AFFECTED WITH A PUBLIC INTEREST

The phrase "affected with a public interest," first used by the Supreme Court in Munn v. Illinois (1877), had a long and distinguished doctrinal lineage in the English common law. The fountainhead of the modern development of that phrase was its formulation by Lord Chief Justice Matthew Hale, in his treatise De Jure Maris, written about 1670 and first published in 1787. In this work, Lord Hale discussed the basis for distinguishing property that was strictly private, property that was public in ownership, and an intermediate category of property (such as in navigable waters) that was private in ownership but subject to public use and hence a large measure of public control. In cases of business under a servitude to the public, such as wharves and cranes and ferries, according to Hale, it was legitimate for government to regulate in order to assure that the facilities would be available for "the common use" at rates that would be "reasonable and moderate." Once the public was invited to use such facilities, Hale wrote, "the wharf and the crane and other conveniences are affected with a publick interest, and they cease to be juris privati [a matter of private law] only." (See granger cases.)

When Chief Justice morrison r. waite, writing for the majority in Munn, cited Lord Hale, it was for the purpose of upholding rate regulation of grain elevators against a fourteenth amendment defense that claimed that the elevator operator's vested property rights were being taken without just compensation. Explaining the Munn rule a year later, in his Sinking Fund Cases opinion, Justice joseph p. bradley pinned the "affectation" doctrine squarely to the concept of monopoly. The question in Munn, Bradley contended, was "the extent of the police power in cases where the public interest is affected"; and the Court had concluded that regulation was valid when "an employment or business becomes a matter of such public interest and importance as to create a common charge or burden upon the citizens; in other words, when it becomes a practical monopoly, to which the citizen is compelled to resort.…"

In the period immediately following the decision in Munn, the Court erected a series of new doctrinal bulwarks for property interests. Among them were the concept of freedom of contract, the requirement that regulation must be "reasonable" as judged by the Court, and the notion of public purpose as a test for the validity of tax measures. As a result, the concept "affectation with a public interest" was pushed into the background, placing in abeyance such questions as whether only "monopoly" business came within its reach or whether instead it could be invoked to cover regulation of businesses that were not of this character.

In the decade of the 1920s, state legislation directly regulating prices and charges for service was challenged in federal courts and led to revitalization of the "affectation" doctrine by the Supreme Court. The issue, as the Court confronted it, had been set forth succinctly by Justice david j. brewer in an earlier opinion (Cotting v. Kansas City Stockyards Co., 1901), upholding a state's regulation of stockyard charges on the ground that the business was affected with a public interest no less than a grain elevator or railroad or wharf. Yet the question must be posed, Brewer insisted, "To what extent may this regulation go?" Did any limits pertain, even in clear cases such as a stockyard's operation? Were the yards' owners left in a position, constitutionally, that they could be deprived "altogether of the ordinary privileges of others in mercantile business?"

In the hands of a property-minded, conservative Court the case-by-case development of the principle at issue, responding to Brewer's challenge, resulted in the creation of a closed legal category: only a business "affected with a public interest" might have prices or charges for service regulated; other, "ordinary," businesses were outside that closed category and therefore not subject to price or rate regulation. Chief Justice william h. taft took on the challenge of defining more precisely the closed legal category in his opinion for the Court in wolff packing co. v. court of industrial relations of kansas. Price and rate regulation were constitutional, Taft asserted, in regard to businesses that were public utilities (under an affirmative duty to render service to the public), businesses that historically had been subject to price regulation, and, finally, a rather baffling category, businesses that "though not public at their inception [historically] may be said to have risen to be such." Over strong objections of dissenters—most consistently Justices oliver wendell holmes and louis d. brandeis—the Court in subsequent years relied on this refined "affectation" doctrine to rule that even businesses subject to regulation in other respects could not be regulated as to rates of charge unless they met the criteria set down by Taft in Wolff. Mandated price minima or maxima were found unconstitutional with respect to theater ticket agencies, dairy vendors, gasoline retailers, and manufacturers and sellers of ice.

Dissenting Justices objected that the phrase "affected with a public interest" was so "vague and illusory" (as Justice harlan f. stone charged in his dissent in Tyson v. Banton, 1927) as to amount to carte blanche for the Court to impose arbitrarily its policy preferences. Holmes was more direct: the concept, he stated in his own dissent in Tyson, was "little more than a fiction intended to beautify what is disagreeable to the sufferers." In Holmes's view, Lord Hale's language had been misapplied and had become a contrived limitation on the state's legitimate police power. "Subject to compensation when compensation is due," Holmes declared, "the legislature may forbid or restrict any business when it has a force of public opinion behind it."

Along with freedom of contract, the vested rights concept, the public purpose concept, and the doctrine of dual federalism, the "affectation" concept became emblematic of doctrinaire formalism mobilized by practitioners of judicial activism. Such doctrines could undermine entirely, critics argued, the capacity of government to respond to changing objective social conditions or to emergency situations that required sweeping legislative intervention. Building on Justice Holmes's views, for example, the legal scholar walton h. hamilton wrote a widely noticed, wholesale attack on the Court in 1930. Although Hamilton was wrong in his view of the alleged novelty and obscurity of Lord Hale's treatise when Waite used it in Munn, he provided an eloquent argument for abandoning the notion of a closed category of businesses immune from price regulation. It was imperative, he argued, for the law to recognize the transformation of industrial structure and the competitive order in the previous half-century; the "affectation" doctrine was a conceptual straitjacket.

The advent of the Great Depression, along with the enactment of extraordinary legislation to deal with a great variety of emergency situations in a stricken society, lent additional weight to the realist argument that Holmes and commentators such as Hamilton and felix frankfurter had set forth. Ruling on the constitutionality of an emergency milk price control law, enacted by New York State at the depth of the Depression spiral, the Supreme Court dramatically terminated the use of the "affectation" doctrine as a defense against price regulation: In nebbie v. new york (1934), the Court concluded that the phrase from Lord Hale meant simply "subject to the exercise of the police power." After Nebbia, so long as the procedural requirements of due process were met, the legislature was left "free to adopt whatever economic policy may reasonably be deemed to promote public welfare."

Harry N. Scheiber
(1986)

Bibliography

Hamilton, Walton 1930 Affectation with a Public Interest. Yale Law Journal 34:1089–1112.

Scheiber, Harry N. 1971 The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts. Perspectives in American History 5:327–402.