Four companies involved in a fraudulent claim on western lands that resulted in the U.S. Supreme Court decision Fletcher v. Peck.
On January 7,1795, Governor George Matthews of Georgia signed into law the Yazoo Land Act, which granted more than 40 million acres of land in present-day Alabama and Mississippi to the Georgia Company, the Georgia-Mississippi Company, the Upper Mississippi Company, and the Tennessee Company for $500,000. Several Georgia legislators owned stock in these companies. When the public learned of the bribery and corruption that secured the passage of the Yazoo Land Act, political turmoil ensued and a newly elected legislature, led by the bombastic Georgia Senator James Jackson (part of the loyal opposition to President George Washington led by Thomas Jefferson), repealed the act February 18,1796. Georgia offered to refund the price of the land, but many purchasers refused to accept the payment and pressed their claims. On April 26,1802, Georgia sold its western lands to the United States for $1.25 million. In the settlement the Yazoo claimants could have received five million acres or the money received from their sale. They rejected this offer as well.
The issue rose to national importance and caused conflict between President Thomas Jefferson and Virginia Representative John Randolph. Jefferson wished to settle the matter by compensating the claimants. Randolph opposed any settlement and accused the administration of helping to perpetrate the fraud, and his political connections allowed him to prevent congressional action. In 1810 the U.S. Supreme Court settled the matter by rendering a decision on Fletcher v. Peck. The Court ruled that the repeal of the act of 1795 by Georgia was unconstitutional and argued that the act constituted a legal contract binding the state to the land deal even if fraudulent. The decision established the legal notion of the inviolability of contracts and eventually led to Congress awarding the Yazoo claimants more than $4 million.
