25 U.S. 213 (1827), United States Supreme Court

Parties Involved
Saunders: A citizen of Kentucky demanding payment in accordance with a contract.
Ogden: A citizen of Louisiana who lived in New York at the signing of the contract and claimed bankruptcy as a defense under a New York bankruptcy law passed in 1801.

Ruling
The main issue of the case was whether or not the New York law violated the Obligation of Contracts Clause of the Constitution. It hinged on whether Congress had exclusive power to pass bankruptcy laws, which itself depended on what was meant by the clause prohibiting states from passing laws impairing the "obligations of contracts." The court's decision, authored by Justice Bushrod Washington, found that the clause prevented states from passing only laws affecting contracts already signed; laws that affected future contracts were construed to become part of the contracts themselves. Since the statute was part of the conditions of any prospective contract, the parties to the contract were presumed to have considered the law in signing the contract; the obligation, then, incorporated the possibility of bankruptcy rather than being impaired by it. The other three Justices joining the Majority were William Johnson, Smith Thompson, and Robert Trimble.

Chief Justice John Marshall authored the dissenting opinion. He held that the Contract Clause gave the federal legislature the exclusive power over bankruptcy laws, rejecting the argument that state laws became part of contracts signed within the state thereafter. Marshall was joined in his dissent by Associate Justices Gabriel Duvall and Joseph Story.