contract. The court said, citing Manigault v. Springs, that "It is the settled law of this court that the interdiction of statutes impairing the obligation of contracts does not prevent the state from (properly) exercising such powers *** for the general good of the public though contracts previously entered between individuals may thereby be affected." And further, quoting from Louisville & N. R. Co. v. Mottley, it was said that "Contracts must be understood as made in the rightful exercise of the rightful authority of government, and no obligation of a contract can extend to the defeat of legitimate government authority." This was stated as to a contract lawful when made, but made unlawful afterward under interstate commerce clause, but it would seem to be equally true under rightful exercise of a state's police power. A late work by the author of this article speaking of discrimination lawful under one classification at the time it is made, says: "But no contract can be the basis for such a discrimination, whether prior or contemporaneous, as it comes under the power to regulate the utility itself." There are cited in support of this many U. S. Supreme Court cases and among them the Mottley case supra. But it is also clear, that the right to disregard the obligation of contract has been expressly declared, when the exercise of a state's police power is involved. Thus the opinion in United Dry Goods Co. case supra, says: "It is settled that neither the 'contract' clause nor the 'due process' clause has the effect of overriding the power of the state to establish all regulations ***; that this power can neither be abdicated, nor bargained away, and is inalienable even by express grant; and that all contract and property rights (1) Union Dry Goods Co. v. Ga. Public Service Corporation, 248 U. S. 372, 39 Sup. Ct. 117, P. U. R. 1919C, 60. (2) 199 U. S. 473, 50 L. ed. 274, 278, 26 Sup. Ct. 127. (3) 219 U. S. 467, 31 Sup. Ct. 265, 34 L. R. A. (N. S.) 671. (4) Collier on Public Service Companies, § 132. are held subject to its fair exercise," excerpt from a former decision." Later than all of the cases above spoken of is a decision by the U. S. Supreme Court, which held, that, where a municipal ordinance granted a street railway a franchise which obligated the railway to give service at a certain rate for fares, that this constitutes in Ohio an absolute bar against any change of rate, one party thereto objecting. There is not in the opinion in this case any reference whatever to the case in 248 U. S. 60, nor to any of the cases it cites, and both opinions were by a unanimous count. As this opinion appears to distinguish between private contract rates and franchise rates, in their alterable effect, it becomes necessary to examine more particularly the exact purport of the lat ter, especially as there are variant rulings in state courts as to the effect of a franchise in the fixing of rates for public utilities. Particular Bearing of the Columbus Case.-Justice Day says: "The insistence on the part of the city is that, under the controlling laws of Ohio, in force when these ordinances were passed and accepted, and the terms of the ordinances, binding contracts were created *** for the period of twenty-five years upon the terms and conditions set forth in the ordinances. *** Whether these ordinances constituted such contracts depends upon the proper construction of the statutes of Ohio in force at the time, and the terms of the ordinances in question." Then he refers to a prior decision,' wherein it was said: "In reason, the conclusion that contracts were engendered would seem to result from the fact that the provisions as to rates of fare were fixed in ordinances for a stated time and no reservation was made of a right (5) Atlantic C. L. R. Co. v. Goldsboro, 232 U. S. 548, 558, 34 Sup. Ct. 364, 58 L. ed. 721. (6) Columbus Ry. P. & L. Co. v. Columbus, 249 U. S. 399, 39 Sup. Ct. 349, P. U. R. 1919D, 239. (7) Cleveland v. Cleveland City R. Co., 194 U. S. 517, 24 Sup. Ct. 756, 48 L. ed. 1102. to alter; that by those ordinances existing rights of the corporations were surrendered, benefits were conferred upon the public, and obligations were imposed upon the corporations to continue those benefits during the stipulated time. When, in addition, we consider the specific reference to limitations of time which the ordinances contained, and the fact that a written acceptance by the corporations was required, we can see no escape from the conclusion that the ordinances were intended to be agreements binding upon both parties definitely fixing the rates of fare which might thereafter be charged." A critical analysis of this statement presents only a single thing to differentiate it from a contract between a public utility and a private party, except that "benefits were conferred on the public," and this seems to be said merely arguendo, and it seems clear that nothing in a private contract could be said or agreed to, or any rights surrendered or benefits conferred which could prevent the exercise of the state's police power thereupon. It is said, however, that "While the precise question was not before the court in Interurban R. & T. Co. c. P. U. Comm. * ** it is evident that the Supreme Court of Ohio takes the same view of the effect of such ordinances as was declared by this court in the Cleveland case." In that case the U. S. Supreme Court speaks of the view by Ohio courts that there arose under ordinances by an Ohio municipality binding contracts, but statutes of Ohio are not specially discussed except to show that "there was lodged by the Legislature of Ohio in the Muncipal Council of Cleveland comprehensive power to contract with street railway companies in respect to the terms and conditions" upon which they should operate, but there is no specific direction that the state's police power in this respect might be abdicated or bargained away. The Cleveland case supra was succeeded by (8) 98 O. St., 120 N. E. 831, P. U. R. 1919, B212. Cleveland v. Electric Ry. Co., 201 1. S. (9) 529, 26 Sup. Ct. 513; Cleveland Elec. Ry. Co. v. Cleveland, 204 U. S. 116, 27 Sup. Ct. 202. 9 others, but these cases do not discuss Ohio statutes with any fuller particularity nor make any reference to the abdication or bargaining away of the state's police power, nor does either of the cases say specifically that the city might not lower the rates fixed in the district court reviewed. In 249 U. S. 399 supra, it is said: "No question is made but that the legislature of a state may, unless restrained by State Constitution, contract away this (police) power, either by an enactment of its own or by delegating to the municipality power to do so. The Milwaukee case1o only holds that *** it did not clearly and unmistakenly appear that the state had contracted away this function of government or had delegated to the municipality the power to contract it away." In the Milwaukee case supra the unanimous opinion was written by the same Justice who wrote the opinion in 249 U. S. 399 supra, and he there said: "It has frequently been held that where a statute of a state is alleged to create or authorize a contract inviolable by subsequent legislation of the state, in determining its meaning, much consideration is given to the decisions of the highest court of the state. Among other cases which have asserted this principle are Freeport Water Co. v. Freeport, 180 U. S. 587, and Vicksburg v. Vicksburg Water Co., 206 U. S. 496, 509." But in 249 U. S. 399 supra, the court appears to take as conclusive the view of the Ohio courts that its statutes did intend to surrender the state's police power in granting to municipalities the power to make binding contracts with a street railways. State Decision That Intent to Surrender Police Power Must Be Clear.-Pennsylvania Supreme Court, after stating that private contracts with public service companies, are made upon the presumption of (10) Milwaukee Elec. R. Co. v. R. Comn., 238 U. S. 174, 35 Sup. Ct. 820. (11) Columbus R. P. L. Co. v. Columbus, 253 Fed. 499. the right of change under state police power, said: "There seems to be no difference in principle between the case of a contract indeterminate and one that is determinate; nor is there any difference in principle between a contract with a borough, with a corporation or with an individual. Any contract of this character, whether for a definite or indefinite period, must give way when its terms conflict with the rates fixed later by a public service commission."12 Tennessee Supreme Court, in a decision. handed down July 3, 1919,13 held that a statute creating a Railroad Commission and authorizing it to fix rates of public utilities does not impair the obligations of contract in a franchise ordinance of a city limiting fares, because "in this state it has been held that the general governmental powers of the state cannot be bargained away. (Lynn v. Polk, 8 Lea. 121.)" In Missouri it was said to be settled in that jurisdiction that rates fixed by franchise and contract are revisable by state agengies in the exercise of the police power to regulate rates.14 Rates Fixed Under Constitutional Franchise. A decision by Virginia Court of Appeals,15 after first quoting from a U. S. Supreme Court decision,16 that "there can be no question in this court as to the competency of a state legislature, unless prohibited by constitutional provisions, to authorize a municipal corporation to contract with a street railway company as to rates of fare, so as to bind during the specified period any future common council from altering or in any way interfering with such contract," said: "The abrogation of such continuing (police) power is never to be (12) Leiper v. B. & Pac. R. Co., 262 Pa. 328, 105 Atl. 551, P. U. R. 1919C, 397. (13) Memphis v. Enloe, Tenn., 214 S. W. 71, P. U. R. 1919 F, 508. (14) Va.-W. P. Co. v. Com., Va., 99 S. E. 723, P. U. R. 1919E, 766. (15) Detroit v. Citizens' St. Ry. Co., 184 U. S 368, 22 Sup. Ct. 410. presumed," and it cites a very great number of cases where such abrogation was denied, saying: "None of these cases controvert the well-established rule of law that if the municipality *** has expressly conferred upon it by statute the unlimited power to contract with the grantee of the franchise *** and the municipality does so contract and the grantee accepts it and acts under it, the contract is irrevocable during its life." It is then said that the Virginia Constitution and Virginia Statute undoubtedly confer on municipalities. absolute power to prevent public utility corporations from doing business therein without their consent, thus a power to impose conditions which may be arbitrarily imposed and this "is not necessarily to be regarded as a power of contract." This distinction appears to me rather shadowy, especially when to every ordinary apprehension there is a contract and not specially a condition imposed. The question would come up more squarely, if a state were vesting the power that had been confided to a municipality of control over its streets in a state commission as its successor in this respect. Certainly the municipality, which had been a mere arm of the government, could be abolished under a state's police power and its powers vested elsewhere. And if the imposing of conditions is not continual in its nature, then i. merely regulatory, and surely regulation ay be taken away from the municipality. Theory of Rate Fixing.-The prime purpose in the fixing of a rate for a public utility is to enable it so to operate as to earn fair compensation and only fair compensation. Both it and the public are possessed of property which is used in its operation and both are entitled to a like measure of reward for such use. It has been held to be confiscatory of the public utility's property to deny it either a fair valuation of what it devotes to public use or that it shall not earn fair compensation for its use. But it must be evident that the only way to determine this question is by taking into view present conditons in which valuation is put upon property and expense attending its devotion to public use. These things are in as constant a state of change as are markets. Values are altogether relative, and it cannot be imagined that any fixing of prices for the future is anything more than a sort of guess. But there is still another aspect to all of this. The public is interested in what becomes of its property in a certain sense-being devoted to public use. It must remain efficient for purposes to which it is devoted. This is police power over the matter in question. This is the thing in which is declared there exists every presumption against its being surrendered, and it cannot be bargained away, unless there is a clear intention that it is surrenderable. It seems to me that the state of Ohio was not clearly shown to have surrendered its police power over street railways. There is no express or explicit statement in any statute that it does surrender it. Further, it seems to me that there is little to be gained in favor of the public utility companies that there should exist any surernder of a state's police power over a public utility. But at all events U. S. Supreme Court only holds that for the definite time in the contracts before the court and by a particular class of public utilities, there was a surrender of the state's police power. It did not hold that such power could be parted with for all time. There may be reason for saying that the interests of a particular utility and of the public as well would be promoted by declaring that contracts for a definite time would remain wholly unchangeable, when they are made with a subordinate agency of the government, though it also be the case that those with private parties are subject to change. But it well But it well may be thought that this difference should unmistakenly appear. The state is in effect on both sides of contracts, when a public utility deals with an arm of public government. It has concern in no wrong being BOYCE, J. A decision of this case depends upon the construction of a land sales agency contract made between the appellant, as party of the first part, and the appellees, as parties of the second part, on the 4th day of December, 1916. By the terms of this contract the said Robert F. Alley, as party of the first part, appointed the parties of the second part, appellees, as exclusive agents to solicit purchasers for the sale of lands owner, controlled or listed for sale by party of the first part "in the shallow water district of Northwest Texas, including Hale and adjoining counties," until January 1, 1918. This exclusive agency covered certain territory in Iowa. The parties of the sec ond part agreed to actively solicit purchasers for such land in said territory, and. to deliver prospective purchasers to the party of the first part at Hale Center, at their own expense, and without cost to the first party. The appellant, as party of the first part, agreed to pay to the second parties as commission the sum of $5 per acre for each acre of land sold to any person resident in the territory assigned to the party of the second part, and to refer any inquiry from persons resident in such territory to the parties of the second part. The first party also agreed "to take proper care of prospective purchasers furnished by second party or their sub agents, when delivered to first party at Hale Center, or other point mutually agreed upon, to furnish two seven-passenger automobiles and show them lands for sale and make proper effort to sell them land and to furnish them meals without cost to second party." Said contract also contained the following paragraph, which furnishes the basis of this suit: "The first party agrees to show any lands owned by second party to prospects furnished by them, and to aid in making sale for no other charge than a commission of one dollar per acre on all lands owned by second party and sold to second party by the first party in said shallow water district, and sold during the term of this contract." During the existence of this contract the appellees sold about 1,600 acres of land in said shallow water district, owned by them, and purchased of appellant, Alley. While the appellant had shown this land to "prospects furnished by" the appellees, sale thereof was not made to any such persons, and the appellant did not show the lands, or aid in any way in making the sale to the persons who actually bought from the appellees. The appellant, Alley, brought this suit to recover $1 per acre commission on this sale, claiming that under the terms of the contract he was entitled to such commission whether such sale was in any way aided by him or not. The general rule is that one employing an agent to sell land for a commission on the sales may make sales himself or through other agents, without liability to the agent for commission on such sales; even where the agency is exclusive, the owner may sell himself, and is not liable for commission. So that, in the ordinary contract providing for a commission to the agent on sales of the land made during the term thereof, the sales have reference only to sales resulting from the efforts of the agent. "The parties may, by contract, avoid the effect of this rule, as where the owner undertakes to pay a commission on all sales within a certain time, no matter by whom made." C. J. vol. 9, p 576; Mechem on Agency (2d Ed.) 2445. In the cases referred to by the authorities making the statement just quoted, the contracts contained some express language or provision that clearly indicated that there was an agreement to pay the commission whether the agent participated in the sale or not. The contract in the case of Parkhurst v. Tryon, 134 App. Div. 843, 119 N. Y. Supp. 184, is more nearly like the one we are considering than any other authority we have found. In that case the written contract between the owner and the agent provided that the agent should "advertise and attempt to sell NOTE-Exclusive Agency Not Preventing Sale by Owner Without Responsibility to Agent.Contracts of this nature are construed upon the theory that there shall be good faith between the owner and his agent. Thus it has been said: "It has been frequently held that the owner of real estate, by employing a real estate agent or broker to effect the sale of property, does not preclude himself from employing other agents for the same purpose, or from effecting a sale himself, provided, that in making the sale himself he acts in good faith; 'good faith' meaning that the owner would not be allowed, after making a contract with a real estate broker, to avail himself of the broker's services, where the broker had procured a purchaser, and to effect the sale himself, thereby depriving the broker of his commission." Moore v. May, 10 Ga. App. 198, 73 S. E. 29. The fact that the contract considered by the court provided that it was irrevocable for three months did not change this rule. Where the contract provided that, if the agent found a purchaser, the owner agreeing, that no other agent should be employed, and the price being a certain amount, the facts show that the agent found a buyer for a less price which h submitted to owner, then the latter told the agent that as he had made some repairs, he would have to have a larger sum. Afterwards the owner sold to the party the agent had found for the price originally fixed. The agent, however, had not disclosed to the owner the name. The court considering that the increased price governed the agent, said: "Power to fix the price is incident to the right retained by the owner to sell, and an agent necessarily must take this into account, and, unless he cares to assume the risk of a sale by the owner to a prospective customer on terms different from those specified, he must disclose such purchaser's name in submitting his proposition. Indeed, there is an element of bad faith in withholding this information from the principal, with whom the agent is required to deal with candor and fairness, and it must be understood from the discussion that recovery might have been had, had the sale been at the price specified in the employment of plaintiff as agent." Gilbert v. McCullough, 146 Iowa 333, 125 N. W. 173. |