Cases Involving State Sovereignty and Suits against States

Georgia v. Brailsford, 1792 and 1794, the first Supreme Court case in which a state appeared as a party, raised the questions of state sovereignty and the supremacy of treaties. It was one of several cases that involved the provision of the Treaty of Paris of 1783 declaring that creditors would meet with “no lawful Impediment to the Recovery of the full Value in Sterling Money of all bona fide Debts heretofore contracted,” and its impact on the numerous debts owed to British merchants.

Georgia, like other states, had enacted a law during the Revolution (1782) to sequester or confiscate debts owed to British creditors. Samuel Brailsford was a British subject to whom James Spalding, a Georgia citizen, owed a bond dated 1774 for the purchase of slaves. Brailsford filed suit in 1790 against Spalding in the Georgia circuit court presided over by Associate Justice James Iredell and district judge Nathaniel Pendleton. Georgia sought to intervene, claiming Spalding owed the debt to the state, not to Brailsford, since it had sequestered the debts of all British creditors by a statute passed before the treaty was signed. Georgia’s petition was denied, in part because it was contended the circuit court would not have jurisdiction in a case in which the state was a party. The case raised two questions: had the sequestration law transferred the right of payment to the state, and, if so, was that right abrogated by the treaty. The judges found for Brailsford, arguing that the state law provided only for the sequestration, not confiscation, of debts to British merchants and that the right to collect Spalding’s debts was never vested in Georgia. Furthermore, even if it had provided for confiscation, the treaty trumped state statute and revived Brailsford’s right to recover his debt.

Georgia then filed a bill in equity in 1792 against Brailsford and Spalding in the Supreme Court, arguing that the treaty did not affect the state’s right to collect a debt sequestered by the state. In the 1792 case the Court ruled that since there existed an adequate remedy at common law, namely suit on a bond, a bill in equity would not lie. The Court directed Georgia to file suit at law the next term and enjoined disbursement of the debt payment until the case was resolved. The state in 1793 then developed a suit, contending that Brailsford had received payment and had reneged on a promise to pay the debt to the state, a contention Brailsford denied. The Court ordered the case to be heard in the following term (February 1794). At that time attorneys for both sides met to compose a jury, striking names from a list of forty-eight merchants, reducing it to a list of twenty four to be summoned, of whom twelve were selected to serve.

The Seventh Amendment to the Constitution requires juries in federal law suits that historically would have used juries under common law. The 1794 case is one of the few Supreme Court cases actually brought before a jury in the 1790s and the only one reported on. The jury is question also appears to be a “special jury” composed almost entirely of merchants, probably chosen for their expertise in mercantile law and custom, similar to such juries used in Britain by Lord Mansfield, Chief Justice of the King’s Bench from 1756 to 1788. During the trial Alexander James Dallas and Jared Ingersoll represented Georgia. They emphasized Georgia’s authority as a sovereign state to confiscate the estates of an alien enemy, and claimed the treaty applied only to “subsisting debts not sequestered or confiscated debts”. William Bradford Jr. represented Brailsford, maintaining the distinction between sequestered and confiscated, citing mercantile law, and asserting that the Treaty of Paris gave creditors the right to recover their debts.

At this time (7 February 1794) Jay made a statement during his charge to the jury (the only Supreme Court charge to a jury ever published) that the jury was not only the judge of facts but the judge of the law, that while they should listen to the directions from the judge, they had the ultimate right to determine the law as well as the facts in controversy. The jury asked the Court whether the sequestration vested the debt with Georgia. After the Court advised that it did not, and that Brailsford was never deprived of the right to collect his debt, the jury found for Brailsford. Legal scholars have long questioned Jay’s assertion that the jury had the right to determine law in a civil case. One scholar has suggested that Jay may have been following the model for a “special jury” dealing with mercantile law and custom, so that his address applied not to all juries, but “to a particular juridical body tasked with particular responsibilities”.8

The question of a state’s amenability to suits first arose in Van Staphorst v. Maryland, a suit brought in 1790 against the state by Dutch bankers for payments due on a wartime loan for which the terms of the contract were in dispute. This was the first case docketed with the Supreme Court, but no decision was issued because the state, fearful of a threat to its sovereignty by setting a precedent for suits against the state, decided to arrange a compromise out-of-court settlement. Jacob and Nicholaas van Staphorst had lent funds to Maryland in 1782 through its agent Matthew Ridley on terms similar to those given for Dutch loans to the United States. However, the provisions for interest payments specified in the contract were very unfavorable to the state. Interest was payable in annual deliveries of one thousand hogsheads of tobacco valued at a low fixed price and with a market value far higher than what was due annually on the loan, especially once tobacco prices rose after war’s end. The Van Staphorsts were entitled to purchase at the reduced price all the surplus tobacco sent beyond what was needed to cover the interest due, causing a substantial loss to the state. When Maryland sought to make payments in cash instead, the Van Staphorsts insisted on strict enforcement of the terms of the contract. All attempts at arbitration had failed, including one in which Jay was to serve as an arbitrator. After the bankers initiated suit in the Supreme Court in 1790, a subpoena ordered the state to appear before the Court in February 1791. The state determined to defend itself in the case, and sent its attorney general, Luther Martin, to Philadelphia, where he appeared before the Court on 8 February 1791, assisted by attorney John Caldwell of Philadelphia. Edmund Randolph served as counsel for the Van Staphorsts. The Court ordered the state to enter a plea or face a default judgment. The state complied, but when the case came before the Court it was clear that since most witnesses were in the United Provinces, it would be necessary to appoint commissioners there to take testimony and forward it to the Court. Seven prominent Dutch Patriots were appointed commissioners, and depositions were taken and forwarded, but in the interim the state arranged for its out-of-court settlement. The case was discontinued in August 1792, and the terms of the settlement reported to the Court in February 1793.9

Perhaps the most significant and certainly the most controversial Supreme Court case during Jay’s tenure was Chisholm v. Georgia (1793), the first Supreme Court decision to be overturned by the passage of a constitutional amendment. Although the issue of state amenability to suit also arose in other cases, including Oswald v. New York in 1792, and Vassal v. Massachusetts and Grayson v. Virginia in 1793, it was the Chisholm case that brought the issue to the fore and to public notice.

In 1792, Alexander Chisholm, executor for the estate of South Carolina merchant Robert Farquahar, sought to sue the state of Georgia in federal court for payments due for goods supplied the state during the American Revolution. The case appeared first in the Circuit Court for the District of Georgia before Associate Justice James Iredell and district judge Nathaniel Pendleton, who declared that the court lacked jurisdiction to try states as defendants. Chisholm then took the case to the Supreme Court, where his counsel, Edmund Randolph, presented the case. Georgia, however, refused to appear before the Court, contending through Alexander J. Dallas and Jared Ingersoll that as a sovereign state it could not be sued in court without its consent.

In a four to one decision with Iredell dissenting, the Supreme Court ruled on 18 February 1793 in favor of Chisholm, declaring that Article 3, section 2 of the Constitution10 abrogated the state’s sovereign immunity and granted the Supreme Court the power to hear all disputes between private citizens from other states or nations and a state. Georgia, however, interpreted the Constitution to authorize the states to sue individuals in other states or nations, but not to be sued by them, and was in fact in the process of suing a citizen of another state in the case Georgia v. Brailsford, discussed above. The Court ordered Georgia to appear at Court during its next session or face default judgment against it, and directed federal Marshal Robert Forsyth to issue a subpoena to the state to appear before the Court; Forsyth delivered it to Governor Edward Telfair and Attorney General Thomas Carnes of Georgia on 11 July 1793.

The jurisdiction of the federal courts over states had been extensively debated during the ratification struggles, when even many Federalists denied that the Constitution opened the states to be sued in the federal courts. Should the states be declared subject to suit, they might anticipate myriad suits from public creditors, Loyalists, land claimants, and others impacted by state actions during the war, and indeed suits were initiated against several states immediately after the decision. Several states, protesting the Court’s decision, continued to refuse to appear as defendants before the Court, and called for a constitutional amendment removing federal jurisdiction over suits against states by citizens or subjects of other states or nations. Congress agreed to the amendment in 1794 and referred it to the states. After the states ratified the Eleventh Amendment in 1795,11 implementation of the Chisholm decision was halted and all similar suits dropped.

Each of the justices had presented his own opinion orally on the Chisholm case, the practice of a single opinion expressing the vote of the majority not having yet developed. Written versions of their statements were subsequently published in pamphlet form in Philadelphia and Massachusetts. Summaries of the attorney general’s arguments and the justices’ opinions prepared by Samuel Bayard, Clerk of the Court, soon appeared in many newspapers, but John Jay’s opinion was apparently the only one published in full in serial form in newspapers in Massachusetts and Pennsylvania and possibly elsewhere.

Jay’s opinion, one of the most “clear, profound, and elegant arguments perhaps ever given in a Court of Judicature,” according to the account published by Bayard, but “a memorable and impolitic” one according to historian Richard B. Morris, was characterized by his nationalism. In arguments similar to those of James Wilson, Jay contended that the sovereignty of the nation lay in the people, not in the states, and thus that the rules of sovereign immunity adopted by other nations did not apply to the states. He strongly supported the right of individuals to sue state governments to ensure their accountability, especially in the fulfillment of their contracts.12

In Oswald v. New York, the state, sued by a citizen of another state, declined to appear before the Court and denied its jurisdiction. Here, too, the state’s claim of immunity was rejected. The case involved the claim by the heirs of John Holt, newspaper editor and printer for the state of New York, for unpaid salary and damages. Holt was hired as state printer in 1777 by the New York Committee of Safety then chaired by John Jay, acting on behalf of the state. Payment of a £200 salary was authorized for one year. Holt continued as state printer until his death in 1784 without further authorization or salary payment. After his death, his widow, Elizabeth Holt, filed a claim for £5,293 for back salary and expenses. The state auditor approved £2,000 in expenses, but denied the claim for salary, as did the state legislature. After her death in 1788, Elizabeth Holt’s son-in-law, printer Eleazer Oswald of Philadelphia, unsuccessfully pursued the claim with the state, then filed suit in the Supreme Court in February 1791, seeking $31,458.35 in salary and damages.

On 8 February 1791, the Supreme Court dispatched subpoenas to Governor George Clinton and Attorney General Aaron Burr, who referred them to the state assembly, which refused to respond during that year or to subsequent subpoenas in the next two years. In February 1793 Oswald’s attorney, John D. Coxe, requested a default judgement if the state again failed to appear in the August 1793 session. Jared Ingersoll then appeared on behalf of the state, contending that the Court lacked jurisdiction because as a sovereign state New York could not be sued without its consent.

In January 1794 the Federalist-controlled state legislature directed the state attorney general to defend the state before the Supreme Court. On 10 May 1794, two days before he sailed for England, Jay was among those called on to give a deposition regarding the terms of Holt’s employment.13 During Jay’s absence, a jury trial was held in the Supreme Court on 5 February 1795 before Justices Wilson, Blair, Iredell, and Paterson, with William Bradford Jr. representing Oswald and Jared Ingersoll representing New York. On 6 February the jury awarded Oswald $5,313 in salary and interest and damages and $.06 in costs; on 9 April 1795, the state legislature authorized payment on condition of Oswald’s signing a release from the jury verdict. Oswald remains the only case in which a state paid damages and court costs after a jury trial. The payment was made prior to the ratification of the Eleventh Amendment.14

Other cases in which subpoenas were issued to the states included Vassall v. Massachusetts, and Grayson v. Virginia. William Vassall instituted an equity suit in the Supreme Court in 1793 against Massachusetts alleging property losses as a Loyalist. The suit was carried over several terms because Massachusetts refused to appear before the Court while Governor John Hancock and the state legislature considered how the state should respond to the subpoenas. The suit was dismissed in February 1797.15

In Grayson v. Virginia, shareholders of the Indiana Company sought compensation for damages incurred from Virginia’s refusal to recognize their prewar claims to an extensive tract of land in what is now West Virginia. William Grayson of Virginia, son and heir of the former senator of Virginia of the same name who had been a shareholder in the Indiana Company, served as the plaintiff, and William Lewis and William Rawle acted as his counsel. After recounting all the company’s fruitless efforts to obtain compensation, William Lewis moved for a writ by the Supreme Court to compel state attendance. On 11 August 1792, the Court issued a subpoena ordering Governor Henry Lee and Attorney General James Innes to appear before it in February 1793. Governor Lee went to Philadelphia vested with “discretionary powers” for the February 1793 term and consulted with Edmund Randolph, who argued in support of the right to sue a state, but advised Lee to wait until the decision in the Chisholm case.

After the Chisholm decision ruled that a state could be sued in federal court by a citizen of another state, Levi Hollingsworth, a Pennsylvania merchant and shareholder in the Indiana Company, replaced Grayson as plaintiff, the suit became Hollingsworth v. Virginia, and a new subpoena was issued. The state ignored it. The state legislature then adopted resolutions stating its opposition to the Chisholm decision and instructing its senators and representatives to cooperate with others to secure a constitutional amendment denying federal jurisdiction over suits against states. The case then dragged on until 1798, when, following news of the ratification of the Eleventh Amendment, the Supreme Court overturned Chisholm. The Court ruled in Hollingsworth that the amendment was valid and that it ended Supreme Court jurisdiction over all suits against states by citizens of other states or nations, including those instituted before the adoption of the amendment. The Indiana Company never received compensation for its land claims.16

The Invalid Pension Cases: The Hayburn Case, Ex Parte Chandler
(Chandler v. Secretary at War), and U.S. v. Yale Todd

Three Supreme Court cases were related to the procedures established under the Invalid Pensions Act of 1792, in which Congress assigned to the circuit court judges the task of reviewing Revolutionary War invalid pension claims and making recommendations thereon to the secretary of war. Both the secretary of war and Congress were given supervisory authority over the circuit court’s recommendations. In districts where no circuit court was held, the district judge was authorized to act instead.17 On 5 April 1792, the Eastern Circuit Court, District of New York, consisting of Chief Justice John Jay, Associate Justice William Cushing, and District Judge James Duane, issued an opinion on the act,18 in which they struck a compromise position that avoided challenging Congress and met the needs of the invalids. They reasoned thus: The government is divided into three branches, none of which may encroach on the others; the legislative and executive may not assign any but judicial duties to the judicial branch; the duties assigned by the Pension Act were not judicial, as shown by the fact that the act authorized the Secretary of War to suspend and Congress to revise the decisions of the courts, although neither executive nor legislature “are authorized to sit as a court of errors on the judicial acts or opinions of this court.”

But while it followed from this that the court as court and the justices as justices must decline to take on the duties assigned by the act, for Jay and his colleagues that was not the end of the matter. Since, they asserted, the act did not deal with judicial matters, it must have been intended simply to appoint them commissioners, albeit “by official instead of personal descriptions”, and the judges might properly act as commissioners under the act.

Justices Wilson and Blair and District Judge Richard Peters, comprising the Circuit Court for Pennsylvania, took a more severe line; in a letter to President Washington they refused to proceed as directed by the act, both because the duties assigned were not judicial, and because the supervisory power over its decisions that the act vested in the executive and the legislature was “radically inconsistent with the independence of that judicial power which is vested in the courts; and, consequently, with that important principle which is so strictly observed by the Constitution of the United States.”

Finally, the judges of the Circuit Court for the District of North Carolina, Justice James Iredell and District Judge John Sitgreaves, wrote to the President as well, concluding, as had their colleagues, that they could not, as judges, take on the assigned duties; on the issue on which the other two circuits had divided they declined to rule, declaring that since the act conferred power on the courts and not on the judges personally they were uncertain whether they might sit as commissioners.19

Although justices assigned to all three circuits opined, only one court, the Circuit Court for the District of Pennsylvania, did so in response to a petition brought before them for review. The petition was that of disabled veteran William Hayburn; the court record tells us that: “after due deliberation thereupon had it is considered by the Court that the same be not proceeded upon”. There was much hostile reaction to what many took to be a Circuit Court declaration of unconstitutionality of an act of Congress, and scholars have debated ever since whether that is in fact what the Court did in this phase of what has come to be known as Hayburn’s Case.

This Pennsylvania Circuit Court proceeding (sometimes referred to as the “First Hayburn Case”) has sometimes been confused with the later Supreme Court proceeding in an action involving this same William Hayburn. Although it is clear that only the Circuit Court took action that could be construed as a declaration of unconstitutionality, the later, Supreme Court, proceeding has sometimes been cited as the first case in which the Supreme Court declared an act of Congress unconstitutional. Nor is the Supreme Court Hayburn’s case authority, as is sometimes claimed, for the propositions that a federal court may only concern itself with judicial matters, and that decisions of the federal judiciary are not subject to review by the executive or legislative branch; it is the Circuit Court, in the earlier Hayburn proceeding, that may be thought to have embraced one or both of these propositions.

Circuit Court treatment of the Invalid Pensions Act provoked two quite different reactions. Some, responding to the court’s declining to follow the act’s mandate, sought congressional action that would accomplish the goals of that act. Others responded to the fact that the judges of the Eastern Circuit had heard applications and awarded pensions as commissioners and that the status of those awards was unclear. According to a report to Congress of 19 December 1792 by Secretary of War Knox, Jay, Cushing, and Iredell, along with the district judge of Maine, had certified 85 applications during the April–May 1792 circuit court session in the Eastern Circuit, and 116 applications during the September–October 1792 session. Questions were now raised about the validity of those certifications.

Among those who petitioned Congress to enable worthy applicants to receive their pensions was William Hayburn; the House of Representatives responded to his entreaty by appointing a committee of five representatives to “inquire into the facts contained in the memorial, and to report thereon.” Hayburn also sought help from Attorney General Edmund Randolph, who informed the Supreme Court that he intended to move for a mandamus directing the Pennsylvania district court to hear Hayburn’s pension petition, “… ex officio, without an application from any particular person …”. Randolph contended that he had power to sue for the enforcement of the act by virtue of Section 35 of the Judiciary Act, which gave the Attorney General authority “to prosecute and conduct all suits in the Supreme Court in which the United States shall be concerned.” He claimed not to need the President’s authority to conduct the suit, as Article II gave the executive branch the responsibility of ensuring that all laws were “faithfully executed;” and he instanced the authority of the English Attorney General, who could have made such a motion under English law. A divided Court concluded that Randolph did not have authority by virtue of his position as Attorney General to move for a mandamus.

Randolph then convinced Hayburn to retain him, and, this time as Hayburn’s lawyer, Randolph again moved for a mandamus requiring the lower court to hear Hayburn’s pension petition; the Supreme Court delayed decision long enough for Congress in 1793 to enact the “Act to regulate the Claims to Invalid Pensions,” which provided a different mechanism for those seeking pensions, thereby mooting the Hayburn proceedings. Thus ended the second, that is, the Supreme Court, Hayburn’s case.

Under the 1793 act, evidence relevant to a claim was to be given “before the judge of the district … or before any three persons specially authorized by commission from the said judge.” The district judge was then to “transmit a list of such claims … to the Secretary for the department of War … and the said Secretary shall make a statement of the case of the said claimants to Congress, with such circumstances and remarks, as may be necessary, in order to enable them to take such order thereon, as they may judge proper.” Under the new act, then, decisions on the merits of pension claims were to be made by Congress, rather than by the judges, who were merely to gather the necessary evidence, to compile the record.20

This second Pensions Act (1793) also addressed the widespread concern about the validity of those pensions that had been approved by the judges acting as commissioners. The act mandated that “the Secretary of War, in conjunction with the Attorney-General, take such measures as may be necessary to obtain an adjudication of the Supreme Court of the United States, on the validity of any rights claimed under the … Invalid Pensions Act of 1792 by the determination of any persons styling themselves commissioners.”21 There were two main routes to the attainment of this object. The first was to bring suit against a successful claimant for recovery of funds paid him in consequence of a ruling by the “commissioners” in favor of the validity of his claim. Accordingly the United States in 1792 brought suit against one such person, Yale Todd, to recover the funds paid out to him under the old law. Chief Justice Jay and Justice Cushing—two of the justices who, sitting as commissioners under the Invalid Pension Act of 1792, had awarded funds to Todd—thus had to determine whether their own actions were legally binding.

The Supreme Court found against Todd, holding, in 1794, that the adjudications by the self-proclaimed commissioners were not valid, and conveyed no legal rights. Although no less an authority than Chief Justice Taney later asserted that Yale Todd declared an act of Congress unconstitutional, the better-established view is that the decision rested on statutory interpretation alone; contemporaries in and out of Congress so understood it, and prudential considerations dictated avoidance if at all possible of a judgment of unconstitutionality. The statute, referring to ‘court’ rather than ‘judges’ did not intend that individual judges were to make determinations of the validity of pension claims.22

This decision settled the matter, but while it was pending, a second route to determination of the legality of the actions of the “commissioners” was embarked upon. There were a number of claimants who had received the approval of the “commissioners”, but for various reasons had not been receiving the funds to which they had been found entitled. In August 1793, Attorney General Randolph moved in the Supreme Court for a mandamus ordering Secretary of War Knox to place on the pension list those veterans who had been approved for a pension by “commissioners” operating under the 1792 Invalid Pension Act. When this general request was deemed too vague by the Court, the motion for mandamus was filed on behalf of John Chandler, a veteran who had been approved for a pension in September 1792, by Justice Iredell and District Judge Richard Law, sitting in the Circuit Court for the District of Connecticut. The Supreme Court began to hear argument on Chandler’s case on 5 February 1794, and issued their decision in the case nine days later, ruling on 14 February that the Court “having considered the two acts of Congress relating to the same, are of opinion, that a mandamus cannot issue, to the Secretary of War, for the purpose expressed in said motion.”23

A lurking ambiguity in the Chandler decision was later addressed by Chief Justice Marshall in Marbury v Madison: “[T]he decision was, not that a mandamus would not lie to the head of a department, directing him to perform an act, enjoined by law, in the performance of which an individual had a vested interest; but that a mandamus ought not to issue in that case—the decision necessarily to be made if the report of the commissioners did not confer on the applicant a legal right.”24 That is, the Court did not hold in Chandler that it would have been improper to issue a mandamus to the Secretary of War ordering that he put Chandler on the pension list, if the recommendation of the “commissioners” had actually given Chandler a legal right to the pension. And that the Supreme Court believed that the “commissioners” rulings were of no effect we know from Yale Todd, which was decided a few days after the Chandler ruling.

Pension claimants were now required to apply for pensions under the new system. Because of the hardships that that process would entail for all the claimants previously certified by the “commissioners”, a congressional committee responding to a petition to Congress by another veteran, Josiah Wittner, recommended that Congress address not just his specific case, but the situation of all the applicants whose cases the “commissioners” had certified. Congress then directed the secretary at war to report on all such cases. On 25 April 1794 Knox submitted a report on the cases certified by the “commissioners,” as well as those certified by the district judge of Maine. On 9 June, Congress, following an opinion expressed by Attorney General William Bradford Jr., declared all the cases certified by the “commissioners” invalid, but not those certified by the district judge of Maine, whose actions conformed to the original Pension Act. This reveals that Congress understood, accurately, that the Supreme Court in Yale Todd had not declared the entire Pension Act of 1792 unconstitutional, but had simply rejected the “commissioner” theory as not contemplated by the act.25