Ogden v. Saunders

Ogden v. Saunders

Argued January 18, 1827
Decided February 19, 1827
Full case name Ogden, Plaintiff in Error v. Saunders, Defendant in Error
Citations

25 U.S. 213 (more)

6 L. Ed. 606; 1827 U.S. LEXIS 394; 12 Wheat. 213
Prior history Court rules for Ogden; brought before Supreme Court on writ of error
Holding
New York law on bankruptcy did not violate the Obligation of Contracts Clause of the United States Constitution.
Court membership
Chief Justice
John Marshall
Case opinions
Majority Washington, joined by Johnson, Thompson, Trimble
Dissent Marshall, joined by Duvall, Story
Laws applied
Obligation of Contracts Clause

Ogden v. Saunders, 25 U.S. 213 (1827), was a United States Supreme Court case that determined the scope of a bankruptcy law in contrast to a clause of the Constitution of the United States. It was the only Constitutional decision from which Chief Justice John Marshall dissented during his tenure on the court.[1]

Parties

Saunders was a citizen of Kentucky demanding payment in accordance with a contract. Ogden was a citizen of Louisiana who lived in New York at the signing of the contract and claimed bankruptcy as a defense under a New York bankruptcy law passed in 1801.

Saunders was represented by Daniel Webster, among others. Webster argued to the Court that the clause of the Constitution barring states from impairing the obligations of contracts is applicable not just to past contracts, but also to future contracts. Ogden's attorneys included Henry Clay.[2] The case was initially argued in 1824, and then again in 1827.[3]

Ruling

The main issue of the case was whether or not the New York law violated the Obligation of Contracts Clause of the Constitution. It hinged on whether Congress had exclusive power to pass bankruptcy laws, which itself depended on what was meant by the clause prohibiting states from passing laws impairing the "obligations of contracts." The court's decision, authored by Justice Bushrod Washington, found that the clause prevented states from passing only laws affecting contracts already signed; laws that affected future contracts were construed to become part of the contracts themselves. Since the statute was part of the conditions of any prospective contract, the parties to the contract were presumed to have considered the law in signing the contract; the obligation, then, incorporated the possibility of bankruptcy rather than being impaired by it. The other three Justices joining the Majority were William Johnson, Smith Thompson, and Robert Trimble.[4] However, there was also a secondary issue in the case, and on that issue Justice Johnson joined the three justices whom he had opposed regarding the main issue.[5]

Dissent

Chief Justice John Marshall authored the dissenting opinion. He maintained that the Contract Clause gave the federal legislature the exclusive power over bankruptcy laws, rejecting the argument that state laws became part of contracts signed within the state thereafter. Marshall was joined in his dissent by Associate Justices Gabriel Duvall and Joseph Story. [6] Near the end of his opinion the Chief Justice recapitulates what is perhaps the central contention of his opinion: "contracts derive their obligation from the act of the parties, not from the grant of government". The Chief Justice in the course of his opinion uses the "will theory of contract". The fact that the state may define how contracts can be formed, how defaults can be remedied, and even exclude from the outset certain types of contract, usurious ones for example, does not make contract a creature of the state. The obligation of any particular contract is what the parties determine it to be. Thus, if Ogden owes Saunders a certain amount in legal tender coin, it is not within the authority of the state, under the US Constitution, to alter that obligation so that, for example, Ogden may simply hand over his property to Saunders in settlement of the debt.

This case was the only one in his long career when Marshall found himself on the losing side in a constitutional case.[1] He took this opportunity to set forth his general principles of constitutional interpretation:[7]

To say that the intention of the instrument must prevail; that this intention must be collected from its words; that its words are to be understood in that sense in which they are generally used by those for whom the instrument was intended; that its provisions are neither to be restricted into insignificance, nor extended to objects not comprehended in them, nor contemplated by its framers; — is to repeat what has been already said more at large, and is all that can be necessary.

In his Ogden dissent, Marshall also adopted a definition of the word "law" that would later be denounced by the individualist anarchist Lysander Spooner.[8][9]

See also

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References

  1. 1 2 Ariens, Michael. "John Marshall."
  2. ↑ History if the Sixth Circuit: Robert Trimble
  3. ↑ Warren, Charles. History of the Harvard Law School and of Early Legal Conditions in America, Volume I (Lewis Publishing 1908).
  4. ↑ Baxter, Maurice. Daniel Webster & the Supreme Court, p. 117 (University of Massachusetts Press 1966).
  5. ↑ Michaelsen, Scott. "Cooper's Monikins."
  6. ↑ Currie, David (1992). The Constitution in the Supreme Court: The First Hundred Years, 1789–1888. Univ. of Chicago. pp. 152–5. ISBN 978-0-226-13109-2.
  7. ↑ Marshall, joined by Associate Justices Gabriel Duvall and Joseph Story, wrote:
    When its existence as law is denied, that existence cannot be proved by showing what are the qualities of a law. Law has been defined by a writer, whose definitions especially have been the theme of almost universal panegyric, "To be a rule of civil conduct prescribed by the supreme power in a State."
    Ogden v. Saunders, 25 U.S. 213, 347 (1827).
  8. ↑ Spooner, Lysander (2008). Let's Abolish Government. Ludwig von Mises Institute. p. 87. ISBN 1-122-82097-6. This definition is an utterly false one. It denies all the natural rights of the people; and is resorted to only by usurpers and tyrants, to justify their crimes....he gives this miserable definition, which he picked up somewhere—out of the legal filth in which he wallowed....
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