The Constitution of the United States of America: Analysis and Interpretation Part 177

In the course of time, however, a distinction emerged between ordinary factual determinations by State commissions and factual determinations which were found to be inseparable from the legal and const.i.tutional issue of confiscation. In two older cases arising from proceedings begun in lower federal courts to enjoin rates, the Court initially adopted the position that it would not disturb such findings of fact insofar as these were supported by substantial evidence. Thus, in San Diego Land and Town Company _v._ National City,[207] the Court declared that: After a legislative body has fairly and fully investigated and acted, by fixing what it believes to be reasonable rates, the courts cannot step in and say its action shall be set aside because the courts, upon similar investigation, have come to a different conclusion as to the reasonableness of the rates fixed. "Judicial interference should never occur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property under the guise of regulation as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation for private property taken for the public use." And in a similar later case[208] the Court expressed even more clearly its reluctance to reexamine factual determinations of the kind just described. The Court is not bound "to reexamine and weigh all the evidence, * * *, or to proceed according to * * * [its] independent opinion as to what are proper rates. It is enough if * * * [the Court] cannot say that it was impossible for a fair-minded board to come to the result which was reached."

Moreover, in reviewing orders of the Interstate Commerce Commission, the Court, at least in earlier years,[209] chose to be guided by approximately the same standards of appraisal as it had originally formulated for examining regulations of State commissions; and inasmuch as the following excerpt from its holding in Interstate Commerce Commission _v._ Union Pacific R. Co.[210] represents an adequate summation of the law as it stood prior to 1920, it is set forth below: "* * * questions of fact may be involved in the determination of questions of law, so that an order, regular on its face, may be set aside if it appears that the rate is so low as to be confiscatory * * *; or if the Commission acted so arbitrarily and unjustly as to fix rates contrary to evidence, or without evidence to support it; or if the authority therein involved has been exercised in such an unreasonable manner as to cause it to be within the elementary rule that the substance, and not the shadow, determines the validity of the exercise of the power. * * * In determining these mixed questions of law and fact, the Court confines itself to the ultimate question as to whether the Commission acted within its power. It will not consider the expediency or wisdom of the order, or whether, on like testimony, it would have made a similar ruling. * * * [The Commission's] conclusion, of course, is subject to review, but when supported by evidence is accepted as final; not that its decision, * * *, can be supported by a mere scintilla of proof--but the courts will not examine the facts further than to determine whether there was substantial evidence to sustain the order."

The Ben Avon Case

These standards of review were abruptly rejected by the Court in Ohio Valley Water Company _v._ Ben Avon Borough,[211] decided in 1920, as being no longer sufficient to satisfy the requirements of due process.

Unlike previous litigation involving allegedly confiscatory rate orders of State commissions, which had developed from rulings of lower federal courts in injunctive proceedings, this case reached the Supreme Court by way of appeal from a State appellate tribunal;[212] and although the latter did in fact review the evidence and ascertained that the State commission's findings of fact were supported by substantial evidence, it also construed the statute providing for review as denying to State courts "the power to pa.s.s upon the weight of such evidence." Largely on the strength of this interpretation of the applicable State statute, the Supreme Court held that when the order of a legislature, or of a commission, prescribing a schedule of maximum future rates is challenged as confiscatory, "the State must provide a fair opportunity for submitting that issue to a judicial tribunal for determination upon its own independent judgment as to both law and facts; otherwise the order is void because in conflict with the due process clause, Fourteenth Amendment."

Without departing from the ruling, previously enunciated in Louisville & N.R. Co. _v._ Garrett,[213] that the failure of a State to grant a statutory right of judicial appeal from a commission's regulation is not violative of due process as long as relief is obtainable by a bill in equity for injunction, the Court also held that the alternative remedy of injunction expressly provided by State law did not afford an adequate opportunity for testing judicially a confiscatory rate order. It conceded the principle stressed by the dissenting Justices that "where a State offers a litigant the choice of two methods of judicial review, of which one is both appropriate and unrestricted, the mere fact that the other which the litigant elects is limited, does not amount to a denial of the const.i.tutional right to a judicial review."[214]

History of the Valuation Question

For almost fifty years the Court was to wander through a maze of conflicting formulas for valuing public service corporation property only to emerge therefrom in 1944 at a point not very far removed from Munn _v._ Illinois.[215] By holding, in 1942, in Federal Power Commission _v._ Natural Gas Pipeline Co.,[216] that the "Const.i.tution does not bind rate-making bodies to the service of any single formula or combination of formulas," and in 1944, in Federal Power Commission _v._ Hope Gas Co.,[217] that "it is the result reached not the method employed which is controlling, * * * [that] it is not the theory but the impact of the rate order which counts, [and that] if the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end," the Court, in effect, abdicated from the position a.s.sumed in the Ben Avon Case.[218] Without surrendering the judicial power to declare rates unconst.i.tutional on grounds of a substantive[219] deprivation of due process, the Court announced that it would not overturn a result deemed by it to be just simply because "the method employed [by a commission] to reach that result may contain infirmities. * * * [A] Commission's order does not become suspect by reason of the fact that it is challenged. It is the product of expert judgment which carries a presumption of validity. And he who would upset the rate order * * * carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences."[220]

In dispensing with the necessity of observing any of the formulas for rate computation which previously had currency, the Court did not undertake to devise, by way of subst.i.tution, any discernible guide to aid it in ascertaining whether a so-called end result is unreasonable.

It did intimate that rate-making "involves a balancing of the investor and consumer interests," which does not, however, "'insure that the business shall produce net revenues,' * * * From the investor or company point of view it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock. * * * By that standard the return to the equity owner should be commensurate with returns on investments in other enterprises having corresponding risks.

That return, moreover, should be sufficient to a.s.sure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital."[221] Nevertheless, in the light of the court's concentration on the reasonableness of the final result rather than on the correctness of the methods employed to reach that result, it is conceivable that methods or formulas, now discredited in whole or in part, might continue to be observed by State commissions in drafting rate orders that will prove to be justiciably sustainable.[222]

REGULATION OF PUBLIC UTILITIES (OTHER THAN RATES)

In General

By virtue of the nature of the business they carry on and the public's interest in it, public utilities are subject, as to their local business, to State regulation exerted either directly by legislature or by duly authorized administrative bodies.[223] But inasmuch as their property remains under the full protection of the Const.i.tution, it follows that whenever this power of regulation is exerted in what the Court considers to be an "arbitrary" or "unreasonable" way and to be in effect an infringement upon the right of ownership, such exertion of power is void as repugnant to the due process clause.[224] Thus, a city cannot take possession of the equipment of a street railway company, the franchise of which has expired,[225] although it may subject said company to the alternative of accepting an inadequate price for its property or of ceasing operations and removing its property from the streets.[226] Likewise, a city, which is desirous of establishing a lighting system of its own, may not remove, without compensation, the fixtures of a lighting company already occupying the streets under a franchise;[227] but in erecting its own waterworks in compet.i.tion with that of a company which has no exclusive charter, a munic.i.p.ality inflicts no unconst.i.tutional deprivation.[228] Nor is the property of a telegraph company illegally taken by a munic.i.p.al ordinance which demands, as a condition of the establishment of poles and conduits in the city streets, that positions be reserved for the city's wires, which shall be carried free of charge, and which provides for the moving of the conduits, when necessary, at company expense.[229] And, the fact that a State, by mere legislative or administrative fiat, cannot convert a private carrier into a common carrier will not protect a foreign corporation which has elected to enter a State, the Const.i.tution and laws of which require that it operate its local private pipe line as a common carrier. Such foreign corporation is viewed as having waived its const.i.tutional right to be secure against imposition of conditions which amount to a taking of property without due process of law.[230]

Compulsory Expenditures

The enforcement of uncompensated obedience to a regulation for the public health and safety is not an unconst.i.tutional taking of property without due process of law.[231] Thus, where the applicable rule so required at the time of the granting of its charter, a water company may be compelled to furnish connections at its own expense to one residing on an ungraded street in which it voluntarily laid its lines.[232]

However, if pipe and telephone lines are located on a right of way owned by a pipe line company, the latter cannot, without a denial of due process, be required to relocate such equipment at its own expense;[233] but if its pipes are laid under city streets, a gas company validly may be obligated to a.s.sume the cost of moving them to accommodate a munic.i.p.al drainage system.[234]

To require a turnpike company, as a condition of its taking tolls, to keep its road in repair and to suspend collection thereof, conformably to a State statute, until the road is put in good order, does not take property without due process of law, notwithstanding the fact that present patronage does not yield revenue sufficient to maintain the road in proper condition.[235] Nor is a railroad bridge company unconst.i.tutionally deprived of its property when, in the absence of proof that the addition will not yield a reasonable return, it is ordered to widen its bridge by inclusion of a pathway for pedestrians and a roadway for vehicles.[236]

Grade Crossings and Other Expenditures by Railroads.--When railroads are required to repair a viaduct under which they operate,[237] or to reconstruct a bridge or provide means for pa.s.sing water for drainage through their embankment,[238] or to sprinkle that part of the street occupied by them,[239] their property is not taken without due process of law. But if an underground cattle-pa.s.s is to be constructed, not as a safety measure but as a means of sparing the farmer the inconvenience attendant upon the use of an existing and adequate grade crossing, collection of any part of the cost thereof from a railroad is a prohibited taking for private use.[240] As to grade crossing elimination, the rule is well established that the State may exact from railroads the whole, or such part, of the cost thereof as it deems appropriate, even though commercial highway users, who make no contribution whatsoever, benefit from such improvements. But, the power of the State in this respect is not unlimited. If its imposition is "arbitrary" and "unreasonable" it may be set aside; but to reach that conclusion, it may become necessary to consider certain relevant facts; e.g., whether a new highway on which an underpa.s.s is to be constructed is essential to the transportation needs of a community already well served by a crossing equipped with devices which are adequate for safety and convenience of a local traffic; whether the underpa.s.s is prescribed as part of a national system of federal aid highways for the furtherance of motor vehicle traffic, much of which is in direct compet.i.tion with the railroad; whether the increase in such traffic will greatly decrease rail traffic and hence the revenue of the railroad; whether the amount of taxes paid by the railroads of the State, part of which is devoted to the upkeep of public highways used by motor carriers, is disproportionately higher than the amount paid by motor carriers.[241]

Compellable Services

The primary duty of a public utility being to serve on reasonable terms all those who desire the service it renders, it follows that a company cannot pick and choose and elect to serve only those portions of its territory which it finds most profitable, leaving the remainder to get along without the service which it alone is in a position to give.

Compelling a gas company to continue serving specified cities as long as it continues to do business in other parts of the State entails therefore no unconst.i.tutional deprivation.[242] Likewise a railway may be compelled to continue the service of a branch or part of a line although the operation involves a loss.[243] But even though a utility, as a condition of enjoyment of powers and privileges granted by the State, is under a continuing obligation to provide reasonably adequate service, and even though that obligation cannot be avoided merely because performance occasions financial loss, yet if a company is at liberty to surrender its franchise and discontinue operations, it cannot be compelled to continue at a loss.[244]

Pursuant to the principle that the State may require railroads to provide adequate facilities suitable for the convenience of the communities served by them,[245] such carriers have been obligated to establish stations at proper places for the convenience of patrons,[246]

to stop all their intrastate trains at county seats,[247] to run a regular pa.s.senger train instead of a mixed pa.s.senger and freight train,[248] to furnish pa.s.senger service on a branch line previously devoted exclusively to carrying freight,[249] to restore a siding used princ.i.p.ally by a particular plant but available generally as a public track, and to continue, even though not profitable by itself, a sidetrack[250] as well as the upkeep of a switch-track leading from its main line to industrial plants.[251] However, a statute requiring a railroad without indemnification to install switches on the application of owners of grain elevators erected on its right of way was held void.[252] Whether a State order requiring transportation service is to be viewed as reasonable may necessitate consideration of such facts as the likelihood that pecuniary loss will result to the carrier, the nature, extent and productiveness of the carrier's intrastate business, the character of the service required, the public need for it, and its effect upon service already being rendered.[253] If the service required has no substantial relation to transportation, it will be deemed arbitrary and void, as in the case of an order requiring railroads to maintain cattle scales to facilitate trading in cattle,[254] and of a prohibition against letting down an unengaged upper berth while the lower berth was occupied.[255]

Intercompany Railway Service.--"Since the decision in Wisconsin M. & P.R. Co. _v._ Jacobson, 179 U.S. 287 (1900), there can be no doubt of the power of a State, acting through an administrative body, to require railroad companies to make track connections. But manifestly that does not mean that a Commission may compel them to build branch lines, so as to connect roads lying at a distance from each other; nor does it mean that they may be required to make connections at every point where their tracks come close together in city, town and country, regardless of the amount of business to be done, or the number of persons who may utilize the connection if built. The question in each case must be determined in the light of all the facts, and with a just regard to the advantage to be derived by the public and the expense to be incurred by the carrier. * * * If the order involves the use of property needed in the discharge of those duties which the carrier is bound to perform, then, upon proof of the necessity, the order will be granted, even though 'the furnishing of such necessary facilities may occasion an incidental pecuniary loss.' * * * Where, however, the proceeding is brought to compel a carrier to furnish a facility not included within its absolute duties, the question of expense is of more controlling importance. In determining the reasonableness of such an order the Court must consider all the facts--the places and persons interested, the volume of business to be affected, the saving in time and expense to the shipper, as against the cost and loss to the carrier."[256]

Although a carrier is under a duty to accept goods tendered at its station, it cannot be required, upon payment simply for the service of carriage, to accept cars offered at an arbitrary connection point near its terminus by a competing road seeking to reach and use the former's terminal facilities. Nor may a carrier be required to deliver its cars to connecting carriers without adequate protection from loss or undue detention or compensation for their use.[257] But a carrier may be compelled to interchange its freight cars with other carriers under reasonable terms,[258] and to accept, for reshipment over its lines to points within the State, cars already loaded and in suitable condition.[259]

Intercompany Discriminatory Railroad Service Charges.--Due process is not denied when two carriers, who wholly own and dominate a small connecting railroad, are prohibited from exacting higher charges from shippers accepting delivery over said connecting road than are collected from shippers taking delivery at the terminals of said carriers.[260] Nor is it "unreasonable" or "arbitrary" to require a railroad to desist from demanding freight in advance on merchandise received from one carrier while it accepts merchandise of the same character at the same point from another carrier without such prepayment.[261]

Safety Regulations Applicable to Railroads

The following regulations with reference to railroads have been upheld: a prohibition against operation on certain streets,[262] restrictions on speed, operations, etc., in business sections,[263] requirement of construction of a sidewalk across a right of way,[264] or removal of a track crossing a thoroughfare,[265] compelling the presence of a flagman at a crossing notwithstanding that automatic device might be cheaper and better,[266] compulsory examination of employees for color blindness,[267] full crews on certain trains,[268] specification of a type of locomotive headlight,[269] safety appliance regulations,[270]

and a prohibition on the heating of pa.s.senger cars from stoves or furnaces inside or suspended from the cars.[271]

Liabilities and Penalties

A statute making the initial carrier[272] or the connecting or delivering carrier,[273] liable to the shipper for the nondelivery of goods is not unconst.i.tutional; nor is a law which provides that a railroad shall be responsible in damages to the owner of property injured by fire communicated by its locomotive engines and which grants the railroad an insurable interest in such property along its route and authority to procure insurance against such liability.[274] Equally consistent with the requirements of due process are the following two enactments; the first, imposing on all common carriers a penalty for failure to settle within a reasonable specified period claims for freight lost or damaged in shipment and conditioning payment of that penalty upon recovery by the claimant in subsequent suit of more than the amount tendered,[275] and the second, levying double damages and an attorney's fee upon a railroad for failure to pay within a reasonable time after demand the amount claimed by an owner for stock injured or killed. However, only in the event that the application of the latter statute is limited to cases where the plaintiff has not demanded more than he recovered in court will its const.i.tutionality be upheld;[276]

but when the penalty allowed thereunder is exacted in a case in which the plaintiff demanded more than he sued for and recovered, a defendant railroad is arbitrarily deprived of its property without due process.[277] The requirements of fair play are similarly violated by a statute which, by imposing double liability for failure to pay the full amount of damages within 60 days after notice, unless the claimant recovers less than the amount offered in settlement, in effect penalizes a carrier for guessing incorrectly what a jury would award.[278]

To penalize a carrier which has collected transportation charges in excess of established maximum rates by permitting a person wronged to sue for and collect as liquidated damages $500 plus a reasonable attorney's fee is to subject the carrier to a requirement so unreasonable as to be repugnant to the due process clause; for such liability is not only disproportionate to actual damages, but is being exacted under conditions which do not afford the carrier an adequate opportunity for safely testing the validity of the rates before any liability for the penalty attaches.[279] Where it appears, however, that the carrier had an opportunity to test the reasonableness of the rate, and that its deviation therefrom, by collection of an overcharge, did not proceed from any belief that the rate was invalid, the validity of the penalty imposed is not to be tested by comparison with the amount of the overcharge. Inasmuch as it is imposed as punishment for violation of a law, the legislature may adjust its amount to the public wrong rather than the private injury, and the only limitation which the Fourteenth Amendment imposes is that the penalty prescribed shall not be "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable." In accordance with the latter standard, a statute granting an aggrieved pa.s.senger (who recovered $100 for an overcharge of 60 cents) the right to recover in a civil suit not less than $50 nor more than $300 plus costs and a reasonable attorney's fee is const.i.tutional.[280]

For like reasons, a statute requiring railroads to erect and maintain fences and cattle guards, and making them liable in double amount of damages for their failure to so maintain them is not unconst.i.tutional.[281] Nor is a Nebraska law which establishes a minimum rate of speed for delivery of livestock and which requires every carrier violating the same to pay the owner of such livestock the sum of $10 per car per hour.[282] On the other hand, when a telephone company, in accordance with its established and uncontested regulations, suspends the service of a patron in arrears, infliction upon it of penalties aggregating $3,600, levied pursuant to a statute imposing fines of $100 per day for alleged discrimination, is so plainly arbitrary and oppressive as to take property without due process.[283]

REGULATION OF CORPORATIONS, BUSINESS, PROFESSIONS, AND TRADES

Domestic Corporations

Although a corporation is the creation of a State which reserves the power to amend or repeal corporate charters, the retention of such power will not support the taking of the corporate property without due process of law. To terminate the life of a corporation by annulling its charter is not to confiscate its property but to turn it over to the stockholders after liquidation.[284] Conversely, unreasonable regulation, as by the imposition of confiscatory rates, although it ostensibly falls short of termination of the corporate existence, entails an invalid deprivation.[285]

Foreign Corporations

Foreign corporations also enjoy the protection which the due process clause affords; but such protection does not ent.i.tle them to enter another State or, once having been permitted to enter, to continue to do business therein.[286] The power of a State to exclude or to expel a foreign corporation being almost plenary as long as interstate commerce is not directly affected, it follows that a State may subject such entry or continued operation to conditions. Thus, a State law which requires the filing of articles with a local official as a condition prerequisite to the validity of conveyances of local realty to such corporations is not violative of due process.[287] Neither is a State statute which requires a foreign insurance company, as part of the price of entry, to maintain reserves computed by a specific percentage of premiums, including membership fees, received in all States.[288] Similarly a statute requiring corporations to dispose of farm land not necessary to the conduct of their business is not invalid as applied to a foreign hospital corporation, even though the latter, because of changed economic conditions, is unable to recoup its original investment from the sale which it is thus compelled to make.[289]

Business: In General

"The Const.i.tution does not guarantee the unrestricted privilege to engage in a business or to conduct it as one pleases. Certain kinds of business may be prohibited; and the right to conduct a business, or to pursue a calling, may be conditioned. * * * Statutes prescribing the terms upon which those conducting certain businesses may contract, or imposing terms if they do enter into agreements, are within the State's competency."[290]

Laws Prohibiting Trusts, Discrimination, Restraint of Trade.--A State act prohibiting trusts, etc., is not in conflict with the Fourteenth Amendment as to a person combining with others to pool and fix prices, divide net earnings, and prevent compet.i.tion in the purchase and sale of grain.[291] Nor does the Fourteenth Amendment preclude a State from adopting a policy against all combinations of competing corporations and enforcing it even against combinations which may have been induced by good intentions and from which benefit and not injury may have resulted.[292] Nor is freedom of contract unconst.i.tutionally abridged by a statute which prohibits retail lumber dealers from uniting in an agreement not to purchase materials from wholesalers selling directly to consumers in the retailers' localities,[293] nor by a law punishing combinations for "maliciously" injuring a rival in his business profession or trade.[294] Similarly, a prohibition of unfair discrimination by any one engaged in the manufacture or distribution of a commodity in general use for the purpose of intentionally destroying compet.i.tion of any regular dealer in such commodity by making sales thereof at a lower rate in one section of the State than in another, after equalization for distance, effects no invalid deprivation of property or interference with freedom of contract.[295] Liberty of contract is infringed, however, by a law punishing dealers in cream who pay higher prices in one locality than in another. Although high bidding by strong buyers tends toward monopoly, the statute has no reasonable relation to such bidding, but infringes private rights whose exercise is not shown to produce evil consequences.[296] A law sanctioning contracts requiring that commodities identified by trade mark will not be sold by the vendee or subsequent vendees except at prices stipulated by the original vendor does not violate the due process clause.[297]

Statutes Preventing Fraud in Sale of Goods.--Laws and ordinances tending to prevent frauds and requiring honest weights and measures in the sale of articles of general consumption have long been considered lawful exertions of the police power.[298] Thus, a prohibition on the issuance by other than an authorized weigher of any weight certificate for grain weighed at any warehouse or elevator where State weighers are stationed, or to charge for such weighing, is not unconst.i.tutional.[299] Nor is a munic.i.p.al ordinance requiring that commodities sold in load lots by weight be weighed by a public weigh-master within the city invalid as applied to one delivering coal from State-tested scales at a mine outside the city.[300] A statute requiring merchants to record sales in bulk not made in the regular course of business is also within the police power.[301]

Similarly, the power of a State to prescribe standard containers to protect buyers from deception as well as to facilitate trading and to preserve the condition of the merchandise is not open to question.

Accordingly, an administrative order issued pursuant to an authorizing statute and prescribing the dimensions, form, and capacity of containers for strawberries and raspberries is not arbitrary inasmuch as the form and dimensions bore a reasonable relation to the protection of the buyers and the preservation in transit of the fruit.[302] Similarly, an ordinance fixing standard sizes of bread loaves and prohibiting the sale of other sizes is not unconst.i.tutional.[303] However, by a case decided in 1924, a "tolerance" of only two ounces in excess of the minimum weight of a loaf of bread is unreasonable when it is impossible to manufacture good bread without frequently exceeding the prescribed tolerance and is consequently unconst.i.tutional;[304] but by one decided ten years later, regulations issued in furtherance of a statutory authorization which impose a rate of tolerance not to exceed three ounces to a pound of bread and requiring that the bread maintain the statutory minimum weight for not less than 12 hours after cooling are const.i.tutional.[305] Likewise a law requiring that lard not sold in bulk should be put upon in containers holding one, three, or five pounds weight, or some whole multiple of these numbers, does not deprive sellers of their property without the process of law.[306]

The right of a manufacturer to maintain secrecy as to his compounds and processes must be held subject to the right of the State, in the exercise of the police power and in the promotion of fair dealing, to require that the nature of the product be fairly set forth.[307] Nor does a statute providing that the purchaser of harvesting or threshing machinery for his own use shall have a reasonable time after delivery for inspecting and testing it, and permitting recission of the contract if the machinery does not prove reasonably adequate, and further declaring any agreement contrary to its provisions to be against public policy and void, does not violate the due process clause.[308]

Blue Sky Laws; Laws Regulating Boards of Trade, Etc.--In the exercise of its power to prevent fraud and imposition, a State may regulate trading in securities within its borders, require a license of those engaging in such dealing, make issuance of a license dependent on a public officer's being satisfied of the good repute of the applicants, and permit him, subject to judicial review of his findings, to revoke the same.[309] A State may forbid the giving of options to sell or buy at a future time any grain or other commodity.[310] It may also forbid sales on margin for future delivery;[311] and may prohibit the keeping of places where stocks, grain, etc., are sold but not paid for at the time, unless a record of the same be made and a stamp tax paid.[312]

Making criminal any deduction by the purchaser from the actual weight of grain, hay, seed, or coal under a claim of right by reason of any custom or rule of a board of trade is a valid exercise of the police power and does not deprive the purchaser of his property without due process of law, nor interfere with his liberty of contract.[313]