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Constitution, and would unquestionably defeat the object of the clause.
A point of greater difficulty, and that upon which the decision of the question appears to have turned, was the nature of the original obligation of the contract made after the passage of such an insolvent law : whether it were unconditional to perform the very act stipulated; or whether a condition were im plied that, in the event of insolvency, the contract should be satisfied by a surrender of property. It was admitted on all hands that the Constitution refers to, and preserves the legal, not the moral obligation of a contract; because obligations purely moral are not enforced by the agency of human laws; and the restraints imposed on the states by the Constitution are intended for objects which, if not restrained, would be the subject of state legislation. The principle insisted on by the chief-justice was, that laws act upon a contract, and do not enter into it and become a stipulation of the parties. “Society," he observed, “affords a remedy for breaches of contract, and if that remedy has been applied, the claim to it is extinguished.” The external action of law upon contracts, by administering the remedy for their breach, is the usual exercise of legislative power; and an interference with those contracts, by introducing into them conditions not agreed to by the parties, would be a very unusual and extraordinary exercise of the power of legislation, and one not, certainly, to be gratuitously attributed to laws which do not profess to claim it.
If the law becomes part of the contract, change of place will not expunge the condition. A contract made in New-York would be the same
other state ; and would still retain the stipulation originally introduced into it—that the debtor should be dis
charged by the surrender of his estate. It cannot be true that contracts are entered into in contemplation of the insolvency of parties to be bound by them. They are framed with the expectation that they will be literally performed. Insolvency, undoubtedly, is a casualty which may possibly occur, but it is never expected. In the ordinary course of human transac. tions, if its probability be even suspected, security is taken against it. But when it comes unlooked for, it would be entirely contrary to reason to consider it as a part of the contract. However, therefore, a law may act upon contracts, it does not enter into them and become a part of them. The effect of such a principle would be a mischievous abridgment of legislative power over subjects within the proper jurisdiction of a state, by arresting its power to repeal or modify such laws with respect to existing contracts.
But it has been objected that “a contract, being a creature of civil society, derives its obligation from the law, which, although it may not enter into the agreement, still acts externally upon it, and determines how far the principle of coercion shall be applied to it; and this rule being universally understood, no individual can justly complain of its application to himself.” This argument was illustrated by reference to the statutes to prevent frauds, which require certain contracts to be reduced to writing, in order to render them obligatory ; to those against usury, which declare an usurious contract void from its origin; and to the statutes of limitations, which enable one party to prevent the other from enforcing the contract between them, after the expiration of a certain period from its breach or non-performance. But here the fallacy lies at the very foundation of the argument, as it assumes that the contract is the mere creature of civil society, and derives all its ob
ligation from human legislation ; that it is not the stipulation that the individual makes which binds him, but some declaration of the supreme power of the body politic to which he belongs; and that, though the original declaration to this effect be lost in remote antiquity, yet it must be presumed to be the origin of the obligation of contracts. It is, however, an objection of no considerable weight against the truth of this position, that no trace exists of any such enactment.
As far back as human research extends, we find the judicial power administering remedies to violated rights or broken contracts, and applying those remedies on the idea of a pre-existing obligation on every man to do that which he has promised to do; that the breach of this obligation is an injury for which the party has a just claim for compensation; and that society ought to afford him a remedy for that injury. We find, too, allusions to the modes of acquiring property ; but from the earliest time, we find no allusion to any supposed act of the governing power as giving obligation to contracts. On the contrary, all the proceedings respecting them, of which we know anything, support the notion of a pre-existing obligation, which human laws merely enforce.
Upon this supposition, that the obligation of the contract is derived from the agreement of the parties, let us proceed to inquire how far laws act externally upon contracts, and in that way control their obligation. It was not denied that a law might have such an effect upon subsequent contracts; nor that it may be capable of discharging a debtor, under the circumstances and conditions prescribed in the statute, which was relied on in the case referred to. that was an effect neither contemplated nor intended by the parties, an act of the Legislature can only have
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this operation when it has the full force of law. A law may determine the obligation of a contract on the happening of a contingency, because it is the law. But if it be not the law, it cannot have this effect; and when its existence or force as law is denied, they cannot either of them be proved by showing what are the qualities of a law. Law has been defined to be “a rule of civil conduct, prescribed by the supreme power in a state.” tem, the Legislature of a state is the supreme power in all cases in which its action is not restrained by the state constitution or the Constitution of the United States. Where it is so restrained, the state Legislature ceases to be the supreme power, and its acts are not law. It was, therefore, begging the question to say that, because contracts may be discharged by a law previously enacted, it was discharged in that case by the act of the Legislature set up for the purpose: for the question returned, Was that act LAW ? Was it consistent with, or repug. nant to, the Constitution of the United States ?
It was readily admitted that the whole subject of contracts was under the control of society, and thai all the power of society over them resides in the state legislatures, except in those special cases where restraint is imposed by the Federal Constitution. The extent of the restraint on the power to impair the obligation of contracts cannot, however, be ascertained by showing that the Legislature may prescribe the circumstances on which their original validity may be made to depend. If the legislative will were that certain agreements should be in writing ; that they should be sealed, and attested by a given number of witnesses ; that they should be recorded, or assume any prescribed form before they became obligatory, all these are regulations which society may rightfully make; and they do not come within the restriction of the Constitution, because they do not impair the obligation of the contract. The obligation must exist before it can be impaired; and a prohibition to impair it when made, does not imply an inability to prescribe those conditions which shall create its obligation. The statutes of frauds which have been enacted in the several states, and which are acknowledged to flow from the proper exercise of state sovereignty, prescribe regulations which must precede the obligation of the contract, and, consequently, cannot impair it. Acts of this description, therefore, are most clearly not within the prohibition. The acts against usury are of the same character : they declare the contract to be void from the beginning, and deny that the instrument ever became a contract ; they deny it all original obligation, and that it cannot, therefore, impair that which never came into existence. Statutes of limitation approach more nearly to the subject under consideration, but can never be identified with it : they defeat a contract once obligatory, but, as has been before observed, they relate only to the remedies furnished to enforce the contract, and their language is generally confined to the remedy ; they do not purport to dispense with the performance of the contract, but proceed upon the presumption that a certain length of time, if unexplained by circumstances, affords reasonable evidence of its having been performed. In prescribing the proofs that shall be received in their courts, and the effect of those proofs, the states exercise their acknowledged powers, as they also do in regulating the remedies and modes of proceeding in those courts.