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The Bill of Rights, 2nd Edition

Allgeyer v. Louisiana

by Thomas Tandy Lewis

Citation: 165 U.S. 578

Date: March 1, 1897

Issues: Freedom of contract; Substantive interpretations of the Due Process Clauses to protect liberty

Relevant Amendments: Fourteenth and Fifth

Brief Summary: The Supreme Court first used the freedom of contract doctrine to overturn a state law as violative of the Due Process Clause of the Fourteenth Amendment. Nine years later, in Adair v. United States (1908), the Court struck down a federal law based on the same interpretative approach to the Due Process Clause of the Fifth Amendment.

In order to regulate insurance businesses, Louisiana prohibited its residents from entering into most types of insurance contracts with companies located outside the state. Allgeyer and Company was fined $1,000 for making such a contract with a New York firm. By a 9-0 vote, the Supreme Court ruled that the law unconstitutionally violated the liberty of citizens to enter into business contracts without unwarranted interference by the state. Writing for the Court, Justice Rufus W. Peckham explained that his opinion was based on the concept that substantive economic liberties were protected by the due process clause of the Fourteenth Amendment. Further, having earlier ruled that insurance was not a form of commerce, the Court could not base the decision on the issue of state jurisdiction.

Although Allgeyer, Adair, and subsequent decisions recognized the authority of national and state governments to regulate private companies, the Court insisted that government must justify the reasonableness of all such regulations. Freedom of contract was to be the rule, with exceptions allowed only when clearly necessary to protect the safety, health, or welfare of the public. Through the next four decades, the Allgeyer and Adair precedents provided a theoretical basis for overturning numerous federal and state laws that regulated terms of employment—such as laws requiring maximum working hours or minimum wages. The Court finally stopped giving special protection for the freedom of contract doctrine in West Coast Hotel Co. v. Parrish (1937) and NLRB v. Jones and Laughlin Steel Corp. (1937).

Citation Types

Type
Format
MLA 9th
Lewis, Thomas Tandy. "Allgeyer V. Louisiana." The Bill of Rights, 2nd Edition, edited by Thomas Tandy Lewis, Salem Press, 2017. Salem Online, online.salempress.com/articleDetails.do?articleName=BOR2e_0153.
APA 7th
Lewis, T. T. (2017). Allgeyer v. Louisiana. In T. T. Lewis (Ed.), The Bill of Rights, 2nd Edition. Salem Press. online.salempress.com.
CMOS 17th
Lewis, Thomas Tandy. "Allgeyer V. Louisiana." Edited by Thomas Tandy Lewis. The Bill of Rights, 2nd Edition. Hackensack: Salem Press, 2017. Accessed December 14, 2025. online.salempress.com.