the mere command to do or to forbear, include a sanction by which such command is to be enforced. This sanction is the remedial portion of the law; and it enters into the notion of human law as much as the command itself does.

Two

§ 597. Now to apply this to the case of contracts. persons enter into a contract; the law by its command obliges one of these parties to do the certain thing agreed upon; the law also says to this party, If you do not perform the thing commanded, you shall be subjected to a certain kind of punishment. This latter is the sanction, and this sanction or remedy as much forms a part of the obligation of the contract as does the very thing agreed to be done. In other words, the parties, by entering into a contract, create an occasion by which the commands of the law come into play; these commands give one party a right as against the other to have a certain thing done, and subject the other to the duty of doing that thing. But this is not all. The very same contract gives to the first party the right against the other to say, If you do not perform exactly what you agreed to do, you shall do something else by way of penalty or satisfaction; and a corresponding alternative duty rests upon this other party to do the thing which is required by way of penalty or satisfaction. In other words, the right to the remedy is included in the notion of the obligation of a contract. Were it otherwise, the obligation would be binding only upon those parties who should voluntarily submit to it, and the law, as a compulsive and restraining force, would become a mere nullity.

III. What State Laws do impair the Obligation of Contracts.

§ 598. We are now to answer the practical question, What kinds and classes of state laws do have the effect to impair the obligation of contracts? This question is one not easy to answer in its full extent. There may be some state statutes which plainly and unequivocally have the injurious effect; concerning which there is no room for argument. There may be others which as plainly and unequivocally do not have the injurious effect. Between these two extremes there are kinds

and classes of laws concerning which there may be a doubt, there may be room for argument, for difference of opinion among legislators and judges. When we attempt, therefore, to lay down general principles which shall be absolutely inclusive and exclusive, — including all laws which are obnoxious to the constitutional provision, and excluding all others, — we shall find ourselves at once involved in great difficulty, a difficulty inherent in the nature of the subject, and enhanced by the conflicting character of decided cases. It is my design, however, to meet the question, and to attempt its solution. If I do not completely succeed, I shall at least be able to point out those cases which have been settled, and to indicate those respecting which there is still a doubt.

§ 599. There are some fundamental principles which are admitted by all, and it is well to fix these in the memory at the outset.

First. The Constitution forbids the states to impair the obligation of contracts. This word "impair" is important. It is not "destroy." destroy." Destroying the obligation of a contract, would, of course, impair it; but impairing is not necessarily destruction; it is a word of far less forcible meaning. The obligation may be impaired, and some obligation, some binding efficacy be left. In fact, lessening, taking away from, or adding to the obligation, that is, to the sum of legal rights and uties flowing from a contract, would be to impair it.

Secondly. Any law thus operating upon a past contract, — that is, upon a contract entered into before the passage of the law, is obnoxious to the Constitution, except in the cases referred to in the next sentence.

Thirdly. If before the execution of the contract, a general law had been passed, giving the legislature the right to modify

1 It may be noted the Constitution does not forbid states to pass laws strengthening a contract, that is making valid what was before void and ineffectual. And a liability may be subsequently by law imposed upon a promisor, or more properly a preëxisting defence taken away, without violating this clause in the Constitution. Satterlee v. Mathewson, 2 Pet. 380; Watson v. Mercer, 8 Pet. 88; Ewell v. Daggs, 108 U. S. 151; Gross v. United States Mortgage Co. 108 U. S. 488. ED.

such contract; or if, in the case of grants and charters by a state, a reservation had been inade in the grant or charter itself, or in prior statutes applicable thereto, giving the legislature power to repeal or modify, a subsequent repeal or modification would not impair the obligation of the contract; for the power thus antecedently reserved would enter into and form a part of the very obligation itself.

We are now prepared to pass to the positive side of the question; and it is evident that all laws which can impair the obligation of a contract, must apply either directly to the terms of the agreement, or to the remedy by which it may be enforced. These cases will be considered separately.

1. Laws which apply directly to the terms of Contracts.

§ 600. In respect to such laws there is little difficulty. The point of contention has been, to determine whether certain transactions entered into between private persons, or between a state and private persons, were contracts. This being

settled, the conclusion is irresistible that statutes modifying their terms, fall within the constitutional inhibition. It is evident that certain classes of legislative enactments would impair the obligation of contracts. In respect to private contracts between individuals, it is so plain as to require the citation of no authority to support the proposition, that all state laws operating upon past agreements, and affecting the very terms thereof; which wholly or partially discharge one contracting party, without the consent of the other, from doing the very thing which he agreed to do; or which add new stipulations or conditions to the engagement; or which take away any that were incorporated into it; or which extend or shorten the agreed time for performance; or which render contracts illegal and void which were before legal and valid; or which make those legal and binding which were before illegal and null;all such legislative acts would impair the obligation of existing contracts affected thereby. In short, these statutes would strike at the very substance of the agreement, increasing or diminishing the aggregate of substantial rights and duties

which, as we have seen, go to make up the obligation. On the contrary, such statutes, as far as they should apply to contracts executed subsequently to their passage, would not impair their obligation.

§ 601. In respect to contracts between a state and private persons, including grants and charters, it is equally plain that, where no power for such purpose is antecedently reserved, all statutes directly repealing the grant or charter, or in any way modifying its express terms, by changing the organization of a corporation, or by taking away powers, or by adding new conditions or duties, impair the obligation of this species of contracts. The cases cited in the former part of this section sufficiently illustrate the application of the rule. But it should be carefully noticed that no implied contracts arise in favor of a corporation, from the mere objects or designs of the charter, so that the modification must be either of something absolutely expressed, or of something necessarily included in what is absolutely expressed. Thus we have seen that imposing a tax on a bank is not prohibited, when the charter is silent on the subject of taxation, because no restriction upon the taxing power can be implied from the mere fact of incorporation. But on the other hand, if a bank should be incorporated by a charter silent in respect to the individual liability of the stockholders, no power being reserved to modify the charter, a subsequent act of the state legislature imposing an individual liability, would fall within the constitutional inhibition. For by the general common law, corporators are not individually liable; and the charter having been granted at a time when this rule of law existed, the rule itself would necessarily enter into and form a part of the obligation. But if the power to modify had been reserved to the state legislature, the subsequent statute of this character would not impair the obligation of a contract, as was directly held in the matter of Oliver Lee and Co.'s Bank.1 The Supreme Court of the United States lately decided in Hawthorne v. Calef,2 that, when the charter of a railway company contained a clause making the property of the stockholders liable, to the amount of the stock held by 2 2 Wall. 10.

1 7 Smith, 9.

them respectively, for the debts of the corporation, a subsequent repeal of this provision was void as against existing creditors, because it destroyed a contract made with them by the charter.

§ 602. It is settled, however, by a solemn judgment of the Supreme Court of the United States, that the states may exercise the right of eminent domain over corporations in the same manner and to the same extent as over individuals, that is, may take the corporate property and franchises for public use, upon paying just compensation therefor; such a proceeding on the part of a state will not impair the obligation of any contract contained in the charter. This proposition, which, as we have seen, has been maintained by several state tribunals, was finally established by the Supreme Court in West River Bridge Co. v. Dix.1

To this general description of statutes which apply to the very terms of contracts and thereby impair their obligation, I shall add a brief reference to the most important class of these laws, and to their effects upon the rights and duties of creditors and debtors.

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§ 603. State Insolvent Laws. The insolvent laws referred to are those which provide, under certain conditions and restrictions, for the absolute discharge of a debtor from his debts. Most states of the Union have statutes of this character as a part of their general scheme of legislation. We may examine the effect of such laws upon debts created before their passage. There can be no difficulty upon this point. The obligation of the contract would be not only impaired, but absolutely destroyed, the debtor being entirely released from doing what he agreed to do. This principle was established in the great case of Sturges v. Crowningshield, the Supreme Court having been unanimous in the result which was reached. With this result all courts, state and national, have heartily agreed. I add, in the foot-note, a few cases in which the rule has been distinctly reaffirmed.3

16 How. 507.

2 4 Wheat. 122.

Farmers' and Mechanics' Bank v. Smith, 7 Wheat. 131; Smith v. Mead, 3 Conn. 253; Boardman v. De Forrest, 5 Conn. 1; Roosevelt v. Cebra, 17 Johns. 108; Kimberly v. Ely, 6 Pick. 451.