Wabash, St. Louis and Pacific Railway Company v. Illinois, 118 U.S. 557 (1886)
Summary of the Court Opinion:

An Illinois statute states that is any railroad company shall, within that state, charge or receive for transportation of passengers or freight of the same class, the same or greater sum for any distance than it does for a longer distance, it shall be liable for a penalty for unjust discrimination. The defendant in this case made such discrimination in regard to goods transported over the same road or roads from Peoria, in Illinois, and from Gilman. in Illinois, to New York; charging more for the same class of goods carried from Gilman than from Peoria, the former being eighty-six miles nearer to New York than the latter, this difference being in the length of the line in the State of Illinois. Held:

1. The Court follows the Supreme Court of Illinois in holding that the statute of Illinois must be construed to include a transportation of goods under one contract and by one voyage from the interior of the state of Illinois to New York.

2. This court holds further that such a transportation is "commerce among the States," even as to that part of the voyage which lies within the State of Illinois, while it is not denied that there may be a transportation of goods which is begun and ended within its limits, and disconnected with any carriage outside of the State, which is not commerce among the States.

3. The latter is subject to regulation by the State, and the statute of Illinois is valid as applied to it. But the former is national in its character, and its regulation is confided to Congress exclusively by that clause of the Constitution which empowers it to regulate commerce among the States.

4. The case of Munn, 94 US 113; Chicago, Burlington & Quincy, 94 US 155; and Peik, 94 US 164; examined in regard to this question, and held, in view of other cases decided near the same time, not to establish a contrary doctrine.

5. Notwithstanding what is there said, this court holds now, and has never consciously held otherwise, that a statute of a state, intended to regulate or to tax or to impose any other restriction upon the transmission of persons or property or telegraphic messages from one State to another, is not within that class of legislation which the State may enact in the absence of legislation by Congress; and that such statutes are void even to that part of such transmission which may be within the State.

6. It follows that the statute of Illinois, as construed by the Supreme Court of the State, and as applied to the transaction under consideration, is forbidden by the Constitution of the United States, and the judgment of that court os reversed.

Mr. Justice Bradley, with whom the Chief Justice and Mr. Justice Gray, dissenting:

The declaration alleged, in substance, that the company charged certain parties fifteen cents per hundred pounds for carrying a load of freight from Peoria, in the State of Illinois, to New York, one hundred and nine miles of the distance being in Illinois, whilst at the same time it charged certain other parties twenty five cents per hundred pounds to carry a like load of the same class of freight from Gilman, also in the state of Illinois, to New York, twenty three miles of the distance being in Illinois, both places being on the line of the road. This allegation was substantially admitted, and judgment was finally rendered in favor of the State, and was sustained by the Supreme Court of the State, to which the present writ of error was directed. (1)

.... We have no doubt that [the State Supreme Court] view of the presumed equal distribution of the charge to every part of the route is correct. If one-tenth, or any other proportion, of the whole route of transportation was in Illinois, the clear presumption is, if nothing be shown to the contrary (as nothing was shown), that the like proposition of the whole charge was made for the transportation in that State.

The principal question in this case, therefore, is whether in the absence of congressional legislation, a State legislature has the power to regulate the charges made by the railroads of the State for transporting goods and passengers to and from places within the State, when such goods and passengers are brought from, or carried to, points without the State, and are, therefore, in the course of transportation from another State, or to another State. It is contended that that as such transportation is commerce between or among different States, the power does not exist. The majority of the Court so hold. We feel obliged to dissent. We think that the State does not lose its power to regulate charges of its own railroads in its own territory, simply because the goods and persons transported have been brought from or are destined to a point beyond the State in another State.

The case before us is not embarrassed by any allegation of a contract between the State and the company; it is a question of the power to regulate, pure and simple. The State has never contracted away or attempted to contract away this power.

It is also unembarrassed by any federal legislation on the subject. No one disputes that Congress, if it saw fit, under its power to regulate commerce among the several States, might regulate the matter under consideration; but it has not done so. The question rests solely and entirely upon the power of the State, when unrestrained by any contract, or by any action of the legislative department of the United States. Does it follow, then, that because Congress has the power to regulate this matter (though it has not exercised that power), therefore the State is divested of all power to regulate? That is the question before us.

We had supposed that this question was concluded by the previous decisions of this court: that all arrangements and regulations respecting highways, turnpikes, railroads, bridges, canals, ferries, dams, and wharves, within the State, their construction and repair, and the charges to be made for their use, though materially affecting commerce, both internal and external, and thereby incidentally operating to a certain extent as regulations of interstate commerce, were within the power and jurisdiction of the several States. This is still our opinion.

It is hardly necessary to argue that, in reference to this rule, railroads, canals, turnpikes, bridges, ferries, and wharves belong to the category of local subjects, local means, and local aids to commercial intercourse. Congress may establish national roads, canals and bridges, it is true; but we speak of those (hitherto the most part) which are constructed and established under State authority; and, in reference to these, it seems to us very clear that, in the absence of congressional legislation to the contrary, they are not only susceptible of State regulation, but properly amenable to it, irrespective of other considerations to which we shall refer.

The highways in a State are the highways of the State. Convenient ways and means of intercommunication are the first evidence of the civilization of a people. The highways of a country are not of private but of public institution and regulation. In modern times, it is true, government is in the habit. in some countries, of letting out the construction of important highways, requiring a large expenditure of capital, to agents, generally corporate bodies created for the purpose, and giving them the right of taxing those who travel or transport thereon, as a means of obtaining compensation for their outlay. But a superintending power over the highway, and the charges imposed upon the public for their use, always remains in the government. This is not only its indefensible right, but is necessary for the protection of the people against extortion and abuse. These positions we deem to be incontrovertible. Indeed, they are adjudged law in the decisions of this court. Railroads and railroad corporations are in this category.

Now, since every railroad may be, and generally is, a medium of transportation for interstate commerce, and affects that commerce; and since the charges of fare and freight for such transportation affect and incidentally regulate that commerce; and since the railroad could not be built, and the charges upon it could not be enacted, without authority from the State, it follows as a necessary consequence that the State, in the exercise of its undoubted functions and sovereignty. does, in the establishment and regulation of railroads, to a certain and very material extent, not only do that which affects but incidentally regulates commerce. It does so by the very act of authorizing the construction of railroads and the collection of fares and freight thereon. No one doubts its power to do this. The very being of the plaintiff in error, the very existence of their railroad, the very power and exercise of charging fares and freights, are all derived from the State. And yet, according to the argument of the plaintiffs in error, pursued to its legitimate consequences, the act of the State in doing all this ought to be regarded as null and void because it operates as a regulation of commerce among the States, Not only does the right to regulate and charge fares and freights at all come to a railroad company from the grant of the State, but the amount of such charges is also regulated by the State law, either by the charter of the company or by legislative regulations, or by the general law that the charges are reasonable....and that is State law, and not Unites States law.... It is evident from what has been said, that the dealing of a State with a railroad corporation of its own creation, in authorizing the construction and maintenance of its road and the charges and fares and freights thereon, is, in its purpose. a matter entirely aside from that kind of regulation of commerce which is obnoxious to the provisions of the Constitution. There is not a particle of doubt that it was the right of the State to prescribe the route of the plaintiff's road--it might be in a direction north and south, or east and west; it might be by one town, or a different town; it was its right to prescribe how the road should be built, what means of locomotion should be used on it, how fast the trains should run, at what stations they should stop. It was its right to prescribe its charges, and to declare that they should be uniform, or, if not uniform, how otherwise: this certainly was the right of the State at the inception of the charter, and every one of these things would most materially affect commerce, not only internal but external; and yet no one of them would be repugnant to the power of Congress to regulate commerce within the meaning of the Constitution.

.... The State of New York built and owns the Erie Canal. Did any court ever attempt to control that State in its regulation of tolls on the canal, even though made for the purpose of affecting the relative movement of goods on the canal and the railroads of the State? We presume that no such attempt was ever made, or would be successful if made.

It is true, and this we concede, that if the laws of a State discriminate adversely to the citizens of products of other States, whether the railroads belong to the State or to private corporations, the courts might intervene on the grounds of repugnancy of such regulations to that freedom of commerce which Congress by its non-action on the subject has indicated shall exist. This has been frequently been decided. Welton v. Missouri 91 US 275, 282. But no such discrimination is made by the law in question.

We also concede that any taxes, duties, or impositions upon interstate commerce (that is, upon the commerce itself), carried on or over railroads of the State, would interfere with the freedom of such commerce, and would be repugnant to the presumed intention of Congress. This has frequently been decided. Crandall v. Nevada 6 Wall 35. But the present is not a case of that kind, and had no semblance of likeness to it. All such discrimination, taxes, duties, and impositions are direct regulations and burdens upon the commerce itself, and come fairly within the exclusive prerogatives of Congress.

The distinction between such burdens and charges for service rendered is well explained in the case of The Gloucester Ferry Co. v. Pennsylvania 114 US 196, 217, where Mr. Justice Field, delivering the unanimous opinion of the court, in relation to ferries, says, "It is true that, from the earliest period in the history of government, the States have authorized and regulated ferries, not only over waters entirely within their limits, but over waters separating them; and it may be conceded that in many respects the States can more advantageously manage much such interstate ferries than the general government; and that the privilege of keeping a ferry, with a right to take toll for passengers and freight, is a franchise grantable by the State to be exercised within such limits and within such regulations as may be required for the safety, comfort, and convenience of the public. Still, the fact is that such a ferry is a means, and a necessary means, of commercial intercourse, between the States bordering on their dividing waters, and it must, therefore, be conducted without the imposition by the State of taxes and other burdens upon the commerce between them. Freedom from such impositions does not, of course. imply exemption from reasonable charges, as compensation for the carriage of persons, in the way of tolls or fares, or from the ordinary taxation to which other property is subjected, any more than like freedom of transportation on land implies such exemption. Reasonable charges for the use of property, either on water or land, are not an interference with the freedom of transportation between the States secured under the commercial power of Congress... That freedom implies exemption from other charges than such as are imposed by way of compensation for the use of the property employed, or for the facilities afforded for its use, or as ordinary taxes upon the value of the property. .....

[The dissent concluded by discussing several other cases in which a distinction had been made between mere regulation of rates and burdens on interstate commerce.]

1. The State Supreme Court conceded this was a question of interstate commerce and then argued that the power over interstate commerce was not exclusive and a state could act in the absence of federal regulation. The state's lawyers had argued that the law applied only to discriminatory charges on interstate shipments.