Georgia's Land Scandal

Reference: Ray Allen Billington, with collaboration from James Blaine Hedges, Westward Expansion, A History of the American Frontier, Second Edition, The Macmillan Co. c 1962; at 211-212.

The Georgia legislature in 1789, and again in 1795, sold the whole tract of its western lands to speculating companies, then proceeded to rescinded the sales. Cession to the United States was not completed until April 24, 1802 comprising the bulk of the later States of Alabama and Mississippi. (Acts of 5 Cong. c. 45, and 6 Cong. c. 50.) The establishment of the Mississippi Territorial government was not to impair the right of the state of Georgia to territorial jurisdiction, or the right of any person to the soil of the territory thereof.

The State's title to the lands had been clouded when the lands had been entirely sold by the legislature in 1795 to four land speculation companies. When it was subsequently discovered that favorable votes had been "purchased" from the prior legislature, the 1796 legislature revoked the sale, creating a cloud on the title.

This imperfect title, however, was ceded to the United States under four conditions; 1) the U.S. was to pay Georgia $1.2 million from the sale of public lands in the cession (the only state to receive payment); 2) 500,000 acres were reserved to satisfy private claims against land in the ceded territory; 3) Indian titles to certain areas of the cession were to be extinguished; and 4) all persons who actually settled in the territory "shall be confirmed in all grants legally and fully executed" prior to the date of cession.

In 1810, a straw lawsuit was brought before the Supreme Court in the case of Fletcher v. Peck challenging the 1796 Georgia revocation of sale on the basis that the land had already passed out of the hands of the speculators and into the hands of innocent third parties. The decision of the Court rested on Article 1, Section 10 of the Constitution; that the states may not rule certain contracts illegal - "impair the obligation of contracts."

The United States, as the recipient of the cession, had to pay these third parties $5 million to quiet their rights under an act of 1814.