Louisiana had a Statute (Article
236) that said that foreign (or
out-of-state) corporations couldn't do business in Louisiana without
having a known place of business within the State for service of process.
Louisiana said they had the
authority to enact this law based on their police powers.
Allgeyer bought insurance from
a New York insurer (Atlantic Mutual), thereby violating the law. When
Louisiana levied a fine, Allgeyer sued, saying that Article 236 was an unconstitutional violation of the 14th
Amendment's Due Process Clause.
Allgeyer argued that they
should be granted the economic freedom to enter into contracts with
anyone they chose to. (aka economic liberty)
The US Supreme Court found for
The US Supreme Court found
that Louisiana violated Allegeyer's economic liberty.
The Court noted that
Allgeyer had entered into the contract with the insurer in New York to
insure their Louisiana property. Atlantic Mutual was not bound in anyway
by Louisiana law, so Article 236
impermissibly interfered with Atlantic Mutual's right to contract.
Which in turn interfered
with Allgeyer's right to contract.