Fletcher v. Peck (Great Events from History: North American Series)
Article abstract: The U.S. Supreme Court expands the idea of the sanctity of contracts as expressed in the Constitution.
Summary of Event
While it is axiomatic that many of the cases from which great constitutional principles are derived have sordid backgrounds, few if any have emerged from such comic-opera corruption as Fletcher v. Peck. On January 7, 1795, the Georgia legislature passed a bill permitting the sale of some thirty-five million acres of fertile, well-watered land for five hundred thousand dollars, payable over a five-year period. The purchasers were four land companies that had been formed to speculate in Western lands. The fact that the state of Georgia did not have clear title to the lands apparently did not bother the legislature because, with one exception, every member of the legislature had been bribed. Nor did the problem of the title appear to inhibit Georgia’s governor, who signed the legislation into law. To be sure, the action was not without some benefits to the state. It needed the money, and the problem of wresting the title to the land from the Native American tribes through action by the federal government now became the concern of the speculators. The state had sold a slightly smaller tract to other speculators six years earlier with the same clouded title and on inferior terms, and the electorate of the state had not been disturbed. In the interval, however, Eli Whitney had...
(The entire section is 1852 words.)
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Fletcher v. Peck (West's Encyclopedia of American Law)
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...
(The entire section is 767 words.)
Fletcher v. Peck (Great American Court Cases)
Legal Citation: 10 U.S. 87 (1810)
Peck had purchased some land from the state of Georgia, which he later sold to Fletcher. Subsequently, the Georgia state legislature rescinded the original sale to Peck. Fletcher's claim was that he had bought the land in good faith and that Peck was guilty of breach of contract.
Chief Lawyers for Appellant
Chief Lawyer for Appellee
John Quincy Adams, Robert Goodloe Harper, Joseph Story
Justices for the Court
Samuel Chase, William Cushing, William Johnson, Henry Brockholst Livingston, John Marshall (writing for the Court), Thomas Todd, Bushrod Washington
Date of Decision
16 March 1810
That a legislature could repeal or modify the acts of a preceding legislature, but it could not invalidate a previously made contract.
This was the first time a state law was found invalid because it conflicted...
(The entire section is 1550 words.)
Fletcher v. Peck (Supreme Court Drama)
Appellant: Robert Fletcher
Appellee: John Peck
Appellant's Claim: That a 1796 act passed by the Georgia legislature could not take away property rights gained by land companies under the Yazoo Land Act of 1795.
Chief Lawyer for Appellant: Luther Martin
Chief Lawyers for Appellee: John Quincy Adams, Robert G. Harper, Joseph Story
Justices for the Court: Samuel Chase, William Cushing, William Johnson, Henry B. Livingston, Chief Justice John Marshall, Thomas Todd, Bushrod Washington
Justices Dissenting: None
Date of Decision: March 16, 1810
Decision: Ruled in favor of Fletcher by finding that a legislature could repeal or amend its previous acts, but could not undo actions that legally occurred under the previous act.
Significance: The ruling marked the first time that a state law had been overturned by the U.S. Supreme Court. The case was also the first affirming the Contract Clause of the U.S. Constitution. The solid legal standing of state land grants established by the Supreme Court reassured the public about purchasing lands as they became available as the United States expanded westward.
North America had long been settled by Native Americans before arrival of the first European colonists on the East Coast in the sixteenth century. Through conquest and agreements, the colonies increasingly assumed control of Indian lands. As part of this westward push, the state of Georgia took from the Indians a large thirty-five million acre region to its west in the Yazoo River area. Known as the Yazoo Lands, much later it became the states of Alabama and Mississippi. But in 1795 the Georgia legislature divided the area into four tracts and sold them to four land companies for a modest total price of only $500,000, or only one-and-a-half cents an acre. This was a good deal for the companies even at 1790s prices. The Georgia legislature overwhelmingly approved this land grant (a transfer of property to another), known as the Yazoo Land Act of 1795. Only one legislator voted against it. The four land companies then began dividing their lands into smaller tracts to sell at considerably higher prices for a substantial profit.
Public outrage erupted when stories of secret deals and partnerships soon came to light. Some of the legislators had been stockholders of the four land companies. In addition, almost every state legislator, two U.S. senators, and a number of judges including Supreme Court Justice James Wilson, had received bribes from the companies including a promised share of the expected large profits. A copy of the act was publicly burned and evidence of the law was erased from public records. The public ousted the corrupt legislature and voted in a new one.
Responding to the public outrage over the fraud and corruption, the new legislature passed a bill in 1796 canceling all property rights gained from the original sale and seeking to regain the lands. Refunds at the original purchase price were offered, but the new owners refused to return the land.
Meanwhile, parcels of the land were being sold and resold to others not involved in the scandal. Questions about the legality of the sales continued to grow. Because of the 1796 act, did the new owners hold legal rights to the lands they had purchased? Because many of the new owners lived far from Georgia in New England, it became a national issue and subject of debates in Congress.
John Peck's Property
One piece of the property of about 15,000 acres passed through several hands in the late 1790s until John Peck of Massachusetts acquired it in 1800. Three years later Peck sold the property for $3,000 to Robert Fletcher, a citizen of New Hampshire. With the 1796 act in mind, Peck wrote in the sales contract that all previous sales were legal. The contract read,
[T]he title to the premises [lands] as conveyed [sold] by the state of Georgia, and finally vested in [owned by] . . . Peck, has been in no way constitutionally or legally impaired [limited] by virtue of any subsequent [later] act of any subsequent legislature of the . . . state of Georgia.
This section meant that despite the 1796 act, Peck still claimed a legal right to sell the land to Fletcher.
Fletcher became increasingly uncomfortable with the sale. Fearing losing both the land and his money, he filed suit in Circuit Court against Peck to challenge the 1796 act. Fletcher claimed that either the contract was not valid or the 1796 act canceling the original sale of the Yazoo tract was unconstitutional. If the act was constitutional, then it was not Peck's land to sell.
Arguments focused on a major issue of which principle should take priority: the state legislature's and public's desire to reverse the land deal, or protection of individual property rights. The Circuit Court ruled in favor of Peck that the sale was valid. Fletcher appealed the decision to the U.S. Supreme Court. The arguments were presented to the Court on February 15, 1810. One of Peck's lawyers was thirty-year-old Massachusetts attorney Joseph Story who, two years later, would become the youngest nominee in the Supreme Court's history.
Recognition of Contracts
The legendary Chief Justice John Marshall (1755835), writing for the Court on March 16, stated that the main question was if the 1796 law could negate all property rights established under the 1795 act. Marshall, although deploring the extensive corruption in the earlier state legislature, wrote that contracts signed under the original law must be accepted as valid. Motives of the legislators could not be formally considered by the Court and certainly were not the responsibility of those buyers who were following the law. Regarding the effect of the 1796 act on the 1795 act, Marshall first accepted the general principle that "one legislature is competent to repeal any act which a former legislature was competent to pass." However, it was clearly a different matter about a legislature undoing actions of people taken under the previous act while it was valid.
Importantly, Marshall considered the original land grant a type of contract. Therefore, the U.S. Constitution's Contract Clause found in Article I, section 10 applied. The section reads, "No State shall . . . pass any . . . ex post facto law [see sidebar], or Law impairing the Obligation [responsibility] of Contracts . . . " This clause, according to Marshall, applied to all parties, including states and individuals.
The right to land ownership created by a contract cannot be so readily taken away. The government could not seize property honestly acquired without just compensation (fair payment) for the loss of property. The intent of the Contract Clause, wrote Marshall, was to restrict state power over the property of its citizens. The 1796 law was an unconstitutional ex post facto law for penalizing one person "for a crime not committed by himself, but by those from whom he purchases." In spite of the profits dishonestly made by the land speculators, states could not negate the later contracts of sale. Political corruption charges were more a matter for the state government, not the Supreme Court.
A Historic Ruling
Peckham, coming out of one of the biggest scandals in Georgia history, was historically important for at least five reasons. First, it was the first Supreme Court ruling to strike down a state law. Secondly, the ruling established a protective attitude to commercial interests (businesses) by the courts. Thirdly, the Court recognized the Contract Clause as a key tool to limit state regulation of economic matters involving contracts and property rights. Federal protection of property rights, often using the Contract Clause, led to overturning numerous state laws through the next century. Fourth, the importance of contracts in American life was established. Lastly, the ruling also established that grants, such as state land grants, are the same under the law as contracts between private individuals.
The decision was considered a major defeat to those advocating stronger state power. The concept of contracts and their importance to property rights was further developed almost a decade later in Trustees of Dartmouth College v. Woodward (1819). With the public assured of federal protection of individual property rights and contracts including state land grants, large scale economic development across the nation proceeded as the nation spread across the West for the next half century.
A broader view of the liberty to contract came later in the nineteenth century in other Court decisions which further limited state regulation of economic matters. Use of the contract clause and other constitutional clauses to limit state regulation ended by the 1930s. By 2000, federal and state regulation of contracts was rarely limited by the courts.
Suggestions for further reading
Coleman, Kennth, ed. A History of Georgia. Second Edition. Athens: University of Georgia Press, 1991.
Magrath, Peter C. Yazoo: Law and Politics in the New Republic, the Case of Fletcher v. Peck. Providence, RI: Brown University, 1966.
Merk, Frederick. Manifest Destiny and Mission in American History: A Reinterpretation.Cambridge, MS: Harvard University Press, 1995.