ing the necessary regulation and control. Under this method the state, through its commission, takes the place of competition, and furnishes the regulation which competition cannot give, and at the same time avoids the expense of duplication in the investment and in the operation of competing municipal public utilities. The Franchise or Permit Indeterminate. For the municipal public utility, operating under what the public-utilities law of Wisconsin and Indiana has aptly designated the "indeterminate permit," is protected against competition and a possible loss of its plant occurring at the expiration of the franchise. Under this law the public-utility commission determines in the first instance whether public convenience and necessity demands municipal public-utility service where such a company proposes to install its plant and furnish such service, and only after a determination of this question in the affirmative, and the granting of its consent by the commission, may the mu 11 Consolidated Gas Co. v. Mayer, 146 Fed. 150; Des Moines Water Co. v. Des Moines, 192 Fed. 193; Des Moines Gas Co. v. Des Moines, 199 Fed. 204; Atty. Gen. ex rel. Gas & E. L. Comrs. v. Walworth Light & P. Co. 157 Mass. 86, 31 N. E. 482, 16 L.R.A. 398; Saratoga Springs v. Saratoga Gas, E. L. & P. Co. 190 N. Y. 562, 84 N. E. 1121, 191 N. Y. 123, 83 N. E. 693, 14 Ann. Cas. 606, 18 L.R.A. (N.S.) 713; Weld v. Gas & E. L. Comrs. 197 Mass. 556, 84 N. E. 101; La Crosse v. La Crosse Gas & Electric Co. 145 Wis. 408, 130 N. W. 530; Calumet Service Co. v. Chilton, 148 Wis. 334, 135 N. W. 131; State ex rel. Kenosha Gas & Electric Co. v. Kenosha Electric R. Co. 145 Wis. 337, 129 N. W. 600; People ex rel. New York Edison Co. v. Willcox, 207 N. Y. 86, 100 N. E. 705, L.R.A.(N.S.); Public Service Gas Co. v. Public Utility Comrs. N. J. L. 87 Atl. 651; Gregg v. Laird, Md. 87 Atl. 1111; Re Russell, 163 Cal. 668, 126 Pac. 875; Pond, Public Utilities, chap. XXIX., XXX., and cases cited. nicipal public-utility plant be installed, thereby avoiding needless competition and duplication of investment by legalizing a monopoly of the business. The consideration, however, for such indeterminate franchise or permit with its exclusive privileges and indefinite duration is that it shall be constantly and completely under the regulation and control of the state through its public-utility commission. State Control Comprehensive. This control covers the question of the capitalization of the municipal public utility, so that the amount of stock and bonds issued by such a company is determined by the public-utility commission which may also control the construction of the plant, thus insuring the expenditure on the plant of all funds received from the sale of such stock and bonds, as well as limiting such expenditure and preventing extravagance or unnecessary construction. This control over the capitalization and issue of stocks and bonds of the municipal public utility by the state not only protects the consumer of the service by securing a fair rate, but also the investor in the public-utility securities. It insures, on the one hand, proper service at a reasonable rate as determined by the actual cost or value of such service, and, on the other, a fair return on the investment actually and necessarily put into the business. such regulation, capitalization and investment coincide, which simplifies the matter of rate regulation as well as that of making investments in the securities of such companies and preventing fluctuation in their values.11 By Ascar L. Pard Commissions and their Functions BY HERBERT J. FRIEDMAN Of the Chicago Bar on T is apparent that everywhere and every hand the state is beginning to deny that a man may do as he pleases with what he may call his own. The business man may no longer manufacture his drugs or his paints or his food products as he may desire. The state has stepped in and told him that there are certain things that he must do and there are other things that he must not do. What has brought about this tremendous change in our economic and social life, it would be useless to discuss here. The reasons are numerous and the causes have gradually developed for over a century. It is apparent, however, that the old laissez faire doctrine, that held that man's best economic welfare was found in allowing him to do as he pleased, has singularly failed. For it has been shown that if man is given his way in the economic competition of life he will not hesitate to adulterate your foods, to impose upon you in the sale of fake patent medicines, and to charge exorbitant prices wherever monopoly has a chance to develop. We are now beginning to accept it as an economic principle that, as a benefit to society, the interference and the supervision of the state is often most necessary. How far this supervision will go, it would be impossible to state, but that it is reaching out farther and farther, and regulating our economic life in every direction, is most apparent. The publicservice corporations everywhere have either felt or are beginning to feel the iron hand of a strong government, and though for years they attempted to resist and to struggle from under the control the government was endeavoring to assert, they are now gradually, though grudgingly, beginning to yield to public pressure. Every day our government is apparently adding to its own functions, or developing, to an extent unthought of a half century ago, its new ones. Every day our government is becoming more comprehensive and more complicated, because the state is enacting new laws and regulating our industrial and our social welfare. A representative in one of our state legislatures may have had some poor success in the quality of paint he used on his farm barn. He hears of other complaints and may draw the conclusion that a good part of the paint that is sold on the market is adulterated, and that his constituents, as well as the entire population of his commonwealth, have been continuously and steadily duped and defrauded by what he bitterly calls the paint trust. So he promptly, and possibly hastily, prepares a bill for the formation of a paint commission, whose duty it becomes to pass upon the question of what constitutes pure paints,though the purest of paints may contain poisonous ingredients, the manner of sale of the pure article, and the methods of enforcing the law. In the same way, if one of our legislators who remains anxious to retain the good will of his electorate, believes that one of our large public-utility corporations may not be giving what he calls a square deal, he promptly introduces a law which may regulate the schedule that all railroads in his state may have to publish, or the quality of gas that the gas company may be selling, or a new method for determining a reasonable price for electricity that should be paid to the electric light companies. To-day we have factory commissions and labor commissions; we have commissions to hire and discharge our city, county, state, and Federal employees (which for the purpose of dignity we are pleased to call civil-service commissions); we have commissions and boards of health to pass upon the food that may be set before us, the drugs that may be prescribed for us; to pass upon the qualifications of the doctors and dentists and architects who may be plying their professions; commissions for the purpose of regulating men who may act as barbers or plumbers, or follow a thousand other trades. We have commissions to regulate municipal dance halls, bathing beaches, parks, and child labor. So, too, commissions are regulating the price of gas, electricity, water, power, railroad rates, and, in a measure in some states, the lowest wage that may be paid. On every hand, just as we have numerous commissions to regulate our industrial welfare, so, too, we have commissions to pass upon our social welfare. An Age of Specialization. In every walk of life man is tending to specialize. The lawyers have divided and subdivided their profession into small parts, and many are satisfied to take one of these parts and to master it. In medicine, we are inclined to sneer at the general practitioner, for we feel that the whole field of medicine is too big for one man to comprehend. If in law and in medicine and in science there are specialists, why should there not be specialists in government? Is government such a simple matter that one man can comprehend it all? Can one person or group of people have such a universal knowledge of society and industry at large, in all of its complex intricacies and manifold perplexities, as to be able to give us the most efficient government? We know better than this. The public knows that a legislative body that comes into existence in a more or less haphazard manner, in the very nature of things, has too many matters coming before it to regulate with any satisfaction, in detail, even one of our industries. Public opinion has forced our legislatures to realize this fact, and today legislatures are glad to delegate in a large measure some of their former functions to various commissions who may have specialized in a limited field. A commission that has specialized and gathered a large amount of knowledge upon one particular subject may act with greater speed, with greater firmness, and with greater justice to all concerned. A commission, with nothing else to attend to, has the time to go deliberately into all the details on any question presented to it, and to master the problem. Its conclusions will bear weight and authority. The commission has been found to be a most satisfactory expedient. Nature of Commissions. It is time that we examined into the nature of the commission. If a commission is an administrative body or a legislative body, then the course of procedure before it is likely to take an entirely different form from that it would take were it a judicial body. An administrative or legislative body is not likely to follow the technical rules of evidence. So, at the outset, we are concerned with the question, "Are the acts and doings of the ordinary commission legislative, administrative, or judicial?" In a highly instructive and interesting case before the Supreme Court of the United States (Prentis v. Atlantic Coast Line R. Co. 211 U. S. 210, 53 L. ed. 150, 29 Sup. Ct. Rep. 67 [1908]), the court went quite extensively into the question whether the duties of the State Corporation Commission of Virginia was judicial or legislative. There, the court, in its opinion by Justice Holmes, said: "But we think it equally plain that the proceedings drawn in question here are legislative in their nature, and none the less so that they have taken place with a body which, at another moment, or in its principal or dominant aspect, is a court such as is meant by § 720. A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand, looks to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power. The establishment of a rate is the making of a rule for the future, and therefore is an act legislative, not judicial, in kind, as seems to be fully recognized by the supreme court of appeals (Com. v. Atlantic Coast Line R. Co. 106 Va. 64, 117 Am. St. Rep. 983, 55 S. E. 572, 9 Ann. Cas. 1124, 7 L.R.A.(N.S.) 1086) and especially by its learned president in his pointed remarks in Winchester & S. R. Co. v. Com. 106 Va. 281, 55 S. E. 692." Chief Justice Fuller, while agreeing with the conclusion of the court, dissented from the opinion. He was of the belief that the act was a judicial one, not legislative. "When it (the Virginia State Corporation Commission) proposed to make a change in a rate of a public service corporation, or otherwise to prescribe a new regulation therefor, the commission was required, sitting as a court, to issue its process, in the nature of a rule, against the corporation concerned, requiring it to appear before the commission at a certain time and place, and show cause, if any it could, why the proposed rate should not be prescribed. The judicial question involved on the return to such rule was whether or not the contemplated rate was confiscatory, or otherwise unjust or unreasonable, and in the hearing and disposition of this question the proceedings of the commission, as prescribed by law, were in every respect the same as those of any other judicial court of record. It issued, executed, and enforced its own writs and processes; it could issue and enforce writs of mandamus and injunction; it punished for contempt; and kept a complete record and docket of its proceedings; it summoned witnesses and compelled their attendance and the production of documents; it ruled upon the admissibility of evidence; it certified any exception to its rulings; and its judgments, decrees, and orders had the same force and effect as those of any other court of record in the state, and were enforced by its own proper processes." Mr. Justice Harlan was also of the opinion that the act of the Virginia State Corporation Commission was in every sense judicial. See also Interstate Commerce Commission v. Cincinnati, N. O. & T. P. R. Co. 167 U. S. 479, 42 L. ed. 243, 17 Sup. Ct. Rep. 896 (1896). A similar question arose as to the nature of the acts of the Public-Service Commission in the state of New York. See People ex rel. Central Park v. Wilcox, 194 N. Y. 383, 87 N. E. 517 (1909). There the court, after reviewing the Prentis case, expressly held the acts of such a commission judicial, and not legislative. The court expressly denied that the acts of the commission were necessarily nonjudicial because it enforced or attempted to enforce a rule of conduct for the future. It pointed out that a judicial decision often determines in advance what future action will be a discharge of all existing liabilities or obligations. On the other hand, there have been a vast number of the most eminent authorities that have held that the functions of a commission are purely administrative. In giving its opinion to the Massachusetts House of Representatives as to the constitutionality of the civil-service law of that state (Laws of 1884, chap. 320), the supreme judicial court of Massachusetts said (Opinion of Justices, 138 Mass. 601 (1885): "The object of the statute before us is to provide for a board of commissioners, who shall make rules for the selection of persons to fill such offices in the government of the commonwealth, and of the several cities thereof, and supervise the administration of such rules. We think the legislature has the constitutional right to provide for the appointment of such commissioners, and to delegate to them the power to make rules, not inconsistent with existing laws, to guide and control their discretion and the discretion of the officers of the state or of the cities in whom the appointing power is vested. This is not a delegation of the power to enact laws; it is merely a delegation of administrative powers and duties, and there is no provision of the Constitution which prevents the legislature from enacting that such rules, when duly made, shall be binding upon the officers and citizens to whom they apply, and that they may be enforced by suitable penalties, as provided in the last section of the statute." The Supreme Court of the United States apparently agreed with this view of the law in the case of Stone v. Farmers' Loan & T. Co. 116 U. S. 307, 336, 29 L. ed. 636, 646, 6 Sup. Ct. Rep. 334, 388, 1191. In the case of Aurora v. Schoeberlein, 230 Ill. 496, 82 N. E. 860, the supreme court of the state of Illinois passed upon a clause of the civil-service act of 1903, which permitted an appeal to the circuit court from any decision of the commission discharging an employee. The court held that this section of the act was unconstitutional for the reason that the government of the state of Illinois was divided by the Constitution into three separate functions,-legislative, executive, and judicial; that the removal of an officer in a civil-service proceeding was an executive act, and that the allowance of an appeal to the circuit court for the purpose of reviewing an executive act was vesting the courts with executive powers contrary to the Constitution. And the United States Supreme Court, in a line of cases where the acts performed were of a similar nature, has held them to be administrative. Thus see the opinion of Mr. Justice Brewer, in the case of Burfenning v. Chicago, St. P. M. & O. R. Co. 163 U. S. 321, 41 L. ed. 175, 16 Sup. Ct. Rep. 1018. In that case, the court strongly intimates that the Land Department, in passing upon the question whether a certain tract of land was swamp land or not, mineral land or not, was passing upon an administrative question. In the case of American School v. McAnnulty, 187 U. S. 94, 108, 47 L. ed. 90, 96, 23 Sup. Ct. Rep. 33 (1902), the United States Supreme Court held that the Postoffice Department, in passing upon the question of whether certain printed matter should be excluded from the mails on the ground that it was fraudulent, was performing a purely administrative act. So, too, the court, in determining the powers of an immigration inspector, in a long line of cases, has invariably been inclined to hold that his duties were administrative. The most important case upon this subject probably is United States v. Ju Toy, 198 U. S. 253, 49 L. ed. 1040, 25 Sup. Ct. Rep. 644 (1905). In that case the immi gration inspector had decided that the petitioner had not been born in the United States, and denied him admission to the United States, and ordered him deported. In appealing to the United States courts for a writ of habeas corpus, the petitioner alleged that he was a citizen of the United States and was being wrongfully deported. The court held it had no power to review the questions or finding of fact of an immigration officer. It would be impossible to uphold this case upon any other theory than that the acts of the immigration officer were purely administrative. Methods of Procedure. If a commission is regarded as an administrative or legislative body, on the one hand, or a judicial body on the other, we may expect to see an entirely different development in the method of its procedure and in the rules of evidence that will prevail. If it is a judicial body, then it seems to be highly important that its members may be those who are versed in law, in order that they may correctly interpret the law of the land. If it is an administrative body, then the legal features will be minimized; the rules of evidence that prevail in our courts will not be followed. The men who will then more likely be appointed to the commission will become specialized with the industrial and social questions that must be dealt with, rather than lawyers. There is no reason why a lawyer should be of any particular aid in determining what may be a fair and remunerative rate for a public-service corporation to charge. There is every reason, however, why a man who has given a life study to gas, electric and power plants, and to railroads may be of the greatest assistance in establishing a fair rate. If our commissions are to be of value, it is to be hoped that those who are appointed to them will be experts, and that in reaching their conclusions they will not be hindered by the vexatious delays of legal technicalities. An administrative body will probably listen to hearsay evidence, and give it such consideration as it may consider it worth; it may dispense with the technical proof of the execution of documents |