contracts have been entered into under a settled construction of the state constitution by its judiciary, they cannot be invalidated afterwards by a change in such construction,' or by any change in the constitution itself."

whether the incompetent restriction is attempted by legislation or by consti tutional amendment. Ibid. See Opinions of Justices, 58 N. H., 623.

1 Gelpcke v. Dubuque, 1 Wall., 175; Olcott v. Supervisors, 16 Wall., 678 Douglass v. Pike County, 101 U. S., 677.

2 White v. Hart, 13 Wall., 646; Opinions of Justices, 58 N. H., 623. But where, at the time a contract is entered into, only realty is taxable for the payment, a subsequent extension to embrace personalty is a mere gratuity, and may be repealed. Foote v. Howard Co. Court, 1 McCrary, 218.

The power which has been conferred upon a municipal corporation to tax or contract debt in aid of a railroad may be taken away at any time before the tax is actually laid or the debt contracted, even though the people have voted the aid. And a subscription made by the municipal officers after by legislation the power is taken away is void. Lieb v. Wheeling, 7 W. Va., 501.

The following cases have an interest in this connection:

After paving contracts had been made, wards were added to the municipality, and it was provided that the residents should not be liable for previous municipal debts. Held, that there were no contract obligations between the paving contractors and the newly added residents which would make this incompetent. United States v. Memphis, 97 U. S., 284.

If an act unconstitutional because not taxing railroads uniformly is repealed, and a different law substituted, the fact that a railroad company has acted upon the repealed act does not establish a contract between it and the state which would preclude the substitution. Railroad Cos. v. Gaines, 97 U. S., 697.

The fact that a saloon-keeper has complied with all the provisions of a tax law before an amendment to it became operative does not give him a vested right to sell under the conditions of the former law. The legislature may amend the law so as to prohibit sales on legal holidays, and the fact of previous payment of the tax will not excuse disobedience. Reithmiller v. People, 44 Mich., 280. See as to recalling licenses, ch. XVIII.

The grantee of an exclusive privilege of furnishing a city with water for a term of years, with a privilege in the city to purchase the works, is taxable upon them while he holds them. Mobile v. Stein, 54 Ala., 23.

The right given by statute to damages for injury from a mob is not founded on contract, and if legislation after the recovery of a judgment changes the rate of taxation that may be levied for its payment, the federal courts cannot interfere. Louisiana v. New Orleans, 109 U. S., 285. When mandamus is applied for to compel taxation for the payment of a judgment, the court will look to see whether the judgment is grounded in contract or tort; if the former, and the contract appears to have been made upon the faith of taxes to be levied, laws modifying the taxing power to the prejudice of the creditor are unconstitutional if thereby he is deprived of all adequate and efficacious remedy. Nelson v. St. Martins, 111 U. S., 716.

If the state, however, in the amplitude of its power over the municipalities of the state, should see fit to take away altogether the corporate powers of the debtor body, and create instead one or more entirely new corporations, which should in law be, not the successors of the other under new names, but new and distinct creations, the creditors might, perhaps, except as to the property of the defunct body, be without remedy. The corporation having ceased to exist, there could no longer be enforcement of their demands through taxation under the old law, and without law it is impossible that taxes should be laid. This was so held where the state by general law abolished a considerable number of municipalities, and made the several communities embraced in the territorial limits of such municipalities respectively taxing districts, in order to provide the means of local government for the peace and safety and general welfare of the district. And it was also held that the property of individual citizens of the abolished municipalities could not by judicial proceedings be subjected to the payment of corporate debts; neither could the property which the municipalities themselves had held for public uses, such as public buildings, streets, squares, parks, promenades, wharves, landing places, fire engines, hose, etc., or in general, anything held for governmental purposes. All such public property would pass, when the municipality ceased to exist, under the immediate control of the state. Even the taxes levied according to law before the general law was passed could only be collected under legislative authority, and if no such authority existed, the remedy of the creditors would be an appeal to the legislature, which alone could grant relief.2 It is possible, therefore, for the state to make use of its power unjustly, and under circumstances where the political remedy is the only one within the reach of parties wronged.

Taxing Contracts. It has never been supposed that the clause in the constitution of the United States which forbids the states to pass laws impairing the obligation of contracts had deprived the states of the power to tax contracts; and it

1 Merriwether v. Garrett, 102 U. S., 472.

2 Merriwether v. Garrett, 102 U. S., 472. See Luehrman v. Taxing District, 2 Lea, 425. These taxing districts are municipal corporations, and suable as such. Uhl v. Taxing District, 6 Lea, 610.

has been customary for them to tax contracts for the payment of money, or having a money value, as the personal property of the owner. The right to do this, if ever in doubt, is now settled.1

But to render a contract taxable it must be subject to the jurisdiction of the government that assumes to tax it; and it is not within its jurisdiction unless the owner is domiciled there, or the contract itself is there in the possession and control of an agent of the owner and for the owner's purposes, and not as mere temporary custodian. Corporation bonds given in one state by one of its corporations, but owned and held by persons domiciled in another state, cannot be taxed in the state where they are issued, even though they are payable in that state and are secured there by mortgage on realty. Therefore a law imposing such a tax, and requiring the treasurer of the corporation to pay it and retain the amount from the sum payable to the bond holder, is a law which undertakes to tax that which is not within its reach, and is for that reason void. This principle is as much applicable to public securities as to any others, and it is not, therefore, competent for a city which has issued obligations whereby it has promised to pay certain definite sums, to diminish these payments under the guise of taxing them. A city may be empowered to tax all property within it, but debts are not property, and credits are not property within a city when not held or owned there.3 So while a franchise tax might be imposed upon a corporation, measured by dividends, it is not competent for a state to levy a tax directly upon the dividends of foreign stockholders,

1 See Catlin v. Hull, 21 Vt., 152; Champaign Co. Bank v. Smith, 7 Ohio St., 42; Cook v. Smith, 30 N. J., 387. That a state may tax mortgages held by residents on lands in other states is affirmed in Kirkland v. Hotchkiss, 42 Conn., 426; S. C. in error, 100 U. S., 491. And see further, People v. Home Ins. Co., 29 Cal., 534; Maltby v. Reading, etc., Co., 52 Pa. St., 140. The mere fact that a part of the capital of a bank is invested abroad does not exempt that part from taxation under the internal revenue law. Nevada Bank v. Sedgwick, 104 U. S., 111.

2 State Tax on Foreign Held Bonds, 15 Wall., 300. See, also, Railroad Co. v. Jackson, 7 Wall., 262; Murray v. Charleston, 96 U. S., 432; Hartman v. Greenhow, 102 U. S., 672; De Vignier v. New Orleans, 16 Fed. Rep., 11; Oliver v. Washington Mills, 11 Allen, 268.

Murray v. Charleston, 96 U. S., 432; De Vignier v. New Orleans, 16 Fed. Rep., 11.

and require the corporation to pay the tax and deduct it from the dividend paid over.1

What Impairs a Contract. The obligation of a contract is the law which binds the parties to perform their agreement.2 This law must govern and control the contract in every shape in which it is intended to bear upon it, whether it affect its validity, construction or discharge. Any law which enlarges, abridges, or in any manner changes the intention of the parties discoverable in it, necessarily impairs the contract itself, which is but evidence of that intention. The manner or the degree in which this change is effected can in no respect influence this conclusion; for, whether the law affect the validity, the construction, the duration, the mode of discharge or the evidence of the agreement, it impairs the contract, though it may not do so to the same extent in all the supposed cases.' It is not by the constitution to be impaired at all. This is not a question of degree or cause, but of encroaching in any respect on its obligation; dispensing with any part of its force." There is no room for any question, therefore, that when the state has stipulated by contract to give exemption from taxation, or has commuted the uncertain taxes for a definite and fixed sum or sums, and afterwards undertakes to tax, in the same manner as it taxes other subjects, the persons, corporations or property which were the subject of the exemption or commutation, the obligation of the contract is impaired. So if the state by a bank charter agrees that the bills of the bank shall be received in payment of taxes, the agreement constitutes a contract between the state and those who shall afterwards become owners of the bills, and any law which denies the right to make such payment impairs the obligation of

1 Oliver v. Washington Mills, 11 Allen, 268.

The registered public debt of a state, whether exempted or taxed by the debtor state, is taxable by another state when owned there. "Taxation of the debt within the debtor state does not change the legal situs of the debt for any other purpose than that of the tax which is imposed. Neither does exemption from taxation." Bonaparte v. Tax Court, 104 U. S., 592.

2 Sturges v. Crowninshield, 4 Wheat., 122.

3 Washington, J., in Ogden v. Saunders, 12 Wheat., 213, 256.

4 Planters' Bank v. Sharp, 6 How., 301, 327. To the same effect is Green v. Biddle, 8 Wheat., 1, 84. See Rivet v. New Orleans, 35 La. An., 134.

the contract, and is void. And if the state, in issuing its own bonds, shall make a like stipulation for their reception in payment of taxes, the obligation of the contract is impaired by any subsequent law which seeks to preclude the exercise of the right. So if the state, in the case of contracts made and payable within it, but held by persons domiciled abroad, were to attempt indirect taxation of the holders by requiring the debtor to pay the tax and retain the amount from the creditors, this would be a plain impairment of the obligation of the contracts, since it would deprive the creditors of a portion of the sum agreed to be paid to them.3

The remedy for the enforcement of a contract is a necessary part of it, without which it could have no legal obligation whatever. But there is, and can be, nothing unchangeable in remedies, and the state must be left at liberty to change them at discretion. In the recognition of this right, however, it is always assumed that no change will be made which will leave the party without a remedy for the enforcement of his contract substantially equal to and as efficient and valuable as that the law entitled him to claim when his contract was made. If the remedy is wholly, in some distinct and important part, taken away, or is hampered with conditions or restrictions, or otherwise seriously impaired in value, the obligation of the contract. is impaired in this particular."

Where, however, the issues of a certain bank were by law receivable for taxes, and an act was passed which provided that there should be no other remedy in any case of the collection of revenue, or an attempt to collect the same illegally, or in funds only receivable by the collector under the law-the same being other or different funds than such as the tax payer

1 Woodruff v. Trapnall, 10 How., 190; Furman v. Nichol, 8 Wall., 44; Keith v. Clark, 97 U. S., 454.

2 Hartman v. Greenman, 102 U. S., 672; Poindexter v. Greenhow, 114 U. S., 270.

State Tax on Foreign Held Bonds, 15 Wall., 300. There would be nothing incompetent in similar legislation if the tax itself were lawful and the corporation were thus indirectly made the collector of sums its members were legally bound to pay. See ch. XIV.

Bronson v. Kinzie, 1 How., 311.

See Von Hoffman v. Quincy, 4 Wall., 535, and numerous cases cited; Tennessee v. Sneed, 96 U. S., 69; Poindexter v. Greenhow, 114 U. S., 270.