Munn v. Illinois

The state of Illinois had passed a law on 25 April 1871, requiring that warehouses take out a license and that they charge rates for storage of grain that did not exceed a state-established rate. The next year, on 29 June 1872, the state filed an action against the firm of Munn & Scott for operating a warehouse without a license and for charging rates higher than permitted under the state regulation. The Illinois Supreme Court ruled in favor of the state, and Munn & Scott appealed the case to the U.S. Supreme Court.

Attorneys for the appellant argued that the state had deprived Munn & Scott of their property rights by requiring a license and by setting maximum rates. They pointed out that rights to property were not worth anything except to the extent that the property could be put to a use. The free use of the property had been regulated by the state, thus depriving the owners of rights in the property. The Fourteenth Amendment expressly prohibited states from depriving individuals of property without due process of law.

In his opinion, Chief Justice Waite pointed out that the state had not infringed on the area of federal jurisdiction, in that Congress had not sought to regulate grain warehouses under the interstate commerce clause. In this case, Waite appeared to be warning the states that legislation in areas involving major railroad commerce, such as grain, could readily impinge on a federal jurisdiction, although it had not done so in this case. Waite recognized that state and federal jurisdictions in interstate commerce could easily interfere with each other. In keeping with a modest view of the federal role, and in keeping with a high regard for state and local interests that was typical of the era of the 1870s, Waite ruled that the grain elevators, even though connected to a national network, were essentially local operations. A state could regulate business which was entirely within a state, and the grain elevators fit that category.

As to the right of the state to regulate business, under the Fourteenth Amendment, Waite argued that private property exposed to the public for public use is also exposed to public regulation in the public interest. If an owner did not want his property to be used in any way by the public, then the public had little reason to regulate it, but once it was used for public purposes, the owner had to expect regulation. Waite based this principle on a long tradition of British and American common law which gave the government power to set fees for ferries and bridges, for inns and other places of public convenience, and to require licenses for many categories of business.

Two justices, Field and Strong, dissented from Waite's opinion, indicating that they believed that the mere act of regulating, requiring a license, and setting prices consisted of "depriving" property rights under the Fourteenth Amendment. Even though a minority opinion, the fact that members of the Court regarded the Fourteenth Amendment as applicable to commerce and not simply to civil rights, suggested that the principles addressed in such cases as Munn and the Slaughterhouse Cases,would have implications for business activities in the future.