Allgeyer v. State of Louisiana

US Constitutional Law

Allgeyer v State of Louisiana
Image: ‘Georgia Cotton’ by Marilyn M King

The powers of state legislation, while binding upon the citizens residing within its borders, doubtless remain subject to the supremacy of the constitution, and so on this occasion, a marine insurance policy drafted and bargained for in another part of the country, was held to allow for the unfettered rights of the insured, while reminding the pursuers that justice is a two-way process.

In the fall of 1894, the defendant cotton exporters negotiated an open marine insurance policy with providers based in New York. The terms of the agreement were drafted and released on the proviso that the defendant completed the transaction by way of written letter to the insurers operational address.

Around the same time, Act No.66 of the State of Louisiana was enacted, so as to prevent foreign insurance operators from issuing policies within the State unless licensed accordingly, as was expressed below:

“[A]ny 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 offense…”

Because the defendants were based in New Orleans, the claimants held that their entering into a contract with an insurance firm outside of Louisiana constituted a violation of those powers, and thus sought recovery of $3,000 in the courts.

In defence of the claim, it was argued that the terms of Act No.66 were unconstitutional in that such powers were an interference with the fundamental right to carry on business in a manner befitting the principles of the U.S. Constitution, while noting that the contract entered into was exempt from state jurisdiction, and executed in full accordance with the law.

While judgment was made in favour of the defendants, an appeal before the Supreme Court of Louisiana resulted in damages of £1000 for the claimants. It was at this point that the defendants requested a review by the U.S. Supreme Court on grounds that the judgment had been made in error.

With an appreciation of the absolute powers conferred under Act No.66 (or art.236), it was found by the Court that in State of Louisiana v. Williams the state court had ruled that:

“[A]n open policy of marine insurance, similar in all respects to the one herein described, and made by a foreign insurance company, not doing business within the state and having no agent therein, must be considered as made at the domicile of the company issuing the open policy, and that where in such case the insurance company had no agent in Louisiana it could not be considered as doing an insurance business within the state.”

While it was further noted that the writing and despatch of the acceptance letter by the appellants, was therefore nothing more than consideration within the terms of the agreement, and not sufficient enough to serve as evidence that the policy was underwritten and concluded within the state of Louisiana. The Court also drew reference to Butchers’ Union Slaughterhouse Co v. Crescent City Live-Stock Landing Co., in which Bradley J stipulated how:

“[T]he right to follow any of the common occupations of life is an inalienable right. It was formulated as such under the phrase ‘pursuit of happiness’ in the Declaration of Independence, which commenced with the fundamental proposition that ‘all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness.’”

And so it was with these salient observations, that the Court ruled Act No.66 as wholly unconstitutional to the Fourteenth Amendment of the Constitution, which itself reads:

“No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

And was therefore unsustainable as an argument for penalty, after which it was held that the Louisiana Supreme Court decision be reversed in lieu of recommencement of proceedings in keeping with the original judgment.

Author: Neil Egan-Ronayne

Author, publisher and foodie...

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s