Imatges de pÓgina

a oinding obligation in relation to subjects of a valuable nature, which may be asserted in a court of justice; but it does not comprehend the political relations between a government and its citizens. The power possessed by a State Legislature to which everything not expressly reserved

is granted, and the temptations to abuse that power, render express restrictions, if not absolutely necessary, at least prudent and useful; but the National Legislature has no pow. er to interfere with contracts, except where it is expressly given to it. By the obligation of contracts, in the meaning and intendment of the Constitution, is understood not merely the moral, but the legal obligation; and in this sense a system of bankruptcy im. pairs the obligation of contracts, when it releases the party from the necessity of performing them; but Congress is expressly invested with this power in regard to bankruptcies, as an enumerated, and not as an implied power, and in no other form can it impair the obligation of a contract.

This prohibition in regard to the states extensive ly and deeply affects their legislative authority; and there is no part of the Federal Constitution that has given rise to more various and able discussions, or to more obstinate and protracted litigation. A com. pact between two states, or a grant from a state (which amounts to a contract) to individuals, is as much protected by it as a grant from one individual to another, and the state is as effectually inhibited from impairing its own contracts, or those to which it is a party, as it is from impairing the obligation of a contract between two individuals. The clause under consideration was first brought into direct judicial discussion by an act of the Legislature of Georgia, passed in the year 1795. This act authorized the sale of a large tract of wild land, in what

was called the Yazoo country, and a grant was made in pursuance of the law, to a number of individuals, under the name of the “ Georgia - Company.” But by an act passed the next year, the Legislature declared its previous grant to be null and void, on the ground of fraud and corruption in obtaining it. of the questions presented to the Supreme Court of the United States for decision arose upon a sale to a third person, by a grantee of the state under the first act, and it was this: Whether the Legislature of Georgia had the constitutional power to repeal the former law, and avoid the sale made under its author. ity. The court declared that, when a law in its na. ture imports a contract, and absolute rights have vested under it, its repeal could neither divest those rights, nor annihilate or impair the title thus acquired.* A party cannot pronounce his own deed invalid, whatever cause may be assigned to impeach it, although that party be the Legislature of a state. It was accordingly declared that an estate held under the act of 1795, having passed into the hands of a bona fide purchaser for a valuable consideration, the State of Georgia was disabled by the Constitution from passing any law by which that estate could be legally impaired and rendered void.

The next case in which this prohibition was brought in review was from the State of New-Jersey; on which occasion it was held that, where a State Legislature declared by law that certain lands to be purchased for the use of some Indians should not be subject to taxation, such act amounted to a contract, which could not be rescinded by a subsequent Legislature.f In this case the Colonial LegisJature, in 1758, authorized a purchase of lands for the Delaware Indians, and made the stipulation mentioned. The Indians occupied the land in pursuance of the law until the year 1803, when it was sold under the authority of the Legislature. In 1804, the Legislature repealed the act exempting the land from taxation; but the act of 1758 was held to be a contract, and that of 1804 a breach of it, and it was accordingly declared void, under the Constitution of the United States : thereby at once confirming the former decision, and recognising the principle alluded to in a former lecture, that a change of government does not affect the previously-vested rights of property. D o

'* 6 Cranch, 87.

+ 7 Cranch, 164.

In a subsequent case from the State of Virginia, the same points again arose, and the court went more largely into the consideration of this delicate and interesting constitutional doctrine, not only establishing the last-mentioned principle, in regard to the effect of a resolution on prior contracts, but at the same time declaring that a legislative grant, competently made, vested an indefeasible and irrevocable title.* There is, indeed, no authority which can support on principle the contrary position. Nor can the Legislature of a state repeal statutes creating private corporations, or confirming to them property acquired under the faith of previous laws, and by such repeal vest it in others, without the consent or default of the corporators. Such a provision would be equally repugnant to the letter and spirit of the Constitution, and to the principles of natural justice. But the provision we are considering has never been understood to embrace any other contracts than those relating to property, or some object of value, capable of being asserted in a court of justice.

* 9 Cranch, 43.

inhibition upon

Where the legal interest in literary or charitable institutions is vested by law in trustees, in order to promote the objects for which they were incorporated, and donations made to them, they are considered as within the protection of the Constitution; and it was in the great case of Dartmouth College that this

the states received the most elaborate discussion, and the most efficient and instructive application." It was there decided that the charter granted by the British crown to that institution, in 1769, was a contract within the meaning of the Constitution, and protected by the clause in question. It was held that the college was a private charitable institution, not liable to legislative control, and that a law of New Hampshire, altering the charter in a material point, without the consent of the corporation, was a “law impairing the obligation" of the charter, and it was, consequently, declared to be unconstitutional and void. Chief-justice Marshall, in delivering the opinion of the court, observed that “Dartmouth College was a private eleemosynary institution, endowed with a capacity to take and hold property for objects unconnected with government. Its funds were bestowed by individuals on the faith of the charter, and consisted entirely of private donations. The corporation was not invested with

any portion of political power, nor did it, in fact, partake in any degree in the administration of civil government. It was instituted as a private corporation for general charity; and the charter was a contract to which the donors, the trustees, and the crown were the original parties, and it was made on a valuable consideration for the security and disposition of prop


* 4 Wheat., 518.


The legal interest in every literary and charitable institution is vested in trustees, to be asserted by them, and they claim or defend in behalf of the object to promote which the corporation was created and the donations made. Contracts of this kind are most reasonably considered within the purview and protection of the Constitution. The one in question remained unchanged by the Revolution, and the duties as well as the powers of the former government devolved on the peopte of New-Hampshire. But the law of that state transferred the whole power of governing the college from the trustees, under the charter, to the executive of NewHampshire ; and the will of the state was thereby substituted for the will of the donors, in every essential operation of the college. The charter was reorganized in such a manner as to convert a literary institution, moulded according to the will of its founders, into a machine entirely subservient to the will of the state. A proceeding thus subversive of the contract on the faith of which the donors invested their property was, consequently, held to be repugnant to the Constitution. This celebrated case, it has been well said, * "contains one of the most full and elaborate expositions of the constitutional sanctity of contracts anywhere to be met with ; and has done more than any other single act proceeding from the authority of the United States to throw an impregnable barrier around all rights and franchises derived from the grant of government, and to give solidity and inviolability to the literary, charitable, and commercial institutions of the country.”

In another case, in which this prohibitory clause of the Federal Constitution came again under dis

* 1 Kent's Com.

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