Budd v. New York


Significance: The Supreme Court reaffirmed that state legislatures had great discretion in regulating businesses “affected with a public interest.”

In 1888 the New York legislature passed a statute establishing maximum rates that grain elevators might charge. The Supreme Court had approved similar regulations of large and strategic businesses in Munn v. Illinois (1877), but it had ruled that rates of regulatory commissions were subject to judicial review in Chicago, Milwaukee, and St. Paul Railway Co. v. Minnesota (1890). In Budd, the justices voted six to three to approve the New York law. State legislatures, in contrast to regulatory commissions, had the authority to decide on the fairness of rates without judicial review. The dissenters argued that the law violated the rights to property and liberty protected by the due process clause of the Fourteenth Amendment. The Court read Munn and Budd narrowly early in the twentieth century, but legislative discretion was restored during the New Deal period.