Ogden v. Saunders

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12 Wheat. (25 U.S.) 213 (1827), argued 18–20 Jan. 1827, decided 19 Feb. 1827 by vote of 4 to 3; majority justices by seriatim opinions, Marshall, Story, and Duvall in dissent. In this decision, a divided Supreme Court held that a New York insolvency law did not impair the obligation of contracts entered into after enactment of the statute, a question that had been left open in Sturges v. Crowninshield (1819), which had struck down a retroactive insolvency act. The majority justices agreed that contract rights were not absolute, that commerce required some kind of bankruptcy legislation, that the bankruptcy power conferred on Congress by Article I, section 8 of the Constitution was not exclusive, and that therefore the states had concurrent powers in the area. In dissent, Chief Justice John Marshall contended that the statute violated not only the Contracts Clause but also various nontextual vested rights of individuals. Ogden v. Saunders removed the Contracts Clause as an absolute bar to state insolvency legislation, an important achievement because Congress was unable to enact permanent bankruptcy legislation until 1898. Ogden was the only case where Chief Justice Marshall dissented in an important constitutional decision. On reargument, Justice William Johnson joined the original dissenters to make a new majority for the holding that a state insolvency statute could not be applied to an out-of-state creditor who had no contract with the forum state other than the original contract.

Richard E. Ellis

Subjects: Law.

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