exercising the right of eminent domain. A "public service or quasi public corporation" has been defined by a late Massachusetts case as one private in its ownership but having an appropriate franchise from the state to provide for a necessity or convenience of the general public incapable of being furnished through the ordinary channels of private competitive business and dependent for its exercise upon eminent domain or some agency of the government." 21

New York has recently passed an act for the control of "private" bankers, by which is meant those bankers doing business without being incorporated. The English Companies Act of 1938 provides for "private companies," such a company being defined as one "which by its articles restricts the right to transfer its shares, limits the number of its members, and prohibits any invitation to the public to subscribe for any shares or debentures of the company.

The doctrine uniformly accepted by our courts as well as by students of the common law today has been succinctly stated as follows:

"The distinction between the private callings - the rule — and the public callings- the exception is the most consequential division in the law governing our business relations. In private businesses, one may sell or not as one pleases, manufacture what qualities one chooses, demand any price that can be gotten, and give any rebates that are advantageous. . . . All this time in public businesses one must serve all that apply without exclusive conditions, provide adequate facilities to meet all the demands of the consumer, exact only reasonable charges for the services that are rendered, and between customers under similar circumstances make no discriminations. . . ." 22

But whether viewed as a classification of business for the purpose of measuring the duty of the trader as trader to public, or as furnishing a guide for the assertion of the police power of the state, this division has not been helpful in practice, and it is, I think, theoretically unsound, and the result of a misconstruction

21 Attorney General v. Haverhill Gas Light Co., 215 Mass. 394, 101 N. E. 1061 (1913).

22 Wyman, The Law of the Public Callings as a Solution of the Trust Problem, 17 HARV. L. REV. 156.

of the cases upon which it purports to rest as well as of the overlooking of material evidence. The difficulty into which it leads in the field of regulation is aptly illustrated by two recent cases, one involving monopoly but no business, and the other business but no monopoly.

The first case, Prairie Oil & Gas Co. v. United States,23 arose under the amendment to the Interstate Commerce Act 24 declaring that pipe lines should "be considered and held to be common carriers within the meaning and purpose" of that act. The company carried only its own oil, and the other facts are stated as follows:

"None of the petitioning corporations is organized or derives any of its corporate powers from laws of the state of its creation under which common carrier or other public service corporations are organized, but each of them was formed and has always conducted its operations under and in compliance with state laws which relate to private as distinguished from public business. With certain alleged exceptions, which will be hereafter noticed, it is not claimed that either of the petitioners is under any statutory or legal obligation, other than the amendment in question, to perform the duties or otherwise act in the capacity of a common carrier. None of the petitioners possesses the right of eminent domain or has acquired any part of its property or rights of way by condemnation; nor has either of them received a franchise from any state, municipal, or local government, though each of them has in many instances laid its pipe lines across or along public streets and highways by permission or consent of the local authorities. None of them has ever held itself out as a common carrier or in fact carried oil for others, but each of them has carried only such oil as it produced from its own wells or purchased from other producers, and which it owned when the transportation took place. The pipe lines of petitioners are laid on private rights of way secured by purchase or lease, except that some of them for short distances, and one of them for a distance of some 300 miles, are laid upon and along the rights of way of certain railroads under some contract arrangement with such railroads."

These facts clearly did not bring the case within Munn v. Illinois,25 as the court had little difficulty in demonstrating.

23

204 Fed. 798, 803, 810 (Commerce Court, 1913).

24

24 Stat. at L. 379 (1887), ch. 104, as amended by 34 Stat. at L. 584 (1906), ch. 3591.

25

94 U. S. 113 (1876).

The court says, however:

"It is not necessary in these cases to consider the circumstances under which or the extent to which business activities, whether public or private, may be regulated by public authority. That is not the point in dispute. That the business of these petitioners, as it is and has been carried on, may be subjected to regulation need not be in any wise questioned. But it is one thing to exercise public control of a private business which as such should be placed under public supervision; it is quite another thing to require that business to be changed from private to public and compel those who are engaged in it to assume the responsibilities of a public calling."

In other words, the business here consisted in buying oil, not in carrying it, but it was the latter that the statute assumed to regulate. The court was at a loss to see how this could be done in the absence of a public profession of carriage. When the case reached the Supreme Court, however,26 Mr. Justice Holmes made a quick disposition of the difficulties. After premising that the transportation, though of oil belonging to the owner of the pipe line, was commerce within the meaning of the Constitution, he said: "The control of Congress over commerce among the States cannot be made a means of exercising powers not entrusted to it by the Constitution, but it may require those who are common carriers in substance to become so in form."

The notion of an inseparable connection between the public character of the calling and regulation is plain, and to satisfy the requirement it became necessary to convert into a common carrier an activity which was not of that character under any accepted definition of the term.

The second case, German Alliance Ins. Co. v. Kansas,27 involved the power of the state to regulate insurance rates. Monopoly as such was not involved.

"The business of fire insurance," it was claimed, "is private, with which the State has no right to interfere, and the right to fix by private contract the rate of premium is a property right of value; the business is not a monopoly either legally or actually; it may not be legally conducted by the National Government or by the State of

26 The Pipe Line Cases, 234 U. S. 548 (June 22, 1914).

27 233 U. S. 389, 397, 406, 428 (1914).

Kansas, or other States under their respective constitutions, and is not a business included within the functions of government. Neither complainant nor others engaged in fire insurance receive or enjoy from the State of Kansas, or any government, state or national, any privilege or immunity not in like manner and to like extent received and enjoyed by all other persons, partnerships and companies, incorporated or unincorporated, respectively, engaged in the conduct of other lines of private business and enterprises. Complainant, therefore, is deprived of one of the incidents of liberty and of its property without due process of law, in violation of the Fourteenth Amendment to the Constitution of the United States."

Mr. Justice McKenna, delivering the opinion of the court, said:

. . . We may put aside, therefore, all merely adventitious considerations and come to the bare and essential one, whether a contract of fire insurance is private and as such has constitutional immunity from regulation. Or, to state it differently and to express an antithetical proposition, is the business of insurance so far affected with a public interest as to justify legislative regulation of its rates? And we mean a broad and definite public interest. In some degree the public interest is concerned in every transaction between men, the sum of the transactions constituting the activities of life. But there is something more special than this, something of more definite consequence, which makes the public interest that justifies regulatory legislation. We can best explain by examples. The transportation of property-business of common carriers is obviously of public concern and its regulation is an accepted governmental power. The transmission of intelligence is of cognate character. There are other utilities which are denominated public, such as the furnishing of water and light, including in the latter gas and electricity. We do not hesitate at their regulation nor at the fixing of the prices which may be charged for their service. The basis of the ready concession of the power of regulation is the public interest. This is not denied, but its application to insurance is so far denied as not to extend to the fixing of rates. It is said, the State has no power to fix the rates charged to the public by either corporations or individuals engaged in a private business, and the 'test of whether the use is public or not is whether a public trust is imposed upon the property and whether the public has a legal right to the use which cannot be denied'; or, as we have said, quoting counsel, 'Where the right to demand and receive service does not exist in the public, the correlative right of regulation as to rates and charges does not exist.' Cases are cited which, it must be admitted, support the contention. The distinction is artificial. It

is, indeed, but the assertion that the cited examples embrace all cases of public interest. The complainant explicitly so contends, urging that the test it applies excludes the idea that there can be a public interest which gives the power of regulation as distinct from a public use which, necessarily, it is contended, can only apply to property, not to personal contracts. The distinction, we think, has no basis in principle (Noble State Bank v. Haskell, 219 U. S. 104), nor has the other contention that the service which cannot be demanded cannot be regulated. . . .”

It is plain that the court regarded the business as private, but subject nevertheless to regulation.

Mr. Justice Lamar, dissenting, with whom the Chief Justice and Mr. Justice Van Devanter concurred, said:

". . . The fundamental idea of a public business, as well declared by the Supreme Court of Kansas, 77 Kans. 608, is that 'all of the public has a right to demand and share in' it. That means that each member of the public on demand and upon equal terms, without written contract, without haggling as to terms, may demand the public service, and secure the use of the facility devoted to public use. If the company can make distinctions and serve one and refuse to serve another, the business ex vi termini is not public. The common carrier has no right to refuse to haul a passenger even if he has been convicted of arson. But if an insurance company is indeed public it is bound to insure the property of the man who is suspected of having set fire to his own house, or whose statements of value it is unwilling to take. This is manifestly inconsistent with the contract of insurance which requires the utmost good faith, not only in making truthful answers to questions asked, but in not concealing anything material to the risk. If the company has the discretion to insure or the right to refuse to insure, then, by the very definition of the terms, it is not a public business. If, on the other hand, the company is obliged to insure bad risks or the property of men of bad character, of doubtful veracity, or known to be careless in their handling of property, the law would be an arbitrary exertion of power in compelling men to enter into contract with persons with whom they did not choose to deal, where confidence is the very foundation of a contract of indemnity. Indeed, it seems to be conceded that a person owning property is not entitled to demand insurance as a matter of right. If not, the business is not public and not within the provision of the Constitution which only authorizes the taking of property for public purposes - whether the taking be of the fee for a lump sum assessed in condemnation proceedings, or whether the use be taken by rate-regulation, which is but another method of exercising the same power."