The Marshall Court, by a vote of 4–1, invalidated a state law for the first time in Fletcher v. Peck (1810) in a case that involved questionable land deals. In 1795, the state of Georgia sold more than 30 million acres of land in the Yazoo area (located in present-day Alabama and Mississippi) to several Northern land companies. These companies in turn sold the land to third parties at much higher prices. It was revealed that many Georgia legislators received bribes for their votes in approving the land sales. In the next round of elections, these legislators were voted out of office and the new legislature passed a law in 1796 that annulled the original sale contracts.

This cancellation presented a problem for innocent third-parties who purchased the land without knowledge of the shady origins of how the land was first acquired. In what some think was a contrived lawsuit—many believe plaintiff and defendant planned the lawsuit together—Robert Fletcher of New Hampshire sued John Peck of Massachusetts in 1803 to “quiet,” or establish, his title to ensure that he had a valid claim to the land.

The Court ruled that the Georgia law invalidating the Yazoo land sales was unconstitutional because it violated the Constitution’s Contract Clause, preventing states from impairing the obligations of contracts. Chief Justice Marshall reasoned that the new law could negatively impact innocent, third-party purchasers, such as Fletcher. “If the original transaction was infected with fraud, these purchasers did not participate in it, and had no notice of it,” he wrote. “They were innocent.” Marshall ruled that Fletcher had “vested rights” in the land that he had innocently purchased.