The Sanctity Of Contracts
Marshall’s work was one of conservation in so far as it was concerned with interpreting the Constitution in accord with the intention which its framers had of establishing an efficient National Government. But he found a task of restoration awaiting him in that great field of Constitutional Law which defines state powers in relation to private rights.
To provide adequate safeguards for property and contracts against state legislative power was one of the most important objects of the framers, if indeed it was not the most important. Consider, for instance, a colloquy which occurred early in the Convention between Madison and Sherman of Connecticut. The latter had enumerated “the objects of Union” as follows: “First, defense against foreign danger; secondly, against internal disputes and a resort to force; thirdly, treaties with foreign nations; fourthly, regulating foreign commerce and drawing revenue from it.” To this statement Madison demurred. The objects mentioned were important, he admitted, but he “combined with them the necessity of providing more effectually for the securing of private rights and the steady dispensation of justice. Interferences with these were evils which had, more perhaps than anything else, produced this Convention.”
Marshall’s sympathy with this point of view we have already noted. ¹ Nor was Madison’s reference solely to the then recent activity of state Legislatures in behalf of the much embarrassed but politically dominant small farmer class. He had also in mind that other and more ancient practice of Legislatures of enacting so-called “special legislation,” that is, legislation altering under the standing law the rights of designated parties, and not infrequently to their serious detriment. Usually such legislation took the form of an intervention by the Legislature in private controversies pending in, or already decided by, the ordinary courts, with the result that judgments were set aside, executions canceled, new hearings granted, new rules of evidence introduced, void wills validated, valid contracts voided, forfeitures pronounced—all by legislative mandate. Since that day the courts have developed an interpretation of the principle of the separation of powers and have enunciated a theory of “due process of law,” which renders this sort of legislative abuse quite impossible; but in 1787, though the principle of the separation of powers had received verbal recognition in several of the state Constitutions, no one as yet knew precisely what the term “legislative power” signified, and at that time judicial review did not exist. ² Hence those who wished to see this nuisance of special legislation abated felt not unnaturally that the relief must come from some source external to the local governments, and they welcomed the movement for a new national Constitution as affording them their opportunity.
¹ See supra, p. 34 ff.
² On special legislation, see the writer’s Doctrine of Judicial Review (Princeton, 1914), pp. 36-37, 69-71.
The Constitution, in Article I, Section X, forbids the States to “emit bills of credit, make anything but gold and silver a legal tender in payment of debts, pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.” Until 1798, the provision generally regarded as offering the most promising weapon against special legislation was the ex post facto clause. In that year, however, in its decision in Calder vs. Bull the Court held that this clause “was not inserted to secure the citizen in his private rights of either property or contracts,” but only against certain kinds of penal legislation. The decision roused sharp criticism and the judges themselves seemed fairly to repent of it even in handing it down. Justice Chase, indeed, even went so far as to suggest, as a sort of stop-gap to the breach they were thus creating in the Constitution, the idea that, even in the absence of written constitutional restrictions, the Social Compact as well as “the principles of our free republican governments” afforded judicially enforcible limitations upon legislative power in favor of private rights. Then, in the years immediately following, several state courts, building upon this dictum, had definitely announced their intention of treating as void all legislation which they found unduly to disturb vested rights, especially if it was confined in its operation to specified parties. ¹
¹ In connection with this paragraph, see the writer’s article entitled The Basic Doctrine of American Constitutional Law, in the Michigan Law Review, February, 1914. Marshall once wrote Story regarding his attitude toward Section X in 1787, as follows: “The questions which were perpetually recurring in the State legislatures and which brought annually into doubt principles which I thought most sacred, which proved that everything was afloat, and that we had no safe anchorage ground, gave a high value in my estimation to that article of the Constitution which imposes restrictions on the States.” Discourse.
Such was still the situation when the case of Fletcher vs. Peck ¹ in 1810 raised before the Supreme Court the question whether the Georgia Legislature had the right to rescind a land grant made by a preceding Legislature. On any of three grounds Marshall might easily have disposed of this case before coming to the principal question. In the first place, it was palpably a moot case; that is to say, it was to the interest of the opposing parties to have the rescinding act set aside. The Court would not today take jurisdiction of such a case, but Marshall does not even suggest such a solution of the question, though Justice Johnson does in his concurring opinion. In the second place, Georgia’s own claim to the lands had been most questionable, and consequently her right to grant them to others was equally dubious; but this, too, is an issue which Marshall avoids. Finally, the grant had been procured by corrupt means, but Marshall ruled that this was not a subject the Court might enter upon; and for the ordinary run of cases in which undue influence is alleged to have induced the enactment of a law, the ruling is clearly sound. But this was no ordinary case. The fraud asserted against the grant was a matter of universal notoriety; it was, indeed, the most resounding scandal of the generation; and surely judges may assume to know what is known to all and may act upon their knowledge.
Furthermore, when one turns to the part of Marshall’s opinion which deals with the constitutional issue, one finds not a little evidence of personal predilection on the part of the Chief Justice. He starts out by declaring the rescinding act void as a violation of vested rights, of the underlying principles of society and government, and of the doctrine of the separation of powers. Then he apparently realizes that a decision based on such grounds must be far less secure and much less generally available than one based on the words of the Constitution; whereupon he brings forward the obligation of contracts clause. At once, however, he is confronted with the difficulty that the obligation of a contract is the obligation of a contract still to be fulfilled, and that a grant is an executed contract over and done with—functus officio. This difficulty he meets by asserting that every grant is attended by an implied contract on the part of the grantor not to reassert his right to the thing granted. This, of course, is a palpable fiction on Marshall’s part, though certainly not an unreasonable one. For undoubtedly when a grant is made without stipulation to the contrary, both parties assume that it will be permanent.