Social Control of Public Utilities

SOCIAL CONTROL OF PUBLIC UTILITIES Public service enterprises are regulated by governments through out the civilized world. It is impossible in this article to trace this development or to outline the present structure of regulation. Those desiring a detailed presentation are referred to the bibliog raphy. In this summary is mainly given a discussion of the de velopment of social control of public utilities in Anglo-American countries. The regulation of national systems of transportation and communication is also excluded except in so far as their prior development has influenced the course of regulation of local utilities.

Munn v. Illinois Decision.

The legal basis of public utility regulation may best be disclosed by considering the famous decision of the U.S. Supreme Court in Munn v. Illinois (94 U.S. 113 [1876]). In this decision is focused the common historico-legal background of public utility regulation in both the United States and Great Britain. Munn v. Illinois involved the validity of an Illi nois statute fixing maximum rates for storing grain in elevators at Chicago. Munn had been engaged in the elevator business since 1862, long before the enactment of the statute, and had been in the habit of charging rates fixed by agreement among the elevator owners in Chicago and had continued to charge these rates al though they were in excess of those fixed by the act. Munn was convicted and fined in the State courts but appealed to the U.S. Supreme Court upon the ground that the act violated the i4th amendment in that it deprived him of his property without due process of law.

Chief Justice Waite, in upholding the validity of the statute, said in substance that under the circumstances in which the ele vators were being operated in Chicago, that is, standing in "the very gateway of commerce and taking toll from all who pass," they had become business "affected with a public interest and had ceased to be juris private only." This was not his own language but was quoted from Lord Chief Justice Hale who had penned it some 200 years ago in England. This legal doctrine, he said, had been a rule of the law of property ever since ; that under this rule and in exercising the police power of the State, "it had been cus tomary in England from time immemorial and in America from its first colonization to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeepers, and so forth," and to fix maximum charges. In further explanation of this "public interest" doctrine, the court said that private property is being used "in a manner to make it of public consequence, and affecting the com munity at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and 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." In a recent case (Charles Wolff Packing Co. v. Court of Indus trial Relations of the State of Kansas, 262 U.S. 522 [1923]), Chief Justice Taft of the U.S. Supreme Court gave further pre cision to this "public interest" doctrine by saying: "In a sense, the public is concerned about all lawful business because it con tributes to the prosperity and well-being of the people. The public may suffer from high prices or strikes in many trades, but the ex pression 'clothed with a public interest' as applied to a business means more than that the public welfare is affected by continuity or by the price at which a commodity is sold or a service rendered. The circumstances which clothe a particular kind of business with a public interest, in the sense of Munn v. Illinois and other cases, must be such as to create a peculiarly close relation between the public and those engaged in it, and raise implications of an affirma tive obligation on their part to be reasonable in dealing with the public." Obligations of Public Utilities.—The affirmative obligations upon public utilities arising out of their peculiarly close relation to the public are usually spoken of as that system of rights and duties which constitutes the law of public service undertakings. Briefly, this law places upon a public utility the extraordinary duty to render reasonably adequate service to all who apply. It is required to serve them up to the limit of its capacity, with capacity being defined as the limit of profitableness. It may not let customers' wants go unsatisfied. Nor may it attach unrea sonable conditions to contracts for service so as in effect to negative its duty "to serve all corners." Furthermore, it must serve without discrimination all customers similarly circum stanced. Finally, a public utility must observe more than ordinary care in the rendition of service in view of the dependence of the public. On the other hand, the law concedes a public utility the right to collect a reasonable price, to render service subject to reasonable rules and regulations, and to withdraw service under prescribed conditions after giving notice to customers. While cus tomers are given the right to demand that a public utility live up to its duties, they are, on the other hand, required to accept recip rocal obligations.