Chicago, Burlington & Quincy Railroad v. McGuire

Headnotes

1. Constitutional Law — Fourteenth Amendment — Liberty of Contract The right to make contracts is embraced within the liberty guaranteed by the Fourteenth Amendment, but that freedom is qualified and not absolute; liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community. 219 U.S. at 565-566
2. Constitutional Law — Judicial Review Where legislative action is arbitrary and has no reasonable relation to a purpose it is competent for government to effect, the legislature transcends its power in interfering with liberty of contract; but where the regulation has a reasonable relation to an object within governmental authority, the exercise of legislative discretion is not subject to judicial review. The scope of judicial inquiry into the question of power is distinct from the scope of legislative consideration of matters of policy, and whether an enactment is wise or unwise, or based on sound economic theory, is for the legislature's judgment. 219 U.S. at 567-568
3. Constitutional Law — Legislative Power The legislature, acting within constitutional limits, is the arbiter of the public policy of the State; a judicial determination upholding or condemning contracts under common-law principles of public policy must yield to the legislative will when constitutionally expressed in subsequent legislation. 219 U.S. at 563
4. Constitutional Law — Police Power — Prohibition of Contracts in Derogation of Statutory Regulation Where the legislature has authority to establish a regulation — such as imposing liability on railroad corporations for injuries to employees and abolishing the fellow-servant rule — it may also prohibit contracts in derogation of that regulation, including stipulations in contracts of insurance, relief, benefit, or indemnity; the interference with the right to contract is incidental to the main object of the regulation and is justified as an aid to its exercise. 219 U.S. at 570-571
5. Constitutional Law — Police Power — Prevention of Nullification of Statutory Liability If the legislature may prohibit contracts that limit liability imposed by a valid regulation, it may also deny effect to the acceptance of benefits under such a contract, and it is not limited by the form of the contract, the nature of the consideration, or whether the engagement is absolute or conditional; the power to prohibit contracts necessarily implies legislative control over the transaction despite the action of the parties, and it makes no difference whether the defense is described as accord and satisfaction. 219 U.S. at 571-572
6. Constitutional Law — Equal Protection A statute does not deny equal protection of the laws merely because its prohibition is limited to a particular class of railroad employees, where the classification is properly the same as that of the original statute whose enforcement it was designed to secure and the classification of the original statute has been sustained as valid. 219 U.S. at 573-574
7. Constitutional Law — Equal Protection The Iowa statute prohibiting contracts between railway companies and their employees limiting the right to recover damages at common law, and providing that acceptance of benefits under such a contract subsequent to injury shall not bar a cause of action, is within the police power of the State and does not violate the due process or equal protection clauses of the Fourteenth Amendment. 219 U.S. at 574-575