LECTURE XI. government, it is equivalent to putting a ligature Exemptions from around an artery of a living body. taxation. A legislature cannot limit the taxing power of its successor. There are a great many intelligent and able lawyers in this country, and there has always been in the Supreme Court of the United States more than one justice, who have thought it not within the constitutional power of one legislature to limit the taxing power of a succeeding one. I have no hesitation in saying that I am one of those. As late as 1869 Chief Justice Chase, Justice Field, and myself made a dissent on that subject.' There has never been a time in the history of the court when there was not a dissenting justice who did not believe in the validity of that class of subsequent legislation; but the majority of the court has always held that these contracts were within the power of the legislatures to make, were binding on them as well as the State, and that, when subsequent legislatures sought to impair them, they were protected by the clause of the Constitution which we have been considering. The theory upon which these decisions have been based is that the State is a corporation, and that all statutes passed by it which invite persons to invest their capital upon the promise of certain privileges granted, which are formally accepted by the grantees and acted upon, constitute a contract between the State and those parties. I concur with this statement of a general prin 1 Washington University v. Rouse, 8 Wall. 439, 441. A legislature cannot limit the its successor. ciple when it is applied to anything which a LECTURE XI. State may properly do; that is to say, that any contract about a matter which is within their taxing power of power comes within this reasoning and should be protected. But where the power is wanting, as it is above intimated is my opinion in regard to limiting future taxation, of course this argument would not apply. Perhaps I cannot do better at this point than to quote from the opinion that I had the honor to deliver in regard to this subject of taxation in its relations to the clause of the Constitution now under discussion. The following language was there used: "As we have already said, since the legislature which passed the act of 1865 had the power to make a contract which should not be subject to repeal or modification by one of the parties to it without the consent of the other, the main question here is, did they intend to make such a contract? "The principal function of a legislative body is not to make contracts, but to make laws. These laws are put into a form which, in all countries using the English language, and inheriting the English common law, is called a statute. "Unless forbidden by some exceptional constitutional provision, the same authority which can make a law can repeal it. The Constitution. of the United States has imposed such a limitation upon the legislative power of all the States, by declaring that no State shall pass any law LECTURE XI. A legislature taxing power of its successor. impairing the obligation of a contract. The cannot limit the frequency with which this court has been called on to declare State laws void, because they do impair the obligation of contracts, shows how very important and far reaching that provision is. "It may safely be said that in far the larger number of cases brought to this court under that clause of the Constitution, the question has been as to the existence and nature of the contract, and not the construction of the law which is supposed to impair it; and the greatest trouble we have had on this point has been in regard to what may be called legislative contracts, — contracts found in statute laws of the State, if they existed at all. It has become the established law of this court that a legislative enactment, in the ordinary form of a statute, may contain provisions which, when accepted as the basis of action by individuals or corporations, become contracts between them and the State within the protection of the clause referred to of the Federal Constitution. "The difficulty in this class of cases has always been to distinguish what is intended by the legislature to be an exercise of its ordinary legislative function in making laws, which, like other laws, are subject to its full control by future amendments and repeals, from what is intended to become a contract between the State and other parties when the terms of the statute have been accepted and acted upon by those parties. This has always been a very nice point; and, when the supposed contract exists only in the form of a general statute, doubts A legislature cannot limit the its successor. still recur, after all our decisions on that class of LECTURE XI. questions. "These doubts are increased when the terms taxing power of of the statute relate to a matter which is in its essential nature one of exclusive legislative cognizance, and which at the same time requires money or labor to be expended by individuals or corporations. In such cases the legislature may be supposed to be merely exercising its power of regulating the burdens which are to be borne for the public service, in which case it could be modified from time to time as legislative discretion might determine; or it might be a contract founded on a fair consideration moving from the party concerned to the State, and which in that case would be beyond the power of the State to impair. Statutes fixing the taxes to be levied on corporations, partake in a striking manner of this dual character, and require for their construction a critical examination of their terms, and of the circumstances under which they are created. "The writer of this opinion has always believed, and believes now, that one legislature of a State has no power to bargain away the right of any succeeding legislature to levy taxes in as full a manner as the Constitution will permit. But, so long as the majority of this court adhere to the contrary doctrine, he must, when the question arises, join with the other judges in considering whether such a contract has been made." 1 1 New Jersey v. Yard, 95 U. S. 104, 113, 114, 115. NOTES UPON LECTURE XI. LECTURE XI. contracts. THIS lecture, like the lecture upon the Regulation of Commerce, was evidently prepared some years ago, and has not been brought down by incorporating into it the later decisions. The latest case cited in it is from 105 U. S. So far as it comes it is thorough; and nothing is left for the editor to do except to take up the Reports at volume 106, and note the more important cases from that time on to the close of volume 140. In deciding whether a State statute of incorporation created a contract, and whether a subsequent statute of the State, as construed by its courts, impaired that contract, the Supreme Court is not governed by previous decisions of the States, unless they are so firmly established as to have become a rule of property.1 The right to demand reimbursement from a municipal corporation for damages caused by a mob is not founded on contract; and the fact that a statutory right to demand such reimbursement has passed into a judgment does not convert the obligation into such a contract as is contemplated in the provision in the Constitu 1 Louisville & Nashville Railroad v. Palmes, 109 U. S. 244. |