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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 inhibition upon the states received the most elaborate discussion, and the most efficient and instructive plication.* 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 property."

* 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 people 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.

cussion, it was observed by the court that the objec. tion to a law, on the ground of its impairing the violation of contracts, did not depend on the extent of the change effected by the law; any deviation from the terms of the contract, by accelerating or postponing the period of performance, which the latter prescribes, imposing conditions not expressed in it, or dispensing with the performance of those which are, however minute or apparently immaterial or partial in their effect on he contract, impairs its obligation. The material point decided on this occasion was, that a compact between two states was a contract within the constitutional prohibition.*

Another case, which led to a very extensive inquiry into the operation of this constitutional restriction, arose under an insolvent act of New-York, passed in 1811. This law was retrospective, and discharged the debtor, upon his single petition and the surrender of his property, without the concurrence of any creditor, from all pre-existing debts, and from all liability and responsibility by reason of them. The court on this occasion recognised the doctrine adverted to in a former lecture, that until Congress exercise its power on the subject of bankruptcy, the individual states may pass bankrupt laws, provided they contain no provision violating the obligation of contracts. It was admitted that the states might discharge debtors from imprisonment, because imprisonment is no part of the contract, but only a means for coercing its performance. It was also admitted that a state may pass statutes of limitations, as they are termed, for these also relate only to the remedy, and not to the obligation of the contract; and it was stated that the insolvent laws of far the greater

* 8 Wheat., 1.

number of states only discharged the person of the debtor, and left the obligation to pay in full force. But a law which discharged the debtor from his contract, and released him without payment, impaired, because it entirely discharged the obligation of the contract; for it is to be observed that there is an obvious distinction, in the nature of things, between the obligation of a contract, and the remedy to enforce it. The latter may be modified as the wisdom of the Legislature may direct. But the Constitution, intending to restore and preserve completely the public credit and confidence, established as a fundamental principle that the former shall be inviolable.*

The case in which the above decision was made had arisen in the Federal Courts, and the contract existed when the state law was passed. But it was afterward held that there was no difference when the suit in such a case is brought in a court of the state of which both the parties were citizens, and in which the contract was made and the discharge obtained, and where the parties continue to reside until the suit be brought. A distinction, however, was taken in the courts of New-York and Massachusetts between a contract made before and one made after the passing of the state law. The doctrine they established was this, that an insolvent act in force when the contract was made did not, in the sense of the Constitution, impair its obligation, because the parties to every contract have reference to the existing laws of the country where it is made, and are presumed to make their contract in reference to them. This distinction was supposed to be consistent with the decision of the Supreme Court of the * 4 Wheat., 122. † 6 ibid., 131. ‡ 16 J. R., 233. 7 J. C. R., 297. 13 Mass. Rep., 1.

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United States; but in a subsequent case, where the discharge was under an insolvent law of a different state from that in which the contract was made, the Supreme Court went a step farther, and held that a discharge under such a law existing when the debt was contracted, was equally within the principle before established.*

It remained, however, to be settled whether a state could constitutionally pass an insolvent law which should effectually discharge the debtor from a debt contracted after the passing of the act, and within the state in which the law was passed. The general language of the court on the last occasion seemed to reach even this case; but the facts on which the question then arose did not cover the whole ground. The decision, therefore, was not authority to the extent mentioned; and it was subsequently ruled, by a bare majority of the court, and after much apparent hesitation, that a bankrupt or insolvent law of a state, discharging both the person of the debtor and his future acquisitions of property, is not a law" impairing the obligation of contracts," in respect to debts contracted within the state subsequently to its enactment.†

The venerable Chief-justice Marshall was among the minority of the court, and delivered the reasons for their dissent. He admitted that none of the former decisions comprehended the question then presented, and that it was, consequently, an open one. He also admitted that there was an essential difference in principle between laws that act on past or future contracts; and that, while those of the former description could seldom be justified, those of the latter were proper subjects of ordinary legislative dis

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