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Fletcher v. Peck

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Facts: In 1795, prompted by bribes, the Georgia legislature conveyed 35 million acres of state land to certain private companies for only 1 1/2 cents per acre. Several private investors, including Fletcher, bought parcels of the land. The next year, the legislature rescinded the conveyance. Fletcher brought suit on a warranty of title, challenging the rescission.

Issue: May a state legislature forfeit the rights of bona fide purchasers of land when the seller of that land acquired title by illegal activity?

Holding: No.

Notes:

  • The original grantee had full possession of the legal estate when he sold to Fletcher. Fletcher had no notice of the underlying fraud and did not participate in it. A conveyance obtained by fraud may be set aside as between the parties, but the rights of third-party bona fide purchasers may not be affected. Otherwise all titles would be insecure.
  • The legislature may not disregard these principles of property law. Otherwise it could divest the estate of any man for whatever reason it would deem sufficient. Even if one legislature may repeal a law passed by a former legislature, it may not undo an act done under that law.
  • The original grant in this case falls within the scope of the Contract Clause-Art. 1, §10. States are not excluded from the operation of that clause. The rescission is in the nature of an ex post facto law, or bill of attainder, both prohibited by the Constitution. The same result may not be obtained by simply annulling the original grant. Thus, the law is invalid either under the general principles that are common to our free institution or by the specific provisions of the Constitution.
  • Concurrence: (Johnson) The scope of the Contract Clause is unclear because the term "obligation of contracts" is not easily defined. States regularly legislate in this area, prescribing how contracts may be authenticated, when they may be enforced, etc. But a state certainly may not revoke its own grants.