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Central Law Journal.

ST. LOUIS, MO., OCTOBER 16, 1908

RIGHT OF EQUITY TO RESTRAIN CRIMINAL PROCEEDINGS INSTITUTED VEXATIOUSLY OR TO AFFECT THE EXERCISE OF CIVIL RIGHTS.

Of course the general rule is that equity will not use its extraordinary power of restraint to interfere with the enforcement of the criminal law. But notable exceptions have been made to this rule. Among these

is the one which we desire to discuss in this editorial, to-wit: Where the enforcement of the criminal law on the part of the proper officers is so evidently malicious, annoying and without foundation, as to injuriously and irreparably affect the civil rights of the party thus persecuted.

We were led into a discussion of this

question by a careful reading of the facts in the case of Ulster Square Dealer v. Fowler, III N. Y. Supp. 16. The plaintiff was a weekly newspaper, very radical and pessimistic, and much disliked in the neighborhood in which it is published. It seemed to cater to the most "undesirable" class in its circle of influence, and had made personal attacks upon citizens of high standing in the community, which were apparently so reckless and scurrilous as to aro se public opinion to the point where it demanded of the officers of the law that they suppress the sheet. The methods selected to meet this situation were not such as to reflect credit on the community. Instead of proceeding against the publisher as for criminal libel, and thus give him the opportunity to prove the truth of the serious charges he had made against leading citizens, the police department ordered the suppression of every issue which should contain any matter deemed "unlawful," because injurious to the moral welfare. This order was, in reality, a censorship of plain

tiff's publication, which he refused to permit, and resulted in his successful application to equity for permanent relief from what the court termed a "continuous trespass on his constitutional right freely to speak, write or publish his sentiments on all subjects." The court said: "No one can take upon himself the right of suppressing in advance the publication of the printed sentiments of another citizen on any public or private question. The defendants assert, however, that whatever they have done in the past in regard to the plaintiff's newspaper and intend to do in the future is but an enforcement of the criminal law, and that, therefore, this court should not lend its injunctive process to restrain them. They rely on Delaney v. Flood, 183 N. Y. 323, 76 N. E. 209, 2 L. R. A. (N. S.) 678, 111 Am. St. Rep. 759, in support of this assertion. This case. properly understood, and as applied by a long line of recent authorities, cannot be cited as an authority for the proposition that equity will not interfere with a seeming attempt to enforce the criminal law, but which is, in fact, a continuous trespass."

It will be observed that this is not a case where an officer of the law is attempting to enforce a void ordinance or statute to the great and irreparable injury of plaintiff, which, by the way, is the only possible ground for equitable interference, in that class of cases as a careful examination of the authorities will disclose. Nor is this a case where the right to enjoin a contemplated action is resisted on the ground that such act if committed would be a violation of the criminal law. The question here is: Can equity enjoin a criminal prosecution. under a valid statute where such prosecution takes the form of persecution and the evident attempt of the police authorities is to force a person to submit to their construction of the law, whatever courts juries may decide, or adopt means for the enforcement of any particular law, which are in no sense justifiable, but are adopted to deprive the defendant of certain civil rights, or simply because, as in the princi

or

pal case, the officers of the law are assured of, the support of local public opinion.

After carefully sifting the decisions we have been able to find very few authorities which discuss this particular question, but the result of our research is that the court in the principal case, although citing no authorities, has stumbled upon a rule that has a sound basis in principle. Not, however, on the ground of a “continuous trespass" for the action of the police in the principal case was a repeated, not a continuous trespass, but on the ground that the attempted prosecution was purely vexatious and a misapplication of the law resulting in injury to the plaintiff's property rights. This was the reason given in Atlanta v. Gas Light Co., 71 Ga. 106, where defendant was threatened with the arrest of all employees who attempted to lay pipes on the streets of Atlanta, in alleged violation of an ordinance preventing the wanton and unauthorized tearing up of the streets. The prosecutions were purely vexatious and intended to affect certain civil rights of the complainant. The court said: "That said persons as may be put on trial can successfully defend themselves, the complainant doubts not. But that is not a matter with which complainant has any concern. But the prevention of said employees from distributing said mains and laying them in their proper places, by any arrest, will be a trespass upon the rights of this complainant. guaranteed by its charter. . . Where it is manifest that a prosecution and arrest is threatened for an alleged violation of city ordinances for the sole purpose of preventing the exercise of civil rights conferred directly by law, injunction is а proper remedy to prevent injury to the party thus menaced." To same effect: Shinkle v. Covington, 83 Ky. 420, loc. cit. 439. So also in Yellowstone Kit v. Wood, 18 Tex. Civ. App. 683, 43 S. W. 1068, the court specifies as one of the exceptions to the rule that equity will not enjoin a criminal proceeding: "To prevent repeated prosecutions, wrongfully instituted, for the purpose of vexing or harassing the defendant therein."

NOTES OF IMPORTANT DECISIONS

LIFE INSURANCE-POWER OF STATE TO DETERMINE FORM AND PROVISIONS OF LIFE INSURANCE POLICIES.-In 1907 Massachusetts which has always taken front rank in the strict regulation of life insurance, passed a law giving the insurance commis. sioner of the state the power to judge of the sufficiency of the forms of life insurance policies to be issued in the state of Massa chusetts using as standards of form certain substantive provisions declared by the legis lature.

In the case of New York Life Insurance Company v. Hardison, Ins. Comr., 85 N. E. 410, the constitutionality of this act was upheld under the police power and under the power to regulate corporations. The court said:

"The insurance commissioner is an administrative officer. The legislature prescribed the requirements in the forms of policies. It did not see fit to prescribe a standard form for life insurance componies, but stopped with an enactment of substantive provisions for all policies. It was proper to leave to the insurance commissioner the management of details in the administration of the law. It was proper to prohibit the use of policies that did not conform to the law, and to punish disobedience on the part of an insurance company. It was a reasonable regulation to require companies to submit the forms of policies to the insurance commissioner before using them, so that he could see whether the law was being obeyed. His duty was to ap prove of every form of policy that seemed to him correct. The insurance companies, after submitting their forms to him, had nothing to do but to go on with their business, unless he made objection within thirty days. If he made such objection, they were given a right to bring a suit in this court for the determina tion of the question whether their proposed action was within the law. With the power of regulation of the business of insurance, and of the conduct of corporations, domestic and foreign, belonging to the legislature, it seems to us that such companies may be forbidden to issue policies that are deemed contrary to law by an administrative officer, until the court can determine the legal ques tions involved. The insurance commissioner cannot decide finally, nor exercise any judicial power in the premises. In these cases, the companies failed to satisfy an administrative officer, acting for the protection of the public, that they were proceeding legally. The statute declares that thereupon, they shall do no more business until there is a judicial determination of their rights by this

court. This part of the case is covered by the decision in Provident Savings, etc., Society v. Cutting, 181 Mass. 261, 63 N. E. 433, 92 Am. St. Rep. 415, and there are many other cases in which authority somewhat like this is held to have been rightly exercised by public officers. Insurance Company v. Wilder, 40 Kan. 561, 20 Pac. 265; State ex rel. v. Moore, 42 Ohio St. 103; Brodbine v. Revere, 182 Mass. 598, 66 N. E. 607; Com. v. Sisson, 189 Mass. 247, 75 N. E. 619, 1 L. R. A. (N. S.) 752, 109 Am. St. Rep. 630."

The right of the legislature to prescribe a standard form of policy has been assumed in many cases. Quinn v. Fire Association, 180 Mass. 560, 62 N. E. 980; Hewins V. London Assurance Company, 184 Mass. 177-183, 68 N. E. 62; Boyden v. Massachusetts Masonic Association, 167 Mass. 242, 45 N. E. 735; Quinlan v. Providence, etc., Insurance Company, 133 N. Y. 356-365, 31 N. E. 31, 28 Am. St. Rep. 645; King v. Concordia Fire Insurance Company, 140 Mich. 258, 103 N. W. 616; Dowling v. Lancashire Fire Insurance Company, 92 Wis. 63, 65 N. W. 738, 31 L. R. A. 112; Anderson v. Manchester Fire Insurance Company, 59 Minn. 182, 60 N. W. 1095, 63 N. W. 241, 28 L. R. A. 609, 50 Am. St. Rep. 400; O'Neill v. American Fire Insurance Company, 166 Pa. 72, 30 Atl. 943, 26 L. R. A. 715, 45 Am. St. Rep. 650.

REGULATION OF RATES TO BE CHARGED BY PUBLIC SERVICE CORPORATIONS-I, MISCELLANEOUS ENTERPRISES AFFECTED WITH A PUBLIC INTEREST.*

In General.-In European countries the regulation of price was a very common practice in carly times. And the power which concerned itself with this practice had no well defined limitation. But in this country,* the constitutions of our national government and of the several states, prescribe a limit to the exercise of such

power.

Our natural and civil liberty to form business relations irrespective of state interference is one among the fundamental rights of American citizens. It is our right and liberty to determine the terms and conditions of the contract upon which our business relations are founded. As a general rule, a man has the right, and is free to ask and receive whatever price he chooses, or is able to obtain, for his goods or services. And he is under no obligation to sell his goods or services. unless he gets his own price. On the other hand,

*Part II. in next week's issue will discuss this same subject as affecting railroad companies exclusively.

no one else is entitled to, or has a right to his goods or services, unless such other person is willing to pay his price, even if the price is unreasonable. To this rule, however, there are some exceptions, which it is our purpose to consider in this article.

The right to demand and receive whatever price one pleases for his property or services, applies only to property or services which are of à private character. But when a business is in any way related to, or is rendered more valuable by special privileges or franchises conferred by the state, and which are not enjoyed by all persons alike, such business is looked upon in law as of a quasi-public character, and may be subjected to state regulation. And not only may a business be regulated which is in the nature of a franchise or special privilege, but the state claims and exercises the right to control a business which is "affected with a public interest." That is to say, when one devotes his property to a use in which the public has an interest, or uses it in a manner to make it of public consequence and affect the community at large, such property is for these reasons, deemed to be "clothed with a public interest," permitting its control or regulation by the state.

The clause usually embodied in our Bills of Rights, "that no person shall be deprived of property without due process of law," has never been construed by the courts of any state whose constitution has such a provision, as to deny the legislature power to make all needful rules and regulations respecting the use and enjoyment of property.1 In the exercise of the powers of government it has been customary to regulate the conduct of its citizens one towards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good. Not including those kinds of business over which the state exercises special control in the interest of peace, health, safety and morals, and which involve only the police power in the narrower sense of the term, it has been customary in England from time immemorial, and in this country from its first colonization, in the exercise of the power of government, to regulate public ferries,2 mills, common carriers, innkeepers, bakers, hackmen7;

(1) Munn v. People, 69 Ill. 80.

(2) Chenargo Bridge Co. v. Paige, 83 N. Y. 179; New York v. Starin, 106 N. Y. 1; Power v. Athens, 99 N. Y. 592; Spader v. N. Y. Elevated R. Co., 3 Abb. N. C. 467.

(3) State v. Edwards, 86 Me. 102; 15 Viner's Abr. 398, 399; Cooley, Const. Lim. 735. See Part II.

(4)

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besides such things as the use of money;s and in so doing to fix a maximum of charge to be made for services rendered, accommodations furnished, and articles sold or hypothecated.

In searching for the principle upon which the power to regulate property rests reference is made to the common law. Lord Chief Justice Hale, said more than two centuries ago, that when property is "affected with a public interest it ceases to be juris privati."10 This has been accepted without objection as an essential element in the law of property ever since. Property becomes clothed with a "public interest" when used in a manner to make it of public consequence, and affect the public generally. When an individual devotes his property to a use in which the public has an interest, the law regards him as granting to the public an interest in that use, and as a result, he must submit to be controlled by the public for the common good to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but so long as he maintains the use, he must submit to the control of the public.11

The power of the legislature to control public service corporations is subject to the constitutional limitations designed to protect persons against oppressive action by a state amounting to a deprivation of their property without compensation, or without due process of law.12 But the legislative regulation of a business carried on under special privileges, or affected with a public

94.

(8)

(9)

See Tiedeman, Lim. Police Power, sec.

"To this day statutes are to be found in many of the states upon some or all of these subjects, and it has never been successfully contended that they come within any of the constitutional prohibitions against interference with private property." Munn v. Illinois, 94 U. S. 113. See generally on the subject of regulating prices; Ames v. R. R. Co., 64 Fed. Rep. 165; Chicago, etc. R. Co. v. Becher, 32 Fed. Rep. 849; Smith v. R. R. Co., 114 Mich. 460; Cooley, Const. 'Law, 234.

(10) De Portibus Maris, 1 Harg. Law Tracts, 78.

(11) People v. Budd, 117 N. Y. 1; Munn v. People, 69 Ill. 80; same. 94 U. S. 113; Budd v. State, 143 U. S. 517; Allnut v. Ingles, 12 East 527; Lake Shore, etc. R. Co. v. R. R. Co.; 30 Ohio St. 604; State V. Columbus Gas Co., 34 Ohio St. 572. See Hockett v. State, 105 Ind. 250; N. J. S. N. Co. v. Bink, 6 How. 344; Sinking Fund Cases, 99 U. S. 747. In Munn V. People, supra it was held that when a business or employment becomes a matter of such public interest or importance as to create a common charge or burden upon the citizen; or, in other words, when it became a practical monopoly, to which the citizen is compelled to resort, and by means of which a tribute can be exacted from the community, it is subject to regulation by the legislature. See Sinking Fund Cases, supra; 25 L. Ed. 511, to same effect.

(12) Western Union Tel. Co. v. Myatt, 98 Fed. Rep. 335.

interest is not a taking of property within the meaning of the constitution, even where it reduces the profits realized from such business, unless it amounts to a virtual confiscation.13

Private Property-Power to Regulate Does Not Depend on Legal Monopoly.-It must be conceded that the uses to which a man may devote his property, the price which he may charge for such use, how much he shall demand or receive for his labor, and the methods of conducting his business are, as a general rule, not the subject of legislative regulation. These are a part of his liberty, of which, under the constitutional guaranty, he cannot be deprived. The merchant and manufacturer, the artisan and laborer, under our system of government, åre left to pursue and provide for their own interests in their own way, untrammeled by burdensome and restrictive legislation which, however, common in rude and irregular times, is inconsistent with constitutional liberty.14 "There is no doubt," said Lord Ellenborough, "that the general principle is favored, both in law and justice, that every man may fix what price he pleases upon his own property or the use of it; but if, for a particular purpose, the public have a right to resort to his premises and make use of them, and he have a monopoly in them for that purpose, if he will take the benefit of that monopoly, he must, as an equivalent, perform the duty attached to it on reasonable terms."15 The power of the legislature, however, to regulate charges for the use of property and the rendition of services connected with it, does not depend in every case upon the circumstance that the owner of the property has a legal monopoly or privilege to use the property for the particular purpose. Private property "affected by a public interest" cannot justly be restricted as meaning only property clothed with a public character by special grant or charter of the state. The control which, by common law and statute, is exercised over common carriers is conclusive upon the point that the right of the legislature to regulate the charges for services in connection with the use of property, does not, in every case, depend upon the question of legal monopoly. And this is true of the control exercised over such matters as the interest on money, hackmen, ferrymen, innkeepers and wharfingers.16 The right of public regulation in these cases cannot be placed upon the ground of special privileges conferred by the public on those affected. The underlying principle is, that business of certain kinds holds such a peculiar re

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lation to the public interest that there is superinduced upon it the right of public regulation.17

But

Firing Compensation for Services Rendered, and for the Use of Property-Maximum Charges. -In countries where the common law prevails, it has been customary for a long time for the legislative department to declare what shall be a reasonable compensation for services rendered in the public employments, or for the use of property in which the public has an interest.18 Undoubtedly, in mere private contracts, relating to matters in which the public has no interest, what is reasonable must be ascertained judicially, this is because the legislature has no control over such a contract. The common law rule, which requires the charge to be reasonable, is itself a regulation as to price. Without it the owner could make his rates at will, and compel the public to yield to his terms, or forego the use. But the law itself, as a rule of conduct, may be changed at the will of the legislators. Indeed, the great office of statutes is to remedy defects in the common law as they are developed, and to adapt it to the changes of time and circumstances. To limit the rate of charge for services rendered in a public employment, or for the use of property in which the public has an interest, is only changing a regulation which existed before, and establishes no new principle in the law.19

While the legislature may constitutionally declare what shall be a reasonable compensation for services rendered in the public employments, or for the use of property clothed with a public interest; or may fix a maximum, beyond which any charge would be unreasonable,20 such power of limitation

or

(17) People v. Budd, supra; Spring Valley Water Works v. Schottler, 110 U. S. 347.

(18) Munn v. Illinois, 94 U. S. 113; Budd v. New York, 143 U. S. 517; C. B. & Q. R. Co. v. Iowa, 94 U. S. 155; Peik v. R. R. Co., 94 U. S. 164; C. M. & St. P. R. Co. v. Ackley, 94 U. S. 179; Stone v. Wisconsin, 94 U. S. 181; Dow v. Beidelman, 125 U. S. 680.

(19) See Dow v. Biedelman, 125 U. S. 680; Munn v. People, 94 U. S. 113.

(20) In addition to the cases cited in the foregoing notes, see: Winona & St. P. R. Co. v. Blake, 94 U. S. 180; Ruggles v. Ilinois, 108 U. S. 526; Ill. Cent. R. R. Co. v. Illinois, 108 U. S. 541; Stone v. Farmer's L. & T. Co., 116 U S. 347; Stone v. R. R. Co., 116 U. S. 352; Brass v. State, 153 U. S. 391; Bondholders v. Road Comrs. Fed. Cases, No. 1, 625; Tilly v. Savannah, F. & W. R. Co., 5 Fed. Rep. 641; Spring Valley Water Works v. Bartlett, 16 Fed. Rep. 615; C. M. & St. P. R. Co. v. Becher, 32 Fed. Rep. 849; Lawrence v. R. R. Co., 94 U. S. 164; So. Minn. R. Co v. Coleman, 94 U. S. 181; State v. Gas Co., 34 Ohio St. 572; Ruggles v. People, 91 Ill. 256; Nash v. Page, 80 Ky. 539; Webster Tel. Case, 17 Neb. 126; Hockett v. State, 105 Ind. 250; Cent. U. T. Co. v. State, 106 Ind. 1; Same v. State, 118 Ind. 194; Chesapeake & P. Tel. Co. v. Baltimore, etc. Tel. Co., 66 Md. 399; Delaware, L. & W. R. Co. v. Cent., etc. Co., 45 N. J. Eq. 50; Wabash, St.

regulation is not without limit. It is not a power to destroy, or a power to compel the doing of services, or permitting the use of property, without reward. Neither is it a power to take private property for public use without just compensation or without due process of law.21 Legislation which prevents a fair and reasonable return, the rights of the public considered, for capital engaged in a legitimate enterprise, is held to be a taking of property within the meaning of the constitution.22

Privileges and Franchises-Gas Companies.As we have observed, the state may regulate charges where the business is one the following of which is not a matter of right, but is permitted by the state as a privilege or franchise, as in the case of turnpike companies,28 the business of setting up lotteries, of giving shows, keeping billiard tables for hire, selling intoxicating drinks, the keeping of ferries and toll bridges.24 And when, for the accommodation of the business, special privileges are given in the public streets,25 or an exceptional use is allowed of public property or public easements, as in the case of hackmen, draymen, regulation of charges is within the power of the legislative department of the state. And this is true in those cases where exclusive privileges are granted to an individual or set of men, in consideration of some special return to

L. & P. R. Co. v. Illinois, 118 U. S. 557; Georgia R. & etc. Co. v. Smith, 128 U. S. 174; Zanesville v. Zanesville Gas, etc. Co., 47 Ohio St. 1; Clyde v. R. R. Co., 57 Fed. Rep. 436; Huidepofer v. Duncan, Id.; Munn v. People, 69 Ill. 80; In re Annan, 50 Hun. 413; People v. Budd, 117 N. Y. 1; State v. Brass, 2 N. H. 482; Sinking Fund Cases, 99 U. S. 700; Spring Valley Water Works v. Schottler, 110 U. S. 347; Lake Shore & M. S. R. Co. v. Cinn., 30 Ohio St. 604; Davis v. State, 68 Ala. 58; Baker v. State, 54 Wis. 368; Girard Pt. Storage Co. v. Southwark Co., 105 Pa. St. 248; Sawyer v. Davis, 136 Mass. 239; Brechbill v. Randall, 102 Ind. 258; Stone v. R. R. Co., 62 Miss. 607.

(21) Dow v. Biedelman, 125 U. S. 680.

(22) Georgia R. & Bkg. Co. v. Smith, 128 U. S. 174; Cotting v. Kan. City Stk. Yds. Co., 79 Fed. Rep. 679. To enable the court to determine what is a reasonable return for the use of property, it must have before it all the facts relating to the particular business. The actual present value of its property, and not its cost, is to be taken as the basis. San Diego, etc. Co. v. Jasper, 89 Fed. Rep. 274; Smyth v. Smyth, 171 U. S. 361; Smyth v. Higginson, 169 U. S. 466. See Merritt v. Knife Fall Co., 34 Minn. 245; Stimson v. Muskegan Co., 100 Mich. 347; The Ann Ryan, Fed. Cases, No. 428; The John M. Welch, Fed. Cases, No. 7,357; Smyth v. Ames, 169 U. S. 466; San Diego, etc. Co. v. City, etc. 74 Fed. Rep. 79; St. L. San Fran. R. Co. v. Gill, 156 U. S. 649; Covington Turnp. Co. v. Sanford, 164 U. S. 578; Wellman v. R. R. Co., 83 Mich. 593.

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