Ogden V. Saunders - Ruling

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. 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.