Western Union Telegraph Co. v. Commercial Milling Co.

Background

A milling company sued a telegraph company after a message was mishandled and not properly delivered. The telegraph company relied on a printed clause on the back of the message that sought to limit its liability for negligence. Michigan enacted a statute declaring such limitation clauses void for telegraph service, and Michigan courts split on whether that statute could reach messages connected with other States.

Reasoning

The Court examined whether the Michigan law unlawfully regulated interstate telegraph messages or improperly restricted the company’s freedom to contract. It distinguished earlier cases where state laws had directly regulated the manner of interstate transmission. The Court concluded the Michigan statute did not add duties or directly govern interstate operations; instead, it declared that public-service carriers cannot escape their duty of care by contract. The justices held that the statute is a valid exercise of the State’s police power, does not unreasonably burden interstate commerce, and does not violate the Fourteenth Amendment’s guarantees as applied here.

Real world impact

The ruling means states may prohibit carriers from using printed clauses to limit liability for negligent service in public communications. Telegraph companies (and similar public carriers) cannot rely on such contractual limitations where state policy forbids them. The decision leaves open that Congress could address the subject differently later, and it distinguishes statutes that directly regulate interstate transmission from laws that enforce local standards of care.

Dissents or concurrances

Mr. Justice Holmes dissented, indicating there was a significant disagreement among the Justices about the proper reach of the statute and its relation to interstate commerce.