Contracts and Natural Law Fundamental Rights (Part V)

Freedom of Contract

As far back as 1795 in American history, federal courts established contract rights as natural rights necessary to protect property and other individual rights. In Vanhorn’s Lessee v. Dorrance, judge William Patterson (a founding father) declared a Pennsylvania statute to be null and void for violating the contract clause of the Constitution. Patterson did admit that citizens must sacrifice property rights for public welfare (with just compensation), but only under “grave emergencies”.

The right or freedom of contract established by the Court in Lochner v. New York (1905) was powerful (actually freedom of contract was elevated eight years earlier in Allgeyer v. Louisiana, but this case does not receive anywhere near the same attention of Lochner). In Allgeyer, the Court’s justice Rufus Peckham held in a unanimous decision: “The 'liberty' mentioned in [the Fourteenth] amendment means not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties, to be free to use them in all lawful ways, to live and work where he will, to earn his livelihood by any lawful calling, to pursue any livelihood or avocation, and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned.”

What made Lochner (and Allgeyer) unusual was the fact the Supreme Court elevated the freedom of contract as a right even though it did not exist in the Constitution. While Lochner v. New York only protected economic contracts, it is apparent that freedom of contract could be used to protect rights that exist in the Bill of Rights such as property rights (buying and selling property is protected by contracts) and religious rights (contract with pastor, priest, deacon, and even the bible or God). That is why conversations between a spouse, doctor, or religious leader are considered privileged, because they are protected by a contract. Freedom of contract could also protect other rights not included in the Constitution such as worker rights (implied contract between employer and employee) and civil rights (implied contract of decency, tolerance, and respect to avoid violating the rights of others – the golden rule). Therefore, the right or freedom of contract is a powerful tool to protect both individual rights within or outside the Constitution. However, the Supreme Court (also referred to as “the Court” throughout this book) rescinded this right under FDR’s progressive New Deal Court in cases like Nebbia v. New York (1934), Parrish v. West Coast Hotel (1937), and Wickard v. Filburn (1941). While the right to contract was killed by the Court, the Court continued to elevate other rights not found in the Constitution including privacy, marriage, sex, abortion, and self-defense to name a few.

There is a zero-percent chance the Court will restore the right of contract. Why? Both the Right and Left abhor the Lochner v. New York decision. It is estimated that fewer than 5% of legal scholars believe that Lochner was a good a decision and the remaining 95% are ecstatic it was overturned. Consider the fact that 90% of legal scholars believe that the Slaughter House cases (1873) were decided improperly. Yet, the Court has refused to overturn that case after 140 years. If the Court is that reluctant to overturn a case that most agree was wrongfully decided, then there is no chance the Court will reinstate Lochner and the freedom of contract. There is, however, a strange relationship between Lochner and the Slaughter House cases. The dissent argument in the Slaughter House cases was not much different than the majority opinion in Lochner. Thus, it begs to reason why one opinion is revered while the other is demonized? Nevertheless, this conflict may be precisely the reason the Slaughter House cases have never been overruled.

So why write a book about the freedom of contract if it has no chance of being restored? To illustrate how the Court has veered from the true textual meaning of the Constitution diminishing its power to protect the rights of all Americans. Had the Court remained committed to the textual meaning of the Constitution and the right of contract, it would have proved to be a useful tool to solve both conservative and liberal problems without the Court doing whatever it takes to obtain a desired result including using discrimination, controversy, and legislative activism.