Fletcher v. Peck

views updated Jun 11 2018

FLETCHER V. PECK

Chief Justice John Marshall's 1810 decision in Fletcher v. Peck arose from the Yazoo Land Fraud, in which the Georgia legislature voted in 1795 to sell 35 million acres of land (in what is now Alabama and Mississippi) to four private companies. The Yazoo land, named after a major river running through it, was sold at bargain rates (less than two cents per acre). Many Georgia legislators had been bribed to offer such good terms: many of them received stock in one of the companies; others received cash payments.

U.S. Senator James Jackson of Georgia returned from the capital in Philadelphia to run for the state legislature and lead the fight against the Yazoo fraud. Angry Georgia voters turned the legislators who voted to sell the land out of office and the new legislature, at the instigation of Jackson, repealed the grant in 1796. In the interim, however, much of the land had been sold one or two times, and the new property owners—many of whom had paid as much as sixteen cents per acre—now claimed they were innocent victims of the Georgia legislature's repeal. But proponents of the repeal claimed that the subsequent purchasers had known about the circumstances of the fraud (the story was reported throughout the nation) and thus could not claim to be innocent purchasers.

The Yazoo fraud took on national dimensions when the purchasers asked Congress to compensate them from their losses. Federalists, who generally supported property rights more vigorously than Jeffersonian Republicans, opposed the repeal. Meanwhile, the four land companies that had purchased the land sought to challenge the repeal by concocting a lawsuit. John Peck, an investor in the New England Mississippi Company (one of the grantees in 1795), sold land to Robert Fletcher (another investor in the same company). In his lawsuit Fletcher presented himself to the court as innocent of the wrongdoing and claimed that he was being deprived of his property rights. The repeal by the Georgia Legislature thus pitted subsequent purchasers against initial grantees.

Marshall's opinion invalidated Georgia's repeal, using two arguments: "Georgia was restrained, either by general principles…common to our free institutions" or by article I, section 10 (the Contracts Clause), of the U.S. Constitution (Fletcher v. Peck, 10 U.S. 87, 139 [1810]). The "general principles" included the idea that innocent subsequent purchasers should not be deprived of their property. As Marshall said, "He has paid his money for a title good at law, he is innocent, whatever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt" (Fletcher, 10 U.S. at 133).

Marshall also broadly construed the Contracts Clause, which prohibits states from passing a "law impairing the obligation of contracts." The initial understanding of that clause appears to have been that states could not interfere with contracts among private parties; it seemed to have no bearing on contracts between the government and individuals. Thus when Fletcher proclaimed the power of federal courts to protect legislated contracts from interference, it marked an expansion of the Contracts Clause. In praise of the Contracts Clause, Marshall wrote, "The people of the United States, in adopting the instrument, have manifested a determination to shield themselves and their property from the effects of those sudden and strong passions to which men are exposed" (Fletcher, 10 U.S. at 138).

For Marshall and other Federalists, the Constitution was a support against the passions of legislatures. Subsequent cases, like Dartmouth College v. Woodward (1819) and Ogden v. Saunders (1827) applied the Contracts Clause to prohibit legislative interference in state charters and bankruptcy. The Contracts Clause thus became an important vehicle for judges (particularly those of the Federalist and later Whig Parties) to protect property rights.

See alsoLand Policies; Land Speculation; Marshall, John; Property .

bibliography

Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810).

Magrath, C. Peter. Yazoo: Law and Politics in the New Republic, the Case of Fletcher v. Peck. Providence: Brown University Press, 1966.

Siegel, Stephen. "Understanding the Nineteenth Century Contract Clause: The Role of the Property-Privilege Distinction and 'Taking' Clause Jurisprudence." Southern California Law Review 60 (1986): 1–108.

White, G. Edward. The Marshall Court and Cultural Change, 1815–35. New York: Macmillan, 1988.

Alfred L. Brophy

Encyclopedia of the New American Nation

Fletcher v. Peck

views updated Jun 11 2018

FLETCHER V. PECK

An 1810 decision by the U.S. Supreme Court, Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 3 L. Ed. 162, held that public grants were contractual obligations that could not be abrogated without fair compensation, even though the state legislature that made the grant had been corrupted and a subsequent legislature had passed an act nullifying the original grant.

The plaintiff, Robert Fletcher, brought suit against John Peck for breach of covenant on land that Fletcher had purchased in 1803. This land was part of a tract of 35 million acres in the area of the Yazoo River (Mississippi and Alabama) that the state of Georgia had taken from the Indians and then sold in 1795 to four land companies for a modest sum ($500,000) for so much land. The land companies then broke up the tract and resold parcels for enormous profits.

When a new Georgia legislature learned in 1796 that some of the legislators who had voted to sell the land had been stockholders in the companies that purchased the tract and that many of the legislators who had authorized the sale had received bribes from the land speculators, it rescinded the original sale on the grounds that it had been attended by fraud and corruption.

The property in question had passed through several hands before Peck purchased it in 1800. Three years later, he sold the land to Fletcher with a deed stating that all the previous sales had been legal. Fletcher, however, contended that the original sale to the land companies was void and that Peck was guilty of breach of covenant because the land was not legally his to sell. After a circuit court found in favor of Peck, the case came before the U.S. Supreme Court on a writ of error.

Speaking for the Court, Chief Justice john marshall deplored the corruption that had found its way into the state legislature but found that the validity of a law cannot depend on the motives of its framers. Nor can private individuals be expected to conduct an inquiry into the probity of a legislature before they enter into a private contract on the basis of a statute enacted by that legislature.

Marshall then turned to the question of whether the statute enacted in 1796 could nullify rights and claims established under the bill that had authorized the land sale in 1795. Although he agreed that as a general principle "one legislature is competent to repeal any act which a former legislature was competent to pass," Marshall held that actions taken under a law cannot be undone by a subsequent legislature. If the law in question is a contract, he reasoned, repeal of the law cannot divest rights that have vested under the contract. To hold otherwise would be tantamount to seizing without compensation property that an individual had acquired fairly and honestly.

In addition to basing his argument on such general considerations, Marshall found that the original grant was a contract within the meaning of the Contract Clause of the U.S. Constitution, which provides that "No State shall … pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts …" (Art. I, § 10, clause 1). Reasoning that the Constitution did not distinguish between contracts between individuals and contracts to which a state was a party, Marshall held that the Framers of the Constitution intended the clause to apply to both. The purpose of the clause, he explained, was to restrain the power of the state legislatures over the lives and property of individuals.

Under the act rescinding the bill of 1795, however, Fletcher would forfeit the property "for a crime not committed by himself, but by those from whom he purchased." Thus the rescinding act "would have the effect of an ex post facto law" and would therefore be unconstitutional. Accordingly Marshall concluded that in spite of the profits reaped by the dishonesty of the land speculators, both general principles and the U.S. Constitution prevented a state legislature from rendering a contract null and void.

Fletcher v. Peck was the first case in which the Supreme Court invalidated a state law as contrary to the Constitution. It also exemplified the protective approach of the Marshall court toward business and commercial interests. In Fletcher and later in the Dartmouth College case (trustees of dartmouth college v. woodward, 17 U.S. [4 Wheat.], 518, 4 L. Ed. 629[1819]), the Court expanded the scope of the term contract and limited the degree to which the states could encroach upon property rights and contractual obligations.

Fletcher v. Peck

views updated May 23 2018

FLETCHER V. PECK,

FLETCHER V. PECK, 6 Cranch 87 (1810), was the first opinion issued by the Supreme Court of the United States in which a state law was invalidated as contrary to the U.S. Constitution. Through various fraudulent activities, including bribery of state officials, the Georgia legislature was persuaded in 1795 to authorize the issuance of grants of certain state-owned land in what were then known as the "Yazoo lands," which encompassed much of the states of Alabama and Mississippi. In 1796 a newly elected legislature passed an act annulling these grants on the ground of fraud.

Meanwhile a parcel of the land, some 600,000 acres, had passed to John Peck, who in turn sold part of his land to Robert Fletcher with a written understanding that the title had not been impaired by the annulment of the land grants by the Georgia state legislature. Fletcher sued Peck for breach of this covenant, but in essence Fletcher was testing whether the act of the Georgia legislature that impaired the original sale and its contract was valid. Fletcher and Peck were business associates and appear to have been using this collusive case to test the legality of the annulment of the land grants.

Thus the question before the Supreme Court was whether or not the original land grant by Georgia, despite its fraudulence, was binding. Landholders argued that the contract clause of Article I, Section 10 of the Constitution and the constitutional prohibition against ex post facto laws barred the state from rescinding, by its subsequent legislative action in 1796, the original legislative contract granting the land. Attorneys for the state of Georgia contended that the state was permitted to declare the contracts void because the original legislative contract of 1795 was based on fraud and thus, they argued, the private contracts based on that act were also fraudulent. They also argued that the contract clause was intended to protect against the annulment of private contracts and was not applicable to the states.

Writing for the unanimous Court, Chief Justice John Marshall recognized the fraud involved in the original contract entered into by the state of Georgia but nevertheless held that the state was bound by the contracts selling the land. By holding that contracts are binding upon states as well as individuals, Marshall's opinion increased the force and importance of the contract clause and of the federal judiciary in relation to the states.