first permission of the State to exercise some right which was originally and exclusively in the sovereign, or to use the property of that sovereign. But in all of the cases where an exclusive privilege to conduct a business has been granted, the citizen had no right before the grant of the privilege to conduct such business. In other words, the thing granted was not something which was a natural or common right.

Power to grant an exclusive franchise, where it is shown in the particular case to be justified as a measure for the safety or interest of the public, is unquestioned, but it is essential that the thing granted be something that is not of natural or common right. For instance, one person cannot be restricted in his right to use and enjoy his property in a particular manner in order that another may use his property in that manner to a greater profit than he could if each was left free to use his own as he pleased. Commonwealth v. Bush (Ky.), 26 Am. Rep. 189.

In the case of New Orleans Gas Co. v. Louisiana Light Co., 115 U.S. 650, 6 S.Ct. 252, 29 L.Ed. 516, it was held that the right to operate gas works and to illuminate a city could not be exercised without special authority from the sovereign. The court said: "It is a franchise belonging to the State, and in the exercise of its police power the State could carry on the business itself or select one or several agents to do so."

The right of the Legislature to prohibit absolutely the engaging in a given calling cannot be doubted, where such calling is inherently injurious to the public health, safety or morals, or has a tendency in that direction ( State v. Armstrong, 38 Idaho 493, 225 P. 491; 33 A. L. R. 835; Mugler v. Kansas, 123 U.S. 623, 8 S.Ct. 273, 31 L.Ed. 205); and, having the right to prohibit it, would have the right, of course, to prescribe by whom or how the business might be conducted--to permit some to engage in it and deny it to others. But it cannot be said that the manufacture or sale of ice is either injurious to the public health, safety or morals, but, on the contrary, is a useful and necessary occupation. While the manufacture of ice is a modern industry, it is one in which any one might engage as a matter of common right, and did not originally come within the power of the State to license or regulate. Any person, having the means and inclination to engage in that business, might do so...