Grant as Contract

The case of Fletcher v. Peck, 6 Cranch 135 affirmed title issued to a private individual by the State of Georgia, disposed of to others and then rescinded by a subsequent legislature as fraudulently issued. Chief Justice Marshall stated:

"A contract is a compact between two or more parties, and is either executory or executed. An executory contract is one in which a party binds himself to do, or not to do, a particular thing; such was the law under which the conveyance was made by the governor. A contract executed is one in which the object of contract is performed; and this, says Blackstone, differs in nothing from a grant. The contract between Georgia and the purchasers was executed by the grant. A contract executed, as well as one which is executory, contains obligations binding on the parties. A grant, in its own nature, amounts to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A party is, therefore, always estopped by his own grant.

"Since, then, in fact, a grant is a contract executed, the obligation of which still continues, and since the constitution uses the general term contract, without distinguishing between those which are executory and those which are executed, it must be construed to comprehend the latter as well as the former. A law annulling conveyances between individuals, and declaring that the grantors should stand seised of their former estates, notwithstanding those grants, would be as repugnant to the constitution as a law discharging the vendors of property from the obligation of executing their contracts by conveyances...."

"Whatever respect might have been felt for the state sovereignties, it is not to be disguised that the framers of the constitution viewed, with some apprehension, the violent acts which might grow out of the feelings of the moment; and that the people of the United States, in adopting that instrument, have manifested a determination to shield themselves and their property from the effects of those sudden and strong passions to which men are exposed. The restrictions on the legislative power of the states are obviously founded in this sentiment; and the constitution of the United States contains what may be deemed a bill of rights for the people of each state....

"The state legislatures can pass no ex post facto law. An ex post facto law is one which renders an act punishable in a manner in which it was not punishable when it was committed. Such a law may inflict penalties on the person, or may inflict pecuniary penalties which swell the public treasury. The legislature is then prohibited from passing a law by which a man's estate, or any part of it, shall be seized for a crime which was not declared, by some previous law, to render him liable to that punishment. Why, then, should violence be done to the natural meaning of words for the purpose of leaving to the legislature the power of seizing, for public use, the estate of an individual in the form of a law annulling the title by which he holds that estate? The court can perceive no sufficient grounds for making this distinction. This rescinding act would have the effect of an ex post facto law....

"It is, then, the unanimous opinion of the court, that, in this case, the estate having passed into the hands of a purchaser for a valuable consideration, without notice, the state of Georgia was restrained, either by general principles which are common to our free institutions, or by the particular provisions of the constitution of the United States, from passing a law whereby the estate of the plaintiff in the premises so purchased could be constitutionally and legally impaired and rendered null and void."

In another early case, Proprietors of Charles River Bridge v. Proprietors, 36 US 420 (1837,) Justice McClean spoke to the issue of exertion of legislative acts of ownership, such as disposal, over land that had already been granted:

"When land is granted, the state can exercise no acts of ownership over it, unless it be taken for public use; and the same rule applies to a grant for a bridge, a turnpike-road, or any other public improvement.

"... An executed contract is the evidence of a thing done; and it would seem, does not necessarily impose any duty or obligation on either party to do any act or thing. If a state convey land which it had previously granted, the second grant is void; not, it would seem to me, because the second grant impairs the obligation of the first, for, in fact, it does not impair it; but because, having no interest in the thing granted, the state could convey none. The second grant would be void in this country, on the same ground that it would be void in England, if made by the king. This is a principle of the common law; and is as immutable as the basis of justice....

In the same case, Justices Wilde and Morton concurred, stating:

"....The principle is admitted, that the grantor can do nothing that shall destroy his deed; and this rule applies as well to the state as to an individual."

Justice Baldwin, in his dissenting opinion in the same case, was in agreement on this general point:

"...'No man shall be taken,' 'no man shall be disseised,' without due process of law, is a principle taken from magna charta, infused into all our state constitutions, and is made inviolable by the federal government, by the amendments to the constitution.

"No new principle was adopted, in prohibiting the passage of a law by a state, which should impair the obligation of a contract; it was merely affirming a fundamental principle of law, and by putting contracts under the protection of the constitution, securing the rights and property of the citizens from invasion by any power whatever. It was a part of that system of civil liberty which 'formed the basis whereon our republics, their laws and constitutions, are erected, and declared, by the ordinance of 1787, to be a fundamental law of all new states.' This was the language of the congress, 'And in the just preservation of rights and property, it is understood and declared, that no law ought ever to be made, or have force in the said territory, that shall in any manner interfere with, or affect, private contracts, or any agreements, bona fide and without fraud, previously formed.' (1 U. S. Stat. 52.) This ordinance was passed during the session of the convention which framed the constitution, several of the members of which were also members of congress; it was, therefore, evidently in their view, and may justly be taken as a declaration of the reasons for inserting this prohibitory clause. As an important contemporaneous historical fact, it also shows, that the convention intended to make the prohibition more definite, less extensive in one respect, and more so in another, than in the ordinance. Omitting the words 'in any manner interfere with or affect,' the words 'impair the obligation of,' were substituted; the word private was omitted, so as to extend the prohibition to all 'contracts,' public or private: as 'the constitution unavoidably deals in general terms' (1 Wheat. 326), marks only great outlines, and designates its general objects (4 Ibid. 407), no detail was made, no definition of a contract given, or exception made...

"Such were the principles of our ancestors, in both revolutions; they are consecrated in the constitution framed by the fathers of our government, in terms intended to protect the rights and property of the people, by prohibiting to every state the passage of any law which would be obnoxious to such imputations on the character of American legislation. The reason for this provision was, that the transcendent power of parliament devolved on the several states by the revolution (4 Wheat. 651), so that there was no power by which a state could be prevented from revoking all public grants of property or franchise, as parliament could do. Harg. L. Tr. 60-61; 4 Wheat. 643, 651. The people of the states renounced this power; and as an assurance that that they would not exercise it; or if they should do so inadvertently, that any law to that effect should be void; the constitution embraces all grants, charters and other contracts affecting property, places them beyond all legislative control, and imposes on this court the duty of protecting them from legislative violation. 6 Cranch 136; 4 Wheat. 625. In the same sovereign capacity in which the people of each state adopted the constitution, they pledged their faith that the sanctity of the obligation of contracts should be inviolable; and to insure its performance, created a competent judicial power, whom they made the final arbiter between their laws and the constitution, in all cases in which there was an alleged collision between them. These principles have been too often, and too solemnly, affirmed by this court, to make any detail of their reasoning or opinions necessary..."