Munn v. Illinois

Summary

After the Civil War, Chicago became the greatest grain market in the world. Wheat and corn from the prairie states arrived by rail and were lifted by steam-powered elevators into enormous warehouses before shipment east. By 1874 fourteen such elevators, owned by about thirty people, were controlled by nine firms that agreed each year on common storage rates. Farmers organized in the Patrons of Husbandry, the Grange, pressed for regulation, and the Illinois Constitution of 1870 declared grain elevators public warehouses. An 1871 statute required their operators to obtain licenses and fixed maximum storage charges. Ira Munn and George Scott, who ran a Chicago elevator, refused to take out a license and charged their customary rates; they were convicted and fined, and the Illinois Supreme Court affirmed. The question was whether a state could fix the maximum charges a private business might collect for the use of its own property. Munn and Scott argued that the statute deprived them of property without due process of law under the Fourteenth Amendment, regulated interstate commerce reserved to Congress, and singled out Chicago warehouses for unequal treatment. Illinois replied that the elevators stood at a chokepoint through which nearly all the region's grain had to pass, that they operated as a virtual monopoly, and that the police power had always extended to such callings. On 1 March 1877 the Court upheld the law, seven to two. Chief Justice Waite drew on the seventeenth-century English jurist Lord Chief Justice Hale, who had written that property affected with a public interest ceases to be purely private. Ferries, wharves, common carriers, innkeepers and bakers had long been regulated under that principle in England and the United States. One who devotes property to a use in which the public has an interest grants the public an interest in that use and must submit to control for the common good. The elevators, standing in the very gateway of commerce, fit that description. Waite added that the reasonableness of the rates was for the legislature, not the courts, and that absent congressional action the state could regulate even though the business touched interstate commerce. Justice Field, joined by Justice Strong, dissented that grain storage was a private business, that Hale's principle applied only to property dedicated to public use or held under a public grant, and that the majority's test would leave all property and all business at the mercy of a legislative majority. The library text includes Waite's opinion and a portion of Field's dissent; footnote material is not reproduced. Munn was decided together with several Granger railroad cases. Later decisions made rates subject to judicial review for reasonableness, and in Nebbia v. New York (1934) the Court held that no special category of business affected with a public interest was required for price regulation.

Plot or Argument

• The question and the police power

  Waite frames the case as whether Illinois may fix maximum storage charges in Chicago warehouses, and explains that by entering society a person gives up some rights, which grounds the police power to regulate the use of property for the common good.

• Lord Hale and property affected with a public interest

  Quoting Hale's treatises on ports and the sea, and English cases on wharves and the London Dock Company, Waite shows that property used in a way that affects the community at large has long been subject to regulation of its charges.

• The gateway of commerce

  Drawing on the facts admitted in the pleadings, Waite describes the Chicago grain trade, the immense elevators and the nine firms that fixed rates together, and concludes that the business is clothed with a public interest.

• Legislatures, courts and the polls

  Once the power to regulate exists, the amount of the charge is a legislative question; the Court cannot judge whether a rate is reasonable, and protection against legislative abuse lies with the voters.

• Commerce and equal treatment

  Waite rejects the commerce and preference objections, holding that the state may act on a business located within it until Congress acts, and that the regulation does not favor one port over another.

• Field's dissent (excerpt)

  Field recounts the 1870 constitution and the 1871 act, argues that Hale spoke only of property dedicated to the public or held by grant, lists ordinary businesses in which the public is equally interested, and insists that the right to use property and receive its fruits is protected as fully as title itself.

Characters

• Ira Y. Munn and George L. Scott, plaintiffs in error

  Partners operating a Chicago grain elevator who refused to obtain a license or observe the statutory rates.

• Chief Justice Morrison R. Waite, author of the opinion of the Court

  Ohio lawyer who grounded state rate regulation in the common-law doctrine of property affected with a public interest.

• Justice Stephen J. Field, dissenter

  Californian who argued that the decision left private business at the mercy of legislative majorities.

• Justice William Strong, joined the dissent

  Pennsylvanian who agreed with Field that grain storage was a private calling.

• Sir Matthew Hale, authority cited

  Seventeenth-century Lord Chief Justice of England whose treatise De Portibus Maris supplied the phrase affected with a public interest.

Lessons

• When private property takes on a public character

  Waite borrows from Lord Hale the idea that some property, by the way it is used, becomes affected with a public interest and may be regulated as to its charges. The doctrine joined old common-law rules about ferries and wharves to the new economy of railroads and grain elevators.

  • What examples from English law does Waite give of property affected with a public interest?
  • What does Waite mean by saying an owner grants the public an interest in the use of his property?
  • Which businesses today, if any, seem to stand in a gateway of commerce like the Chicago elevators?

• Reading the same authority two ways

  Field accepts Hale as an authority but reads him narrowly, as speaking only of property dedicated to the public or held under a royal grant. The disagreement shows how the meaning of a historical source can decide a constitutional case.

  • How does Field's reading of Hale differ from Waite's?
  • Why does Field list manufacturers, printers and makers of utensils?

• Courts, legislatures and reasonable rates

  Waite holds that once a business may be regulated, the reasonableness of the rate is for the legislature and that the remedy for abuse is at the polls. Field replies that the use and fruits of property are protected as fully as its title. Later decisions moved toward judicial review of rates.

  • Why does Waite say that people must resort to the polls rather than the courts?
  • What does Field mean when he says that all that is beneficial in property arises from its use?
  • Should judges review whether a legislated price is fair?

• Farmers, markets and the Granger movement

  The Illinois law came from an organized movement of farmers who believed that railroads and elevator operators held them captive. Waite notes that something had led the whole people to seek remedies against virtual monopolies; the elevator owners saw the same law as an interference with their capital and industry.

  • What facts about the Chicago grain trade does Waite treat as admitted?
  • How would a farmer and an elevator owner each describe the purpose of the 1871 law?
  • When should government set prices rather than leave them to agreement?

Context

Railroads opened the prairie to commercial agriculture in the 1850s and 1860s, and Chicago became the hub through which grain passed to eastern and European markets. Farmers faced falling prices after the war and blamed high charges by railroads and elevators. The Grange, founded in 1867, and allied groups won laws in Illinois, Iowa, Minnesota and Wisconsin regulating railroad and warehouse rates, laws known collectively as the Granger laws.

Composition

Illinois adopted its new constitution in 1870 and the Warehouse Act in April 1871. Munn and Scott were prosecuted in Cook County for doing business without a license and charging more than the statute allowed; the Illinois Supreme Court affirmed by three to two. The case was argued in Washington in January 1876 and decided in March 1877, along with the railroad rate cases from Iowa, Wisconsin and Minnesota.

Reception

Munn was greeted as a victory for the Granger movement and a defeat for railroads and warehousemen. Within little more than a decade the Court began to hold that the reasonableness of rates was ultimately a judicial question and limited state power over interstate rates. Field's dissent became a foundation of the later doctrine of economic due process. Some scholars regard Waite's opinion as an early charter of the regulatory state; others see in Field's dissent a principled defense of property against majority power.

Comparisons

• slaughter-house-cases

  Four years earlier the Court had read the Fourteenth Amendment narrowly against Louisiana butchers, with Field also in dissent defending the right to pursue a calling.

• lochner-v-new-york

  In 1905 a majority adopted much of the economic liberty Field defended in Munn, striking down a bakers' hours law the Munn approach would likely have left to the legislature.

• west-coast-hotel-v-parrish

  The 1937 decision upholding a minimum wage returned to Munn's deference to legislative judgment on economic regulation.

• the-wealth-of-nations

  Smith's warning that people of the same trade seldom meet without conspiring to raise prices bears on the nine Chicago firms that agreed on common rates.

• commentaries-on-the-laws-of-england

  Blackstone's account of property as an absolute right, subject to regulation by the laws of the land, frames the English common-law background both Waite and Field invoke.

Quotes

For Students

A reading companion for classical Christian high school students. See the student guide.

Reading Guide

Watch for

• Waite's account of what a person gives up on entering society.
• The repeated Latin phrase juris privati only and what it means.
• Hale's examples of ferries, wharves and cranes.
• The phrase gateway of commerce and the statistics on Chicago grain.
• Field's list of businesses in which the public is equally interested.

Key terms and names

Affected with a public interest

Hale's phrase, adopted by Waite, for private property used in a way that makes it of public consequence and so subject to regulation.

Juris privati

Latin for of private right: property held purely as a private matter.

Police power

The authority of a state to regulate persons and property for the common good.

Grain elevator

A warehouse in which grain is lifted by machinery from railcars or boats into storage bins.

Granger laws

State laws of the 1870s, backed by farmers' organizations, regulating railroad and warehouse rates.

Virtual monopoly

Control of a market by a few firms acting together, even without a legal grant of exclusive rights.

Seminar Questions

1. Comprehension What did the Illinois statute require of grain warehouse operators, and what did Munn and Scott do?
2. Comprehension What facts about the Chicago grain trade does Waite rely on to show a public interest?
3. Interpretation Why does Waite think the reasonableness of the rates is not a question for the Court?
4. Interpretation According to Field, what kinds of property did Hale mean when he spoke of a public interest?
5. Interpretation How does Field answer the Illinois court's view that an owner keeps his property while he retains title?
6. Big Question Is there a limit to what a legislature may regulate in the name of the public interest, and who should decide where it lies?

Faith Connections

• Proverbs 11:26 (Scripture)

  He that withholdeth corn, the people shall curse him: but blessing shall be upon the head of him that selleth it, a proverb about the duties of those who control the grain supply.

• Genesis 41:47-57 (Scripture)

  Joseph stores Egypt's grain in the cities during years of plenty and sells it in famine, an early picture of storehouses holding a public trust.

• Thomas Aquinas, Summa Theologiae II-II, q. 77 (Great Conversation)

  Aquinas asks whether one may lawfully sell a thing for more than it is worth, part of the long tradition on the just price that lies behind debates over regulated rates.

Logic and Rhetoric

Central argument: Waite reasons that the police power has always reached property affected with a public interest, that the Chicago elevators, as a virtual monopoly at the gateway of commerce, fall in that class, and that the setting of their rates is therefore for the legislature and ultimately the voters. Field answers that grain storage is a private business, that Hale's principle reaches only dedicated or granted property, and that the majority's test removes all protection for the use of property.

Rhetorical device: appeal to authority. Waite rests his central principle on Lord Hale's words, quoted repeatedly, and Field contests the same authority (quotes 0 and 4).

Debate: Resolved: that a state may fix the prices charged by any business that serves a large part of the public.

Memory Work

For protection against abuses by legislatures the people must resort to the polls, not to the courts.

If this be sound law, if there be no protection, either in the principles upon which our republican government is founded, or in the prohibitions of the Constitution against such invasion of private rights, all property and all business in the State are held at the mercy of a majority of its legislature.

Writing Prompts

Essay: Explain how Waite uses Lord Hale's doctrine to uphold the Illinois warehouse law, and assess Field's argument that the doctrine had been stretched beyond its original meaning.

Comparison with Lochner v. New York: Compare Waite's deference to the Illinois legislature in 1877 with Peckham's review of the New York bakery law in 1905, and explain how Field's dissent in Munn helped prepare the way for Lochner.

Medical Lens

The case concerns grain warehouse rates, the police power and the Fourteenth Amendment's protection of property; it has no medical or psychological content.

Creative Prompts

• Classroom

  Hold a hearing before the Illinois legislature in 1871: an Iowa farmer, a Chicago elevator owner and a railroad agent each testify about whether storage rates should be fixed by law.

• Essay

  Write a brief for Munn and Scott that reads Lord Hale as Field does, and a reply brief for Illinois that reads him as Waite does.

• Dialogue

  Imagine a conversation at a Grange meeting in 1877 after news of the decision arrives, with one member celebrating and another worried about what else the legislature might regulate.

• Essay

  Choose one modern business, such as an electric utility or an airport, and argue whether it is affected with a public interest in Waite's sense.

Further Reading

• Nature's Metropolis: Chicago and the Great West, William Cronon

  Environmental and economic history with a detailed account of the Chicago grain elevators and the trade they served.

• The Granger Movement, Solon Justus Buck

  Early scholarly study of the farmers' organizations behind the Granger laws.

• Morrison R. Waite: The Triumph of Character, C. Peter Magrath

  Biography of the Chief Justice who wrote the Munn opinion.