Early Constitutional Cases and Property Law

The Marshall Court and Property Rights

One of the earliest courts to make a number of decisions which determine the future direction of property law in United States was a Marshall court. In conjunction with attaining court, from 1801 John Marshall dominated the Supreme Court three decades. As a federalist, Marshall was sympathetic to property interests and business enterprise.  He believes that property ownership both preserved individual liberty and encourage productive use of resources. The contracts cause emerged as the centrepiece of the martial court jurisprudence.

Relying upon the doctrine of vested rights, Marshall fashioned clause into a powerful bulwark to property interests. It is initial step was to broaden the definition of contracts that were entitled to protection under the Constitution. In a landmark case of Fletcher against tech which was heard in 1810, Marshall held that the state was constitutionally barred from reaching its contracts. At issue was an attempt by the Georgia legislature to rescind the huge land grant given to a local Indian tribe. Marshall noted that the terms of the contract clause a general and are applicable to contracts of every description. Likewise, in New Jersey against Wilson of 1812.  The Marshall court determined that a tax exemption was contractual right and hence estate could not revoke such preferred treatment.

A far more important application of contracts cause of converting Dartmouth College against Woodward of 1819.  this case held that a corporate charter was constitutionally protected contract. As corporations grew more numerous and powerful during the 19th century, public control corporations became a major concern. The power of the state to repeal or alter the charter of incorporation suggested one avenue by which regulations might be imposed. The Dartmouth College ruling aided corporate enterprise direct in constitutional barrier against legislative infringement of existing charters. In comparing opinion however Justice Justice story suggested that state legislatures could reserve the right to modify corporate charters when they were issued.  The exercise of such a reserve power would not constitute an impairment of contract.

Application to Bankrutpcy Law

The contracts cause was also a major force in shaping debtor creditor relations. After ratification of the Constitution many states continue to practice in enacting debt relief measures. Creditors vigourously attack such laws arguing that state their relief measures represented in unconstitutional impairment of contract. The challenge to the new of bankruptcy act of 1811 came before the Supreme Court in the case of Sturges against crime shield of 1890. Marshall concluded that New York’s laws were void because it relieved debtors of the obligation to pay debts contracted before the measures were passed. States could not retroactively discharge a contractual obligations.

Economic distress in the wake of a panic in 1819, many states passed the bankruptcy laws covering only debts incurred after the date of enactment. By narrow 43 margin the Supreme Court sustained Newell’s by statute in the case of Ogden against Saunders of 1847. The justices held the law in effect when a contract was made form part of the agreement. Consequently the application of bankruptcy laws to posterior obligations did not impair any contract. The often decision marked a watershed in the history of the contracts cause interpretation. Without retreating from early decisions, the court was henceforth guided by more cautious spirit in contracts cause cases. An example of this approach is founded province bank against billings of 1830 in which Marshall declared that surrender of the states para-taxation could not be implied from the grant will of charter incorporating a bank. This ruling established principle the grants privileges to corporations must be expressly set Forth in charters.

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