Allgeyer v. Louisiana

Allgeyer v. Louisiana, 165 U.S. 578 (1897), 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.

Case Brief

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 fraud by requiring state citizens and corporations 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:

"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 York to insure an international shipment of cotton, 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 jurisdiction 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 Justice Rufus Peckham 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 avocation, 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 upon this right, leaving such determinations to be made by future courts over "each case as it arises."

See also

• The Slaughterhouse Cases, 83 U.S. 36 (1873)
• Munn v. Illinois, 94 U.S. 113 (1876)
• Mugler v. Kansas, 123 U.S. 623 (1887)
• Lochner v. New York, 198 U.S. 45 (1905)