Allgeyer v. Louisiana
Encyclopedia
Allgeyer v. Louisiana, , was a landmark United States Supreme Court
case in which a unanimous court struck down a Louisiana
statute
on grounds that it violated an individual's "liberty to contract." This was the first case in which the Supreme Court interpreted the word liberty in the Due Process Clause
of the Fourteenth Amendment to mean economic liberty.
by requiring state
citizens and corporation
s to abstain from business with out-of-state marine
insurance
companies. Compliance with the statute required that all out-of-state insurance companies have an appointed agent within the state. The text of the statute read:
to insure an international shipment of cotton
, at the time in Louisiana, under an open policy Allgeyer had with the insurance company.
The case went to trial, and the parish court entered a judgment for the defendant, Allgeyer.
The Louisiana Supreme Court reversed the decision on appeal for one count, and found that the other two counts were not proved. As a result, Allgeyer was fined $1000.
Attorneys for Allgeyer claimed the statute violated both the Louisiana and United States constitutions. They reasoned that liberty in the Due Process Clause entitled citizens to be free from arbitrary restrictions. In particular, the attorneys claimed that:
Rufus Peckham
authored the opinion of the court, holding that the statute violated the Fourteenth Amendment.
Justice Peckham then defined liberty, using the dissent of Associate Justice Joseph P. Bradley from the Slaughter-House Cases. However, Peckham did not give any indication of the limits of permissible inroads of state police power
upon this right, leaving such determinations to be made by future courts over "each case as it arises."
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
case in which a unanimous court struck down a Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
on grounds that it violated an individual's "liberty to contract." This was the first case in which the Supreme Court interpreted the word liberty in the Due Process Clause
Due process
Due process is the legal code that the state must venerate all of the legal rights that are owed to a person under the principle. Due process balances the power of the state law of the land and thus protects individual persons from it...
of the Fourteenth Amendment to mean economic liberty.
Statute
In 1894, the Louisiana Legislature passed a statute entitled "An act to prevent persons, corporations or firms from dealing with marine insurance companies that have not complied with law." The purpose of the statute ostensibly was to prevent fraudFraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
by requiring state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
citizens and corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s to abstain from business with out-of-state marine
Marine (ocean)
Marine is an umbrella term. As an adjective it is usually applicable to things relating to the sea or ocean, such as marine biology, marine ecology and marine geology...
insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
companies. Compliance with the statute required that all out-of-state insurance companies have an appointed agent within the state. The text of the statute read:
"That any person, firm or corporation who shall fill up, sign or issue in this State any certificate of insurance under an open marine policy, or who in any manner whatever does any act in this State to effect, for himself or for another, insurance on property, then in this State, in any marine insurance company which has not complied in all respects with the laws of this State, shall be subject to a fine of one thousand dollars, for each offence, which shall be sued for in any competent court by the attorney general for the use and benefit of the charity hospitals in New Orleans and Shreveport."
Facts
On October 27, 1894 E. Allgeyer & Co. dispatched mail from New Orleans to the Atlantic Mutual Insurance Company in New YorkNew York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
to insure an international shipment of cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, at the time in Louisiana, under an open policy Allgeyer had with the insurance company.
Procedural History
On December 21, 1894 the State of Louisiana filed a petition in Orleans Parish court alleging Allgeyer had violated the statute in three counts, and sought a cumulative fine of $3000. Instead of offering an argument of innocence, Allgeyer challenged the statute on grounds that it violated the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution.The case went to trial, and the parish court entered a judgment for the defendant, Allgeyer.
The Louisiana Supreme Court reversed the decision on appeal for one count, and found that the other two counts were not proved. As a result, Allgeyer was fined $1000.
Issue
May a state prohibit a party within its jurisdiction from insuring property within the state through an out-of-state insurance company which has no appointed agent within the state and where the insurance contract is made outside the state?Attorneys for Allgeyer claimed the statute violated both the Louisiana and United States constitutions. They reasoned that liberty in the Due Process Clause entitled citizens to be free from arbitrary restrictions. In particular, the attorneys claimed that:
- the statute deprived Allgeyer of property without due process
- the statute violated Allgeyer's right to equal protection
- the action prosecuted fell outside the jurisdictionJurisdictionJurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
of Louisiana, thus making the statute not applicable - the insurance contracts, and all business which transpired under them, were under the jurisdiction of New York, and lawfully made under that jurisdiction
- Allgeyer had the right to perform all acts necessary to execute the contracts in Louisiana.
Unanimous opinion
A unanimous court held for Allgeyer. Associate JusticeAssociate Justice of the Supreme Court of the United States
Associate Justices of the Supreme Court of the United States are the members of the Supreme Court of the United States other than the Chief Justice of the United States...
Rufus Peckham
Rufus Wheeler Peckham
Rufus Wheeler Peckham was an Associate Justice of the Supreme Court of the United States from 1895 until 1909. He was known for his strong use of substantive due process to invalidate regulations of business and property. Peckham's namesake father was also a lawyer and judge, and a congressman...
authored the opinion of the court, holding that the statute violated the Fourteenth Amendment.
"The 'liberty' mentioned in [the Fourteenth] amendment means not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties, to be free to use them in all lawful ways, to live and work where he will, to earn his livelihood by any lawful calling, to pursue any livelihood or avocationAvocationAn avocation is an activity that one engages in as a hobby outside one's main occupation. There are many examples of people whose professions were the ways that they made their livings, but for whom their activities outside of their workplaces were their true passions in life...
, and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned." [Emphasis added.]
Justice Peckham then defined liberty, using the dissent of Associate Justice Joseph P. Bradley from the Slaughter-House Cases. However, Peckham did not give any indication of the limits of permissible inroads of state police power
Police power
In United States constitutional law, police power is the capacity of the states to regulate behavior and enforce order within their territory for the betterment of the general welfare, morals, health, and safety of their inhabitants...
upon this right, leaving such determinations to be made by future courts over "each case as it arises."
See also
- The Slaughterhouse Cases,
- Munn v. IllinoisMunn v. IllinoisMunn v. Illinois, 94 U.S. 113 , was a United States Supreme Court case dealing with corporate rates and agriculture. The Munn case allowed states to regulate certain businesses within their borders, including railroads, and is commonly regarded as a milestone in the growth of federal government...
, - Mugler v. KansasMugler v. KansasMugler v. Kansas, , was an important United States Supreme Court case in which the 8 to 1 majority opinion of Associate Justice John Marshall Harlan—and the lone, partial dissent by Associate Justice Stephen J. Field—laid the foundation for the U.S...
, - Lochner v. New YorkLochner v. New YorkLochner vs. New York, , was a landmark United States Supreme Court case that held a "liberty of contract" was implicit in the due process clause of the Fourteenth Amendment. The case involved a New York law that limited the number of hours that a baker could work each day to ten, and limited the...
,