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

John W. Cary argued the case for the plaintiff. He claimed the ruling of the state court had no legal ground for the state to limit transport rates, and that such a move was incompatible with the charter the federal government had granted to public railroads, as in Stone v. Farmers L. & T. Co. (1886). The company had been deprived of its property and its use without the due process of law (Allnutt v. Inglis) and, in another unrelated case involving the railway, Chicago, Milwaukee and St. Paul Railway Co. v. Ackley (1876). Cary maintained the court was mistaken in its opinion that rates set by the commission were final, lawful, and that C M & St. P Railway should not have to abide by the commission's rulings. The state court was also mistaken in issuing a writ of mandamus.

W. C. Goudy argued for the plaintiff as well. In presenting his arguments, Goudy suggested that the decision of the Railroad and Warehouse Commission should be subjected to judicial investigation. He believed the sections of the statute of Minnesota which authorized regulatory action by the railroad commission final were repugnant to the Fifth and Fourteenth Amendments. As precedent, Goudy cited Munn v. Illinois (1877), and Gibbons v. Ogden (1824). Moreover, he claimed the state court disregarded its own previous ruling in Brown v. Maryland (1827).

Counsel for the state of Minnesota argued that the state's supreme court did not exceed its jurisdiction and the writ of mandamus was a legitimate use of available leverage to force a common carrier to comply with the commission's ruling. Moreover, according to a prior ruling made inChicago, Burlington and Quincy Railroad Company v. Chicago(1876), the judgment of the state court was obligatory before the U.S. Supreme Court. The attorney for the defendant reasoned that if not protected by their charters, railroad companies and, subsequently, their transport rates are subject to state control. He concluded that the general statute regulating common carriers or their transport charges did not inevitably deprive railroads of their property without due process of law if a ruling was not in collision with a railroad's charter as stated in Richmond, F. & P. R. Co. v. Richmond (1877).

On a 6-3 vote, the U.S. Supreme Court reversed the decision of the lower court. In writing their decision, the Court was careful to state that the legislature of the state of Minnesota had a right to form such a commission and that the decision of the Railroad and Warehouse Commission was indeed obligatory. The Supreme Court was also careful to acknowledge that their authority did not extend to making a determination whether the state's set rate was just. The charter that gave competence to the directors of the company to regulate the transport charges did not mean that the state abandoned its right to intervene when there existed a compelling need for the state to set rates. Furthermore, a federal charter protected a company and excluded it from legal liability only if its (federal) grant clearly stated so, which was clearly not within the charter of the C M & St. P Railway. However, the Court also found that the company was denied due process in the Minnesota Railroad and Warehouse Commission hearings because it had no opportunity to appear and justify the basis for their transport rates. The Supreme Court thus found the writ of mandamus issued by the Minnesota Court to be "repugnant to the U.S. Constitution" and remanded the case back to the lower court for further adjudication.

Justice Bradley, writing the dissenting opinion, felt the Court neglected precedence set in Munn v. Illinois; interestingly, his main objection to the majority opinion was that the case presented a legislative rather than judicial issue. However, he agreed with the majority opinion that states retained the authority to craft laws (within the limits of the U.S. Constitution) and so the state of Minnesota did not surpass its power by founding the Railroad and Warehouse Commission. Bradley went on to posit that "due process of law does not always require the court. It merely requires such tribunals and proceedings as are proper to the subject in hand." Moreover, he also agreed that while the U.S Constitution tacitly granted state governments the ability to make their own regulatory bodies and code, states were obliged to conduct fair hearings.