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Louisville & N. R. Co. v. Mottley - 219 U.S. 467, 31 S. Ct. 265 (1911)

Rule:

Contracts must be understood as made in reference to the possible exercise of the rightful authority of the Government, and no obligation of a contract can extend to the defeat of legitimate government authority.

Facts:

As the result of a collision in Kentucky of railroad trains belonging to defendant, Louisville & Nashville Railroad Company ("L&N"), plaintiffs E.L. Mottley and his wife, Annie E. Mottley, sustained serious personal injuries. The collision was allegedly caused by the gross carelessness and negligence L&N's agents and servants. Thereafter, in 1871, the Mottleys and L&N entered into a written agreement wherein the railroad company agreed to issue free railroad passes to the couple for life. After a congressional act regulating commerce was passed in 1906, L&N refused to honor the agreement. The Mottleys filed a lawsuit in federal circuit court seeking to enforce the parties' agreement. The circuit court entered judgment in favor of the Mottleys, but on direct appeal to Supreme Court of the United States, that judgment reversed and the case was remanded with directions to dismiss the suit for want of jurisdiction. The Mottleys then filed an action in Kentucky circuit court, which rendered judgment for the Mottleys; the Court of Appeals of Kentucky affirmed the judgment. L&N was granted a writ of certiorari.

Issue:

Was the parties' agreement enforceable?

Answer:

No.

Conclusion:

The Supreme Court of the United States reversed and remanded the appellate court's decision. The Court ruled that under the federal commerce act, a carrier engaged in interstate commerce could not charge, collect, or receive for transportation on its road anything but money. Consequently, after passage of the commerce act, L&N could not lawfully accept from the Mottleys any compensation "different" in kind from that mentioned in its published schedule of rates. The rates or charges specified in such schedule were payable only in money, and they could not be paid any other way without defeating the policy established by the acts regarding commerce. Thus, the Court held that the Mottleys were not entitled to the relief sought and L&N rightly refused, after the passage of the commerce act, to comply with the parties' agreement. 

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