Petitioner: E. Allgeyer & Co.
Respondent: State of Louisiana
Petitioner's Claim: That states restricting the right of companies to contract with whom they choose violates the Fourteenth Amendment's Due Process Clause.
Chief Lawyer for Petitioner: Branch K. Miller
Chief Lawyer for Respondent: M. J. Cunningham
Justices for the Court: David J. Brewer, Henry B. Brown, William R. Day, Chief Justice Melville W. Fuller, Horace Gray, John Marshall Harlan I, Rufus W. Peckham, George Shiras, Jr., Edward D. White
Justices Dissenting: None
Date of Decision: March 1, 1897
Decision: Ruled in favor of Allgeyer and reversed a lower court ruling by finding that the Due Process Clause includes an unwritten liberty of contract that cannot be restricted by state law.
Significance: The decision created a new liberty under the Fourteenth Amendment, the liberty of contract. For the first time, the Court ruled a state law unconstitutional because it denied a person the right to make a contract. States were largely blocked from passing laws protecting their citizens and the general public from unfair or unsafe business practices for the next forty years until the Court shifted philosophy in 1937.
Through much of the nineteenth century, the federal government allowed states to freely regulate business activities within their borders. When laws were struck down by the U.S. Supreme Court for being unreasonable interference with business activities, it commonly used the Constitution's Commerce Clause or the Contracts Clause to justify its action. Regarding the Contract Clause, Article I, Section 10, Clause 3 of the U.S. Constitution states that "No state shall . . . pass any . . . law impairing the obligation of [responsibility to honor] contracts." The Commerce Clause is located in Article I, Section 8 and states that "The Congress shall have Power . . . To regulate Commerce [business activity] ... among the several States . . . "
Toward the end of the nineteenth century trade and industry were greatly expanding across the nation. As the states began passing more laws to protect their citizens and businesses, the courts became interested in protecting the economic and property interests of the new industries and related business. These interests included the right of employers and employees in determining the work conditions and their employment relationship to one another.
To protect insurance companies in the port of New Orleans from outside competition, the Louisiana legislature in 1894 passed Act No. 66. The act made it illegal for individuals and companies to sign...