Fletcher v. Peck

When the case made it to the Supreme Court 25 years later, the United States was torn between two competing political philosophies. One was known as federalism, which maintained that the federal government was more important than any state government and that one of the most important functions of any government was to protect the sanctity of property. The other major philosophy of the time was known as republicanism. This philosophy focused on democracy--the rights of every individual--rather than on property, and on states' rights rather than federal sovereignty.

When Fletcher v. Peck was heard by the Court, it was embodied in the crux of this controversy. The question of which aspect of the case should be given primacy became a pivotal issue: the state legislature's wish to rescind the land deal, or the property rights of the people who had bought the land.

The Supreme Court decision was a major step in establishing the sanctity of both contracts and the U.S. Constitution. In an apparently unanimous decision written by Chief Justice Marshall, the Court made three major points:

(1) The original land grant made by the Georgia state legislature was, in effect, a contract.

(2) The U.S. Constitution protects the sanctity of contracts. Indeed, Article I, Section 10, Clause 3 of the Constitution provides that "No State shall . . . pass any . . . law impairing the obligation of contracts . . . "

(3) Therefore, the state of Georgia was not legally able to rescind the contract it had entered into when it had granted the Yazoo lands to the original companies--even if bribery and corruption had gone into the making of the contract.

Thus, the Court's decision upheld the two basic tenets of federalism: the supremacy of the federal government over the state governments, and the sanctity of private property. After all, wrote Chief Justice Marshall, there must be some limit to what government could do. And, "where are [these limits] to be found, if the property of an individual, fairly and honestly acquired, may be seized without compensation?"