Louisville & Nashville R.R. Co.v.Mottley

Whether the Act of June 29, 1906 prohibits a railroad from issuing lifetime free passes pursuant to a contract entered into in 1871?⁸

The Act of June 29, 1906 provides that no common carrier subject to its provisions shall after January 1, 1907, directly or indirectly issue or give any interstate free ticket, free pass, or free transportation for passengers except to specified classes of persons.⁹ It further provides that no carrier shall charge, demand, collect, or receive a greater or less or different compensation for the transportation of passengers than the rates specified in its published tariffs.¹⁰ This compensation must be paid in money.¹¹ This statutory language reflects a deliberate congressional purpose to eliminate every form of discrimination.¹² It ensures that published rates are paid uniformly in cash so that all shippers and passengers may know and enjoy equal benefits from the tariffs.¹³

Yes. The Louisville and Nashville Railroad Company operated lines extending through Kentucky, Tennessee, and other states.¹⁴ This rendered it a common carrier engaged in interstate transportation and therefore subject to the 1906 Act.¹⁵ The Mottleys were not among the excepted classes of persons permitted to receive free passes.¹⁶ The 1871 agreement called for the issuance of passes in consideration of the release of damage claims rather than payment of the published money fares.¹⁷ This constitutes the acceptance of different compensation forbidden by the statute.¹⁸

The addition of the word different to the earlier prohibition on greater or less compensation demonstrates Congress's intent to close loopholes that had allowed carriers to deviate from published tariffs through non-cash arrangements.¹⁹ Because the passes contemplated by the agreement would not be paid for in money according to the company's schedule of rates, the Act directly prohibits their issuance after January 1, 1907.²⁰ The statutory command is not limited to new contracts but reaches any ongoing performance that would violate the uniform-rate policy.²¹

The Interstate Commerce Commission has confirmed that nothing but money may be accepted in payment for transportation.²² The Supreme Court has repeatedly held that a carrier may not depart from its published schedule in any manner without incurring statutory penalties.²³ Application of these principles to the established facts shows that continued performance of the 1871 agreement after the effective date of the 1906 Act would require the railroad to engage in precisely the conduct Congress sought to eradicate.²⁴

The Act of June 29, 1906 prohibits the Louisville and Nashville Railroad Company from issuing lifetime free passes to the Mottleys pursuant to the 1871 contract.²⁵

Whether Congress may by subsequent legislation render unenforceable an agreement for free interstate transportation that was valid when made?²⁶

Contracts are made subject to the possible future exercise of Congress's constitutional power to regulate interstate commerce.²⁷ No obligation of a contract can extend to the defeat of legitimate governmental authority.²⁸ When Congress acts within its commerce power to prohibit arrangements for free interstate transportation, previously valid agreements that conflict with the new regulation become unenforceable.²⁹ The power to regulate commerce is complete in itself and unrestricted except by constitutional limitations.³⁰

Yes. The 1871 agreement between the Mottleys and the railroad must be regarded as having been made subject to the contingency that Congress might later exert its full authority over interstate commerce in a manner that would render the agreement unenforceable.³¹ The framers of the Constitution never intended that private contracts could restrict the national government's ability to regulate commerce among the states.³²

Principles established in earlier decisions confirm that property and contract rights are held subject to the lawful demands of the sovereign.³³ Legislation altering the legal consequences of prior arrangements does not impair the obligation of contracts when it operates as a general regulation of commerce.³⁴ The 1906 Act was enacted to cut up by the roots every form of discrimination and favoritism in interstate transportation.³⁵

Because the agreement would have been illegal if made after passage of the Act, it cannot now be enforced against the railroad even though it was valid when executed.³⁶ Allowing enforcement would permit individuals to nullify congressional regulation by anticipatory contracts.³⁷ The established facts therefore demonstrate that subsequent legislation may lawfully render the 1871 agreement unenforceable.³⁸

Congress may by subsequent legislation render unenforceable an agreement for free interstate transportation that was valid when made.³⁹

Whether the constitutional power of Congress to regulate interstate commerce is limited by private contracts previously made between carriers and passengers?⁴⁰

The power granted to Congress to regulate commerce among the states is complete in itself and unrestricted except by limitations found in the Constitution itself.⁴¹ Private contracts between carriers and passengers cannot hamper or restrict the exercise of that power, because the framers never intended that individuals or corporations could, by private agreement, render of no avail the full constitutional authority of Congress over interstate commerce.⁴²

No. The constitutional power of Congress to regulate interstate commerce is not limited by private contracts previously made between carriers and passengers.⁴³⁴⁴ The agreement between the railroad and the Mottleys cannot be enforced in a manner that would obstruct the uniform-rate policy established by the 1906 Act.⁴⁵

Allowing such enforcement would permit parties to evade congressional regulation through the simple device of entering contracts in anticipation of future legislation.⁴⁶ The Supreme Court has consistently rejected the proposition that the constitutional guarantee of liberty to enter private contracts limits Congress's power to legislate on subjects affecting interstate commerce.⁴⁷ Application of these principles to the facts shows that the railroad's refusal to issue further passes after January 1, 1907, was required by federal law and that the state courts erred in compelling performance of the agreement.⁴⁸

The constitutional power of Congress to regulate interstate commerce is not limited by private contracts previously made between carriers and passengers.