Milwaukee Chicago and St. Paul Railway Company v. the State of Minnesota

The U.S. Supreme Court confirmed that the state of Minnesota, hence all states, have the legislative power to craft laws regulating rates of transport. However, the manner in which the state of Minnesota executed their authority via the Railroad and Warehouse Commission--not allowing the Chicago, Milwaukee, and St. Paul Railway Company representation before the commission rate hearings--breached the Fourteenth Amendment of the U.S. Constitution. Thus, while states could legally regulate service rates rate hearings and decisions had to be conducted in a manner which permitted participation and input by all affected parties.

In March of 1887, the state of Minnesota established a Railroad and Warehouse Commission. The duties of this commission were defined in a legislative act of Minnesota (General Laws of 1887, chapter 10). The first section of this act proclaimed that any common carrier "engaged in the transportation of passengers or property . . . from one place or station to another, both being within the State of Minnesota" would be liable to its provisions. Thus, the commission was authorized to force any common carrier to change its tariffs if it found such charges "unreasonable" and "unequal." The commission, however, was obliged to notify carriers, in writing, and explain why such charges were unlawful. If a common carrier overlooked such notification and refused to follow or adopt recommended charges it was subject to a writ of mandamus (a written order to undertake a certain legal procedure; subject to the mandamus are individuals, public officials, companies, and courts). In essence, the Railroad and Warehouse Commission had total authority and autonomy in determining what constituted lawful rate charges.

The commission, joined by the Board of Trade Unions of Farmington, Northfield, Faribault and Owatonna, petitioned the Chicago, Milwaukee, and St. Paul Railway Company (C M & St. P Railway) complaining that their charge for transport of milk was unjust. The petition stated that the company charged four cents per gallon of milk for shipment from Owatonna to St. Paul and Minneapolis, but from Faribault, Dundas, Northfield and Farmington to St. Paul and Minneapolis, the price was three cents per gallon. The commission requested that charges should be replaced with ones determined fair by the commission. Officials from C M & St. P Railway refused to change rates arguing that their charges were even lower than in some parts of the country. In response, the commission and the Board of Trade Unions met at the office of the commission in St. Paul. They concluded that transport charges of three cents per gallon of milk was high and that two-and-one-half cents was fair.

The commission reported their findings to C M & St. P Railway. The report protested that the company overcharged for its service and announced that the sum of two and one-half cents was just compensation. The Commission ruled that the new, set rate should be charged regardless of the transport distance in the state. When the Railway Company refused to comply, the state attorney general applied for a writ of mandamus from the Minnesota Supreme Court. Consequently, the court issued an "alternative" writ of mandamus. (Although the court's deadline for the response to be filled and returned was 14 December 1887, C M & St. P Railway responded on 23 of December, 1887.)

The heart of the company's response debated whether the state had a legal ground to establish a regulatory commission with such vast authority. The brief pointed out that C M & St. P Railway succeeded all franchises granted by the Congress of the United States in 1857 to the Cedar Valley Railroad Company and that under the ninth section of the charter, the directors of the company were granted exclusive right to regulate the rates of transport. The only clause in the charter was that the company had to "assure a reasonable rate."

C M & St. P Railway applied twice for a peremptory writ of mandamus, but the Minnesota Supreme Court denied their application both times. The court affirmed the writ and issued an order that the railroad must obey the decision of the Railroad and Warehouse Commission. To counter this decision, the company submitted a writ of error (written order, usually, from a superior court to a lower one to send a record of the case for review) to the U.S. Supreme Court.