# Ogden v. Saunders

> Supreme Court of the United States · March 13, 1827 · 25 U.S. 213

URL: https://www.frixlaw.com/law-library/cases/85530

## Case

- **Full name:** Ogden, Plaintiff in Error, Against Saunders, Defendant in Error
- **Court:** Supreme Court of the United States
- **Decided:** March 13, 1827
- **Citations:** 25 U.S. 213; 12 Wheat. 213; 6 L. Ed. 606; 1827 U.S. LEXIS 394
- **Precedential status:** Published
- **Opinion:** Opinion by Washington
- **Judges:** Justice'Trimble-, Cliief, Johnson, Washington, Thompson, Trimble, Marshall, Duvall, Story
- **Cited by:** 887 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/85530

## How later opinions describe it (automated extraction)

- holding that a claim of actual innocence must be supported by “new 26 27 1 Petitioner has filed both an original opposition, ECF No. 19, and a supplement, ECF No. 20. Although the second filing is not authorized by the local rules, I have considered both out of 28 an abundance…
- stating “that the intention of the [statute] must prevail; that this intention must be collected from its words; that its words are to be understood in that sense in which they are generally used by those for whom the [statute] was intended; [and] that its provisions are neith…
- explaining that the framers prohibited bills of attainder and ex post facto laws "in order to restrain the State legislatures from oppressing individuals by arbitrary sentences, clothed with the forms of legisla- ------'-tion, and from making retrospective laws applicable to c…
- explaining that “the substantial liberty interest at stake” warranted placing the burden on the government to “prove by clear and convincing evidence that [a 6 noncitizen] is a flight risk or a danger to the community to justify denial of bond’’
- explaining “that [a legal text’s] words are to be understood in that sense in which they are generally used by those for whom the instrument was intended”

## Opinion text

The learned judges delivered their opinions as follows c
Mr. Justice Washington.
The first and most important point to be decided in this cause turns essentially upon the question, whether the obligation of a contract is impaired by a State bankrupt or insolvent law, which discharges the person and the future acquisitions of the debtor from his liability under a contract entered into in that State after the passage of the act ?
This question has never before been distinctly presented to the consideration of this Court, and decided, although it has been supposed by the judges of a highly respectable State Court, that it was decided in the cáse of
M'Millan
v.
M‘Niel,
( 4
Wheat.
Rep. 209 .) That was the case of a debt contracted by two citizens of South Carolina, in that State, the discharge of which had a view to no other State. The debtor afterwards removed .to the territory of Louisiana, where he was regularly discharged, as an insolvent, from all his debts, under an act of the legislature of that State, passed prior to the time when the debt in question was contracted. To an action brought by the creditor in the District'Court of Louisiana, the defendant plead in bar his discharge, under the law of that territory, and it was contended by the counsel for the debtor in this Court, that the law undet which the debtor was discharged, having passed before the contract was made, it could not be said to impair its obligation. The cause was argued on one side only, and it would seem' from the report of the case, that no written opinion was prepared by the Court. The Chief Justice stated that the circumstance of the State law, under which the debt was attempted to be discharged', having been passed before the debt was contracted, made no difference in the application of .the principle, which had been asserted by the
*255
Court in the case of
Sturges
v.
Crowninshield.
The correctness of this position is believed to be incontrovertible. The principle alluded to was, that a State bankrupt law, which impairs the obligation of a contract, is unconstitutional in its application to such contract. In that case, it is true, the contract preceded in order of time the act of assembly, under which the debtor was discharged, although it was not thought necessary to notice that circumstance in the opinion which was pronounced. The principle, however, remained in the opinion of the Court, delivered in
M'Millan
v.
M'Niel,
unaffected by the circumstance that the law of Louisiana preceded a contract made in another State, since that law, having no extra-territorial force, never did at any time govern or affect the obligation of such contract. It could not, therefore, be correctly said to be prior to the contract, in reference to its obligation, since if, upon legal principles, it could affect the contract, that could not happen until the debtor, became a citizen of Louisiana, and that was subsequent to the contract. But I hold the principle to be well established, that a discharge under the bankrupt laws of one government, does not affect contracts made or to be executed under another, whether the law be prior or subsequent in the date to that of the contract; and this I take to be the only point really decided in the case alluded to. Whether the Chief Justice was'correctly understood by the Reporter, when he is supposed to have said, “ that this case was not distinguishable in principle from the preceding case of
Sturges
v. Crowninshield,” it is not material at this time to inquire, because I understand the meaning of these expressions to go no farther than to intimate, that there was no distinction between the cas'es as to the constitutional objection, since it professed to discharge a debt contracted in another State, which, at the time it was contracted, was not within its operation, nor subject to be discharged by it. The case now to be decided, is that of a debt contracted in the State of New-York, by a citizen of that State, from which he was discharged, so far as he constitutionally could be, under a bankrupt law óf that State, in force at the time when the debt was contracted. It is a case, therefore, that bears no resemblance to the one just noticed
*256
1 come now to the consideration of the question, which, for the first time, has been ■ directly brought before this Court for judgment. I approach it with more than.ordinary sensibility, not only on account of its importance, which must be acknowledged by all, but of its intrinsic difficulty, which every step I have taken in arriving at a conclusion with which my judgment could in any way be satisfied, has convinced me attends it. I have examined both 'sides of this great question with the most sedulous care, and the most anxious desire to discover which of them, when adopted, would be most likely to fulfil the intentions of those' who framed the constitution of the United States. I am far.from asserting that my labours have resulted in entire success. They have led me to the only conclusion.by. which I can stand with any degree of confidence ; and yet, 1 should be disingenuous were I to declare, from this place, that I embrace it without hesitation, and without a doubt of its correctness. The most that candour will permit me to say upon the subject is, that 1 see, or think l see, my way more clear on the side which my judgment leads me to adopt, than on the other, and it pmst remain for others to decide whether the guide I have chosen has been a safe one or not.
It has constantly appeared to me, throughout
the
different investigations of this question, to which it has been.my duty tó attend, -that the error of those who controvert the constitutionality of the bankrupt law under consideration, in its application to this case, if they be in error at all, has arisen from not distinguishing accurately between a law which impairs a contract, and one which impairs its obligation, A contract is defined by all to be an agreement to do, or not to do, some particular act; and in the construe-, tion of this agreement, depending essentially upon the will of the parties between whom it is formed, we seek for their intention with a view to fulfil it. Any law, then, which enlarges, abridges, or in any manner changes this intention, when it is discovered, necessarily impairs.the contract itself, which is but the evidence of that intention. The manner, or the ¡degree, in which this change is effected, can in no respect influence this conclusion; fpr whether the law affect the validity, the construction, the duration, the ipqde of dis
*257
charge, or the evidence of the agreement, it impairs the contract, though it may not do so to the same extent in all the supposed cases. Thus, a law which declares that no action shall be brought whereby to charge a person upon his agreement to pay the debt of another, or upon an agreement relating to lands, unless the same be reduced to writing, impairs a contract made by parol, whether the law precede or follow the making of such contract; and, if the argument that this law also impairs, in the former case, the obligation of the contract, be sound, it must follow, that the statute of frauds, and all other statutes which in any manner meddle with contracts, impair their obligation, and are, consequently, within the operation of this section and article of the constitution. It will not do to answer, that, in the particular case put, and in others of the same nature, there is no contract to impair, since the pre-existing law denies all remedy for its enforcement,-or forbids the making of it, since it is impossible to denythat the parties have expressed their will in the form of a contract, notwithstanding the law denies to it any valid obligation.
This leads us to a critical examination of the particular phraseology of that part of the above section which relates to contracts. It is a law which impairs the obligation of contracts, and not the contracts themselves, which is interdicted. It is not to be doubted, that this term,
obligation,
when applied to contracts, was well considered and weighed by those who framed the constitution, and was intended to convey a different meaning from what the prohibition would have imported without it. it is this meaning of which we are all in search.
What is it, then, which constitutes the obligation of a. contract? The answer is given by the .Chief .Justice, in the ' case of
Sturges
v.
Crowninshield,
to which I readily assent now, as I did then; it is the law which binds the parties to perform their agreement. The law, then, which has this binding obligation, must govern and control the contract in every shape in which it is intended to bear upon it, whether it affect its validity, construction; or discharge.
But the question, which law is referred to in the above '
*258
definition, still remáins to be solved. It cannot, for a moment, be conceded that the mere moral law is intended, since the obligation which that imposes is altogether of the imperfect kind, which the parties to it are free to obey, or not, as they please. It cannot be supposed, that it was with this law the grave authors of this instrument were dealing,
The universal law of all civilized nations, which declares that men shall perform that to which they have agreed, has been supposed by the counsel who have argued this cause for the defendant in error, to be the law which is alluded to; and I have no objection to acknowledging its obligation, whilst I must deny that it is that which exclusively governs the contract. It is upon this law that the obligation which nations acknowledge to perform their compacts with each other is founded, and I, therefore, feel no objection to answer the question asked by the same counsel — what law it is which constitutes the obligation of the compact between Virginia and Kentucky? by admitting, that it is this common law of nations which requires them to perform it. I admit further, that it is this law which creates the obligation of a contract made upon a desert spot, where no municipal law exists, and (which was another case put by the same counsel) which contract, by the tacit assent of all nations, their tribunals are authorized to enforce.
But can it be seriously insisted, that this, any more than the moral law upon which it is founded, was exclusively in the contemplation of those who framed this constitution ? What is the language of this universal law ? It is simply that all men are .bound to perform their contracts. The injunction is as absolute as the contracts to which it applies. It admits of no'qualification', and no restraint, either as to its validity, construction, or discharge, further than may be necessary to develope the intention of the parties to the con-; tract. And if it be true, that this is exclusively the law to Which the constitution refers us, it is very apparent, that the sphere of State legislation upon subjects connected with the contracts of individuals, would be abridged beyond what it canfor a moment he believed the sovereign States of thisUnion would have consented to; for it will be found, upon examination. that.'there áre few Jaws which concern the general
*259
police of a state, or. the government of its citizens, in then intercourse with each other, or with strangers, which may not in some way or other affect the contracts which they have entered into, or may thereafter form. For what are laws of evidence, or which concern remedies — frauds and perjuries — laws of registration, and those which affect landlord and tenant, sales at auction, acts of limitation, and those which limit the fees of professional men, and the charges of tavern keepers, and a multitude of others which crowd the codes of every State, but laws which may affect the validity, construction, or duration, or discharge of contracts ? Whilst I admit, then, that this common law of nations, which has been mentioned, may form in part the obligation of a contract, I must unhesitatingly insist, that this law is to be taken in strict subordination to the municipal laws of the land where the contract is made, or is to be executed. The former can be satisfied by nothing short of performance; the latter may affect and control the validity, construction, evidence, remedy, performance and discharge of the contract. The former is the common law of all civilized nations, and of each of them; the latter is the peculiar law of each, and is paramount to the former whenever they come in collision with each other..
It is, then, the municipal law of the State, whether that be written or unwritten, which is emphatically the law of the ■ contract made within the State, and must govern it throughout, wherever its performance is sought to be enforced.
It forms, in my humble opinion, a part of the contract, and travels with it wherever the parties to it may be found. It is so regarded by all the civilized nations of the world, and is enforced by the tribunals of those nations according to its own forms, unless the parties to it have otherwise agreed, as where the contract is to be executed in, or refers to the laws of, some other country than that in which it .is formed, or where it is of an immoral character, or contravenes the policy of the nation to whose tribunals the appeal is made; in which latter cases, the remedy which the comity of nations affords for enforcing the obligation of contracts wherever formed, is denied. Free from these objections, this law, which.accom pañíes the contract as forming a part of
*260
is regarded and enforced every where, whether it affect the validity, construction, or discharge of the contract. It jg Up0n principle of universal law, that the discharge of the contract, or of one of the parlies to it, by the bankrupt laws of the country where it was made, operates as a discharge every where.
If then, it be true, that the law of the country where the contract is made, or to be executed, forms a part of that contract, and of its obligation, it would seem to be somewhat of a solecism to say, that it does, at the. same time, impair that obligation.
But, it is contended, that if the municipal law of the State where the contract is so made, form a part of it, scdoes that clause of the constitution which prohibits the ' States from passing laws to impair the obligation of contracts ; and, consequently, that the law is rendered inopera - tive by force of its controlling associate. AÜ this I admit, provided it be first proved, that the law so incorporated with, and forming a part of the contract, does, in effect, impair its obligation; and before this can be proved, it must be affirmed, and satisfactorily made out, that if, by the terms of the contract, it is agreed that, on the happening of a certain event, as, upon the future insolvency of one of the parties, and his surrender of all his property for the benefit of. his creditors, the contract shall be considered as performed and at an end, this stipulation would impair the obligation of the contract. If this proposition can be successfully affirmed, I can only say, that the soundness of it is bey.ond the reach of my mind to understand.
Again ; it is insisted, that if the law of the contract form's a part of it, the law itself cannot be repealed without impairing the obligation of the contract. This proposition Í must be permitted to deny. Tt may be repealed at any time at the will of the legislature, and then it ceases to form ány part of those contracts
which may afterwards he entered into.
The repeal is no more void than a new law would be which operates upon contracts to affect their validity, construction, of duration. Both arc valid, (if the view which I take of this case he correct,) as they may affect contracts afterwards formed; but neither are so, if they bear upon existing contracts;. and, in the former case, in which the re
*261
peal contains no enactment, the constitution would forbid the application of the repealing law to past contracts, and to those only.
To illustrate this argument, let us take four laws, which, either by new enactments, of by the repeal of former laws, may affect contracts as to their validity, construction, evidence, or remedy.
Laws against usury are of the first description.'
A law which converts a penalty, stipulated for by the parties, as the only atonement for a breach of the contract, into a mere agreement for a just compensation, to be measured by the legal rate of interest, is of the second...
The statute of frauds, and the statute, of limitations, maybe cited as examples of the two last.
The validity of these laws can never be questioned by those who accompany me in the vie w which I take of the question under consideration, unless they operate, by their express-provisions, upon contracts previously entered into; and even then they are void only so far as they do so operate, because, in that case, and in that case only, do they impair the obligation of those contracts. But if they equally' impair the-Voligation of contracts subsequently made, which they must do if this be the operation of a bankrupt law upon such contracts, it would seem to follow, that all such laws, whether in the form of, new enactments, or of repealing laws, producing the same legal consequences, are made-void by the constitution; and yet the counsel for the defendants in error have not ventured to maintain so alarming a proposition.
If it be conceded that
those laws
are not repugnant to the constitution, so far as they apply to subsequent contracts, 1 am yet to be instructed liow to distinguish between those laws, and the one now under consideration'. How has this been attempted by the learned counsel who have argued this cause upon the ground of such a
distinction'!
They have insisted, that the effect of the law first supposed, is to annihilate the contract in its birth, or rather to prevent it from having a legal existence, and, consequently, that there is no obligation to be impaired. But this is clearly not so, since it may legitimately avoid, all contracts after -
*262
wards entered info» which reserve to the lender a higher rate of interest than this lav/ permits.
The validity of the second law is admitted, and yet this can only die in its application to subsequent contracts; for it has not, and 1 think it cannot, for a moment, he maintained, that a law which, in express terms, varies the construction of an existing contract, or which, repealing a former law, is made to produce the same effect, does not impair the obligation of that contract-
The statute of frauds, and the statute of limitations, which have been putas examples of the third and fourth classes of laws, are also admitted to b.e valid, because they merely concern the modes of proceeding in the trial of causes. The former, supplying a rule of evidence, and the latter, forming a part of the remedy given by the legislature to enforce the obligation, and likewise providing a rule of evidence.
Ail this Í, admit. But how does it. happen that these laws, like those which affect the validity and construction of contracts, are valid as to subsequent, and yet void as to prior and subsisting contracts ? For ive are informed by the learned judge who delivered the opinion of this Court in the case of
Sturges
v.
Crowninshield,
that, s‘ if, in a State where six years may be pleaded in bar to an action of assumpsit, a law should pass, declaring that contracts already in existence, not barred by the statute, should be construed within it, there could be little doubt of its unconstitutionafity.”
it is thus most apparent, that, which ever way we turn, whether to laws affecting the validity, construction, or discharges of contracts, or the evidence or remedy to
be
employed in enforcing them, we are met by this overruling and admitted distinction; between those which operate retrospectively, and those which operate prospectively, in all of them, the law is pronounced to be void in the first class of cases, and not so in the second..
Let. us stop, then, to make a more critical examination of
the
act of limitations, which, although it concerns the remedy, or, if it must be'conceded, the evidence, is yet void or otherwise, as it is made to apply retroactively, or prospectively, and see if it can, upon any intelligible principle, be distin
*263
guished from a bankrupt law, when applied in the same manner ? ■ What is the effect of the former ? The answer is, to discharge the debtor and all his future acquisitions from his contract; because he is permitted to plead it in bar of any remedy which can be instituted against him, and consequently in bar or destruction of the obligation which his contract imposed upon him. What is the effect of a discharge under a bankrupt law ? I can answer this question in no other terms than those which are given to the former question. If there be a difference, it is one which, in the eye of justice at least, is more favourable to the válidity of the latter than of the former; for in the one, the debtor surrenders every thing which he possesses towards the discharge of his obligation, and in the other, he surrenders nothing, and sullenly shelters himself behind a legal objection with which the law has provided him, for the purpose of protecting his person, and his present, as well as his future acquisitions, against the performance of his contract.
It is said that the former does not discharge him absolutely from his contract, because it leaves a shadow sufficiently substantial to raise a consideration for a new promise to pay. And is not this equally the case with a certificated bankrupt, who afterwards promises to pay a debt from which his certificate hád discharged him ? In the former case, it is said, the defendant must plead the statute in order to bar the remedy, and to exempt him from his obligation. And so, I answer, he must plead his discharge under the bankrupt law, and his conformity to it, in order to bar the remedy of his creditor, and to secure to himself a like exemption. I have, in short, sought in vain for some other grounds on which to distinguish the two laws from each other, than those which were suggested at the bar. I can imagine no other, and I confidently believe that none exist which will bear the test of a critical examination.
To the decision of this Court, made in the case of
Sturges v. Crowninshield,
and to the reasoning of the learned Judge who delivered that opinion, I entirely submit; although I did not then, nor can I now bring my mind to concur in that part of it which admits the, constitutional power of the State legislatures to pass bankrupt laws, by which I understand, those laws which discharge the person and the future
*264
acquisitions of the bankrupt from his debts. I have always thought that the power to pass such a taw was exclusively vested by the constitution in the legislature of the United States. But it becomes me to believe that this opinion was, and is incorrect, since it stands condemned hy the decision of a majority of this Court, solemnly pronounced.
After making this acknowledgment, 1 refer again to the above decision with some degree of confidence, in support of the opinion to which 1 am now inclined to come, thát a bankrupt law, which operates prospectively, or in so far as it does so operate, does not violate the constitution of the United States. It is there stated, “ that, until the power to pass uniform laws on the subject of bankruptcies be exercised hy Congress, the States are not forbidden to pass a bankrupt law, provided it contain no principle which violates the tenth section of the first article of the constitution of the United States.”- The question in that case was, whether the law of New York, passed on the third of April. 1811, which liberates, not only the person of the debtor, but discharges him from all liability for any debt contracted previous, as well as subsequent to his discharge, on his surrendering his property for the use of his creditors, was a valid law under the constitution in its application to a debt contracted prior to its passage ? The Court decided that it was not, upon the single ground that it impaired the obligation of that contract. And if it be true, that the States cannot pass a similar law to operate upon contracts subsequently entered into, it. follows inevitably, either that they cannot, pass such laws at all, contrary to the express declaration of the Court, as before quoted, or that such laws do not impah the obligation of contracts subsequently entered into; infi.de. it is.a self-evident proposition, that every contract that can be formed, must either precede, or follow, any law by which it may be affected,
I havjg, throughout the preceding part of this opinion, considered the municipal law
0(
the country where the contract is made, as incorporated with the contract, whether it affects its validity, construction, or discharge. But I think it quite immaterial to stickle for this position, if it be conceded to me. what can scarcely he denied, that this mnnich
*265
pal law constitutes the law of the .contract so formed, and must govern it throughout. I hold the legal consequences to be the same, in which ever view the- law, as it aflects the contract, is considered.
I come now to a more particular examination and construction of the section under which this question arises; and I am free to acknowledge, that the collocation of the subjects for which it provides, has made an irresistible impression upon my mind, much stronger, I am persuaded, than I can find language to communicate to the minds of others.
It declares,,.that t is impossible-to suppose, that the framers of the con* stitution could have regarded the exercise' of this power as an eyjj jn tbe abstract, else they would hardly have engraft* ed it upon that instrument which was to become the great safeguard of public justice and public morals.
And had they been so jealous of the exercise of this power in the States, it is not credible'that they would have left unimpaired those unquestionable powers over the administration of justice which the States do exercise, and which, in their immoral exercise, might leave to .the-.ereditor the mere shadow of justice.. The debtor’s person, no one doubts, may be exempted from execution. But there is high precedent for exempting his lands; and public feeling would fully sustain an exemption of his slaves. What is to prevent the extension of exemption, until nothing is left but the mere mockery of a judgment, without the means of enforcing its satisfaction ?
But it is not only in their execution laws, that the creditor has been left to the justice and honour of the States for his security. Every judiciary in the Union owes its existence to some legislative act; what is to prevent a repeal of that act ? and then, what becomes of his remedy, if he has not access to the Courts of the Union ? Or what is to prevent the extension of the right to imparl ? of the time to plead ? of the interval between the sittings of the State Courts ? Where is the remedy against all this
1
and why wore not these powers taken also from the States, if they „could not be trusted with the subordinate and incidental power here denied them ?. The ■ truth is, the Convention saw all this,-and saw the impossibility of providing an adequate remedy for such mischiefs, if it was not to be found' ultimately in the wisdom and virtue of the State rulers, under the salutary control of that republican form of' government which it guarantees to every State. For the/oragner and the
citizens of other Stales,
it provides the safeguard of a tribunal which cannot be controlled by State laws in the application of the remedy; and for the protection of all, was interposed that oath which it requires to be administered to all the public functionaries, as wejl of the States as the United States, it may be palled the ruling principle of
*281
the constitution, to interfere as little as possible between the citizen and his own State government; and hence, with a few safeguards of a very general nature, the executive, legislative and judicial functions of the States are left as they were, as to their own citizens, and as to all internal concerns. It is not pretended that this discharge could operate upon the rights of the citizen of any other State, unless his contract was entered into in the State that gave it, or unless be had voluntarily submitted himself to the
lex fori oi
the State before the discharge, in both which instances he is subjected to its effects by his own voluntary act.
For these considerations, I pronounce the exclusive power of Congress over the relief of insolvents untenable, and the dangers apprehended from the contrary doctrine ’unreál.
We will next inquire whether- the Slates - are precluded from the exercise of this power by that clause in the constitution, which declares that no State shall “pass any bill of attainder,
ex post facto
law, or láw impairing the obligation of contracts.”
This law of the State of New-York is supposed to have violated the obligation of a contract, by releasing Ogden from a debt which he had not satisfied; and the decision'turns upon the question, first, in what-consists the obligation of a contract? and, secondly, whether the act of New-York will amount to a violation qf that obligation, in the sense of the constitution.
The'first of these questions has ..been so often examined and considered in this and other Courts of the United States, and a® little progress has yet been made in fixing the precise meaning of the words “obligation of a contract,”, that I should turn in despair from the inquiry, were I not convinced that the difficulties the question presents are mostly factitious, and the result of refinement and technicality; or df attempts at definition made in terms defective'both in precision and comprehensiveness. Right or wrong, I come to my conclusion on their meaning, as applied to executory contracts, the subject now before us, by a simple and shorthanded exposition.
Right and obligation are considered bv all ethical writers
.
*282
as correlative terms : Whatever I by my contract give another a right to require of me, I by that act lay myself under an 0biigatioll to yield or-bestow.' ■ The obligation of every contract will then consist of that right or power over my will or actions, which 1, by my contract, confer on another. And that right and power will be found to be measured neither by moral law alone, nor universal law alone, nor by the laws of society alone, butby a combination of the three, — an operation in which the moral law is explained and applied by the law of nature, and both modified and adapted to the exigencies of society by positive law. The constitutioh was framed for society, and an advanced slate of society, in which 1 will undertake to say that
all
the contracts of men receive a relative, and not a positive interpretation: for the rights of all must beheld and enjoyed in subserviency to the good of the whole. The State construes them,, the State applies them, the State controls them, and the State decides how far the social exercise of the rights they give us over each other can be justly asserted. 1 say the social exercise of these rights, because in a state of nature, they are asserted over a fellow creature, but in a state of society, over a fellow citizen. Yet, it is worthy of observation, how closely the analogy is preserved between the assertion of these rights in a state of nature and a state of society, in their application to the class of contracts under consideration.
Two men, A. and B., having no previous connexion with each other, (we may suppose them even of hostile nations,) are thrown upon a desert island. The first, having had the good fortune to procure food, bestows a part of it upon the other, and he contracts to return an equivalent in. kind. It is obvious here, that B. subjects himself to something more than the moral obligation of his contract, and that the law of nature, and the sense of mankind, would justify A. in resorting to any means in his- power to compel a compliance with this contract. ‘ But if it should appear that B., by sickness, by accident, or circumstances beyond human control, however superinduced, could not possibly comply with his . contract, the decision would be otherwise, and the exercise of compulsory power over B. would be followed with the indignation of mankind. He has- carried the power con
*283
ferred on him over the will or actions of another beyond their legitimate extent, and done injustice in his turn. .“
Summum jus est summa
The progress of parties, from the initiation to the con-. summation of their rights, is exactly parallel to this in a state of society. With this difference, that in the concoction of théir contracts, they are controlled by the laws of the society of which they are members; and for the construction and enforcement of their contracts, they rest upon the functionaries of its government. They can enter into no contract which the laws of that community forbid, and the validity and effect of their contracts is what the existing laws give to them. The remedy is no longer retained in their own hands, but surrendered to the community, to a power competent to do justice, and hound to discharge towards them the acknowledged duties of government to society, according to received principles of equal justice. The public duty, in this respect, is the substitute for that right which they possessed in a state of nature, to enforce the fulfilment of contracts; and if, even in a state of nature, limits were prescribed by the reason and nature of things, to the exercise of individual power in enacting the fulfilment of- contracts, much more will they be in a state of society. For it is among the duties of society to enforce the rights of humanity; and both the.debtor and,the society have their interests in the administration of justice, and in the general good; interests which must not'be swallowed up and lost sight of while yielding attention to the claim of the creditor. The debtor may. plead the visitations of Providence, and the society has an interest in preserving every member of the community from despondency — in relieving him from a hopeless state of prostration, in which he would be useless to himself, his family, and the' community. When that state of things has arrived in which the community has fairly and fully discharged .its duties to the creditor, and in. which,, pursuing the debtor-any longer would destroy the one, without benefitting the other, must ■always be a question, to he determined by the common guardian of the rights of both ; and in’this originates the power exercised .by governments in favour of insolvents.
*284
It grows oat of the administration of justicer and is a necessary appendage to it;
There was a time when a different idea prevailed, and then it was supposed that the rights of the creditor required the sale of the debtor, and his family, A similar notion now prevails on the coast of Africa, and is often exercised there by brute force. It is worthy only of tire country in which it now exists, and of that state of society in which it once originated and prevailed.
46
Lex non cergit ad imposmbiliaf1
is
a
maxim applied by law to the contracts of° parties in a hundred ways. And where isAhe objection, in a moral or political view, to applying it to the exercise of the power to relieve insolvents ? It is in analogy with this maxim, that the power to relieve them is exercised ; a‘nd if it never was imagined, that, in other cases, this maxim violated the obligation of contracts, I see no reason why the fair, ordinary, and reasonable eXer* 'cise of it in this instance, should be subjected to that imputation.
If it be objected to these views of the subject, that they are as applicable to contracts prior to the law, as to tboste posterior to it, and, therefore, inconsistent with the'decisión in the case of
Sturges
v.
Crowninshield,
my reply is, that I think this no objection to its correctness. I entertained this opinion then, and have seen no reason to doubt it since. But if applicable to the case of prior debts,
multo fortiori,
will it be so to those contracted subsequent to suph a law; the posterior date of the contract removes all doubt of its being in the fair, and unexceptionable administration of justice that the discharge is awarded.
I must not be' understood here, as reasoning upon the assumption that the remedy is grafted. into the contract, i hold the doctrine untenable, and infinitely more restrictive on State power than the doctrine contended for by the opposite party. Since, if the remedy enters into the contract, then the States lose all power to alter their lSws for the administration of justice. Yet, 1 freely admit, that the remedy enters into the' views of the parties when contracting; that the constitution pledges the States to every creditor for the full, and fair, and°candid exercise of State power to the
*285
ends bf justice, according to its ordinary administration, tminfluenced by views to lighten, or lessen, or defer the obligation to which each contract fairly and legally subjects the individual who enters into it. Whenever an individual enters into a contract, 1 think his assent is to be inferred, to abide by those rules in the administration of justice which belong to the jurisprudence of the country of the contract. And when compelled to pursue his debtor in other States, lie is equally bound to acquiesce in the law of the forum to which he subjects himself. The law of the contract remains the same every where, and it will be the same in every tribunal; hut the remedy necessarily varies, and with it the effect of the constitutional pledge, which can only have relation to the laws of distributive justice known to the policy of each State severally. It is very true, that inconveniences may occasionally grow out of irregularities in the administration of justice by the States. But the citizen of the same State is referred to his influence over his ohm institutions for his security, and the citizens of the other States have, the institutions and powers of the general government to resort to. And this is all the security the constitution ever intended to hold out against the undue exercise of the power of the . States over their own contracts, and their own jurisprudence.
But, since a knowledge of the laws, policy, and jurisprudence of a State, is necessarily imputed to every one entering into contracts within its jurisdiction, of what surprise can he complain, or what violation of public faith, who still enters into contracts under that knowledge? It is no reply to urge; that, at the same time knowing of the constitution, he had a right -to suppose the discharge void -and inoperative, since this would be but speculating on a legal opinion, in which, if he proves mistaken, he has still nothing to complain of but his own temerity, and concerning which, all that come after this decision, at least, cannot complain of being misled by their ignorance or misapprehensions. Their knowledge of the existing laws of the State will henceforward be unqualified, and was so, in the view of the law,- before this decision was made.
It is now about twelve or fourteen years since I was called
*286
upon, on my circuit, in the case of
Gell, Canonge & Co.
v.
L.
Jacobs, to review all this doctrine. The cause was ably argued by gentlemen whose talents are well known in this capítol, and the opinions which I then formed, I have seen no reason since to distrust.
It appears to me, that a great' part of the difficulties of the cause, arise from not giving sufficient weight to the general intent of this clause in the constitution, and subjecting it to a severe literal construction, which would be better adapted to special pleadings.
By classing bills of attainder,
ex post facto'\o.ws,
and laws impairing the obligation of contracts together, the general intent becomes very apparent; it is a general provision against arbitrary and tyrannical legislation over existing rights; whether of person or property. It is true, that some confusion has arisen from an. opinion, which seerrs early, and without due, examination, to have found its way into this Court; that the phrase ■“
ex post facto f
was confined to laws affecting criminal acts alone. The fact, upon, examination, will be found otherwise-; for neither in its signification or uses is it thus restricted. It applies, to civil as well as to criminal acts, (1
Shep. Touch.
68. 70. 73.)-and with this enlarged signification attached to that phrase, the purport of the clause would be, “
that the States shall pass no law, attaching to' the acts of, individuals other effects or consequences than those attached to them by the laws existing at their dale ; and all contracts .thus, construed, shall be enforced according to their just and reasonable purport
But to assign to contracts, universally, a literal purport, and to exact for them a rigid literal fulfilment, cbuld not have been the intent of the constitution. It is - repelled by a hundred examples. Societies exercise a positive control as well.over the inception, construction, and fulfilment Of contracts, as over the form and measure; of the remedy to enforce them.
As instances of the first, take the contract imputed to the drawer of a bill, or endorser of a note, with its modfficalions; the deviations of the law from' the literal contract of the parties to a penal bond, a mortgage, a policy of insurance; bottomry, bond, and various others that might be
*287
enumerated. And for instances of discretion exercised in applying the remedy, take the time for which executors are exempted from suit; the exemption of members of legislatures ; of judges ; of persons attending Courts, or going to elections; the preferences given in the marshalling of assets ; sales on credit for a present debt; shutting of Courts altogether against gaming debts and usurious contracts, and above all,
acts of limitation.
I hold it impossible to maintain the constitutionality of an act of limitation, if the modification of the remedy against debtors, implied in the discharge of insolvents, is unconstitutional. I have seen no distinction between the cases that can bear examination.
It is in vain to say that acts of limitation appertain to the remedy only : both descriptions of laws appertain to the remedy, and exactly in the same way ; they put a period to the remedy, and upon the same terms, by what has been called, a
tender of paper money in the form of a plea,
and to the advantage of the insolvent laws, since if the debtor can pay, he has been made to pay. But the door of justice is shut in the face of the creditor in the other instance, without an inquiry on the subject of the debtor’s capacity to pay. And it is equally vain to say, that the act of limitation raises a presumption of payment, since it cannot be taken advantage of on the general issue, without provision by statute ; and the only legal form of a plea implies an acknowledgment that the debt has not been paid.
Yet so universal is the assent of mankind in favour of limitation acts, that it is the opinion of profound politicians, that no nation could subsist without one.
The right, then, of the creditor, to the aid of the public arm for the. recovery of contracts, is not absolute and unlimited, but may be modified by the necessities or policy of societies. And this, together with the contract itself, must be taken by the individual, subject to such restrictions and conditions as are imposed by the laws of the country. The right to pass bankrupt laws is asserted by every civilized nation in the world. And in no writer, I will venture to say, has it ever been suggested, that the power of annulling such contracts, universally exercised under their bankrupt or insolvent systems, involves a violation of the obligation of con
*288
tracts. In international law, the subject is perfectly under* stood,-and the right generally acquiesced in; and yet the deüial of justice is, by the same code, an acknowledged cause of war.
But, it is contended, that if the obligation of a contract has relation at all to the laws which give or modify the remedy, then the obligation of a contract is ambulatory, arid uncertain, and will mean a different thin^'bn every State in which it may be necessary to enforce the contract.
There is no question that this effect follows; and yet; after this concession, it will still remain to be shown how any violation of the obligation of the contract can arise from that cause. It is a casualty well known to the creditor when he enters into the contract; and if obliged to prosecute his rights in another State, what more can he claim of that State, than that its Courts shall be open to him on the same terms on which they are open to other individuals
?
It is only by voluntarily subjecting himself to the
lex fori
of a State, that he can be brought .within the provisions of its statutes in favour of debtors, since, in no other instance, does' any State pretend to a right to discharge the contracts entered into in another State. He who enters into a pecuniary contract, knowing that he may. have to pursue his debtor, if he flees from justice, casts himself, in fact, upon the justice of nations.
It has also been urged, with an earnestness that could only proceed from deep conviction, that insolvent laws were tender laws of the wors description, and that it is impossible to maintain the constitutionality of insolvent laws that have a future operation, without asserting the right of the States to pass tender laws, provided such laws are confined to a future operation.
Yet to all this there appears to be a simple and conclusive answer. The prohibition in the constitution to make any thing but gold or silver coin a tender in payment of debts is express and universal. The framers of the. constitution regarded it ás an evil to be repelled without modification; they have, therefore, left nothing to be inferred or deduced from construction on this-subject. But the contrary is the fact with regard to insolvent laws ; it’ contains no express
*289
prohibition to pass such laws,.and we are called upon here to deduce .such a prohibition from a clause, 'which is any1 thing but explicit, and which already has been judicially dedared to embrace a great variety of other subjects. The inquiry, then, is open and indispensable in relation to insolvent laws, prospective or retrospective, whether they do, in the sense' of the constitution, violate the obiigatiori of contracts? There would be much in the argument, if-there was no express prohibition against passing tender law's; but with such express prohibition, the cases have no analogy. And, independent of the different provisions in the constitution, there is a distinction existing between tender laws,and insolvent laws in their object and policy, which sufficiently points out the principle upon which the constitution acts upon them as .several and distinct; a tender law supposes a capa-' city in the debtor to pay and satisfy the debt in some way, but the discharge of an insolvent is founded in his. incapacity ever to pay, which incapacity is judicially determined according to the laws of- the State that passes it The one imports a positive violation of the contract, since all contracts to pay, not expressed otherwise, have relation to payment in the current coin of the country; the other imports an impossibility that the creditor evercan fulfil the contract.
If it be urged, that to assume this impossibility is itself an arbitrary act, that parties have in view something more than present possessions, that they look to future acquisitions, that industry, talents and integrity áre as confidently trusted as property itselfand, to release them from this liability, impairs the obligation of contracts; plausible 'as tfie argument may seem, i think the answer is obvious and-incontrovertible.
Why may not the community, set bounds to the will of the •contracting parties in this as in every other instance ? That will is controlled in the instances of gaming debts, usurious contracts, marriage, brokage bonds,' and. various others; and why may not the community also declare that, “ look to what you will, ho contract formed within the territory which we govern shall he valid asagainst future acquisitions;” “we have,an interest in the happiness, and services, and families of this community, which shall not he superseded by indi ‘
*290
vidual views ?” Who can doubt the power of the State to prohibit her citizens from running, iq debt altogether? A measure a thousand times wiser than that impulse to speculation and ruin, which has hitherto been communicated to individuals by our public policy. And if to be prohibited altogether, where is the limit which may riot be set both to •the. acts and the views of the contracting parties ?
When considering the first question in this cause, I took occasion to remark on the evidence of contemporaneous exposition'deducible from well known facts.- Every candid mind will admit that this is a very, different thing from contending that the frequent repetition of wrong will create a right. It proceeds upon the presumption, that the cotempOraries of the constitution have claims to our deference on the question of right, because they had the best opportunities of informing themselves of the understanding of the framers of the constitution, and of the sense put upon it by the people when it was adopted by them ; and in this point -of view it is obvious that the consideration bears as strongly upon the second point in the cause as on the first. For, had there been any possible ground to think otherwise, who could suppose that such men, and so many' of them, acting u,nder the most solemn oath, and generally acting rather under a feeling of jealousy of the power of the general government than otherwise, would universally have acted upon the conviction, that the power to relieve insolvents by a discharge from the debt had not been taken from the States by the article prohibiting the violation of contracts ? The whole history of the times, up to a time subsequent to the repeal of the bankrupt law, indicates a settled knowledge of the contrary.
If it be objected to the views which I have taken of this subject, that they imply a departure from the-direct and literal meaning of terms, in order to substitute an artificial or complicated exposition ; my reply is, that 'the error is on the other side ;
qui hceret in ¡itera, hceret in cortice.
All the notions of society, particularly in their jurisprudence, are more or less artificial 5 our constitution no where speaks the language of men in a state of nature; let any one attempt a literal exposition of the phrase which immediately precedes the one un-*
*291
der consideration, I mean “
ex post facto f
and he will soon acknowledge a failure. Or let him reflect on the mysteries that hang around the little slip of paper which lawyers know by the title of a bail-piece. The truth is, that even compared with the principles of natural law, scarcely any contract imposes an obligation conformable to the' literal meaning of terms. He who enters into a contract to follow the plough for the year, is not held to its literal performance, since many casualties may intervene which woúld release him from the obligation without actual performance.. There is a very striking illustration of this principle to be found in many instances in the books; I mean those cases in which parties are released from their contracts by a declaration of war, or where laws are passed rendering that unlawful, even incidentally, which was lawful at the time of the contract. Now, in both these instances, it is the government that puts an end to the contract, and yet no one ever imagined that it thereby violates the obligation of a contract.
it is, therefore, far from being true, as a general proposition, “ that a government necessarily violates the obligation of a contract, which it puts an end to without performance.” it is the motive, the policy, the object, that must characterize the legislative act, to affect it with the imputation of violating the obligation of contracts.
In the effort to get rid of the universal vote of mankind in favour of limitation acts, and laws against gaming, usury, marriage, brokage,. buying and selling of office's, and many of the same description, we have heard it argued,-that, as to limitation acts,-the creditor has nothing to complain of, because time is allowed him,, of which, if he does not avail himself, it is his own neglect; and. as to all others, there is no contract violated, because there was' none ever incurred. But it is obvious that this mode of answéring the argument involves a surrender to us of our whole ground,. It admits the right of the government to limit and define the power of contracting, and the extent of the creditor’s remedy against his debtor; to regard other rights besides his, and to modify his rights so. as not to let them override entirely the general interests of society, the interests of the community itself in the talents and services of the debtor, the regard due to his
*292
happiness, and to the claims of his family upon him and upon the government.
No one questions the duty of the government to protect and enforce the just rights of every individual over all within its control. What we contend for is no more than this, that it is equally the duty and right ofgovernments to impose limits,to the avarice and tyranny of individuals, so as not to suffer oppression to be exercised under the semblance of right and justice. It is true, that in the exercise of this power, governments themselves may sometimes be the authors of oppression and injustice; but, wherever the constitution could impose limits to such power, it has done so; and' if it has not been able to impose effectual and universal restraints, it arises only
from
the
extreme
difficulty of regulating the movements of sovereign power; and the absolute necessity, after every effort that can' be made to govern effectually, that will, still exist to leave some space for .the exercise of discretion, and the influence of justice and wisdom.
Mr. Justice Thompson.
This action is founded on several bills of exchange, bearing date in September, 1806, drawn by J. Jordan, upon Ogden, the plaintiff in error, in favour of Saunders, the defendant in error. The drawer and payee, at the date of the bills, were citizens' of, and resident in, Kentucky. Ogden was a citizen of, and resident in, New-York, where the bills were presented, and accepted by him, but were not paid when they came to maturity, and are still unpaid. Ogden sets up, in bar of this action, his discharge under the insolvent law of the State of NeW-York, passed in April, 1801, as one of the revised laws of that State. His discharge was duly obtained on the 19th of April; 1808, he having assigned all his property for the benefit of his creditors, and having, rn all respects, complied with the laws of New-York for giving relief in cases .of insolvency ’ These proceedings, according to those laws, discharged. the insolvent from all debts due at the time of the assignment, or contracted for before that time, though payable afterwards, except in some specified cases, which do not affect the present question. From this brief statement it appears, that Ogden, being sued upon his acceptances of
*293
the bills in question,
the contract was
made,
and to he executed within the Stale, of- New-York,
and was made
subsefluent
to the passage of the law under which lie was discharged. Under these circumstances, the general question presented for decision'is, whéther this discharge can be set up in bar of the present suit. It is not pretended, but that if'the law under which the discharge-was obtained, is valid, and the discharge is to have its effect according to the provisions of that law, it -is an effectual bar to any recovery against Ogden. But, it is alleged, that this law is void under the prohibition in the constitution of the United States, (art. 1. sec. 10.) which declares, that “ no State shall pass any law impairing the obligation of contracts.5’ So that the inquiry here is, whether thé law of New-York, under which the discharge was obtained, is repugnant to this clause in the constitution ; and. upon the most mature consideration, I have arrived at the conclusion, that the law vis -not void, and that, the discharge set up by the plaintiff in error is an effectual protection against any liability upon the hills in question. In considering this question, I have assumed, thatthe point now presented is altogether- úndecidedt and entirely open for discussipn. Although several cases have been before this Court which may have a bearing upon the question, yet, Upon the argument, the particular point now raised has been treated by the coCtnsehas still open for decision, and so considered by the Court by permitting its discussion. Although the law under which Ogden .was discharged appears, by the record, to have beou passed in the year 1801, yet, it is proper to notice, that this was a mere revision and re-enactment of a law which was in force as early, at least, as from the year 1788, and which has continued in force from-that--time to the present, (except from the 3d of April, 181 f, until the 14th of February, 1812,) in all its materia! provisions, which have any bearing upon the present question. To declare a law null and void after such a lapse of time, and thereby prostrate a system which has been in operation for nearly forty years, ought to be called, for by some urgent necessity, and founded upon reasons and principles scarcely admitting of doubt. In our complex system of government, we must expect that questions in
*294
volving the jurisdictional' limits between the general and State governments, will frequently arise; and they are always questions o.f great delicacy, and can never be met. without feeling deeply and sensibly impressed with the sentiment, that this is the paint upon which the harmony of our. system is most exposed to interruption. Whenever such a question >is presented for decision, 1 cannot better express piy views of the leading principles which ought to govern this Court, than in the language of the Court itself in1 the case of
Fletcher
v. Peck, ( 6 Cranch, 128 .) “ The question (says the Court) whether a law be void'for its repugnancy to the constitution, is', at all times, a question of much delicacy, which ought seldom or ever be decided in the affirmative in a doubtful case. The Court, when impelled by duty to render such a judgment, would be unworthy of its station, could it be unmindful of the solemn obligation which that station imposes. But, it is not on slight implication, and vague conjecture, that the legislature is to be pronounced to have transcended its powers, and its acts to be considered void. The opposition between the constitution and the law should be such, that the judge feels a clear and strong conviction of their incompatibility with each other.” If such be the rule by which the examination of this case is to be governed and tried, (and that i.t is no one can doubt,) I am certainly not prepared to say, that it is not, at least, a doubtful case, or that I feel a clear conviction that the law in question is incompatible with the constitution of the United States.
In the discussion at the bar, this has rightly been considered a question relating to the division of power between ' the general and State governments. • And in the consideration of all such questions, it cannot be too often repeated, (although universally admitted,) or too deeply impressed on the mind, that all the powers of the general government are derived solely from the constitution ; and that whatever power is not conferred by that charter, is reserved to the States- respectively, or to the people. The State of New-i ork,' when the Iaysr in question was passed, (for I consider this a-mere continuation of the Insolvent Act of 1788,) was
*295
in the due and rightful exercise of its powers as an indépendent government; and unless this power has been surrendered by the constitution of the United States, it still-remains in the State. And in this view, whether the law in question.be called a bankrupt or an insolvent law, is wholly immaterial; it was such a law as a sovereign State had r. right to pass; and the simple inquiry is, whether that right has been surrendered. No difficulty arises here out of any inquiry about express or implied powers granted by the constitution If the States have no authority to pass laws like this, it must be in consequence of the express provision, “ that no State shall pass any law impairing the obligation of contracts.”
It is admitted, and has so been decided by this Court, that a State law, discharging insolvent debtors from their contracts, entered into
antecedent
to the passing of the la^, falls within this clause in the constitution, and is void. In the case now before tbe Court, the contract was made
subsequent
to the passage of the law ; and this, it is believed, forms a solid ground of distinction, whether tested by the letter, or the spirit and policy of the prohibition. It was not denied on the argument, and, I presume, cannot be, but that a law may be void in part and good in part; or, in other words, that it may be void, so far as it has a retrospective application to past contracts, and valid, as applied prospectively to future contracts. The distinction was taken'by the Court in the third Circuit, in the case of
Golden
v.
Prince,
(5
Hall’s L. J.
502.) and which, I believe, was the first case that brought into discussion the. validity of a State law analogous to the one now under consideration. It was there held, that the law was unconstitutional in relation to that particular case, because it impaired the obligation of the contract, by discharging the debtor from the payment of his debts, due or "contracted for
before
the passage of the law. ' But it was admitted, that a law, prospective in its operation, under which a Contract afterwards made might be, avoided
in a way different from that provided by the parties,
would be clearly constitutional. And how is this distinction to be sustained, except on the ground that contracts are deemed to be made in reference to the existing law, and to be go-
*296
verned, regulated, and controlled by its provisions ? As the question before the Court was the validity of an insolvent ]aWi which discharged the debtor from all contracts, the distinction must have been made in refererice to the operation of the discharge upon contracts made before, and such as were made after the passage of the law, and is. therefore, a case bearing directly upon the question now' before the Court. That the power given by the constitution to Congress, to establish uniform laws on the subject of bankruptcies throughout the United States, does not withdraw the subject entirely from the States, is settled by the case of
Sturges
v. Crowninshield, ( 4
Wheat. Rep.
191 .) Itis there expressly held, that “ until the power to pass
uniform laws
on the subject of bankruptcies is exercised by Congress, the States are not- forbidden to pass a bankrupt law, provided it contain noprinciple which violates the 10th section of the first article of the constitution of the United States.” And this case also decides, that the right of the States to pass bankrupt laws is not
extinguished,
but is only
suspended
by the enactment of a general bankrupt law by Congress, and that a repeal of that law-removes disability to the exercise •of the power by the States; so that the question now before tbé Court,, is narrowed down to the single inquiry, whether a State bankrupt law.
operating prospectively
upon contracts made after its enactment, impairs the - obligation of such contract, within'the sense and meaning of the constitution of the United States.
This clause in the constitution has given rise to much • discussion, and great- diversity of .opinion has been entertained árs to its true interpretation. Its application to some cases may be plain and palpable, to others more doubtful. But,.so- far as relates to the particular question now under consideration, the weight of judicial opinions in the State Courts is altogether in favour of the constitutionality of the latvy so far' as my examination has extended. And, indeed, I am not aware of a single contrary opinion. ( 13
Mass. Rep.
1 . 16
Johns.
Rep. 233. 7.
Johns. Ch. Rep.
299. 5 Binn.
Rep.
264 . 5
Hall's L. J.
520. 6th ed. 475.
Niles' Reg.
15th of September, 1821.
Townsend
v.
Townsend.)
la proceeding to a more particular examination of the
*297
trite import of the clause
“
no State shall pass any lawimpairing the obligation of contracts,” the inquiries which seem naturally to arise are, what is a contract, what its obligation, and what may be said to impair it. As to what constitutes a contract, no diversity of opinion exists; all the elementary writers on the subject, sanctioned by judicial decisions, consider it briefly and simply an agreement in which a competent party undertakes to do, or not to do, a particular thing; but all know, that the agreement does not always, nay, seldom, if ever, upon its face, specify the full extent of the terms and conditions of the contract; many things are necessarily implied, and to be governed by some rule not contained in the agreement; and this rule can be no other than the existing law when the contract is made, or to be executed. Take, for example, the familiar case of an agreement to pay a certain sum of money, with interest. The amount, or rate of such interest, is to be ascertained by some standard out of the agreement, and the law presumes the parties meant the common rate of interest established in the country where the contract was to be performed. This standard ,is not looked to for the purpose of removing any doubt or ambiguity arising on the contract itself, but to ascertain the extent of its obligation; or, to put a case more analogous, suppose a statute should, declare generally, that all contracts for the payment of money should bear interest after the day of payment fixed in the contract, and a note, where such ■ law was in force, should be madfe payable in a given number of days after date. Such note would surely dráw interest from the day it became payable, although the note upon its face made no provision for interest ; and the obligation of the contract to pay the interest svould be as complete and binding as to pay the principal; but such would not be its operation without looking out of the instrument itself, to the law which created the obligation to pay interest. The same rulé applies to contracts of every description; and parties must be understood as making their contracts with reference to existing laws, and impliedly assenting that such contracts are to be construed, governed, and controlled, by such laws. Contracts absolute, and un*
*298
conditional, upon their face, are often considered subject to an implied condition which the law establishes as Upplicable to such cases. Suppose a State law should declare, that in all- conveyances thereáfter to be made, of real estate, the land should be held as security for the payment of the consideration money, and liable to be sold, in case default should be made in payment: w'ould such a law be unconstitutional? And yet it would vary the contract from that which was made.by the parties, it judged of by the face of the deed alone, and would be making a contract conditional, which the parties had made absolute, and would certainly be impairing such contract, unless it was deemed to have been made subject to the provisions of such law, and with reference thereto, and that the law was impliedly adopted as forming the obligation and terms of the contract, The whole doctrine of the
lex loci
is founded on this principle.
The language of the Court, in the third Circuit, in the case of
Campanque
v. Burnell, (1
Washington
C. C.
Rep.
341.) is very strong on this point. Those laws, say the Court, which in aqy manner affect the contract, whether ih its
construction, the mode of discharging it,
or which control the
obligation
which the cor tract imposes, are. essentially incorporated -with the contrae' itself. The contract is a law which the parties impose upon themselves, subject, however, to the paramount law — the law of the country where the contract is made. And when to be enforced by foreign tribunals such tribunals aim only to give effect to the contracts) according to the laws which gaye them validity. So, also, in this Court, in the case of
Benner
v.
the Bank of Columbia,
( 9
Wheat. Rep.
586 .) the language of the Court is to the same effect, and shows that we may look out of the contract, to any known law or custom, with reference to which the parties may be presumed to have contracted, in order to ascertain their intention, and the. legal, and binding force, and obligation of their contract. The
Bank of Columbia
v.
Oakley,
( 4
Wheat. Rep.
235 .) is another case recognising the same principle. And in the case of
Dartmouth Collage
v.
Woodward,
( 4
Wheat. Rep.
695 .) it is well observed by one of the judges of this Court, “ that all contracts recognised as valid in any
*299
country, obtain their
obligation
and construction
jure loci
contractus.” And this doctrine is universally recognised, both, in the English and American Courts.
If contracts are not made with reference to existing laws, and to be governed, and regulated by such laws, the agreement of parties, under the extended construction now claimed for this clause in the constitution, may control Staté laws on the subject of contracts altogether, A parol agreement.for the sale of land is a contract, and if the agreement alone makes the contract, and it derives its obligation solely from such agreement, without reference to the existing law, it would seem to follow, that any law which had declared such contract void, or had denied a remedy for breach thereof, would impair its obligation. A construction involving such consequences is certainly inadmissible. Any contract not sanctioned by existing laws creates no civil obligation ; and any contract discharged, in the mode and manner provided by the existing law where it was made, cannot, upon any just principles of reasoning, be said to impair such contract.
It will, I believe, be found on examination, that the course of legislation in sorpe of the States between 'debtor and creditor, which formed the grounds of so much complaint, and which probably gave rise to this prohibition in the constitution, consisted principally, if not entireiy,of laws having a; retrospective operation upon antecedent debts.
If a contract does not derive its obligation frqm the positive law of the country, where it is made, where is to be found the rule, that such obligation does not attach until the contracting party has attained a certain age ? In what code of natural law, or in what system of universáí.law, out of which it is said, at the bar, spring the eternal and unaltérable principles of right and of justice, will he found a rule, that such obligation does not attach so as to bind a party utider the age of twenty-one years ? No one will pretend, that a law exonerating a party from contracts entered into before arriving at such age, would be invalid.' And .yet, it would impair the obligation of the contrae!, if such obligation-is derived from any other source'than the existing laii of the place where made. Would it not héwithin' tbe legi
*300
tímate powers of a State legislature to declare prospectively no one should be made responsible, upon contracts entered into before arriving at the age of
twenty-five
years, This, I presume, canitot be doubted. But, to apply such a law to past contracts, entered into when
twenty-one
years was tl)e limit, would clearly be a violation of the obligation of the contract. No such distinction, however, could exist, unless the obligation of the contract grows out of the existing law, and with reference to which the contract must be deemed to have been made.
The true import of the term
obligation,
as used in the constitution, may admit of some doubt. That it refers to the civil, or legal, and not moral obligation, is admitted by all. But whether the remedy upon the contract is entirely excluded from the operation of this provision, is a point on which some diversity of opinion has been entertained.
That it is not intended to interfere with or limit State legislation, in relation to the remedy, in the ordinary prosecution of. suits, no one- can doubt. And, indeed, such a principle is indispensable to facilitate commercial intercourse between the citizens or subjects of different governments, and is sanctioned by all civilized nations ; and if, according to the language of these cases, this principle extends to the
obligation,
as well as the construction of contracts, it would seem to follow, as a necessary conclusion, that it must embrace all the consequences growing out of the laws of the country where the contract is made; for it is.the law which creates the obligation, and whenever, therefore, the
lex loci
provides for the dissolution of the contract in any prescribed mode, the parties are presumed to have acted subject to such contingency. And hence, in the English Courts, wherever the operation of a foreign discharge under a bankrupt law has been brought under consideration, they-have given to it the same effect that it would have had in the country where the contract was made. And the same rule has been recognised and adopted in the Courts of this country almost universally, where the question has arisen. But whether a law might not so change the nature and extent of existing remedies, and thereby so materially impair the right, as to fall within the scope
*301
of this prohibitioriasf iTextebded to remedies upon antecedent contracts, is by uo means dear. If the law, whatever it máy be, relating to the remedy, has a prospective operation. only, nonobjection can arise to it under this clause in the constitution. It is a question that must rest in the sound discretion of the State legislature. But men, when eutering into contracts, can hardly be presumed entirely regardless of the remedy which the law provides in case of a breach of the contract; and the means of obtaining satisfaction for such breach enters essentially into consideration in making the contract. If, at the time of making the contract, it be known,' that the person only of the debtor, and not his property, or his personal property , only, and not his lands, or a certain part of either, is tó be resorted to for satisfaction, no ground of complaint can exist, the contract having been made with full knowledge of all these things ; hut if, at the time the contract is made, not only the person, but all the property, both real and personal, of the debtor, might be reported to for satisfaction, and a law should be passed, placing beyond the reach of the creditor the whole, or the principal part, of the debtor’s property, it would be difficult to sustain the constitutionality of such a law. The statute of limitations is conceded to relate to the remedy. Suppose, when a contract was made, the limitation was six years, and it should be reduced to six months, or any shorter period, and applied to antecedent contracts, would it not be repugnant to the constitution ? But if the legislature of a State should choose to adopt, prospectively, six months as the limitation, who could .question the authority so to do ? And suppose, further, that the-unconstitutionally of the law in question is admitted, could the State of New-York pass a law limiting the right of recovery against any insolvent who had been duly discharged according to the provisions of the insolvent act, to ten days from the passage of such lawj And yet-this would be a statute of limitation, and affect the remedy only. The law now in question is nothing more than taking away all remedy •, and whether it be the whole, or some material part thereof, would see'm to differ in degree only, •and not in principié’: and if to have a retrospective opera
*302
tion, might well be considered as falling within the spirit and policy of the prohibition.
In the case' of
Sturges
v.
Crowninshield ,
the Court, in explaining the meaning of the terms “ obligation of. a contract,” say, “ A contract is an agreement in which a party undertakes to do, or not to do, a particular thing.
The law binds him io perform his
undertaking,
and this is, of course, the obligation of his
contract.” That is, as 1 understand'it,
the law of the contract forms its
obligation; and if so, the contract is fulfilled, and its obligation discharged by complying with whatever the existing law required in relation to such contract; and it would seem to me to follow, that if the law, looking to the contingency of the debtor’s becoming unable to pay the whole debt, should provide for his discharge on payment of a part, this would enter into the law of the contract, and the obligation to pay wo ild, of course, be subject to such contingency.
It is unnecessary, however, on the present occasion, to attempt to draw, with precision, the line between the right and the remedy, or to determine whether the prohibition-in the constitution extends to the former, and not to the latter, or whether, to a certain extent, it embraces both; for the law in question strikes- at the very root of the cause of action, and takes away both right and remedy, and the question still remains, does the prohibition extend to a State bankrupt or insolvent law, like the one in question, when applied to contracts entered into subsequent to-its passage. Whether this is technically a bankrupt or an insolvent law, is of little importance. Its operation, if valid, is to discharge the debtor absolutely from all future liability on surrendering up his property, and, in that respect, 'is a- bankrupt law, according to the universal understanding in England, where a bankrupt system is in operation. It is not, however, limited to
traders,
but extends to every class of citizens; and, in this respectáis more analogous to the English insolvent laws, which only authorize the discharge of the debtor from imprisonment.
If this provision in the constitution was unambiguous, and its meaning entirely free from doubt, there would be no door left open, for construction, or any proper ground upon which
*303
the intention of the framers of the constitution could be inquired into': this Court' would be bound to give to it its full operation, whatever might be the views entertained of •its expediency But the diversity of opinion entertained of its construction, will fairly justify an inquiry into the irttentiou, as well as the reason and policy of the provision ; all which, in my judgment, will warrant its being confined to laws affecting contracts, made antecedent to the passage of such-laws. Such would appear to be the plain and natural interpretation of the words, “ no State shall pass any law impairing the obligation of contracts.”
The law must have a present effect upon some contract in existence, to bring it within the plain meaning of the language employed. There would be no propriety in saying, that a law impaired, or in any manner whatever modified or altered, what did net exist. The most obvious and natural application of the words themselves, is to laws having a retrospective operation upon existing contracts ; and this construction is fortified by the associate prohibitions, “no State shall pass any bill of attainder,
ex post facto
law, or law impairing the obligation of cor tracts.” The two first arc confessedly restricted to retrospective laws, concerning crimes and penalties affecting the personal security of individuals. And no good reason is perceived why the last should not be restricted to retrospective laws, relating to private rights growing out of the contracts of parties. The *one provision is intended to protect the person of the citizen from punishment criminally for any act not unlawful when committed; and the other to protect the rights of property, as secured by contracts sanctioned by existing laws. No one supposes that a State legislature is under any restriction in declaring, prospectively, any acts criminal which its own wisdom and policy may deem expedient. And why not apply the same rule of construction and operation to the other-provision relatingto the rights of properly? Neither provision can strictly be considered as introducing any new prin - ciple, but only for greater security and safety to incorporate into this charter provisions admitted by all to be among the first principles of our government. No Slate Court would, I presume, sanction and enforce an
ex post- facto
law: if no
1827. Ogden v Saunders.
*304
such prohibition'was contained in the constitution of the United States; so, neither would retrospective laws, taking away vested rights, he enforced. Such laws are repugriantto those fundamental principles, upon which every just system of laws is founded. It is an elementary principle adopted and sanctioned by the Courts of justice in this country, and in Great Britain, whenever such laws have come under consideration, and yet retrospective' laws are clearly within this prohibition. It is, therefore, no objection to the view I have taken of this clause in the constitution, that the provision was unnecessary. Thegreatprinciple asserted,no doubt, is, as laid down by the Court in
Sturges
v.
Crowninshield, the inviolability
of contracts ; and this principle is fully maintained by confining the prohibition to laws affecting antecedent contracts. It is the same principle, we find, cotemporaneously, (13th July, 1787, 1
L. U. S.
475.) asserted by. the old Congress, in an ordinance.for the government of the territory of the Uuited States norfh-west of the river Ohio. By one of the fundamental articles it is provided, that “ in the just preservation of
rights and properly,
it is understood and' declared that no law ought ever to be made, or have force in the territory, that shall in any manner whatever interfere with or affect private contracts or engagements,
bona fide,
and without fraud, previously• made,1’ thereby pointedly making a distinction between laws affecting contracts antecedently, and subseq.uehtly made; and such a distinction seems to me to he founded upon the soundest principles of justice, if there is any thing in the argument,- that contracts are made with reference to, and derive their obligation from the existing law.
That the prohibition, upon the States to pass laws impairing the obligation of contracts is applicable to private rights merely, without reference to bankrupt laws, was evidently the understanding of those distinguished commentators on the constitution, who wrote the Federalist. In the 44th number of that wprk (p. 281.) it is said, that “ bills of attainder,
ex post facto
laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations pre
*305
fixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. Our own experience has taught us, nevertheless, that additional defences against these dangers ought not to be omitted. Very properly, therefore, have the Convention added this constitutional bulwark in favour of
personal security
and
private
rights.” Had it been supposed that this restriction had for its object the taking from the States the right of passing insolvent laws, even when they went to discharge the contract, it is a little surprising that no intimation of its application to that subject should be found in these commeniaries upon the constitution. And it is still more surprising, that if it had been thought susceptible of any such interpretation, that no objection should have been made
in any of the
States to the constitution on this ground, when the ingenuity of man was on the stretch in many States to defeat its adoption ; and particularly in the State of New-York, where the law now in question was in full force a¡ the very time the State Convention was deliberating upon the adoption of the constitution. But if the prohibition is confined to retrospective laws, as it naturally imports, it is not surprising that it should have passed without objection, as it is the assertion of a principle universally approved.
It
was pressed upon the Court with great confidence, and, as it struck me at the time, with much force, that if this restriction' could not reach laws existing at the time the contract was made, State legislatures might evade the prohibition (immediately preceding) to make any thing but gold and silver a tender in payment of debts, by making the law prospective in its operation, and applicable to contracts thereafter to be made. But on reflection, I think, no such consequences are involved. When we look at the whole clause in which these restrictions are contained, it will be seen, that the subjects embraced therein are evidently to be divided into two classes ; the one of a public and national character, the power over which is entirely taken away from the States; and the other relating to private and personal rights, upon which the States may legislate under the restrictions Specified. The former are, “ no State shall enter any into treaty, alliance, or confederation, grant
*306
letters of marque and reprisal, coin money, emit bilis oí credit.” Thus far there can be no question, that they relate to p0wers 0f a general and national charactér. The next in order is, or “make any thing but gold and silver a tender in payment of debts;” this is founded upon the same principles of public and national policy, as the prohibition to coin money and emit bills of credit, and is so considered in the commentary on this clause in the number of the Federalist I have referred to, It is there said, the power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on,the same principles with that of issuing a paper currency. Ail these prohibitions, therefore,.-relate to powers of a public nature, and are general and universal in their application, and inseparably, connected with national policy. The subject matter is entirely withdrawn from State authority. and State legislation. But the succeeding prohibitions are of a different character; they relate to personal security and private rights, viz. or “ pass any bill of attainder,
ex post facto
law, or law impairing the obligation of contracts.” The subject matter of -such laws is not withdrawn from the States ; but the legislation thereon must be under the restriction therein imposed. Slates may legislate on the subject of contracts, but the laws must not impair the obligation of such contracts; A tender of payment necessarily refers to the time when the tender is made, and has no relation to the time when the law authorizing it shall be passed, or when the debt rvas contracted. The prohibition is, therefore, general and unlimited in its application. It has been urged in argument, that this prohibition to the States to pass laws impairing-the obligation of contracts, had in view an object of great national policy, connected with the power to regulate commerce ; that the leading purpose was to take from the States the. right of passing bankrupt laws. And to illustrate and enforce this position, this clause has been collated with that which gives to Congress the power of passing uniform laws on the subject of bankruptcies; and by transposition of the clause, the constitution is made to read, Congress shall have power to establish uniform laws on the subject of bankruptcies throughout the United States; but no State
*307
shall pass any law impairing the obligation of contracts; and thisprohibition is made to mean, no State shall pass any bankrupt law.
No just objection can be made to this collocation, if the grant of the power to Congress, and the prohibition in question to the States, relate to the same, subject matter, viz. bankrupt laws. But it appears to me very difficult to maintain this proposition. It is, in the first place, at variance with the decision in
Sturges
v.
Crovminshield,
where it is held, that this power is not taken from the States absolutely, but only in a limited and modified sense. And in the next place, it is not reasonable to suppose, that a denial of this power to the States, would have been couched in such ambiguous terms, if, as has been Contended, the giving to Congress the exclusive power to pass bankrupt laws, was the great and leading object of this prohibition, and the preservation of private rights followed only as an incident of minor importance, it is difficult to assign any satisfactory reason, why the denial of the power to the States was not expressed in plain and unambiguous terms, viz. no State shall pass any bankrupt law. This would have been a more natural, and, certainly, a less doubtful form of expression; and, besides, if the object was to take from the States altogether the right of passing bankrupt laws, or insolvent laws having the like operation, why did not the denial of the power extend also to naturalization laws? The grant of the power to Congress on this subject, is contained in the same clause, and substantially in the same words, “ To establish an uniform rule of naturalization, and uniform laws on the subject of. bankruptcies throughout, the United States.” If the authority of Congress on the subject of naturalization is exclusive, from the nature of the power, why is it not,.also, with respect to bankruptcies ? And if, in the one cáse, the denial of the power to the States was necessary, it was equally so in the other. I cannot think, therefore, that the prohibition to pass laws impairing .the obligation of contracts, had any reference to a general system of bankrupt or insolvent laws. Such’a system, established by. the sovereign-legislative power of the general, or-Sfate governments, cannot, in^any just sense,.be said to
*308
impair the obligation of contracts. In every government of laws there must be a power somewhere to regulate civil contracts; and where, under our system, is that power vested ? It must be either in the general or State governments. There is certainly no such power granted to the general government, and all power not granted is reserved, to . the States. The whole subject, therefore, of the regulation of contracts must remain with the States, and be governed by, their laws respectively; and to deny to them the right if prescribing the terms and conditions upon which persons shall be bound by their contracts thereafter made, is imposing upon the States a limitation, for which I find no authority in the constitution; and no contract can impose a civil obligation beyond that prescribed by the existing la$v when the contract was made; nor can such obligation be impaired by controlling and discharging the contract- according to the provisions of such law. Suppose a contract for the payment of money should contain an express stipulation by the creditor to accept a proportional part, in case the debt- or should become insolvent, and to discharge the contract, can there be a. doubt that such contract would be enforced ? And what is the law in question but such contract, when applied to the undertaking of Ogden by accepting these bills. It is no strained construction of the transaction, to consider , the contract and the law inseparable, when judging of the
obligation
imposed upon-the debtor; and, if so, the undertaking was conditional, and the holder of thé. bills agreed to accept a part in case of the inability of the acceptor, by reason of his insolvency,
(o
pay the whole;
The unconstitutionally of this law is said to arise fcotfi its exempting the property of the insolvent, acquired after his discharge, from the payment of his antecedent debts. A discharge of the person of the debtor is admitted to be no violation of the contract. ' If this objection is well founded, it must be on the ground, that the obligation of every contract attaches upon the property of the debtor, and any law exonerating it, violates this obligation, I do not mean that the position implies a lien by way of mortgage, or pledge, on any specific property, but that all the property which a debtor has, when called upon for payment, is liable to be
*309
taken in execution to satisfy the debt, and. that a law releasing any portion of it impairs the obligation of the contract. The force and justice of this position, when applied to contracts .existing at the time the law is passed, is not now drawn in question. But its correctness, when applied tó contracts thereafter made, is denied. The mode, and manner, and the extent to which property may be taken in satisfaction of debts, must be left to the sound discretion' of the legislature, and regulated by its views of policy and expediency, in' promoting the general welfare of the community, subject to such regulation. It was the policy of the common law, under the feudal system, to exempt lands altogether from being seized, and applied in satisfaction of debts; not even possession could be taken from the tenant. There can be no natural right growing out of the.relatidn of debtor and creditor, that will give the latter an unlimited claim upon the property of the former. It is a matter entirely for the regulation of civil society ; nor is there any fundamental principle of justice, growing out of such relation, that calls upon government to enforce the payment of debts to the uttermost fi-irthing which the debtor may possess'; and that the modification and extent of such liability, is a subject within the authority of State legislation, seems to be admitted by the uninterrupted exercise of it. I have not deemed it necessary to look into the statute books of all the States on-this subject, but think it may be safely affirmed, that in most, if not all the States, some limitation of the right of the creditor, over the property of the debt- or, has been established.. In New-York, various articles of personal property are exempted from execution. In Rhode Island, real estate cannot at all betaken on judicial process for satisfaction of a debt, so long as the body of the debtor is to be foupd within the State; and Virginia has adopted the English' process of elegit, and a moiety only of the debtor’s freehold is. delivered to the creditor, until, out of the rents and profits thereof, the debt is paid. Do these statute regulations impair the obligation of contracts ? I presume this will not be contended for ; and yet they would seem to me to fall within the principle urged on the part of the defendant in error.
*310
^’s 110 satisfactory answer to say, that such laws- relate to the remedy. The principle asserted is, that the creditor j,as a r¡ght to his debtor’s property by virtue of the obligation °f the contract, to the full satisfaction of the debt; and-if so, a law, which in
anj
shape exempts, any portion of .it, must impair the obligation of the contract. Such a limitation and restriction upon the powers of the State governments cannot, in my judgment, be supported, under the prohibition to pass laws impairing the obligation of contracts.
If the letter, of the constitution does not imperiously demand a construction which denies to (he States the power of passing insolvent laws like the one in question, policy and expediency require a contrary construction. Although there may be some diversity of opinion as to the policy of establishing a general bankrupt system in.the United States, yet it is generally admitted that such laws are useful, if not absolutely necessary, in a commercial community. That it was the opinion of the framers of the constitution, that the power to pass bankrupt laws ought somewhere'to exist, is clearly inferrable from the grant of such power to Congress. A contrary conclusion would-involve the greatest absurdity'. The specific power, however, granted to Congress, never did, nor never could, exist in the State governments. That' power is to establish
uniform laws
on the subject of bankruptcies throughout the United States, which could only be done by a government having co-extensive jurisdiction. Congress not having as- yebdeemed it expedient to exercise the power of re-establishing a uniform system of bankruptcy', affords no well-founded argument against the expediency or necessity of sucha system in any particular State. A bankrupt law js most necessary in a commercial community; and as different States in this respect do not stand on the same footing, a system which might be adapted to one, might not suit all, which would naturally present difficulties in forming any uniform system; and Congress may, as heretofore, deem it expedient to leave each State to establish such system as shall best suit its-own local circumstances and views of policy, k'nowing, at the same time, that if any great public inconvenience shall grow out of the different State laws, the evils
*311
may be corrected by establishing a uniform system, according to the provision of the constitution, which will suspend the State laws on the subject. If such should be the views entertained by Congress, and induce them to abstain from the exercise óf the power, the importance to the State of NewYórk, as w'ell as other States, of establishing the validity of laws like the one in question, is greatly increased. The long continuance of it there, clearly manifests the views of the State legislature with respect to the policy and expediency of the law. And I cannot but feel strongly impressed, that the length of time which this law has been in undisputed operation, and the repeated sanction it has received from every department of the government, ought to have great weight when judging of its constitutionality.
The provisions of the 61st section of the bankrupt law of 1800, appear to me to contain a clear expression of the opinion of Congress in favour of the validity of this, and similar laws in other States. It cannot be presumed they were ignorant of the existence of these laws, or their extent and operation. And, indeed, the section expressly assumes the existence of such laws, by declaring that this act shall not repeal or annul the laws of any State now in force, or which may be
thereafter
enacted for the relief of insolvent debtors, except so far as the same may
affect persons zoithin the purview of the bankrupt act;
and even with respect to such persons, it provides that, if the creditors shall not prosecute a commission of bankruptcy within a limited time, they shall be entitled to relief under the State laws for the relief of insolvent debtors. And what relief did such laws give ?' Was it merely from imprisonment only ? Certainly not. The State laws here ratified and sanctioned, or, at least, some of them, were such as had the full effect and operation of a bankrupt law, to wit: to discharge the debtor absolutely from all future responsibility. .It is true, if these lawrs were unconstitutional and void, this section of the bankrupt law could'give them no validity. But it is not in this light the argument is used. The reference is only to show the sense of Congress with respect to the validity of such laws; and, if it is fair to presume Congress was acquainted with the extent and operation of these law's, this clause is a direct affirmation of their valid!
*312
ty. For it cannot be presumed that body would have expressly ratified and sanctioned laws which they considered unconstitutional.
In the case of
Sturges
y.
Crowninskield,
as I have before remarked, it is said, that byr this prohibition (Art. 1. sec. 10.) in the constitution, the Convention appears to have intended to establish a great principle, “
that contracts should be invio
lable.” This was certainly, though a great, yet not a
new
principle, it is a principle inherent in every sound and just system of laws, independent of express constitutional restraints. And if the assertion of this principle was the object of the clause, (as I think it was,) is it reasonable to conclude, that the framers of the constitution supposed that a bankrupt or insolvent law, like the one in question, would violate this principle ? Can it be supposed that the constitution would have reserved the right, and impliedly enjoined the duty upon Congress to pass a bankrupt law, if it had been thought that such law would violate this great principle? If the discharge of a party from the performance of his contracts, when he has, by misfortunes, become incapable of fulfilling them, is a violation of the eternal and unalterable principles of justice, growing out of what has been called at the bar the universal law, can it be, that a power, drawing after it such consequences, has been recognised and reserved in our constitution ? Certainly not. And is the discharge of a contract any greater violation of those sacred principles in a State legislature, than in that of the United States ? No such distinction will be pretended. But a bankrupt or insolvent law involves no such violation of the great principles of justice, and this is HC-t the light in which it always has been, and ought to be, considered. Such law, in its principle and object, has in view the benefit of both debtor and creditor, and is no more than the just exercise of the sovereign legislative power of the government to relieve a debtor from his contracts, when necessity, and unforeseen misfortunes, have rendered him incapable of performing them; and whether this power is to be exercised by the States individually, or by the United States, can make no difference in principle, in a government like ours, where sovereignty, to a modified extent,
*313
exist» both in the States, and in the United States. It was, in'the formation of the constitution, a mere question of policy and expediency, where this power should be exercised;. -arid there can be no question, but that,, so far a» respects a . bankrupt law-, properly speaking, the power ought to be exercised by the general government. It is naturally connect-; ed with commerce, and should be uniform throughout the United States. A bankrupt system deals with commercial men, but this affords no reason why a State should hot éxercise its sovereign power in relieving the necessities of men who do not fall within the class of traders, and who, from like misfortune, have become incapable of performing their contracts.
Without questioning the constitutional power of Congress to extend a bankrupt law to all classes of debtors,(the expediency of such a measure may. well be doubted. There ip not the same necessity of uniformity, of system, as to other classes than traders ; their dealings are generally loca], and different considerations of policy may influence different States on this subject ; and should Congress pass a bankrupt law confined to traders, it would still leave the insolvent law of New-York in force as to other classes of debtors, subject to such 'alteration as that State shall deem expedient.
Upon the whole, therefore, it having been Settled by {his Court, that the State's have a right to pass bankrupt laws, provided they do not violate the prohibition against impairing the obligation of contracts ; and believing, as I do, for the reasons I have given, tha.t the insolvent law in question, by which a debtor obtains a discharge from all future re* sponsibility, upon contracts entered into after the passage of the law, and befóre his-disctiarge, does not impair the obligation of his contracts ; I am of opinion, that the judgr ment of the Court below ought to be reversed.
Mr. Justice'Trimble-
The question raised upon the record in this case, and which has been discussed at the bar, may be stated thusHas a State, since the adoption of the constitution of the United States, authority to pass a bdnk
*314
rupt or insolvent law, discharging the bankrupt or insolvent from all contracts made within Jh'e State after the passage of t¡]e Ja^ upon the bankrupt or insolvent surrendering his eifects, and obtaining a certificate of discharge from the constituted authorities of the State ?
The Counsel for the defendant in erfor have endeavoured to maintain the negative of the proposition, on two grounds:
First, That the power conferred on Congress by the Constitution, “ to establish uniform laws on- the subject of bankruptcies throughout the United States,” is, in its nature, an exclusive power; that, consequently, no State has authority to pass a bankrupt law-; and that the law under consideration is a bankrupt law.
Secondly. That it is a law impairing the obligation of contracts, within the meaning of the constitution.
In the case of
Sturges
v.
Crowninshield,
( 4
Wheat. Rep.
122 .) this Court expressly decided, “ that since the adoption of the constitution of the United States, a State has authority to pass a bankrupt law, provided such law does not- impair the obligation of contracts, within the meaning of the constitution, and provided there be no act of'Congress in force to establish a uniform system of bankruptcy conflicting with such law.”
This being a direct judgment of the Court, overruling the first position assumed in argument, that judgment ought to prevail, upless it be very clearly shown to be erroneous.
Not having'been a member of the Court when th-.d judgment was given, I will content myself with saying, the argument has not convinced me it is erroneous; and that, on the contrary, I think the opinion is fully sustained by' a sound construction of the constitution.
There being no act of Congress in force to establish a uniform system of bankruptcy, the first ground of argument must fail.
It is argued, that the law under consideration is a law impairing the obligation of contracts within the meaning of .the constitution. The 10th section of the 1st art. of the constitution is in' these wordá : “ no State shall enter into any treaty, alliance, or confederation, grant letters of marque and reprisal; coin money; emit bills of credit; make any
*315
thing but gold and silver coin a tender in payment of debts; pass any bill of attainder,
ex post facto
law, or law impairing the obligation of contracts.; or grant any title of nobility.”
In the case of
Sturges
v.
Crowninshield,
the defendant in the original .suit had been discharged in New York, under an insolvent law of that State, which purported to apply to past as well as future contracts; and being sued oh a contract made within the State prior to the passage of the law, he pleaded his certificate of discharge in bar of the action. In answer to the 3d and 4th questions, certified from the. Circuit Court to this Court for its final decision, drawing in question the constitutionality of the law, and the sufficiency of the plea in bar founded upon it, this Court certified its opinion, “that the áct of New-York, pleaded in this case, so far as it attempts to discharge the contract on which this suit was instituted, is a law impairing the obligation bf contracts, within the meaning of the constitution of the United States; and that the plea of the defendant is -not a good and sufficient bar of the plaintiff’s action.”
In the case of
M'Millan
v.
M'Neal,
( 4
Wheat. Rep.
209 .) the defendant in the Court below pleaded a discharge obtained by him in Louisiana, on the 23d of August, 1815, under the insolvent law of that State, passed in 1808, in bar of a suit instituted against him upon a contract made in South Carolina,, in the year 1813. This Court decided that the plea was no bar to the action; and affirmed the judgment given below for the plaintiff.
These cases do not decide the case at bar. In the first, the. discharge was pleaded in bar to. a contract made prior to the passage of the law; and in the second, the discharge in one State under its laws, was pleaded to a contract made in another State. They leave the question open, whether a discharge obtained in a State, under an insolyent law of the State, is a good bar' to an action brought on a contract made within the State after the passage of the law-.
In presenting this inquiry, it is immaterial whether the law purports to apply to past as well as future contracts, or is wholly prospective in its provisions.
*316
It is not the terms of the law, but its effect, that is inhibited by the constitution. A law may be in part constitutional, an(j ¡n parj. unconstitutional. It may, when applied to a given case, produce an effect which is prohibited by the constitutionbut it may not, when applied to a case differently circumstanced, produce such prohibited effect. Whether the law under consideration, in its effects and operation upon the contract sued on in this case, be a law impairing the obligation of this contract, is the only necessary inquiry.
In order to come to a just conclusion, we mhst ascertain, if we cán, the sense in which the terms, “ obligation of contracts,” is.used in' the constitution.. In attempting to-do this, I will premise, that in construing an instrument' of so much solemnity and importance, effect should be given, if possible, to every word. No expression should he regarded as a useless expletive; nor should it be supposed, without the most urgent necessity, that the illustrious framers of that instrument had, from ignorance or inattention, used different words, which are, in effect, merely tautologous,
1 understand it to he admitted in argument, and if not admitted, it could not be reasonably contested, that, in the nature of things, there is a difference between a contract, and the
obligation
of tlie contract. The terms contract, and obligation, although sometimes used loosely as convertible terms do not properly impart the same idea. The constitution plainly presupposes that a contract and its obligation are different.things. Were they the same thing, and the
terms, contract and obligation convertible, the constitution, instead of being read as it now is,, “that no State shall pass any law impairing the obligation of contracts,” might, with the same meaning, be read, “ that no State shall pass any law impairing the
obligation
of obligations,” or, “ the contract of contracts;” and to give to the constitution the same meaning which either of these readings would import, would be ascribing to its framers a useless and palpably absurd tautology. The illustrious framers of the constitution could pot be ignorant that there were, or might be, many contracts without obligation, and many obligations without contracts, “ A contract is defined to be, an agreement in which a par
*317
ty undertakes to do, or not to do, a particular thing.’.’
Sturges
v. Crowninshield, ( 4
Wheat. Rep.
197 .)
This definition is sufficient for all the purposes of the present investigation, and its general accuracy is not contested by either side.
From the very terms of the definition, it results incontestibly, that the .contract is the sole act of the parties, and depends wholly on their will. The same words, used by the same parties, with the same objects in view,' would be the same contract, whether made upon a desert island, in London, Constantinople, or New-York. It would be the
same contract,
whether the law of the place where the contract wás made, recognised its validity, and furnished remedies to enforce its performance, or prohibited the contract, and withheld all remedy for its violation.
The language of the constitution plainly supposed that the
obligation
of a contract is something not wholly depending upon the will of the parties. It incontestibiy supposes the obligation to be something which attaches to, and lays hold of the contract, and which, by some superior external power, regulates and controls the conduct of the parties in relation to.the contract; it evidently supposes that superior external power to rest in the will of the legislature.
What, then, is the obligation of contracts, within the meaning of the constitution ? From what source does that obligation arise ?
The learned Chief Justice, in delivering the opinion of the Court in
Sturges
v.
Crowninshield,
after having defined a contract to be “ an agreement wherein a party undertakes to do, or not to do, a particular thing,” proceeds to define the obligation of the contract in these words: “.the
law
binds him to perform his engagement, and
this,
is, of course, the obligation of the contract.”
The
Institutes,
lib. 3. tit. 4. (Cooper’s translation,) says, “ an obligation is the
chain of the
law, by which we are. necessarily bound to make some payment, according to the law of the land.”
Pothier,
in his treatise concerning obligations, in speak ing of the obligation of contracts, calls it “
vinculum legist
the chain of the law. Paley, p. 56. says, “to be obliged, is
*318
be urged by a violent motive, resulting from the command of another.” From these authorities, and many more might be cited, it may be fairly concluded, that the obligáfion of the contract consists iri the
power and efficacy
of the law which applies to, and enforces performance of the contracts, or the payment of an equivalent for non-peFformance. The obligation does not inhere, and subsist in the contract itself,
propr.io
vigore, but in the law applicable to the contract. This is the sense, I.think, in which the constitution, uses the term “ obligation.”
From what law, and how, is this obligation derived, within the meaning of the constitution ? Even if it be admitted that the moral law necessarily attáches to the agreement, that jvojuld not bring it within the meaning of the constitution. Moral obligations are those arising from the admonitionk of.conscience and accountability to the Supreme Being. No hurnán-lawgiver can impair them. They are entirely foreign from the purposes of the constitution. The constitution- evidently contemplates an, obligation which might be impaired by-a law of the State, if not prohibited by the constitution.
It is argued, that the obligation of contracts is founded in, and derived from, general and universal law; that, by these laws, the obligation of contracts is.co-extensive with the duty of performance, and, indeed, the same thing; that the obligation is not derived from, nor depends upon, the civil or municipal laws of the State; and that this general universal duty, or obligation, is what the constitution intends- to guard and protect against the unjust encroachments of State legislation. In support of this doctrine, itis said,, that no State, perhaps, ever declared by statute or positive law that contracts shall be obligatory; but that all States, assuming the pre-existence of the obligation of contracts, have only superadded, by municipal law, the means of carrying the pre-existing'obligatiois into effect.
This argumentstruck me, a*, urst, with great force; but; upon reflection,HI am convinced it is more speeious than solid. If it were admitted, that, in an enlarged And very general sense, obligations have their foundation in natural, or what is called, in the argument, universal law; that this
*319
natural obligation, is, in the general, assumed by States as pre-existing, and, upon this assumption, they have- not thought it necessary to pass-declaratory laws in affirmance of the principle^ of- universal-law: yet nothing favourable . to the argument can result from these admissions, unless it be furiher admitted, or proved, that a State has no authority to regulate, alter, or in any wise control, the operation. of this universal law within the State, by its own peculier municipal enactions. This is. not admitted, and,' I think, cannot be proved.
I admit that men have, by the laws of nature, the right of acquiring, and possessing- property, and the right of contracting engagements. I admit, that these natural rights have their correspondent natural obligations. 1 admit, that in a state'of nature, when men have not submitted themselves to the controlling authority of civil government, the natural obligation of contracts is co-extensive with the duty of performance. This natural pbligation is founded solely in the principles of natural or universal law. What is this natural obligation? All writers who treat on the subject of obligations, agree, that it consists in the right of the one party, to demand from the other party what is due; and if it be withheld, in his right, and supposed capacity to enforce performance, or to take an equivalent for non-performancé, by his own power. This natural obligation exists among sovereign and independent States and nations, and amongst men, in a State of naturé, who have no common superior, and'over whom none claim, or can exercise, a controlling legislative authority*
But when- men form a social compact, and organize a civil government, they necessarily surrender the regulation and control of these natural rights and obligations into the hands of the government. Admitting it, then, to be true, that, in general, men derive the right of private property, and of contracting engagements, from the principles of na-. tural, universal law ; admitting that these' rights are, in the general, not'derived from, or created by society, but are brought into it; and that no express, declaratory, municipal law, be necessary for their creation or recognition; yet, it is equally true, that these rights, and the obligations result
*320
ing from them, are subject to be regulated, modified, and, sometimes, absolutely restrained, by. the positive enactions 0f municipa| iaw. J think it incontestibly true, that the
natural
obligation of
private
contracts between individuals in society, ceases, and is converted into a
civil
obligation, by the very act of surrendering the right and power of enforcing performance into the hands of the government. The right and power of enforcing.performance exists, as I think all, must admit, only in the law of the land, and the obligation resulting from this condition is a civil obligation.
As, in a state of nature; the natural obligation of a contract consists in the right and potential capacity of the individual to take, or enforce the delivery, of the thing due to him by the contract, or its equivalent; so, in the social state, the obligation of a contract consists in the efficacy of the civil law, which attaches to the contract, and enforces its performance, or gives an equivalent in lieu of performance. From these principles it seems to result as a necessary corollary, that the obligation of a contract made within, a sovereign State, must be precisely that allowed by the law of the State, and none other. I say
allowed,
because, if there be nothing in the municipál law to the contrary, the civil obligation being, by the very nature of government, . substituted for, and put in the place of, natural obligation, would be co-extensive with it; but if by positive enactions, the civil obligation is regulated and modified so as that it does not correspond with the natural obligation, it is plain the extent of the obligation must depend wholly upon the municipal law. If the positive law of the State declares the contract shall have no obligation, it can have no obligation, whatever, may be the principles of natural, law in relation to such a contract. This doctrine has been held and maintained by all States and nations. .The power of controlling, modifying, and even of taking away, all obligation from such contracts

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/85530. Public record. Not legal advice.