I. What are Contracts within this Provision of the Constitution? $539. A contract is defined by C. J. Marshall to be "an agreement in which a party undertakes to do, or not to do, a particular thing." Contracts may be express, or implied; express, when the parties formally and in positive terms declare what is to be done or forborne; implied, when the stipulations are not thus definitely set forth, but are inferred from the conduct, situation, or relations of the parties, and the promise is treated as though actually made, because in good faith it ought to have been made. Contracts may also be executory, or executed; executory, when the promise or stipulation is yet unperformed; executed, when the promise or stipulation has been performed. 1. Executory Contracts. § 540. Adopting the foregoing elementary definitions and divisions, I say — Express executory contracts made between private persons are plainly within the restrictive provision of the organic law. This has never been doubted or questioned. Implied executory contracts between private persons are as plainly and confessedly covered by the general terms of the Constitution. 2. Executed Contracts. § 541. When the parties have performed the stipulations agreed upon, and the rights are no longer future or executory, but have become fixed, so that the compact is now in the nature of a grant of property, power, or rights, is there still such a contract within the meaning of the Constitution, that the state legislatures are forbidden to step in, annul the perfected results of the executed agreement, and restore the parties to their original position? The Supreme Court of the United States has answered this question in the affirmative, and has decided that executed as well as executory contracts are embraced within the restrictive operation of the Constitution. In many such cases a party would also be protected by the clause in most, if not all, of the state constitutions, forbidding statutes which deprive a person of his property without due process of law. § 542. The first case in order of time was Fletcher v. Peck. The legislature of Georgia had by statute conveyed certain lands to particular grantees. Subsequently the legislature of the same state revoked the former grant, on the ground of alleged corruption, and transferred the lands to other persons. The parties, plaintiff and defendant in the suit, represented these two sets of grantees, and the whole case turned upon the validity of the second statute. Chief Justice Marshall delivered the opinion of the court. After defining the word "contract," and stating the distinction between executory and executed agreements, he proceeds: 2 "Since then, in fact, a grant is a contract executed, the obligation of which still continues, and since the Constitution uses the general term contract,' without distinguishing between those which are executory and those which are executed, it must be construed to comprehend the latter as well as the former. A law annulling conveyances between individuals, and declaring that the grantors should stand seized of their former estates notwithstanding those grants, would be as repugnant to the Constitution as a law discharging the vendors of property from the obligation of executing their contracts by conveyances. It would be strange if a contract to convey was secured by the Constitution, while an absolute conveyance remained unprotected. $543. "If under a fair construction of the Constitution grants are comprehended under the term contracts, is a grant from the state excluded from the operation of the provision? Is the clause to be considered as inhibiting a state from impairing the obligation of contracts between two individuals, but as excluding from that inhibition contracts made with itself? The words themselves contain no such distinction. They are general and are applicable to contracts of every description. If contracts made with a state are to be exempted from their operation, the exception must arise from the character of the 1 6 Cranch, 87. 2 Ibid. 137. contracting party, not from the words which are employed. Whatever respect might have been felt for the state sovereignties, it is not to be disguised that the framers of the Constitution viewed with some apprehension the violent acts which might grow out of the feelings of the moment; and that the people of the United States in adopting that instrument have manifested a determination to shield themselves and their property from the effects of those sudden and strong passions to which men are exposed. The restrictions on the legislative powers of the states are obviously founded on this sentiment; and the Constitution of the United States contains what may be deemed a bill of rights for the people of each state." The court unanimously declared the second statute passed by the Georgia legislature to be void. § 544. The same doctrine was emphatically stated by the court in Terret v. Taylor1 (1815), the opinion being delivered by Mr. Justice Story. Again, in the great case of Dartmouth College v. Woodward2 (1819), Chief Justice Marshall uses the following language; 3 "If a doubt could exist that a grant is a contract, the point was decided in Fletcher v. Peck, in which it was laid down that whether executed or executory both [forms of contract] contain obligations binding on the parties, and both are equally within the provisions of the Constitution of the United States, which forbids the state governments to pass laws impairing the obligation of contracts." § 545. These early decisions of the Supreme Court of the United States have been repeatedly followed by the same tribunal. The latest case which involves and restates the same principle is McGee v. Mathis (1866). In 1850 the United States gave to the State of Arkansas certain wild lands upon certain conditions, which were accepted by the state. In 1851 the state legislature passed a statute providing for the sale and drainage of these lands; and for that purpose a transferable scrip was issued, which was paid to contractors who constructed drains and levees, and which could be received in pay 19 Cranch, 43, 52. 8 Ibid. 656. 2 4 Wheat. 518. 4 4 Wall. 143. ment of any of these lands which should be taken up by the holder. To encourage the reclamation of these lands, the same statute enacted "that all said lands shall be exempt from taxation for the term of ten years, or until they shall be reclaimed." In 1855 this latter clause was repealed, and the lands were included in the general taxation. In 1857 another statute was passed which imposed a special tax on the same lands. The plaintiff had, before 1855, become owner of a quantity of land-scrip, with which he, after 1855, took up and located a number of sections. The action was brought to relieve the portions thus taken up and located from the state tax. The Supreme Court of the United States declared the statute exempting these lands from taxation to be a contract between the state and the scrip-holders; and pronounced the repeal invalid as to those persons who were holders at the time. § 546. By the preceding judgments of the highest national court, the following general propositions have been established as a part of the constitutional law of the land: An executed agreement, or grant, between private persons, by means of which property, powers, or rights are transferred from one to the other, is a contract, with the obligation of which no state may interfere. A state may also make a grant to a private person, by means of which rights are conferred upon him; and a contract is thus perfected between them, the obligation of which the state may not afterwards impair by altering, amending, or repealing the terms of the grant. By far the greater number of judicial questions which have arisen and been passed upon by the courts, have related to grants made by states to private persons; the contention being whether such grants amounted to contracts so as to be binding upon the commonwealths which made them. It will be immediately perceived that this controversy involves the whole subject of national and state sovereignties. The partisans of state sovereignty have uniformly contended that the supreme disposing power of a state cannot be limited; that what one legislature has done another may always undo; that a contract between a state and a private person, by which the former confers absolute rights upon the latter, is a simple impossibility. Through the mass of forensic and judicial discussion growing out of this subject I must now conduct the reader. We shall find much discrepancy, much conflict; but at the same time we shall discover certain grand principles firmly established by that court which has the power to decide authoritatively upon the meaning and import of constitutional provisions. I shall, therefore, take up in order several species of legislative acts, and inquire whether they are contracts. 3. Offices. § 547. When the law-making power of a state has created an office with a certain salary and emoluments, and a person has been appointed to the official position, and is fulfilling its duties and receiving its perquisites, is the state legislature, in the absence of any provision of the local constitution, restrained by the organic law of the nation from abolishing the office before the term thereof has expired, and from depriving the officer of the gains which he would otherwise have received? In other words, is the statute creating an office, taken in connection with the appointment of a person thereto, an executed contract between the state and that person, which is protected by the Constitution of the United States? The decisions of courts and the dicta of judges have, with hardly a dissenting voice, answered this question in the negative, and determined that public offices are not contracts. § 548. In the case of Warner v. The People, the legislature of New York had virtually abolished an office, and had created another in its stead. The power to do so depended entirely on the state constitution, and that fundamental law was alone invoked in deciding the question. The legislative act was held to be invalid. But in the course of his opinion Chancellor Walworth uttered a dictum which, coming from so able a judge, is entitled to much weight. He says: "The fees and emoluments of office may not only be reduced by direct 1 2 Denio, 272, 281. See also Taft v. Adams, 3 Gray, 126; Russell v. Howe, 12 Gray, 147; Opinion of the Justices, 117 Mass. 603. ED. |