government, in the sense in which it has been understood for a century and a half, will be at an end, and the doctrine of the police power will have been swallowed up in the capacious maw of unrestrained democracy.

STATE POLICE POWERS AND FEDERAL PROPERTY

GUARANTEES

BY CHARLES C. MARSHALL OF THE NEW YORK BAR

(From the Columbia Law Review, March, 1904)

The Federal Constitution as originally adopted contained only two clauses that could be said to be guarantees of property rights1 as against the exercise by the States of their Police Powers. They were contained in the Commerce Clause, providing that Congress shall have power to regulate commerce with foreign Nations and among the several States, and in the Fugitive Slave Clause. The Commerce Clause, in that it signified freedom of commerce from State control was a guarantee of property rights involved therein, and the Fugitive Slave Clause, in that it secured the return of the fugitive slave was a guarantee to the Slave States of slave property. Both operated to restrain the States in the exercise of their Police Powers touching the property in question.

We do not overlook the provisions forbidding the States to pass laws impairing the obligation of contracts, that full faith and credit should be given by each State to the public acts, records and judicial proceedings in every other State, that the citizens of each State should be entitled to all the provisions and immunities of citizens in the several States, nor such provisions as those delegating to the National Government the power to tax, to establish uniform bankruptcy laws, and to coin money and regulate the value thereof, and to fix the standard of weights and measures. All these may at times affect property rights and possibly override some manifestations of State Police Powers, but their effect is indirect and incidental and they are in no sense limitations on State sovereignty in respect to property rights and are not to be considered here.

The jealousy by the States of the Federal Power which thus showed itself in the Federal Constitution as originally adopted was none the less active in 1789 when the first ten amendments were added, for, as is well known, these were directed against the National Government in their restrictive effect and were not intended to apply to the

1 It is, of course, Common Law property rights which are referred to. Special property rights, such as patents, copyrights, etc., are excepted from consideration here.

States. They in effect provided, touching property, that no person should be deprived by the Federal Government of life, liberty or property without due process of law, and that private property should not be taken by the same for public use without compensation. The States in these respects were still left free of Federal limitations.

Each State in the exercise of its Police Power may determine the status of property, may impair and in effect destroy it, whether such property exist originally within the State or come therein from other States in which it enjoys the full property status. No interstate rights or obligations can be pleaded by the other States and there is no Federal power or guarantee which they can invoke. Violent as was the revolution in interstate property rights marked by the Fourteenth Amendment, it was confined, with the qualification stated above, to one species of property which it swept out of existence. All other property in the States of the Union remained with attributes and incidents the same as from the beginning wholly subject to the State Police Powers to whose dread exercise property always has yielded as readily as wax in the blaze of the furnace.

It is desirable at this point to refer to cases which reveal, as no definition can, the present limits of the Police Power under our law. We may select the Slaughter House cases; 1 Mugler vs. Kansas; 2 Munn vs. Illinois.3

In the Slaughter House cases the Court sustained the exercise of the Police Power by the State of Louisiana in a statute which in effect destroyed the value of a large amount of property in lands and buildings and fell with crushing force upon the citizens of the State engaged in slaughtering. The statute provided that that business should be entirely given over to a single corporation, or, if pursued by others, should be conducted on the premises of such privileged corporation upon payment thereto for the privilege. We quote from the language of Mr. Justice Field in his dissenting opinion:

The act of Louisiana presents the naked case, unaccompanied by any public considerations, where a right to pursue a lawful and necessary calling previously enjoyed by every citizen, and in connection with which a thousand persons were daily employed, is taken away and vested exclusively for twenty-five years, for an extensive district and a large population, in a single corporation, or its exercise is for that period restricted to the establishments of the corporation, and then allowed only upon onerous conditions.

In the case of Mugler vs. Kansas, the State statute prohibited the manufacture and sale of intoxicating liquors for use as a beverage,

1 (1872) 16 Wall. 36.

2 (1887) 123 U.S. 623.

3 (1876) 94 U.S. 113.

declared all places for their manufacture, sale or gift, common nuisances, and provided that upon the judgment of a Court to that effect, the sheriff should close them and destroy all property including not only liquors, but screens, bars, tables, glasses and other property used therein, irrespective of the fitness and value of such property for other and innocent purposes. The owner was upon conviction to be punished by fine and imprisonment. No jury trial was provided for.

In the Grain Elevator Case, Munn vs. Illinois, it was held that a State Legislature could fix by law the maximum charges for the storage of grain in warehouses in the State held in private ownership, and it was asserted that private property, when it is devoted by the owner to a public use or the prosecution of a business affected with a public interest, is subject to legislative regulation in respect to prices and charges. This decision profoundly affected all property interests in the United States, and may be considered as one of the most momentous ever rendered by the Court. By subsequent decisions,1 the Court held that such prices and charges must be reasonable, and that the power to review the Statute fixing them and to hold the same unconstitutional and void for unreasonableness was a judicial power a qualification which mitigates to some extent the sweeping character of the first decision. But as this rule of reasonableness must change with public sentiment, and yield to economic and political exigencies, to the influence of which courts as well as legislatures are subject, its efficacy may well be doubted.

Such being our Constitutional Law of property rights, it is difficult to discover any basis for that rigid conception of property which prevails in American life, for that widespread notion of Federal property guarantees ready to be invoked by the citizens of the States, for that conviction so deeply imbedded even in intelligent minds that the legal conception of property is definite and permanent, that "property" existed prior to the Constitution and is superior to it, and that the principal object of that instrument is to preserve it forever in its original lines regardless of economic, social and moral changes, the exigencies of society and the very life of the State itself.

So distinguished an authority on the practical side of the property question as Mr. Morgan in his testimony in the Northern Securities Case, defined the principle of community of interests as "that principle that a certain number of men who own property, can do what they like with it." It is clear that under our law the most powerful individual cannot do as he likes with his property. The artificial ownership that arises from combination or incorporation as hereafter more fully pointed out, so far from extending the rights of property, limits 1 C. M. & St. P. R. R. Co. vs. Minnesota (1889) 134 U.S. 418; Covington & Lex. Road Co. vs. Sanford (1896) 164 U.S. 578.

them and subordinates them further to the public interest. The Common Law maxim, "A man may do as he will with his own," is frequently quoted. The qualification which the Common Law always attached is overlooked or disregarded-"so that he does not injure another." In the first clause of the maxim is the sum and substance of the Common Law of private property; in the second clause is its condensed doctrine of the Police Power. To state either without the other is a manifest perversion.

It was the grave contention of the coal owners that the late controversy between them and their employees was a purely private affair, in which the public had no interest. Through artificial combination they had stifled competition, and possessed themselves practically of the national anthracite coal supply. They had as donations from the Public their right of combination, perpetuity of existence in their corporations, their railway franchises across the public domain. With all this they asserted that their rights and duties were only those of private owners. The claim was even made that inasmuch as the Public could use bituminous coal, anthracite coal was not a necessary of life, and that therefore the Public had no interest in the situation · a suggestion which savored much of the innocent inquiry of the Queen of France, at a somewhat critical period of the world's history, "If the people cannot get bread, why don't they eat cake?" Not less remarkable were the claims of labor combinations on the opposite side of the controversy in respect to their commodity of labor. The true answer to the claims of both parties is that as the one side by combination had assumed the duty of supplying the Public with coal, and as the other side had assumed the duty of supplying the Public with labor, both had entered upon a service or duty affected, yes, dominated, by a public interest, and the interposition of the Public by way of legislative action, and even by the much criticised action of the Chief Federal Executive, may have had, under the doctrine of the Grain Elevator Case, and the force of the Commerce Clause, a firmer legal and constitutional basis than was apprehended at the time.

Not the least important fact in that Case was that the property affected was vested in individual as distinguished from corporate ownership. It was quite generally conceded that if the grain elevators had been owned by corporations in the enjoyment of public franchises, the decision of the Court would have rested on a firmer basis, but the basis of the decision, as we have said, was not the nature of the ownership, but the fact that the property affected was " devoted to the public use or "affected with a public interest."

Space does not permit of commenting further on that momentous decision. We may however refer here briefly to its importance to the interstate corporation question. It may be said that a "trust," (and by that is meant nothing more than the corporation of sufficient

size to absorb all or a substantial part of a particular class of property, manufacture or trade), in that it assumes to supply the Public with a particular service or commodity, becomes thereby "affected with a public interest" and therefore, within the doctrine of the Grain Elevator Case, peculiarly subject to legislative control. In view of this fact, the recourse of the most important property and industrial interests of the country to incorporation as a method of ownership and development would seem to be fraught with some peril, and if some late writers on political economy are correct, to verify the maxim, "Whom the Gods would destroy they first make mad."

The enormous industrial expansion and material development of the last twenty years has necessarily engendered interstate property problems of great magnitude. Railway extensions and consolidations, irrigation schemes, sanitary systems, and municipal water supplies have brought before the Supreme Court interstate questions of novel aspect and great importance. To these conditions the vast increase in the corporate form of ownership and enterprise have largely added. “The trust" as defined above, in its largeness of resources, which is the essential result of combination, easily groups in one artificial ownership, created and localized in one State, property and rights existing in and ramifying through many different States. Every such artificial ownership may raise interstate questions, may present a conflict between property rights and Police Powers, for under our Federal system every such artificial ownership rests upon quite a different legal basis from that which underlies individual or natural ownerships.

The Constitution provides by Article IV that the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States, but it nowhere provides that the corporations of each State shall be so entitled. Therefore, while citizens of each State may in common with the citizens of any other State acquire and hold property within that State, a corporation created in one State cannot acquire and hold in corporate ownership property in another State whose laws forbid such corporate ownership.

1 The corporation embracing the trolley lines, gas and electric interests of several counties in New Jersey calls itself "The Public Service Corporation."

2 The Northern Securities Merger.

Kansas vs. Colorado (1902) 185 U.S. 125.

4 Missouri vs. Illinois (1900) 180 U.S. 208.

New York City vs. Pine (1902) 185 U.S. 93.

Corporations as is well known have been held by the U. S. Supreme Court not to be citizens, and hence not to be entitled to the privileges of citizens within the provisions of Article IV of the Federal Constitution. Santa Clara Co. vs. Southern Pac. R.R. (1885) 118 U.S. 394. They are, however, held to be persons and therefore entitled to the protection of the Fourteenth Amendment. Covington Turnpike Co. vs. Sanford (1896) 164 U.S. 578. No contention is of course intended to be made in the text that if a State permits the acquisition of property within it by a corporation of another State, it can subsequently arbitrarily deprive that corporation of its property. The Fourteenth Amendment would, of course, prevent.