Colonial Courts and Secured Credit: Early American Commercial Litigation and Shays' Rebellion
Priest, Claire, The Yale Law Journal
There is a peculiar inconsistency within current legal scholarship concerning the role of the courts in commercial relationships during the colonial period. Colonial legal scholars universally recognize that debt litigation ending in default judgments overwhelmed the caseload of colonial courts. At issue, however, is whether this high level of uncontested cases reflects a rationally organized effort of creditors and debtors to endow credit agreements with greater security, or whether these uncontested cases represent efforts to collect after real defaults and, thus, are evidence of widespread colonial insolvency.
Recent colonial law scholarship asserts that creditors and debtors used litigation as a means of endowing credit agreements with greater security.(1) Colonial legal scholars found that the percentage of cases ending in default judgments increased dramatically in the 1720s and 1730s and remained at very high levels throughout the eighteenth century.(2) When debtors did not default, they often confessed judgment against themselves, conceding responsibility for their debt.(3) The prevailing interpretation today among colonial scholars is that the rise in uncontested debt cases and confessions of judgment by debtors is evidence of creditors and debtors using the court system as a rational mechanism to record debts. Creditors brought suit against debtors because becoming judgment creditors secured their interest in debtors' property by allowing quick execution at their discretion. The high level of uncontested cases and confessions of judgment represent voluntary debtor participation in the system: Debtors acquiesced to the entry of judgments against them (by default) because they too benefited from the bureaucratization of credit. Thus, according to thc current interpretation, the increase in uncontested debt litigation indicates not an increase in underlying disputes or in economic distress, but rather the creation of a modernized mechanism for debt recording, similar in kind to today's perfection of security interests through Article 9 of the Uniform Commercial Code. This view will be termed here the "debt-recording interpretation" of colonial litigation.
Yet, while the debt-recording interpretation of colonial courts is the dominant explanation of default judgments in current colonial law scholarship, other evidence characterizes the operations of the colonial court system in a dramatically different way. In 1786 and 1787, shortly after the Revolution, Shays' Rebellion constituted a widespread attack on the structure of the colonial court system, culminating in the violent takeover and closing of many county courts in western Massachusetts and throughout New England. The Shaysites (who referred to themselves as "Regulators") raised an armed revolt against the colonial court system. They condemned its injurious costliness, its fee structure which, they claimed, enabled judges, witnesses, and sheriffs to profit at the expense of litigants, and its cooptation by lawyers.(4)
Defenders of the regime dismissed the Regulators as "men in distress involved in debt and discontented"(5) and desiring "equal distribution of property," and "the annihilation of debts."(6) Several of the Regulators' principal court reform proposals, however, were designed chiefly to reduce costs and administer justice more effectively. Indeed, although some Regulator proposals were clearly radical--such as to entirely abolish the courts of common pleas(7)--others were more moderate. One Regulator proposed adopting a system according to which creditors and debtors could inexpensively record and secure debts, for example, by substituting the common pleas courts with "courts of record" that would specifically provide a debt-securing and recording service.(8) Others proposed that the Massachusetts General Court enact legislation to provide for an inexpensive process to record debts within the common pleas system. The General Court responded by enacting the Confession Act of 1786,(9) which allowed debtors to avoid costly litigation in any debt case by "confessing" judgments against themselves to a justice of the peace for a small fee. …