Chisholm v. Georgia

Facts:
On October 31, 1777 the Executive Council of Georgia authorized State Commissioners, Thomas Stone and Edward Davis to purchase supplies from South Carolinian merchant Robert Farquhar. They never paid Farquhar eventually Farquhar died. Charleston merchant Alexander Chisholm became the executor of Farquar's estate and he pressed Georgia for payment. Georgia refused. Chisholm sued Georgia in US Circuit (district) Court. Georgia claimed that a state cannot be sued by citizens of another state. The court ruled in favor of Georgia. In 1792 Chisholm appealed the decision to the US Supreme Court. Georgia refused to respond on grounds that a state could not be sued by an individual from another state. The Court heard the case regardless and ruled against Georgia overturning the original decision.

Reasoning:
Georgia claimed sovereignty and thus immunity to suits for property. However, Wilson argued in the majority decision that only the people are sovereign and therefore states are subject to suits. Wilson quotes Art III Sec 2 "The judicial power shall extend to all cases...between a State and Citizens of another State" to back up his decision.
HOWEVER, the order of that wording suggests that the framers only intended to address cases in which a State was suing a citizen not the other way around. This interpretation is supported by Federalist 81 in which Publius (AHam) writes: "I shall take occasion to mention here a supposition which has excited some alarm upon very mistaken grounds. It has been suggested that an assignment of the public securities of one State to the citizens of another, would enable them to prosecute that State in the federal courts for the amount of those securities; a suggestion which the following considerations prove to be without foundation.
It is inherent in the nature of sovereignty not to be amenable to the suit of an individual WITHOUT ITS CONSENT. This is the general sense, and the general practice of mankind; and the exemption, as one of the attributes of sovereignty, is now enjoyed by the government of every State in the Union. Unless, therefore, there is a surrender of this immunity in the plan of the convention, it will remain with the States, and the danger intimated must be merely ideal. The circumstances which are necessary to produce an alienation of State sovereignty were discussed in considering the article of taxation, and need not be repeated here. A recurrence to the principles there established will satisfy us, that there is no color to pretend that the State governments would, by the adoption of that plan, be divested of the privilege of paying their own debts in their own way, free from every constraint but that which flows from the obligations of good faith. The contracts between a nation and individuals are only binding on the conscience of the sovereign, and have no pretensions to a compulsive force. They confer no right of action, independent of the sovereign will. To what purpose would it be to authorize suits against States for the debts they owe? How could recoveries be enforced? It is evident, it could not be done without waging war against the contracting State; and to ascribe to the federal courts, by mere implication, and in destruction of a pre-existing right of the State governments, a power which would involve such a consequence, would be altogether forced and unwarrantable."

Reaction:
This case incited dramatic public outcry. Within a day of the decision the House proposed a resolution to amend the Constitution to prohibit such suits. With in 11 months the 11th Amendment was passed and ratified.