§ 489. Changes in Means or Manner of Enforcement of Con

tracts.

The obligation of a contract is not impaired by a law which changes the legal or equitable means for its enforcement, existing at the time it was entered into, provided an adequate even though not so convenient a remedy is retained or substituted therefor. The principle in this respect is thus similar to that discussed in connection with the due process of law clause."

§ 490. Contracts May Be Validated by Curing Technical Defects.

Laws which operate to remedy or cure technical defects so as to give validity to otherwise invalid contracts are constitutional, their effect being to confirm rather than to impair the obligation of contracts.1

§ 491. Contracts by the State not to Tax.

Elsewhere in this treatise it is pointed out that, to a certain extent, the State's right of taxation may, in return for a substantial consideration, be parted with. When thus parted with, the undertaking not to exercise the right in the manner specified constitutes a contract, the obligation of which is impaired by a

3 Section 462. In Bronson v. Kinzie et al. (1 How. 311; 11 L. ed. 143), the court say: "If the laws of the State passed afterwards had done nothing more than change the remedy upon contracts of this description, they would be liable to no constitutional objection. For undoubtedly, a State may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future. It may, for example, shorten the period of time within which claims shall be barred by the statute of limitations. It may, if it thinks proper, direct that the necessary implements of agriculture, or the tools of the mechanic, or articles of necessity in household furniture, shall, like wearing apparel, not be liable to execution on judgments. . . . Although a new remedy be deemed less convenient than the old one, and may in somɛ degree render the recovery of debts more tardy and difficult, it will not follow that the law is unconstitutional. Whatever belongs merely to the remedy may be altered according to the will of the State, provided the alteration does not impair the obligation of the contract." Citing Green v. Biddle, 8 Wh. 1; 5 L. ed. 547.

4 Watson v. Mercer, 8 Pet. 88; 8 L. ed. 876.

5 Section 503.

subsequent law authorizing its exercise. The clause thus operates as a limitation upon the taxing power of the State. As to the police powers of the State, as will be presently shown, the rule is otherwise. No State, it has been held, may validly contract not to exercise in the future a contract which is necessary to the health, safety, comfort, or morality of its citizens.

§ 492. Contracts to Which a State is a Party.

The contracts, the obligation of which is secured from impairment by the States, include agreements between the States and between a State and an individual or individuals, as well as those between individuals. In other words, the State when contracting does so upon the same terms as a private individual or corporation, and may not plead its sovereignty as justifying subsequent action upon its part impairing the contractual obligations which it has assumed. Its non-amenability to suit may, however, enable a State to avoid the performance of an agreement which it has undertaken to perform. This branch of the subject is more fully discussed in the chapter of this treatise dealing with the Suability of the State.

§ 493. What Constitutes a Contract.

Election or appointment to a public office does not create a contract between the State and the one so appointed.7

Marriage, though in some respects properly describable as a contract, is not one the obligation of which is protected from impairment by the State.

In the Dartmouth College cases Chief Justice Marshall declares: "The provision of the Constitution never has been understood to embrace other contracts than those which respect property or some object of value, and confer rights which may be asserted in a court of justice. It never has been understood to restrict the

6 Chapter LIV.

7 See Section 82, and especially the case of Butler v. Pennsylvania, 10 How. 402; 13 L. ed. 472.

84 Wh. 518; 4 L. ed. 629.

right of the legislature to legislate on the subject of divorce." In Maynard v. Hill this doctrine is judicially affirmed, the court saying, marriage "is something more than a mere contract. The consent of the parties is of course essential to its existence, but when the contract to marry is executed by the marriage, a relation between the parties is created which they cannot change. Other contracts may be modified, restricted, or enlarged, or entirely released upon the consent of the parties. Not so with marriage. The relation once formed, the law steps in and holds the parties to various obligations and liabilities."

A license granted by a State, or by one of its political subdivisions, is not a contract within the meaning of the prohibition. It is nothing more than the grant of a privilege which so far as the federal prohibition regarding the impairment of the obligation of contracts is concerned may be revoked at any time at the will of the grantor, or additional conditions upon its enjoyment imposed. This principle is so well settled that a citation of authorities is scarcely needed. The only difficulty lies in determining in specific cases whether the grant of authority by the State is in the nature of a license or of a franchise, which is to be construed as a contract. However, the presumption is always against the existence of a contract. "A contract binding the State is only created by clear language and not to be extended by implication beyond the terms of the statute.” 10

§ 494. Foreign Corporations: Permission to do Business Within the State.

Generally speaking, the right of a foreign corporation to do business within a State is in the nature of a license which that State may revoke or modify at discretion. Where, however, the foreign corporation, relying upon an existing law to the effect that certain charges will not, for a certain period at least, be imposed upon it, has entered the State for the transaction of business there, a con

9 125 U. S. 190; 8 Sup. Ct. Rep. 723; 31 L. ed. 654.

10 Williams v. Wingo, 177 U. S. 601; 20 Sup. Ct. Rep. 793; 44 L. ed. 905; Fanning v. Gregoire, 16 How. 524; 14 I.. ed. 1043.

tract to that effect is held to exist between it and the State, the obligation of which the latter may not impair. Thus in American Smelting, etc., Co. v. Colorado" it was held that "a contract right to do business in the State during the corporate lifetime of domestic corporations without being subject to any greater liabilities than were or might be imposed upon domestic corpora tions was acquired by a foreign corporation by virtue of its admission into the State of Colorado with the right to do business therein under the then-existing laws of that State, which, inter alia, subjected foreign corporations coming into the State to the liabilities restrictions, and duties which then were or might thereafter be imposed upon domestic corporations of like character, and that such right was unconstitutionally impaired by an act of the State, exacting from such corporation an annual tax or license fee in double the amount of that imposed upon domestic corporations."

§ 495. Charters of Public Corporations.

The charters of public corporations, investing them with subordinate legislative and other governmental powers are not contracts within the meaning of the obligation clause, and, so far as the federal Constitution is concerned, the state legislature has, with reference to them, unlimited powers of amendment or repeal. "It is settled law that the legislature in granting it [a municipal charter] does not divest itself of any power over the inhabitants of the district which it possessed before the charter was granted. Unless the Constitution otherwise provides, the legislature still has authority to amend the charter of such a corporation, enlarge or diminish its powers, extend or limit its boundaries, divide the same into two or more, consolidate two or more into one, overrule its action whenever it is deemed unwise, impolitic or unjust, and even abolish the municipality altogether, in the legislative discretion.'

" 12

11 204 U. S. 103; 27 Sup. Ct. Rep. 198; 51 L. ed. 393.

12 Laramie Co. v. Albany Co., 92 U. S. 307; 23 L. ed. 552. See also New Orleans v. New Orleans Waterworks Co., 142 U. S. 79; 12 Sup. Ct. Rep. 142; 35 L. ed. 943.

§ 496. Contracts by Municipal Corporations.

Where, however, municipalities or other subordinate political corporations have, in the exercise of their charter powers, entered into contracts, those contracts are protected from subsequent impairment by state law.13 Such corporations, as holders of state securities and other contract obligations, are secured against their impairment.11

Generally speaking, also, franchises granted by municipal corporations, if authorized by their charters, are contracts which, under the authority of the Dartmouth College case, presently to be considered, are protected against impairment.

So also, a state law limiting the powers of taxation of a municipal corporation, whereby its ability to pay its debts is materially lessened, is void as to debts created prior thereto, the creditors relying upon the taxing powers of the corporation to provide the funds for the payment of their claims.15

In Louisiana v. New Orleans 16 the court declare it to be settled law that "where a municipal corporation is authorized to contract, and to exercise the power of local taxation to meet its contractual engagements, this power must continue until the contracts are satisfied; and that it is an impairment of an obligation of the contract to destroy or lessen the means by which it can be enforced."

So also, generally, it is held to be an impairment of the obligation of contracts entered into by municipal corporations to deprive them by subsequent state legislation of any authority whatsoever, whereby they may be rendered less able to perform their agreements, or whereby the enforcement of their claims by creditors. is rendered more difficult or less certain. That obligation is

13 New Orleans v. New Orleans Waterworks Co., 142 U. S. 79; 12 Sup. Ct. Rep. 142; 35 L. ed. 943.

14 Mobile v. Watson, 116 U. S. 289; 6 Sup. Ct. Rep. 398; 29 L. ed. 620; Louisiana v. Pillsbury, 105 U. S. 278; 26 L. ed. 1090.

15 United States v. Port of Mobile, 12 Fed. 768; Seibert v. Lewis, 122 U. S. 284; 7 Sup. Ct. Rep. 1190; 30 L. ed. 1161; Sawyer v. Concordia, 12 Fed. 754; Wolff v. New Orleans, 103 U. S. 358; 26 L. ed. 395; Ralls Co. v. United States, 105 U. S. 733; 26 L. ed. 1220.

16 30 Sup. Ct. Rep. 40.