MUTUALITY OF OBLIGATION IN CONTRACT.— NUDUM PACTUM.

N the case of Storm et al., Plaintiffs in Error, v. United States, the action was against the principals and sureties upon a bond given for the faithful performance of his contract on the part of a contractor for supplies to the government, the alleged cause of action being the breach of the covenants of the agreement. This agreement was duly executed by the assistant quartermaster and the contractors, under the hand and seal of the respective parties, and contained the provision that it " may be terminated at such time as the quartermaster-general may direct," and that it is made subject to the approval of the department and division commanders. Upon the trial the United States offered the agreement in evidence to support the issues on their part. The defendants objeoted to its admissibility, insisting that it was a nudum pactum; that it appeared on its face that it might have been terminated at any time at the election of the plaintiffs; that it was not mutually binding, and that, inasmuch as it was wanting in that respect, it was without consideration, and was inoperative and void. In respect to this objection the court says:

"Beyond doubt the written agreement went into operation, and it is not even suggested that the department and division commanders ever expressed any disapproval of its terms and conditions, nor does the record furnish any evidence to raise a doubt that it was fully approved by all whose assent was necessary to give it a binding obligation. Suppose it to be true that the quartermaster-general might terminate it if he should see fit, it is a sufficient answer to the suggestion to say that he never did interfere in the matter, and that the contract continued in full force and operation throughout the whole period for which the necessary supplies were purchased by the United States in open market.

"Where the defendant has actually received the consideration of a written agreement it is no answer to an action brought against him for a breach of his covenants in the same, to say that the agreement did not bind the plaintiff to perform the promises on his part therein contained, provided it appears that the promises in question have in fact been performed in good faith, and without prejudice to the defendant. Addison on Cont. (6th ed.) 15; Morton v. Burr, 7 Ad. & Ell..25.

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'Agreements are frequently made which are not, in a certain sense, binding on both sides at the time when executed, and in which the whole duty to be performed rests primarily with one of the contracting parties. Contracts of guaranty may fall under that class, as when a person solicits another to employ a particular individual as his agent for a specified period, and engages that if the person adäressed will do so, he, the applicant, will be responsible for the moneys the agent shall receive and neglect to pay over during that time. The party indemnified in such a case is not bound to employ the party designated by the guarantor, but if he do employ him in pursuance of the promise, the guaranty attaches and becomes binding on the party who gave it. Kennaway v. Trelcavan, 5 Mees. & Welsb. 501.

"Cases often arise where the agreement consists of mutual promises, the one promise being the consideration for the other, and it has never been seriously questioned that such an agreement is valid, and that

the parties are bound to fulfill their respective stipulations. Miles v. Blackall, 11 Adol. & Ell. (N. S.) 365; Emerson v. Slater, 22 How. 35.

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Such a defense could not be sustained, even if the action was upon a simple contract, but the agreement here is under seal, and the action is an action of debt founded on the bond given to secure the performance of the agreement, and it is an elementary rule that a bond or other specialty is presumed to have been made upon good consideration so long as the instrument remains unimpeached. 1 Taylor's Ev., 6th ed., 103; Lowe v. Peers, 4 Burr. 2225; Dorr v. Munsell, 13 Johns. 431. "Want of consideration is not a sufficient answer to an action on a sealed instrument, because the seal imports a consideration or renders proof of consideration unnecessary, because the instrument binds the parties by force of the natural presumption that an instrument executed with so much deliberation and solemnity is founded upon some sufficient cause. Parker v. Parmele, 20 Johns. 134; 1 Smith's Lead. Cas. (7th Am. ed.) 698; 1 Chitty on Cont. (11th Am. ed.) 20; Paige v. Parker, 8 Gray, 213; Wing v. Chase, 35 Me. 265; 2 Bl. Com. 446; Fallows v. Taylor, 7 Term, 473."

STATE REGULATION OF COMMERCIAL

TRAFFIC.

SUPREME COURT OF THE UNITED STATES.

MUNN AND SCOTT, Plaintiffs in Error, v. THE PEOPLE OF THE STATE OF ILLINOIS.

A number of private firms built elevators at Chicago for the purpose of storing grain in bulk, and transferring it between cars and boats which were engaged in transporting it. A large amount of grain coming from eight States is stored in these elevators, the grain of many different owners being mixed together. Held, that an act of the legislature of Illinois, passed after the erection of such elevators, limiting the charges for storage of grain therein, was not repugnant to these provisions of the Federal Constitution, viz.: (1) Art. 1, sec. 8, which confers upon Congress the power "to regulate commerce with foreign nations and among the several States;" (2) Art. 1, sec. 9, which provides that "no preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another;" (3) Art. 14 of the amendments, which provides that no State shall "deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws."

When private property is devoted to public use it is subject to public regulation.

The elevators in question being wholly within the State of Illinois, although engaged in facilitating inter-State commerce, were no part of such commerce.

The provision mentioned of art. 1, sec. 7, of the Federal Constitution, operates only as a limitation upon the powers of Congress, and in no respect affects the States in the regulation of their domestic affairs.

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N error to the Supreme Court of the State of Illinois.

Mr. Chief Justice WAITE delivered the opinion of the Court.

The question to be determined in this case is, whether the general assembly of Illinois can, under the limitations upon the legislative power of the States imposed by the Constitution of the United States, fix by law the maximum of charges for the storage of grain in warehouses at Chicago and other places in the State having not less than one hundred thousand inhabitants, "in which grain is stored in bulk, and in which the grain of different owners is mixed together, or in which grain is stored in such a manner that the identity of different lots or parcels cannot be accurately preserved."

It is claimed that such a law is repugnant

1. To that part of section 8, Article I of the Constitution of the United States which confers upon Congress the power "to regulate commerce with foreign nations and among the several States; "

2. To that part of section 9, of the same article, which provides that "no preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another;" and

3. To that part of Amendment XIV, which ordains that no State shall "deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

We will consider the last of these objections first. Every statute is presumed to be constitutional. The courts ought not to declare one to be unconstitutional unless it is clearly so. If there is doubt the expressed will of the legislature should be sustained.

The Constitution contains no definition of the word "deprive," as used in the fourteenth amendment. To determine its signification, therefore, it is necessary to ascertain the effect which usage has given it when employed in the same or a like connection.

While this provision of the amendment is now in the Constitution of the United States, as a limitation upon the powers of the States, it is old as a principle of civilized government. It is found in Magna Charta and, in substance, if not in form, in nearly or quite all the constitutions that have been from time to time adopted by the several States of the Union. By the fifth amendment it was introduced into the Constitution of the United States as a limitation upon the powers of the national government, and by the fourteenth as a guaranty against any encroachment upon an acknowledged right of citizenship by the legislatures of the States.

When the people of the United Colonies separated from Great Britain they changed the form but not the substance of their government. They retained for the purposes of government all the powers of the British Parliament, and, through their State constitutions or other forms of social compact, undertook to give practical effect to such as they deemed necessary for the common good and the security of life and property. All the powers which they retained they committed to their respective States, unless in express terms or by implication reserved to themselves. Subsequently, when it was found necessary to establish a national government for national purposes, a part of the powers of the States and of the people of the States was granted to the United States and the people of the United States. This grant operated as a further limitation upon the powers of the States, so that now the governments of the States possess all the powers of the Parliament of England, except such as have been delegated to the United States or reserved by the people. The reservations by the people are shown in the prohibitions of the constitutions.

When one becomes a member of society he necessarily parts with some rights or privileges which, as an individual not affected by his relations to others, he might retain. "A body politic," as aptly defined in the preamble of the Constitution of Massachusetts, "is a social compact by which the whole people covenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good." This does not confer power upon the whole people to control rights which are purely and exclusively private (Thorpe v. R. & B. R.

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R. Co., 27 Vt. 143), but it does authorize the establishment of laws requiring each citizen to so conduct himself and so use his own property as not unnecessarily to injure another. This is the very essence of government, and has found expression in the maxim sic utere tuo ut alienum non laedas. From this source come the police powers, which, as was said by Chief Justice Taney in The License Cases, 5 How. 583, “are nothing more or less than the powers of government inherent in every sovereignty, * that is to say, * * * the power to govern men and things." Under these powers the government regulates the conduct of its citizens one toward another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good. In their exercise it has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeepers, etc., and in so doing to fix a maximum of charge to be made for services rendered, accommodations furnished and articles sold. To this day statutes are to be found in many of the States upon some or all these subjects, and we think it has never yet been successfully contended that such legislation came within any of the constitutional prohibitions against interference with private property. With the fifth amendment in force, Congress, in 1820, conferred power upon the city of Washington "to regulate * * *the rates of wharfage at private wharves, * * * the sweeping of chimneys, and to fix the rate of fees therefor, * * and the weight and quality of bread" (3 Stat. 587, § 7); and in 1848, "to make all necessary regulations respecting hackney carriages and the rates of fare of the same, and the rates of hauling by cartmen, wagoners, carmen, and draymeu, and the rates of commission of auctioneers." 9 Stat. 224, § 2.

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From this it is apparent that down to the time of the adoption of the fourteenth amendment it was not supposed that statutes regulating the use or even the price of the use of private property necessarily deprived an owner of his property without due process of law. Under some circumstances they may, but not under all. The amendment does not change the law in this particular; it simply prevents the States from doing that which will operate as such a deprivation.

This brings us to inquire as to the principles upon which this power of regulation rests, in order that we may determine what is within and what without its operative effect. Looking, then, to the common law, from whence came the right which the Constitution protects, we find that when private property is "affected with a public interest, it ceases to be juris privati only." This was said by Lord Chief Justice Hale more than two hundred years ago, in his Treatise "De Portibus Maris" (1 Harg. Law Tracts, 78), and has been accepted without objection as an essential element in the law of property ever since. Property does become clothed with a public interest when used in a manner to make it of public consequence and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use, but so long as he maintains the use he must submit to the control.

Thus, as to ferries, Lord Hale says, in his Treatise

"De Jure Maris” (1 Harg. Law Tracts, 6), the king has "a right of franchise or privilege, that no man may set up a common ferry for all passengers, without a prescription time out of mind, or a charter from the king. He may make a ferry for his own use, or the use of his family, but not for the common use of all the king's subjects passing that way; because it doth in consequence tend to a common charge, and is become a thing of public interest and use, and every man for his passage pays a toll, which is a common charge, and every ferry ought to be under a public regulation, viz. : that it give attendance at due times, keep a boat in due order, and take but reasonable toll; for if he fail in these he is fineable." So if one owns the soil and landing places on both banks of a stream he cannot use them for the purposes of a public ferry, except upon such terms and conditions as the body-politic may from time to time impose, and this because the common good requires that all public ways shall be under the control of the public authorities. This privilege or prerogative of the king, who in this connection only represents and gives another name to the body-politic, is not primarily for his profit, but for the protection of the people and the promotion of the general welfare.

And again, as to wharves and wharfingers, Lord Hale, in his treatise "De Portibus Maris," already cited, says: "A man, for his own private advantage, may, in a port or town, set up a wharf or crane, and may take what rates he and his customers can agree for cranage, wharfage, housellage, pesage; for he doth no more than is lawful for any man to do, viz. : makes the most of his own. ** * If the king or subject have a publick wharf, unto which all persons that come to that port must come and unlade or lade their goods as for the purpose, because they are the wharves only licensed by the queen, * * * or because there is no other wharf in that port, as it may fall out where a port is newly erected; in that case there cannot be taken arbitrary and excessive duties for cranage, wharfage, pesage, etc., neither can they be enhanced to an immoderate rate, but the duties must be reasonable and moderate, though settled by the king's license or charter. For now the wharf and crane and other conveniences are affected with a publick interest, and they cease to be juris privati only; as if a man set out a street in new building on his own land, it is now no longer bare private interest, but is affected by a publick interest." This statement of the law by Lord Hale was cited with approbation and acted upon by Lord Kenyon, at the beginning of the present century, in Bolt v. Stennett, 8 T. R. 606.

And the same has been held as to warehouses and warehousemen. In Aldnutt v. Inglis, 12 East, 527, decided in 1810, it appeared that the London Dock Company had built warehouses in which wines were taken in store at such rates of charge as the company and the owners might agree upon. Afterward the company obtained authority under the general warehousing act, to receive wines from importers before the duties upon the importation were paid, and the question was whether they could charge arbitrary rates for such storage, or must be content with a reasonable compensation. Upon this point Lord Ellenborough said (p. 537): "There is no doubt that the general principle is favored both in law and justice, that every man may fix what price he pleases upon his own property, or the use of it; but if, for a particular purpose, the public have a right to resort to his premises and nike

use of them, and he have a monopoly in them for that purpose, if he will take the benefit of that monopoly, he must, as an equivalent, perform the duty attached to it on reasonable terms. The question then is, whether, circumstanced as this company is by the combination of the warehousing act with the act by which they were originally constituted, and with the actually existing state of things in the port of London, whereby they alone have the warehousing of these wines, they be not, according to the doctrine of Lord Hale, obliged to limit themselves to a reasonable compensation for such warehousing. And according to him, whenever the accident of time casts upon a party the benefit of having a legal monopoly of landing goods in a public port, as where he is the owner of the only wharf authorized to receive goods, which happens to be built in a port newly erected, he is confined to take reasonable compensation only for the use of the wharf." And further on (p. 539): “It is enough that there exists in the place and for the commodity in question a virtual monopoly of the warehousing for this purpose, on which the principle of law attaches as laid down by Lord Hale in the passage referred to [that from 'De Portibus Maris,' already quoted], which includes the good sense as well as the law of the subject." And in the same case, Le Blanc, J., said (p. 541): "Then, admitting these warehouses to be private property, and that the company might discontinue this application of them, or that they might have made what terms they pleased in the first instance, yet, having as they now have this monopoly, the question is, whether the warehouses be not private property clothed with a public right, and if so, the principle of law attaches upon them. The privilege, then, of bouding these wines being at present confined by the act of parliament to the company's warehouses, is it not the privilege of the public, and shall not that which is for the good of the public attach on the monopoly, that they shall not be bound to pay an arbitrary but a reasonable rent? But upon this record the company resist having their demand for warehouse rent confined within any limit, and though it does not follow that the rent in fact fixed by them is unreasonable, they do not choose to insist upon its being reasonable for the purpose of raising the question. For this purpose, therefore, the question may be taken to be, whether they may claim an unreasonable rent. But though this be private property, yet the principle laid down by Lord Hale attaches upon it, that when private property is affected with a public interest, it ceases to be juris privati only; and in ease of its dedication to such a purpose as this, the owners cannot take arbitrary and excessive duties, but the duties must be reasonable."

We have quoted thus largely the words of these eminent expounders of the common law, because, as we think, we find in them the principle which supports the legislation we are now examining. Of Lord Hale it was once said by a learned American judge: "In England, even on rights of prerogative, they scan his words with as much care as if they had been found in Magna Charta, and the meaning once ascertained, they do not trouble themselves to search any further." 6 Cow. 536, note.

In later times the same principle came under consideration in the Supreme Court of Alabama. That court was called upon, in 1841, to decide whether the power granted to the city of Mobile to regulate the weight and price of bread was unconstitutional, and it was

contended that "it would interfere with the right of the citizen to pursue his lawful trade or calling in the mode his judgment might dictate," but the court said, "there is no motive * * for this interference on the part of the legislature with the lawful actions of individuals or the mode in which private property shall be enjoyed, unless such calling affects the public interest, or private property is employed in a manner which directly affects the body of the people. Upon this principle, in this State, tavern-keepers are licensed; * * * and the County Court is required at least once a year to settle the rates of inn-keepers. Upon the same principle is founded the control which the legislature has always exercised in the establishment and regulation of mills, ferries, bridges, turnpike roads, and other kindred subjects." Mobile v. Yuille, 3 Ala. (N. S.) 140.

From the same source comes the power to regulate the charges of common carriers, which was done in England as long ago as the third year of the reign of William and Mary, and continued until within a comparatively recent period. And in the first statute we find the following suggestive preamble, to wit: "And whereas divers wagoners and other carriers, by combination amongst themselves, have raised the prices of carriage of goods in many places to excessive rates, to the great injury of the trade: Be it, therefore, enacted," etc. 3 W. & M., chap. 12, § 24, 3 Stat. at Large (Great Britain), 481. Common carriers exercise a sort of public office, and have duties to perform in which the public is interested. New Jersey Nav. Co. v. Merchants' Bank, 6 How. 382. Their business is, therefore, "affected with a public interest," within the meaning of the doctrine which Lord Hale has so forcibly stated.

But we need not go further. Enough has already been said to show that when private property is devoted to a public use it is subject to public regulation. It remains only to ascertain whether the warehouses of these plaintiffs in error, and the business which is carried on there, come within the operation of this principle.

For this purpose we accept as true the statements of fact contained in the elaborate brief of one of the

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counsel of the plaintiffs in error. From these it appears that "the great producing region of the west and north-west sends its grain by water and rail to Chicago, where the greater part of it is shipped by vessel for transportation to the seaboard, by the great lakes, and some of it is forwarded by railway to the eastern ports. * * Vessels, to some extent, are loaded in the Chicago harbor and sailed through the St. Lawrence directly to Europe. * * The quantity [of grain] received in Chicago has made it the greatest grain market in the world. This business has created a demand for means by which the immense quantity of grain can be handled or stored, and these have been found in grain warehouses, which are commonly called elevators, because the grain is elevated from the boat or car by machinery, operated by steam, into the bins prepared for its reception; and elevated from the bins, by a like process, into the vessel or car which is to carry it on. *** In this way the largest traffic between the citizens of the country north and west of Chicago, and the citizens of the country lying on the Atlantic coast north of Washington, is in grain which passes through the elevators of Chicago. In this way the trade in grain is carried on by the inhabitants of seven or eight of the great States of the west with four or five of the

States lying on the seashore, and forms the largest part of inter-state commerce in these States. The grain warehouses or elevators in Chicago are immense structures, holding from 300,000 to 1,000,000 bushels at one time, according to size. They are divided into bins of large capacity and great strength. * * * They are located with the river harbor on one side and the railway tracks on the other, and the grain is run through them from car to vessel, or boat to car, as may be demanded in the course of business. It has been found impossible to preserve each owner's grain separate, and this has given rise to a system of inspection and grading, by which the grain of different owners is mixed, and receipts issued for the number of bushels which are negotiable, and redeemable in like kind, upon demand. This mode of conducting the business was inaugurated more than twenty years ago and has grown to immense proportions. The railways have found it impracticable to own such elevators, and public policy forbids the transaction of such business by the carrier; the ownership has, therefore, been by private individuals, who have embarked their capital and devoted their industry to such business as a private pursuit."

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In this connection it must also be borne in mind that although in 1874 there were in Chicago fourteen warehouses adapted to this particular business and owned by about thirty persons, nine business firms controlled them, and that the prices charged and received for storage were such "as have been from year to year agreed upon and established by the different elevators or warehouses in the city of Chicago, and which rates have been annually published in one or more newspapers printed in said city, in the month of January in each year, as the established rates for the year then next ensuing such publication." Thus it is apparent that all the elevating facilities through which these vast productions "of seven or eight great States of the west" must pass on the way to four or five of the States on the seashore," may be a "virtual" monopoly. Under such circumstances it is difficult to see why, if the common carrier, or the miller, or the ferryman, or the innkeeper, or the wharfinger, or the baker, or the cartman, or the hackney-coachman pursues a public employment and exercises "a sort of public office," these plaintiffs in error do not. They stand, to use again the language of their counsel, in the very "gateway of commerce," and take toll from all who pass. Their business most certainly "tends to a common charge, and is become a thing of public interest and use." Every bushel of grain for its passage pays a toll, which is a common charge," and, therefore, according to Lord Hale, every such warehouseman "ought to be under public regulation, viz., that he *take but reasonable toll." Certainly if any business can be clothed with a public interest and cease to be juris privati only," this has been. It may not be made so by the operation of the Constitution of Illinois or this statute, but it is by the facts.

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We also are not permitted to overlook the fact that, for some reason, the people of Illinois, when they revised their Constitution in 1870, saw fit to make it the duty of the general assembly to pass laws "for the protection of producers, shippers, and receivers of grain and produce" (Article XIII, section 7), and by section 5 of the same article to require all railroad companies receiving and transporting grain in bulk or otherwise, to deliver the same at any elevator to which it might be consigned, that could be reached by any