Obligations Resting upon Public Utilities. — Because the interests of the entire com munity are directly concerned in the manner in which a public utility is operated and because the public service company is almost invariably the recipient of some of the legal privileges already mentioned, it is necessary and natural that obligations and duties should be imposed on those who engage in public utility enter prises which do not rest upon the ordinary business man conducting an ordinary business. These obligations and duties may be set forth under the following heads: (1) The public utility must serve all who apply. The man who runs a dry-goods store or a carpenter shop may decline the patronage of persons with whom he does not care to deal. His reasons may be entirely arbitrary, but he is neverthe less within his rights. Not so with the public utility corporation. The nature of its busi ness makes necessary a very different rule. The law imposes upon it the obligation of serving any member of the public without dis crimination. The railroad company or the hotel cannot arbitrarily pick and choose their patrons. Refusal to serve any one who is entitled to demand its service not only sub jects the public utility management to an ac tion for damages but also will lead to the is suance by the courts of a writ of mandamus compelling it to perform the duty of rendering equal service to all. This rule is, however, subject to certain reasonable qualifications. A public utility, for example, may be under a duty to serve only the members of a certain class. Thus common carriers and hotels are obliged to serve only travelers and not those who wish to use their facilities for other pur poses. Also there is a duty to serve only those who comply with such reasonable regulations as may be made by the public utility manage ment in the interests of the convenience, health and safety of the public. (2) The public serv ice company must not only serve all who apply but it must give them equal service without discrimination. This does not mean actual identity of service nor does it preclude the establishment of proper systems of priorities, as in the case of emergencies of various kinds or in the transportation of perishable freight. But every member of the public must have the same chance to enjoy these special services. The requirement of equal service does not pre vent the segregation of the races by the estab lishment of so-called (Jim Crow) facilities on common carriers and the like. In such cases, however, the accommodations afforded, though not the same, must in the eye of the law be equal. (3) The public utility must make the same charges to all for the same service. Dis criminations and rebates are forbidden. This problem will be considered more fully at a later point. (4) The duty of furnishing ade quate service and suitable facilities rests upon those who engage in public utility enterprises. The private business man is free to give poor service or sell inferior goods. Those whose businesses are affected with a public interest must meet the reasonable standards of ef ficiency or quality set forth usually by corpo rate charter, franchise or statute. Water, gas and electricity must be supplied continuously and in stipulated quantities and railway coaches must be heated and kept clean. (5) Finally, public utility corporations are subjected to special rules of liability for loss or injury to their patrons in certain cases. In this regard innkeepers and common carriers are in a pe culiar position. They are held to have insured the safety of the goods or belongings of their patrons. They are liable for the loss of such property while in their possession, even with out fault upon their part. This is a rule of unusual strictness and it does not apply to other kinds of public utilities nor does any such absolute liability attach to common car riers or hotel-keepers for injuries to the per sons of their patrons. In fact apart from these special cases the duty which rests upon public service corporations to exercise due care in behalf of the safety of others is in no way peculiar. If the service rendered involves special danger of course special diligence is necessary to constitute reasonable care, but the law requires only the care which a reason able man under like circumstances would exert. Public service companies, however, are not permitted to enter into contracts by which they exempt themselves from all liability for loss or injury due to their negligence. Such con
tracts are regarded as contrary to public policy since they would tend to lower the standards of service rendered to the public. It is, how ever, within limits permissible to make con tracts limiting the amount of damages recover able for losses or to require patrons to place a valuation which shall be regarded as final upon goods transported by a common carrier.
Rights of Public Utilities.— The special obligations resting upon public service corpo rations are compensated not only by the special legal privileges already referred to but also by certain well-defined legal rights. (1) First, there is the right to reasonable compensation for the service rendered. There is no duty to furnish free service. This right may be en forced by placing a lien upon the property or belongings of the patron. It is also permissible for the public service company to ensure pay ment by requiring it in advance. (2) In the second place, there is the right to make rea sonable rules and regulations regarding the conduct of its business. The non-compliance with these rules by any person is sufficient justification for denying him the service to which he would otherwise be entitled. Such rules are those requiring decent and orderly deportment in inns or public conveyances. Or the rules may bear upon the liability of the management of the public utility for losses suffered by patrons, such as the familiar rule restricting the legal responsibility of hotels to the loss of property placed in checkrooms pro vided for that purpose.
The Need for Regulation of Public Utili ties.— From the foregoing discussion it is ob vious that the welfare of the public is vitally concerned with the manner in which the busi ness of a public utility is carried on. Public convenience and economic necessity may de mand that public service companies enjoy monopolistic privileges; but it is certainly im perative that any such monopoly be subjected to strict regulation in thepublic interest. Wherever a business is endowed with privileges and rights not commonly enjoyed, such a busi ness must be held rigidly accountable for the way in which those advantages are used. As public utilities have increased in number and variety, as modern society with the increasing complexity and insistence of its demands has become more vitally dependent upon the serv ices they render and as it has grown ever more apparent that, left to their own devices, public service corporations will usually serve their own interests at the expense of those of the public, the necessity of subjecting them to adequate and scientific regulation has come to be universally recognized. Public utility regulations may be conveniently grouped under three heads: first, regulation of rates charges; second, regulations to secure equality of service; third, special requirements in the interest of public convenience.Each of these forms of regulations may be briefly discussed.
Regulation of Rates.— Practically every public utility is subjected to regulation in the matter of rates. When a business is affected with a public interest either by reason of its monopolistic character or its enjoyment of pc culiar legal privileges, the public must be pro tected from exploitation through the charging of exorbitant rates. Otherwise public utilities would speedily become agencies of oppression instead of public service.
The question who is to determine what rates shall be charged for public utility services has been answered differently at different times. At the outset the view was taken that the legis lature should decide what the rate should be and that public service corporations who felt that the rate so fixed was unreasonably low had no remedy except to persuade the legis lature to change its mind. This was the view adopted by the Supreme Court of the United States in the famous case of Munn v. Illinois (94 U. S. 113), decided in 1876, sustaining the right of the legislature of Illinois to fix the charges made by grain elevators. This doc trine has been modified, however, in such a way as to subject the reasonableness of rates fixed either by direct action of the legislature or by commissions acting under its authority to scrutiny by the courts. The courts will not themselves determine what the rate should be as a rule of future policy but confine them selves to the task of approving or invalidating the rates established by legislative authority when the reasonableness of such rates is ques tioned by litigation.