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tract and that many of the legislators who had authorized the sale had received bribes from the land speculators, it rescinded the original sale on the grounds that it had been attended by fraud and corruption.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.

further readings

Robertson, Lindsay G. 2000. "'A Mere Feigned Case': Rethinking the Fletcher v. Peck Conspiracy and Early Republican Legal Culture." Utah Law Review 2000 (spring): 249–65.

Fletcher v. Peck, 6 Cranch (10 U.S.) 87 (1810), argued 15 Feb. 1810, decided 16 March 1810 by vote of 4 to 1; Marshall for the Court, Johnson dissenting in part; Cushing and Chase not participating. In Fletcher v. Peck the Supreme Court employed the Contracts Clause of the Constitution as an instrument of judicial nationalization. In 1794, after notorious bribery involving virtually every member of the Georgia legislature, two U.S. senators, and many state and federal judges (including Justice James Wilson of the Supreme Court), the Georgia legislature authorized the sale of thirty‐five million acres in the Yazoo area (present‐day Alabama and Mississippi) to four land companies for 1.5 cents per acre. Corrupted legislators were defeated at the polls, and in 1796 the legislature rescinded the Yazoo grant, invalidating all property rights derived from it. In the meantime, however, purchasers under the 1794 statute sold off millions of acres. One of the purchasers under this later sale, Robert Fletcher, brought what amounted to a collusive suit against his seller, John Peck, for breach of warranty of title, the ultimate objective being to invalidate the legislative rescission.

Fletcher v. Peck presented Chief Justice John Marshall with a dilemma. He had to uphold the original legislative grant, corrupted by bribery, in order to reassure investors who took land under state grants, while voiding the later, untainted statute. He therefore proceeded cautiously. The only question before the Court, Marshall said, was title; to remedy political corruption, citizens should resort to the polls, not to the courts. Having sidestepped the corruption issue, Marshall deftly took up the constitutional issues. Could legislatures deprive bona fide investors of the lands they had acquired under the corrupt grant? Each buyer, said Marshall, had procured “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. All titles would be insecure, and the intercourse between man and man would be very seriously obstructed, if this principle be overturned” (pp. 133–134).

Marshall held the rescinding act an unconstitutional abridgment of the obligation of lawful contracts under the Contracts Clause. Equally important, he tied the rights protected by that clause to the natural law doctrine of vested rights: when an agreement was “in its nature a contract, when absolute rights have vested under that contract, a repeal of the law cannot divest those rights” (p. 134). He concluded that “either by principles which are common to our free institutions, or by the particular provisions of the constitution of the United States” (p. 139), a state legislature could not enact legislation that impaired contracts or disturbed land titles supposedly acquired in good faith.

Fletcher v. Peck provoked public outcry, particularly from proponents of states' rights who accused the Court of pandering to speculators and of imposing a doctrinal strait‐jacket on frontier legislatures. Marshall's opinion did in fact support land speculators and protected the titles of some unscrupulous investors as well as bona fide purchasers of western lands. But Marshall considered contractual rights and obligations essential to the American experiment in self‐rule. Thus, Fletcher's legacy was complex: it was a benchmark in Marshall's campaign to protect the law of property and contracts from legislative interference, an early statement about the need to separate politics from law, and an example of judicial receptivity to the needs of investors in an age of capital scarcity. At the same time, it reflected the Court's commitment to the security of contracts and property rights as protected under the Constitution.

Bibliography

C. Peter Magrath , Yazoo: Law and Politics in the New Republic (1966).

Sandra F. Van Burkleo

Fletcher v. Peck (1810).In an opinion delivered by Chief Justice John Marshall, the U.S. Supreme Court in Fletcher v. Peck used the contract clause of the U.S. Constitution (art. I, sec. 10) to protect individual property rights from state legislative action. The case arose from conflicting land claims to Georgia's Yazoo territory (modern Alabama and Mississippi). During the 1780s and early 1790s, Georgia sold much of this land to speculators. The largest sale, in 1795, involved the bribery of the state legislature. When Jeffersonian Republicans subsequently gained power in Georgia, the state assembly repealed the 1795 sale.

Later, John Peck of Massachusetts bought land that Georgia had sold under the 1795 act; Peck then sold it to Robert Fletcher of New Hampshire, who in 1803 sued Peck in federal court, claiming that Peck had not had clear title to the land. (This was a friendly suit; both parties wished to establish the legitimacy of land titles under the 1795 act.) In 1807, the federal Circuit Court upheld Peck's position, and Fletcher appealed to the Supreme Court.

Ruling in favor of Peck, Marshall held first that the Supreme Court was powerless to investigate the motives of the Georgia legislature in making the 1795 sale. In so doing, the Chief Justice further clarified the distinction between political questions, left to other branches of government, and judicial questions that the Court might properly decide. Marshall then voided the Georgia repeal act on two grounds, natural law and the contract clause. Even in the absence of specific constitutional protection, Marshall contended, the very nature of government and society constrained a legislature from seizing property without compensation. But in impairing a contract obligation between the state and the original purchasers, Marshall went on, Georgia's repeal act violated the contract clause of the Constitution. If fraud between two parties in the transfer of property could adversely affect the rights of subsequent buyers and sellers of that property, he argued, then “all titles would be insecure, and the intercourse between man and man would be seriously obstructed”.

Marshall's ruling served to protect and stimulate private economic initiative. More generally, his opinion gave the federal courts a role, under the contract clause, in reviewing state regulation of private contract and property rights. The contract clause continued to be used by the Supreme Court throughout the nineteenth century to limit state regulatory power. In the Gilded Age and beyond, the Court often invoked the contract clause, and cited Fletcher v. Peck, to shield corporations from state regulation and to block state reform efforts.
See also Charles River Bridge v. Warren Bridge; Dartmouth College Case; Early Republic, Era of the; Economic Regulation; Judicial Review; Laissez‐faire.

Bibliography

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

Paul G.E. Clemens

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.

BIBLIOGRAPHY

Ackerman, Bruce A. Private Property and the Constitution. New Haven, Conn.: Yale University Press, 1977.

Magrath, C. Peter. Yazoo: Law and Politics in the New Republic. Providence, R.I.: Brown University Press, 1966.

Akiba J.Covitz

Esa LianneSferra

Meredith L.Stewart

See alsoJudicial Review .

Fletcher v. Peck case decided by the U.S. Supreme Court in 1810, involving the Yazoo land fraud . The court ruled that an act of the Georgia legislature rescinding a land grant was unconstitutional because it revoked rights previously granted by contract. The decision was the first to declare a state legislative act unconstitutional.