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decided: February 28, 1927.



Taft, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Sanford, Stone

Author: Sutherland

[ 273 U.S. Page 426]

 MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

Appellant is engaged in the business of reselling tickets of admission to theatres and other places of entertainment in the City of New York. It employs a large number of salesmen, messenger boys and others. Its expenses are very large, and its sales average approximately 300,000 tickets per annum. These tickets are obtained either from the box office of the theatre or from other brokers and distributors. It is duly licensed under § 168, c. 590, New York Laws, 1922, and has given a bond under § 169 of that chapter in the penal sum of $1,000 with sureties, conditioned, among other things, that it will not be guilty of any fraud or extortion. See Weller v. New York, 268 U.S. 319, 322.

[ 273 U.S. Page 427]

     Section 167 of chapter 590 declares that the price of or charge for admission to theatres, etc., is a matter affected with a public interest and subject to state supervision in order to safeguard the public against fraud, extortion, exorbitant rates and similar abuses. Section 172 forbids the resale of any ticket or other evidence of the right of entry to any theatre, etc., "at a price in excess of fifty cents in advance of the price printed on the face of such ticket or other evidence of the right of entry," such printing being required by that section. Both sections are reproduced in the margin.*fn*

This suit was brought to enjoin respondents from proceeding either at law or in equity to enforce the last named section, and from revoking plaintiff's license, enforcing by suit or otherwise the penalty of the bond or prosecuting criminally appellant or any of its officers or agents for reselling or attempting to resell any ticket or other evidence of the right of entry to any theatre, etc., at a price in excess of fifty cents in advance of the printed

[ 273 U.S. Page 428]

     price. The bill alleges threats on the part of appellees to enforce the statute against appellant, to forfeit its license, enforce the penalty of its bond and institute criminal prosecutions against appellant, its officers and agents. It is further alleged that the terms of the statute are so drastic and the penalties for its violation so great [imprisonment for one year or a fine of $250 or both] that appellant may not resell any ticket or evidence of the right of entry at a price beyond that fixed by the statute even for the purpose of testing the validity of the law; and that appellant will be compelled to submit to the statute whether valid or invalid unless its suit be entertained, and thereby will be deprived of its property and liberty without due process of law and denied the equal protection of the law, in contravention of the Fourteenth Amendment to the federal Constitution. Following the rule frequently announced by this court, that "equitable jurisdiction exists to restrain criminal prosecutions under unconstitutional enactments, when the prevention of such prosecutions is essential to the safeguarding of rights of property," we sustain the jurisdiction of the district court. Packard v. Banton, 264 U.S. 140, 143, and cases there cited.

The case was heard below by a statutory court of three judges and a decree rendered denying appellant's prayer for a temporary injunction and holding the statute assailed to be valid and constitutional. The provision of the statute in question also has been upheld in a judgment of the New York state court of appeals, People v. Weller, 237 N. Y. 316, brought here on writ of error. That case, however, directly involved only § 168, requiring a license, and although it was insisted that § 172 restricting prices should also be considered, upon the ground that the two provisions were inseparable, this court held otherwise, sustained the validity of the license section and declined to

[ 273 U.S. Page 429]

     pass upon the other one. Weller v. New York, 268 U.S. 319, 325.

Strictly, the question for determination relates only to the maximum price for which an entrance ticket to a theatre, etc., may be resold. But the answer necessarily must be to a question of greater breadth. The statutory declaration (§ 167) is that the price of or charge for admission to a theatre, place of amusement or entertainment or other place where public exhibitions, games, contests or performances are held, is a matter affected with a public interest. To affirm the validity of § 172 is to affirm this declaration completely, since appellant's business embraces the resale of entrance tickets to all forms of entertainment therein enumerated. And since the ticket broker is a mere appendage of the theatre, etc., and the price of or charge for admission is the essential element in the statutory declaration, it results that the real inquiry is whether every public exhibition, game, contest or performance, to which an admission charge is made, is clothed with a public interest, so as to authorize a law-making body to fix the maximum amount of the charge, which its patrons may be required to pay.

In the endeavor to reach a correct conclusion in respect of this inquiry, it will be helpful, by way of preface, to state certain pertinent considerations. The first of these is that the right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself, Case of the State Freight Tax, 15 Wall. 232, 278, and, as such, within the protection of the due process of law clauses of the Fifth and Fourteenth Amendments. See City of Carrollton v. Bazzette, 159 Ill. 284, 294. The power to regulate property, services or business can be invoked only under special circumstances; and it does not follow that because the power may exist to regulate in some particulars it exists to regulate in others or in all.

[ 273 U.S. Page 430]

     The authority to regulate the conduct of a business or to require a license, comes from a branch of the police power which may be quite distinct from the power to fix prices. The latter, ordinarily, does not exist in respect of merely private property or business, Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S. 238, 246, but exists only where the business or the property involved has become "affected with a public interest." This phrase, first used by Lord Hale 200 years ago, Munn v. Illinois, 94 U.S. 113, 126, it is true, furnishes at best an indefinite standard, and attempts to define it have resulted, generally, in producing little more than paraphrases, which themselves require elucidation. Certain properties and kinds of business it obviously includes, like common carriers, telegraph and telephone companies, ferries, wharfage, etc. Beyond these, its application not only has not been uniform, but many of the decisions disclose the members of the same court in radical disagreement. Its full meaning, like that of many other generalizations, cannot be exactly defined; -- it can only be approximated.

A business is not affected with a public interest merely because it is large or because the public are warranted in having a feeling of concern in respect of its maintenance. Nor is the interest meant such as arises from the mere fact that the public derives benefit, accommodation, ease or enjoyment from the existence or operation of the business; and while the word has not always been limited narrowly as strictly denoting "a right," that synonym more nearly than any other expresses the sense in which it is to be understood.

The characterizations in some decisions of businesses as " quasi public," People v. King, 110 N. Y. 418, 428, "not 'strictly' private," Aaron v. Ward, 203 N. Y. 351, 356, and the like, while well enough for the purpose for which they were employed, namely, as a basis for upholding police regulations in respect of the conduct of particular

[ 273 U.S. Page 431]

     businesses, cannot be accepted as equivalents for the description "affected with a public interest," as that phrase is used in the decisions of this court as the basis for legislative regulation of prices. The latter power is not only a more definite and serious invasion of the rights of property and the freedom of contract, but its exercise cannot always be justified by circumstances which have been held to justify legislative regulation of the manner in which a business shall be carried on.

And, finally, the mere declaration by the legislature that a particular kind of property or business is affected with a public interest is not conclusive upon the question of the validity of the regulation. The matter is one which is always open to judicial inquiry. Wolff Co. v. Industrial Court, 262 U.S. 522, 536.

In the Wolff case, this court held invalid the wage fixing provision of the compulsory arbitration statute of Kansas as applied to a meat packing establishment. The power of a legislature, under any circumstances, to fix prices or wages in the business of preparing and selling food was seriously doubted, but the court concluded that, even if the legislature could do so in a public emergency, no such emergency appeared, and, in any event, the power would not extend to giving compulsory continuity to the business by compulsory arbitration. In the course of the opinion (p. 535), it was said that business characterized as clothed with a public interest might be divided into three classes:

"(1) Those which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the affirmative duty of rendering a public service demanded by any member of the public. Such are the railroads, other common carriers and public utilities.

"(2) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest

[ 273 U.S. Page 432]

     times, has survived the period of arbitrary laws by Parliament or Colonial legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs and grist mills. State v. Edwards, 86 Me. 102; Terminal Taxicab Co. v. District of Columbia, 241 U.S. 252, 254.

"(3) Businesses which though not public at their inception may be fairly said to have risen to be such and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner by devoting his business to the public use, in effect grants the public an interest in that use and subjects himself to public regulation to the extent of that interest although the property continues to belong to its private owner and to be entitled to protection accordingly." Citing the Munn case and others.

If the statute now under review can be sustained as valid, it must be in virtue of the doctrine laid down in the third paragraph; and it will aid in the effort to reach a correct conclusion in that respect if we shall first consider the principal decisions of this court where that doctrine has been applied. The leading, as well as the earliest, definite decision dealing with a business falling within that class is Munn v. Illinois, supra, which sustained the validity of an Illinois statute fixing the maximum charge to be made for the use of elevators and warehouses for the elevation and storage of grain.

As ground for that decision the opinion recites, among other things, that grain came from the west and northwest by water and rail to Chicago where the greater part of it was shipped by vessel to the seaboard and some of it by railway to eastern ports; that Chicago had been made the greatest grain market in the world; and that the business had created a demand for means by which the immense quantity of grain could be handled or stored and these had been found in grain elevators. In this way the largest

[ 273 U.S. Page 433]

     traffic between the country north and west of Chicago and that lying on the Atlantic coast north of Washington, was in grain passing through the elevators at Chicago. The trade in grain between seven or eight of the great states of the west and four or five of those lying on the sea-shore, formed the largest part of the interstate commerce in these states. The elevators in Chicago were immense structures, holding from 300,000 to 1,000,000 bushels at one time. Under these circumstances, it was said that the elevators stood in the very "gateway of commerce" and took toll from all who passed; that their business certainly tended to a common charge and had become a thing of public interest and use; that every bushel of grain for its passage paid a toll, which was a common charge; and, finally, that if any business could be clothed "with a public interest, and cease to be juris privati only," this had been made so by the facts.

There is some general language in the opinion which, superficially, might seem broad enough to cover cases like the present one. It was said, for example (p. 126): "Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large." Literally, that would include all the large industries and some small ones; but in accordance with the well settled rule the words must be limited to the case under consideration. Cohens v. Virginia, 6 Wheat. 264, 399; Plumley v. Massachusetts, 155 U.S. 461, 474. Indeed, the language quoted is qualified immediately by a statement of the general rule, that -- "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."

The significant requirement is that the property shall be devoted to a use in which the public has an interest,

[ 273 U.S. Page 434]

     which simply means, as in terms it is expressed at page 130, that it shall be devoted to "a public use." Stated in another form, a business or property, in order to be affected with a public interest, must be such or be so employed as to justify the conclusion that it has been devoted to a public use and its use thereby, in effect, granted to the public. See Louisville &c. R. R. Co. v. West Coast Co., 198 U.S. 483, 500. The subsequent elevator and warehouse cases, Budd v. New York, 143 U.S. 517, and Brass v. Stoeser, 153 U.S. 391, while presenting conditions of less gravity, rest upon the authority of the Munn case. The differences among the three cases are in matters of degree.

In Cotting v. Kansas City Stock Yards Co., &c., 183 U.S. 79, 85, Mr. Justice Brewer, speaking on that point for himself and two other members of the court, said that, tested by the Munn case, the stock yards of the company, situated in one of the gateways of commerce and so located that they furnished important facilities to all seeking transportation of cattle, were subject to governmental price regulation. But the majority of the court, without referring to this view, assented to a reversal upon a ground specifically stated (pp. 114-115); and the authority of the case must be limited by the terms of that statement.

German Alliance Ins. Co. v. Kansas, 233 U.S. 389, carries the doctrine further and marks the extreme limit to which this court thus far has gone in sustaining price fixing legislation. There the court said that a business might be affected with a public interest so as to permit price regulation although no public trust was impressed upon the property and although the public might not have a legal right to demand and receive service; and it was held that fire insurance was such a business. Mr. Justice McKenna, speaking for the court, pointed out that in an insurance business each risk was not individual;

[ 273 U.S. Page 435]

     that "there can be standards and classification of risks, determined by the law of averages," and, while there might be variations, that rates are fixed and accommodated to such standards. Discussing the question whether the business was affected with a public ...

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