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built its fertilizing factory in the designated locality. When the factory was put there, the country around about was swampy and nearly uninhabited. The evidence showed that this factory was an unendurable nuisance to the inhabitants for many miles around its location; that the stench was intolerable, producing nausea and discomfort and depreciating the value of near-by property. The company transported the offal used in its factory through the village of Hyde Park, which was about a mile from the factory. The village was incorporated by a charter authorizing it to abate a nuisance, and by ordinance the village forbade the transportation of offal or other unwholesome or offensive matter through the village and prohibited the maintenance of any offensive or unwholesome business within the limits of the village, or within one mile of those limits.
The company violated the ordinance and was fined in accordance with its provisions. The Supreme Court of Illinois sustained the fine, whereupon the company brought the case into the Supreme Court of the United States, claiming that it was protected by its charter from the enforcement against it of the ordinance complained of, and that its charter was a contract within the meaning of the contract clause of the Constitution of the United States.
MR. JUSTICE SWAYNE delivered the opinion of the court.
In the case before us it does not appear that the factory could not be removed to some other place south of the designated line, where it could be operated, and where offal could be conveyed to it from the city by some other railroad, both without rightful objection. The company had the choice of any point within the designated limits. In that respect there is no restriction.
The charter was a sufficient license until revoked; but we cannot regard it as a contract guaranteeing, in the locality originally selected, exemption for fifty years from the exercise of the police power of the State, however serious the nuisance might become in the future, by reason of the growth of population around it. The owners had no such exemption before they were incorporated, and we think the charter did not give it to them.
There is a class of nuisances designated "legalized." There are cases which rest for their sanction upon the intent of the law under which they are created, the paramount power of the Legislature, the principle of "the greatest good for the greatest number," and the importance of the public benefit and convenience involved in their continuance.
The decree of the Supreme Court of Illinois is affirmed.
NOBLE STATE BANK v. C. N. HASKELL, ET AL.
219 U. S. 104. 1911.
This was a proceeding against the Governor of the State of Oklahoma and other officials who constitute the State Banking Board to prevent them from levying and collecting an assessment from the Noble State Bank under an Act passed by the State in 1907. This act creates the Board and directs it to levy upon every bank existing under the Laws of the State an assessment of 1% of the bank's average daily deposits, with certain daily deductions, for the purpose of creating a depositors' guaranty fund. There are provisos for keeping up the fund, and by an Act passed March 11th, 1909, since the suit was begun, the assessment was raised to 5%.
The purpose of the fund is shown by its name. It is to secure the full repayment of deposits. When a bank becomes insolvent and goes into the hands of the bank commissioner, if its cash immediately available is not enough to pay depositors in full, the banking board is to draw from the depositors' guaranty fund (and from additional assessments if required) the amount needed to make up the deficiency. A lien is reserved upon the assets of the failing bank to make good the sum thus taken from the fụnd. The plaintiff said that it was solvent, and did not want the help of the guaranty fund, and that it could not be called upon to contribute toward securing or paying the depositors in other banks, consistently with Article I, Sec. 10, and the 14th Amendment of the Constitution of the United States. The petition was dismissed by the Supreme Court of the State.
MR. JUSTICE HOLMES delivered the opinion of the Court:
The reference to Article I, Sec. 10, does not strengthen the plaintiff's bill. The only contract that it relies upon is its charter. That is subject to alteration or repeal, as usual, so that the obligation hardly could be said to be impaired by the Act of 1907 before us, unless that statute deprives the plaintiff of liberty or property without due process of law. See Sherman v. Smith, I Black, 587. Whether it does so or not is the only question in the case. *
The substance of the plaintiff's (i. e., the bank's) argument is that the assessment takes private property for private use without compensation. And while we should assume that the plaintiff would retain a reversionary interest in its contribution to the fund, so as to be entitled to a return of what remained of it if the purpose were given up (see Danby Bank v. State Tieasurer, 39 Vt. 92, 98), still there is no denying that by this law a portion of its property might be taken without return to pay debts of a failing rival in business. Nevertheless, notwithstanding the logical form of the objection, there are more powerful considerations on the other side. In the first place, it is established by a series of cases that an ulterior public advantage may justify a comparatively insignificant taking of private property for what, in its immediate purpose, is a
private use: Clark v. Nash, 198 U. S. 361, etc.
And in the next, it would seem that there may be other cases besides the everyday one of taxation, in which the share of each party in the benefit of a scheme of mutual protection is sufficient compensation for the correlative burden that it is compelled to assume. See Ohio Oil Co. v. Indiana, 177 U. S. 190, etc. *
At least, if we have a case within the reasonable exercise of the police power as above explained, no more need be said.
It may be said in a general way that the police power extends to all the great public needs. Camfield v. United States, 167 U. S. 518. It may be put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare. Among matters of that sort probably few would doubt that both usage and preponderant opinion give their sanction to enforcing the primary conditions of successful commerce. One of those conditions at the present time is the possibility of payment by checks drawn against bank deposits, to such an extent do checks replace currency in daily business. If, then, the legislature of the State thinks that the public welfare requires the measure under consideration, analogy and principle are in favor of the power to enact it. Even the primary object of the required assessment is not a private benefit, as it was in the cases above cited of a ditch for irrigation or a railway to a mine, but it is to make the currency of checks secure, and by the same stroke to make safe the almost compulsory resort of depositors to banks as the only available means for keeping money on hand. The priority of claim given to depositors is incidental to the same object, and is justified in the same way. The power to restrict liberty by fixing a minimum of capital required of those who would engage in banking is not denied. The power to restrict investments to securities regarded as relatively safe seems equally plain. It has been held, we do not doubt, rightly, that the inspections may be required and the cost thrown on the bank. See Charlotte, C. & A. R. Co. v. Gibbes, 142 U. S. 386. The power to compel, beforehund, co-operation, and thus, it is believed, to make a failure unlikely and a general panic almost impossible. must be recognized, if government is to do its proper work, unless we can say that the means have no reasonable relation to the end. Gundling v. Chicago, 177 U. S. 183, etc.
* So far is that from being the case that the device is a familiar one. It was adopted by some States the better part of a century ago, and seems never to have been questioned until now. Danby Bank v. State Treasurer, 39 Vt. 92, etc.
It is asked whether the State could require all corporations or all grocers to help to guarantee each other's solvency, and where we are going to draw the line. But the last is a futile question, and we will answer the others when they arise. With regard to the police power, as elsewhere in the law, lines are pricked out by the gradual approach and contact of decision on the opposing sides. Hudson County Water Co. v. McCarter, 209 U. S. 349.
It will serve as a datum on this side, that, in our opinion, the statute before us is well within the State's constitutional power, while the use of the public credit on a large scale to help individuals in business has been held to be beyond the line. Citizens' L. Asso. v. Topeka, 20 Wall. 655 * * * The question that we have decided is not much helped by propounding the further one, whether the right to engage in banking is or can be made a franchise. But as the latter question has some bearing on the former, and as it will have to be considered in the following cases, if not here, we will dispose of it now. It is not answered by citing authorities for the existence of the right at common law. There are many things that a man might do at common law that the States may forbid. He might embezzle until a statute cut down his liberty. We cannot say that the public interests to which we have adverted, and others, are not sufficient to warrant the State in taking the whole business of banking under its control. On the contrary, we are of opinion that it may go on from regulation to prohibition except upon such conditions as it may prescribe. In short, when the Oklahoma Legislature declares by implication that free banking is a public danger, and that incorporation, inspection, and the above-described co-operation are necessary safeguards, this court certainly cannot say that it is wrong
Some further details might be mentioned, but we deem them unnecessary. Of course, objections under the State Constitution are not open here.
Note. See also Minnesota Rate Cases, page 212, and as to due process of law and its relation to the taxing power, see McCray v. U. S., page 143.
THE GUARANTEE OF A REPUBLICAN FORM OF GOVERN.
Article IV, section 4, of the Constitution of the United States provides: "The United States shall guarantee to every State in this Union a Republican Form of Government.”
The OREGON INITIATIVE AND REFERENDUM.
PACIFIC STATES TELEPHONE & TELEGRAPH COM
PANY V. STATE OF OREGON.
223 U. S. 118 (1912).
This case was brought to the Supreme Court of the United States upon a writ of error from the Supreme Court of the State of Oregon which affirmed a judgment of the Circuit Court for Multnomah
County in that State enforcing a tax on the gross revenue of a domestic corporation. The facts were as follows:
In 1902 Oregon amended its Constitution. This amendment, while retaining an existing clause vesting the exclusive legislative power in a general assembly consisting of a senate and a house of representatives, added to that provision the following: “But the people reserve to themselves power to propose laws and amendments to the Constitution, and to enact or reject the same at the polls, independent of the legislative assembly, and also reserve power at their own option to approve or reject at the polls any act of the legislative assembly." (Art. 4, Sec. 1.) Specific means for the exercise of the power thus reserved was contained in further clauses authorizing both the amendment of the Constitution and the enactment of laws to be accomplished by the method known as the initiative and that commonly referred to as the referendum. As to the first, the initiative, it suffices to say that a stated number of voters were given the right at any time to secure a submission to popular vote for approval of any matter which it was desired to have enacted into law, and providing that the proposition thus submitted, when approved by popular vote, should become the law of the State. The second, the referendum, provided for a reference to a popular vote, for approval or disapproval, of any law passed by the legislature, such reference to take place either as the result of the action of the legislature itself, or of a petition filed for that purpose by a specified number of voters.
In 1903 detailed provisions for the carrying into effect of this amendment were enacted by the legislature.
By resort to the initiative in 1906, a law taxing certain classes of corporations was submitted, voted on, and promulgated by the governor in 1907 as having been duly adopted. By this law telephone and telegraph companies were taxed, by what was qualified as an annual license, 2 per centum upon their gross revenue derived from business done within the State. Penalties were provided for nonpayment, and methods were created for enforcing payment in case of delinquency.
The Pacific States Telephone & Telegraph Company, an Oregon corporation engaged in business in that State, made a return of its gross receipts, as required by the statute, and was accordingly assessed 2 per cent. upon the amount of such return. The suit which is now before us was commenced by the state to enforce payment of this assessment and the statutory penalties for delinquency. The petition alleged the passage of the taxing law by resort to the initiative, the return made by the corporation, the assessment, the duty to pay, and the failure to make such payment.
The corporation contested the tax principally upon the ground that the creation by a State of the power to legislate by the initiative and referendum caused the prior lawful State government to be bereft of its lawful character and destroyed all government republi