Sec. 10.--Powers Denied to States Cl. 1.-Contracts-Definition Barnitz v. Beverly, 163 U. S. 118 (statutes altering mortgagor's right of redemption). Penniman's Case, 103 U. S. 714 (abolition of imprisonment for debt). Wheeler v. Jackson, 137 U. S. 245 (alteration in statute of limitations). Definition of Contracts In general. For the purposes of this clause the term "contracts" embraces agreements between States, between States and individuals, between States and corporations, between a State and the United States. Corporations are within the protection of the clause to the same extent as individuals. Mere social compacts between a State and its citizens are not comprehended by the prohibition; it protects contracts relating to rights which are not governmental. Green v. Biddle, 8 Wheat. 1. Providence Bank v. Billings, 4 Pet. 560. Dartmouth College v. Woodward, 4 Wheat. 627. McGee v. Mathis, 4 Wall. 155. Billings v. Hall, 7 Cal. 1. Stone v. Mississippi, 101 U. S. 820. See also Achison v. Huddleson, 12 How. 298. State Bank of Ohio v. Knoop, 16 How. 389. West River Brdg. Co. v. Dix, 6 How. 531. New Jersey v. Wilson, 7 Cranch 164. Pennsylvania v. Wheeling, etc., Bridge Co., 13 How. 560. Neil v. Ohio, 3 How. 720. Von Hoffman v. Quincy, 4 Wall. 550. Hall v. Wisconsin, 103 U. S. 8. Bridge Proprietors v. Hoboken Co., 1 Wall. 146. Miller v. State, 15 Wall. 488. This prohibition includes and protects contracts which respect property or some object of value and which confer rights that may be asserted in a court of justice. It is not necessary that a contract be executory; the clause includes executed contracts as well. Nor is it necessary that the contract be express; implied contracts as well are protected; whether the contract relates to real or personal estate, is executed or executory, by parol or under seal, the Constitution preserves it inviolate as to its obligations. Fletcher v. Peck, 6 Cranch 136. Farrington v. Tennessee, 95 U. S. 683. Fisk v. Jefferson Police Jury, 116 U. S. 131. The term "contract" presupposes a valid contract, one imposing obligations under general principles of law and not void under the constitution and laws of a State or entered into without authority of the party sought to be charged. A contract to be protected from impairment must be founded upon good con Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Definition sideration. Before the Supreme Court can determine whether a State law is repugnant to the obligation clause it must appear that a legal contract is involved, and for this purpose the bare averment of a contract is insufficient. The ultra vires contract of a corporation is not within the protection of this clause. A State constitution is not a contract within the meaning of that term as here used. New Orleans v. Water Works Co., 142 U. S. 88. City R. Co. v. Citizens' R. Co., 166 U. S. 564. Church v. Kelsey, 121 U. S. 283. Griffith v. Connecticut, 218 U. S. 563. If a contract, when made, was valid by the constitution and laws of the State, as then expounded by the highest authority whose duty it was to administer them, no subsequent action by the legislature or judiciary can impair its obligation. Havemeyer v. Iowa County, 3 Wall. 303. Zane v. Hamilton County, 189 U. S. 381. Pacific, etc., R. Co. v. Los Angeles, 194 U. S. 118. Necessity for mutual assent. The term "contract" is used in the Constitution in its ordinary sense as signifying the agreement of two or more minds for considerations proceeding from one to the other to do or not to do certain acts. Mutual assent to its terms is of its very essence. Louisiana v. New Orleans, 109 U. S. 288. Durkee v. Board of Liquidation, 103 U. S. 646. Where a corporation is by its charter authorized to engage in a business affecting the public interest, and given exclusive privileges which tend to establish a monopoly, such grant of exclusive privileges does not become a contract or vested right, so as to be protected from impairment by the State or Federal Constitution, until the grantee has, to say the least, begun preparations or made some expenditures to perform the service to the public which constitutes the consideration for the grant of the privileges. Capital City Light, etc., Co. v. Tallahassee, 28 So. 810; affirmed in 186 U. S. 401. Necessity for consideration.-To make a contract which can not be impaired by subsequent legislation there is the same necessity for a consideration that there would be if it were a contract between private parties. If the law be a mere offer of a bounty, it may be withdrawn at any time notwithstanding the recipients of such bounty may have incurred expenses upon the faith of such offer. Grand Lodge, etc., v. New Orleans, 166 U. S. 146. Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Definition If it be a mere nude pact, a bare promise to allow a certain thing to be done, it will be construed as a revocable license. Pearsall v. Great Northern R. Co., 161 U. S. 667. A grant of exemption is never to be considered as a mere gratuity-a simple gift from the legislature. No such intent to throw away the revenues of the State or to create arbitrary discriminations between the holders of property can be imputed. A consideration is presumed to exist. Illinois Cent. R. Co. v. Decatur, 147 U. S. 201. There is no necessity of looking for the consideration for a legislative contract outside of the objects for which the corporation was created. These objects were deemed by the legislature to be beneficial to the community, and this benefit constitutes the consideration for the contract, and no other is required to support it. Home of Friendless v. Rouse, 8 Wall. 437. While an issue of new mortgage bonds by a street railway can not properly be termed a legal consideration for an ordinance extending the term of an exclusive franchise, since the negotiation of the new loan was neither a benefit to the city nor a detriment to the railroad company, yet the subsequent negotiation of such a loan operates against the city by way of estoppel. The continued operation of the road may itself be regarded a sufficient consideration for the extension of the franchise. City R. Co. v. Citizens' R. Co., 166 U. S. 566. Interest. Interest on a principal sum may be stipulated for in the contract itself, either to run from the date of the contract until it matures or until payment is made; and its payment in such a case is as much a part of the obligation of contract as the principal, and equally within the protection of the Constitution. Morley v. Lake Shore, etc., R. Co., 146 U. S. 168. Missouri & Ark. Co. v. Sebastian County, 249 U. S. 170. Connecticut Mut. Life Ins. Co. v. Cushman, 108 U. S. 51. Griffith v. Connecticut, 218 U. S. 563. See also Koshkonong v. Burton, 104 U. S. 679, as to implied contract for Sturges v. Crowninshield, 4 Wheat. 207, and Ewell v. Daggs, 108 Implied contracts.-The protection of the constitutional provision may be invoked against impairing the obligation of implied contracts as well as express contracts. Stewart v. Jefferson Police Jury, 116 U. S. 135. See also Bryan v. Board of Education, 151 U. S. 639, for a case where the court would not imply a contract in the absence of express provisions. Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Definition Executory and executed contracts.-The constitutional prohibition applies alike to both executory and executed contracts, by whomsoever made. Farrington v. Tennessee, 95 U. S. 683. See also Green v. Biddle, 8 Wheat. 92; and as to the distinction between executed and executory contracts of States, see Pearsall v. Great Northern R. Co., 161 U. S. 672. Contract right to easements.-An owner of real property abutting on a street in New York City, who derived his title from the grantor to the city, in trust for a public highway, of the strip of land constituting the street, and acquired such title when the State courts had decided that one so situated had a contract right to easements of light, air, and access, which could not be taken from him without compensation by the construction of an elevated railroad in the adjoining street, is protected against impairment of his easements by the substitution by a railroad company, at the subsequent command of the State, of an elevated structure in lieu of its surface roadbed, which occupied the street at the time of his purchase, and cut off his access to the street. Muhlker v. New York, etc., R. Co., 197 U. S. 544 (per Justices McKenna, Harlan, Brewer, and Day; Justice Brown concurring in the result). A purely statutory right of a landowner to recover damages resulting to his property from a change in the grade of a street upon which it abuts is not a right of contract within the meaning of this clause. Crane v. Hahlo, 258 U. S. 142. Judgments as contracts.-A judgment is not itself a contract in the sense in which that word is here used whether it is based upon contract or tort. The term "contract" signifies as agreement of the minds, for mutual consideration, to do or not to do certain acts, and a judgment cannot be said to possess any of these essentials. So where the law at the time a judgment is rendered prescribes a rate of interest which judgments shall bear, a law changing the rate is not void as applied to that judgment. Morley v. Lake Shore, etc., R. Co., 146 U. S. 162. Freeland v. Williams, 131 U. S. 416. Louisiana v. New Orleans, 109 U. S. 288. McCullough v. Virginia, 172 U. S. 102. McFaddin v. Evans-Snider-Buel Co., 185 U. S. 505. The refusal of a State court to treat a decree of dismissal in the Federal court as conclusive of a point left open did not impair the obligation of that decree as a contract. Swift v. McPherson, 232 U. S. 51. A judgment for the amount due upon a contract does not terminate its obligation. The debt remains contractual in charac Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Definition ter, and its payment is as much within the obligation of the contract after the judgment as it was before. Lamb v. Powder River, etc., Co., 132 Fed. 440. The confession of a judgment is a contract on the side of the defendant, who thus acknowledges or assumes upon himself a debt, which may be made the ground of an action, but on the side of the plaintiff the necessity of resorting to certain means of enforcing that judgment is not an obligation arising out of contract, but one imposed upon him by the laws of the country. Livingston v. Moore, 7 Pet. 549. See also Garrison v. New York, 21 Wall. 203, as to fiction that judgment is a contract of record. It was held in Stanford v. Coram (28 Mont. 288, 72 Pac. 655) that a judgment is not a contract within the meaning of the constitutional provision because it lacked the element of consent. A judgment is only a contract because it is evidence of a debt or obligation on the part of the defendant due to the plaintiff. The judgment itself presupposes, and is founded on, some antecedent obligation or contract, and is only a higher evidence of that contract because it now has the sanction of the judicial determination of its validity and amount by a court of law. The essential nature and character of the contract remains unchanged; and, in deciding how far it may be affected by legislation, reference must be had mainly to the original contract. Blount v. Windley, 95 U. S. 176. The right to reimbursement for damages caused by a mob or riotous assemblage of people is not founded upon any contract · between a city and the sufferers. Its liability for damages is created by a law of the legislature and can be withdrawn or limited at its pleasure, and its character is not at all changed by the fact that the amount of loss, in pecuniary estimation, has been ascertained and established by judgments. Louisiana v. New Orleans, 109 U. S. 287. Tenure and compensation of public officers.-The appointment to and the tenure of an office created for the public use, and the regulation of the salary affixed to such an office, do not come within the import of the term "contracts." They are functions appropriate to that class of powers and obligations by which governments are enabled, and are called upon, to foster and promote the general good; functions, therefore, which governments can not be presumed to have surrendered. Butler v. Pennsylvania, 10 How. 417. See also Head v. Missouri University, 19 Wall. 526, as to the removal of a professor in a State university prior to the expiration of the term for which appointed. |