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Wednesday, May 20, 2020

Ogden v. Saunders as the Anti-Lochner

A centerpiece of my Bushrod Washington biography is Ogden v. Saunders, an 1827 Supreme Court case which concluded that states could enact bankruptcy laws that applied prospectively. Ogden is fascinating for many reasons, one of which being that Washington wrote the lead opinion for the majority while Chief Justice Marshall (joined by Justice Story) dissented. We also have Washington's notes on Ogden and get to see him argue with himself (more on that in another post).

Ogden raised two issues. First, was the power to enact bankruptcy laws vested exclusively in Congress by the Constitution? Second, would a state bankruptcy law violate the Contracts Clause? [Set aside the first issue for now.] Washington reasoned that a prospective state bankruptcy law did not violate the Contracts Clause because state law was the backdrop against which contracts were made. He rejected the idea that natural law (or what he called the moral obligation to honor a promise) was the benchmark. He then ran through a series of examples of state laws that regulated contracts and pointed out that many of them would be invalid under Marshall's dissenting view (though Marshall denied that this was the case).

In a sense, Washington's opinion was the forerunner of Holmes' dissents in the liberty of contract cases. Holmes also like to point out that state laws regulated contracts in all sorts of ways that made the notion of a fundamental right on that subject difficult to understand. Indeed, there are some similarities between what Holmes said and Washington's Ogden opinion that I wonder if there was some unconscious copying going on--Holmes did not cite Ogden--but it's also possible that they reached the same conclusion independently.

One last point for this post--Bushrod was very much a legal positivist. He showed virtually no interest in natural law, except for one circuit opinion in which he threw in some dicta on the subject moving deciding the case on other grounds. This was good in cases such as Ogden or Golden v. Prince, in which he rejected what later became Justice Story's theory of federal common law in Swift v. Tyson. But this was not so good for slavery, which could be upheld only on a positive law basis.

More on Ogden tomorrow.  

Posted by Gerard Magliocca on May 20, 2020 at 08:29 AM | Permalink

Comments

Very interesting rulings. Just worth to note, reasoning ( impairment of contracts) in connection with public policy indeed ( as suggested in one of your previous posts recently). I quote from " Odgen":

" A contract is not merely that which the parties expressly stipulate. It is that also which the existing laws of the country where the contract is made annex as conditions to it at the time when it is formed. It had been admitted, that a State might prohibit contracts altogether. If so, it may permit them, sub modo, with such conditions as it thinks fit to annex; and the parties who make a contract in that State, make it subject to the conditions. These conditions enter into the contract, and form a part of it as completely as if they had been expressly stipulated by the parties themselves. These conditions are sometimes beneficial to one party, sometimes to the other: sometimes they add to the contract, sometimes they diminish it. But in every instance they receive the tacit assent of the parties, and are not considered as impairing the obligation of the contract."

Here to the ruling:

https://tile.loc.gov/storage-services/service/ll/usrep/usrep025/usrep025213/usrep025213.pdf

Thanks

Posted by: El roam | May 20, 2020 10:33:34 AM

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