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Gorsuch Tries (Unsucessfully) To Restore the Contract Clause

On a happy note, for the first time in my academic career, an article that I wrote (with Douglas Kmiec) was quoted in a Supreme Court opinion. On a less happy one, it seems to have persuaded only a single justice. Thank you, Neil Gorsuch!

The case in question was Sveen v. Melin and the issue was whether the Minnesota law’s provision to wipe out a spouse as a contractual beneficiary in a life insurance policy after a divorce violates the Contract Clause. It is not a case that will garner many headlines, but an important constitutional liberty is at stake—the right to contract.

The Contract Clause provides that “No State shall impair the obligation of Contracts.” For the first hundred years of the Supreme Court, it was the most litigated provision of our fundamental law. And the Court enforced it quite strictly against state laws that retrospectively interfered with contractual obligation. (Chief Justice John Marshall even argued it applied to prospectively changing contract law, but lost to a majority opinion, written by Justice Joseph Story. It was the only major case in which these two great justices disagreed.)

But with the rise of progressive jurisprudence the Contract Clause has become a shadow of its former self. In Home Building and Loan Association v. Blaisdell, the Supreme Court permitted Minnesota to suspend foreclosures authorized by a mortgage contract. As Justice George Sutherland wrote in dissent, not only was that contrary to the language of the Clause, but the kind of debt relief at issue was actually the motivation for the prohibition.  There is no serious argument that this economic liberty protected was not in the text of the Constitution.

Ever since, the Contract Clause has functioned as a platform for the Court to balance interests as it sees fit rather than to enforce a strict rule against impairments. And Sveen is another in the long line of such discretionary balancing. The main import of the majority opinion is that many people forget to change the beneficiary after divorce, and the legislature is helpfully protecting them. In any event, according to the majority, those who want to keep their ex-spouses as beneficiaries can write them back in. Thus, the impairment is both insubstantial and reasonable.

But the language of the Contracts Clause does not exempt “reasonable” or “insubstantial” impairments from its strictures. For good reason. A contract protects individual rights of those under its regime, and what is reasonable and insubstantial for one individual may not be for another. Most people no doubt would be happy with this law, even those who signed such life insurance contracts. But, as Gorsuch implies, the Contract Clause protects the contractual rights of everyone, including those who would not know enough to write their ex-spouses back in as beneficiaries.

To be sure, the state has some paternalistic reasons in support of this law, but they do not rise to the compelling level generally required by the Court to trump a constitutional right.  Unless there is some basis in original meaning, our rule of law should no more play favorites with rights than it should play favorites with persons.

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