Brief Fact Summary. Nebbia, owner of a grocery store, was convicted for selling milk at a price below the minimum fixed by a New York statute.
Synopsis of Rule of Law. Business regulations are upheld when the legislative objective is to protect public health and safety rather than to interfere with the free market. The regulations must be sufficiently related to the legislative objectives.
The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare.View Full Point of Law
Issue. Does the statute deprive Nebbia of due process of law?
Held. Justice Roberts’ opinion. No, the Fourteenth Amendment cannot be invoked to resist necessary and appropriate exertion of the police power.
The Court held that the milk industry was not a public utility and that the statute was not enacted to prevent a monopoly or monopolistic practice. However, the due process clause makes no mention of sales or of prices any more than it speaks of business or contracts or buildings or other incidents of property. The state may regulate other elements of manufacture or trade with incidental effect upon price, but the state is incapable of directly controlling the price itself. This view was negated in Munn v. Illinois.
The question is whether circumstances vindicate the challenged regulation as a reasonable exertion of governmental authority or condemn it as arbitrary or discriminatory? Whether or not a business is for the public interest or public use is not a valid criteria to determine whether price control legislation is constitutional. The state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells so long as they have a reasonable relation to a proper legislative purpose. They can be neither arbitrary nor discriminatory.
Discussion. Business regulations are upheld when the legislative objective is to protect public health and safety rather than to interfere with the free market. The regulations must be sufficiently related to the legislative objectives.