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Allgeyer v. Louisiana
[165 U.S. 578]
Fuller Court,  Decided 9-0,  3/1/1897

This was the first Supreme Court decision to actually put into play the recently conceived doctrine of freedom of contract.

The state of Louisiana, in its attempts to insure that companies doing business in the state met certain conditions, made it illegal for citizens to purchase certain kinds of insurance outside of the state. When Allgeyer & Co. did so with a New York company, the state of Louisiana prosecuted.

Inasmuch as the Court had never viewed the insurance business as being interstate commerce, the Louisiana statute could not be ruled unconstitutional as having trod on territory reserved to Congress.

But since the contract in question was executed in New York, the Court ruled that Louisiana had no jurisdiction over the actual transaction, and that Allgeyer, the Louisiana "citizen" in question, was protected in its right to consummate an otherwise lawful contract by the Due Process clause of the Fourteenth Amendment. Thus was legally born the doctrine of freedom of contract.

Legal usage over the next three decades viewed the newly defined freedom as the rule rather than the exception, and it became the basis for, among other things, suits against government control over the conditions of employment -- minimum wages, maximum hours of work, unionization, etc.

The doctrine continued to be received wisdom until the New Deal era banished many such freedoms in the interest of socialization.

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Other decisions pertaining to Freedom of Contract:

Adair v. United States    [208 U.S. 161 (1908)]  Fuller Court
Adkins v. Children's Hospital    [261 U.S. 525 (1923)]  Taft Court
Dartmouth College v. Woodward    [17 U.S. 518 (1819)]  Marshall Court
Hepburn v. Griswold    [75 U.S. 603 (1870)]  Chase Court

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