of the Supreme Court of the United States. (c) In the case of Kennedy v. Earl of Casillis, (d) an injunction had been unwarily granted in the English Court of Chancery, to restrain a party from proceeding in a suit in the Court of Sessions in Scotland, where the parties were domiciled. It was admitted that the Court of Sessions was a court of competent jurisdiction, and an independent foreign tribunal, though subject to an appeal like the Court of Chancery, to the House of Lords. If the Court of Chancery could in that way restrain proceedings in the Court of Sessions, the sessions might equally enjoin proceedings in chancery, and thus stop all proceedings in either court. Lord Eldon said he never meant to go further with the injunction than the property in England; and he, on motion, dissolved it in toto. (e)1

* (4.) No_state_can pass any law impairing the obligation *413 of contracts.

ligation of con

We come next to a prohibition of great moment, and affecting extensively and deeply the legislative authority of the No state can states. There is no prohibitory clause in the constitution impair the obwhich has given rise to more various and able discus- tracts. sions, or more protracted litigation, than that which denies to any state the right to pass any law impairing the obligation of contracts. I shall endeavor to give a full and accurate view of the judicial decisions defining and enforcing this prohibition.

The case of Fletcher v. Peck, (a) first brought this prohibitory clause into direct discussion. The legislature of Georgia, by an

(c) The assumed jurisdiction was not afterwards sustained; and a bill in equity in a state court for an injunction, though against an alien or citizen of another state, was held not to be such a suit as was removable to a Circuit Court of the United States. 1 Paige, 183.

(d) 2 Swanst. 313. But in the subsequent case of Bushby v. Munday, 5 Madd. Ch. 297, the Vice-Chancellor granted an injunction, under special circumstances, to restrain proceedings in the Court of Sessions in Scotland. The New York Court of Chancery has disclaimed any such jurisdiction, in respect to a foreign suit previously commenced, though it were in possession of jurisdiction over the person of the party. Mead v. Merritt, 1 Paige, 402.

(e) It has been assumed and asserted by official authority, that the judicial power of the United States had no power to enjoin the executive branch of the government from the execution of a constitutional duty or of a constitutional law, any more than they could arrest the legislature itself in passing the law. Opinions of the AttorneysGeneral, July 27, 1824, vol. i. 507, 508.

(a) 6 Cranch, 87.

VOL. I.

1 See Williams v. Ayrault, 31 Barb. (N.Y.) 864.

38

act of 7th of January, 1795, authorized the sale of a large tract of wild land, and a grant was made, by letters patent, in pursuance of the act, to a number of individuals, under the name of the Georgia Company. Fletcher held a deed from Peck for a part of this land, under a title derived from the patent; and in the deed Peck had covenanted that the state of Georgia was lawfully seised when the act was passed, and had good right to sell, and that the letters patent were lawfully issued, and the title has not since been legally impaired. The action was for breach of covenant; and the breach assigned was, that the letters patent were void, for that the legislature of Georgia, by act of 13th February, 1796, declared the preceding act to be null and void, as being founded in fraud and corruption. One of the questions presented to the Supreme Court upon the case was, whether the legislature of Georgia could constitutionally repeal the act of 1795, and rescind the sale made under it.

*414

*The court declared, that when a law was in its nature a contract, and absolute rights have vested under that contract, a repeal of the law could not devest those rights, nor annihilate or impair the title so acquired. A grant was a contract within the meaning of the constitution. The words of the constitution were construed to comprehend equally executory and executed contracts, for each of them contains obligations binding on the parties. A grant is a contract executed, and a party is always estopped by his own grant. A party cannot pronounce his own deed invalid, whatever cause may be assigned for its invalidity, and though that party be the legislature of a state. A grant amounts to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A grant from a state is as much protected by the operation of the provision of the constitution, as a grant from one individual to another; and the state is as much inhibited from impairing its own contracts, or a contract to which it is a party, as it is from impairing the obligation of contracts between two individuals.1 It was accordingly de

1 The State of Arkansas chartered a bank, of which it owned all the stock, and provided in the charter that the bills of the bank should be received in payment of debts due the state; held, that a repeal of that provision could not impair the obligations of the state to receive bills issued prior to the repeal in payment of debts due the state. Woodruff v. Trapnal, 10 How. U. S. 190; Paup v. Drew, Id. 218. What is an impairing of a contract is discussed in Baltimore & S. R. Co. v. Nesbit, 10 How. U. S. 395; Butler v. Pennsylvania, Id. 402; East Hartford v. Hartford Bridge Co. Id. 511. See post, vol. iii.

clared, that the 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 constitutionally disabled from passing any law whereby the estate of the plaintiff could be legally impaired and rendered void.

The next case that brought this provision in review before the Supreme Court, was that of The State of New Jersey v. Wilson. (a) It was there held, that if the legislature should declare by law, that certain lands, to be thereafter purchased for the use of the Indians, should not be subject to any tax, such a legislative act amounted to a contract, which could not be rescinded by a subsequent legislation. In that case, the colonial legislature of New Jersey, in 1758, authorized the purchase of lands for the

*

Delaware Indians, and made that stipulation. Lands were 415 accordingly purchased, and conveyed to trustees for the use

of the Indians, and the Indians released their claim to other lands, as a consideration for this purchase. The Indians occupied these lands until 1803, when they were sold to individuals under the authority of an act of the legislature, and, in 1804, the legislature repealed the act of 1758, exempting those lands from taxation. The act of 1758 was held to be a contract, and the act of 1804 was held to be a breach of that contract, and void under the constitution of the United States.

The Supreme Court went again, and more largely, into the consideration of this delicate and interesting constitutional doctrine, in the case of Terret v. Taylor. (a) It was there held, that a legis

(a) 7 Cranch, 164; In Brewster v. Hough, 10 N. Hamp. 138, it was held that the legislature of a state could not effectually devest itself of the power of taxation, for it was essentially a power of sovereignty or eminent domain, and the court considered the case of New Jersey v. Wilson might be sustained on the ground that it was in the nature of a treaty with the Indians. Ch. J. Marshall, in the case of Providence Bank v. Billings, 4 Peters U. S. 561, considered that it was not to be inferred, without positive stipulation, that a state had agreed to relinquish its power of taxation. But in Gordon v. Appeal Tax Court, 3 How. U. S. 133, it was adjudged that the legislature of a state might make a binding contract not to be impaired, to refrain from imposing any tax upon a bank or its stockholders. This would seem to remove the doubt suggested in the case in New Hampshire, and to show that a state may, in relation to any particular subject, and for reasons of public policy or consideration, contract that the sovereign power shall not be exercised. This point is ably discussed in the American Law Magazine for January, 1846, art. 4. State Bank of Ohio v. Knoop, 16 How. U. S. 369. And see Ohio L. Ins. & Trust Co. v. Debolt, 16 How. U. S. 416.

(a) 9 Cranch, 43.

lative grant, competently made, vested an indefeasible and irrevocable title. There is no authority or principle which could support the doctrine, that a legislative grant was revocable in its own nature, and held only durante bene placito. Nor can the legislature repeal statutes creating private corporations, or confirming to them property already acquired under the faith of previous laws, and by such repeal vest the property in others, without the consent or default of the corporators. Such a proceeding would be repugnant to the letter and spirit of the constitution, and to the principles of natural justice.

But it was in the great case of Dartmouth College v. Woodward, (b) that the inhibition upon the states to impair by law the obligation of contracts, received the most elaborate discussion, and the most efficient and instructive application. It was there held, that the charter granted by the British crown to the trustees of Dartmouth College in 1769 was a contract within the meaning of the constitution, and protected by it; and that the college was a private charitable institution not liable to the control of the * 416 legislature; and that the act of the legislature of New Hampshire, altering the charter in a material respect, without the consent of the corporation, was an act impairing the obligation of the charter, and consequently unconstitutional and void.

The chief justice, in delivering the opinion of the court, observed, that the provision in the constitution never had been understood to embrace other contracts than those which respect property, or some object of value, and confer rights which may be

(b) 4 Wheaton, 518.

1 In Christ's Church v. Phil. 24 How. U. S. 300, it was held by the Supreme Court of the U. S. that an exemption from taxation contained in the charter of a corporation granted by a state, was in its nature durante bene placito and revocable by subsequent act. It was adjudged, however, by the same court in the Jefferson Branch Bank v. Skelly, 1 Black, 436, that a state in chartering a corporation might in express terms, and for a consideration, contract that the corporation should be exempt from taxation, and that a contract so made was protected from subsequent legislation. In that case the charter provided that six per cent of the profits of the bank should be paid to the state in lieu of taxes. See, also, Piqua Branch of the State Bank of Ohio v. Knoop, 16 How. U. S. 369, and Dodge v. Woolsey, 18 How. U. S. 331, where the same point was determined. In the Jefferson Branch Bank v. Skelly, 9 Ohio State, 606, the Supreme Court of Ohio refused to follow the two last-mentioned cases, and held that the act imposing the tax was constitutional. But on appeal in the Supreme Court of the U. S. the judgment was reversed. 1 Black, 436, supra.

asserted in a court of justice. Dartmouth College was a private eleemosynary institution, endowed with a capacity to take property for objects unconnected with government, and its funds were bcstowed by individuals on the faith of the charter, and those funds consisted entirely of private donations. The corporation was not invested with any portion of political power, nor did it partake, in any degree, in the administration of civil government. It was the institution of a private corporation for general charity. The charter was a contract to which the donors, the trustees of the corporation, and the crown, were the original parties, and it was made on a valuable consideration, for the security and disposition of property. The legal interest, in every literary and charitable institution, is in trustees, and to be asserted by them, and they claim or defend in behalf of the religion, charity, and education, for which the corporation was created, and the private donations made. Contracts of this kind, creating these charitable institutions, are most reasonably within the purview and protection of the constitution. This contract remained unchanged by the Revolution; and the duties, as well as the powers of the government, devolved on the people of New Hampshire; but the act of that state which was complained of transferred the whole power of governing the college, from trustees appointed according to the will of the founder expressed in the charter, to the executive of New Hampshire. The will of the state was 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 institu- *417 tion, moulded according to the will of its founders, and placed under the control of private literary men, into a machine entirely subservient to the will of government. This was, consequently, subversive of that contract, on the faith of which the donors invested their property; and the act of the legislature of New Hampshire was therefore held to be repugnant to the constitution of the United States.1

*

1 See State v. Heyward, 3 Rich. 389. See, also, Toledo Bank v. Bond, 1 Ohio State, 622. It is held in this case that the charter of a private corporation is not a contract within the inhibition of the Constitution of the United States; and it is denied that the contrary doctrine received the sanction of a majority of the court in the Dartmouth College case.

A state, it seems, has no authority to impair rights acquired under a construction given to an act. Lambertson v. Hogan, 2 Barr, 22.

Where the state parts with property, even by gift, it is a contract not to impair the