Fletcher v

Fletcher v. Peck, 6 Cranch 87 (1810). The Supreme Court, in an opinion delivered by Chief Justice John Marshall, used the contract clause of the Constitution (Article I, Section 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). Georgia sold much of this land during the 1780s and early 1790s (despite the claim to the region of its Native American inhabitants) to speculators, the largest sale coming in 1795 after bribes were paid to the state legislature. After the sale, Jeffersonian Republicans gained power, using the fraudulent land sales as a campaign issue against the Federalists, and the state assembly repealed the sale act.

John Peck, of Massachusetts, bought land that Georgia had previously sold under the 1795 act; Peck then sold it to Robert Fletcher, of New Hampshire, and in 1803 Fletcher brought a collusive suit against Peck in federal court, claiming that Peck did not have clear title to the land he sold to him. Their hope was to use the suit to establish the legitimacy of titles under the 1795 act, and to use a court ruling to get compensation from the federal government for their land. In 1807, the federal Circuit Court upheld Peck's position, and Fletcher appealed to the U.S. Supreme Court.

Marshall ruled in favor of Peck. He held first that the Supreme Court was powerless to investigate the motives of the Georgia legislature in making the 1795 sale, and in so doing further clarified the distinction between political questions, left to other branches of government and judicial questions, that the Court might properly decide. Marshall then upheld Peck's claims and voided the Georgia repeal act on two grounds, natural law and the contract clause. Even in the absence of specific constitutional protection, the very nature of government and society, Marshall contended, kept a legislature from seizing property without compensation. The state repeal act, however, also impaired a contract obligation between the state and the original purchasers in violation of Article I, Section 10 of the United State Constitution.

Marshall ruled to protect and stimulate private economic initiative. If, he argued, fraud between two parties in the transfer of property could adversely affect the rights of subsequent buyers and sellers of that property, then "[a]ll titles would be insecure, and the intercourse between man and man would be seriously obstructed...." More generally, his opinion gave the federal courts a role, under the contract clause, in reviewing state legislative regulation of private contract and property rights. The contract clause would continue to be used by the Supreme Court throughout the nineteenth century to limit state regulatory power, and after the Civil War, the Court often invoked the Clause, and cited Fletcher v. Peck, to protect corporations from state laws and to block state reform efforts.