- Thu Mar 23, 2023 5:42 pm
For the answer to your question, I would start by looking at the second paragraph of the passage. The paragraph starts by explaining that the decision was based on the 14th Amendment, which applies to state action. But restrictive covenants don't appear to be state action. They are contracts between two individuals. The court therefore said that the covenants themselves were legal, but the enforcement of them by the state was an unacceptable action under the 14th Amendment. Their reasoning meant that the court can only enforce contract provisions that would be legal for the state itself to do.
The next paragraph explains why that is a problem. It uses the example of a contract that restricts the speech of one of the parties. Contracts to restrict speech are typically perfectly legal between individuals and common in exchange for settlements. However, the government couldn't have an individual sign the same contract with them without potential First Amendment violations. The reasoning from the Shelley case would have meant that individuals couldn't enforce those contracts because judicial enforcement would mean the state was restricting speech, as opposed to individuals. And in fact, courts have refused to use the Shelley reasoning to apply cases of speech or other private action.
Hope that helps!