Contemporary American History, 1877-1913

by Charles A. Beard

Justice Harlan's opinion is interesting not only because it touches upon the possibility of a judicial review of the rate fixed by the legislature; but because the learned Justice bases his contention on the contract between the railroad and the state to the effect that rates should be "reasonable." This indicates plainly that not even in the mind of Justice Harlan, who later became the firm exponent of the power of judicial review, was there any clear belief that the Fourteenth Amendment as such gave the Court any power to review the "reasonableness" of a rate fixed by the legislature. In other words, he derived his doctrine of judicial review from the power of the Federal judiciary to enforce the obligation of contracts, and not from its power to compel "due process of law."

It is impossible to trace here the numerous decisions following the Ruggles case in which the Supreme Court was called upon to consider the power of state legislatures to control and regulate corporations, particularly railways. It is impossible also to follow out all of the fine and subtle distinctions by which the dictum of Chief Justice Waite, in the Munn case, to the effect that private parties must appeal to the people, and not to the courts, for protection against state legislatures, was supplanted by the firm interpretation of the Fourteenth Amendment in such a manner as to confer upon the courts the final power to review all state legislation regulating the use of property and labor. Of course we do not have, in fact, this clear-cut reversal of opinion by the Court, but rather a slow working out of the doctrine of judicial review as opposed to an implication that the Court could not grant to corporations the relief from legislative interference which they sought. There are but few clear-cut reversals in law; but the political effect of the Court's decisions has been none the less clear and positive.

The Minnesota Rate Case

It seems desirable, however, to indicate some of the leading steps by which the Court moved from the doctrine of non-interference with state legislatures to the doctrine that it is charged with the high duty of reviewing all and every kind of economic legislation by the states. One of the leading cases in this momentous transition is that of the Chicago, Milwaukee, and St. Paul Railway Company v. Minnesota, decided in 1889, which made a heavy contribution to the doctrine of judicial review of questions of political economy as well as law. This case involved the validity of a Minnesota law which conferred upon a state railway commission the power to fix "reasonable" rates. The commission, acting under this authority, had fixed a rate on the transportation of milk between two points.

The railroad having refused to put the rate into effect, the commission applied to the supreme court of the state for a writ of mandamus. In its answer the railroad claimed, among other contentions, that the rate fixed was unreasonably low. The supreme court of the state refused to listen to this contention, saying that the statute by its terms made the order of the commission conclusively reasonable; accordingly it issued the mandamus. By writ of error, the case was brought to the Supreme Court of the United States, which, by a vote of six to three, ordered the decree of the state court vacated, on the ground that the statute as construed by the supreme court of the state was unconstitutional, as a deprivation of property without due process of law.

The opinion of the Court, written by Justice Blatchford, has frequently been interpreted to hold, and was indeed interpreted by the dissenting minority to hold, that the judiciary must, to satisfy the requirements of "due process," have the power of final review over the reasonableness of all rates, however fixed. It is doubtful whether the language of the opinion sustains this reading; but the strong emphasis on the place of the judiciary in determining the reasonableness of rates lent color to the contention that Mr. Justice Blatchford was setting up "judicial supremacy." In the course of his opinion, he said: "The question of the reasonableness of a rate of charge for transportation by a railroad company, involving as it does the element of reasonableness both as regards the company and as regards the public, is eminently a question for judicial investigation requiring due process of law for its determination. If the company is deprived of the power of charging reasonable rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus in substance and effect, of the property itself without due process of law and in violation of the Constitution of the United States."

The dissenting members of the Court in this case certainly saw in Justice Blatchford's opinion an assertion of the doctrine that whatever the nature of the commission established by law or the form of procedure adopted, the determination of rates was subject to review by a strictly judicial tribunal. In his dissent, Mr. Justice Bradley declared that the decision had practically overruled Munn v. Illinois and the other Granger cases. "The governing principle of those cases," he said, "was that the regulation and settlement of the affairs of railways and other public accommodations is a legislative prerogative and not a judicial one.... The legislature has the right, and it is its prerogative, if it chooses to exercise it, to declare what is reasonable. This is just where I differ from the majority of the Court. They say in effect, if not in terms, that the final tribunal of arbitrament is the judiciary; I say it is the legislature. I hold that it is a legislative question, not a judicial one, unless the legislature or the law (which is the same thing) has made it judicial by prescribing the rule that the charges shall be reasonable and leaving it there. It is always a delicate thing for the courts to make an issue with the legislative department of the government, and they should never do it, if it is possible to avoid it. By the decision now made we declare, in effect, that the judiciary, and not the legislature, is the final arbiter in the regulation of fares and freights of railroads and the charges of other public accommodations. It is an assumption of authority on the part of the judiciary which, it seems to me, with a due reverence to the judgment of my brethren, it has no right to make.... Deprivation of property by mere arbitrary power on the part of the legislature or fraud on the part of the commission are the only grounds on which judicial relief may be sought against their action. There was in truth no deprivation of property in these cases at all.... It may be that our legislatures are invested with too much power, open as they are to influences so dangerous to the interests of individuals, corporations, and societies. But such is the Constitution of our republican form of government, and we are bound to abide by it until it can be corrected in a legitimate way."

The Development of Judicial Review

A further step toward judicial review even still more significant was taken, in the case of Reagan v. Farmers' Loan and Trust Company, decided by the Supreme Court in 1894. This case came up from the Federal circuit court of Texas which had enjoined the state railway commissioners from fixing and putting into effect railway rates which the Trust Company, as a bondholder and interested party, contended were too low, although not confiscatory.

The opinion of the Court, written by Justice Brewer, who, as Federal circuit judge, had already taken advanced ground in favor of judicial review, went the whole length in upholding the right of the judiciary to review the reasonableness, not only of a rate fixed by a commission, as in the case in hand, but even of one fixed by the legislature. The case differed in no essential way, declared the justice, from those cases in which it had been the age-long practice of the judiciary to act as final arbiters of reasonableness—cases in which a charge exacted by a common carrier was attacked by a shipper or passenger as unreasonable. The difference between the two cases was merely that in the one the rate alleged to be unreasonable was fixed by the carrier; in the other it was fixed by the commission or by the legislature. In support of this remarkable bit of legal reasoning, the opinion adduced as precedents merely a few brief excerpts, from previous decisions of the Court, nearly all of which were pure dicta.