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The court declared, that when a law was in its nature a contract, and absolute rights have vested under that contract, a repeal of the law could not devest those rights, nor annihilate or impair the title so acquired. A grant was a contract within the meaning of the constitution. The words of the constitution were construed to comprehend equally executory and executed contracts, for each of them contains obligations binding on the parties. A grant is a contract executed, and a party is always estopped by his own grant. A party cannot pronounce his own deed invalid, whatever cause may be assigned forits invalidity, and though that party be the legislature of a state. A grant amounts to an extinguishment of the right of the grantor, and im · plies a contract not to reassert that right. A grant from a state is as much protected by the operation of the provision of the constitution, as a grant from one individual to another, and the state is as much inhibited from impairing its own contracts, or a contract to which it is a party, as it is from impairing the obligation of contracts between two individuals. It was, accordingly, declared, that, the estate held under the act of 1795, having passed into the hands of a bona fide purchaser for a valuable consideration, the state of Georgia was constitutionally disabled from passing any law whereby the estate of the plaintiff could be legally impaired and rendered void.
The next case that brought this provision in review before the Supreme Court, was that of The State of New-Jersey v. Wilson. It was there held, that if the legislature should declare by law, that certain lands to be thereafter purchased for the use of the Indians, should not be subject to any tax, such a legislative act amounted to a contract, which could not be rescinded by a subsequent legislature. In that case, the colonial legislature of New-Jersey, in 1758, authorized the purchase of lands for the Delaware
a 7 Cranch, 164,
Indians, and made that stipulation. Lands were accordingly purchased, and conveyed to trustees for the use of the Indians, and the Indians released their claim to other lands, as a consideration for this purchase. The Indians occupied these lands until 1803, when they were sold to individuals under the authority of an act of the legislature, and, in 1904, the legislature repealed the act of 1758, exempting those lands from taxation. The act of 1759 was held to be a contract, and the act of 1904 was held to be a breach of that contract, and void under the constitution of the United States.
The Supreme Court went again, and more largely, into the consideration of this delicate and interesting constitutional doctrine, in the case of Terrett v. Taylor. It was there held, that a legislative grant, competently made, vested an indefeasible and irrevocable title. There is no authority or principle which could support the doctrine, that a legislative grant was revocable in its own nature, and held only durante bene placito. Nor can the legislature repeal statutes creating private corporations, or confirming to them property already acquired, under the faith of previous laws, and by such repeal vest the property in others, without the consent or default of the corporators. Such a proceeding would be repugnant to the letter and spirit of the constitution, and to the principles of natural justice.
But it was in the great case of Dartmouth College v. Woodward, that the inhibition upon the states to impair by law the obligation of contracts, received the most elaborate discussion, and the most efficient and instructive application. It was there held, that the charter granted by the British crown to the trustees of Dartmouth College in 1769, was a contract within the meaning of the constitution, and protected by it; and that the college was a private charitable institution, not liable to the control of the legislature; and that the act of the legislature of New-Hampshire, altering the charter in a material respect, without the consent of the corporation, was an act impairing the obligation of the charter, and, consequently, unconstitutional and void.
a 9 Cranch, 43.
b 4 Wheaton, 518.
The chief justice, in delivering the opinion of the court, observed, that the provision in the constitution never had 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. Dartmouth College was a private eleemosynary institution, endowed with a capacity to take property for objects unconnected with government, and its funds were bestowed by individuals on the faith of the charter, and those funds consisted entirely of private donations. The corporation was not invested with any portion of political power, nor did it partake, in any degree, in the administration of civil government. It was the institution of a private corporation for general charity. The charter was a contract to which the donors, the trustees of the corporation, and the crown, were the original parties, and it was made on a valuable consideration, for the security and disposition of property. The legal interest in every literary and charitable institution is in trustees, and to be asserted by them, and they claim or defend in behalf of the religion, charity, and education, for which the corporation was created, and the private donations made. Contracts of this kind, creating these charitable institutions, are most reasonably within the purview and protection of the constitution. This contract remained unchanged by the revolution ; and the duties, as well as the powers of the government, devolved on the people of New-Hampshire, but the act of that state which was complained of, transferred the whole power of governing the college, from trustees appointed according to the will of the founder expressed in the charter, to the executive of New-Hampshire. The will of the state was substituted for the will of the donors, in every essential operation of the college. The charter was reorganized in such a manner as
to convert a literary institution, moulded according to the will of its founders, and placed under the control of private literary men, into a machine entirely subservient to the will of government. This was, consequently, subversive of that contract, on the faith of which the donors invested their property; and the act of the legislature of New-Hampshire was therefore held to be repugnant to the constitution of the United States.
The same course of reasoning, and leading to the same conclusion, was adopted and expressed by some of the other judges.
In the opinion given by Judge Story, he added some new and interesting views of the nature of the contracts which the constitution intended to protect. He denied the power of the legislature to dissolve even the contract of marriage, without a breach on either side, and against the wishes of the parties. A dissolution of the marriage obligation, without any default or assent of the parties, may as well fall within the prohibition of the constitution, as any other contract for a valuable consideration. A man has as good a right to his wise, as to the property acquired under a marriage contract; and to devest him of that right withont his default, and against his will, would be as flagrant a violation of the principles of justice, as the confiscation of his estate. The prohibitory clause he also considered to extend to other contracts besides those where the parties took for their own private benefit. A grant to a private trustee, for the benefit of a particular cestui que trust, or for any special private or public charity, cannot be the less a contract, because the trustee takes nothing for his own benefit. Nor does a private donation, vested in a trustee for objects of a general nature, thereby become a public trust, which the government may, at its pleasure, take from the trustee. Government cannot revoke a grant even of its own funds, when given to a private person, or to a corporation, for special
It has no other remaining authority but what is judicial to enforce the proper administration of the trust. Nor VOL. I.
is a grant less a contract, though no beneficial interest accrues to the possessor. Many a franchise, whether corporate or not, may, in point of fact, be of no exchangeable value to the owners, and yet they are grants within the meaning and protection of the constitution. All incorporeal hereditaments, as immunities, dignities, offices, and franchises, are rights deemed valuable in law, and whenever they are the subjects of a contract or grant, they are just as much within the reach of the constitution as any other grant. All corporate franchises are legal estates. They are powers coupled with an interest, and corporators have vested rights in their character as corporators. Upon this doctrine it was insisted, that the trustees of Dartmouth College had rights and privileges under the charter, of which they could not be devested by the legislature without their consent. The act of the legislature did impair their rights, and vitally affect the interest of the college under the charter. If a grant of franchise be made to A. in trust for a special purpose, the grant cannot be revoked, and a new grant made to A. B. and C., for the same purpose, without violating the obligation of the first grant. If property be vested by grant in A. and B., for the use of a general charity, or private eleemosynary foundation, the obligation of that grant is impaired, when the estate is taken from their exclusive management, and vested in them in common with ten other
persons. I have thus stated the substance of the argument of the Supreme Court in this celebrated case, and it contains one of the most full and elaborate expositions of the constitutional sanctity of contracts to be met with in any of the reports. The decision in that case did more than any other single act, proceeding from the authority of the United States, to throw an impregnable barrier around all rights and franchises derived from the grant of government; and to give solidity and inviolability to the literary, charitable, religious, and commercial institutions of our country.