''Smyth v. Ames'', 171 U.S. 361 (1898), also called ''The Maximum Freight Case'', was an 1898 United States

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case.. The Supreme Court voided a

Nebraska Nebraska () is a state in the Midwestern region of the United States. It is bordered by South Dakota to the north; Iowa to the east and Missouri to the southeast, both across the Missouri River; Kansas to the south; Colorado to the southwe ...

railroad tariff law, declaring that it violated the

Fourteenth Amendment to the United States Constitution The Fourteenth Amendment (Amendment XIV) to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments. Often considered as one of the most consequential amendments, it addresses citizenship rights and ...

in that it takes property without the due process of law. The Court defined the constitutional limits of governmental power to set railroad and utility rates by stating that regulated industries have the right to a "fair return". The ruling was later overturned in '' Federal Power Commission v. Hope Natural Gas Co.''.Siegel, Stephen A
Smyth v. Ames

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. Accessed 18 February 2009 The decision was unanimous and the majority opinion was written by Justice John M. Harlan.

Prior history

On April 12, 1893, Nebraska passed a law, a so-called "maximum rate bill", establishing maximum rates for the transportation of freights within the state. The Railroad Commissioners of Nebraska were empowered to reduce any freight rate. Several precedents had been set by the Supreme Court regarding state control over railways. Until '' Munn v. Illinois'' when the

Granger Laws The Granger Laws were a series of laws passed in several midwestern states of the United States, namely Minnesota, Iowa, Wisconsin, and Illinois, in the late 1860s and early 1870s.American History, “The Granger Laws,” From Revolution to Reconstr ...

were declared constitutional, it had been held that railway property was protected from state authority by the

Contract Clause Article I, Section 10, Clause 1 of the United States Constitution, known as the Contract Clause, imposes certain prohibitions on the states. These prohibitions are meant to protect individuals from intrusion by state governments and to kee ...

of the Constitution, which states that no state shall pass any "Law impairing the Obligation of Contracts". However, in the Munn case, the Court ruled that all property was held subject to legislative regulation if it was "affected with a public interest". Further decisions built off the Munn decision, specifying that while the legislature may regulate property "affected by the public interest", they must exercise it reasonably by applying the used and useful principle, so as to not deprive citizens of their property without

due process Due process of law is application by state of all legal rules and principles pertaining to the case so all legal rights that are owed to the person are respected. Due process balances the power of law of the land and protects the individual pers ...

of law.

Case

The maximum rate law was contested by the

Union Pacific The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...

, St. Joseph and Grand Island Railway,

Omaha and Republican Valley Railway The Omaha and Republican Valley Railway was a branch line of the Union Pacific that crossed Nebraska. Traversing several counties, including Buffalo County, the Railway was the impetus for several settlements, and upon its demise, several ghost to ...

, and the Kansas City and Omaha Railway. They claimed the law was confiscation, and therefore unconstitutional. They said the law would make a difference of $2,250,00 annually. The Supreme Court unanimously found the law unconstitutional. The court found that it is not enough to show a tariff – even if the tax is in the public interest – still leaves a company enough money to pay operating expenses and stock dividends.

Effects of the decision

Businessmen were pleased by the decision, and believed it would give stability to railroad investments. Others were unhappy. The

Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads (and later trucking) to ensure fair rates, to eliminat ...

was weakened by the Court's decision.

Subsequent history

The ruling was overturned in the 1944 case of '' Federal Power Commission v. Hope Natural Gas Co.'' The named plaintiff in the case, Nebraska Attorney General Constantine Joseph Smyth, later served as Chief Justice of the Court of Appeals of the District of Columbia.

References

External links

* {{USArticleI United States Constitution Article One case law United States Supreme Court cases United States Supreme Court cases of the Fuller Court 1898 in United States case law Legal history of Nebraska Contract Clause case law Rail transportation in Nebraska