PROHIBITIONS ON THE STATES. — IMPAIRING CONTRACTS.
§ 1368. The remaining clause, as to
impairing the obligation of contracts, will require a more full and
deliberate examination. The Federalist treats this subject in the
following brief, and general manner. "Bills of attainder, ex post
facto laws, and laws impairing the obligation of contracts are
contrary to the first principles of the social compact, and to every
principle of sound legislation. The two former are expressly prohibited by
the declarations prefixed to some of the state constitutions; and all of
them are prohibited by the spirit and scope of their fundamental
character. Our own experience has taught us, nevertheless, that additional
fences against these dangers ought not to be omitted. Very properly,
therefore, have the convention added this constitutional bulwark, in
favour of personal security, and private rights, &c. The sober people
of America are weary of the fluctuating policy, which has directed the
public councils. They have seen with regret and indignation, that sudden
changes and legislative interferences in cases affecting personal rights
became jobs in the hands of enterprising and influential speculators, and
snares to the more industrious and less informed part of the community.
They have seen, too, that one legislative interference is but the first
link in a long chain of repetitions, every subsequent interference being
naturally provoked by the effects of the preceding. They very rightly
infer, therefore, that some thorough reform is wanting, which will banish
speculations on public measures, inspire a general prudence and industry,
and give a regular course to the business of society. 1
§ 1369. With these remarks the subject
is dismissed. And yet, perhaps, there is not a single clause of the
constitution, which has given rise to more acute and vehement controversy;
and the nature and extent of whose prohibitory force has called forth more
ingenious speculation, and more animated juridical discussion.
2 What is a contract? What is the
obligation of a contract? What is impairing a contract? To what classes of
laws does the prohibition apply? To what extent does it reach, so as to
control prospective legislation on the subject of contracts? These and
many other questions, of no small nicety and intricacy, have vexed the
legislative halls, as well as the judicial tribunals, with an uncounted
variety and frequency of litigation and speculation.
§ 1370. In the first place, what is to
be deemed a contract, in the constitutional sense of this clause? A
contract is an agreement to do, or not to do, a particular thing;
3 or (as was said on another
occasion) a contract is a compact between two or more persons.
4 A contract is either executory,
or executed. An executory contract is one, in which a party binds himself
to do, or not to do a particular thing. An executed contract is one, in
which the object of the contract is performed. This differs in nothing
from a grant; 5 for a contract
executed conveys a chose in possession; a contract executory conveys only
a chose in action. 6 Since, then,
a grant is in fact a contract executed, the obligation of which continues;
and since the constitution uses the general term, contract,
without distinguishing between those, which are executory and those, which
are executed; it must be construed to comprehend the former, as well as
the latter. A state law, therefore; annulling conveyances between
individuals, and declaring, that the grantors should stand seized of their
former estates, notwithstanding those grants, would be as repugnant to the
constitution, as a state law discharging the vendors from the obligation
of executing their contracts of sale by conveyances. It would be strange,
indeed, if a contract to convey were secured by the constitution, while an
absolute conveyance remained unprotected. 7
That the contract, while executory, was obligatory; but when executed,
might be avoided.
§ 1371. Contracts, too, are express, or
implied. Express contracts are, where the terms of the agreement are
openly avowed, and uttered at the time of the making of it. Implied
contracts are such, as reason and justice dictate from the nature of the
transaction, and which therefore the law presumes, that every man
undertakes to perform. 8 The
constitution makes no distinction between the one class of contracts and
the other. It then equally embraces, and applies to both. Indeed, as by
far the largest class of contracts in civil society, in the ordinary
transactions of life, are implied, there would be very little object in
securing the inviolability of express contracts, if those, which are
implied, might be impaired by state legislation. The constitution is not
chargeable with such folly, or inconsistency. Every grant in its own
nature amounts to an extinguishment of the right of the grantor, and
implies a contract not to re-assert it. A party is, therefore, always
estopped by his own grant. 9 How
absurd would it be to provide, that an express covenant by him, as a
muniment attendant upon the estate, should bind him for ever, because
executory, and resting in action; and yet, that he might re-assert his
title to the estate, and dispossess his grantee, because there was only an
implied covenant not to re-assert it.
§ 1372. In the next place, what is the
obligation of a contract? It would seem difficult to substitute words more
intelligible, or less liable to misconstruction, than these. And yet they
have given rise to much acute disquisition, as to their real meaning in
the constitution. It has been said, that right and obligation are
correlative terms. Whatever I, by my contract, give another a right to
require of me, I, by that act, lay myself under an obligation to yield or
bestow. The obligation of every contract, then, will consist of that
right, or power over my will or actions, which I, by my contract, confer
on another. And that right and power will be found to be measured, neither
by moral law alone, nor by universal law alone, nor by the laws of society
alone; but by a combination of the three; an operation, in which the moral
law is explained, and applied by the law of nature, and both modified and
adapted to the exigencies of society by positive law. In an advanced state
or society, all contracts or men receive a relative, and not a positive
interpretation. The state construes them, the state applies them, the
state controls them, and the state decides, how far the social exercise of
the rights, they give over each other, can be justly asserted.
10 Again, it has been said, that
the constitution distinguishes between a contract, and the obligation of a
contract. The latter is the law, which binds the parties to perform their
agreement. The law, then, which has this binding obligation, must govern
and control the contract in every shape, in which it is intended to bear
upon it. 11 Again, it has been
said; that the obligation of a contract consists in the power and efficacy
of the law, which applies to, and enforces performance of it, or an
equivalent for non-performance. The obligation does not inhere, and
subsist in the contract itself, proprio vigore, but in the law
applicable to the contract. 12 And
again, it has been said, that a contract is an agreement of the parties;
and if it be not illegal, it binds them to the extent of their
stipulations. Thus, if a party contracts to pay a certain sum on a certain
day, the contract binds him to perform it on that day, and this is its
§ 1373. Without attempting to enter
into a minute examination of these various definitions, and explanations
of the obligation of contracts, or of the reasoning, by which they are
supported and illustrated; there are some considerations, which are
pre-supposed by all of them; and others, which enter into some, and are
excluded in others.
§ 1374. It seems agreed, that, when the
obligation of contracts is spoken of in the constitution, we are to
understand, not the mere moral, but the legal obligation of contracts. The
moral obligation of contracts is, so far as human society is concerned, of
an imperfect kind, which the parties are left free to obey or not, as they
please. It is addressed to the conscience of the parties, under the solemn
admonitions of accountability to the Supreme Being. No human lawgiver can
either impair, or reach it. The constitution has not in contemplation any
such obligations, but such only, as might be impaired by a state, if not
prohibited. 14 It is the civil
obligation of contracts, which it is designed to reach, that is, the
obligation, which is recognised by, and results from the law of the state,
in which it is made. If, therefore, a contract, when made, is by the law
of the place declared to be illegal, or deemed to be a nullity, or a nude
pact, it has no civil obligation, because the law in such cases
forbids its having any binding efficacy, or force. It confers no legal
right on the one party, and no correspondent legal duty on the other.
There is no means allowed, or recognised to enforce it; for the maxim is,
ex nudo pacto non oritur actio. But when it does not fall within
the predicament of being either illegal, or void, its obligatory force is
coextensive with its stipulations.
§ 1375. Nor is this obligatory force so
much the result of the positive declarations of the municipal law, as of
the general principles of natural, or (as it is sometimes called)
universal law. In a state of nature, independent, of the obligations of
positive law, contracts may be formed, and their obligatory force be
complete. 15 Between independent
nations, treaties and compacts are formed, which are deemed universally
obligatory; and yet in no just sense can they be deemed dependent on
municipal law. 16 Nay, there may
exist (abstractly speaking) a perfect obligation in contracts, where there
is no known and adequate means to enforce them. As, for instance, between
independent nations, where their relative strength and power preclude the
possibility, on the side of the weaker party, of enforcing them. So in the
same government, where a contract is made by a state with one of its own
citizens, which yet its laws do not permit to be enforced by any action or
suit. In this predicament are the United States, who are not suable on any
contracts made by themselves; but no one doubts, that these are still
obligatory on the United States. Yet their obligation is not recognised by
any positive municipal law in a great variety of cases. It depends
altogether upon principles of public or universal law. Still, in these
cases there is a right in the one party to have the contract performed,
and a duty on the other side to perform it. But, generally speaking, when
we speak of the obligation of a contract, we include in the idea some
known means acknowledged by the municipal law to enforce it. Where all
such means are absolutely denied, the obligation of the contract is
understood to be impaired, though it may not be completely annihilated.
Rights may, indeed, exist without any present adequate correspondent
remedies between private persons. Thus, a state may refuse to allow
imprisonment for debt; and the debtor may have no property. But still the
right of the creditor remains; and he may enforce it against the future
property of the debtor. 17 So a
debtor may die without leaving any known estate, or without any known
representative. In such cases we should not say, that the right of the
creditor was gone; but only, that there was nothing, on which it could
presently operate. But suppose an administrator should be appointed, and
property in contingency should fall in, the right might then be enforced
to the extent of the existing means.
§ 1376. The civil obligation of a
contract, then, though it can never arise, or exist contrary to positive
law, may arise or exist independently of it; 18
and it may be, exist, notwithstanding there may be no present adequate
remedy to enforce it. Wherever the municipal law recognises an absolute
duty to perform a contract, there the obligation to perform it is
complete, although there may not be a perfect remedy.
§ 1377. But much diversity of opinion
has been exhibited upon another point; how far the existing law enters
into, and forms a part of the contract. It has been contended by some
learned minds, that the municipal law of the place, where a contract is
made, forms a part of it, and travels with it, wherever the parties to it
may be found. 19 If this were
admitted to be true, the consequence would be, that all the existing laws
of a state, being incorporated into the contract, would constitute a part
of its stipulations, so that a legislative repeal of such laws would not
in any manner affect it. 20 Thus,
if there existed at the time a statute of limitations, operating on such
contracts, or an insolvent act, under which they might be discharged, no
subsequent repeal of either could vary the rights of the parties, as to
using them, as a bar to a suit upon such contracts. If, therefore, the
legislature should provide by a law, that all contracts thereafter made
should be subject to the entire control of the legislature, as to their
obligation, validity, and execution, whatever might be their terms, they
would be completely within the legislative power, and might be impaired,
or extinguished by future laws; thus having, a complete ex post facto
operation. Nay, if the legislature should pass a law declaring, that all
future contracts might be discharged by a tender of any thing, or things,
besides gold and silver, there would be great difficulty in affirming them
to be unconstitutional; since it would become a part of the stipulations
of the contract. And yet it is obvious, that it would annihilate the whole
prohibition of the constitution upon the subject of tender laws.
§ 1378. It has, therefore, been
judicially held by a majority of the Supreme Court, that such a doctrine
is untenable. Although the law of the place acts upon a contract, and
governs its construction, validity, and obligation, it constitutes no part
of it. The effect of such a principle would be a mischievous abridgment of
legislative power over subjects within the proper jurisdiction of states,
by arresting their power to repeal, or modify such laws with respect to
existing contracts. 22 The law
necessarily steps in to explain, and construe the stipulations of parties,
but never to supersede, or vary them. A great mass of human transactions
depends upon implied contracts, upon contracts, not written, which grow
out of the acts of the parties. In such cases the parties are supposed to
have made those stipulations, which, as honest, fair, and just men, they
ought to have made. When the law assumes, that the parties have made these
stipulations, it does not vary their contract, or introduce new terms into
it; but it declares, that certain acts, unexplained by compact, impose
certain duties, and that the parties had stipulated for their performance.
The difference is obvious between this, and the introduction of a new
condition into a contract drawn out in writing, in which the parties have
expressed every thing, that is to be done by either. 23
So, if there be a written contract, which does not include every term,
which is ordinarily and fairly to be implied, as accompanying what is
stated, the law performs the office only of expressing, what is thus
tacitly admitted by the parties to be a part of their intention. To such
an extent the law acts upon contracts. It performs the office of
interpretation. But this is very different from supposing, that every law,
applicable to the subject matter, as a statute of limitations, or a
statute of insolvency, enters into the contract, and becomes a part of
the contract. Such a supposition is neither called for by the terms of the
contract, nor can be fairly presumed to be contemplated by the parties, as
matters ex contractu. The parties know, that they must obey the
laws; and that the laws act upon their contracts, whatever may be their
§ 1379. In the next place, what may
properly be deemed impairing the obligation, of contracts in the sense of
the constitution? It is perfectly clear, that any law, which enlarges,
abridges, or in any manner changes the intention of the parties, resulting
from the stipulations in the contract, necessarily impairs it. The manner
or degree, in which this change is effected, can in no respect influence
the conclusion; for whether the law affect the validity, the construction,
the duration, the discharge, or the evidence of the contract, it impairs
its obligation, though it may not do so to the same extent in all the
supposed cases. 25 Any deviation
from its terms by postponing, or accelerating the period of performance,
which it prescribes; imposing conditions not expressed in the contract; or
dispensing with the performance of those, which are a part of the
contract; however minute or apparently immaterial in their effect upon it,
impair its obligation. 26 A
fortiori, a law, which makes the contract wholly invalid, or
extinguishes, or releases it, is a law impairing it. 27
Nor is this all. Although there is a distinction between the obligation of
a contract, and a remedy upon it; yet if there are certain remedies
existing at the time, when it is made, all of which are afterwards wholly
extinguished by new laws, so that there remain no means or enforcing its
obligation, and no redress; such an abolition of all remedies, operating
in presenti, is also an impairing of the obligation of such
contract. 28 But every change and
modification of the remedy does not involve such a consequence. No one
will doubt, that the legislature may vary the nature and extent of
remedies, so always, that some substantive remedy be in fact left. Nor can
it be doubted, that the legislature may prescribe the times and modes, in
which remedies may be pursued; and bar suits not brought within such
periods, and not pursued in such modes. Statutes of limitations are of
this nature; and have never been supposed to destroy the obligation of
contracts, but to prescribe the times, within which that obligation shall
be enforced by a suit; and in default to deem it either satisfied, or
abandoned. 29 The obligation to
perform a contract is coeval with the undertaking to perform it. It
originates with the contract itself, and operates anterior to the time of
performance. The remedy acts upon the broken contract, and enforces a
pre-existing obligation. 30 And a
state legislature may discharge a party from imprisonment upon a judgment
in a civil case of contract, without infringing the constitution; for this
is but a modification of the remedy, and does not impair the obligation of
the contract. 31 So, if a party
should be in gaol, and give a bond for the prison liberties, and to remain
a true prisoner, until lawfully discharged, a subsequent discharge by an
act of the legislature would not impair the contract; for it would be a
lawful discharge in the sense of the bond. 32
§ 1380. These general considerations
naturally conduct us to some more difficult inquiries growing out of them;
and upon which there has been a very great diversity of judicial opinion.
The great object of the framers of the constitution undoubtedly was, to
secure the inviolability of contracts. This principle was to be protected
in whatever form it might be assailed. No enumeration was attempted to be
made of the modes, by which contracts might be impaired. It would have
been unwise to have made such an enumeration, since it might have been
defective; and the intention was to prohibit every mode or device for such
purpose. The prohibition was universal. 33
§ 1381. The question has arisen, and
has been most elaborately discussed, how far the states may
constitutionally pass an insolvent law, which shall discharge the
obligation of contracts. It is not doubted, that the states may pass
insolvent laws, which shall discharge the person, or operate in the nature
of a cessio bonorum, provided such laws do not discharge, or
intermeddle with the obligation of contracts. Nor is it denied, that
insolvent laws, which discharge the obligation of contracts, made
antecedently to their passage, are unconstitutional. 34
But the question is, how far the states may constitutionally pass
insolvent laws, which shall operate upon, and discharge contracts, which
are made subsequently to their passage. After the most ample argument it
has at length been settled by a majority of the Supreme Court, that the
states may constitutionally pass such laws operating upon future
§ 1382. The learned judges, who held
the affirmative, were not all agreed, as to the grounds of their opinions.
But their judgment rests on some one of the following grounds: (1.) Some
of the judges held, that the law of the place, where a contract is made,
not only regulates, and governs it, but constitutes a part of the contract
itself; and, consequently, that an insolvent law, which, in the event of
insolvency of the party, authorizes a discharge of the contract is
obligatory as a part the contract. (2.) Others held, that, though the law
of the place formed no part of the contract, yet the latter derived its
whole obligation from that law, and was controlled by its provisions; and,
consequently, that its obligation could extend no further, than the law,
which caused the obligation; and if it was subject to be discharged in
case of insolvency, the law so far controlled, and limited its obligation.
(3.) That the connexion with the other parts of the clause, (bills of
attainder and ex post facto laws,) as they applied to
retrospective legislation, fortified the conclusion, that the intention in
this part was only to prohibit the like legislation. (4.) That the known
history of the country, as to insolvent laws, and their having constituted
a part of the acknowledged jurisprudence of several of the states for a
long period, forbade the supposition, that under such a general phrase, as
laws impairing the obligation of contracts, insolvent laws, in the
ordinary administration of justice, could have been intentionally
included. (5.) That, whenever any person enters into a contract, his
assent may be properly inferred to abide by those rules in the
administration of justice, which belong to the jurisprudence of the
country of the contract. And, when he is compelled to pursue his debtor in
other states, he is equally bound to acquiesce in the law of the latter,
to which he subjects himself. (6.) That the law of the contract remains
the same every where, and will be the same in every tribunal. But the
remedy necessarily varies, and with it the effect of the constitutional
pledge, which can only have relation to the laws of distributive justice,
known to the policy of each state severally. These and other auxiliary
grounds, which were illustrated by a great variety of arguments, which
scarcely admit of abridgment, were deemed satisfactory to the majority of
§ 1383. The minority of the judges
maintained their opinions upon the following grounds: (1.) That the words
of the clause in the constitution, taken in their natural and obvious
sense, admit of a prospective, as well as of a retrospective operation.
(2.) That an act of the legislature does not enter into the contract, and
become one of the conditions stipulated by the parties; nor does it act
externally on the agreement, unless it have the full force of law. (3.)
That contracts derive their obligation from the act of the parties, and
not from the grant of the government. And the right of the government to
regulate the manner, in which they shall be formed, or to prohibit such as
may be against the policy of the state, is entirely consistent with their
inviolability, after they have been formed. (4.) That the obligation of a
contract is not identified with the means, which government may furnish to
enforce it. And that a prohibition to pass any law impairing it does not
imply a prohibition to vary the remedy. Nor does a power to vary the
remedy imply a power to impair the obligation derived from the act of the
parties. (5.) That the history of the times justified this interpretation
of the clause. The power of changing the relative situation of debtor and
creditor, and of interfering with contracts, had been carried to such an
excess by the state legislature, as to break in upon all the ordinary
intercourse of society, and to destroy all private confidence. It was a
great object to prevent for the future such mischievous measures. (6.)
That the clause, in its terms, purports to be perpetual; and the
principle, to be of any value, must be perpetual. It is expressed in terms
sufficiently broad to operate in all future times; and the just inference,
therefore, is, that it was so intended. But if the other interpretation of
it be adopted, the clause will become of little effect; and the
constitution will have imposed a restriction, in language indicating
perpetuity, which every state in the Union may elude at pleasure. The
obligation of contracts in force at any given time is but of short
duration; and if the prohibition be of retrospective laws only, a very
short lapse of time will remove every subject, upon which state laws are
forbidden to operate, and make this provision of the constitution so far
useless. Instead of introducing a great principle, prohibiting all laws of
this noxious character, the constitution will suspend their operation only
for a moment, or except pre-existing cases from it. The nature of the
provision is thus essentially changed. Instead of being a prohibition to
pass laws impairing the obligation of contracts, it is only a prohibition
to pass retrospective laws. (7.) That there is the less reason for
adopting such a construction, since the state laws, which produced the
mischief, were prospective, as well as retrospective. 35
§ 1384. The question is now understood
to be finally at rest; and state insolvent laws, discharging the
obligation of future contracts, are to be deemed constitutional. Still a
very important point remains to be examined; and that is, to what
contracts such laws can rightfully apply. The result of the various
decisions on this subject is, (1.) That they apply to all contracts made
within the state between citizens of the state. (2.) That they do not
apply to contracts made within the state between a citizen of a state, and
a citizen of another state. (3.) That they do not apply to contracts not
made within the state. In all these cases it is considered, that the state
does not possess a jurisdiction, coextensive with the contract, over the
parties; and therefore, that the constitution of the United States
protects them from prospective, as well as retrospective legislation.
36 Still, however, if a creditor
voluntarily makes himself a party to the proceedings under an insolvent
law of a state, which discharges the contract, and accepts a dividend
declared under such law, he will be bound by his own act, and be deemed to
have abandoned his extra-territorial immunity. 37
Of course, the constitutional prohibition does not apply to insolvent, or
other laws passed before the adoption of the constitution, operating upon
contracts and rights of property vested, and in esse before that
time. 38 And it may be added, that
state insolvent laws have no operation whatsoever on contracts made with
the United States; for such contracts are in no manner whatsoever subject
to state jurisdiction. 39
§ 1385. It has been already stated,
that a grant is a contract within the meaning of the constitution, as much
as an unexecuted agreement. The prohibition, therefore, equally reaches
all interferences with private grants and private conveyances, of whatever
nature they may be. But it has been made a question, whether it applies,
in the same extent, to contracts and grants of a state created directly by
a law, or made by some authorized agent in pursuance of a law. It has been
suggested, that, in such cases, it is to be deemed an act of the
legislative power; and that all laws are repealable by the same authority,
which enacted them. But it has been decided upon solemn argument, that
contracts and grants made by a state are not less within the reach of the
prohibition, than contracts and grants of private persons; that the
question is not, whether such contracts or grants are made directly by law
in the form of legislation, or in any other form, but whether they exist
at all. The legislature may, by a law, directly make a grant; and such
grant, when once made, becomes irrevocable, and cannot be constitutionally
impaired. So the legislature may make a contract with individuals directly
by a law, pledging the state to a performance of it; and then, when it is
accepted, it is equally under the protection of the constitution. Thus,
where a state authorized a sale of its public lands, and the sale was
accordingly made, and conveyances given, it was held, that those
conveyances could not be rescinded, or revoked by the state.
40 So where a state, by a law,
entered into a contract with certain Indians to exempt their lands from
taxation for a valuable consideration, it was held, that the exemption
could not be revoked. 41 And
grants of land, once voluntarily made by a state, by a special law, or
under general laws, when once perfected, are equally as incapable of being
resumed by a subsequent law, as those founded on a valuable consideration.
Thus, if a state grant glebe lands, or other lands to parishes, towns, or
private persons gratuitously, they constitute irrevocable executed
contracts. 42 And it may be laid
down as a general principle, that, whenever a law is in its own nature a
contract, and absolute rights have vested under it, a repeal of that law
cannot divest those rights, or annihilate or impair the title so acquired.
A grant (as has been already stated) amounts to an extinguishment of the
right of the grantor, and implies a contract not to reassert it.
§ 1386. The cases above spoken of are
cases, in which rights of property are concerned, and are, manifestly,
within the scope of the prohibition. But a question, of a more nice and
delicate nature, has been also litigated; and that is, how far charters,
granted by a state, are contracts within the meaning of the constitution.
That the framers of the constitution did not intend to restrain the states
in the regulation of their civil institutions, adopted for internal
government, is admitted; and it has never been so construed. It has always
been understood, that the contracts spoken of in the constitution were
those, which respected property, or some other object of value, and which
conferred rights capable of being asserted in a court of justice.
44 A charter is certainly in form
and substance a contract; it is a grant of powers, rights, and privileges;
and it usually gives a capacity to take and to hold property. Where a
charter creates a corporation, it emphatically confers this capacity; for
it is an incident to a corporation, (unless prohibited,) to take and to
hold property. A charter granted to private persons, for private purposes,
is within the terms, and the reason of the prohibition. It confers rights
and privileges, upon the faith of which it is accepted. It imparts
obligations and duties on their part, which they are not at liberty to
disregard; and it implies a contract on the part of the legislature, that
the rights and privileges, so granted, shall be enjoyed. It is wholly
immaterial, in such cases, whether the corporation take for their own
private benefit, or for the benefit of other persons. A grant to a private
trustee, for the benefit of a particular cestui que trust, is not
less a contract, than if the trustee should take for his own benefit. A
charter to a bank, or insurance, or turnpike company, is certainly a
contract, founded in a valuable consideration. But it is not more so, than
a charter incorporating persons for the erection and support of a hospital
for the aged, the sick, or the infirm, which is to be supported by private
contributions, or is founded upon private charity. If the state should
make a grant of funds, in aid of such a corporation, it has never been
supposed, that it could revoke them at its pleasure. It would have no
remaining authority over the corporation, but that, which is judicial, to
enforce the proper administration of the trust. Neither is a grant less a
contract, though no beneficial interest accrues to the possessor. Many a
purchase, whether corporate or not, may, in point of fact, be of no
exchangeable value to the owners; and yet the grants confirming them are
not less within the protection of the constitution. All incorporeal
hereditaments, such as immunities, dignities, offices, and franchises, are
in law deemed valuable rights, and wherever they are subjects of a
contract or grant, they are just as much within the reach of the
constitution, as any other grants; for the constitution makes no account
of the greater, or less value of any thing granted. All corporate
franchises are legal estates. They are powers coupled with an interest;
and the corporators have vested rights in their character as corporators.
§ 1387. A charter, then, being a
contract within the scope of the constitution, the next consideration,
which has arisen upon this important subject, is, whether the principle
applies to all charters, public as well as private. Corporations are
divisible into two sorts, such as are strictly public, and such as are
private. Within the former denomination are included all corporations,
created for public purposes only, such as cities, towns, parishes, and
other public bodies. Within the latter denomination all corporations are
included, which do not strictly belong to the former. There is no doubt,
as to public corporations, which exist only for public purposes, that the
legislature may change, modify, enlarge, and restrain them; with this
limitation, however, that property, held by such corporation, shall still
be secured for the use of those, for whom, and at whose expense it has
been acquired. 46 The principle
may be stated in a more general form. If a charter be a mere grant of
political power, if it create a civil institution, to be employed in the
administration of the government, or, if the funds be public property
alone, and the government alone be interested in the management of them,
the legislative power over such charter is not restrained by the
constitution, but remains unlimited. 47
The reason is, that it is only a mode of exercising public rights and
public powers, for the promotion of the general interest; and, therefore,
it must, from its very nature, remain subject to the legislative will, so
always that private rights are not infringed, or trenched upon.
§ 1388. But an attempt has been made to
press this principle much farther, and to exempt from the constitutional
prohibition all charters, which, though granted to private persons, are in
reality trusts for purposes and objects, which may, in a certain sense, be
deemed public and general. The first great case, in which this doctrine
became the subject of judicial examination and decision, was the case of
Dartmouth College. The legislature of New-Hampshire had, without the
consent of the corporation, passed an act changing the organization of the
original provincial charter of the college, and transferring all the
rights, privileges, and franchises from the old charter trustees to new
trustees, appointed under the act. The constitutionality of the act was
contested, and after solemn argument, it was deliberately held by the
Supreme Court, that the provincial charter was a contract within the
meaning of the constitution, and that the amendatory act was utterly void,
as impairing the obligation of that charter. The college was deemed, like
other colleges of private foundation, to be a private eleemosynary
institution, endowed, by its charter, with a capacity to take property
unconnected with the government. Its funds were bestowed upon the faith of
the charter, and those funds consisted entirely of private donations. It
is true, that the uses were in some sense public; that is, for the general
benefit, and not for the mere benefit of the corporators; but this did not
make the corporation a public corporation. It was a private institution
for general charity. It was not distinguishable in principle from a
private donation, vested in private trustees, for a public charity, or for
a particular purpose of beneficence. And the state itself, if it had
bestowed funds upon a charity of the same nature, could not resume those
funds. In short, the charter was deemed a contract, to which the
government, and the donors, and the trustees of the corporation, were all
parties. It was for a valuable consideration, for the security and
disposition of property, which was entrusted to the corporation upon the
faith of its terms; and the trustees acquired rights under it, which could
not be taken away; for they came to them clothed with trusts, which they
were obliged to perform, and could not constitutionally disregard. The
reasoning in the case, of which this is a very faint and imperfect
outline, should receive a diligent perusal; and it is difficult to present
it in an abridged form, without impairing its force, or breaking its
connexion. 48 The doctrine is held
to be equally applicable to grants of additional rights and privileges to
an existing corporation, and to the original charter, by which a
corporation is first brought into existence, and established: As soon as
the latter become organized and in esse, the charter becomes a
contract with the corporators. 49
§ 1389. It has not been thought any
objection to this interpretation, that the preservation of charters, and
other corporate rights, might not have been primarily, or even
secondarily, within the contemplation of the framers of the constitution,
when this clause was introduced. It is probable, that the other great
evils, already alluded to, constituted the main inducement to insert it,
where the temptations were more strong, and the interest more immediate
and striking, to induce a violation of contracts. But though the motive
may thus have been to reach other more pressing mischiefs, the prohibition
itself is made general. It is applicable to all contracts, and not
confined to the forms then most known, and most divided. Although a rare
or particular case may not of itself be of sufficient magnitude to induce
the establishment of a constitutional rule; yet it must be governed by
that rule, when established, unless some plain and strong reason for
excluding it can be given. It is not sufficient to show, that it may not
have been foreseen, or intentionally provided for. To exclude it, it is
necessary to go farther, and show, that if the case had been suggested,
the language of the convention would have been varied so, as to exclude
and except it. Where a case falls within the words or a rule or
prohibition, it must be held within its operation, unless there is
something obviously absurd, or mischievous, or repugnant to the general
spirit of the instrument, arising from such a construction. 50
No such absurdity, mischief, or repugnancy, can be pretended in the
present case. On the contrary, every reason of justice, convenience; and
policy unite to prove the wisdom of embracing it in the prohibition. An
impregnable barrier is thus thrown around all rights and franchises
derived from the states, and solidity and inviolability are given to the
literary, charitable, religious, and commercial institutions of the
§ 1390. It has also been made a
question, whether a compact between two states, is within the scope of the
prohibition. And this also has been decided in the affirmative.
52 The terms, compact and
contract, are synonymous; and, when propositions are offered by one state,
and agreed to and accepted by another, they necessarily constitute a
contract between them. There is no difference, in reason or in law, to
distinguish between contracts made by a state with individuals, and
contracts made between states. Each ought to be equally inviolable.
53 Thus, where, upon the
separation of Kentucky from Virginia, it was agreed by compact between
them, that all private rights and interests in lands in Kentucky, derived
from the laws of Virginia, should remain valid and secure under the laws
of Kentucky, and should be determined by the laws then existing in
Virginia; it was held by the Supreme Court, that certain laws of Kentucky,
(commonly called the occupying claimant laws,) which varied and restricted
the rights and remedies of the owners of such lands, were void, because
they impaired the obligation of the contract. Nothing (said the court) can
be more clear upon principles of law and reason, than that a law, which
denies to the owner of the land a remedy to secure the possession of it,
when withheld by any person, however innocently he may have obtained it;
or to recover the profits received from it by the occupant; or which clogs
his recovery of such possession and profits, by conditions and
restrictions, tending to diminish the value and amount of the thing
recovered; impairs his right to, and interest in, the property. If there
be no remedy to recover the possession, the law necessarily presumes a
want of right to it. If the remedy afforded be qualified and restrained by
conditions of any kind, the right of the owner may indeed subsist, and be
acknowledged; but it is impaired, and rendered insecure, according to the
nature and extent of such restrictions. 54
But statutes and limitations, which are mere regulations of the remedy,
for the purposes of general repose and quieting titles, are not supposed
to impair the right; but merely to provide for the prosecution of it
within a reasonable period and to deem the non-prosecution within the
period an abandonment of it. 55
§ 1391. Whether a state legislature has
authority to pass a law declaring a marriage void, or to award a divorce,
has, incidentally, been made a question, but has never yet come directly
in judgment. Marriage, though it be a civil institution, is understood to
constitute a solemn, obligatory contract between the parties. And it has
been, arguendo, denied, that a state legislature constitutionally
possesses authority to dissolve that contract against the will, and
without the default of either party. This point, however, may well be left
for more exact consideration, until it becomes the very ground of the lis
§ 1392. Before quitting this subject it
may be proper to remark, that as the prohibition, respecting ex post
facto laws, applies only to criminal cases; and the other is confined
to impairing the obligation of contracts; there are many laws of a
retrospective character, which may yet be constitutionally passed by the
state legislatures, however unjust, oppressive, or impolitic they may be.
57 Retrospective laws are, indeed,
generally unjust; and, as has been forcibly said, neither accord with
sound legislation, nor with the fundamental principles of the social
compact. 58 Still they are, with
the exceptions above stated, left open to the states, according to their
own constitutions of government; and become obligatory, if not prohibited
by the latter. Thus, for instance, where the legislature of Connecticut,
in 1795, passed a resolve, setting aside a decree of a court of probate
disapproving of a will, and granted a new hearing; it was held, that the
resolve, not being against any constitutional principle in that state, was
valid; and that the will, which was approved upon the new hearing, was
conclusive, as to the rights obtained under it. 59
There is nothing in the constitution of the United States, which forbids a
state legislature, from exercising judicial functions; nor from divesting
rights, vested by law in an individual; provided its effect be not to
impair the obligation of a contract. 60
If such a law be void, it is upon principles derived from the general
nature of free governments, and the necessary limitations created thereby,
or from the state restrictions upon the legislative authority, and not
from the prohibitions of the constitution of the United States. If a state
statute should, contrary to the general principles of law, declare, that
contracts founded upon an illegal or immoral consideration, or otherwise
void, should nevertheless be valid, and binding between the parties; its
retrospective character could not be denied; for the effect would be to
create a contract between the parties, where none had previously existed.
Yet it would not be reached by the constitution of the United States; for
to create a contract, and to impair or destroy one, can never be construed
to mean the same thing. It may be within the same mischief, and equally
unjust, and ruinous; but it does not fall within the terms of the
prohibition. 61 So, if a state
court should decide, that the relation of landlord and tenant did not
legally subsist between certain persons; and the legislature should pass a
declaratory act, declaring, that it did subsist; the act, so far as the
constitution of the United States is concerned, would be valid.
62 So, if a state legislature
should confirm a void sale, if it did not divest the settled rights of
property, it would be valid. 63
Nor (as has been already seen) would a state law, discharging a party from
imprisonment under a judgment upon a Contract, though passed subsequently
to the imprisonment, be an unconstitutional exercise of power; for it
would leave the obligation of the contract undisturbed. The states still
possess the rightful authority to abolish imprisonment for debt; and may
apply it to present, as well as to future imprisonment. 64
§ 1393. Whether, indeed, independently
of the constitution of the United States, the nature of republican and
free governments does not necessarily impose some restraints upon the
legislative power, has been much discussed. It seems to be the general
opinion, fortified by a strong current of judicial opinion, that since the
American revolution no state government can be presumed to possess the
tran[s]cendental sovereignty, to take away vested rights of property to
take the property of A. and transfer it to B. by a mere legislative act.
65 That government can scarcely be
deemed to be free, where the rights of property are left solely dependent
upon a legislative body, without any restraint. The fundamental maxims of
a free government seem to require, that the rights of personal liberty,
and private property, should be held sacred. At least, no court of
justice, in this country, would be warranted in assuming, that any state
legislature possessed a power to violate and disregard them; or that such
a power, so repugnant to the common principles of justice and civil
liberty, lurked under any general grant of legislative authority, or ought
to be implied from any general expression of the will of the people, in
the usual forms of the constitutional delegation of power. The people
ought not to be presumed to part with rights, so vital to their security
and well-being, without very strong, and positive declarations to that
§ 1394. The remaining prohibition in
this clause is, that no state shall "grant any title of nobility."
The reason of this prohibition is the same, as that, upon which the like
prohibition to the government of the nation is founded. Indeed, it would
be almost absurd to provide sedulously against such a power in the latter,
if the states were still left free to exercise it. It has been
emphatically said, that this is the corner-stone of a republican
government; for there can be little danger, while a nobility is excluded,
that the government will ever cease to be that of the people.
1. The Federalist, No. 44.
2. 1 Kent's Comm. Lect. 19, p. 387.
3. Sturgis v. Crowninshield,
4 Wheaton's R. 197. See also Green v. Biddle, 8 Wheat R. 92; Ogden
v. Saunders, 12 Wheat. R. 256, 297, 302, 316, 335; Gorden v.
Prince, 3 Wash. Cir. Ct. R. 319.
4. Fletcher v. Peck, 6
Cranch, 136; S.C. 2 Peters's Cond. R. 321.
5. Id. and 2 Black. Comm. 443.
6. 2 Black. Comm. 443.
7. Fletcher v. Peck, 6
Cranch's R. 137; 8. C. 2 Peters's Cond. R. 321, 322.
8. 2 Black. Comm. 443.
9. Fletcher v. Peck, 6
Cranch's R. 137; S. C. 2 Peters's Cond. R. 321, 322; Dartmouth College
v. Woodward, 4 Wheat. R. 657, 658, 688, 689.
10. Per Johnson J. in Ogden v.
Saunders, 12 Wheat. R. 281, 282.
11. Id. Washington J., p. 257, 258,
259; Thompson J., p. 300, 302; Trimble J., p. 316.
12. Id. Trimble J., p. 317, 318.
13. Id. Marshall C.J., p. 335, 314
to 346; Sturgis v. Crowninshield, 4 Wheat. R. 197; Fletcher v.
Peck, 6 Cranch's R. 137.
14. Ogden v. Saunders, 12
Wheaton's R. 257, 258, 280, 281, 300, 316 to 318, 337, 338.
15. Ogden v. Saunders, 12
Wheat. R. 281, 282; Id. 344 to 346; Id. 350.
16. Ogden v. Saunders, 12
Wheat. R. 280, 281, 344 to 346.
17. See Sturgis v. Crowninshield,
4 Wheat. 200, 201; Mason v. Haile, 12 Wheat R. 370.
18. Ogden v. Saunders, 12
Wheat. R. 344 to 346; Id. 350.
19. Ogden v. Saunders, 12
Wheat. R. 259, 260; Id. 297, 298, 302.
20. Ogden v. Saunders, 12 Wheat. R.
260, 261, 262, 284, 336 to 339.
21. Ogden v. Saunders, 12 Wheat. R.
284, 324, 325, 336 to 339.
22. Ogden v. Saunders, 12 Wheat. R.
23. Ogden v. Saunders, 12
Wheat. R. 341, 342.
24. Ogden v. Saunders, 12
Wheat. R. 284, 324, 325, 338, 339, 340, 343, 354.
25. Id. 256; Id. 327; Golden v.
Prince, 3 Wash. Cir. R. 319.
26. Green v. Biddle, 8
Wheat. R. 1, 84.
27. Sturgis v. Crowninshield,
4 Wheat. R. 197, 198.
28. Ogden v. Saunders, 12
Wheat. R. 284, 285, 327, 349, 350, 351, 352, 353; Sturgis v.
Crowninshield, 4 Wheat. R. 200, 201, 207.
29. Sturgis v. Crowninshield,
4 Wheat. R. 200, 206, 207; Mason v. Haile, 12 Wheat. R. 370, 380,
381; Ogden v. Saunders, 12 Wheat. R. 262, 263, 349, 350; Hawkins
v. Barney's Lessee, 5 Peters's Sup. R. 457.
30. Ogden v. Saunders, 12
Wheat. R. 349, 350.
31. Mason v. Haile, 12
Wheat. R. 370.
33. Sturgis v. Crowninshield,
4 Wheat. R. 199, 200.
34. Sturgis v. Crowninshield,
4 Wheat. R. 100; Farmers and Mechanics Bank v. Smith, 6 Wheat. R.
131; Ogden v. Saunders, 12 Wheat. R. 213.
35. See Ogden v. Saunders,
12 Wheat. R. p. 254 to 357.
36. Ogden v. Saunders, 12
Wheat. R. 358; McMullan v. Neil, 4 Wheat. R. 209.
37. Clay v. Smith, 3
Peters's Sup. R. 411.
38. Owings v. Speed, 5
Wheat. R. 420.
39. United States v. Wilson,
8 Wheat. R. 253.
40. Fletcher v. Peck, 6
Cranch. 87, 135; S. C. 2 Peters's Cond. R. 208; 1 Kent's Comm. Lect. 19,
41. New Jersey v. Wilson, 7
Cranch, 164; 8. C. 2 Peters's Cond. R. 457; 1 Kent's Comm. Lect. 19, p.
42. Terrett v. Taylor, 9
Cranch, 52; S. C. 3 Peters's Cond. R. 259; Town of Pawlet v. Clarke,
9 Cranch, 535; S. C. 3 Peters's Cond. R. 408; 1 Kent's Comm. Lect. 19, p.
43. Fletcher v. Peck, 6
Cranch 87, 135; S. C. 2 Peters's Cond. R. 308; 1 Kent's Comm. Lect. 19, p.
44. Dartmouth College v.
Woodward, 4 Wheat R. 518, 629.
45. Dartmouth College v.
Woodward, 4 Wheat. R. 518, 629, 630, 636, 638, 644, 645, 646, 647,
653, 656, 657, 658, 697, 698, 699, 700, 701, 702.
46. Terrett v. Taylor, 9
Cranch, 52; Dartmouth College v. Woodward, 4 Wheat. R. 663, 694.
47. Dartmouth College v.
Woodward, 4 Wheat. R. 518, 629, 630, 659, 663, 694, to 701.
48. Dartmouth College v.
Woodward, 4 Wheat R. 518, 624 et seq.; 1 Kent Comm. Lect 19, p. 389 to
49. Dartmouth College v.
Woodward, 4 Wheat. R. 518, 624 et seq.; 1 Kent. Comm. Lect. 19, p. 389
50. Dartmouth College v.
Woodward, 4 Wheat. 644, 645. See also Sturgis v. Crowninshield,
4 Wheat, R. 202.
51. 1 Kent. Comm. Lect. 19, p. 390.
52. Green v. Biddle, 8
Wheat. R. 1; 1 Kent. Comm. Lect. 19, p. 393; Sergeant on Constitution, ch.
28 [ch. 30.]
53. Green v. Biddle, 8
Wheat. R. 1, 92.
54. Green v. Biddle, 8
Wheat. R. 1, 75, 76.
55. Hawkins v. Barney's Lessee,
5 Peters's Sup. R. 457; Bank of Hamilton v. Dudley's Lessee, 2
Peters's Sup. R. 492.
56. Dartmouth College v.
Woodward, 4 Wheat. R. 629, 695, 696.
57. See Beach v. Woodhull, 1
Peters's Cir. Ct. R.; 2 Calder v. Bull, 3 Dall. R. 386; Satterlee
v. Mathewson, 2 Peters's Sup. R. 380; Wilkinson v. Leland, 2
Peters's Sup. R. 627, 661.
58. Patterson J. in Calder v.
Bull, 3 Dall. R. 397.
59. Calder v. Bull, 3 Dall.
60. Satterlee v. Mathewson,
2 Peters's Sup. R. 380, 413; Calder v. Bull, 3 Dall. R. 386. See
Olney v. Arnold, 3 Dall. R. 308; Wilkinson v. Leland, 2
Peters's Sup. R. 627.
61. Satterlee v. Mathewson,
2 Peters's Sup. R. 380, 412, 413.
62. Satterlee v. Mathewson,
2 Peters's Sup. R. 380, 412, 413.
63. Wilkinson v. Leland, 2
Peters's Sup. R. 627, 661.
64. Mason v. Haile, 2
Peters's Sup. R. 870.
65. Fletcher v. Peck, 6
Cranch, 67, 134.
66. Wilkinson v. Leland, 2
Peters's Sup. R. 627, 657. See also Satterlee v. Mathewson, 2
Peters's Sup. R. 380, 413, 414; Fletcher v. Peck, 6 Cranch, 67,
134; Tenett v. Taylor, 9 Cranch, 52; Town of Pawlet v.
Clark[e], 9 Cranch, 535. See also Sergeant on Const. ch. 28, [ch. 30.]
67. The Federalist, No. 84.
Next | Previous |
Contents | Text Version