GRANGER CASES (1877)

Munn v. Illinois, 94 U.S. 113

Chicago, Burlington & Quincy Railroad Co. v. Iowa, 94 U.S. 155

Peik v. Chicago & Northwestern Railway Co., 94 U.S. 164

Chicago, Milwaukee & St. Paul Railroad Co. v. Ackley, 94 U.S. 179

Winona and St. Peter Railroad Co. v. Blake, 94 U.S. 180

Stone v. Wisconsin, 94 U.S. 181

The Granger Cases, decided on March 1, 1877, included Munn v. Illinois, in which state regulation of grain warehouse and elevator rates and practices was challenged, and five railroad cases in which the companies attacked the validity of state legislatures' imposition of fixed maximum rates. In these decisions, the Supreme Court upheld the state regulations. Conservative, pro-business voices—and Justice stephen j. field, in vigorous dissent in Munn—regarded the decisions as a catastrophic surrender of due process values in law and a mortal blow to entrepreneurial liberty. They left legislatures, Field contended, with an unfettered power over private property rights of business firms. To the Court's majority, speaking through Chief Justice morrison r. waite, however, the issue of state regulation's legitimacy must turn on the difference in nature between business that was purely private and business that was affected with a public interest, hence peculiarly subject to regulation.

Laws for the regulation of railroads and grain warehouses, enacted in Illinois, Wisconsin, Iowa, and Minnesota during the period 1871–1874, were at issue in the 1877 decisions. Until recent years, historians and students of constitutional law have tended to accept the view that the Grange and other farm organizations provided the political muscle in the midwestern reform movements that produced those laws. Indeed, it was customary to regard the legislation as radical, antibusiness, and anti-private property in intent and content. Recent research (particularly the work of historian George L. Miller) has shown, however, that there was no general antagonism between agrarian and business interests in the debates over the regulatory laws. Instead, reform was sought by coalitions, in a pattern of intrastate sectionalism; farmers lined up with commercial interests in some sections that favored regulation, and similar interests joined against regulation in other sections. The division of views depended much more upon calculations of local advantage and disadvantage from regulation than upon political ideology, "agrarian" or otherwise, or even upon political party alignments.

Contrary to another view long held by scholars, the Granger laws did not lack legislative precedent. The charters of early railway companies typically had carried maximum rate provisions and other features that bespoke the state's interest in the efficient provision of transport services. And in the 1850s several states (notably New York and Ohio) had prohibited local discrimination in railroad rate-making and had levied special taxes on railroad companies to offset the effects of rail competition on state-owned canals. The Granger laws may be seen as an extension of a regulatory tradition well established in American railway law.

Still another common error of interpretation concerns the doctrinal basis of the "affectation" doctrine as employed in Waite's majority opinion in Munn. The concept of "business affected with a public interest," according to a long-standard view, was a surprising resort to a forgotten antiquity of English common law—a concept reintroduced into American law after a lapse of nearly two centuries. In fact, the concept of affectation was well known in American riparian and admiralty law; and equally familiar was the jurist from whose writings Waite drew the affectation concept for use in Munn, for Lord Chief Justice Matthew Hale's tracts on common law had been cited in scores of important American cases in riparian and eminent domain law.

The Court's majority in the Granger Cases rejected the contention of railroad counsel that if state legislatures were permitted to mandate fixed, maximum rates, the result would be to deprive business of fair profits, and thus to produce effective "confiscation" of private property. The majority also rejected the view that the equal protection and due process clauses of the Fourteenth Amendment warranted judicial review of the fairness of rates. Such regulatory power was subject to abuse, Waite conceded, but this was "no argument against its existence. For protection against abuses by legislatures the people must resort to the polls, not to the courts."

Thus the Granger Cases decisions held back, at least for a time, the conservative efforts to make the Fourteenth Amendment a fortress for vested rights against the state police power. The decisions were also of enduring importance in constitutional development for their elaborate formulation of the "affectation with a public interest" doctrine. Relying upon the advice of his colleague Justice joseph p. bradley, who was learned in the English law of common carriers and in admiralty law, Waite explored in his opinion the legitimate reach of the police power in regulation of business. He concluded that modern railroad companies and warehouses played a role in commerce that was analogous to the role played by ferry operators and others who in the seventeenth century had exercised a "virtual monopoly" of vital commercial services, hence were held subject to regulations not ordinarily imposed on other businesses. Thus the Court indicated, by implication at least, that businesses not so affected with a special public interest could not be regulated.

Not long after publication of the decisions, Waite wrote privately: "The great difficulty in the future will be to establish the boundary between that which is private, and that in which the public has an interest. The Elevators furnished an extreme case, and there was no difficulty in determining on which side of the line they properly belonged." This proved an accurate forecast of the Court's future travails, until in Nebbia v. New York (1934) the Court finally abandoned the "affectation" doctrine, holding that all businesses were subject to state regulation under the police power.

Within fifteen years after the Granger Cases, moreover, the Court had begun to invoke both the commerce clause and the Fourteenth Amendment to strike down state regulations of interstate railroad operations and to review both procedural and substantive aspects of state regulation of business. The drive to establish a new constitutional foundation for vested rights, in sum, for many years relegated the Granger Cases' support of a broad legislative discretion to the status of a doctrinal relic.

Harry N. Scheiber
(1986)

Bibliography

Fairman, Charles 1953 "The So-Called Granger Cases, Lord Hale, and Justice Bradley." Stanford Law Review 5:587–679.

Magrath, C. Peter 1963 Morrison R. Waite: The Triumph of Character. New York: Macmillan.

Miller, George L. 1971 Railroads and the Granger Laws. Madison: University of Wisconsin Press.

Scheiber, Harry N. 1971 The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts. Perspectives in American History 5:327–402.