Judicial Compulsion and the Public Fisc - a Historical Overview

Article excerpt

INTRODUCTION

On September 13, 2011, the Providence Rhode Island Superior Court denied the State's motion for summary judgment on a claim, brought by a number of public employee unions, asserting that the statutory pension system "establishes a contractual relationship between the State of Rhode Island and participating employees" sufficient to trigger the Contract Clause and the Takings Clause of the state constitution when benefits to vested employees are statutorily reduced. (1) Undoubtedly this case can be regarded as early thunder from a not-so-distant storm. (2) The likelihood of litigation arising from alteration of pension benefits has generated interest at both the federal and state levels. (3) In times of fiscal contraction, social welfare benefits might be altered in ways that engender litigation. (4) Guarantees of quality education in state constitutions have produced many suits affecting the public fisc. (5) Historically, the most dramatic fiscal-forensic disputes arose from the repudiation of public-bonded indebtedness. (6)

In Part I, we review the law bearing on actions implicating the public fisc until 1960. In Part II, we give an overview of the law since 1960. In the Conclusion, we discuss why judicial recognition of vested rights in mere legislative provisions might be unwise both for the broader public interest and for the beneficiaries of such legislation regarded as a class.

I. JUDICIAL COERCION AND THE FISC TO 1960

A. Law of Nations on Sovereign Immunity

According to the customary law of nations at the time of the Founding, a true sovereign could not be sued in its own courts, nor in those of another sovereign, without its consent. (7) For sovereign (as opposed to commercial) debt, that same principle continues to find recognition under the Foreign Sovereign Immunities Act. (8) Under the law of nations, "the non-payment of the debts of a State, due to the citizens of another State, as to the latter State, is a wrong of a political character, the proper subject of negotiation and treaty, and even a casus belli." (9) Indeed, because default of obligations was a valid casus belli under international law, the United States sometimes found itself acting as an international debt collector to keep European countries from acting militarily in the New World. (10)

B. The Immunity of the British Crown by the End of the Eighteenth Century

By 1786, British courts recognized that there was no generally effective judicial remedy against the Crown. (11) Of course, "[i]t bears remembering that the common law had nothing akin to modern public-law litigation, which holds the government accountable for broad constitutional violations." (12) With respect to contract, "Blackstone argued that contract actions against the King succeeded not as a matter of legal right but only because 'no wise prince will ever refuse to stand to a lawful contract.'" (13) Nor, according to Blackstone and Locke, was there liability in tort. (14)

As a consequence, "nearly all of the cases in which the Crown was amenable to suit involved 'real actions'--the branch of common law that dealt with rights in real property." (15) There were special reasons to permit these real action suits: Before the abolition of the last incidents of feudal tenure in 1660, the Crown had an interest in these real actions, "for otherwise it might be impossible to determine proper feudal relationships." (16) So many limitations were placed on the suits, however, that they essentially amounted to suits by consent. (17) Also, the "more generally useful remedy" in real actions--the petition of right (18)--in fact required consent. (19)

Although the monstrans de droit (20) did not technically require consent, it was subject to tacit consent because the Crown could always abate it through the writ of rege inconsulto. (21) In the course of the seventeenth and eighteenth centuries, Parliament acquired complete control over state finances through the appropriation power. …