Munn v. Illinois: Supreme Court Case, Arguments, Impact

In Munn v. Illinois (1877), the U.S. Supreme Court found that the state of Illinois could regulate a private industry in the public interest. The Court's decision drew a distinction between state and federal industry regulation.

Facts of the Case

In the mid-1800s, grain was grown in the west and shipped eastward by boat or by train. As railroads expanded to connect regions across the U.S., Chicago became a hub and midpoint for shipping one of the fastest-growing products in the U.S.—grain. In order to store the bushels that were being shipped by train or boat, private investors began building grain warehouses (also known as elevators) alongside railroad tracks and harbors. The grain warehouses in Chicago held 300,000 to one million bushels at one time to keep up with demand. Railways found it impractical to own and operate grain warehouses, even though they were often situated alongside railroad tracks. This allowed private investors to step in to buy and build large grain elevators.

In 1871, an association of farmers called the National Grange pressured the Illinois State legislature to set a maximum rate for grain storage. These rates, and other protections won by the farmers, became known as the Granger Laws. Munn and Scott owned and operated private grain stores in Chicago. In January 1972, Munn and Scott set rates for their service that were higher than those allowed under the Granger Laws. The firm was charged and found guilty of exceeding the maximum grain storage cost. Munn and Scott appealed the decision, arguing that Illinois had illegally interfered with their private business.

Constitutional Question

The Due Process Clause of the Fourteenth Amendment states that a government entity shall not deprive someone of life, liberty, or property without due process of law. Were the owners of grain elevators unjustly deprived of property due to the regulations? Can the state of Illinois create regulations that impact private industries within states and across state boundaries?

Arguments

Munn and Scott argued that the state had unlawfully deprived them of their property rights. Central to the concept of owning property is being able to use it freely. In limiting the free use of their grain stores, the state of Illinois had deprived them of their ability to completely control their property. This regulation was a violation of due process under the Fourteenth Amendment, the attorneys argued.

The state argued that the Tenth Amendment reserved all rights not granted to the federal government for the states. Illinois had exercised its power to lawfully regulate business in the interest of the public good. The state had not excessively exercised its authority when imposing maximum rates and licensing requirements on warehouse owners.

Majority Opinion

Chief Justice Morrison Remick Waite delivered the 7-2 decision which upheld that state's regulations. Justice Waite noted that there are many circumstances in which private property may be used and regulated for the public good. The Court used a combination of English common law and American jurisprudence, acknowledging that the United States retained a lot of British governing practices post revolution. Justice Waite found that private property, when used publicly, is subject to public regulation. Grain stores are used by the public for the common good and charge farmers a fee for usage. He noted that the fee was similar to a toll. Every bushel of grain pays a "common toll" for its passage through the warehouse. It is difficult to see, Justice Waite pointed out, how fishermen, ferrymen, innkeepers, and bakers must be subject to tolls exacted for the "public good," but owners of grain stores could not. Regulation of private industries used for the common good is not subject to Fourteenth Amendment due process claims, the Court found.

With respect to interstate commerce, Justice Waite pointed out Congress had not tried to assert power over the grain stores. It's true that Congress alone can control interstate commerce, he wrote. However, a state like Illinois might take action to protect the public interest, and not interfere with federal control. Additionally, in this situation, grain warehouses participated in interstate commerce no more than a horse and cart would as they traveled between state lines. They are connected by an interstate mode of transportation but are essentially local operations, the Court opined.

Justice Waite added that the warehouse owners could not complain that the Illinois legislature enacted laws that affected their business after they built their warehouses. From the beginning, they should have expected some sort of regulation in the interest of the common good.

Dissenting Opinion

Justices William Strong and Stephen Johnson Field dissented, arguing that forcing a business to obtain a license, regulating business practices, and setting rates were clear intrusions upon property rights without due process of law. These intrusions could not be upheld under the Fourteenth Amendment, the justices argued.

Impact

Munn v. Illinois drew an important and lasting distinction between interstate commerce, which is the federal government's domain, and domestic commerce, which a state is free to regulate. Munn v. Illinois was considered a win for the National Grange because it upheld the maximum prices they had fought for. The case also stood to represent the U.S. Supreme Court's acknowledgment that the Fourteenth Amendment Due Process Clause could apply to business practices as well as people.

Sources

• Munn v. Illinois, 94 U.S. 113 (1876).
• Blomquist, J.R. “Warehouse Regulation since Munn v. Illinois.” Chicago-Kent Law Review, vol. 29, no. 2, 1951, pp. 120–131.
• Finkelstein, Maurice. “From Munn v. Illinois to Tyson v. Banton: A Study in the Judicial Process.” Columbia Law Review, vol. 27, no. 7, 1927, pp. 769–783. JSTOR, www.jstor.org/stable/1113672.