Ogden v. Saunders

Ogden v. Saunders, 25 U. S. 213 (1827), was a United States Supreme Court case that determined the scope of a bankruptcy law in relation to a clause of the Constitution of the United States. It is notable for its era in producing multiple opinions from the justices. Justice William Johnson delivered the majority opinion. Chief Justice John Marshall, Justice Gabriel Duvall, and Justice Joseph Story concurred in part and dissented in part to the Court's judgment, while Justices Bushrod Washington, Smith Thompson, and Robert Trimble dissented.

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. The case was initially argued in 1824, and then again in 1827.

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 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.