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

[This case arose from the Yazoo land scandal. During the 1780s, Georgia claimed a 35-million acre tract of land that encompassed much of present day Alabama and Mississippi. In 1789, Georgia sold much of this land (known as the Yazoo because of the presence of a river by that name in the area) to speculators, but the attempt to settle this land failed due in part to the presence of the people of the Cherokee, Creek, Choctaw, and Chickasaw tribes. This failure led to Chisholm v. Georgia, 2 Dall. 419 (1793), in which a pre-Marshall Supreme Court held that a South Carolina citizen could sue a state, Georgia, in federal court. This frightened the debt-ridden states, which then ratified the 11th Amendment to bar such action in February 1795. (However, the effective date of the amendment was not well understood back then, for the President did not formally declare it part of the Constitution until January 8, 1798. Later it was agreed that Presidents have no power concerning constitutional amendments.

In early 1795 (after a veto by the Governor), the Georgia legislature, all but one of whom was bribed, passed a law granting the Yazoo lands to the four Yazoo land Companies for $500,000, or one and a half cents per acre. The scandal broke, and at election time the people of Georgia cleaned house. The new legislature repealed the Act selling the land to the Yazoo Land Company in 1796. On the same day that the law was repealed, 11 million acres of the Yazoo land was sold to the New England Mississippi Land Company for $1,138,000, a 650% profit in 13 months time.

As a result of the 11th Amendment, the speculators could not sue Georgia in federal court. As a result of legislative action revoking jurisdiction, they were also barred from suing the state courts of Georgia. The only remaining option was to create what we now call a "test case." The Supreme Courtís jurisdiction extends to "cases and controversies," not to advisory opinions, and this lawsuit appeared to be collusive, as noted by Justice William Johnson in his concurrence. John Peck of Massachusetts bought land from someone who could trace his title to the state of Georgia. He then sold 15,000 acres to Robert Fletcher of New Hampshire, based on a warranty deed, warranting good title. The two were obviously citizens of different New England states, and in June 1803 Fletcher sued Peck in federal circuit court in Massachusetts on diversity grounds, alleging that the title was bad, and requesting the return of his money. The case was held over until October 1806 at the behest of the parties. Although tried before a jury, the judgment was not rendered until a year later. At the circuit court, Justice Cushing and Judge John Davis held in favor of Peck, concluding that the warranty deed was good. Fletcher appealed to the Supreme Court, which heard the case during its February 1809 Term. The Supreme Court reversed the decision of the circuit court on the ground that Peck had erred in his pleadings. The parties amended the pleas almost immediately, and the case was held over for argument during the Courtís February 1810 Term. At the Supreme Court, Peck was represented by Joseph Story and Robert Goodloe Harper, a South Carolina congressman who had been an investor in the South Carolina Mississippi Company, one of the land speculation companies involved in the scandal. In the circuit court, Peck was represented by John Quincy Adams, a Massachusetts Senator and future President. Fletcher was represented by Luther Martin, an Anti-Federalist at the time of the Constitutional Convention, but now a long-time Federalist. The political congruence of counsel suggests strongly that the dispute was feigned. On the Yazoo land fraud, see C. Peter Magrath, Yazoo (1966).]

MARSHALL, Ch. J.:

The question, whether a law be void for its repugnancy to the constitution, is, at all times, a question of much delicacy, which ought seldom, if ever, to be decided in the affirmative, in a doubtful case. The court, when impelled by duty to render such a judgment, would be unworthy of its station, could it be unmindful of the solemn obligations which that station imposes. But it is not on slight implication and vague conjecture that the legislature is to be pronounced to have transcended its powers, and its acts to be considered as void. The opposition between the constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other.

In this case the court can perceive no such opposition. In the constitution of Georgia, adopted in the year 1789, the court can perceive no restriction on the legislative power, which inhibits the passage of the act of 1795. The court cannot say that, in passing that act, the legislature has transcended its powers, and violated the constitution.

The 2d count assigns, in substance, as a breach of this covenant, that the original grantees from the state of Georgia promised and assured divers members of the legislature, then sitting in general assembly, that if the said members would assent to, and vote for, the passing of the act, and if the said bill should pass, such members should have a share of, and be interested in, all the lands purchased from the said state by virtue of such law.

That corruption should find its way into the governments of our infant republics, and contaminate the very source of legislation, or that impure motives should contribute to the passage of a law, or the formation of a legislative contract, are circumstances most deeply to be deplored. How far a court of justice would, in any case, be competent, on proceedings instituted by the state itself, to vacate a contract thus formed, and to annul rights required, under that contract, by third persons having no notice of the improper means by which it was obtained, is a question which the court would approach with much circumspection. It may well be doubted how far the validity of a law depends upon the motives of its framers, and how far the particular inducements, operating on members of the supreme sovereign power of a state, to the formation of a contract by that power, are examinable in a court of justice. If the principle be conceded, that an act of the supreme sovereign power might be declared null by a court, in consequence of the means which procured it, still would there be much difficulty in saying to what extent those means much be applied to produce this effect. Must it be direct corruption, or would interest or undue influence of any kind be sufficient? Must the vitiating cause operate on a majority, or on what number of the members? Would the act be null, whatever might be the wish of the nation, or would its obligation or nullity depend upon the public sentiment?

If the majority of the legislature be corrupted, it may well be doubted, whether it be within the province of the judiciary to control their conduct, and, if less than a majority act from impure motives, the principle by which judicial interference would be regulated, is not clearly discerned.

If the title be plainly deduced from a legislative act, which the legislature might constitutionally pass, if the act be clothed with all the requisite forms of a law, a court, sitting as a court of law, cannot sustain a suit brought by one individual against another founded on the allegation that the act is a nullity, in consequence of the impure motives which influenced certain members of the legislature which passed the law.

The third count recites the undue means practised on certain members of the legislature, as stated in the second count, and then alleges that, in consequence of these practices, and of other causes, a subsequent legislature passed an act annulling and rescinding the law under which the conveyance to the original grantees was made, declaring that conveyance void, and asserting the title of the state to the lands it contained.

The lands in controversy vested absolutely in James Gunn and others, the original grantees, by the conveyance of the governor, made in pursuance of an act of assembly to which the legislature was fully competent. Being thus in full possession of the legal estate, they, for a valuable consideration, conveyed portions of the land to those who were willing to purchase. If the original transaction was infected with fraud, these purchasers did not participate in it, and had no notice of it. They were innocent. Yet the legislature of Georgia has involved them in the fate of the first parties to the transaction, and, if the act be valid, has annihilated their rights also.

In this case the legislature may have had ample proof that the original grant was obtained by practices which can never be too much reprobated, and which would have justified its abrogation so far as respected those to whom crime was imputable. But the grant, when issued, conveyed an estate in fee-simple to the grantee, clothed with all the solemnities which law can bestow. This estate was transferrable; and those who purchased parts of it were not stained by that guilt which infected the original transaction. Their case is not distinguishable from the ordinary case of purchasers of a legal estate without knowledge of any secret fraud which might have led to the emanation of the original grant. According to the well known course of equity, their rights could not be affected by such fraud. Their situation was the same, their title was the same, with that of every other member of the community who holds land by regular conveyances from the original patentee.

The principle asserted is, that one legislature is competent to repeal any act which a former legislature was competent to pass; and that one legislature cannot abridge the powers of a succeeding legislature.

The correctness of this principle, so far as respects general legislation, can never be controverted. But, if an act be done under a law, a succeeding legislature cannot undo it. The past cannot be recalled by the most absolute power. Conveyances have been made, those conveyances have vested legal estate, and, if those estates may be seized by the sovereign authority, still, that they originally vested is a fact, and cannot cease to be a fact.

Georgia is a member of the American union; and that union has a constitution the supremacy of which all acknowledge, and which imposes limits to the legislatures of the several states, which none claim a right to pass. The constitution of the United States declares that no state shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.

Does the case now under consideration come within this prohibitory section of the constitution?

In considering this very interesting question, we immediately ask ourselves what is a contract? Is a grant a contract?

A contract is a compact between two or more parties, and is either executory or executed. The contract between Georgia and the purchasers was executed by the grant. A contract executed, as well as one which is executory, contains obligations binding on the parties. A grant, in its own nature, amounts to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A party is, therefore, always estopped by his own grant.

If, under a fair construction of the constitution, grants are comprehended under the terms contracts, is a grant from the state excluded from the operation of the provision? Is the clause to be considered as inhibiting the state from impairing the obligation of contracts between two individuals, but as excluding from that inhibition contracts made with itself?

The words themselves contain no such distinction. They are general, and are applicable to contracts of every description. If contracts made with the state are to be exempted from their operation, the exception must arise from the character of the contracting party, not from the words which are employed.

Whatever respect might have been felt for the state sovereignties, it is not to be disguised that the framers of the constitution viewed, with some apprehension, the violent acts which might grow out of the feelings of the moment; and that the people of the United States, in adopting that 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. The restrictions on the legislative power of the states are obviously founded in this sentiment; and the constitution of the United States contains what may be deemed a bill of rights for the people of each state.

It is, then, the unanimous opinion of the court, that, in this case, the estate having passed into the hands of a purchaser for a valuable consideration, without notice, the state of Georgia was restrained, either by general principles which are common to our free institutions, or by the particular provisions of the constitution of the United States, from passing a law whereby the estate of the plaintiff in the premises so purchased could be constitutionally and legally impaired and rendered null and void.

Judgment affirmed with costs.

JOHNSON, J.

In this case I entertain, on two points, an opinion different from that which has been delivered by the court.

I do not hesitate to declare that a state does not possess the power of revoking its own grants. But I do it on a general principle, on the reason and nature of things: a principle which will impose laws even on the Deity.

The security of a people against the misconduct of their rulers, must lie in the frequent recurrence to first principles, and the imposition of adequate constitutional restrictions.

I have thrown out these ideas that I may have it distinctly understood that my opinion on this point is not founded on the provision in the constitution of the United States, relative to laws impairing the obligation of contracts. It is much to be regretted that words of less equivocal signification, had not been adopted in that article of the constitution.

I have been very unwilling to proceed to the decision of this cause at all. It appears to me to bear strong evidence, upon the face of it, of being a mere feigned case. It is our duty to decide on the rights, but not on the speculations of parties. My confidence, however, in the respectable gentlemen who have been engaged for the parties, has induced me to abandon my scruples, in the belief that they would never consent to impose a mere feigned case upon this court.

Commentary on Fletcher v. Peck

As noted in the introduction, Fletcher v. Peck was part of the long and sordid history of the Yazoo land scandals. Marshall holds that the deed is warrantable, because he concludes that the 1796 Act repealing the sale of land is unconstitutional. Why? Marshall offers two independent reasons: 1) either the legislation violated natural property rights, which were vested (existing), or 2) the law violated the contract clause ("No state ... shall ... pass any Law impairing the Obligation of Contracts"óArt. I, ß 10, cl.1). If option 1) is exclusively relied upon, then Samuel Chase's idea of natural justice as stated in Calder v. Bull is reawakened. If 2), then James Iredell's positivist approach is Calder is to be dominant. Justice William Johnson, in contrast, was completely willing to use the higher law argument by itself. Additionally, Marshall refuses to inquire into the reason for the 1794 Act, stating that it was too controversial (motive inquiries of legislative action are only very rarely allowed in a few other areas of constitutional law).

The reaction in Congress to Marshall's decision was quite hostile (Congress is dominated by Jeffersonian Republicans, and Marshall and the parties in the case were reviled Federalists), but Congress appeared confused and divided about how to respond to the Courtís decision. The profits made by speculators between 1794 and 1814 were over $3.5 million dollars. In 1814, Congress passed a bill providing $5 million to settle the Yazoo claims and take title to the lands. Eventually, disappointed landowners were paid $4.2 million, a huge amount of money, but the last claims were not settled until decades later. The United States itself did well in this case, for the invention of the cotton gin by Eli Whitney in 1792 made the Yazoo land ever more valuable. (For example, the amount of cotton harvested increased by over 50 tons in a thirty year period in the early 19th century.)

In an excellent law review article recently published, Prof. Lindsay Robertson offers a fascinating history concerning the procedural limitations of Fletcher v. Peck. Prof. Robertson notes that disputes concerning title to land were resolved by an action in ejectment. One claimed a trespass vi et armis (driven out violently), that is, a fictional tenant of the plaintiff was ejected from the land violently by a fictional tenant of the defendant. Under English common law, this common law writ was triable only to a jury of the vicinage, or neighborhood (because only neighbors would know enough to determine who was the rightful owner of the land). So, if a court lacked jurisdiction over the neighbors (as was the case in which the land was in federal territory of Mississippi, and the case was filed in Massachusetts), it lacked subject matter jurisdiction over the case. An additional problem facing the Yazoo land owners was that because the land was in Mississippi Territory, an ejectment action could be tried there, but under the Judiciary Act of 1789, no appeal could be taken from a judgment of a territorial court. And Congress was under Republican control, not Federalist control, so amending the Act was highly unlikely to occur. So, the lawyers in Fletcher v. Peck turned the case from a "local" case to a transitory case. Thatís why the case was a feigned case, which is a term from English history, in which equity cases were turned into law cases because the facts were too complicated to be decided effectively based on equity law that barred viva voce testimony.

Fletcher v. Peck was decided by the Court during its February 1810 Term. The Court decided 39 cases that term, most of which were unanimous, a tribute to Marshall's persuasiveness. In fact, Marshall delivered the only dissent of the Term.