utory as well as executed contracts, no difficulty seems to have presented itself in relation to the true construction of the clause

kept in repair by the city, it was held under a new charter containing no such restriction, that the same abuttors might be assessed for substituting Nicholson pavement. Bradley v. McAtee, 7 Bush, 667. And the exemption of a corporation from taxation does not cover land owned by it, but not used or occupied for its necessary purposes. State v. Newark, 1 Dutcher, 315.

Where a State Legislature has enacted that the bills of a certain bank shall be receivable for taxes, any such bills issued before the repeal of the law carry with them the privilege. Furman v. Nichol, 8 Wal. 44. But such privilege, though contained in a charter, may be repealed as to future issues. Graniteville &c. Co. v. Roper, 15 Rich. L. 138; State v. Stoll, 2 Rich. (N. S.) 558.

Although the subject has been considered in a few cases only, it seems settled that a State may, in a charter, bind itself by a collateral stipulation which restricts its power of eminent domain. Binghamton Bridge Case, 3 Wal. 51; California Tel. Co. v. Alta Tel. Co. 22 Cal. 398. In the Binghamton Bridge Case, a provision in the charter of a toll bridge that no other bridge should be built within two miles above or below the one in question on the same river, was sustained, and the State charter of a new free bridge company within the limits was held void, although a flourishing city had grown up at the place, and the old bridge was utterly inadequate for the public necessities.

Can a State under the form of a contract alienate its police power? This question has not been passed upon by the Supreme Court of the United States. The State courts, so far as they have spoken, answer it with a decided negative. Thorpe v. Rutland &c. R. R. 27 Vt. 149, per Redfield, C. J.; State v. Noyes, 47 Mo. 189; Indianapolis &c. R. R. v. Kercheval, 16 Ind. 84; Ohio &c. R. R. v. McClelland, 25 Ill. 140.

Where a State Constitution contained the following provision: "No man or set of men are entitled to exclusive separate public emoluments or privileges but in consideration of public services," it was held that a clause in the charter of a bank commuting its tax was constitutional. Daughdrill v. Ala. L. I. & T. Co. 31 Ala. 91; see also Bank v. New Albany, 11 Ind. 139.

Miscellaneous. The provision of the Constitution has no application to contracts entered into after a State statute reserving the power to alter or abrogate them. Thus, contracts made after the passage of a State insolvent law may be discharged by the operation of such law; and charters granted after the reservation of power therefor, may be changed or repealed. In re Empire B'k, 18 N. Y. 199; Roby v. Boswell, 23 Geo. 51; Guillotte v. New Orleans, 12 La. Ann. 432; but see Goenen v. Shroeder, 8 Minn. 387, that the Legislature cannot reserve the right to impair the obligation of contracts; and see remarks of Bradley, J., in Miller v. State, 15 Wall. 499.

A vote of a municipality-of the taxpayers or electors—to subscribe to the stock of a corporation is not a contract; there must be a subscription. Aspenwall v. Comm'rs of Daviess Co. 22 How. (U. S.) 364.

Such circumstances as might estop from doing certain acts do not constitute a contract not to do them. Thus, where land is taken under authority of the Legislature for a public park, the title being taken absolutely and the neighboring property being assessed for the benefit, the Legislature may authorize the use of the land for

in regard to agreements of a private character. All private contracts, in the ordinary legal application of that phrase, are understood to be embraced by it. If an agreement is such that

other purposes, although this will lessen the value of surrounding property. Brooklyn Park Comm'rs v. Armstrong, 45 N. Y. 234.

Causes of action ex delicto are not within the constitutional guaranty. Drehman v. Stifle, 8 Wal. 595.

What is included in the Contract, forming a part of it ?—The rate of interest does, and cannot be lowered by legislation. Myrick v. Battle, 5 Flor. 345. And if it cannot be lowered, for a like reason it cannot be raised; but days of grace, it is said, do not, and may be shortened by statute by the creation of a holiday. Barlow v. Gregory, 31 Conn. 261. This decision is plainly opposed to the ratio decidendi of the numerous cases in the Supreme Court of the United States defining the meaning of obligation." "Obligation" being the sum of legal rights and duties which the law creates from the facts of a contract, the right to three additional days of grace is as perfect, and as much a legal right inherent in the particular contract, as the duty to pay the paper at all. Because the parties do not expressly stipulate for three additional days, does not make the legal title to them any the less one of the essential features of this particular contract. To take away this right by statute is as plain a violation of the constitutional guaranty, as the taking away the right to interest after the debt became payable would be. This case is a very good illustration of the confusion which the State courts have thrown around a subject which is in itself simple and comprehensible-a confusion which results from an indisposition on the part of so many judges to appreciate the meaning of the word “obligation."

The security upon which a contract was entered into forms a part of the contract. Thus, where improvement bonds were issued with a lien on an entire tract, a statute authorizing the sale of a part of the tract free from the lien was held invalid. Brooklyn Park Comm'rs v. Armstrong, 45 N. Y. 234.

But the method in which the security is to be made available may be changed, provided the change is not injurious to the creditor. Thus, a statute was upheld which authorized receivers of an insolvent corporation, where its property was encumbered with mortgages the validity of which was questioned, and where the property was deteriorating, to sell such property clear of encumbrances, but to hold the proceeds subject to the lien and to abide the event. Potts v. New Jersey Arms Co. 2 C. E. Green, 395.

Where a charter delegates the power of eminent domain to a corporation, and provides a certain method for its exercise, this method, it has been held, does not form part of the contract between the State and the corporation. Thus, a certain provision in a charter prescribing the method of acquiring a right of flowage may, it has been held, be repealed, and a new method prescribed; and the right acquired under the original method may be divested by such repeal, and the party left to ac quire the right under the new method. Pick v. Rubicon &c. Co. 27 Wisc. 433; sed qu. Where the law, provided that purchasers of school lands should have the right to revive their contracts, though forfeitable for non-payment, at any time before a public sale; this provision, it was held, made a part of the contract with all who purchased school land under it, and they could only be deprived of their rights by a public sale. Damman v. Comm'rs, 4 Wisc. 414.

590

if executory it can be enforced in a court of justice, or that if executed a remedy can be sought for its violation or infringe ment, then it is a contract to be protected within the meaning of the constitutional clause. The precise extent and value of the protection, we shall consider when we consider the next head, as to what impairs the obligation of contracts.

But much more serious embarrassments present themselves in regard to rights or interests created by or under legislation; and many most interesting cases have been decided, as to the rules to be applied in this respect to legal enactments. endeavor to state, as briefly as I can with precision, the results I shall thus far arrived at.

Several years before the point was submitted to the Federal tribunals, it was said by one of the most eminent jurists of the country, that "rights legally vested in any corporation cannot be controlled or destroyed by any subsequent statute, unless a power for that purpose be reserved to the Legislature in the act of incorporation."* * The question of legislative contracts was first distinctly presented to the Supreme Court of the United States in a case involving the power of a State to repeal an act containing a grant of lands, and under which individual titles of bona fide purchasers had become vested. The Legislature of Georgia, on the 7th of January, 1795, passed an act in relation to their unappropriated territory; and on the 13th of January of the same year, letters patent for a portion of this land were issued, under and by virtue of the act, to Gwin and others. From Gwin and others the lands in question passed to one Greenleaf, by deed of the 22d of August, 1795; and from Greenleaf, by sundry mesne conveyances, to the defendant Peck; and he, by conveyance of the 14th of May, 1803, conveyed it to the plaintiff with a covenant, that the State of Georgia was, at the time of the passage of the above act of January, 1795, legally seized in fee of the soil; that the Legis lature had good right to convey; and further, that the title to the premises so conveyed by the State of Georgia, and finally vested in Peck, had been in no way constitutionally or legally

Per Parsons, C. J., Wales v. Stetson, decided in 1806, 2 Mass. 146.

impaired by virtue of any subsequent act of any subsequent Legislature of the State of Georgia. The declaration in the suit then averred that the passage of the act of the 7th of January, 1795, was obtained by undue influence and corruption, and that the Legislature of the State of Georgia afterwards, on the 13th of February, 1796, repealed the act of 1795, by an act declaring the former act, and all grants under it, null and void, and affirmed the whole territory in question to be vested in the State. The plea to this count set up that the grantees under the patent were citizens of other States than Georgia, and that they had no notice of the corrupt practices charged. On demurrer to this plea, the precise question presented was whether the act of the State of Georgia of 1796, repealing the act of 1795, could have any effect on the title of a purchaser, acquired under the prior act, for a valuable consideration and without notice; and it was decided by the Supreme Court, on very elaborate consideration, that as well upon general principles common to all free institutions, as on the particular provision which we are considering, no such effect could be given to the act of 1796. They held that the law of 1795 was in the nature of a contract; that absolute rights had vested under that contract; that the repeal of the act impaired the obligation of the contract; and that, consequently, the subsequent statute was unconstitutional and void. *

* Fletcher v. Peck, A.D. 1810, 6 Cranch, 136 to 138. These grants are familiarly known as the Yazoo grants.

The doubts and difficulties that at first existed as to this clause of the Constitution can be well seen in the opinion of Mr. Justice Johnson in this case, 6 Cranch, 144, 145.

Several interesting questions were discussed in this case. As to the general extent of legislative power, it was said that the valid ity of the rescinding act of 1796 might well be doubted, even were Georgia a single sovereign power. "To the Legislature all legis lative power is granted; but the question whether the act of 1796, transferring the property of an individual to the public, be in the nature of the legislative power, is well worthy of serious reflection." On the constitutional question, Johnson, J., dissented. He held that the obligation clause only applied to executory contracts, and put his concurrence with the court on the general doctrine. He said "I do not hesitate to declare that a

State does not possess the power of revoking its own grants. But I do it on a general principle, on the reason and nature of things, -a principle which will impose laws even upon the Deity."—Ibid. p. 143.

In regard to the question how far fraud could be alleged in an act of legislation, the chief justice said-"It may well be doubted how far the validity of a law depends on the motives of its framers, and how far the particular inducements operating on members of the supreme sovereign power of a State to the formation of a contract by that power, are examinable in a court of justice." See also Mr. J. Johnson's Opinion, p. 144. The subject was discussed at length. But it was said that at all events fraud of this kind could not be set up incidentally and collaterally; that it would be indecent in the extreme, upon a private contract between two individuals, to enter into an inquiry respecting the corrup tion of the sovereign power of a State.

I may observe, on this question of fraud,

A case was shortly afterwards presented, of much interest in regard to the general question of the sacredness of legislative grants, in connection with the early history of Virginia.* It appears, and indeed is judicially declared in this case, that at an early period the religious establishment of England, together with the general rights and authorities growing out of the common law of the mother country, was adopted in the colony of Virginia; and by various statutes passed from 1776 to 1788 the Legislature of the State confirmed and established the rights of the church to all its lands and other property. In 1798 a different public opinion prevailed in the State; and by two statutes passed in that year and in 1801, the Legislature repealed the previous legislation on the subject, as inconsistent with the principles of religious freedom declared by the Constitution, and asserted the right of the Legislature to all the prop erty of the Episcopal church in the State. The Supreme Court, however, held the grants contained in the original acts to be irrevocable, and that the acts of 1798 and 1801 were wholly inoperative. It may be remarked, however, that the decision in this case, although obviously correct, is placed by the court as much on the principles of natural justice, as on express provis ion; nor is the statement of the constitutional point very clear or well defined. Indeed, it is matter of interesting observation. to notice how gradually the legal mind of the country has approached the solution of our great constitutional questions, and with what sagacious caution the judiciary have generally declared their authority.

The precise question that we are now considering,—i. e., how far a legislative act is to be treated as a contract, was soon after presented in a broader shape. In the year 1754, a clergyman of the name of Wheelock established a charity school in Connecticut for the instruction of Indians in Christianity. De

that in Connecticut the following language has been used—“Fraud is not to be presumed; and when this court is called upon, in this collateral manner, to declare void an act of the General Assembly, upon the ground that it was fraudulently obtained, this fact should be clearly proved." The Derby Turnpike Co. v. Parks, 10 Conn. 540.

[That misrepresentation or fraud in ob

taining a legislative act will not, when shown in a collateral proceeding, invalidate the act, see Jersey City, &c. R. R. v. Jersey City, &c. R. R. 20 N. J. Eq. 61. And the same is true of bad motives on the part of the legislators. People v. Shepard, 36 N. Y. 285; State v. Cram, 16 Wisc. 343.-EDITOR.]

* Terrett v. Taylor, 9 Cranch, 43.