Chicago, Milwaukee & St. Paul Railway Co. v. Minnesota
134 U.S. 418, 1890 U.S. LEXIS 1984, 10 S. Ct. 462 (1890)
Rule of Law:
A state statute that authorizes a commission to set railroad rates finally and conclusively, without providing the carrier an opportunity for judicial review as to the reasonableness of those rates, deprives the carrier of property without due process of law in violation of the Fourteenth Amendment.
Facts:
- The Chicago, Milwaukee & St. Paul Railway Company owned and operated a railroad line running through Minnesota.
- The Minnesota legislature passed a statute establishing a Railroad and Warehouse Commission with the authority to regulate fares and freights.
- The Railway Company was charging a rate of three cents per gallon for transporting milk between certain points within the state.
- The Commission, upon reviewing the Railway Company's schedule, declared the three-cent rate unreasonable and directed that it be reduced to two and one-half cents per gallon.
- The Railway Company refused to adopt the lower rate recommended by the Commission, maintaining that its original rate was reasonable and the Commission's rate was unfair.
Procedural Posture:
- The State of Minnesota (via the Attorney General) applied to the Supreme Court of Minnesota for a writ of mandamus to compel the Railway Company to comply with the Commission's rate order.
- The Supreme Court of Minnesota issued an alternative writ of mandamus.
- The Railway Company filed a return (response) arguing the Commission's rates were unreasonable.
- The Supreme Court of Minnesota construed the statute to forbid judicial inquiry into the reasonableness of the rates and refused to allow the Railway Company to present evidence on that issue.
- The Supreme Court of Minnesota issued a peremptory writ of mandamus ordering the Railway Company to adopt the lower rates.
- The Railway Company sued out a writ of error to the Supreme Court of the United States.
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Issue:
Does a state statute that empowers a railroad commission to fix transportation rates as final and conclusive, thereby prohibiting judicial inquiry into the reasonableness of those rates, violate the Due Process Clause of the Fourteenth Amendment?
Opinions:
Majority - Justice Blatchford
Yes, such a statute violates the Constitution because the question of the reasonableness of a rate is fundamentally a judicial one. The Court reasoned that the Minnesota Supreme Court interpreted the state statute to mean that the Commission's rates were 'final and conclusive,' essentially barring the courts from reviewing whether the rates were fair. The U.S. Supreme Court held that this interpretation creates a conflict with the U.S. Constitution. If a company is not allowed to prove in court that a state-mandated rate is unreasonably low, the state could theoretically force the company to carry goods without reward. This amounts to a deprivation of the lawful use of property, and thus the property itself, without due process of law. There must be a mechanism for judicial investigation into the reasonableness of the rates.
Dissenting - Justice Bradley
No, the regulation of railroad rates is a legislative prerogative, not a judicial one. Justice Bradley argued that this decision effectively overrules Munn v. Illinois. When the legislature (or its agent, the Commission) fixes a rate, that decision should be final unless the legislature has explicitly left the question open to the courts. He asserted that the judiciary should not act as the final arbiter of fares and freights, as this is a policy question belonging to the legislative branch. Unless there is evidence of fraud or arbitrary confiscation, the 'due process' requirement is satisfied by the legislative creation of the Commission.
Concurring - Justice Miller
Yes, the judgment should be reversed, but strictly because the state court refused to hear evidence regarding the reasonableness of the rates. Justice Miller agreed that states have the power to regulate rates via commissions and that these rates are generally the law of the land. However, he emphasized that this power cannot be exercised arbitrarily to destroy the value of property. He argued that there must be an ultimate remedy in the courts to prevent oppressive legislation that amounts to a taking of property, and the specific denial of the right to present evidence in this case constituted a denial of due process.
Analysis:
This is a landmark decision in the development of 'substantive due process' regarding economic regulations. By declaring that the reasonableness of a rate is a 'question for judicial investigation,' the Court moved away from the deferential standard set in Munn v. Illinois (1877), where rate-setting was seen largely as a legislative function. This case established the judiciary as a check on the state's police power to regulate business, ensuring that regulations do not become confiscatory. It paved the way for the 'Lochner era,' where the Court frequently struck down economic regulations deemed to interfere with property rights and freedom of contract.
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