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U.S. Supreme Court

Chas. Wolff Packing Co. v. Court of Ind. Relations, 262 U.S. 522 (1923)

Chas. Wolff Packing Company v. Court of

Industrial Relations of the State of Kansas

No. 739

Argued April 27, 1923

Decided June 11, 1923

262 U.S. 522


1. Legislative authority to abridge freedom of contract can be justified only by exceptional circumstances, and the restraint must not be arbitrary or unreasonable. P. 262 U. S. 533.

2. Businesses said to be clothed with a public interest justifying some public regulation may be divided into three classes:

(a) Those which are carried on under authority of a public grant of privileges expressly or impliedly imposing the affirmative duty of rendering public service demanded by any member of the public -- e.g., the business of a common carrier or a public utility.

(b) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary regulation of all trades and callings by Parliament or Colonial legislatures -- e.g., inns, cabs, and grist mills.

(c) Other businesses which have come to have such a peculiar relation to the public that government regulation has been superimposed upon them -- where the owner, by devoting his business to the public use, in effect grants the public an interest in that use and subjects himself to regulation to the extent of such interest. P. 262 U. S. 535.

Page 262 U. S. 523

3. A declaration by a legislature that a business has become affected by a public interest is not conclusive of the question whether attempted regulation on that ground is justified. P. 262 U. S. 536.

4. In the present day, one does not devote one's property or business to public use, or clothe it with a public interest, merely by making commodities for, and selling them to, the public in the common callings. P. 262 U. S. 537.

5. The option to deal or abstain from dealing usually distinguishes private from quasi-public occupations. P. 262 U. S. 537.

6. Whether the public has become so peculiarly dependent on a particular business that the owner, by engaging therein, subjects himself to intimate public regulation must be determined upon the facts of each case. P. 262 U. S. 538.

7. The extent to which a business which has become "clothed with a public interest" may be regulated depends upon the nature of the business, its relation to the public and the abuses reasonably to be feared. P. 262 U. S. 539.

8. Assuming that the business of manufacturing and preparing food for human consumption may be put in the third class of quasi-public businesses noted above, par.2(c), the Industrial Relations Act of Kansas, in seeking, as a measure for protection of public peace, health and general welfare, to enforce continuity and efficiency of the business by compelling employer and employees to submit controversies over wages to state arbitration, and in requiring the employer to pay the wages so fixed (even if confiscatory), and in forbidding the employee to join in strikes against them -- exceeds the limit of permissible regulation and deprives the employer of property, and both employer and employee of liberty, without due process of law in violation of the Fourteenth Amendment. P. 262 U. S. 540.

9. Public regulation can secure continuity in a business against owner and employee only when the obligation of continued service is direct and is assumed when the business is entered upon. Pp. 262 U. S. 541, 262 U. S. 543.

10. Where the theory and purpose of a statute depend upon compulsion of both employer and employee, its effect upon the employee may be considered when its constitutionality is attacked by an employer. P. 262 U. S. 541.

11. The compulsory arbitration attempted under the Kansas statute in this case was not justifiable on the ground of temporary emergency. P. 262 U. S. 542. Wilson v. New, 243 U. S. 332, distinguished.

111 Kans. 501 reversed.

Page 262 U. S. 524

This case involves the validity of the Court of Industrial Relations Act of Kansas. Chapter 29, Special Session, Laws of 1920. The act declares the following to be affected with a public interest: first, manufacture and preparation of food for human consumption; second, manufacture of clothing for human wear; third, production of any substance in common use for fuel; fourth, transportation of the foregoing; fifth, public utilities and common carriers. The act vests an industrial court of three judges with power, upon its own initiative or on complaint, to summon the parties and hear any dispute over wages or other terms of employment in any such industry, and if it shall find the peace and health of the public imperiled by such controversy, it is required to make findings and fix the wages and other terms for the future conduct of the industry. After 60 days, either party may ask for a readjustment, and then the order is to continue in effect for such reasonable time as the court shall fix, or until changed by agreement of the parties. The supreme court of the state may review such orders, and, in case of disobedience to an order, that court may be appealed to for enforcement.

The Charles Wolff Packing Company, the plaintiff in error, is a corporation of Kansas engaged in slaughtering hogs and cattle and preparing the meat for sale and shipment. It has $600,000 capital stock and total annual sales of $7,000,000 . More than half its products are sold beyond the state. It has 300 employees. There are many other packing houses in Kansas of greater capacity. This is considered a small one.

In January, 1921, the president and secretary of the Meat Cutters' Union filed a complaint with the Industrial Court against the Packing Company respecting the wages its employees were receiving. The company appeared and answered, and a hearing was had. The court made findings, including one of an emergency, and an order as

Page 262 U. S. 525

to wages, increasing them over the figures to which the company had recently reduced them. The company refused to comply with the order, and the Industrial Court then instituted mandamus proceedings in the supreme court to compel compliance. That court appointed a commissioner to consider the record, to take additional evidence, and report his conclusions. He found that the company had lost $100,000 the previous year, and that there was no sufficient evidence of an emergency or danger to the public from the controversy to justify action by the Industrial Court. The supreme court overruled his report, and held that the evidence showed a sufficient emergency.

The prescribed schedule of wages and the limitation of hours and the rate of pay required for overtime resulted in an increase in wages of more than $400 a week.

It appeared from the evidence that the company and plant were under the control of, and in business association with, what were called "The Allied Packers," who have plants in various cities and compete with the so-called Big Five Packers, the largest in the country; that the products of the Wolff Packing Company are sold in active competition with such products made by other concerns throughout the United States. It appeared further that, about the time of this controversy, a strike was threatened in the packing houses of the Big Five, which the President of the United States used his good offices to settle. The chief executive of the Wolff Company testified that there had been no difficulty in securing all the labor it desired at the reduced rates offered. The Industrial Court conceded that the Wolff Company could not operate on the schedule fixed without a loss, but relied on the statement by its president that he hoped for more prosperous times.

The packing company brings this case here on the ground that the validity of the Industrial Court Act was

Page 262 U. S. 526

upheld although challenged as in conflict with the provision of the Fourteenth Amendment that no state shall deprive any person of liberty or property without due process of law.

Page 262 U. S. 533

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