In the first century or so of our national existence, one of the Constitution’s provisions that was most often at issue was the Contract Clause. But following New Deal era decisions that eviscerated it, hardly any cases have since centered on it. The clause has been so forgotten that few Americans even know it’s there, in Article I, Section 10, reading, “No state shall pass any law impairing the obligation of contracts.”

American courts took the Contract Clause very seriously until the New Deal. Professor James W. Ely’s recent book The Contract Clause: A Constitutional History (which I reviewed here) recounts the way the Marshall Court esteemed the clause and how it held up quite well (although with some erosion) during the “Progressive” era.
Then came the Great Depression.
Just as the Court turned its back on other cornerstones of limited government and the rule of law during that era, so did it jettison the once-formidable Contract Clause. In a 1934 decision, Home Building & Loan Association v. Blaisdell, Chief Justice Hughes decided that during the “emergency” of the Depression, the Court had to allow legislatures to impose a moratorium on mortgage foreclosures. In an early exemplar of “living Constitution” theory, the Chief Justice said that the Contract Clause “is not an absolute one and is not to be read with literal exactness….” He went on to say that the Constitution’s restraints on power “must not be confined to the interpretation which the framers, with the conditions and outlook of their time, would have placed upon them.”

Just imagine if the First Amendment had been treated that way, giving the government wide latitude to censor or punish free speech and the press on the breezy, “Well, times have changed” approach. The First Amendment would be cowering in the shadows today.
Conversely, imagine if the Court had developed a robust, pro-contract jurisprudence based on the Contract Clause to match its pro-speech jurisprudence emanating the its favored First Amendment. Lots of governmental interference with people’s liberty to shape their lives through contracts they want -- or don’t want -- would have been prevented, such as minimum wage laws.


Which brings us to the case at hand, Sveen v. Melin.
Mark Sveen and Kaye Melin were married in 1997 and lived in Minnesota. After their marriage, Sveen purchased a life insurance policy, naming Kaye as primary beneficiary and his children by a previous marriage as contingent beneficiaries. The couple divorced in 2007 and Sveen died in 2011.
The trouble arose out of the fact that the state changed its probate code in 2002. The law now provided that life insurance beneficiary designations would be revoked upon divorce. After the divorce, Mark did not change the beneficiary designation, leaving Kaye listed as the primary beneficiary when he died. Naturally, both Melin and the Sveen children want the proceeds, the latter arguing that under the new Minnesota law, they are entitled to the money. Hence the suit.
That’s where the Contract Clause enters the picture. Did Minnesota violate it when it in effect rewrote existing life insurance contracts with its revocation-upon-divorce statute?

An amicus brief has been submitted by Professor Ely and in it, he makes a powerful argument in favor of upholding the Eighth Circuit and breathing life back into the Contract Clause.
Here is the gist of Professor Ely’s argument:
“This Court should take this opportunity to reject the current three-factor test and return to the original understanding of the Contract Clause. Under such an approach, there is no question that Respondent (Melin) must prevail. Yet, even if the Court is not inclined to fundamentally reevaluate its Contract Clause jurisprudence, Respondent must still prevail because it is not possible to rule for Petitioners without reinventing the three-factor test as a hyper-deferential, state-always- wins charade. Such a ruling would truly mean the end of the Contract Clause.“

The Supreme Court will hear oral arguments in the case on March 19. It would be one of the great results of its current term if the justices would not merely uphold the Eighth Circuit but also give a full-throated declaration that the Contract Clause will henceforth be read just as it was written.

More at: https://www.forbes.com/sites/georgel...r-let-it-die/#