Louisville & Nashville Railroad v. Mottley
31 S. Ct. 265, 219 U.S. 467, 1911 U.S. LEXIS 1648 (1911)
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Rule of Law:
A federal law passed under Congress's authority to regulate interstate commerce that prohibits a certain type of contract is constitutional and renders pre-existing, valid contracts of that type unenforceable.
Facts:
- In 1871, E. L. Mottley and Annie E. Mottley were seriously injured in a collision involving trains operated by the Louisville and Nashville Railroad Company.
- The collision was allegedly caused by the negligence of the railroad's agents.
- On October 2, 1871, the Mottleys and the railroad entered into a written agreement to settle the Mottleys' claims for damages.
- Under the agreement, the Mottleys released the railroad from all liability for their injuries.
- In exchange for the release, the railroad company agreed to issue the Mottleys free passes for travel on its lines, renewable annually for the rest of their lives.
- For over thirty years, the railroad company honored the agreement and provided the annual passes.
- After Congress passed the Hepburn Act in 1906, the railroad refused to issue any more passes, claiming the new law made the agreement illegal.
Procedural Posture:
- The Mottleys first sued the Louisville and Nashville Railroad Company in the Circuit Court of the United States for the Western District of Kentucky for specific performance of the agreement.
- The federal trial court entered a decree in favor of the Mottleys.
- The railroad company appealed directly to the U.S. Supreme Court, which reversed and remanded with instructions to dismiss for lack of federal question jurisdiction.
- The Mottleys then filed a new suit in the Circuit Court of Warren County, Kentucky (a state trial court).
- The Kentucky state trial court ordered the railroad company to specifically perform the agreement.
- The railroad company, the appellant, appealed to the Court of Appeals of Kentucky (the state's highest court), which affirmed the trial court's judgment in favor of the Mottleys, the appellees.
- The railroad company then brought the case to the U.S. Supreme Court for review.
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Issue:
Does a federal law that prohibits common carriers from charging or receiving a 'different' compensation for transportation than what is published in their tariffs render a pre-existing contract for lifetime free passes, made in settlement of a personal injury claim, unenforceable?
Opinions:
Majority - Mr. Justice Harlan
Yes, the federal law renders the pre-existing contract unenforceable. The Commerce Clause grants Congress the power to regulate interstate commerce, and this power can supersede prior private contracts. The 1906 act, by prohibiting any 'different' compensation other than the published cash tariff, was intended to eliminate all forms of discrimination and favoritism by carriers. The lifetime passes, although exchanged for valid consideration, constitute a 'different' form of compensation than money and are therefore prohibited by the statute. The fact that the contract was valid when made is immaterial, as all contracts related to interstate commerce are implicitly subject to future congressional regulation. The enforcement of this law does not violate the Fifth Amendment, as any loss to the Mottleys is a consequential result of a valid exercise of governmental power, not a direct appropriation of property.
Analysis:
This case is a landmark decision affirming the supremacy of federal regulatory power under the Commerce Clause over private contractual rights. It establishes the principle that validly enacted federal statutes can retroactively nullify private agreements whose performance would violate the statute's public policy objectives. The decision significantly strengthened the government's ability to regulate industries and ensures that parties cannot use long-term contracts to shield themselves from future legislation. This holding has broad implications for any contract in a federally regulated field, reinforcing that such agreements are made subject to the sovereign's power to legislate for the public welfare.
