and Co.'s Bank. The Supreme Court of the United States. lately decided in Hawthorne v. Calef, 2 that, when the charter of a railway company contained a clause making the property of the stockholders liable, to the amount of the stock held by them respectively, for the debts of the corporation, a subsequent repeal of this provision was void as against existing creditors, because it destroyed a contract made with them by the charter. § 602. It is settled, however, by a solemn judgment of the Supreme Court of the United States, that the states may exercise the right of eminent domain over corporations in the same manner and to the same extent as over individuals, that is, may take the corporate property and franchises for public use, upon paying just compensation therefor; such a proceeding on the part of a state will not impair the obligation of any contract contained in the charter. This proposition, which, as we have seen, has been maintained by several state tribunals, was finally established by the Supreme Court in West River Bridge Co. v. Dix.8 To this general description of statutes which apply to the very terms of contracts and thereby impair their obligation, I shall add a brief reference to the most important class of these laws, and to their effects upon the rights and duties of creditors and debtors. § 603. State Insolvent Laws.-The insolvent laws referred to are those which provide, under certain conditions and restrictions, for the absolute discharge of a debtor from his debts. Most states of the Union have statutes of this character as a part of their general scheme of legislation. We may examine the effect of such laws upon debts created before their passage. There can be no difficulty upon this point. The obligation of the contract would be not only impaired, but absolutely destroyed, the debtor being entirely released from doing what he agreed to do. This principle was established in the great case of Sturges v. Crowningshield, the Supreme Court having been unanimous in the result which was reached. 1 7 Smith's R. 9. 2 2 Wallace's R. 10. With this result all courts, state and national, have heartily agreed. I add, in the foot-note, a few cases in which the rule has been distinctly reaffirmed.1 § 604. We may also examine the effect of insolvent laws. upon contracts entered into subsequent to their passage. This question was presented in the great case of Ogden v. Saunders.2 Perhaps no case was ever argued before the Supreme Court with more care, and decided with more consideration. I have already spoken of this judgment somewhat at large, and need not repeat the arguments and separate conclusions of the judges. It was held by a majority of the court that a state insolvent law, providing for a discharge of a debtor from his debts, does not impair the obligation of contracts entered into subsequent to its passage, and while it continues in force. I am not able to see any doubt as to the correctness of this decision upon principle, and it seems remarkable that two such able jurists as Marshall and Story should have dissented. At all events the rule was thus settled, and has since been universally followed.3 § 605. Although not necessarily connected with the subjectmatter of this work, it is proper to state the practical rules which have been established in reference to the effect of an insolvent discharge. Such discharge operates upon two persons or classes of persons, the debtor and his creditors; upon the debtor favorably, by relieving him from his liabilities; upon the creditors unfavorably, by destroying their claims. Now the question arises, Does the discharge of a debtor by the laws of a state in which he is domiciled, operate upon the claims of all American creditors, no matter in what state they may reside? This question is partly constitutional, and is partly referable to that department of jurisprudence which modern writers term the private international law. The fun 1 Farmers' and Mechanics' Bank v. Smith, 6 Wheat. R. 131. Smith ". Mead, 3 Conn. R. 253. Boardman v. DeForrest, 5 Conn. R. 1. Roosevelt v. Cebra, 17 Johns. R. 108. Kimberly v. Ely, 6 Pick. R. 451. 2 12 Wheaton's R. 213. 3 Blanchard v. Russell, 13 Mass. R. 1. 480. Betts v. Bagley, 12 Pick. R. 572. Hemstead v. Reed, 6 Conn. R. damental principle established by the Supreme Court is, that the state domicil or inhabitancy of the creditor is the fact which determines the validity of a state insolvent discharge as against him; or, in other words, that these discharges have no extra-territorial effect as against the creditor. There may be three cases. § 606. First. The creditor and the debtor may be inhabi tants of the same state. Here, of course, the insolvent discharge granted in that state, destroys the creditor's claim. Being a member of the state, he is bound by its laws, and the obligation of the contract he entered into was created by those laws. This rule is so well settled, that I simply refer, in its support, to a few cases collected in the foot-note.1 § 607. Secondly. The creditor may be an inhabitant of a different state from the one in which the debtor obtains his discharge, and the contract may not, by its express terms, have been made payable in the latter commonwealth. The creditor is not bound, against his consent, by such a discharge. His claim still subsists, and may be enforced, notwithstanding the insolvency. These were the facts in Ogden v. Saunders. Ogden, then an inhabitant of New York, had accepted certain bills of exchange held by Saunders, a resident of Kentucky. Ogden was subsequently discharged in New York under the insolvent law of that state. Having afterwards removed to Louisiana, he was there sued upon these bills, and set up his discharge as a defence to the action. This defence the Supreme Court finally overruled.2 The same court reaffirmed the rule in Boyle v. Zacharie,3 and Cook v. Moffatt.1 State courts have acquiesced in this doctrine.5 § 608. Thirdly. The courts of Massachusetts and of one or two other states, however, have endeavored to engraft an exception upon the last mentioned rule, as follows: If the con 1 Ogden v. Saunders, 12 Wheat. R. 358. 314. Walsh v. Farrand, 13 Mass. R. 19. 366. 3 Peters' R. 348, 635. 5 Norton v. Cook, 9 Conn. R. 314. 18. Pugh v. Bussell, 2 Blackf. R. 366. Norton v. Cook, 9 Conn. R. Pugh v. Bussell, 2 Blackf. R. 2 12 Wheaton's R. 358, 369. 4 5 Howard's R. 295. Bradford v. Farrand, 13 Mass. R. tract, by its express terms, was to be performed in the state where the debtor resided, and where he obtained his discharge, the creditor, though an inhabitant of another state, is bound by that discharge. This statement of the rule would make the efficacy of the discharge to depend upon the locus of the contract, and not upon the domicil of the creditor. The Supreme Court of Massachusetts insisted upon this view in the old case of Blanchard v. Russell 1 (1816), and later, in that of Scribner v. Fisher 2 (1854). But the Court of Appeals of New York had considered the exact question, and had arrived at an opposite conclusion in Donelly v. Corbett (1852). Finally, the case of Baldwin v. Hale (1863), was carried to the Supreme Court of the United States, and the exception which the Massachusetts tribunals had endeavored to establish, was overruled; the place of performance was held immaterial; the domicil of the creditor, under all circumstances, was declared to be the determining fact. After this decision, the Massachusetts court gracefully receded from its position, and in Kelly v. Drury 5 (1864), adopted the views of the national judiciary. The Supreme Court again affirmed their rule in Gilman v. Lockwood (1867). 2. Laws which Apply Directly to the Remedy. § 609. What laws, if any, which apply directly to the remedy, fall within the inhibition of the Constitution, has given rise to much judicial controversy and conflict of decision. State courts of undoubted ability have asserted and maintained the proposition, that the remedy is completely under the control of the local law. Others of no less authority have admitted that the remedy may be interfered with to such an extent as to impair the obligation of contracts, but have virtually refused to apply this doctrine to cases where any remedy has been left, although its efficacy may have been materially diminished, or a resort to it may have been arbitrarily postponed. On the other hand, the Supreme Court of the United 2 2 Gray's R. 43. 59 Allen's R. 27. 1 13 Mass. R. 1. 3 3 Selden's R. 500. States has, in a series of important cases, established and applied the rule, that materially abridging or postponing the existing remedy, or imposing new conditions upon it which substantially interfere with its pursuit, have the effect to impair the obligation of contracts. But it must be admitted that the state courts have shown themselves very unwilling to accept these conclusions of the national tribunal, and the reasoning upon which they were founded, and to apply them in their integrity to subsequent cases as they have arisen. I believe, however, that the obscurity which has been thrown around this subject, and the direct contradiction of judicial decision which has been so frequent, have resulted in great measure from the employment of the word "remedy" in uncertain and even in double senses; that in this, as in so many other forensic disputes, the parties have not given to the same terms the same meaning; and that by a proper analysis it is possible to arrive at a general principle which may reconcile all conflict, and be a guide in the decision of all cases. § 610. It was shown in a former paragraph that a remedial right is included in the very notion of the obligation of a contract; that without such a right there would be nothing imperative in the rule of law requiring parties to do what they have agreed to do. Any state statute which impairs this remedial right in the case of an existing contract, as truly and as effectually impairs the obligation as though its operation had been directed against the very terms in which the parties had expressed their compact. This would seem to be self-evident. But lawyers, judges, and text-writers have not always distinguished between this intrinsic remedial, or sanctioning right, which is additional to the primary right flowing from the very terms of the contract, and which equally with it forms a part of the obligation, and the mere modes, the mere judicial procedure by means of which this secondary right is enforced. The word "remedy" has been applied to both, to the essential remedial right which is the final object of all judicial procedure, and to the procedure itself; a denial that the latter forms any part of the obligation has been tacitly or expressly extended to the former; and the whole remedy has |