Chief Justice John Marshall issued several of the most important Supreme Court decisions during his tenure from 1801-1835. His 1810 decision in the Fletcher v. Peck case is among those with the greatest historical significance.
Fletcher v. Peck centered around the Contract Clause of the Constitution (Article I Section 10 Clause I).
In his decision Marshall issued a broad interpretation of the Contract Clause, arguing that it also applied to state laws involving contracts, not just to private transactions.
As a result of the monumental decision, the Supreme Court struck down a 1796 Georgia law central to the case. Fletcher v. Peck was the first time in United States history that the federal government (Supreme Court) ruled a state law unconstitutional.
In the case Marshall issued the second major constitutional law pronouncement seven years after the significant Marbury v. Madison case.1
Both are considered to be landmark cases due to the establishment of constitutional precedents that could be applied in future cases.
Fletcher v. Peck would go on to have significant impacts on American society including its protection of private property rights and its aid in furthering economic development.
Fletcher v. Peck Background
The background of Fletcher v. Peck centers around a Georgia law called the Yazoo Land Act of 1795.
In the law the state of Georgia sold nearly 35 million acres of land in modern day Mississippi and Alabama to private speculators at incredibly cheap prices.
The land was named after the Yazoo nation that lived along the Mississippi River and occupied a portion. The Creek Nation also occupied significant portions of the “Yazoo land.”
In order to help pay for the land, the private speculators immediately sold off much of the land to other individuals and speculators creating a massive web of land contracts.
It was soon discovered that all but one of the state legislators had been bribed to sell the land at an incredibly discounted price. The entire affair became known as the Yazoo land scandal.
Voters swiftly replaced the disgraced legislators in the next election cycle. The new legislature promptly repealed the law in 1796 and voided all of the land sales that resulted due to the prior act.
In 1800 a speculator named John Peck went on to purchase some land that was originally part of the Yazoo Land Act of 1795.
Peck later sold this land to one of his business associates, Robert Fletcher. Fletcher proceeded to sue Peck in 1803 on the grounds that Peck did not legally own title to the land based on the 1796 Georgia law repeal repealing the 1795 land act.
The two speculators almost certainly colluded to bring this case to the Supreme Court.1
Peck and Fletcher were not inherently concerned about the proper title to the land. Instead, they hoped for the courts to rule in Peck’s favor.
This would simultaneously establish the validity of the original land titles under the 1795 Yazoo Land Act, as well as put pressure on the federal government to administer the Yazoo territory and compensate those who had bought land resulting from the original sale.
As speculators, Peck and Fletcher stood to gain in both scenarios.
Summary of Fletcher v. Peck
A brief summary of Fletcher v. Peck highlights that Chief Justice John Marshall ruled in favor of John Peck. In the process, Marshall ruled a Georgia state law unconstitutional for the first time in US history.
Future Supreme Court Justice Joseph Story and future President John Quincy Adams notably represented the defendant (Peck).
The highly influential, though controversial, lawyer Luther Martin represented the plaintiff (Fletcher). Martin was a prolific drinker and allegedly showed up so drunk to the arguments that Chief Justice Marshall adjourned the court until he was sober enough to continue.2
In 1810 the Supreme Court unanimously ruled in favor of Peck with John Marshall issuing the majority opinion.
Marshall summed up the ruling in the following:
“When a law is in the nature of a contract, when absolute rights have vested under that contract, a repeal of the law cannot divest those rights. A party to a contract cannot pronounce its own deed invalid, although that party be a sovereign State. A grant is a contract executed.”
Marshall noted that despite the “impure motives” behind the 1795 Yazoo Land Act, the repeal and voiding of the original land contracts would jeopardize the rights of innocent third parties that went on to purchase that land.
As the state was party to a “binding contract” in its sale of Yazoo lands, it was subject to Article I Section 10 Clause I of the Constitution, also known as the Contract Clause.
The Supreme Court thus ruled that Peck indeed did have title to the land he sold Fletcher and ruled in his favor.
In effect, Marshall struck down the 1796 Georgia law repealing the original 1795 Yazoo land contracts. It was the first time the Supreme Court ruled a state law to be unconstitutional.
The Significance of Fletcher v. Peck
The historical significance of Fletcher v. Peck comes from its landmark ruling that a state law was unconstitutional for the first time, its protection towards private property rights, and its use as a barrier to state economic regulation of businesses.
Fletcher v. Peck firmly established the Constitution’s Contract Clause as a method to counteract a state’s attempt to void contractual obligations.
It also significantly ruled that the state could be considered a party liable under the Contract Clause, not just to be reserved between private parties.3
Ruled a State Law Unconstitutional
The Supreme Court’s ruling in Fletcher v. Peck was historic as the first time it ruled a state law unconstitutional.
Marshall’s court had already demonstrably established the doctrine of judicial review during the important Marbury v. Madison case in 1803.
In the process it also struck down a federal law for the first time in history, declaring a section of the Judiciary Act of 1789 to be unconstitutional.
The progression of utilizing judicial review to determine the constitutionality of state laws was only natural. The first prime opportunity to do so came in the case of Fletcher v. Peck.
As important as Marshall ruling was, it is also important to note what Marshall avoided in the majority opinion.
Marshall explicitly avoided discussing whether Georgia rightfully owned title to the Yazoo land in the first place. If Georgia never formally owned the land as it was considered native land, then the original act would not have been valid in the first place.
The use of the Contract Clause to defend private private property also featured significantly in the decision.
Further Protection to Private Property Rights
One of the biggest benefactors of the Fletcher v. Peck decision was the reinforced protection of private property rights.
Marshall in part justified his decision to rule in favor of Peck by considering the alternative scenario.
Had the court allowed the 1796 repeal law to remain, states at any time would have the freedom to revoke private property rights by retroactively canceling contracts they no longer wished to honor.
Furthermore, all property transactions would therein become exponentially riskier as it would be difficult to ensure no fraud had ever occurred in the past title transfers.
Marshall in effect was arguing for a constitutional limitation on the states’ ability to cancel contracts or take property from private parties.4
In Marshall’s view and the view of the Federalists of the time, public property and public interests do not come before the interests of private property.5
This view can be summed up by this quote from the English jurist and politician William Blackstone:
“So great moreover is the regard of the law for private property, that it will not authorize the least violation of it; no, not even for the general good of the whole community.”
While Fletcher v. Peck certainly reinforced private property protections, future courts cases would limit the implications.
In 1824 the important Gibbons v. Ogden decision supported the limitations of private property protection. In this case, the monopolistic interests of a New York steamship business gave way to the public right of free steam navigation on the Hudson.5
Barrier to State Economic Regulation of Businesses
The significance of Fletcher v. Peck is that it also helped to serve as a barrier to the state economic regulation of businesses.
Marshall and the Federalists envisioned the United States becoming an economic power of its own. In order to become this way, businesses needed favorable laws to protect investment and encourage economic development.
Economic development would surely be discouraged if business owners were concerned that their contracts could be repealed or their property subsumed by the government.
Furthermore, foreign investment was critical to help grow the American economy. These investments were liable to disappear should the free market be spurned in favor of the public ability to over-regulate markets.
In this light it can be interpreted the the Supreme Court’s decision in Fletcher v. Peck helped protect investment, decreased risk in the American economy, and encouraged economic development.
This was a massive win for leaders who wished to see the American economy develop and expand such as Henry Clay’s American System.
The judiciary continued to rely upon Marshall’s interpretation of the Contract Clause to protect businesses over the next century.
In fact, in the late 1800s the Contract Clause was utilized more often that any other constitutional clause to overturn state legislation.4
As with private property protections the courts eventually established limits to the Fletcher v. Peck interpretation.
In the 1837 Charles River Bridge v. Warren Bridge case, new Chief Justice Roger Taney established the concept of “police power” where public interests were better served and private interests were not always the primary beneficiary.5
Conclusion
To recap, the significance of Fletcher v. Peck consisted of the following:
- Ruled a state law unconstitutional for the first time
- Provided further protection to private property rights
- Served as a barrier to state economic regulation of businesses
Historians today still discuss its impact on shaping the early United States.
With a focus on business and economic development, the continually labor-starved United States further encouraged immigration into the country.
Policy followed suit with tariff law taking center stage over the next several decades as evidenced by the Tariff of 1816 and significant 1828 Tariff of Abominations.
The landmark decision also further highlighted the social division within the United States. Northerners fully embraced the favorable business conditions and utilized the free market to develop a significant manufacturing presence over the next several decades.
Meanwhile southerners failed to embrace the business applications fully, instead leaning on the private property protections. Southerners leaned into their agrarian, slave-centered economy and relied upon the private property protections in their justification for slavery.
Ultimately Fletcher v. Peck had a significant impact upon American society and has rightfully earned its declaration as a landmark decision.
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To learn more about US history, check out this timeline of the history of the United States.
Sources
1) HOBSON, CHARLES F. The Great Yazoo Lands Sale: The Case of Fletcher v. Peck. University Press of Kansas, 2016. JSTOR, http://www.jstor.org/stable/j.ctt1gn69zz
2) Reynolds, William L., “Luther Martin, Maryland and the Constitution” (1988). Faculty Scholarship. 577. https://digitalcommons.law.umaryland.edu/fac_pubs/577
3) T. A. D., III. “Revival of the Contract Clause: Allied Structural Steel Co. v. Spannaus and United States Trust Co. v. New Jersey.” Virginia Law Review, vol. 65, no. 2, 1979, pp. 377–402. JSTOR, https://doi.org/10.2307/1072532.
4) Zigler, Michael L. “Takings Law and the Contract Clause: A Takings Law Approach to Legislative Modifications of Public Contracts.” Stanford Law Review, vol. 36, no. 6, 1984, pp. 1447–84. JSTOR, https://doi.org/10.2307/1228674.
5) Mendelson, Wallace. “New Light on Fletcher v. Peck and Gibbons v. Ogden.” The Yale Law Journal, vol. 58, no. 4, 1949, pp. 567–73. JSTOR, https://doi.org/10.2307/793082.
