The New York State Legislature
gave Fulton and Livingston the exclusive right (aka a monopoly) to operate
ferries (steamboats) in NY State waters. They licensed Ogden to run a
ferry from NYC to Elizabethtown, New Jersey.
Gibbons was running his own
personal ferry between NYC and Elizabethtown.
Obviously, Gibbons ferry was
operating (at least partially) in NY waters.
Gibbons was licensed to
"ferry in the coasting trade" under a Federal Statute.
Ogden obtained an injunction
against Gibbons from the NY Court. Gibbons appealed to the US Supreme
Court.
The US Supreme Court found for
Gibbons
The US Supreme Court
interpreted the Federal Statute to authorize entry of Gibbons' ferries
into NY waters. The NY monopoly was therefore invalid under the Supremacy
Clause, and the injunction was
dissolved.
The Court found that
'navigation' is indeed 'commerce' as defined by Article I, Section 8,
Clause 3 of the Constitution, aka
the Interstate Commerce Clause.
"The mind can scarcely
conceive a system for regulating commerce between nations which shall
exclude all laws concerning navigation." The ruling determined that
"a Congressional power to regulate navigation is as expressly
granted as if that term had been added to the word 'commerce'.
The Court defined the word
'among' broadly, to include any sort of activity that has some connection
with more than one State.
Three requirements for an
activity to be excluded:
Activities that are
completely interior to a State.
Activities that do not in
any way affect another State.
It is
"unnecessary" for Congress to regulate the activity
Ogden unsuccessfully argued
that State laws requiring inspection of cargo demonstrated that the power
to regulate commerce was not exclusively in Congress.
The Court concluded that
Congressional power over commerce should extend to the regulation of all
aspects of it, overriding State law to the contrary.
"If, as has always
been understood, the sovereignty of Congress, though limited to
specified objects, is plenary as to those objects, the power over
commerce with foreign nations and among the several states is vested in
Congress as absolutely as it would be in a single government, having in
its constitution the same restrictions on the exercise of the power as
are found in the Constitution of the United States."
So basically, this case was
one of the first to say that, because of the Interstate Commerce Clause, if the Federal government takes some action
related to interstate commerce (like granting Gibbons a license), then
States can't block it.
When this decision was
announced, the public was very happy to see the end of a monopoly. It was
later referred to as "the emancipation proclamation" of American
commerce.
