2.5.2. The Mid-Atlantic States (1900-1925): Auto Safety and Decent Housing

MacPherson v. Buick Motor Co. - New York, 1916 (111 N.E. 1050)

  • In early 19th-century America, most people lived in small communities and bought goods from local merchants whom they knew and could hold directly responsible if the goods turned out to be defective.  As America industrialized and developed commercial networks spanning the country, manufacturers increasingly sold their goods through intermediaries rather than to the customer directly.  The law made it difficult for customers injured by defective products to hold manufacturers responsible: under the "privity" doctrine of contract law, they could only make claims against the person who sold them a product directly, who often had not created the defect causing the danger.  
  • During the late 19th century, the "privity" doctrine began to erode:  courts created exceptions for hazardous products such as explosives and harsh chemicals.  In MacPherson, a Buick owner was injured when the spokes of one wheel broke and the wheel collapsed.  MacPherson sued the manufacturer as well as his auto dealer, and the New York Court of Appeals used the occasion to forge a major breakthrough in the law.  It held that in future, manufacturers of potentially dangerous products would be treated as having made an implied promise to all consumers - not just dealers and other direct purchasers - that their products were safe.  
  • Justice Benjamin Cardozo, speaking for the court, tried to portray its decision as merely an application of existing law, but in fact MacPherson dramatically expanded consumers' rights.  Several decades later courts in California and New Jersey, influenced by MacPherson, expanded such rights further, making manufacturers liable for dangerous products whether or not they are negligent - a doctrine followed by nearly all states today.           

People ex rel. Durham Realty Corp. v. LaFetra – New York, 1921 (130 N.E. 601)

  • New York City experienced a severe housing shortage during World War I.  Building materials were diverted to the war effort even as the city's population continued to expand, and as a result landlords raised rents sharply and brought eviction lawsuits against more than 100,000 tenants who could not pay.  In 1920, the legislature enacted emergency laws imposing an eviction moratorium until late 1922, provided that tenants paid a “reasonable rent.” 
  • Several landlords promptly challenged the law as an unconstitutional interference with their right to lease their property on terms of their own choosing, but New York’s highest court had little difficulty upholding the law.  A majority of the justices concluded that providing adequate housing was a public interest and gave relatively little weight to landlords’ interest in freely negotiating with tenants for the best terms they could get.  This was due in part to the fact that rents had risen to astonishing heights, but it also demonstrated the fact that the court’s view of the permissible limits of police power had expanded greatly since the turn of the century.  The court noted that the people had overturned  Ives and several of its other recent decisions by constitutional amendment, and it seemed determined to avoid similar rejections going forward.
  • The 1920s laws and the LaFetra case were the beginning of an tradition of rent control laws that affect many New York City housing properties and continue to be a subject of controversy to this day

1916 Buick - courtesy New York Public Library

"If to the element of danger there is added knowledge that the [product] will be used by persons other than the purchaser ... then, irrespective of contract, the manufacturer of this thing of danger is under a duty to make it carefully.  ... We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else." - Justice Benjamin Cardozo, in MacPherson

Rent strike, New York City (1919) - courtesy Wikimedia Commons

“The Legislature has found that … those who own seek the uttermost farthing from those who choose to live in New York and pay for the privilege rather than go elsewhere; and that profiteering and oppression have become general.  It is with this condition, and not with economic theory, that the state has to deal in the existing emergency.  … A historical justification of liberty of contract between landlord and tenant is not a demonstration that the system must survive every exigency … The law of each age is ultimately what that age thinks should be the law.” – Justice Cuthbert Pound, in Durham Realty