Note: Justice Smith Thompson took no part in the consideration or decision of the case.
Facts of the case
In 1798, Robert Livingston and Robert Fulton received exclusive navigation privileges of all the water terrain within the U.S. State of New York by the New York State Legislature. This privilege allowed Livingston and Fulton the right to operate boats across the waters of the State of New York for a period of twenty years; effectively working as a monopoly for their steamboat business. The two also petitioned for similar monopoly arrangements with other States in the U.S. to run a national monopoly in the domestic boat-business. However, all the States petitioned to, except for the Orleans Territory, rejected the petition(s).
The arrangement continued to operate in favor of Livingston and Fulton for a while, and whenever challenges to their right were made, Livingston and Fulton undercut potential competitors by offering to sell them a franchise or simply buying their boats from them. Defying the monopoly, former New Jersey governor Aaron Ogden attempted to set up his own boat business. However, he failed in his attempts. Ultimately, he purchased a license from an assignee of Livingston and Fulton. He ran this new business with his partner, Thomas Gibbons, operating between the waterways of New Jersey and New York City.
Ogden and Gibbons continued to run their business on the separate license for three years; after which their relationship deteriorated. Later Gibbons took a new license granted under a 1793 coasting legislation passed by the United States Congress. Seeing Gibbons pose a threat to Ogden’s business, Ogden took Gibbons to the New York Court of Errors. The court ultimately granted a permanent injunction against Gibbons. Later, a separate complaint was filed in the Court of Chancery of New York by Ogden asking the court to completely restrain Gibbons from operating his business in the aforementioned waters.
At the Court of Chancery, the plaintiff’s lawyer, Thomas Addis Emmet and Thomas J. Oakley, contended that States have concurrent powers with Congress on matters relating to interstate commerce; and as such, the license by which Ogden was operating was valid and superseded the license being held by Gibbons. The respondent’s lawyer, U.S. Attorney General William Wirt and Daniel Webster argued that it was the U.S. Congress that had exclusive power over all matters relating to interstate commerce, as was stipulated in Article I, Section 8, Clause 3 of the United States Constitution, also known as the “Commerce Clause”. Ultimately, the Court of Chancery of New York found in favour of Ogden and issued an injunction against Gibbons.
Losing a second time, Gibbons appealed the decision of the Court of Chancery at the Supreme Court of the United States stating that the monopoly afforded to Ogden by virtue of the license granted by the New York State Legislature conflicted with the federal legislation.
Supreme Court of the United States
On 2nd March 1824, Chief Justice John Marshall wrote a unanimous decision of the participating justices in favour of Gibbons. He began his judgment by explaining the meaning and scope of Congress’s powers. He notably stated that “Commerce undoubtedly, is traffic, but it is something more; it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.”
According to this interpretation of the commerce clause, Congress had the power to regulate the navigation of steamboats on the nation’s waterways. It is here, Chief Justice Marshall notes that Congress’s power to fully regulate commerce was absolute and supreme relative to state governments provided it was exercised within the limitations stipulated by the Constitution. Consequently, the Supreme Court directed that state statutes in conflict with a validly enacted federal law relating to matters of commerce could not be sustained under the supremacy clause provided under Article VI of the U.S. Constitution. Hence, the license that the New York State Legislature granted to Ogden to enjoy exclusive monopoly of commercial steamboat(s) was held unconstitutional.
A copy of the judgment can be found here.
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States of America. Established on 4th March 1789; 232 years ago, SCOTUS has the ultimate appellate jurisdiction over all federal and state courts cases that involve a point of federal law, and original jurisdiction over a narrow range of cases. In this section, you will find summaries of landmark decisions of the Supreme Court of the United States dating back from 1789.
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