The New State

increase. The gradual progress away from contract in legal theory is just the gradual recognition of this principle. You can have a contractual relation between two wills or you can have those two wills uniting to form one will. Contract never creates one will. It is the latter process which is shown in the development of corporation law.51 The laws regulating partnership are based on contractual relations between the individual members. The laws regulating corporations are based on the theory that a corporation is something quite different from the individuals who constitute it or the sum of those individuals, that a new entity has been created. I am writing at this moment (February, 1918) in a room with the thermometer at 42, but the law would not uphold me in going and getting my share, as a stock holder, of the coal now in the New York, New Haven and Hartford sheds! But to many the personality of the corporation is a fiction: they do not consider the corporation a self-created entity but a state-created entity. To others, following Gierke, the corporation is merely a state-recognized entity, it has the inherent power to create itself. The increasing acceptance of this latter theory has made it possible to hold liable groups which have not been legally incorporated but which exercise powers analogous to those of corporations. This has been the principle of some of the English decisions making trade-unions responsible, as notably in the Taff-Vale case.

The paradox of contract is that while it seems to be based on relation, it is in reality based on the individual. Contract is a particularist conception. Mr. Pound speaks of the significance of the “parallel movement away from liberty of contract and yet at the same time towards the full recognition of association.” It is the legal theory of association based on our growing understanding of group psychology which will finally banish contract. When Duguit, the eminent French jurist, tells us that contract is diminishing, it is because he sees a time when all juridical manifestations will come from unilateral acts.52 We see contract diminishing because we believe in a different mode of association: as fast as association becomes a “community” relation, as fast as individuals are recognized as community-units, just so fast does contract fade away. Jellinek points out that legal theory is coming to recognize that violation of community is quite different from the violation of contract.

From status to contract we do not now consider the history of liberty but of particularism⁠—the development of law through giving a larger and larger share to the particular will. The present progress of law is from contract to community. Our particularistic law is giving way to a legal theory based on a sound theory of interrelationship. Our common law has considered men as separate individuals, not as members of one another. These separate individuals were to be “free” to fight out their differences as best they could, it being overlooked that freedom for one might not mean freedom for the other, as in the case of employer and employed. “Individual rights” in practice usually involve some difference of opinion as to who is the individual! Mr. Olney said of the Adair case: “It is archaic, it is a long step into the past, to conceive of and deal with the relations between the employer in such industries and the employee as if the parties were individuals.”53

The principles of individual rights and contract which have long dominated our courts54 are giving way now to sounder doctrine. The old idea was that a man could do what he liked with his own; this is not the modern notion of law. We find a judge recently saying: “The entire scheme of prohibition as embodied in the Constitution and laws of Kansas might fail, if the right of each citizen to manufacture intoxicating liquors for his own use or as a beverage were recognized. Such a right does not inhere in citizenship.”55 Our future law is to serve neither classes nor individuals, but the community. The lawyer is to bring his accumulation of knowledge not to his clients merely, but to enrich and interpret and adjust our whole social life.

We have many signs today of the growing recognition of community as the basis of law. The following are taken from an article by Mr. Pound:56

The increasing tendency of law to impose limitations on the use of property, limitations designed to prevent the antisocial use of property. This has already been noticed in our new building laws.

The limitations now imposed on freedom of contract. This is shown in the statutes regulating the hours and conditions of labor, in the law of insurance,57 in the judicial decisions which have established that the duties of public service corporations are not contractual, flowing from agreement, but quasi-contractual, flowing from the calling in which the public servant is engaged.

Limitations on the part of creditor or injured party to exact satisfaction. This is illustrated by the homestead exemptions which prevail in many states, and such exemptions as tools to artisans, libraries to professional men, and animals and implements to farmers.

Imposition of liability without fault, as illustrated in workmen’s compensation and employers’ liability.58

Water rights are now interpreted with limitations on the owners. The idea is becoming accepted that running water is an asset of society which is not capable of private appropriation or ownership except under regulations that protect the general interest. This tendency is changing the whole water law of the western states.

Insistence on interest of society in dependent members of household. With respect to children it is not the individual interest of the parents, but the interest of society which is regarded.

Thus modern law is being based more and more upon a recognition of the community principle.

When we sometimes hear a lawyer talk of such measures as old age pensions as