Here’s a hard truth in life: sometimes the bad guys win. Sometimes, they have to. That’s a big part of what the case of Fletcher v. Peck (1810) 10 U.S. (6 Cranch) 87 teaches us.
The Treaty of Paris resolved the American Revolution, ceding all British holdings in continental North America along its modern northern border up to the Great Lakes, and between the Atlantic Ocean and the Mississippi River. Part of those lands were the area to the west of Georgia, which are now the states of Alabama and Mississippi. In the decades of the 1790’s and 1800’s, that territory was known as the Yazoo Lands. They were inhabited mostly by Indians, but were ripe for eventual development into housing and agriculture. Which meant that there was money to be made.
The state of Georgia claimed that the Yazoo Lands were part of Georgia’s sovereign territory. In 1795, the Georgia legislature, influenced by massive bribery from land speculators, divided the Yazoo Lands into four tracts and sold all four of them for five hundred thousand dollars. According to one website $500,000 in 1800 would be a little bit less than $6,500,000 today; that’s practically every square inch of the states of Alabama and Mississippi for less than a decent NFL player’s annual salary, or the modern-day equivalent of roughly $0.22 per acre. (This is the point at which you emit a low whistle of astonishment.) The speculators turned around and began doing what speculators do, which was to subdivide the real property and churn the titles, selling the subdivided land for substantially more than the Georgia sale price of about a cent and a half per acre. That’s one of the things about real governmental corruption — it’s rarely as subtle as we see in the movies.
The voters, disgusted at their Legislature’s behavior, turned nearly all of the scoundrels out of office in the next election. The successor Legislature passed a law purporting to repeal the Yazoo Lands sale, and to void all transactions following from the sale. But the equivalent (if not the uninflated reality) of hundreds of millions of dollars had changed hands in the less than a year between the sale and the repeal. So a tremendous amount of money was at stake.
John Peck was one of the successor speculators – he had bought some of the land from someone who had bought the land from Georgia. He sold the land to Robert Fletcher at a profit. Peck still held title to other property in the Yazoo Lands. The last thing that either Peck or Fletcher wanted was for the repeal of the Yazoo Lands Act to be valid, because both of them, and a lot of other speculators, would have been left holding empty title and with little effective financial recourse. So, Fletcher contended that Peck did not have clear title when he sold the land.
If that looks like Fletcher wanted to lose, well, he did. This was a collusive lawsuit. Fletcher didn’t try very hard to show that Peck lacked valid title. Fletcher, who held the nominally disputed real property and other real property in the Yazoo Lands, really wanted all of those titled to be confirmed. There were two real challenges to proving Peck’s case that the titled granted in the Yazoo Land sale were valid – the first was that the state of Georgia had repealed the Yazoo Land sale, and the second was that the Indians, who after all had been here before the Europeans, were the valid holders of title to those lands.
The Supreme Court ruled that the repeal of the Yazoo Land Act was unconstitutional under Article I, Section 10, of the Constitution, which contains the “Contracts Clause:”
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Condensed to the applicable part, the Contracts clause provides that “No State shall… pass any … Law impairing the Obligation of Contracts.” The Yazoo Lands Act and the sales transacted under the Act were contracts, which could not subsequently be “impaired.”
The part of this case that I can’t quite square in my own mind is how the collusive nature of the lawsuit was either not detected or deliberately ignored. If there were ever going to be a “standing” suit, this would be it – there was no true “case or controversy” before the Court because both parties wanted the same result. Fletcher wanted to lose and did not offer a full-throated defense of the Georgia law reversing the Yazoo Land Act. But we’d have to wait until 1923 before we got a definitive statement of what it takes to literally “make a Federal case” out of something. (Stay tuned, law fans, that one’s on the agenda.)
But, really, how could the result be otherwise? If it were the case that Georgia could sell land in January, and then claw back the sale in June, then no one would ever buy land from Georgia at all. And since all title to land ultimately derives from the state* a result allowing that a state could claw back land sales would place the ownership of every piece of land in the United States in doubt. This was one of the reasons that the Contracts Clause was put in place – under the Articles of Confederation, “private relief” was granted to particular persons by the Congress, typically relieving them of the obligation to pay debts but also allocating land, often to the detriment of private individuals who had been Loyalists during the Revolution. This was thought (particularly by Alexander Hamilton) to be a drag on commerce and an impediment to the expansion of the fledgling economy of the United States. Thus, the Contracts Clause.
As to private contracts, in 1934 we find a shift in the winds as a Depression-era law restricting the ability of a mortgagor to foreclose on a defaulted loan upheld by the Supreme Court, but that’s a subject to deal with in the future. For now, rest assured that modern jurisprudence has derived a test for determining whether a law impairs a contract or is a permissible regulation. Back in 1810, however, the Court simply proclaimed the repeal of the Yazoo Lands Act an impairment of contract, and that was that.
The remarkable thing of the Fletcher v. Peck opinion was not so much the result; because when you think about it, it had to be that way even though the corrupt bastards won. The remarkable thing was that the Supreme Court, having previously carved out for itself the role of Constitutional arbiter against Congress, in this case also carves out for itself the role of Constitutional arbiter against the various States. It was for the Federal Supreme Court to find a violation of the Federal Constitution in a State law. This despite the passage of the Ninth, Tenth, and Eleventh Amendments, which all could have been read to find that Georgia was immune from this suit, or the “cases and controversies” clause of Article III, which could have been read to indicate that a collusive lawsuit is not justiciable by a federal court.
Instead, the Supremacy Clause and the Contracts Clause were selected from the text of the Constitution, the bad guys in this case won, and the Supreme Court successfully asserted its own power to review state laws for violation of the Federal Constitution. This, in turn, laid the political and legal groundwork for the doctrine of incorporation which followed enactment of the Fourteenth Amendment later in our history. An individual State may not violate the Federal Constitution – that is the right result, and it’s just too bad the corrupt bastards who sold all of Alabama and Mississippi had to win in order to get there.
* Yes, my libertarian friends, it really does. More about that in an upcoming installment of this series.
After reading just two of your summaries, would it be fair to say that John Marshall was an opportunist?
Yes, I think it would. However, I would also exonerate him from the negative connotations of opportunism. The Republic was still new, and precedents both legal and political were yet unset. Marshall viewed his position as the head of one of the three co-equal branches of government, and I think he felt both an institutional obligation to aggrandize SCOTUS’ power in at least as significant a way as he felt a desire to exercise power personally. And IMO, the USA has, on balance, benefitted from a strong and independent judiciary — a strength and independence which is the direct result of Marshall’s labors in the early years of our new nation.
The John Marshall court did more than aggrandize SCOTUS, though it certainly did in Marbury v. Madison, ostentatiously putting aside powers Congress had granted it, all the while grabbing the Constitution, more importantly its own interpretation of the Constitution as its only guide.
In those times, the great debates centered on the power struggles between the States and the Federal Government. How much power would each have in the new nation? The John Marshall court came down firmly on the side of the Federal Government. If he established an independent judiciary, that independence came at the cost of diminished independence for the several States.
Thank you both!
Burt,
Great post, but I have reservations about the notion that the Court’s decision in Fletcher v. Peck laid the foundation for the Incorporation Doctrine, or that the application of the Contracts Clause is inconsistent with the 9th, 10th, or 11th Amendments. The Contracts Clause provides that “No State shall…” do certain categories of things. Georgia had no recourse in the 9th Amendment, which provides “The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people.”
Nor could Georgia have found a colorable defense in the 1oth Amendment, which provides “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” In the language of the 10th Amendment, then, the power to impair the obligation of contracts is a power “prohibited by [the Constitution] to the States.”
Finally, the 11th Amendment’s text does not prohibit suits by a citizen against his own state—this would become a matter of decisional law in 1890 in Hans v. Louisiana.
So, I agree that this was the right result, but not because of a general rule that “An individual State may not violate the Federal Constitution,” but rather because the Constitution specifically prohibits the states from impairing the obligation of contracts. This does not lay the foundation for an interpretation of the Constitution that says “Congress shall make no law…” really means “Congress and the states shall make no law….”
Oh, sure, get all textualist on me!
Fletcher does get us to the states’ lawmaking power being restricted by the federal constitution, and SCOTUS deciding when that has happened. If “lay the foundation” is too strong for you, I’d be willing to dial that back to “sets the table for” incorporation or “foreshadows” incorporation.
What we need to remember is that the case could have been decided differently. Marshall could have thrown it out on standing grounds because it was collusive. He could have called the repeal a condemnation of private property. Instead, he did this, enlarging the court’s power and asserting federal supremacy.
That’s probably true about the standing issue, at least as the doctrine currently exists. And yes, expanding federal supremacy was certainly Marshall’s M.O.
Burt, you are killing it with these posts. I don’t have a ton to add, but I love reading them.
+1
+2
Rehnquist writing on Fletcher v. Peck
Can the federal government, under the constitution, impair the obligation of contracts?
Yes. There is nothing like the Contracts Clause that applies to the Federal government.
The most prominent example of this is called the Bankruptcy Code and the Constitution specifically authorizes Congress to do it. But unlike the “special laws” or “private laws” as had been the practice under the Articles of Confederation, it must be done by way of a uniform rule available to everyone.
Also, the Fifth Amendment makes clear that the Federal government may not take private property other than for a public purpose and must “fairly” compensate the former owner for property thus taken. The limits of what constitutes a “taking” as opposed to a non-compensable “regulation” are continually in flux, but have been relatively deferential to the Federal government for quite some time now.
Thanks for the response. I had always–well, often, not always–wondered about that.
1. For some reason I’ve never thought much about this case. Thank you for explaining it, and its significance, so clearly.
2. Ditto what both you and Blaise said about Marshall’s motivations. He clearly was opportunistic in a strategic sense–he had goals, a) securing the stability of the union by strengthening its centripetal force and b) ensuring the co-equal status of the Court with Congress and the Executive, and he astutely recognized and used the opportunities that arose.
3. Of course all title to land derives from government. But that says nothing about the natural right to property! /obligatory libertarian rant (by a libertarian who is positively Benthamic on the subject of natural rights).
Thanks so much for explaining this case in laymen’s terms that a non-attorney can understand.
Question: After Marshall’s decision, was John Peck allowed to keep the property he had purchased or was he awarded money instead? Is there a publication that gives info about the total number of acres which John Peck owned? Have you run across anything about what Peck did after the decision?
I’m asking because I’m a direct descendant of this particular “corrupt bastard who won.”
You may be interested in knowing that in 1808, he named a son Alexander Hamilton Peck. Thanks so much-Barbara Peck Haigh
How fascinating to hear from a descendant of one of the litigants!
Mr. Peck, your ancestor, retained title to the land he had bought in the transactions. I presume, but do not know, that he then sold the land at a profit; he was, after all, a land speculator. Eventually the bubble on the Yazoo lands burst, as do all such things. But I don’t know if your ancestor came out ahead of the game or holding the bag.
BTW, I hope you do not infer any slight or insult to yourself when I criticize this now more-than-two-centuries-old series of transactions as corrupt. I’ve ancestors who did less than noble things myself.
Thanks for your answer. I know that John Peck left Boston for Kentucky in 1816 and that his four sons were graduates of Transylvania Uni. They settled in MS and LA., becoming successful community leaders. As an aside, John Peck received a Revolutiony War pension for joining the Navy at age 9, serving as a top mizen boy the duration of the war onboard several ships.
Can you tell me if there exists info about the total acreage that he purchased?
No offense taken. I’m just fascinated by learning what my ancestors did and experienced.
Thanks again. Barbara Peck Haigh