There May be Change of Remedy. The legislature may in good faith, regulate the remedy by general laws, but not to such an extent as to affect or impair the obligation of the contract.'

Rebellious States are within the prohibition. This inhibition extends not only to States confessedly acting within the national union as professed members thereof, but also to the enactments of States that have nominally seceded therefrom, and are professedly acting as integral parts and members of an unlawful and rebel-political organization; so that, although the merely domestic action of such erratic States may be enforcible for the protection and good order of society, when free from constitutional objections, yet statutes thereof which are incompatible with the national constitution will be held void by reason thereof, when brought in question after the suppression of such hostile organizations, upon the same principle and to the same extent as if enacted by loyal States; and this, too, as well in relation to laws impairing the obligations of contracts as to other unconstitutional enactments. In like manner all enactments of such principal rebel government itself will be recorded as illegal and void, and so of judicial order and decisions made in virtue thereof.3

Cases in illustration. Personal liability for corporate debts. Release of by law. A provision in the charter of a private corporation rendering stockholders liable to the amount of their stock for all debts of the corporation contracted prior to the transfer of their stock, is a contract between such stockholders and the creditors of the corporation, which is impaired by a law subsequently passed repealing such individual liability clause of the charter. 4

Bank bills receivable, by law, for taxes. So, where a bank charter made the bills of the bank receivable by the State in pay

122; Mason v. Haile, 12 Wheat. 370; Charles River Bridge v. Warren Bridge, 11 Pet. 420; Hawkins v. Barney's Lessee, 5 Pet. 456; Farmers' and Mechanics' Bank e. Smith, 6 Wheat. 131; Satterlee v. Matthewson, 2 Pet. 380; Wilkinson v. Leland, 2 Pet. 627; Hawthorne v. Calef, 2 Wall. 10; McGee . Mathis, 4 Wall. 143; Fletcher v. Peck, 6 Cr. 88; Dodge v. Woolsey, 18 How. 331; Cooley on Const. Limitations, 4th ed. 333 et seq.; Pomeroy

ment of taxes, this was held to amount to a contract with the holders of the bills; and it was further held that an act of assembly repealing such provision was void, as impairing the obligation of the contract.1

An exclusive privilege is a contract. So, a provision in a State statute chartering a company to build a toll bridge, that no bridge over the same stream should be built within a given distance from the one thus authorized to be built, is a contract between the corporators and the State, which is impaired by the building of another bridge over the same stream within the inhibited distance, and by act of the legislature permitting the erection of such latter bridge, and such subsequent statute is void as repugnant to the Constitution of the United States, which declares that no State shall make any law impairing the obligation of contracts.2

Purchases under State exemption from taxation. Likewise the sale of lands by a State, or scrip receivable for lands under a statute providing as an inducement to the purchase that the lands should not be taxed for a given number of years, or until reclaimed from their condition as swamp lands, amounts to a valid contract between the State and the purchaser or holder of the scrip or lands, which is irrepealable by the State; and the enactment subsequently of a law repealing such exemption clause and providing for taxing such lands, before the expiration of the time specified, or reclaimation of the land from their swamp land condition, impairs the contract within the meaning of the Constitution, and is therefore unconstitutional and void. 3

Curative laws. But curative laws, making contracts valid, do not impair the obligation of contracts.4

Bank charter exemption from taxation for bonus paid. But a State law which, in consideration of a bonus, embodies in a bank charter a provision exempting the bank from taxation, is a contract inhibition against taxation of the stockholders of such bank, upon their stock therein; and a law creating such tax is void for impairing the contract. Yet such inhibition does not extend or exist longer than the term of the charter, and if thereafter the

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1 Woodruff v. Trapnall, 10 How. 190. The Binghamton Bridge, 3 Wall.

3 McGee v. Mathis, 4 Wall. 143.

4 Satterlee v. Matthewson, 2 Pet. 380.

charter be renewed without such provision, there is no longer such restriction as to taxation as to the bank or its stocks.1

Laws affirming invalid and doubtful contracts. But State laws making valid irregular and doubtful, or even void, contracts, not thereby affecting injuriously contract rights of third persons, are not laws impairing the obligations of contract within the meaning of the United States Constitution.2

Legal dissolution of private corporations. Nor does the dissolution of a private corporation by authority of an existing State law or laws providing therefor, and for closing up its concerns, operate as against the corporation creditors as an impairment of their contract of indebtedness. The obligation of those contracts continues, and are enforcible against the assets of the defunct corporation, and they could reach nothing else if the corporation had not dissolved. Every creditor is supposed to know the nature of such corporations, and their liability to dissolution, voluntary or forced, and to contract with it in reference thereto. Creditors, in such case, must look to the corporate assets, which will be liable so far as not transferred into the hands of bona fide purchasers. The case is no harder than that of creditors of a natural person who dies. They, too, must look to the assets for satisfaction of their demands. If there are no assets in either case, yet the contract obligation still remains, and is in no wise impaired.4

Existing Laws Enter into Contracts. The laws of a State existing at the time of making a contract enter into it as a part thereof, so far as regards its force and obligation; and its judicial enforcement by judgment or decree, and process of the courts; hence, subsequent laws requiring property levied on and offered for sale, or offered for sale under decree of the courts, to be appraised, and requiring bids of two-thirds the appraised value as a condition prerequisite to a sale, superadds a condition unknown to the contract, and obstructs and impairs the obligation of the same, and is therefore void. The Supreme Court of the United States have held that the obligation of a contract is to perform the promises and undertakings contained therein; the right of

'Gordon v. The Appeal Tax Court, 3 How. 133; Ches v. The Appeal Tax Court, 3 How. 133; Dodge v. Woolsey, 18 How. 331.

2 Watson v. Mercer, 8 Pet. 88; Satterlee v. Matthewson, 2 Pet. 380.

Mumma v. Potomac Co., 8 Pet. 281. • Ibid.

the obligee to bring suit, obtain judgment, and take out final process thereon, and enforce it until satisfied, pursuant to the substantial features of the existing law, and that if such law allows a sale of property for what it will bring, that a subsequent law prohibiting a sale unless for a named proportion of its value, is, as stated, void, for impairing the obligation of the contract.1 So, where the charter of a bank declared it "capable and able, in law, to have, possess, receive, retain, and enjoy, to themselves and their successors, lands, rents, tenements, hereditaments, goods, chattels, and effects, of what kind soever, nature, and quality, and the same to grant, demise, alien, or dispose of for the good of" such bank; and "to receive money on deposit, and pay away the same free of expense, discount bills of exchange and notes," a subsequent law prohibiting the bank from transferring, by endorsement or otherwise, any note, bill receivable, or other evidence of debt, was held, inasmuch as the charter privileges so granted amounted to a contract between the State and the bank, an enactment which violated the obligation of the contract, and was therefore unconstitutional and void.

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Abolition of Imprisonment for Debt. A State may pass a law discharging persons imprisoned for debt, and such a law does not impair the obligation of the contract. It merely modifies the remedy, but does not take the remedy away. Imprisonment is no part of a contract of indebtedness, and therefore releasing a prisoner who is held for a debt does not, in any manner, impair the contract creating the debt. The power of a State to impose imprisonment as part of the remedy, also enables it to abolish that part of the remedy generally; and, if it be allowable by a general law, it is also allowable in special cases. 3 In Sturges v. Crowninshield, here cited, the Supreme Court of the United States say: "Imprisonment of the debtor may be a punishment for not performing his contract, or may be allowed as a measure for inducing him to perform it. But a State may refuse to inflict. this punishment, or may withhold it altogether, and leave the contract in full force. Imprisonment is no part of the contract,

Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 6 How. 608; Howard v. Bugbee, 24 How. 461.

9 Planters' Bank of Miss. v. Sharp,

6 How. 301; State Bank of Ohio v. Knoop, 16 How. 369.

3 Mason v. Haile, 12 Wheat. 370; Sturges v. Crowninshield, 4 Wheat. 200; Beers v. Haughton, 9 Pet. 329.

and simply to release the prisoner does not impair its obligation." Such being the power of a State legislature, it results therefrom that the enactment of a law discharging a prisoner held for debt, on bonds, in the prison bounds, and the going at large of such prisoner beyond said bounds, as the result of such discharge, neither violates the obligation of any contract nor amounts to a breach of condition of the bonds, conditioned that the prisoner shall "continue to be a true prisoner, in the custody, guard and safe-keeping, * until he shall be lawfully discharged;" for such a release, by operation of law, is a lawful discharge.1

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State Insolvent Laws. And so it is held that State insolvent laws do not impair the obligations thereafter entered into between the citizens of the States by which they are enacted.

Taxing a City's Own Indebtedness. An ordinance of a city taxing its own indebtedness, as the property of its non-resident creditor, is illegal, and so is a provision thereof requiring the amount of the tax to be deducted and withheld from the creditor out of the accruing interest on such debt. Such ordinances are void as violating and impairing the obligation of the contract.3 In the language of STRONG, J.: "States and cities, when they borrow money, and contract to pay it with interest, are not acting as sovereignties. They come down to the level of ordinary individuals."4

XVI. USURY.

This subject has been incidentally treated of in Sec. IX. of this chapter, under the head of "Commercial Paper." As connected with our general subject, it can present itself in either one of three phases: 1st. Where the contract is made in one State, and is performable in another, and the interest contracted for is usurious according to the lex loci contractus, but is allowable and valid by the lex solutionis, or the law of the place where the contract is to be performed. 2d. Where the interest contracted for is valid by the lex loci contractus, but is invalid and usurious by