"Unconstitutional Conditions"

The case of Frost v. Railroad Commission of State of California, 271 U.S. 583 (1926,) involved the constitutionality of the Auto Stage and Truck Transportation Act of California (Statutes of California 1917, p. 330, c. 213, amended 1919,) as applied to a transporter of citrus under a private single contract.

The Act designated the Railroad Commission to permit, supervise and regulate transportation between fixed termini of persons or property by a "common carrier" or "transportation company" operating under "private contracts of carriage" for compensation over the public highways. Permits were are issued by the incorporated city or town, city and county, or county within or through which the applicant intended to operate. The Railroad Commission was authorized to supervise and regulate such transportation companies, fixing their rates, fares, charges, classifications, rules, and regulations, and generally, to regulate them in all matters affecting their relationship with the traveling and shipping public. In addition to a permit, the applicant had to obtain a certificate from the Commission declaring that public convenience and necessity require the exercise of such right or privilege. As condition of the certificate, the Commission could attach such terms and conditions as in its judgment the public convenience and necessity might require. Operation under a permit without a certificate was prohibited.

The plaintiffs were brought before the commission for failure to obtain the required certificate. They charged unconstitutionality based on the claim that the Act took their property for public use without just compensation, deprived them of their property without due process of law, and denied them the equal protection of the laws, in violation of the Fourteenth Amendment to the federal Constitution. Justice Sutherland delivered the opinion of the Court:

"[The State Supreme Court,] while saying that the state was without power, by mere legislative fiat or even by constitutional enactment, to transmute a private carrier into a public carrier, declared that the state had the power to grant or altogether withhold from its citizens the privilege of using its public highways for the purpose of transacting private business thereon, and that therefore the Legislature might grant the right on such conditions as it saw fit to impose. In the light of this general statement of principle, it was held that the effect of the transportation act is to offer a special privilege of using the public highways to the private carrier for compensation upon condition that he shall dedicate his property to the quasi public use of public transportation; that the private carrier is not obliged to submit himself to the condition, but, if he does not, he is not entitled to the privilege of using the highways.

"It is very clear that the act, as thus applied, is in no real sense a regulation of the use of the public highways. It is a regulation of the business of those who are engaged in using them. Its primary purpose evidently is to protect the business of those who are common carriers in fact by controlling competitive conditions. Protection or conservation of the highways is not involved..."

"Thus, it will be seen that, under the act as construed by the state court, whose construction is binding upon us, a private carrier may avail himself of the use of the highways only upon condition that he dedicate his property to the business of public transportation and subject himself to all the duties and burdens imposed by the act upon common carriers. In other words, the case presented is not that of a private carrier, who, in order to have the privilege of using the highways, is required merely to secure a certificate of public convenience and become subject to regulations appropriate to that kind of a carrier, but it is that of a private carrier, who, in order to enjoy the use of the highways, must submit to the condition of becoming a common carrier and of being regulated as such by the Railroad Commission. The certificate of public convenience, required by section 5, is exacted of a common carrier, and is purely incidental to that status. The requirement does not apply to a private carrier qua private carrier, but to him only in his imposed statutory character of common carrier. Apart from that signification, so far as he is concerned, it does not exist.

"That, consistently with the due process clause of the Fourteenth Amendment, a private carrier cannot be converted against his will into a common carrier by mere legislative command, is a rule not open to doubt, and is not brought into question here. It was expressly so decided in Michigan Commission v. Duke, 266 U.S. 570, 577,578, 45 v. Duke, 266 U.S. 570, 577, 578 S., 45 also, Hissem v. Guran, 112 Ohio St. 59, 146 N. E. 808; State v. Nelson, 65 Utah, 457, 462, 238 P. 237. The naked question which we have to determine, therefore, is whether the state may bring about the same result by imposing the unconstitutional requirement as a condition precedent to the enjoyment of a privilege, which, without so deciding, we shall assume to be within the power of the state altogether to withhold if it sees fit to do so. Upon the answer to this question, the constitutionality of the statute now under review will depend.

"There is involved in the inquiry not a single power, but two distinct powers. One of these, the power to prohibit the use of the public highways in proper cases, the state possesses; and the other, the power to compel a private carrier to assume against his will the duties and burdens of a common carrier, the state does not possess. It is clear that any attempt to exert the latter, separately and substantively, must fall before the partamount authority of the Constitution. May it stand in the conditional form in which it is here made? If so, constitutional guaranties, so carefully safeguarded against direct assault, are open to destruction by the indirect, but no less effective, process of requiring a surrender, which, though in form voluntary, in fact lacks none of the elements of compulsion. Having regard to form alone, the act here is an offer to the private carrier of a privilege, which the state may grant or deny, upon a condition which the carrier is free to accept or reject. In reality, the carrier is given no choice, except a choice between the rock and the whirlpool-an option to forego a privilege which may be vital to his livelihood or submit to a requirement which may constitute an intolerable burden.

"It would be a palpable incongruity to strike down an act of state legislation which, by words of express divestment, seeks to strip the citizen of rights guaranteed by the federal Constitution, but to uphold an act by which the same result is accomplished under the guise of a surrender of a right in exchange for a valuable privilege which the state threatens otherwise to withhold. It is not necessary to challenge the proposition that, as a general rule, the state, having power to deny a privilege altogether, may grant it upon such conditions as it sees fit to impose. But the power of the state in that respect is not unlimited, and one of the limitations is that it may not impose conditions which require the relinquishment of constitutional rights. If the state may compel the surrender of one constitutional right as a condition of its favor, it may, in like manner, compel a surrender of all. It is inconceivable that guaranties embedded in the Constitution of the United States may thus be manipulated out of existence."

"In Southern Pacific Co. V. Denton, 146 U.S. 202, 207, 13 S. Ct. 44, there was under consideration a Texas statute requiring a foreign corporation desiring to do business in the state to agree that it would not remove any suit from a court of the state into the Circuit Court of the United States. This court held the statute invalid, saying:

'But that statute, requiring the corporation, as a condition precedent to obtaining a permit to do business within the state, to surrender a right and privilege secured to it by the Constitution and laws of the United States, was unconstitutional and void, and could give no validity or effect to any agreement or action of the Corporation in obedience to its provisions.'

"[I]n Western Union Tel. Co. v. Kansas, 216 U.S. 1, 34-48, 30 S. Ct. 190, upon a full review of the prior decisions, the principles set forth in the foregoing quotations was again reaffirmed. That case involved the validity of a Kansas statute which provided that a corporation of another state, though engaged in interstate business, must, as a condition of doing local business, pay to the state certain graduated percentages of its capital stock. It was held that this requirement operated as a burden on the interstate business of the company, in violation of the commerce clause of the Constitution, as well as a tax on its property beyond the limits of the state, in violation of the due process of law clause; that thus it was violative of the constitutional rights of the company; and that the right of the company to continue to do business in Kansas was not and could not be affected by the condition. The general principle was again announced in the following words (pages 47, 48 ( 30 S. Ct. 206)):

'The right of the telegraph company to continue the transaction of local business in Kansas could not be made to depend upon its submission to a condition prescribed by that state, which was hostile both to the letter and spirit of the Constitution. The company was not bound, under any circumstances, to surrender its constitutional exemption from state taxation, direct or indirect, in respect of its interstate business and its property outside of the state, any more than it would have been bound to surrender any other right secured by the national Constitution.'

"[A]nd the principle, that a state is without power to impose an unconstitutional requirement as a condition for granting a privilege, is broader than the applications thus far made of it. In Western Union Tel. Co. v. Foster, supra, two telegraph companies were engaged in transmitting the quotations of the New York Stock Exchange among the states. This was held to be interstate commerce, and an order of the public Service commission of Massachusetts, requiring the companies to remove a discrimination, was held to infringe their constitutional rights. One of the grounds upon which the order was defended was that it rested upon the power of the state over the streets which it was necessary for the telegraph to cross. That contention was answered broadly (page 114 (38 S. Ct. 439)):

'But, if we assume that the plaintiffs in error under their present charters could be excluded from the streets, the consequence would not follow. Acts generally lawful may become unlawful when done to accomplish an unlawful end (United States v. Reading Co., 226 U.S. 324, 357, 33 S. Ct. 90), and a constitutional power cannot be used by way of condition to attain an unconstitutional result (Western Union Telegraph Co. v. Kansas, 216 U.S. 1, 30 S. Ct. 190; Pullman Co. v. Kansas, 216 U.S. 56, 30 S. Ct. 232; Sioux Remedy Co. v. Cope, 235 U.S. 197, 203, 35 S. Ct. 57. The regulation in question is quite as great an interference as a tax of the kind that repeated decisions have held void. It cannot be justified 'under that somewhat ambiguous term of police powers."

"And, in almost the last expression of this court upon the subject, Burnes Nat. Bank v. Duncan, supra, the rule is none the less broadly but more succinctly stated to be (page 24 (44 S. Ct. 428)):

'The states cannot use their most characteristic powers to reach unconstitutional results. Western Union Telegraph Co. v. Kansas, 216 U.S. 1 (30 S. Ct. 190); Pullman Co. v. Kansas, 216 U.S. 56 (30 S. Ct. 232); Western Union Telegraph Co. v. Foster, 247 U.S. 105, 114 (38 S. Ct. 438, 1 A. L. R. 1278).'