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Yazoo Land Fraud is a massive fraud with real estate, during which the U.S. State of Georgia’s politicians in 1794 sold vast tracts of land to political insiders at meager prices. In 1796 the state made attempts to return the land. These disputes reached the Supreme Court, but it settled the conflict in favor of the decision of the 94th year. This case was the first in US history when the Court repealed state law.

Explanation:

The origins of Yazoo Land Fraud were laid ten years before this event. After the American Revolutionary War, the state of Georgia needed to consolidate its territorial claims, as well as satisfy the need for land for development. These territories ran west of the Mississippi River through the areas of the modern states of Alabama and Mississippi.

Part of these lands belonged to Native Americans, and some of them were claimed by Spanish Florida. In 1785, to assert its claims, the state organized the county of Bourbon. However, under pressure from the Federal Government, the county was dissolved three years later due to unresolved Spanish and Native American claims.

In 1789, a secret society called the Combined Society was born with the goal of the land speculating. The members of this society preceded the famous scandal with the lands of Yazoo and pursued roughly the same goals.

The Combined Society has formed three companies wishing to buy territories from the state of Georgia at a negligible price of one cent per acre of land. The deal failed in 1792 when a secret society tried to pay with obsolete currency, after which the company was discovered.

In 1794, four new companies were formed, pursuing the same goal as the Combined Society. The top officials of these companies included both members of the disbanded secret society and state politicians.

The purpose of these companies was to purchase more than 160 thousand square kilometers of land for a total price of 500 thousand dollars, which was much lower than their market value.

To ensure the success of this venture, representatives of these companies offered many state officials bribes in exchange for their help and protection. Finally, on January 7, 1795, Governor George Mathews signed a bill known as the Yazoo Act, which legalized the sale of these lands.

This decision caused a wide public outcry, which ultimately led to mass protests, reforms, and changes in the state government. As a result of the 1796 election, Jared Irwin was elected Governor of Georgia, after which he soon passed a law repealing the Mathews Act of Yazoo.

However, at this point, most of the land was resold to third parties and companies, and despite all the efforts of the state, many people refused to give it back. Since the state government believed that these people had no claim to these lands, while the people themselves claimed that they had bought legally sold properties, this discussion resulted in a protracted lawsuit.

The end of this process came only in 1810 when the proceedings reached the Supreme Court. However, the Court represented by Chief Justice John Marshall made an unexpected decision: the lands were sold under legal contracts, and this act could not be reversed retroactively by the introduction of another law. This decision is recognized as one of the first precedents of how the Supreme Court overturned the state law.