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 HUNTING 
 
 THE OBLIGATION OF CONTRACTS CLAUSE OF THE 
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SERIES XXXVII NO. 4 
 
 JOHNS HOPKINS UNIVERSITY STUDIES 
 
 IN 
 
 Historical and Political Science 
 
 Under theiDirection of the 
 
 Departments of History, Political Economy, and 
 Political Science 
 
 THE OBLIGATION OF CONTRACTS 
 
 CLAUSE OF THE UNITED STATES 
 
 CONSTITUTION 
 
 .BY 
 
 WARREN B. HUNTING, PH.D. 
 Late Second Lieutenant, 168th Infantry, A. E. F. 
 
 BALTIMORE 
 THE JOHNS HOPKINS PRESS 
 
 1919 
 
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THE OBLIGATION OF CONTRACTS CLAUSE OF THE 
 UNITED STATES CONSTITUTION 
 
Cornell University 
 
 IJJa Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924018125124 
 
SERIES XXXVII NO. 4 
 
 JOHNS HOPKINS UNIVERSITY STUDIES 
 
 IN 
 
 Historical and Political Science 
 
 Under the Direction of the 
 
 Departments of History, Political Economy, and 
 Political Science 
 
 THE OBLIGATION OF CONTRACTS 
 
 CLAUSE OF THE UNITED STATES 
 
 CONSTITUTION 
 
 BY 
 
 WARREN BLUNTING, PH.D. 
 Late Second Lieutenant, 168th Infantry, A. E. F. 
 
 
 BALTIMORE 
 
 THE JOHNS HOPKINS PRESS 
 
 1919 
 
 7 1 <W V 
 
Copyright 1919 by 
 THE JOHNS HOPKINS PRESS 
 
 
 PRESS OF 
 
 THE NEW ERA PRINTING COMPANY 
 
 LANCASTER, PA. 
 
CONTENTS 
 
 Page 
 
 Preface vii 
 
 Chapter I. Introduction 1 1 
 
 Chapter II. The Meaning of "Obligation of Con- 
 tracts " Considered 1.5 
 
 Chapter III. Can a State Be Obligated by a Con- 
 tract ? 40 
 
 Chapter IV. The Dartmouth College Case 58 
 
 Chapter V. The Obligation of Contracts Clause as 
 Viewed by the Framers of the Con- 
 stitution in 
 
PREFACE 
 
 The general purpose of this study is the examination of 
 the questions which have been decided by the Supreme 
 Court of the United States in cases arising under that clause 
 of Article i, section 10, of the United States Constitution 
 which provides that " no States shall . . . pass any law im- 
 pairing the obligation of contracts" (and which will, for 
 convenience, be referred to, hereafter, as the "contracts 
 clause"), in so far as these questions relate, in any way, to 
 special privileges granted by the States. By " special privi- 
 leges" reference is had to what are commonly known as 
 " franchises," such as the privilege of being a corporation, 
 the privileges of engaging in certain public service busi- 
 nesses such as that of common carriage, the privilege of ex- 
 ercising the state's power of eminent domain, the privilege 
 of using the public streets and highways for tracks, pipes, 
 wires, etc.; and also to those privileges which may be dis- 
 tinguished from " franchises " by the designation of " im- 
 munities," such as the immunity or exemption from taxa- 
 tion by the state, or from rate regulation. This use of these 
 terms is adopted because it calls attention to an important 
 distinction between the two kinds of privileges. The usage 
 is not universal, however. Blackstone designates all spe- 
 cial privileges by the general term " franchises." 
 
 A survey of the decisions will show that the questions 
 arising in these cases, when viewed most broadly, divide 
 themselves into two rather different fields of inquiry. The 
 first field is concerned with the questions which are peculiar 
 to the " contracts clause," per se — such as, What is a " con- 
 tract " ? — and which are fundamental to a true understand- 
 ing of the clause. The second field is concerned with the 
 construction of particular grants of privileges. Here the 
 leading principle is the so-called doctrine of the strict con- 
 
 vii 
 
Viii OBLIGATION OF CONTRACTS 
 
 struction (in favor of the state) of state grants. It might 
 be described as the general law of franchises and immuni- 
 ties, for it is a body of law whose characteristic rules are 
 due, not to the "contracts clause" itself, but to the fact 
 that the States have made certain peculiar grants or con- 
 tracts which, because they have been made by States, are 
 regarded and construed in a peculiar way. These rules 
 might easily have arisen had there been no "contracts 
 clause " in the Constitution. They would have arisen wher- 
 ever franchises are regarded as legal interests to be pro- 
 tected by the courts from infringement by the Government, 
 whether under the "due process of law clause" or some 
 other similar constitutional provision or the ordinary law 
 of the land. 
 
 In the first of the two fields of inquiry which we have 
 noted it has been the especial endeavor to arrive at a true 
 understanding of the principal conceptions underlying the 
 " contracts clause " or, at least, of such of them as are nec- 
 essarily involved in a consideration of the contracts of the 
 States. This part of the study will include an examination 
 of the much criticised Dartmouth College case and the 
 hardly less criticised case of Fletcher v. Peck, with the pur- 
 pose of determining the justice of these criticisms. 
 
 In the second field the special endeavor has been to dis- 
 cover the proper conception of the doctrine of strict con- 
 struction, and to trace the application of that doctrine to the 
 details of the various particular franchises which have been 
 the subject of litigation with the purpose of stating, so far 
 as possible, what the cases have actually decided, of testing 
 the correctness of the application of the doctrine of strict 
 construction to particular cases, and of tracing the fluctua- 
 tions, if any there be, in the general attitude of the court 
 towards this doctrine. This can be done the better inas- 
 much as the Supreme Court, in these cases, has generally 
 confined itself to a reference to its own precedents, which 
 thus have gradually worked themselves out into a more or 
 less unified body of law. 
 
PREFACE IX 
 
 A more detailed explanation of the field covered and its 
 relation to the whole subject of the " contracts clause " will 
 be found in the Introduction, which follows. It is not 
 thought that the work done in the second field of inquiry, 
 because it is confined to an examination of the decisions of 
 the United States Supreme Court alone, will be lacking in 
 practical utility, for it is only these decisions that can give 
 an authoritative statement of the law of franchises and im- 
 munities as it will be applied by the federal courts when 
 their aid is invoked for the protection of these grants, and 
 they are asked to apply the prohibitions of the "contracts 
 clause." In the second place, although the State courts are 
 not bound to follow the decisions of the Supreme Court 
 in so far as they may choose to give a greater protection to 
 franchises, either by applying the "contracts clause" or 
 some prohibition of the State constitution, than the Supreme 
 Court has seen fit to do, nevertheless the State courts do 
 regard the decisions of the Supreme Court in this class of 
 cases with very great respect, and will generally follow 
 them. Therefore the Supreme Court decisions are about 
 the best source from which to discover what has been 
 termed the general law of franchises and immunities; and 
 because the " contracts clause," under the Constitution and 
 the provisions of the United States statutes as to the judi- 
 ciary, always gives the Supreme Court jurisdiction of these 
 cases where the owner of the franchise is dissatisfied with 
 the decision of the State court, a great many of them have, 
 naturally, come before the court, thus securing a compre- 
 hensive and more or less unified character to its body of 
 decisions on this subject. 
 
 The writer wishes to express his sense of indebtedness to 
 Professor W. W. Willoughby, director of the Department 
 of Political Science at the Johns Hopkins University, be- 
 cause it was through him that he was led to undertake this 
 study, and more especially because it is his instruction and 
 friendly counsel, very largely, that have enabled the writer to 
 
X OBLIGATION OF CONTRACTS 
 
 obtain a conception of the methods and requirements of 
 legal reasoning. 
 
 W. B. H. 
 
 Dr. Hunting was killed in France on July 15, 1918, while 
 serving in the American army. He had intended to add to 
 the study here published chapters dealing respectively with 
 "Consideration," "Franchises under the Contracts Clause," 
 "Charters," "Special Franchises," "Rate Privileges," "Tax 
 Exemptions," " Effect of Sales, Mortgage Foreclosures, Re- 
 organizations, Consolidation and Merger upon Franchises," 
 and " The Effect of the Reserved Right to Alter, Amend or 
 Repeal upon Charter Franchises and Privileges." Consid- 
 erable progress had been made by Dr. Hunting upon these 
 chapters, but the manuscript was not in a condition that 
 justified its publication. 
 
THE OBLIGATION OF CONTRACTS CLAUSE 
 OF THE UNITED STATES CONSTITUTION 
 
 CHAPTER I 
 Introduction 
 
 The most fundamental of the questions arising out of 
 the " contracts clause " are obviously these : ( i ) What is a 
 "contract"? (2) What is the "obligation" of a "con- 
 tract"? (3) What is a "law"? (4) What constitutes an 
 "impairment"? A general view of the cases that have 
 arisen under this clause suggests that the contracts which 
 are sought to be protected under it may profitably be classi- 
 fied into contracts between private individuals, that is, pri- 
 vate contracts, and contracts between a State and private 
 individuals, or between two States, that is, State contracts. 
 This classification is justified by the fact that the two kinds 
 of contracts, generally speaking, do not both raise for solu- 
 tion the same fundamental inquiries, the nature of which 
 we have already stated. And in the cases where they do 
 raise the same fundamental inquiry, the principle for deter- 
 mining it is often different in the case of state contracts 
 from what it is in the case of private contracts. 
 
 The purpose of this study is to cover those contracts of 
 the States which confer special privileges, and which may 
 be designated as " franchises " and " immunities," that is to 
 say, the franchise is to be a corporation, and franchises to 
 engage in public services such as railroad, street railway 
 and telegraph franchises, ferry and bridge franchises, water 
 and gas franchises, franchises to use the streets of a city 
 for gas and water pipes and street railways, and finally, be- 
 cause they are of somewhat the same nature as these fran- 
 
 11 
 
12 
 
 OBLIGATION OF CONTRACTS [S5 6 
 
 chises, rate privileges and tax exemptions. This study, 
 therefore, omits from the field of state contracts those cases 
 which have dealt with contracts contained in state securi- 
 ties—that they should be receivable in payment of taxes 
 and the like,— land grants by the States, and cases of con- 
 tracts between the States, or between a State and the United 
 
 States. 
 
 The first question to be considered is the power of the 
 States to obligate themselves by contract. This involves 
 first a consideration of the meaning of the terms "obliga- 
 tion" and "contract," viewed as technical legal concepts, 
 and then a consideration of their meaning when viewed in 
 the light of the circumstances surrounding the adoption of 
 the "contracts clause." It involves also the more specific 
 questions, whether a grant is a contract and whether a char- 
 ter of incorporation is a contract. It will then be consid- 
 ered whether or not a consideration is required for the 
 validity of the contracts of the States, and if so, what con- 
 stitutes a consideration. 
 
 As the obligation of a contract, generally speaking, has 
 been held to be that which a party is obligated to do, accord- 
 ing to the law of the State wherein the contract was made 
 and as prescribed by that law at the time the contract was 
 so made, it is obvious that in these cases the federal courts, 
 when they seek to determine what the obligation of a par- 
 ticular contract is, are called upon to determine a question 
 of state law. Moreover, as regards contracts made by the 
 state which can, of course, only be made by law, as the state 
 can only act through law, 1 the legislature must be authorized 
 by the state constitution to make the contract, and must 
 enter into a contract by means of a legislative act, and any 
 inferior body must likewise obtain authority from the legis- 
 lature, before it can enter into contracts on behalf of the 
 state. In these cases, therefore, the federal courts not only 
 have to determine a question of state law, but a question of 
 state constitutional or statutory law. Some consideration, 
 
 1 W. W. Willoughby, The Nature of the State, pp. 195, 221. 
 
557] INTRODUCTION 1 3 
 
 therefore, is necessary of the relations between the state 
 and federal courts in cases of this kind, and the respect paid 
 by the federal courts to the decisions of the state courts. 
 
 The obligation of a contract is, of course, chiefly deter- 
 mined by the language of the particular contract in ques- 
 tion, and the courts must necessarily interpret this language 
 for themselves, so that, in many cases, perhaps in the 
 greater part of those here reviewed, the court is engaged 
 simply in construing the language of particular contracts. 
 It is doing what any state court might have to do, under the 
 ordinary law or under provisions in the state constitution, 
 and which the Supreme Court itself might have had to do 
 under the " due process clause " of the federal Constitution, 
 as well as under the "contracts clause." As one of the 
 parties to these contracts is a State, however, a new aspect 
 is put upon the question ; the contract is no longer construed 
 by the ordinary rules ; it is interpreted in the light of a spe- 
 cial canon of construction that has been adopted by the 
 courts, namely, that all such contracts are to be construed 
 strictly against the grantee and in favor of the State. The 
 general nature of this doctrine of strict construction must 
 therefore be considered, and this will be followed by chap- 
 ters upon charters, special franchises, rate privileges and 
 tax exemptions, all of which will be chiefly taken up with 
 tracing the application of this doctrine to the facts of par- 
 ticular cases. 
 
 The effect of mortgage foreclosures, consolidations, mer- 
 gers, sales and reorganizations of corporations is included 
 in the study, first, because no opinion can be given upon the 
 question whether a corporation has or has not the privileges 
 which belonged to its predecessor corporation unless one is 
 familiar with the peculiar rules of law applicable to these 
 transactions; secondly, because these rules very largely re- 
 sult from an application of the doctrine of strict con- 
 struction. 
 
 The subject of the effect of the reserved right to alter, 
 amend or repeal charters, franchises and immunities is also 
 
14 OBLIGATION OF CONTRACTS [558 
 
 treated, inasmuch as this is now one of the most important 
 phases of the law dealing with these special privileges. It 
 may probably be said, also, that the cases on this subject 
 involve, theoretically at any rate, an application of the pro- 
 hibition of the " contracts clause." 
 
 It was intended to add chapters dealing with the police 
 power as affecting franchise and immunities, with the ques- 
 tion what is an "impairment," and the question what is a 
 " law," but these, owing to lack of time to complete them, 
 have been omitted. 
 
CHAPTER II 
 
 The Meaning of "Obligation of Contracts" 
 Considered 
 
 It was stated in the preceding chapter that the questions 
 arising out of the " contracts clause " might be analyzed, in 
 a general and abstract way, into : what is a " contract " ? 
 what is its " obligation " ? what is a " law " ? and what con- 
 stitutes an "impairment"? Within the first two of these 
 inquiries have fallen the most important particular questions 
 which have arisen over the "contracts clause" — the ques- 
 tions which have aroused the most discussion and have 
 given rise to the most celebrated cases. These are : whether 
 a grant or executed contract is a " contract " and gives rise 
 to an " obligation " ; whether a state can " contract " and be 
 under an " obligation " thereby ; whether a charter of incor- 
 poration can be said to be a " contract " ; whether the " obli- 
 gation of contracts " is derived from natural or from posi- 
 tive law — a pertinent question in determining whether the 
 "obligation" of a "contract" can be prospectively impaired, 
 or only retrospectively ; finally, whether the remedy for the 
 enforcement of a " contract," which is in force at the time 
 of its making, is a part of the " obligation." 
 
 The last of these questions falls rather within the domain 
 of private contracts, or contracts between individuals, than 
 within the domain of state contracts, and so does not espe- 
 cially concern us, but the first four are all involved in a con- 
 sideration of the contracts of states, and therefore demand 
 our attention. Of course* these questions have long since 
 been answered in leading cases that settle the law upon the 
 points involved. A review of the first eight cases decided 
 by the court, wherein the "contracts clause" was applied, 
 will give the answers to the questions which we have put. 
 
l6 OBLIGATION OF CONTRACTS [560 
 
 They are taken in their chronological order so as to show 
 the way in which the law actually developed. 
 
 In 1810 in Fletcher v. Peck, 1 it was held that a grant of 
 land was a contract, and that a State was as much obligated 
 by its grant of land as an individual by his. A statute re- 
 pealing the grant was, therefore, held to impair the obliga- 
 tion of a contract. 
 
 In 1812 in New Jersey v. Wilson, 2 it was held that an 
 agreement providing for exemption from taxation, made 
 with the Indians by the State of New Jersey in connection 
 with a tract of land granted them in consideration of a sur- 
 render by them of their claims to other tracts of land, was 
 a contract protected by the " contracts clause." 
 
 In 1819 in the case of Sturges v. Crowninshield, 3 it was 
 held that a state bankruptcy law impaired the obligation of 
 contracts which had been made prior to its enactment. It 
 was not necessary to determine whether the obligation of 
 the contract was created by positive or by natural law. 
 
 In the very next case, however, McMillan v. McNeill, 4 
 Marshall, speaking for the court, did hold an insolvent law 
 to constitute an impairment of the obligation of a contract 
 made subsequent to its enactment, stating that the case could 
 not be distinguished from that of Sturges v. Crowninshield. 
 This holding of Marshall's was later explained away, upon 
 the ground that the insolvent law there involved was that 
 of Louisiana, while the contract was made in South Caro- 
 lina, and hence was not subject to the law of Louisiana in 
 so far as its essential validity and its obligation were con- 
 cerned. 
 
 In the same year, 1819, the case of Trustees of Dart- 
 mouth College v. Woodward 3 was decided. This case held 
 that the charter incorporating Dartmouth College, granted 
 by the Crown in the year 1769, constituted a contract with 
 
 1 6 Cranch, 87. 
 
 2 7 Cranch, 164. 
 
 3 4 Wheat. 122. 
 
 4 4 Wheat. 209—1819. 
 
 5 4 Wheat. 518. 
 
56 1 ] MEANING OF " OBLIGATION OF CONTRACTS " 1 7 
 
 the English state the obligation of which passed to the State 
 of New Hampshire upon her severance from England, and 
 came under the protection of the United States Constitution 
 when she became a member of the Union. The case has 
 always been regarded as establishing the doctrine that all 
 charters of private corporations are contracts. 
 
 In Owings v. Speed 6 it was held that the "contracts 
 clause " did not operate to invalidate a law passed prior to 
 the going into effect of the Constitution. 
 
 In Farmers' and Mechanics' Bank v. Smith 7 the prin- 
 ciple of Sturges v. Crowninshield was reaffirmed. 
 
 In 1823 in Green v. Biddle 8 it was held that a contract 
 between two of the States of the Union was within the pro- 
 tection of the "contracts clause" equally with a contract 
 between two individuals, or a State and an individual. 
 
 In 1827 in Ogden v. Saunders 9 it was held that a state 
 insolvency law could not be considered as operating as an 
 impairment of the obligation of contracts entered into sub- 
 sequently to its enactment. The majority judges delivered 
 separate opinions, the reasoning of which — each judge look- 
 ing at the question from a slightly different point of view — 
 is difficult to harmonize. It is probably true, however, that 
 they all essentially agreed on the proposition that the obli- 
 gation of a contract made within a sovereign state, must be 
 precisely that allowed by the law of the state and none 
 other. This case contains the best discussion to be found 
 in the reports as to what is the meaning of the words " obli- 
 gation " and " contracts " as found in the Constitution. 
 
 In the light of these adjudications it might seem that 
 further discussion of these questions would be useless. 
 However, the first and fifth of these decisions, particularly, 
 have been very much criticised. It has been said that Chief 
 Justice Marshall was wrong both in the decision that a 
 grant was a contract and in holding that a charter of 
 
 6 5 Wheat. 420—1820. 
 
 7 6 Wheat. 131— 1821. 
 
 8 8 Wheat. 1. 
 
 » 12 Wheat. 213. 
 
1 8 OBLIGATION OF CONTRACTS [5^2 
 
 incorporation was a contract; that the first decision was 
 made in a friendly suit,, manufactured for the purpose of 
 obtaining a ruling; and that, in the second, the court was 
 led astray by the persuasive eloquence of Daniel Webster, 
 combined with the weakness of the opposing counsel, and 
 the employment by Webster and his associates of influence 
 other than that of argument in open court. It has also been 
 said that the "contracts clause" was never intended to 
 apply to the contracts of the States. 10 
 
 Because it is believed that it is a matter of some interest 
 to determine whether these foundation principles of our 
 constitutional jurisprudence are fundamentally wrong or 
 not, and that it is possibly a matter of present importance, 
 in so far as the tendency to a gradual warping away from 
 these principles is increased, if the belief is general that they 
 were wrongly decided, we shall undertake an examination 
 of the ratio decidendi of these decisions in order to deter- 
 mine the justice of the criticisms which have been made 
 upon them. It is believed, also, that such an examination 
 will bring out the fundamental conceptions involved in this 
 clause more clearly than it is possible to do in any other way. 
 
 For the purposes of the following discussion we shall 
 
 10 The most elaborate criticism of the Dartmouth College Case is 
 to be found in John M. Shirley's " The Dartmouth College Causes," 
 a book devoted 1 exclusively to that purpose. The number of critics 
 is swelled, however, by such writers as the late Chief Justice Doe 
 of New Hampshire, writing in 6 Harvard Law Rev. 161, 213; Clem- 
 ent H. Hill in 8 Am. Law Rev. 198 (perhaps the strongest criticism 
 that has been made) ; and numerous others, among which may be 
 mentioned the anonymous writer in 28 Am. Law Rev. 440; J. F. 
 Orton in the Independent, Aug. 19 and 26, 1909; J. P. Cotton, Jr., in 
 his edition of Marshall's decisions. On p. 347 Cotton says : " One 
 rises from the opinion dissatisfied — there is bias in the statement of 
 facts, bias in the statement of premises, and the assumption that the 
 charter was a contract is too hasty and too barely supported." Ad- 
 verse judgments are expressed by Prof. Jeremiah Smith in John 
 Marshall, ed. by Dillon, vol. i, pp. 154-155, 37°; by Morawetz in his 
 work on Corporations, 2d ed., sec. 1045, p. 1005. Henry Cabot Lodge, 
 in his life of Daniel Webster, expresses the opinion that the decision 
 was due to Webster's skillful presentation of the political aspects of 
 the case so as to arouse within Marshall a belief that the principles 
 of Federalism were menaced. See, to the same effect, 28 Am. Law 
 Rev. 356. 
 
563] MEANING OF " OBLIGATION OF CONTRACTS " 19 
 
 need to premise only two or three of the ordinary rules of 
 statutory and constitutional construction which, we assume, 
 any person who endeavors to ascertain the true meaning of 
 the " contracts clause " would have to follow, namely : that 
 the words and phrases of the clause should be given their 
 ordinary meaning; that since it is quite apparent that the 
 clause is dealing with a technical, legal subject matter, its 
 terms should be interpreted in the light of their technical 
 or legal meaning, which would be, presumptively, the mean- 
 ing given to them by the common law ; finally, that the court 
 must look to the general opinion current at the time of the 
 adoption of the Constitution, and at all facts and circum- 
 stances shedding light on that opinion, in order to determine 
 whether the technical meaning of the language used should 
 be either restricted or enlarged. 
 
 With this preface, we shall begin with the first question 
 that was presented to the court, that is, whether a grant was 
 a " contract " with an " obligation " within the meaning of 
 the " contracts clause." 
 
 Is a Grant a Contract? 
 
 In answering this question we must consider, to some ex- 
 tent, what was meant by "contracts" and what was con- 
 sidered to be their " obligation." And perhaps the best way 
 to approach the subject is by considering the views of mod- 
 ern jurists as to the conceptions included in these terms. 
 
 First, as to obligation : this term originated in the Roman 
 law, and was a fundamental conception of that law, as it 
 has been and still is of the civil law. The excellent expla- 
 nation given by Salmond is quoted in the notes, where it 
 may be referred to, 11 but for our present purpose his short 
 
 11 Salmond, Jurisprudence, sec. 165, p. 428 : " Obligation, in its 
 popular sense is merely a synonym for duty. Its legal sense, derived 
 from' Roman law, differs from this in several respects. In the first 
 place, obligations are merely one class of duties, namely those which 
 are the correlatives of rights in personam. _ An obligation is the 
 vinculum juris, or bond of legal necessity which binds together two 
 or more determinate individuals. It includes, for example, the duty 
 to pay a debt, to perform a contract, or to pay damages for a tort 
 
20 
 
 OBLIGATION OF CONTRACTS [5^4 
 
 definition is sufficient. He says : " An obligation, therefore, 
 may be defined as a proprietary right in personam or a duty 
 which corresponds to such a right." Disregarding the 
 qualification of "proprietary" which is immaterial to our 
 present purpose, it will be noted that an obligation is a legal 
 relationship between two persons, involving a right on one 
 side and a duty on the' other (though the duty is often the 
 only part of the relation referred to as the "obligation"), 
 and that this duty is one in personam, that is, it is a particu- 
 lar duty owed to the other party to the relationship, such as 
 a promise to pay money, and is contradistinguished from a 
 common duty which all alike owe> such as the duty of re- 
 fraining from interfering with a person's rights over the 
 property which he owns. The obligation, being a legal rela- 
 tionship, is necessarily a creature of law. Of course cer- 
 tain acts are the occasions of the arising of obligations, but 
 such acts cannot truly be said to create them. 12 This con- 
 ception is that which modern jurists, equally with the jurists 
 of Rome, attribute to the term obligation. 
 
 As to contract: Savigny defined a contract as "the con- 
 currence of several persons in a declaration of intention 
 whereby their legal relations are determined." 13 Accord- 
 ing to this definition, it will be noticed, a conveyance would 
 constitute a contract since, in a conveyance, the legal rela- 
 tions of the two parties are determined by a concurrence of 
 the wills of the parties ; and it is for this reason that Markby 
 criticises Savigny's definition, 14 claiming that he thereby 
 loses sight of the fundamental distinction between a con- 
 veyance and a contract, which Austin so laboriously insisted 
 
 but not the duty to refrain from interference with the person, prop- 
 erty or reputation of others. Secondly, the term obligation is in 
 law the name not merely of the duty but also of the correlative 
 right. . . . Thirdly, and; lastly, all obligations pertain to the sphere 
 of proprietary rights. ... An obligation therefore may be defined 
 as a proprietary right in personam or a duty which corresponds to 
 such a right." 
 
 12 Markby, Elements of Law, sec. 603, p. 298; 
 
 18 Savigny, Treatise on Roman Law, 2d French ed., Paris, 1856, 
 vol. iii, p. 314 ; see also Markby, sec. 608. 
 
 " Markby, sees. 609-610. 
 
565] MEANING OF " OBLIGATION OF CONTRACTS " 21 
 
 upon. He thinks it unimpeachable as a definition of "agree- 
 ment," but would limit the term contract to those agree- 
 ments which involve a promise to do or forbear from some 
 future act. In other words, he would limit the idea of 
 contract to agreements by which obligations are occasioned 
 between the parties. The dispute is, to a certain extent, 
 one of nomenclature, for Savigny made a division of con- 
 tracts into two classes, obligatory and not obligatory. What 
 Markby calls a contract, he calls an " obligatory contract," 
 that is, a contract which occasions an obligation between the 
 parties. 16 Savigny's conception of an obligatory contract 
 is that which most of the English jurists term a contract. 
 Thus Anson says: "Contract is that form of agreement 
 which directly contemplates and creates an obligation." 16 
 According to Salmond, " A contract is an agreement which 
 creates an obligation or right in personam between the par- 
 ties." 17 When Pollock says, " a contract is an agreement 
 and promise enforceable by law," 18 the idea that the agree- 
 ment contemplates and effects an obligation is conveyed by 
 the added words "and promise." Salmond criticises this 
 definition on the ground that certain agreements occasion 
 legal relations which may be termed contracts, although they 
 are not enforceable, for example, voidable and illegal con- 
 tracts — but into this question it is not necessary to enter. 
 Holland accepts Savigny's wide use of the word contract, 
 distinguishing, however, between the wider and narrower 
 senses of the term. 19 
 
 It is, therefore, clear that, although these jurists differ 
 upon the question whether or not a conveyance should prop- 
 
 15 Savigny. See, for example, p. 317, where he says : " If one mis- 
 conceives the contractual nature of these numerous and important 
 acts, it is because he fails to distinguish from them the obligatory 
 contract which ordinarily precedes and accompanies them. Thus, 
 for example, in the sale of a house, attention is called, and rightly, 
 to the obligatory contract of sale, but it is forgotten that the subse- 
 quent ' tradition ' is a contract at the same time entirely apart from 
 this sale, although necessitated by it." 
 
 16 Anson, Contracts, nth ed., p. 2. 
 
 17 Salmond, sec. 123, p. 313. 
 
 18 Pollock, Contracts, p. 2. 
 
 18 Holland, Jurisprudence, 10th ed., pp. 209, 240. 
 
22 OBLIGATION OF CONTRACTS [S^ 6 
 
 erly be termed a contract, they all agree that a conveyance, 
 whether contract or not, does not give rise to any obligation. 
 The English jurists, indeed, have laid great stress upon the 
 point. Austin insisted upon the distinction with his char- 
 acteristic vigor,, and Markby, Holland and Salmond have all 
 followed him. So also have Anson and Pollock in their 
 authoritative treatises on the law of contracts. Anson 
 says, speaking of agreements, and meaning thereby a con- 
 currence of the will of two or more persons whereby their 
 legal relations are determined: "But agreement as thus 
 defined seems to be a wider term than contract. It includes 
 legal transactions of two kinds besides those which we ordi- 
 narily term contracts. These are: (i) Agreements the 
 effect of which is concluded so soon as the parties thereto 
 have expressed their common consent in such manner as the 
 law requires. Such are conveyances and gifts wherein the 
 agreement of the parties at once effects a transfer of rights 
 in rem, and leaves no obligation subsisting between them." 20 
 Sir Frederick Pollock expresses the same idea when he 
 says: "A consideration, properly speaking, can be given 
 only for a promise. Where performance on both sides is 
 simultaneous, there may be agreement in the wider sense, 
 but there is no obligation and no contract." 21 
 
 The manner in which this result is reached will clearly 
 appear if we glance over the fundamental doctrines which 
 these jurists propound. The content of a legal right is "a 
 capacity residing in one man of controlling . . . the actions 
 of others." This capacity is given by the state to the pos- 
 sessor of the right. The state is the creator and recognizer 
 of rights. And this is the principle upon which it creates 
 or recognizes rights or the transference of them: "The 
 origination, transfer and extinction of rights . . . are due 
 to Facts, i.e., either an Event or an Act." 22 A Juristic Act 
 is denned as "a manifestation of the will of a private 
 
 20 Anson on Contracts, p. 3. 
 
 21 Pollock on Contracts, 7th Eng. ed., p. 167. See also Holland, 
 pp. 248-249. 
 
 22 Holland, p. 151. 
 
567] MEANING OF "OBLIGATION OF CONTRACTS" 2$ 
 
 individual directed to the origin, termination or altera- 
 tion of rights." 23 Another name for Juristic Act, and one 
 which shows its nature very clearly, is Act in the Law. 
 Further, "Juristic Acts are distinguished into 'one-sided,' 
 where the will of only one party is active, as in making a 
 will, accepting an inheritance, or taking seisin; and 'two- 
 sided,' where there is a concurrence of two or more wills to 
 produce the effect of the act, which is thus a ' contract ' in 
 the widest sense of that term." 24 In other words, the 
 theory seems to be that rights are created and transferred, 
 but always by the state. The state takes cognizance of cer- 
 tain phenomena, upon the appearance of which it declares 
 rights to exist or to inhere in certain persons. A contract 
 or agreement between two persons is simply one of these 
 phenomena. When "A" enters into an agreement whereby 
 he gives his chattels or his land to " B " and agrees that 
 " B " shall have them, "B" acquires rights in the transferred 
 property, not because " A " gave them to him, but because 
 the law declares that he shall have them. The law termi- 
 nates " A 's " rights and originates " B's." 25 There is no 
 obligation, no subsisting legal relation arising out of the 
 transaction. 26 
 
 This analysis of the operation and effect of a conveyance 
 seems strange, at first glance, because of the extent to which 
 it minimizes the part played by the grantor in the transac- 
 tion. One naturally feels that the grantee acquires his 
 right because the grantor gives it to him. In other words, 
 the grantor had a right to possess and control the thing; 
 he had a right, likewise, to give it away. Yet, if one pushes 
 the analysis a little farther along this line, he might without 
 much difficulty arrive at the conclusion that the absolute 
 
 23 Ibid., p. 112. 
 
 2 * Ibid., p. 118. 
 
 "5 Ibid., p. 153. 
 
 26 It is difficult to understand what Holland means by the follow- 
 ing note, which is found on page 153: " Puchta, Inst. II, p. 325, 
 points out that in all derivative acquisitions there is a legal relation 
 between the auctor and the person acquiring; not merely a loss by 
 one and a gain to another as in usucapio." 
 
24 OBLIGATION OF CONTRACTS [568 
 
 owner and possessor of a right can not really divest himself 
 of it, but that the most he can do is to agree to allow another 
 person to exercise possession and control over the thing, 
 and to agree not thereafter to assert his own rights, as 
 against such person. We would say, however, that we do 
 not believe that the natural, or ordinary, practical view of 
 the transaction— which we have already vouched as author- 
 ity for questioning the view that the whole force of a con- 
 veyance is derived from the law alone— would reach to the 
 other logical extreme of holding that the donor's power is 
 so absolute that he cannot divest himself of it. The prac- 
 tical view would rather be, it seems to us, that the grantee 
 derives his right from the consent of the grantor, and yet 
 that, once the grantor has completed the formalities evi- 
 dencing that consent, all his right and power has become 
 extinguished, and he is not, therefore, under any further 
 and subsisting obligation towards his grantee. 
 
 Turning next to Fletcher v. Peck, it is noticeable that both 
 Chief Justice Marshall, delivering the opinion of the major- 
 ity of the court, and Justice Johnson, dissenting, adopt the 
 general conception, which we have heretofore given, of the 
 term obligation. It is only when they come to apply that 
 conception to the case of a conveyance that they are unable 
 to agree. What we have termed the practical view, and 
 what is, when elaborated and fitted into a system, the view 
 of the modern jurists, was stated very clearly, in that case, 
 by Justice Johnson in his dissenting opinion. He said: 
 
 Whether the words "acts impairing the obligation of contracts" 
 can be construed to have the same force as must have been given to 
 the word's obligation and effect of contracts is the difficulty in my 
 mind. 
 
 There can be no solid objection to adopting the definition of the 
 word " contract " given by Blackstone. The etymology, the classical 
 signification and the civil law idea of the word will all support it. 
 But the difficulty arises on the word " obligation " which certainly 
 imports an existing moral or physical necessity. Now a grant or 
 conveyance by no means necessarily implies the continuance of an 
 obligation beyond the moment of executing it. It is most generally 
 but the consummation of a contract, is functus officio the moment it 
 is executed, and continues afterwards to be nothing more than the 
 evidence that a certain act was done. 27 
 
 27 6 Cranch 78, 144. 
 
569] MEANING OF " OBLIGATION OF CONTRACTS " 2$ 
 
 Marshall answered the argument in this manner : 
 
 A contract is a compact between two or more persons and is either 
 executory or executed. An executory contract is one in which a 
 party binds himself to do, or not to do, a particular thing, such was 
 the law under which the conveyance was made by the governor. A 
 contract executed is one in which the object of contract is per- 
 formed, and this, says Blackstone, differs in nothing from a grant. 
 The contract between Georgia and the purchasers was executed by 
 the grant. A grant, in its own nature, amounts to an extinguish- 
 ment of the right of the grantor, and implies a contract not to reas- 
 sert that right. A party is, therefore, always estopped by his own 
 grant. 
 
 Since then, in fact, a grant is a contract executed, the obligation 
 of which still continues, and since the constitution uses the general 
 term contract without distinguishing between those which are exec- 
 utory and those which are executed, it must be construed to com- 
 prehend' the latter as well as the former. A law annulling convey- 
 ances between individual's and declaring that the grantors should 
 stand seized of their former estates, notwithstanding those grants, 
 would be as repugnant to the constitution as a law discharging the 
 vendors of property from the obligation of executing their con- 
 tracts by conveyances. It would be strange if a contract to convey 
 was secured by the Constitution, while an absolute conveyance re- 
 mained unprotected. 28 
 
 Thus Marshall gave to the word obligation the general 
 meaning which, we have seen, Roman, civilian, and modern 
 jurists all attribute to it. He recognized it essentially as 
 " a tie, whereby one person is bound to perform some act 
 for the benefit of another." 29 He sought to point out what 
 it was that the grantor in a conveyance was still bound to 
 do, or rather to refrain from doing, after the act of convey- 
 ance had been performed. Was he correct, then, in saying 
 that every grant implies a contract not to reassert the right 
 which has been granted ? 
 
 When we ask, Was he correct? we mean, Was he justi- 
 fied by authority? And the first authority to which we 
 shall turn will be the writers upon the general jurisprudence 
 of that time. It seems to us that it must be borne in mind, 
 in any consideration of the early cases construing the " con- 
 tracts clause," that the phrase "obligation of contracts" 
 was foreign to the common law, but that it was a term and 
 conception in general use in the Roman and civil law and 
 
 28 6 Cranch, 78, 136. 
 
 29 This is the definition of Holland, p. 236. 
 
2 6 OBLIGATION OF CONTRACTS [57° 
 
 in the so-called law of nature; and, finally, that the prin- 
 ciples of this law of nature constituted the generally ac- 
 cepted philosophy of law of that day. 30 
 
 It is a reasonable presumption that the writers upon nat- 
 ural law would tend to regard a conveyance of property as 
 a contract. In developing a theory of property, these jur- 
 ists usually started with some such general proposition as 
 that all things were originally owned in common. This 
 gave each man a natural and inherent right in the world's 
 wealth. The general mass of property was then usually 
 regarded as having been divided up by an agreement or 
 contract between every one, each renouncing his right in 
 the property which was thereafter to be owned in severalty 
 by each of the others. This plainly partakes of the nature 
 of an obligatory contract. The more so because, philo- 
 sophically viewed, one can not, of his own act, totally divest 
 himself of a right which is absolutely his. And, in any 
 event, the one and only element of the conveyance, accord- 
 ing to natural law, was the consent of the parties. Or, if 
 they started with the premise that no man had any right of 
 property at all, they then derived the right of property 
 from a general contract, whereby each agreed not to inter- 
 fere with the enjoyment of the others in the specific pieces 
 so allotted to each. Here, also, is plainly an obligatory con- 
 
 30 How generally accepted it was we shall show in more detail 
 hereafter. We shall also show that Marshall accepted the doctrine, 
 and that his construction of the " contracts clause " was always 
 based upon this "natural law" conception of obligation and con- 
 tract. It will hardly be disputed that, in deciding Fletcher v. Peck, 
 it would have been quite proper to have adverted to the writers 
 upon natural law to see what light they were able to shed upon the 
 question whether or not a conveyance was a, contract and involved 
 a subsisting obligation. The arguments in Fletcher v. Peck are not 
 reported. It was not the custom then, we believe, to file printed 
 briefs. Arguments were confined to those made orally in court, of 
 which the judges took notes. Although, therefore, it is not certain 
 that civil or natural law precedents were referred to in that case, it 
 is extremely probable that such was the fact, in view of the emi- 
 nence of the counsel— J. Q. Adams and Joseph Story on one side 
 and Luther Martin on the other — and in view of a reference to civil 
 law doctrines which Justice Johnson made in his dissenting opinion. 
 
57 *] MEANING OF " OBLIGATION OF CONTRACTS " 27 
 
 tract. The transferring of the right, thereafter, would 
 seem to partake of much the same nature. 
 
 In confirmation of the foregoing statements regarding 
 the views of the writers upon natural law, we may cite 
 Pufendorf. This writer holds that certain obligations are, 
 by the law of nature, born with men; but that all other 
 obligations, which he terms "adventitious" obligations, 
 "proceed from a simple, or from a mutual act, of which 
 the former is properly called a free grant or promise, the 
 latter a pact or covenant," Regarding promises and pacts 
 or covenants, he says : 31 
 
 But inasmuch as all acknowledge that promises and pacts do trans- 
 fer a right to others, before we proceed, it may not be improper to 
 examine Hobbes's opinion about the transferring of right He 
 then, from his project of a state of nature, having inferred, that 
 every man hath naturally a right to everything, and having farther 
 shown, that from the exercise of the right there must needs arise a 
 war of every man against every man, a state very unfit for the pres- 
 ervation of mankind, he concludes, " That whilst reason commands 
 men to pass out of this state of war, into a condition of peace, 
 which peace is consistent with a right of every man to every thing, 
 it at the same time prescribes that men should lay down some part 
 of this universal right." "A man," he says, "may lay down, or divest 
 himself, of his right in two ways, either by simply renouncing it, 
 or by transferring it to another. The former is done, if he declares 
 by sufficient signs, that he is content it shall hereafter be unlawful 
 for him to do a certain thing, which before he might have lawfully 
 done. The latter if he declare by sufficient signs to another person, 
 who is willing to receive such a right from him, that he consents 
 it shall be for the future, as unlawful for himself to resist^him in 
 the doing of a certain thing, as he might before have justly resisted 
 him." Hence he infers that the transferring of right consists purely 
 in non-resistance; or that, he who in a state of nature transfers a 
 right to another does not give the other party a new right which 
 before he wanted, but only abandons his own right of resisting such 
 a person in the exercise of his. 
 
 Pufendorf takes issue with this explanation to this ex- 
 tent. He maintains that in a state of nature man has 
 powers only and not rights, " for 'tis ridiculous trifling to 
 call that power a right, which should we attempt to exer- 
 
 31 Pufendorf, Law of Nature and Nations, with notes by Bar- 
 beyrac, translated by Kentiett, 4th ed., 1729; Book 3, chap, v, sees. 
 1 and 2, p. 259. 
 
28 OBLIGATION OF CONTRACTS [572 
 
 cise, all other men have an equal right to obstruct or pre- 
 vent us." He then continues : 32 
 
 Thus much then we allow, that every man has naturally a power 
 or license of applying to his use, any thing that is destitute of sense 
 or reason. But we deny that this power can be called a right, both 
 because there is not inherent in those creatures any obligation to 
 yield themselves unto man's service ; and likewise because men being 
 naturally equal, one cannot fairly exclude the rest from possessing 
 any such advantages unless by their consent, either express or pre- 
 sumptive, he has obtained the peculiar and sole enjoyment of it. 
 ... A man then acquires an original right over things, when all 
 others either expressly or tacitly renounce their liberty of using 
 such a thing, which before they enjoyed in_ common with him. This 
 original right being once established, by virtue of which the primi- 
 tive community of things was taken off, the transferring of right 
 is nothing else but the passing it away from one to another, who 
 before was not master of it. Hence appears the absurdity of saying, 
 that the transferring of right consists barely in non-resistance. In- 
 asmuch as that negative term cannot express the force of the obliga- 
 tion arising from such an act; ss which properly implies an inward 
 inclination to make good the contract. Though non-resistance be 
 indeed one consequence of the obligation, and without which it can- 
 not be fulfilled. . . . He [Hobbes] ought indeed to have expressed 
 himself thus : Since in a state of mere nature things belonged no 
 more to one than to another, therefore if a particular person desired 
 the sole use of anything, to make him master of his wish, it was 
 necessary that all other men should renounce the use of the same 
 thing. _ If they did this gratis, the act had somewhat in it like a 
 gift; if with some burden, or under some condition, it was then 
 a kind of contract, for which we have no name. But Should one 
 man have renounced his power over such a thing, this could have 
 been no prejudice to others, and consequently he only would have 
 been debarred from the use of it, who had thus freely quitted all 
 title to it 
 
 It would seem correct to say that both Pufendorf and 
 Hobbes regarded a conveyance as essentially a contract with 
 a subsisting obligation. Hobbes' " renunciation " is clearly 
 a contract, and Pufendorf's chief objection is that Hobbes 
 makes the " obligation " of the transaction merely a passive 
 one. It being established that an obligation arises out of 
 the transaction, the fact that Pufendorf calls those convey- 
 ances which are made gratis gifts, and those made with a 
 burden or condition contracts, is of little moment. This is 
 simply due to his peculiar use of the word " contracts." All 
 alienation, he elsewhere states, is effected through the con- 
 
 32 Ibid., pp. 260-261. 
 
 33 Italics ours. 
 
573] MEANING OF " OBLIGATION OF CONTRACTS " 2Q, 
 
 currence of the will of both the grantor and the grantee, 3 * 
 which is a pact. In the ordinary acceptation of the term 
 this would be a contract. It would clearly be a contract at 
 common* law, whose broad definition of contract, waiving 
 the requirement of consideration, was: "An agreement of 
 two or more persons to do or not to do a particular thing." 35 
 Pufendorf's distinction between pacts and contracts was 
 certainly not the generally accepted one among writers upon 
 the law of nature. Barbeyrac says that he derived it from 
 some of the Roman law authorities. 86 
 
 Kent, 37 in his commentaries, writing in the year 1827, 
 says: 
 
 There has been much discussion among the writers on the civil 
 law, whether a gift was not properly a contract, inasmuch as it is 
 not perfect without delivery and acceptance, which imply a conven- 
 tion between the parties. In the opinion of Toullier every gift is a 
 contract, for it is founded on agreement, while on the other hand 
 Pufendorf had excluded it from the class of contracts out of defer- 
 erence to the Roman lawyers,_ who restrained the definition of a 
 contract to engagements resulting from negotiation. Barbeyrac, in 
 his notes to Pufendorf, insists that, upon principles of natural law, 
 a gift inter vivos, and which ordinarily is expressed by the simple 
 term gift, is a true contract, for the donor irrevocably divests him- 
 self of the right to a thing and transfers it gratuitously to another, 
 who accepts it, and which' acceptance, he rationally contends, to be 
 necessary to the validity of the transfer. The English law does not 
 
 s * Pufendorf , Book 4, chap, ix, sec. 1, p. 413: "Now as the con- 
 veyance of rights is transacted between two parties, the one from 
 whom, and the other to whom they pass, so in those methods of 
 acquisition which flow from the force and virtue of property the 
 concurrence of two wills is required, the giver's and the receiver's." 
 
 35 2 Kent's Corns. 450; 2 Blackstone's Corns. 442. 
 
 38 See Pufendorf, Book 5, chap, i, sec. 4, p. 473, and Barbeyrac's 
 note 1 to Book 5, chap, iv, sec. 1, p. 80. Pufendorf says : " In my 
 opinion the difference between pact and contract may be best taken 
 from the object, so as to call 1 that contract which concerns those 
 things and actions which are the subject of traffic and so presuppose 
 property and price; and that pact by which we covenant about 
 other things. By this means pact, strictly speaking, will take in all 
 negative agreements, by which we covenant not to do, or not to 
 demand, what otherwise we might do or demand; as also those 
 agreements that have for their object the exercise of our natural 
 faculties, so far as they hereby tend to the promoting of mutual 
 profit and advantage, considered merely by themselves without any 
 regard to price, or any valuable consideration, in a word, when we 
 agree to do some work that is not mercenary." 
 
 3J 2 Kenf s Corns. 438. 
 
3Q 
 
 OBLIGATION OF CONTRACTS [574 
 
 consider a gift, strictly speaking, in the light of a contract, because 
 it is voluntary and without consideration, whereas a contract is 
 defined to be an agreement upon sufficient consideration to do or 
 not to do a particular thing. 
 
 Although called " civil law " writers, Puf endorf and Bar- 
 beyrac were, as we have seen, writers on the law of nature, 
 and it was in treating of the law of nature that they dis- 
 cussed the nature of the transfer of rights. Puf endorf, we 
 have further seen, seems to attribute to a conveyance all the 
 elements of a contract except the name, and particularly 
 that element which Chancellor Kent does not take into con- 
 sideration at all, that element which was specifically re- 
 quired if the contract was to come within the operation of 
 the "contracts clause," namely, the element of obligation. 
 Toullier on the other hand, was apparently a writer on the 
 civil law in the strict sense, and to the discussion of the 
 civil law doctrines, which follows, he may, therefore, be 
 added, upon the authority of Kent, as a writer who held 
 that a conveyance was a contract. Austin in his Lectures 
 on Jurisprudence, and particularly in several of the notes 
 that have been appended to them, discoursed at some length 
 upon the theories of contract and conveyance held by the 
 writers on the civil law, and it is upon this explanation of 
 the civil law that our discussion will be based. 
 
 The civil law's manner of dealing with this question was 
 very unsatisfactory to Austin's logical mind, and he criti- 
 cised it with much vigor. The civil law doctrine may be 
 summarized in the language of Amos. 38 After describing 
 the ceremonies of tradition and mancipation, he continues: 
 
 Most of the acts above exemplified, and the kinds of intentional 
 transfer they represent, follow upon previous mutual promises and 
 arrangements between the old and the new owner. This has led' to 
 an erroneous notion which has deeply coloured the history of Roman 
 law in the Middle Ages, and which reappears in most European 
 Codes,_ to the effect that all rights of ownership whatever are of 
 necessity preceded by a contract, or at least an obligation arising 
 out of a contract or a delict, and that a contract has for its main, 
 if not its only, purpose the bringing about the acquisition of rights 
 of ownership. The falsity and mischievousness of this notion has 
 been exhibited in great detail, and with much assiduity by Mr. 
 Austin. 
 
 38 Amos, Jurisprudence, pp. 164-166. 
 
575] MEANING OF "OBLIGATION OF CONTRACTS" 3 1 
 
 Turning now to Austin himself, we find this comment 
 upon a passage from the famous jurist Heineccius : 
 
 _ If you examine this passage closely, and take its parts in conjunc- 
 tion, you will find it involving the following assumptions: I. That 
 every acquisition of dominium consists of two degrees: One of them 
 being the proximate ; the other the remote cause of the right. One 
 of them, modus acquirendi (strictly so called) ; the other titulus, or 
 titulus ad acquirendum. 2. That the titulus, or remote cause of the 
 right, always consists of an incident importing jus in personam, 
 e.g. a contract'. 
 
 And as to the doctrine of the Roman lawyers, he said that 
 it seemed to be this : 
 
 This tradition is not sufficient to pass an irrevocable right, unless 
 the preceding contract bind the alienor, and therefore impart to the 
 alienee jus ad rem. In other words, the tradition is not sufficient' to 
 pass the right irrevocably, unless the preceding contract amount to 
 Justus titulus: titulus ad transferendum dominium habilis. Accord- 
 ingly every acquisition by delivery, made in pursuance of a contract', 
 is divisible into two degrees: a mode of acquisition and a title to 
 acquire. 38 
 
 If, then, an obligatory contract was a necessary part of 
 every conveyance, it would seem to follow that the transfer 
 of the rights was to a certain extent due to this personal 
 obligation, so that every conveyance would involve a con- 
 tinuing obligation of a kind. And the French code, there- 
 fore, said of a sale, where no tradition was necessary, but 
 where title passed immediately, that the dominium was 
 transferred by virtue of the obligation of the contract.* 
 
 As to the English law, it is, of course, extremely difficult 
 to say what was the general view of the common law upon 
 a question such as this. Professor Ames and Professor 
 
 39 Austin, Jurisprudence, pp. 995, 996, 999. Heineccius' work was 
 published in 1789. 
 
 40 Austin's comment on the language of the code is interesting. 
 He says : " to style the sale a contract, is a gross solecism. It is 
 however a solecism which may be imputed to the Roman lawyers; 
 and with which it were not candid to reproach the authors of the 
 Code. But when they talk of obligations as imparting dominium 
 or property, they talk with absurdity which has no example, and 
 which no example could extenuate. If they had understood the 
 system which they so servilely adored and copied* they would have 
 known that obligation excluded the idea of dominium: that it im- 
 parts to the obligee jus in personam, and jus in personam merely. 
 This is its essential difference : This is the very property which gives 
 it its being and its name." Jurisprudence, p. 1005. 
 
32 OBLIGATION OF CONTRACTS [576 
 
 Maitland have shown that the early law could not conceive 
 of the transfer of rights as such. Their only conception 
 was of the transfer of tangible things. A conveyance, 
 therefore, according to Professor Ames, consisted of a 
 transfer of the seizin or possession of the thing granted and 
 an abandonment or extinguishment of the grantor's right 
 in the thing. Thus Professor Ames says : 
 
 A derivative title is commonly acquired from an owner by pur- 
 chase or descent. The title in such cases is said to pass by transfer. 
 For all practical purposes this is a just expression. But if the trans- 
 action be closely scrutinized, the physical res is the only thing trans- 
 ferred. The seller's right of possession, being a relation between 
 himself and the res, is purely personal to him, and cannot, in the 
 nature of things, be transferred to another. The purchaser may 
 and does acquire a similar and coextensive right of possession, but 
 not the same right that the seller had. What really takes place is 
 this: the seller transfers the res and abandons or extinguishes his 
 right of possession. The buyer's possession is thus unqualified by 
 the existence of any right of possession in another, and he, like 
 the occupant, and for the same reason, becomes absolute owner.* 1 
 
 And again he says : 
 
 Even a relation between a person and! a physical thing in his pos- 
 session, as already stated, cannot be transferred. The thing itself 
 may be transferred, and, by consent of the parties to such transfer, 
 the relation between the transferror and the thing may be destroyed 
 and replaced by a new but similar relation between the transferee 
 and the res.* 2 
 
 This view of the transaction is further supported by re- 
 ferring to the old form of conveyance of the right of a dis- 
 seized owner to his disseizor. The disseized owner's right 
 constituted what was left of ownership after it had been 
 bereft of seizin, and it gives some idea of the nature of an 
 ordinary conveyance when it is pointed out that this con- 
 veyance, or release, as it was called at common law, was 
 in its early form a "quit-claim" deed. 43 And the phrase 
 "quit-claim" long retained its place in the conveyancing 
 practice. 
 
 41 Select Essays in Anglo-American Legal History, vol. iii, p. 564. 
 
 42 Ibid., pp. 482-483; and see the statements of Maitland; in his 
 essay on the Mystery of Seisin, pp. 601-602. 
 
 43 Speaking of the forms of early releases, Holdsworth says: 
 " Sometimes the party swore to abide by the transaction." History 
 of English Law, vol. iii, p. 197. 
 
577] MEANING OF " OBLIGATION OF CONTRACTS " 33 
 
 It is interesting to place along side of these theories of 
 early law the statement of Blackstone as to the nature of 
 gifts of chattels personal, as showing the persistence of 
 ideas in the field of law. He says: "Grants or gifts of 
 chattels personal are the act of transferring the right and 
 the possession of them ; whereby one man renounces, and 
 another immediately acquires, all title and interest therein." 4 * 
 
 Now the theory stated by Professor Ames as the one on 
 which the early law acted, that a gift was a transfer of pos- 
 session together with a renunciation of right, when viewed 
 philosophically would tend to lead to the conclusion that a 
 conveyance involved a contract with a subsisting obligation. 
 But it does not necessarily follow that the early law took 
 this further step and more philosophical view. It would be 
 mere theorizing to try to proceed any further than Pro- 
 fessor Ames has himself gone. It may be noted that the 
 quit claim deed generally contained words of grant as well, 
 and that soon the phrases in common use were that the 
 grantor would quit-claim "his right" or even "the land" 
 to the grantee. 45 And according to Blackstone, repeating 
 Littleton and Coke, a release from a disseized owner oper- 
 ated by way of passing the right (mitter le droit). iS It is 
 not certain, therefore, that the common law did regard a 
 conveyance in the light of a contract with a subsisting obli- 
 gation. Nor do we think that the rule that a person is 
 always estopped by his own grant affords much evidence 
 that there was an obligation and a contract involved in a 
 conveyance, for this doctrine was only used when a person 
 had made a deed of property which he could not then con- 
 vey, but which he had afterwards become the owner of. 
 The deed therefor could have had no operation as a con- 
 veyance, but was given effect as an estoppel. 47 
 
 We do not find, however, writers of weight classifying 
 
 44 2 Blacksto tie's Corns., p. 421. 
 
 45 2 Pollock & Maitland, History of English Law, p. 01. 
 
 46 2 Blackstone's Corns., p. 325. 
 
 * T a Blackstone's Corns., ed. Wendell, p. 290, note. 
 
 3 
 
34 
 
 OBLIGATION OF CONTRACTS [57^ 
 
 conveyances under contracts. Thus there is the statement 
 of Blackstone, that contracts are executory or executed and 
 that a contract executed differs nothing from a grant;* 8 and 
 a statement by his successor in the Vinerian Professorship 
 to the effect that: "Particular goods and chattels may 
 change their owner by gift or grant and by contract. These 
 I mention together because, as Sir William Blackstone ob- 
 serves, even a gratuitous gift is not perfected but by deliv- 
 ery, and consequently, as I understand it, by the acceptance 
 of the person to whom the goods are given, which has the 
 semblance of a contract." 49 And we would point out that, 
 call a conveyance a contract, and you raise the suggestion 
 that there must be an obligation; you emphasize the fact 
 that the grantee has his rights merely by the consent of the 
 grantor; you obscure the part which the state takes in the 
 matter; you suggest the idea that if one man obtains his 
 right solely from another, he necessarily holds it subject to 
 the will of the latter, who can go no farther than to bind 
 himself never to exercise the power of revocation. 
 
 Finally there was the plain statement of Powell on Con- 
 tracts, a work published in 1790, and written by a person 
 evidently familiar with the civil law, that a conveyance in- 
 volved a contract with an obligation. It was this work that 
 Justice Washington relied upon, in his opinion in the Dart- 
 mouth College case. 60 
 
 48 2 Blackstone's Corns., p. 440 ff. 
 
 40 2 Wooddeson, Lectures, t>. 410. 
 
 50 After giving a definition of contract as found in Blackstone, 
 and_ one from the civil law, Powell says, pp. 4-5 : " Perhaps the fol- 
 lowing description will be deemed more simple than either. 'A 
 oontract is a transaction in which each party comes under an obli- 
 gation to the other, and each, reciprocally, acquires a right to what 
 is promised by the other.' It is evident that, under these definitions 
 of a contract, every feoffment, gift, grant, lease, loan, pledge, bar- 
 gain, covenant, agreement, promise, etc., may be included; for in 
 all these transactions, there is a mutual consent of the minds of the 
 parties concerned in them, upon agreement between them, respecting 
 some property or right that is the object of stipulation. The ingre- 
 dients requisite to form a contract are: First, Parties; Secondly, 
 Consent; Thirdly, an Obligation to be constituted or dissolved. 
 That these things must coincide is evident from the very nature and 
 essence of a contract; for the regular effect of all contracts being 
 
579] MEANING OF "OBLIGATION OF CONTRACTS" 35 
 
 The English writers leaned strongly in the same direc- 
 tion. And, in spite of the opinion of Austin that it is an 
 absurdity to say that the Roman law regarded an obligation 
 as imparting dominium, it seems to us that when it was said 
 that tradition alone was not sufficient to pass an irrevocable 
 right if there was not a preceding contract binding the 
 alienor, the obligation of such precedent contract is an 
 essential part of the conveyance, and may be said to be sub- 
 sistent in every conveyance, even though it is not, of itself, 
 sufficient to effect the transfer of rights in rem. 51 
 
 And, finally, we would point out that a distinction might 
 be drawn between a conveyance by an individual and a con- 
 veyance or grant by the state, and that the latter might be 
 regarded as more in the nature of a contract than the 
 former, inasmuch as the state has the power to disregard 
 its own grants. 
 
 As to the English law on this point, it is difficult to say 
 what was the theory about Crown grants. It is true that 
 Buller, J. said, in The King v. Passmore, 62 that " the grant 
 of incorporation is a compact between the crown and a num- 
 ber of persons, the latter of whom undertake, in considera- 
 tion of the privilege bestowed, to exert themselves for the 
 good government of the place. If they fail to perform it, 
 there is an end of the compact." The question in the case 
 
 on one side to acquire, and oni the other to part with, or alien some 
 property, or to abridge and restrain natural liberty by binding the 
 parties, or one of them to do, or restraining them or one of them, 
 from doing something which before he might have done or omitted 
 doing at his pleasure, it is necessary that the party to be bound, 
 shall have given his free assent to what is imposed upon him." 
 
 51 As to the true theory of the matter, we are not ' able to refute 
 the arguments of the modern jurists we have referred to. Their 
 contentions seem unanswerable. And if their view is the correct 
 one, it would seem much better not to speak of conveyances as con- 
 tracts in any sense. The term contract distinctly suggests the idea 
 of obligation. Possibly the writers who use it do see some sort of 
 obligation in a conveyance. We have already noted the reference 
 by Holland to Putchta's opinion " that in all derivative acquisitions 
 there is a legal relation between the auctor and the person acquiring; 
 not merely a loss by one and a gain to another, as in usucapio." 
 Holland, p. 153. What else can such a relation'ship be but a right 
 in personam with its corresponding duty? 
 
 6z 3 T. R. 246. 
 
36 OBLIGATION OF CONTRACTS [5^0 
 
 was, however, over the duties of the incorporators who 
 clearly had entered into an obligatory contract. Speaking 
 of franchises, Blackstone said: "But the same identical 
 franchise that has been granted to one cannot be bestowed 
 on another, for that would prejudice the former grant." 
 Nevertheless, the authorities which he cites do not offer any 
 special suggestion of the contract as opposed to the con- 
 veyance theory. 53 And also, as to the doctrine that the king 
 cannot repeal a charter once granted, the leading case of The 
 King v. Amery does not disclose any particular theory of 
 contract. 84 
 
 Whether it was because, being a believer in the general 
 doctrines of natural rights and natural law, he considered 
 that all conveyances were in the nature of contracts, or 
 whether it was a distinction based upon the nature of state 
 grants, we find that James Wilson, the reputed author of 
 the " contracts clause," 66 in an argument made in 1785, con- 
 tended that whenever the state passes a law granting land, 
 
 63 The two authorities are as follows : Keilway, 196 (1688) : " To 
 which the court responded and said, that if the King, by his letters 
 patent dated May 1st grant me an office, or other things ; and then by 
 other patents dated May 2nd he grants the same thing to a stranger, 
 these second patents are merely void, and moreover, I will have a 
 scire facias against the second patentee and will avoid these last 
 patent by judgment of the court." 2 Rolle, Abr. 191 (1668): "If 
 the King grant two several letters patent of the same thing, the first 
 patentee can have a scire facias against the later patentee to repeal 
 the later patent" 
 
 M 3 T. R. 515; at 568, the court say: "The third and last question 
 will then be, what is the effect of the subsequent charter of restora- 
 tion by King James the Second? And as to that we are of opinion 
 that it was a void charter, and of no effect. For though it be com- 
 petent to the Crown to pardon a forfeiture and to grant restitution, 
 that can only be done where things remain in statu quo, but not so 
 as to affect legal rights properly vested in third persons, which is the 
 case here; for Charles the Second whilst the forfeiture existed had 
 incorporated a new body of men in the town, and invested them 
 with new rights ; which being done, it would not have been in the 
 power of Charles the Second, and of course it was not within the 
 power of his successors, to defeat an interest once legally vested in 
 such new corporation ; and there cannot exist in the same place two 
 independent corporations with general powers of government, and 
 therefore we think that such charter of restoration was absolutely 
 void and of no effect." 
 
 55 See the argument of Hunter in Sturges v. Crowninshield, 4 
 Wheat. 122. 
 
58 1 ] MEANING OF " OBLIGATION OF CONTRACTS " 37 
 
 or granting charters of incorporation or other privileges of, 
 that nature, such laws are to be considered as compacts. 
 This argument was made in opposition to certain legislation 
 then pending in the Legislature of Pennsylvania, the pur- 
 pose of which was to repeal the charter of the Bank of 
 North America, which had been granted by a preceding 
 legislature. Among his reasons for opposing the legisla- 
 tion was the following : 
 
 Because such a proceeding would wound that confidence in the 
 engagements of government, which it is so much the interest and 
 duty of every state to encourage and reward. The act in question 
 formed a charter of compact between the legislature of this state, 
 and the president, directors and company of the Bank of North 
 America. The latter asked for nothing but what was proper and 
 reasonable: the former granted nothing but what was proper and 
 reasonable ;_ the terms of the compact were, therefore, fair and 
 honest; while these terms are observed on one side, the compact 
 cannot, consistently with the rules of good faith, be departed from 
 on the other. 36 
 
 Again, after stating that in most cases it is true that a state 
 must have the power to amend and repeal its own laws, he 
 continues : 
 
 Very different is the case with regard to a law by which the state 
 grants privileges to a congregation or other society. Here two oar- 
 ties are instituted, and two distinct interests subsist. Rules of jus- 
 tice, of faith, and of honor, must, therefore, be established between 
 them: for if interest alone is to be viewed, the congregation or 
 society must always lie at the mercy of the community. 
 
 Still more different is the case with regard to a law by which an 
 estate is vested or confirmed in an individual; if, in this case, the 
 legislature may, at discretion^ and without any reason assigned, 
 divest and destroy his estate, then a person, seized of an estate in 
 fee simple, under legislative sanction, is, in truth, nothing more 
 than a solemn tenant at will. 
 
 J?or these reasons, whenever the objects and makers of an instru- 
 ment, passed under the form of a law, are not the same, it is to be 
 considered as a compact and interpreted according to the rules and 
 maxims by which compacts are governed. 57 
 
 58 i Wilson's Works, ed. Andrews, p. 565. 
 
 57 Wilson held a doctrine of obligation which may be epitomized 
 in the following sentences taken from the law lectures which he 
 published in 1792. After stating Pufendorf's doctrine " that obliga- 
 tions are laid on human beings by a superior," he continues : " To 
 different minds the same things, sometimes, appear in a very differ- 
 ent manner. If I was to make a maxim upon this subject, it would 
 be precisely the reverse of the maxim of Baron Pufendorf . Instead 
 
38 OBLIGATION OF CONTRACTS [5*52 
 
 If it erred at all, we think the summary heretofore made 
 of the authority which Marshall had for his ruling that a 
 grant was essentially a contract, erred because it stated the 
 case too weakly. 
 
 In discussing the question whether a conveyance is a con- 
 tract, it was not clearly determined whether the "obliga- 
 tion " of a contract, as that term is used in the Constitution, 
 referred to the obligation created by positive law, or to 
 some other obligation— say that created by natural law. 
 Nor was it necessary to do so in order to pass judgment 
 upon the point. For if the obligation was that created by 
 positive law, the Roman, civil and common law authorities 
 which we have cited were clearly in point, and the doctrines 
 of natural law would still have had a bearing on the ques- 
 tion, not as being absolute authorities, but as having some 
 persuasive force. If, on the other hand, the term "obli- 
 gation," as we suggested, was intended to have reference to 
 what may be called the "natural law" obligation of con- 
 
 of saying that a man cannot obligate himself ; I would say, that no 
 other person on earth can oblige him, but that he certainly can oblige 
 himself. Consent is the sole principle, on which any claim in conse- 
 quence of human authority, can be made upon one man by another 
 . . . exclusively of the duties required by the law of nature, I can 
 conceive of no claim, that one man can make on another but in 
 consequence of his own consent." Wilson's Works, ed. Andrews, 
 p. 190. As we have been quoting freely from Pufendorf to show 
 the contractual nature of a conveyance, upon the principles of nat- 
 ural law, and as the doctrines attributed to him by Wilson, in the 
 above quotation, suggest a theory of analytical rather than natural 
 jurisprudence, we would make the following explanation of the 
 apparent discrepancy. Pufendorf did state the doctrine thus attrib- 
 uted to him. At the same time he regarded consent as constitutive 
 of obligations : The law of nature is sanctioned by the command, of 
 God. Book 2, chap, viii, sec. 20. By the law of nature certain obli- 
 gations are born with men, others, which he calls " adventitious," 
 " fall upon men by the intervention of some human deed, not with- 
 out the consent of the parties. . . . When men have engaged them- 
 selves by pacts their nature obliges them as sociable creatures, most 
 religiously to observe and perform themi." Book 3, chap, iv, sec. 3. 
 The state is founded upon the social and governmental compacts. 
 Book 7, chap, ii, sees. 6, 7, 8. Civil law does not abrogate natural 
 law. Indeed he says that, when mankind entered into the social 
 compact, "we must suppose that they took it for granted that nothing 
 should be established by the civil law which was contrary to the 
 natural." 
 
583] MEANING OF "OBLIGATION OF CONTRACTS" 39 
 
 tracts, then the writers upon natural law could be consid- 
 ered as furnishing the best authority to be had. 
 
 It becomes necessary now, however, to determine more 
 carefully by what law the obligation spoken of in the Con- 
 stitution is to be determined. By the term " obligation " as 
 used in the " contracts clause," did the f ramers refer to the 
 obligation as fixed by positive law, that is, by the law of the 
 States, or to the moral obligation, or to the obligation as 
 fixed by the law of nature, then generally assumed to exist, 
 or to the obligation as determined by the established prin- 
 ciples of the common law, or to the obligation as determined 
 by the federal courts in the application by them of what 
 might be called a federal common law? 
 
 The chief difficulty which arises with reference to the 
 positive law theory of obligation is to determine how a state 
 can obligate itself by a contract when its own law is con- 
 ceived of as the sole creator and definer of obligation. It 
 will, therefore, be necessary to consider with some care this 
 point. 
 
CHAPTER III 
 
 Can a State be Obligated by a Contract? 
 
 In considering this, the second question raised in Fletcher 
 v. Peck, we are confronted by the question, as already sug- 
 gested, by what law is a state obligated by its contract? 
 Austin laid it down that a sovereign state could not possess 
 legal rights, must less owe legal duties. 1 Might there not 
 be some other law for determining the obligation of a con- 
 tract to which the framers of the Constitution had refer- 
 ence? Particularly as to the contracts of the States, is 
 there not some superior law which binds the States to their 
 obligations? The answer is at once suggested that the Con- 
 stitution of the United States is the superior law which 
 creates the obligation. This idea is clearly expressed by 
 Taylor, one of the earlier writers in this country, upon the 
 law of private corporations. He says: "Further, to say 
 that the state, from which emanate most of the rules of law 
 composing the constitution [of a corporation] is a party to 
 the agreement which the constitution embodies, means that 
 the state has done an act whereby it has expressed its inten- 
 tion to bring itself within the operation of some law supe- 
 rior to itself, which thereupon manifests itself in legal rela- 
 tions between the state and the corporation, legal relations 
 which the state cannot alter at its will, since they are the 
 manifestations of a law superior to itself. That paramount 
 law is expressed in the constitution of the United States." 2 
 We do not think, however, that this is the correct view of 
 the matter, and for proof thereof would refer to the leading 
 case of Ogden v. Saunders. 3 
 
 1 Lectures on Jurisprudence, 3d ed., pp. 288-292. 
 
 2 Taylor on Private Corporations, sec. 448. 
 
 3 12 Wheat. 213. 
 
 40 
 
585] CAN A STATE BE OBLIGATED BY A CONTRACT? 4 1 
 
 The question which arose for determination in that case 
 was whether a state insolvency law should be declared in- 
 valid as impairing the obligation of contracts in so far as it 
 attempted to discharge debtors from liability upon their 
 contracts, in the case where such contracts were made sub- 
 sequently to the passage of the law. Several views were 
 taken of this question, which we shall endeavor to state in a 
 very brief way. The majority of the court held that the 
 obligation of a contract is determined by positive law, and 
 hence that no obligation can arise out of any contract which 
 will conflict with that law as it exists at the time the con- 
 tract is entered into. 
 
 The counsel for the defendant contended that the Con- 
 stitution was the supreme law of the land and that, since it 
 entered into the obligation of a contract as much as the 
 state insolvency law itself did, and since it forbade the im- 
 pairment of the obligation of contracts, it clearly nullified 
 the operation of the state insolvency law. To this obviously 
 unsound argument Justice Trimble gave the following ad- 
 mirable answer: 4 
 
 The law of the state, although it constitutes the obligation of the 
 contract, is no part of the contract itself ; nor is 1 the constitution 
 either a part of the contract, or the supreme law of the state in the 
 sense in which the argument supposes. The constitution is the su- 
 preme law of the land upon all subjects upon which it speaks. It 
 isthe sovereign will of the whole people. Whatever this sovereign 
 will enjoins, or forbids, must necessarily be supreme, and must coun- 
 teract the subordinate legislative will of the United States and of 
 the States. But on subjects, in relation to which the sovereign will 
 is not declared, or fairly and necessarily implied, the constitution 
 cannot t with any semblance of truth, be said to be the supreme law. 
 It could not, with any semblance of truth, be said that the consti- 
 tution of the United States is the supreme law of any state in rela- 
 tion to the solemnities requisite for conveying real estate, or the 
 responsibilities or obligations consequent upon the use of certain 
 words in such conveyances. The constitution contains no law, no 
 declaration of the sovereign will, upon these subjects, and cannot, 
 in the nature of things, in relation to them, be the supreme law. 
 Even if it were true, then, that the law of a state in which a con- 
 tract is made, is part of the contract, it would not be true that the 
 constitution would be part of the contract. The constitution no- 
 where professes to give the law of contracts, or to declare what 
 shall or shall not be the obligationi of contracts. It evidently pre- 
 
 * 12 Wheat. 213 at 325-326. 
 
42 OBLIGATION OF CONTRACTS [586 
 
 supposes the existence of contracts by the act of the parties, and 
 the existence of their obligation, not by authority of the constitu- 
 tion, but by authority of law ; and the preexistence of both the con- 
 tracts and their obligation being thus supposed, the sovereign will is 
 announced that no state shall pass any law impairing the obligation 
 of contracts. If it be once ascertained that a contract existed, and 
 that am obligation, general or qualified, of whatsoever kind had once 
 attached or belonged to the contract by law, then, and not till then 
 does the supreme law speak, by declaring that obligation shall not 
 be impaired. 
 
 This argument seems to us conclusive that the effect of 
 the "contracts clause" is not to make the "obligation of 
 contracts " a creation of federal law. And although the 
 case at hand involved only a private contract, the argument 
 applies with equal force to State contracts, because it is 
 based upon a construction of the very words of the " con- 
 tracts clause" itself. 
 
 Nor did Chief Justice Marshall, who delivered the dis- 
 senting opinion, speaking for himself and on behalf of Jus- 
 tices Story and Duval, use any such argument as the one we 
 have just been considering. His argument is founded on 
 the theory that the obligation of a contract does not rest 
 upon positive law, but upon natural law, and is therefore 
 intrinsic in the contract itself, rather than imposed from 
 without. The theory of natural law is elegantly set forth. 
 And the argument is a strong one, not because of the in- 
 trinsic soundness of the natural law theory, but from 
 the consideration which Marshall stated in the following 
 manner : 
 
 When we advert to the course of reading generally pursued by 
 American statesmen in early life, we must suppose, that the f ramers 
 of our constitution were intimately acquainted with the writings of 
 those wise and learned men, whose treatises on the laws of nature 
 and nations have guided public opinion on the subjects of obliga- 
 tion and contract. If we turn to those treatises, we find them to 
 concur in the declaration, that contracts possess an original intrinsic 
 obligation, derived from the acts of free agents, and not given by 
 government. We must suppose that the framers of our constitu- 
 tion, took the same view of the subject, and the language they have 
 used confirms this opinion. 
 
 Finally, the Chief Justice pointed out that if the view of 
 the majority was correct, the States might pass acts declar- 
 
S87] CAN A STATE BE OBLIGATED BY A CONTRACT? 43 
 
 ing that all contracts should be subject to legislative control, 
 and should be discharged as the legislature might prescribe, 
 which would thereupon be a condition upon which every 
 contract would thereafter be made ; " thus, one of the most 
 important features in the constitution of the United States, 
 one which the state of the times most urgently required, 
 one on which the good and wise reposed confidently for 
 securing the prosperity and harmony of our citizens, would 
 be prostrate, and be construed into an inanimate, inopera- 
 tive unmeaning clause." He also made this pertinent sug- 
 gestion: "Had the intention been to confine the restriction 
 to laws which were retrospective in their operation, lan- 
 guage could have been found and would have been used to 
 convey this idea." 
 
 The argument thus made is, in itself, a telling one. The 
 " Fathers " were versed in the law of nature and of nations 
 and did hold to its principles. Remembering that fact, and 
 viewing the language of the " contracts clause " literally, one 
 is disposed to come to the same conclusion that the Chief 
 Justice did. 5 "This argument," said Justice Trimble, re- 
 ferring to that of the Chief Justice, " struck me, at first, 
 with great force." Three of the four majority justices, in- 
 deed, distinctly recognized that there was a natural law 
 which sanctioned the obligation of contracts. 
 
 The difficulty with Marshall's argument was that it could 
 not be applied to the existing state of things. The reductio 
 ad absurdum which follows from endeavoring to apply it 
 is the best kind of proof, not that the " Fathers " did not 
 believe in natural law, nor that they did not intend to refer 
 to the "natural" obligation of contracts, but that the nat- 
 ural law theory is fallacious and will not work. Thus, it 
 was asked, how, if the " natural " obligation of all contracts 
 was guaranteed by the Constitution, could a State pass stat- 
 
 5 We shall, hereafter, review the evidence which can be adduced 
 to show what the intention of the framers was in regard to the 
 "contracts clause," and also to show how much of this evidence 
 Marshall could have had to guide him in reaching the decisions we 
 are reviewing. 
 
44 OBLIGATION OF CONTRACTS [588 
 
 utes of limitations, statutes of frauds, statutes forbidding 
 usury contracts, gambling contracts, contracts by persons 
 under twenty-one years of age? Marshall answered that 
 statutes of frauds, registration acts, etc., did not impair the 
 obligation, rather they simply prescribed forms and rules 
 of evidence, and that statutes of limitations act upon the 
 remedy, not upon the obligation. Both of these points seem 
 well taken, but when he argues in favor of the validity of 
 usury laws : " They declare the contract to be void in the 
 beginning. They deny that the instrument ever became a 
 contract. They deny it all original obligation and cannot 
 impair that which never came into existence," when he 
 allows to the state the right "to regulate contracts, to pre- 
 scribe the rules by which they shall be evidenced, to pro- 
 hibit such as may be deemed mischievous,"* it seems that 
 the majority had good reason for saying that he thereby 
 surrendered his whole argument. If a State can forbid any 
 contract it deems mischievous, it takes a good deal of 
 searching to discover the remains of any obligation, in the 
 natural law sense, still protected by the federal Constitu- 
 tion. If it can forbid entirely the making of contracts, it 
 can surely attach to them the condition that they shall be 
 subject to be discharged upon the insolvency of the debtor 
 being established after proceedings taken. 
 
 The position of the majority clearly is, therefore, that 
 the civil obligation of contracts, at least when it is clearly 
 and positively declared, is the paramount obligation, and is 
 the one that the Constitution protects. 
 
 But they do not deny the existence of a natural obligation 
 and its operation in certain cases. It may be that the " obli- 
 gation" of a "contract" between a State of the Union and 
 one of its citizens is founded on natural rather than munici- 
 pal law. At any rate, it is desirable to understand more 
 clearly the views of the majority in so far as they bear upon 
 this question. Justice Washington, speaking of the uni- 
 versal law of civilized nations, says : 
 
 6 Italics ours. * 
 
589] CAN A STATE BE OBLIGATED BY A CONTRACT? 45 
 
 I, therefore, feel no objection to answer the question asked by the 
 same counsel— what law is it which constitutes the obligation of the 
 compact between Virginia and Kentucky? by admitting, that it is 
 the common law of nations which requires them to perform it. I 
 admit further, that it is this law which creates the obligation of a 
 contract made upon a desert spot, where no municipal law exists and 
 (which was another case put by the same counsel) which contract, 
 by the tacit assent of all nations, their tribunals are authorized to 
 enforce. . . . Whilst I admit, then, that this common law of all 
 nations, which has been mentioned, may form in part the obligation 
 of a contract, I must unhesitatingly insist, that this law is to be 
 taken in strict subordination to the municipal laws of the land where 
 the contract is made or is to be executed. 7 
 
 Justice Johnson's ideas are found expressed in the fol- 
 lowing quotation: 
 
 Right and obligation are considered by all ethical writers as cor- 
 relative terms. . . . The obligation of every contract will then con- 
 sist of that right or power over my will or actions, which I, by my 
 contract, confer on another. And that right and power will be 
 found to be measured neither by moral law alone, nor universal law 
 alone, nor by the laws of society alone, but by a combination of the 
 three, — an operation in which the moral law is explained and applied 
 by the law of nature, and both modified and adapted to the exigen- 
 cies of society by positive law. The constitution was framed for 
 society and an advanced state of society ... in which I will under- 
 take to say that all the contracts of men receive a relative, and not 
 a positive interpretation: for the rights of all must be enjoyed in 
 subserviency to the good of the whole. The state construes them, 
 the state applies them, and the state decides how far the social exer- 
 cise of the rights they give us over each other can be justly asserted. 8 
 
 Justice Thompson did not discuss the question whether, 
 in regard to State contracts, there was an obligation arising 
 from natural law. He was contented with viewing the obli- 
 gation as the creature of municipal law, and confined him- 
 self to the contract at hand. Justice Trimble's conception 
 was as follows : 
 
 I admit, that men have, by the laws of nature, the right of acquir- 
 ing, and possessing property, and the right of contracting engage- 
 ments. I admit that these natural rights have their correspondent 
 natural obligations. I admit, that, in a state of nature, when men 
 have not submitted themselves to the controlling authority of civil 
 government, the natural obligation of contracts is co-extensive with 
 the duty of performance. This natural obligation is founded solely 
 in the principles of natural or universal law. . . . This natural obli- 
 gation exists among sovereign and independent states and nations, 
 and amongst men, in a state of nature, who have no common supe- 
 
 8 
 
 12 Wheat. 213 at 258-259. 
 12 Wheat. 213 at 281-282. 
 
46 OBLIGATION OF CONTRACTS [59° 
 
 rior, and over whom none claim, or can exercise, controlling legis- 
 lative authority. But when men form a social compact, and organ- 
 ize a civil government, they necessarily surrender the regulation 
 and 1 control of these natural rights and obligations into the hands of 
 the government. I think it incontestably true that the natural obli- 
 gation of private contracts between individuals in society, ceases, 
 and is converted into a civil obligation, by the very act of surren- 
 dering the right and; power of enforcing performance into the hands 
 of tiie government. . . 
 
 As, in a state of nature, the natural obligation of a contract con- 
 sists in the right and potential capacity of the individual to take or 
 enforce the" delivery of the thing due to him by the contract, or its 
 equivalent; so, in the social state, the obligation of a contract con- 
 sists in the efficacy of the civil law, which attaches to the contract, 
 and enforces its performance, or gives an equivalent in lieu of per- 
 formance. From these principles it seems to result as a necessary 
 corollary, that the obligation of a contract made within a sovereign 
 state, must be precisely that allowed by the law of the State and 
 none other. I say, allowed, because if there be nothing in the mu- 
 nicipal law to the contrary, the civil obligation being, by the very 
 nature of government, substituted for, and put in the place of, nat- 
 ural obligation, would be coextensive with it; but if by positive 
 enactions, the civil obligation is regulated and modified so as that it 
 does not correspond with the natural obligation^ it is plain, the 
 extent of the obligation must depend wholly upon the municipal law. 9 
 
 Story, in his Commentaries, expresses his understanding 
 of the obligatory nature of state contracts in the following 
 manner : 
 
 Nor is this obligatory force so much the result of the positive 
 declaration of the municipal as of the general principles of natural 
 or (as it is sometimes called) universal law. . . . Nay there may 
 exist (abstractly speaking) a perfect obligation in contracts where 
 there is no known and adequate means to enforce them. As, for 
 instance, between independent governments. ... So in the same 
 government, where a contract is made by a State with one of its 
 own citizens, which yet its laws do not 1 permit to be enforced by any 
 action or suit. In this predicament are the United States who are 
 not suable on any contracts made by themselves ; but no one doubts 
 that these are still obligatory on the United States. Yet their obli- 
 gation is not recognized by any positive municipal law, in a great 
 variety of cases. It depends altogether upon principles of public or 
 universal law. . . .The civil obligation of a contract, then, though 
 it can never exist contrary to positive law, may arise or exist inde- 
 pendently of it, and it may exist notwithstanding there may be no 
 present adequate remedy to enforce it. 1 * 
 
 These quotations show how strong was the influence of 
 the natural law theory during the period when the meaning 
 of the " contracts clause" was being outlined. It will be 
 
 9 12 Wheat. 213 at 319-320. 
 
 10 Story on the Constitution, sec. 1381, p. 251. 
 
59 1] CAN A STATE BE OBLIGATED BY A CONTRACT? 47 
 
 well to remember, in reading Fletcher v. Peck, and Dart- 
 mouth College v. Woodward, that Marshall felt that the 
 obligation of a contract was not dependent on any narrow 
 and technical considerations, but on the broad basis of nat- 
 ural right and justice. And even when the rest of the court 
 disagreed with him and, being forced by the circumstances 
 of the case to choose between positive and natural law, he 
 stood out for the supremacy of positive law, they did not 
 deny the existence of a law of nature. It is difficult to 
 state exactly what position the majority of the court took 
 in Ogden v. Saunders in regard to the obligation of con- 
 tracts made between a State and one of its citizens. The 
 question was not immediately before them. All the justices 
 admitted the existence and validity of natural law. As to 
 private contracts, civil law supersedes natural law, but it 
 impliedly adopts the principles of natural law unless it ex- 
 pressly enacts otherwise. It is fair to assume that they 
 either regarded a state as bound by its contracts with its 
 citizens by the sanction of natural law alone, or that the 
 municipal law has impliedly adopted the principles of nat- 
 ural law in this matter. 
 
 Defenders of natural law obviously would not find the 
 trouble that the Austinians have found in holding that a 
 sovereign state may be obligated by its contract. For this 
 the authority of James Wilson, the reputed author of the 
 "contracts clause," may be cited. Thus he says, speaking 
 of the state: 
 
 It is an artificial person. It has its affairs and its interests; it 
 has its rules ; it has its obligations ; and it has its rights. It'_ may 
 acquire property, distinct from that of its members; it may incur 
 debts, to be discharged out of the public stock, not out' of the pri- 
 vate fortunes 'of individuals: it may be bound by contracts and for 
 damages arising quasi ex contractu.' 11 
 
 So also Puf endorf says : " That no Prince hath power to 
 release himself from his oath, when there lies no objection 
 either against the validity of his taking it, or the matter con- 
 tained in it, or the circumstances belonging to it, upon pre- 
 
 11 Wilson's Works, ed. Andrews, p. 272. 
 
48 OBLIGATION OF CONTRACTS [S9 2 
 
 tence that it is lawful for him to relieve his subjects in some 
 particular oaths, I think is evident. For the oaths which he 
 has power to vacate in his subjects have always this condi- 
 tion annexed to them if it please the sovereign. And 'tis 
 certain it would be impossible to bind any obligation upon 
 a man if he reserves to himself a power to break from it 
 whenever he thinks fit." Further he says : " and therefore 
 upon the whole all contracts made by the prince oblige the 
 commonwealth, unless they are manifestly absurd or unjust. 
 And when the case is doubtful 'tis always to be presumed 
 in favor of the prince. . . . And so whatever a free people 
 contract, devolves upon and obliges the person they after- 
 wards confer sovereignty upon, though they give him never 
 so full and absolute a power." 12 
 
 We have seen, therefore, that it was the natural law 
 theory of the obligation of a contract that was looked to as 
 furnishing the test of the obligation of state contracts, and 
 that, upon this theory, an obligation exists entirely irre- 
 spective of the legal omnipotence — the sovereignty — of one 
 of the contracting parties. The English Parliament could 
 be as completely obligated by its contract as any of our state 
 legislatures by theirs. It is therefore clear that the criticism 
 so often made of the Dartmouth College case, that the Eng- 
 lish Parliament could not have been obligated by any con- 
 tract in connection with the grant of the college charter, is 
 entirely beside the point. The argument is a valid one, 
 when it is used to show that no contract could have been 
 intended, under the well understood principles of law exist- 
 ing when the charter was granted ; but if it is attempted to 
 go farther, and to say that there could not possibly have 
 been any contract, because of the legal omnipotence of Par- 
 liament, we think the argument overlooks the meaning which 
 the court has attributed to the word " obligation." And we 
 would further point out that, except in so far as the legisla- 
 tures of the states are restrained by constitutional provi- 
 sions of their own, they are as legally omnipotent as Parlia- 
 
 12 Law of Nature and Nations, Book 8, chap, x, sec. 3, pp. 865-866. 
 
593] CAN A STATE BK OBLIGATED BY A CONTRACT? 49 
 
 ment, and if Parliament cannot obligate itself, they are 
 equally as incapable of binding themselves by contract. 
 
 If the federal courts do, as a matter of practice, construe 
 state contracts by applying principles of natural right and 
 justice, it becomes a matter of no practical importance 
 whether we allow these principles an independent author- 
 ity or regard them as impliedly adopted by the municipal 
 law of the States. The only difference which one would 
 imagine might result would be an increased respect for the 
 decisions of the state courts, if the question to be decided 
 is avowedly one of state law. The attitude of the federal 
 courts towards state decisions, in this class of cases, is in- 
 deed one of great independence, but this does not neces- 
 sarily lead to the conclusion that the federal courts do not 
 rest the obligation of contracts upon state law. In the first 
 place this independence of judgment is asserted even where 
 the determination of the obligation of a contract necessi- 
 tates a construction of the state constitution or statutes. 13 
 In the second place, in cases where the federal jurisdiction 
 is based upon diversity of citizenship, and where it is gener- 
 ally admitted, therefore, that the federal courts are apply- 
 ing state law, these courts may exercise an independent 
 judgment as to what the state law is ; and in matters of com- 
 mercial law and general jurisprudence they consider them- 
 selves peculiarly free from any obligation to follow state 
 decisions. 14 
 
 An interesting case that comes rather close to settling the 
 theoretical question we are discussing and which yet does 
 not quite do so, is Douglas v. Kentucky, 15 where the court 
 refused to apply the rule it had previously established that 
 " if the contract, when made, was valid by the laws of the 
 State as then expounded by all departments of the govern- 
 ment, and administered in its courts of justice, its validity 
 and obligation cannot be impaired by any subsequent action 
 
 ls Jefferson Branch Bank v. Skelly, 1 Black, 426. 
 
 14 Burgess v. Seligtnan, 107 U. S. 20; Swift v. Tyson, 16 Pet. 1. 
 
 " 168 U. S. 488. 
 
5<3 OBLIGATION OF CONTRACTS [594 
 
 of legislation, or decision of its courts altering the construc- 
 tion of the law. 16 
 
 Here the facts were that the legislature had granted a 
 lottery privilege to a municipality, which had sold it to a 
 private individual. Before the latter resold it, there had 
 been a decision of the highest court of the State holding 
 that a grantee or his assigns who invested money on the 
 faith of a lottery grant, acquired a legal right thereto, and, 
 in addition, a quo warranto had been issued against the pur- 
 chaser of the lottery in dispute and had been decided in 
 favor of the owner. On the strength of these decisions the 
 plaintiff purchased the lottery. Later a repealing act was 
 passed. The Court of Appeals of Kentucky reversed itself 
 and allowed the repealing act to stand, and an appeal was 
 taken to the United States Supreme Court. Thus, the case 
 contained facts which brought it completely within the rule 
 laid down by Taney in Life Insurance Co. v. Debolt, and 
 adopted by the whole court in Gelpcke v. Dubuque. There 
 was the prior state decision holding that a lottery franchise 
 was a valid contract; there was a purchase made on the 
 faith of that decision, whereby the purchaser and the state, 
 on the doctrine of novation, entered into a new contract; 
 there was a subsequent reversal of the former decision by 
 the state court, and an application by the state court of a 
 statute repealing the grant. Had the question been consid- 
 ered to be only whether or not, at the time the plaintiff pur- 
 chased the lottery, the state law regarded him as obtaining 
 a legal title thereto good as against the State, as acquiring 
 a legal right that the lottery grant should not be repealed, 
 it should have been answered in the affirmative, certainly if 
 the rule of Gelpcke v. Dubuque was to be applied. But the 
 court refused to apply the rule of Gelpcke v. Dubuque. 
 The court said : " The defendant insists that his rights having 
 been acquired when these decisions of the highest court of 
 Kentucky were in full force, should be protected according 
 
 "Life Insurance & T. Co. v. Debolt, 16 How. 416; Gelpcke v. 
 Dubuque, I Wall. 175. 
 
595] CAN A STATE BE OBLIGATED BY A CONTRACT? 5 I 
 
 to the law of the state as it was adjudged to be when those 
 rights attached. But is this court required to accept the 
 principles announced by the state court as to the extent to 
 which the contract clause of the Federal Constitution re- 
 stricts the powers of the state Legislature? Clearly not. 
 . . . This court must determine — indeed it cannot consis- 
 tently with its duty refuse to determine — upon its own re- 
 sponsibility, in each case as it arises, whether that which a 
 party seeks to have protected under the contract clause of 
 the Constitution of the United States is a contract the obli- 
 gation of which is protected by that instrument against hos- 
 tile state legislation." 
 
 The rule of Gelpcke v. Dubuque and Life Insurance Co. 
 v. Debolt is rather clearly based on the idea that the validity 
 and obligation of the contract is determined by state law, 
 and for this reason the decisions in force at the time of the 
 formation of the contract are to be regarded as fixing its 
 obligation. It is difficult to say, however, whether Justice 
 Harlan refused to regard those decisions, on the ground 
 that the federal court was not administering state law at all, 
 or simply upon the ground that the rule of Gelpcke v. Du- 
 buque was a rule of policy, which did not obviate the duty 
 incumbent upon the court of exercising an independent 
 judgment and, when the occasion required, of making an 
 exception to the rule. 
 
 As to what contracts the States may make and what they 
 may not make, the Supreme Court has made a number of 
 somewhat varied rulings. From the nature of the case, it 
 is difficult to draw a line between contracts which the States 
 may make and those which they may not make. In' the 
 Ohio Bank Tax cases 17 in which the question of the validity 
 of contracts as to exemption from taxation was reargued, 
 the majority simply argued that the power of a state to con- 
 tract was a result of its sovereignty, and that to deny it this 
 power was to deny it its sovereignty. The court has, how- 
 
 17 Piqua Branch Bank v. Knoop, 16 How. 369. and Ohio Life In- 
 surance Co. v. Defoolt, 16 How. 416. 
 
J2 OBLIGATION OF CONTRACTS [S9 6 
 
 ever, held that the States cannot contract away their 
 power 18 of eminent domain, or their police power, 19 nor any 
 of their power to supervise and regulate the forms of ad- 
 ministering justice. 20 A State cannot contract concerning 
 governmental subjects, hence it cannot contract with the 
 citizens of a town that, upon fulfilling certain conditions, it 
 will establish the county-seat at that place. 21 Land under 
 navigable waters cannot be alienated except in parcels which 
 can be disposed of without detriment to the public interest 
 in the lands and waters remaining. 22 On the other hand, 
 perpetual corporate, ferry, turnpike, gas, water, railroad 
 and street railway franchises have been held to be contracts 
 within the protection of the "contracts clause." These 
 privileges may be made exclusive as well. Finally, the 
 State may grant exemptions from rate regulation at the 
 hands of the legislature. 28 
 
 Obviously the court has not been particularly consistent 
 in its rulings as to what may and what may not be the sub- 
 ject of contracts by the States. But upon principles of 
 natural law or general jurisprudence there is abundance of 
 room for differences of opinion as to the proper limits of 
 the power of states to contract. That even the writers 
 upon natural law placed some limits upon the right of the 
 state to contract may be seen from a rather interesting pas- 
 sage from Pufendorf. He says: 
 
 What hath been said of the contracts of princes may also be said 
 of their grants and donations, viz : that they cannot be recalled by 
 the successors where they were made upon fair and reasonable rea- 
 sons. . _. . What hath been said with relation to grants may also 
 be applied to privileges and immunities, namely, that it ought to be 
 considered upon what reasons and with what moderation and cau- 
 tion they were given, and whether they were consistent with the 
 peace and security of the state, for without dispute, these things are 
 of far greater concern than the unwary easiness of the prince. And 
 
 18 Cincinnati v. Louisville & N. R. Co., 223 U. S. 390. 
 
 19 Stone v. Mississippi, 101 U. S. 814. 
 
 20 Bank of Columbia v. Okely, 4 Wheat. 235, 245 ; and Cairo, etc. 
 R. Co. v. Hecht, 95 U. S. 168. 
 
 21 Newton v. Commissioners, 100 U. S. 548. 
 
 22 Illinois Central R. Co. v. Illinois, 146 U. S. 387. 
 
 23 See the special chapters on franchises and rate exemptions. 
 
597] CAN A STATE BE OBLIGATED BY A CONTRACT? 53 
 
 indeed all privileges are to be confined under such limitations when- 
 ever tney begin to lie heavy upon the other subjects. 2 * 
 
 It is apparent that in determining, in a concrete case, 
 whether or not a contract with the state exists, as, for ex- 
 ample, in the case of the grant of corporate privileges, the 
 theory and practice upon the subject of state contracts must 
 be given some consideration, even if the ultimate sanction 
 of the contract be natural or universal law. The reason is 
 that natural law only, renders obligatory that to which the 
 parties intend to bind themselves, and in a state whose mu- 
 nicipal law has never recognized any contractual relation 
 between the state and its grantee in the granting of cor- 
 porate franchises, it would be difficult to say that a contract 
 was intended by the parties. Hence, in considering the 
 Dartmouth College case, it will be necessary to examine the 
 doctrines of the common law and the established parlia- 
 mentary precedents in regard to corporate grants before it 
 can fairly be determined whether an obligatory contract, 
 even upon principles of natural law, was created by the 
 grant. 
 
 Before beginning the discussion of that case, however, it 
 is desirable to see what are the essentials of an obligatory 
 state contract upon positive law principles alone, for modern 
 jurists generally agree that it is proper to speak of a state 
 being obligated by a contract merely under the sanction of 
 its own municipal law. 
 
 Recognizing the fact which we have already stated, that 
 obligation is the legal relationship between the parties, that 
 it is, from one point of view, the legal duty owed by one 
 person to another, and from another point of view, the legal 
 right or power which that other has to control the actions 
 of the first, and recognizing that this right and duty are the 
 creatures of law, Austin laid it down that the state, which 
 was the source of all law, could not be limited or bound by 
 law, and therefore could owe no legal duties, could be sub- 
 
 2 * Pufendorf, p. 867. 
 
5 4 OBLIGATION OF CONTRACTS [59 8 
 
 ject to no legal obligations. 26 In fact, he held that it could 
 possess no legal rights. This opinion is likewise held by 
 Markby 26 and by Amos, 27 and it may be found in one, at 
 any rate, of the decisions of the Supreme Court of the 
 United States, for, in Kawanakoa v. Polybank, 28 Justice 
 Holmes, in extending the doctrine of the non-suability of 
 the state to protect the government of the territory of 
 Hawaii, explained the theory as follows: "A sovereign is 
 exempt from suit, not because of any formal conception or 
 absolete theory, but on the logical and practical ground that 
 there can be no legal right as against the authority that 
 makes the law on which the right depends." 
 
 Recent writers have shown very clearly, however, that 
 the subject may have rights as against the sovereign, be- 
 cause that which makes any other right a legal right is 
 merely its recognition as such by the sovereign; if, there- 
 fore, the sovereign recognizes the existence of rights as 
 against itself, these rights are legal rights. There is no 
 higher sanction to any legal right than this. 29 So Brown 
 says, in his work, The Austinian Theory of Law: "Sov- 
 ereignty does not preclude the notion of obligation, but only 
 the notion of limitation by a power external to itself." 
 Pollock says : " In practice, individual citizens may count on 
 the submission of the State to its own tribunals (whatever 
 the extent of it may be) not being arbitrarily revoked. The 
 security is the same, in the last resort, that we have for the 
 due administration and enforcement of the ordinary law 
 binding on subjects." Salmond is so excellent upon this 
 point that we shall quote his argument in full. He says : 
 
 A subject may claim rights against the state, no less than against 
 another subject. He can institute proceedings against the state for 
 the determination and recognition of these rights in due course of 
 
 26 Austin, Jurisprudence, 3d ed., pp. 288-292. 
 28 Markby, sec. 154, p. 92. 
 
 27 Amos, Science of Jurisprudence, p. 77. 
 
 28 205 U. S. 349- 
 
 29 See Pollock, First Book of Jurisprudence, p. 63 ff. ; Brown, The 
 Austinian Theory of Law, p. 194; Salmond, p. 202 ff.; Holland, 
 p. 126. 
 
599] CAN A STATE BE OBLIGATED BY A CONTRACT? 55 
 
 law, and he can obtain judgment in his favor, recognizing their ex- 
 istence or awarding to him compensation for their infringement. 
 But there can be no enforcement of that judgment. What duties 
 the state recognizes as owing by it to it's subjects, it fulfills of its 
 own free will and unconstrained good pleasure. The strength of 
 the law is none other than the strength of the state, and cannot be 
 turned or used against the state whose strength it is. The rights 
 of the subject against the state are therefore imperfect. They ob- 
 tain legal recognition but no legal enforcement. 
 
 The fact that the element of enforcement is thus absent in the 
 case of rights against the state has induced many writers to deny 
 that these are legal rights at all. But as we have already seen, we 
 need not so narrowly define the term legal right, as to include only 
 those claims that are legally enforced. It is equally logical and 
 more convenient to include within the term all those claims that are 
 legally recognized in the administration of justice. All rights against 
 the state are not legal, any more than all rights against private per- 
 sons are legal. But some of them are ; those, namely, which can be 
 sued for in courts of justice, and the existence and limits of which 
 will be judicially determined in accordance with fixed principles of 
 law, redress or compensation being awarded for any violation of 
 them. To hold the contrary and to deny the name of legal right 
 or duty in all cases in which the state is the defendant is to enter 
 upon a grave conflict with legal and popular speech and thought. 
 In the language of lawyers, as in that of laymen, a contract with 
 the state is as much a source of legal rights and obligations as is a 
 contract between two private persons; and the right of the holder 
 of consols is as much a legal right, as is that of a debenture holder 
 in a public company. It is not to the point to say that rights against 
 the state are held at the state's good pleasure, and are therefore not 
 legal rights at all; for all other legal rights are in the same posi- 
 tion. They are legal rights not because the state is bound to recog- 
 nize them, but because it does so. 
 
 Whether rights against the state can properly be termed legal 
 depends simply on whether judicial proceedings in which the state 
 is the defendant are properly included within the administration of 
 justice. For if they are rightly so included, the principles by which 
 they are governed are true principles of law, and the right's defined 
 by these legal principles are true legal rights. The boundary line 
 of the administration of justice has been traced in a previous chap- 
 ter. We there saw sufficient reason for including not only the 
 direct enforcement of justice but all other judicial functions exer- 
 cised by courts of justice. This is the ordinary use of the term and 
 it seems open to no logical objection. 
 
 And a further quotation from Brown will, perhaps, aid in 
 
 understanding the matter 
 
 If a sovereign, having laid down a law that contracts shall be 
 enforced, enters into contracts with its own subjects, and if those 
 contracts are enforced as a matter of fact by its courts even as 
 against the sovereign, then it is impossible to deny that the sovereign 
 is under a legal duty towards its subjects. We cannot refuse to 
 describe the sovereign's liability as a legal duty on the ground that 
 the sanction is self imposed, if as a matter of fact the sanction is 
 
56 OBLIGATION OF CONTRACTS [600 
 
 invariably admitted by the sovereign., and applied by the courts. 
 Austin's failure to recognize the fact is a conclusive illustration of 
 the need for 'revising his theory of sovereignty. 80 
 
 So, also, Holland says : 
 
 Indeed it is not improper to talk of the state as having duties, 
 namely such as it prescribes to itself, though it has the physical 
 power to disregard and the constitutional power to repudiate them. 
 Such duties as we often see enforced, e.g. in England, principally, 
 but not exclusively by a Petition of Right, which is lodged with the 
 Home Secretary, and, after due investigation, receives, in suitable 
 cases, the Royal fiat "let right be done." The subsequent proceed- 
 ings follow the course of an ordinary action. This remedy is inap- 
 plicable in cases of tort. 81 
 
 Although this, the latest view of modern jurists, allows 
 that the state may be under legal obligations, and goes far 
 toward supporting the doctrine that a legally omnipotent 
 legislature is obligated by its grant of lands or franchises, 
 there is, nevertheless, a certain difficulty in applying the 
 conception to the concrete case of a grant by the state. 
 
 Although these same jurists deny that a grant is, gener- 
 ally speaking, a contract, nevertheless, we have seen that, 
 for the purposes of the "contracts clause" it is to be so 
 regarded, and that the only way in which it can be so re- 
 garded is by implying an agreement not to revoke the grant. 
 Now there is no legal procedure in any state, whose govern- 
 ment is organized without constitutional limitations, by 
 which any such contract can be recognized, let alone en- 
 forced. That is to say, Parliament, for example, has pro- 
 vided for a legal recognition as against itself, of the obli- 
 gation which it creates when it agrees to pay a certain sum 
 of money at a certain time. It has not provided for any 
 direct legal recognition of the specific contract not to repeal 
 a franchise granted or a land grant made. The point, of 
 course, is a rather finely drawn one. We think it correct 
 to say, however, that, in the eye of the law, to-day as well 
 as in Blackstone's time, the legal title which an individual 
 has to a piece of land conveyed to him by the state is as 
 
 30 Brown, The Austinian Theory of Law, p. 194. 
 
 31 Holland, Jurisprudence, 10th ed., p. 126. 
 
6oi] CAN A STATE BE OBLIGATED BY A CONTRACT? 57 
 
 strong as that which he has to a similar piece of land con- 
 veyed to him by another individual. And we think it prob- 
 ably correct to say that, in Blackstone's time, a grant of 
 franchises by the Crown or by Parliament was regarded as 
 conveying legal rights — legal rights, the court would have 
 said, had it been possible to bring the abstract question be- 
 fore them, even as against Parliament. In this case, we 
 think it correct to say that state grants give rise, by munici- 
 pal law, to legal rights against the state : (and, if the grant 
 be regarded as a contractual relation, that the right of the 
 individual and the corresponding duty of the state may 
 properly be spoken of as a legal obligation). 
 
 The principal question, then, in the Dartmouth College 
 case, must be whether or not corporate charters — at least 
 the charters of colleges — were regarded, at the time of the 
 grant in question, as a species of private property. This 
 inquiry is of almost equal importance whether the existence 
 of the obligation is to be determined by natural or municipal 
 law. Finally, it may be noted that, in a state whose gov- 
 ernment is organized with a legally omnipotent Parliament, 
 as is England, it may well be that the question of the invio- 
 lability of private property or of state grants can not be 
 determined entirely by reference to the law as administered 
 by the courts. Reference must also be made to the actual 
 practice of the sovereign body which, perhaps as much as 
 anything else, will show the nature of the rights of indi- 
 viduals. 
 
CHAPTER IV 
 The Dartmouth College Case 
 
 We have reserved for consideration in this chapter the 
 most famous of all the cases dealing with the "contracts 
 clause"— Trustees of Dartmouth College v. Woodward. 1 
 
 The broad constitutional question involved in that case 
 was whether a charter of incorporation constituted a con- 
 tract within the protection of the " contracts clause " of the 
 United States Constitution. But this was by no means the 
 only question that had to be decided. Those who have 
 found fault with the most important principle there laid 
 down have also tried to discredit the decision by pointing 
 out errors of law in regard to other points involved, and 
 errors in the statement of facts, each of which, they contend, 
 are sufficient to have caused a reversal of the whole decision. 
 The case, therefore, cannot be fairly discussed, nor really 
 understood, without some consideration of these collateral 
 questions. 
 
 Dartmouth College was incorporated by a charter from 
 the Crown (signed in behalf of the king by Governor Went- 
 worth of New Hampshire) granted in 1769. It cannot be 
 gainsaid that, in the year 1816, and ever since its incorpora- 
 tion, practically, Dartmouth College had been a " going con- 
 cern," with lands, buildings, trustees, faculty and students, 
 all located in what was, after 1776, the State of New Hamp- 
 shire. In the year 181 6, the legislature of New Hamp- 
 shire passed three laws amending the charter of the college 
 so as to change its name to "The Trustees of Dartmouth 
 University " ; to change the number of trustees from twelve 
 to twenty-one, of whom nine should constitute a quorum; 
 to provide that the nine new trustees be appointed by the 
 
 1 4 Wheat. 518. 
 
 58 
 
603] THE DARTMOUTH COLLEGE CASE 55 
 
 Governor and Council ; to provide for a board of overseers 
 of twenty-five members, appointed by the Governor and 
 Council, with power to veto the acts of the trustees relative 
 to the appointment of the president and faculty and to other 
 administrative matters; to provide that each of the two 
 boards should have power to remove any of their members ; 
 and to give the trustees power to organize colleges in the 
 university. These remarkable amendments, it will easily 
 be perceived, were drawn up to accomplish a particular pur- 
 pose. There had been a schism in the old board of trustees. 
 The rock upon which the board had split, by a vote of eight 
 to four, was the president of the college, Dr. John Whee- 
 lock, son of the founder. The history of the events leading 
 up to the passage of the amending acts is interesting. As 
 recited by Shirley, in the work already referred to, it shows 
 the spread of the controversy until, from a quarrel among 
 the Trustees of Dartmouth College, it assumed the shape 
 of a state-wide political controversy, the sides of which 
 were taken by the Federalists and the Anti-Federalists re- 
 spectively, 2 but all this is immaterial to a discussion of the 
 case from a legal standpoint. 3 It will suffice to point out 
 that the addition of the nine new trustees was evidently in- 
 tended to turn the party of the minority into the party of 
 the majority. The old trustees refused to accept the amend- 
 ments and removed Woodward, the secretary and treasurer 
 of the corporation, who joined the camp of the enemy, 
 taking with him the seal and record books of Dartmouth 
 College, and was made secretary and treasurer of the newly 
 organized " Dartmouth University." The old trustees there- 
 upon brought an action of trover in the name of the old 
 corporation to recover their seal and records from Wood- 
 
 2 According to Shirley in his work entitled 1 " The Dartmouth Col- 
 lege Causes," which is accepted by H. C. Lodge in his Life of Daniel 
 Webster. 
 
 3 It has been contended that the decision was chiefly due to the 
 political aspect of the case, which Webster astutely played upon in 
 his argument before the Supreme Court — Lodge, Life of Webster, 
 p. &>— but this inference, of course, cannot with fairness be drawn 
 before the legal questions have been examined. 
 
60 OBLIGATION OF CONTRACTS [604 
 
 ward, and this action it was that was brought before the 
 Supreme Court. It was contended before that court that 
 the acts of 1816 impaired the obligation of the contract con- 
 tained in the charter. 
 
 It is important to set out the facts in slightly more detail, 
 particularly the circumstances surrounding the grant of the 
 charter, inasmuch as Mr. Shirley, in his book entitled " The 
 Dartmouth College Causes," already referred to, has chal- 
 lenged the statement of facts which Chief Justice Marshall 
 made in delivering his opinion as erroneous and intention- 
 ally misleading, and as giving an entirely different aspect 
 to the case from that which it would otherwise have had. 
 
 The facts of the case were found by a special verdict of 
 the jury (which really was agreed upon by stipulation be- 
 tween counsel) , which is set out in full in Wheaton's report. 
 It was upon these facts that the case came before the Su- 
 preme Court. The verdict began by setting forth the char- 
 ter which, as usual, set out in the preamble the facts which 
 induced the Crown to make the grant. The essential facts 
 there set out are: That the Reverend Eleazer Wheelock 
 had, many years before, set on foot, at his own expense and 
 on his own estate, an Indian Charity School. Others had 
 lent pecuniary assistance and the school had prospered to 
 such an extent that it was thought advisable to raise funds 
 in England, which was done, the funds being placed in the 
 hands of certain trustees residing there. It further recited 
 that Wheelock represented that he had authorized the Eng- 
 lish trustees to select a fitting location for the school, and 
 had set before them the offers of grants of land that had 
 been made by several of the governments in America ; that 
 a large number of proprietors of lands in western New 
 Hampshire, considering that such a location would be ad- 
 vantageous for carrying out the work among the Indians, 
 "and also, considering, that without the least impediment 
 to the said design, the same school may be enlarged and 
 improved to promote learning among the English, and be a 
 means to supply a great number of churches and congrega- 
 
605] THE DARTMOUTH COLLEGE CASE 6 1 
 
 tions, which are likely soon to be formed in that new coun- 
 try, with a learned and orthodox ministry, they the said 
 proprietors have promised large tracts of land, for the uses 
 aforesaid, provided the school shall be settled in the western 
 part of our said province " ; that the English trustees chose 
 the same location; and that "the said Wheelock has also 
 represented the necessity of a legal incorporation, in order 
 to the safety and well being of said seminary, and its being 
 capable of the tenure and disposal of lands and bequests 
 for the use of the same." The charter then proceeded to 
 incorporate Dartmouth College, making it "from hence- 
 forth and forever " a body corporate and politic, and giving 
 the necessary corporate powers to carry out its purpose of 
 instructing and educating the youth of the Indian tribes as 
 shall appear necessary and expedient for civilizing and 
 christianizing children of pagans, and also for the education 
 of English youth and any others, including the power to 
 appoint professors, tutors and various officers usually con- 
 nected with such institutions, and to grant such degrees as 
 were usually granted in either of the universities, or any 
 other college of the realm of Great Britain. The officers, 
 it was declared, might exercise their authority " as fully and 
 freely as any of the officers and ministers in our universities 
 or colleges in our realm of Great Britain lawfully may or 
 ought to do." Eleazer Wheelock was recited to be the 
 founder of the institution and was appointed its first presi- 
 dent, with power to appoint his successor, who might, how- 
 ever, be removed by the trustees. It was made the duty of 
 the president, in order that the English contributors might 
 "be satisfied that their liberalities are faithfully disposed 
 of," to transmit annually to the Trustees in England an 
 account of the disbursements of the sums which he should 
 receive from the donations and bequests made in England. 
 The verdict then set out the acceptance of the charter, and 
 that immediately after its organization the corporation re- 
 ceived by gift, devise and otherwise lands, chattels and 
 money, and that among the gifts to the college were a grant 
 
62 OBLIGATION OF CONTRACTS [606 
 
 of lands from the State of Vermont, in 1785, and two from 
 the State of New Hampshire, in 1789 and 1807. The 
 amending statutes are then set out and the proceedings in- 
 volved in the action at hand are given, as we have already 
 recited them. 
 
 From this statement of facts, found in the special verdict, 
 it is clear that the purpose was to incorporate Moor's In- 
 dian Charity School, and that the method was to create an 
 incorporated college and have the school funds transferred 
 to it ; and this is exactly the view that Marshall takes in his 
 opinion. 
 
 Mr. Shirley, however, endeavors to show that the facts 
 were quite different, and that the Chief Justice was well 
 aware that they were. His argument on this point is, of 
 course, based wholly on facts outside the record, nor is it 
 clear that Marshall really knew of them. Nevertheless, we 
 have endeavored to ascertain their importance, assuming, 
 for the sake of argument, that they had been in the record. 
 
 Mr. Shirley marshalls the evidence and argues the matter 
 at such length 4 that it will be impossible for us to do any- 
 thing more than to state our conclusions, reached after read- 
 ing his statement. He contends that Moor's Indian Charity 
 School and the college were always regarded as separate 
 institutions, even after the incorporation ; that all the funds 
 had been raised, prior to the incorporation, belonged to the 
 school and were never given to the college; and that the 
 first gift to the college was a large grant of land made by 
 Governor Wentworth, in behalf of the Crown, in January, 
 1770, thus making the foundation of the institution a pub- 
 lic one. 
 
 What Mr. Shirley does show, we think, is that the origi- 
 nal intention (which is plainly shown in the preamble to 
 the charter already set out) was to incorporate the charity 
 school, with the idea that it would eventually broaden its 
 operations — hence the name "college"; that the English 
 trustees did not take kindly to these doings of Dr. Whee- 
 
 * Shirley, The Dartmouth College Causes, p. 20 ff., p. 412 ff. 
 
607] THE DARTMOUTH COLLEGE CASE 63 
 
 lock, and that he, therefore, promised that the school funds 
 should be kept separate, as before, and that the president 
 of the school who, he said, was not necessarily the president 
 of the college, should have the sole administration of the 
 funds. As a matter of fact, the school funds must have 
 been given to the college, as there was no such legal person 
 as the school, and, in fact, we are told that gifts, which had 
 been made to the school upon condition that it be incorpor- 
 ated, were called for immediately after the charter was 
 granted. In 1807 we find the legislature passing an act 
 which, after reciting that it had always been considered that 
 the school and the college were separate branches of the 
 same institution, with separate funds, and that the president 
 of the college "ever has been and ever should be" presi- 
 dent of the school, but that the trustees had never consid- 
 ered that they had any official right to be concerned in the 
 application of the funds of the school, proceeds to associate 
 the trustees with the president in that office. It is perfectly 
 clear, therefore, that, legally, there never had been more 
 than one institution, namely, Dartmouth College, and that 
 Dr. Wheelock was taking an impossible position when he 
 told the English trustees that the school funds were con- 
 trolled by the president of the school, who was not, neces- 
 sarily, president of the college. Mr. Shirley does show, 
 however, that one of the first gifts to the college was a large 
 grant of land by the Crown. Litigation threatened to arise 
 later over the right of the Crown to make this grant, and 
 the college therefore surrendered it, taking, two years after- 
 wards, in 1789, the grant referred to in the special verdict 
 as a substitute for the prior doubtful grant. This lends a 
 semblance of validity to the claim made by Mr. Shirley that 
 the foundation was a public one in the sense of the rule 
 stated in Blackstone that, if the king and a private man join 
 in endowing an eleemosynary foundation, "here the king 
 has his prerogative," and therefore " the king alone shall be 
 the founder of it." 5 It would seem probable that, in such 
 
 « Blackstone, 481. 
 
64 OBLIGATION OF CONTRACTS [608 
 
 a case, the king would have had the visitatorial power to the 
 same extent as a private founder, and that, after the Revo- 
 lution, this power might be said to have become vested in 
 the state legislature — though in the case of so-called " civil " 
 corporations, of which the king was always considered the 
 founder, it was laid down that his visitatorial power could 
 only be exercised by the court of King's Bench. 6 But it 
 would be a question for serious consideration whether the 
 visitor would have had the right to do what the legislature 
 had attempted to do in the case of Dartmouth College. 
 
 The rules relating to the power of visitation were very 
 technical, but, in view of the fact that the charity school 
 was already founded and in existence and that the charter 
 was intended to incorporate this school, and particularly, in 
 view of the fact that Dr. Wheelock is named in the charter 
 as the founder, thus evidencing an intention on the part of 
 the Crown to waive its prerogative in the matter, we do not 
 think the argument would have been applicable had all the 
 facts which Mr. Shirley sets out appeared in the record. 
 
 Further criticisms of the statement of facts, as, for in- 
 stance, that there was no formal application such as was 
 suggested by Marshall's statement that there was an " appli- 
 cation" made for a charter, are not of enough moment to 
 need answering. It has also been pointed out that the 
 power of giving degrees and the powers of the officers of 
 the college were recited to be as comprehensive as those of 
 the universities in England, with the object of proving that 
 the College was really a university, and of following this 
 up by showing that the universities were public corpora- 
 tions. It has already been shown, however, that there was 
 no grand division of corporations, at common law, into 
 public and private. 
 
 Having considered the questions which have arisen from 
 the special circumstances surrounding the granting of this 
 particular charter, it remains to consider the fundamental 
 question of the case, namely, what was the status of cor- 
 
 6 1 Blackstone, 481. 
 
6og] THE DARTMOUTH COLLEGE CASE 65 
 
 porations at common law ? Did the municipal law of Eng- 
 land regard corporate franchises in the same light as it 
 regarded other kinds of property ? Can these grants fairly 
 be said to have been considered to be contracts, according 
 to the principles of the common law? And if it cannot 
 quite be said that, upon common law principles, they were 
 contracts, could it be said that they were contracts upon the 
 principles of natural or universal law ? 
 
 The fundamental principles of the law of corporations as 
 they appear, practically unchanged, during the latter half 
 of the eighteenth and the first half of the nineteenth cen- 
 turies may be found in Blackstone's Commentaries, pub- 
 lished in 1762; in Wooddeson's Lectures on the Laws of 
 England, published in 1783; in Kyd on Corporations, pub- 
 lished in 1793; and in Grant on Corporations, a work pub- 
 lished somewhat later than these three (1850), yet which 
 contains, practically unaltered, all the old law on this subject. 
 
 Referring to these authorities, we find that, as between 
 the Crown and the recipients of its grants of corporate 
 powers, the charter became a private, vested right. This 
 plainly appears from the doctrines : that a charter is of no 
 effect until it is accepted by the incorporators ; that a new 
 or amended charter is not effectual until it is accepted by 
 the corporation ; 7 and that the Crown cannot dissolve a cor- 
 poration. 8 Grant says: 
 
 The general principle of law with respect to grants being that the 
 Crown cannot derogate from its own grant, it follows that when a 
 charter has once' been granted and accepted, the king cannot after- 
 wards interfere with the operations of the provisions of it, or with 
 the privileges, rights and liabilities that are incident to a corporation. 9 
 
 In the leading case of The King v. Passmore, 10 Buller, J. 
 said: 
 
 I do not know how to reason on this point better than in the 
 manner urged by one of the relator's counsel, who considered the 
 grant of incorporation to be a comp act between the Crown and a 
 
 T Grant on Corporations, pp. 18, 19. 
 
 8 Ibid., p. 10; 1 Blackstone, 485. 
 
 9 Grant, p. 33. 
 w 3 T. R. 246. 
 
 5 
 
66 OBLIGATION OF CONTRACTS [6 10 
 
 certain number of subjects, the latter of whom undertake, in con- 
 sideration of the privileges which are bestowed, to exert themselves 
 for the good government of the place. 
 
 Again, it may be pointed out that a corporation is spoken 
 of by Blackstone as a franchise. 11 A franchise, moreover, 
 is classed as an incorporeal hereditament, that is, as prop- 
 erty. The whole law of corporations is treated by Black- 
 stone and other writers as a part of private law. Liberties, 
 franchises and privileges were among the things mentioned 
 in Magna Charta, of which a freeman should not be dis- 
 seized, but by the judgment of his peers or the law of the 
 land. 12 
 
 The inference is, without doubt, clearly and strongly war- 
 ranted that the franchise of being a corporation was a pri- 
 vate, property right, and that, as such, it was regarded as 
 sacred, as much guaranteed against parliamentary confis- 
 cation as any other property right of an individual, and 
 hence, upon the principles of natural or universal law, nay, 
 even upon the principles of the common law itself, could 
 fairly be regarded as a contract, binding upon Parliament 
 as well as upon the Crown. Clearly, the burden is shifted 
 upon him who would prove the contrary. 
 
 These rules of the common law seem to furnish the only 
 solid foundation for the court's decision, yet they receive 
 quite varying treatment at the hands of the three Justices 
 who delivered opinions in the case. Justice Washington 
 relies on these rules more specifically than does either Story 
 or Marshall. He sets them out in full to prove his first 
 point — that a corporate charter is a contract. He then 
 draws a distinction between public and private corporations, 
 holding that the former are subject to legislative control 
 whereas the latter are not. A college he finds to be a pri- 
 vate eleemosynary corporation. 
 
 Washington, apparently, did not find it necessary to re- 
 fute the argument that Parliament could not have been 
 obligated by its contract since it was legally omnipotent. 
 
 11 2 Blackstone's Corns., 37. 
 12 1 Coke's Institutes, 47. 
 
6ll] THE DARTMOUTH COLLEGE CASE 67 
 
 Story does not place any particular emphasis upon the 
 specific doctrines which Washington relied on. He begins 
 by describing a corporation as an artificial person, existing 
 in contemplation of law, etc., and then launches into a dis- 
 quisition upon public and private corporations. He reviews 
 the doctrines as to the visitatorial powers of the founders 
 of eleemosynary corporations, reviews the College charter, 
 and determines that it is a private eleemosynary corpora- 
 tion. He then states, page 683 : 
 
 We are now led to the consideration of the first' question in the 
 cause, whether this charter is a contract within the clause of the 
 constitution prohibiting any state from passing any law impairing 
 the obligation of contracts, 
 
 and, after stating and explaining Fletcher v. Peck, says : 
 
 It determines in the most unequivocal manner, that the grant of a 
 State is a contract within the clause of the constitution now in ques- 
 tion, and that it implies a contract not to reassume the rights 
 granted. A fortiori, the doctrine applies to a charter or grant from 
 the king. 
 
 Continuing, he discusses at some length the question of 
 consideration, then the question — which none of the other 
 justices discussed — as to how a corporation could be a con- 
 tracting party to the sovereign act which creates it. This 
 he follows with an answer to the criticism that there could 
 be no contract between the State and the trustees because 
 the latter had no private beneficial interest in the property, 
 a point which he treats from various aspects and at great 
 length. After meeting the objection that the charter was 
 dissolved by the Revolution, he finishes the opinion by ex- 
 amining the acts of New Hampshire in question and point- 
 ing out how they impaired the obligation of the contract 
 contained in the original charter, and here he brings in sev- 
 eral of the rules which Washington relied on, as, for ex- 
 ample, that a new charter cannot be imposed on a corpora- 
 tion without its consent. 
 
 Chief Justice Marshall argues quite differently from 
 either Story or Washington. He opens the argument with 
 this assertion, page 627: 
 
68 OBLIGATION OF CONTRACTS [6 1 2 
 
 It can require no argument to prove that the circumstances of this 
 case constitute a contract. An application is made to the crown for 
 a charter to incorporate a religious and literary institution. In the 
 application it is stated that large contributions have been made for 
 the abject, which will be conferred on the corporation as soon as it 
 shall be created. The charter is granted, and on its faith property 
 is conveyed. Surely in this transaction every ingredient of a com- 
 plete and legitimate contract is found. 
 
 "Is this contract protected by the constitution of the 
 United States?" he asks. "It is argued," he says, "that 
 the clause was not intended to restrain the States from 
 regulating their civil institutions." To this he is quite ready 
 to agree. Therefore he says, pages 629, 630: 
 
 This is the point on which the cause essentially depends. If the 
 act of incorporation be a grant of political power, if it create a 
 civil institution to be employed in the administration of government, 
 or if the funds of the college be public property, or if the State of 
 New Hampshire, as a government, be alone interested in its trans- 
 actions, the subject is one in which the legislature may act according 
 to its judgment, unrestrained by any limitation of its power imposed 
 by the constitution of the United States. 
 
 As was his wont, Marshall cites practically no authorities. 
 He examines the charter. It appears to be a private 
 eleemosynary corporation. Do its objects stamp on it a 
 different character? No; every schoolmaster is not a 
 public officer. Nor does the source from which it derived 
 its funds make it a public institution. Is it from the act of 
 incorporation? This he likewise discusses on principle, 
 until he asks the question : " Is it because its existence, its 
 capacities, its powers, are given by law?" Because the 
 government has given it power to take property may it in- 
 terfere to direct how and for what purposes this property 
 may be held? This he answers by asserting: "This prin- 
 ciple has never been asserted or recognized, and is supported 
 by no authority. Can it derive aid from reason?" He 
 then enters into the question, which he thinks the most diffi- 
 cult, as to who has sufficient interest in the property of the 
 College to give him a standing in court. In so doing he 
 makes the following rather interesting remark, page 643, 
 in regard to the omnipotent power of Parliament, he being 
 the only justice who has anything to say upon the subject: 
 
6 1 3] THE DARTMOUTH COLLEGE CASE 69 
 
 According to the theory of the British Constitution, their Parlia- 
 ment is omnipotent. To annul corporate rights might give a shock 
 to public opinion, which that government has chosen to avoid; but 
 its power is not questioned. Had) Parliament, immediately after the 
 emanation of this charter, and the execution of those conveyances 
 1 j t° llowed i1: > annulled) the instrument, so that the living donors 
 would nave witnessed the disappointment of their hopes, the perfidy 
 of the transaction would have been universally acknowledged. Yet, 
 then, as now, the donors would have had no interest in the property ; 
 then, as now, those who might be students would have had no rights 
 to be violated; then, as now, it might be said, that the trustees, in 
 whom the rights of all were combined, possessed no private, indi- 
 vidual, beneficial interest in the property confided to their protec- 
 tion. Yet the contract would at that time have been deemed sacred 
 by all. What has since occurred to strip it of its inviolability? 
 Circumstances have not changed. In reason, in justice, and in law, 
 it is now what it was in 1769. 
 
 He concludes this part of the argument by saying, page 
 643: "This is plainly a contract to which the donors, the 
 trustees, and the crown (to whose rights and obligations 
 New Hampshire succeeds) were the original parties. It is 
 a contract made on a valuable consideration. It is a con- 
 tract for the security and disposition of property. It is a 
 contract, on the faith of which real and personal estate has 
 been conveyed to the corporation." 
 
 " It is more than possible," he admits, " that the preserva- 
 tion of rights of this description was not particularly in the 
 view of the f ramers of the constitution." Being within the 
 words of the Constitution, however, it must be within its 
 operation likewise, "unless there be something in the literal 
 construction so obviously absurd, or mischievous, or repug- 
 nant to the general spirit of the instrument, as to justify 
 those who expound the constitution in making it an excep- 
 tion." But he finds that public policy does not demand that 
 these institutions remain subject to legislative supervision. 
 
 The charter was therefore a contract protected by the 
 United States Constitution. New Hampshire succeeded to 
 the obligations of the Crown. And here he again touches 
 upon the omnipotent power of Parliament. He says, page 
 651: 
 
 By the revolution, the duties, as well as the powers of govern- 
 ment devolved on the people of New Hampshire. It is admitted, 
 
yO OBLIGATION OF CONTRACTS [614 
 
 that among the latter was comprehended the transcendent! power of 
 parliament, as well as that of the executive department. It is too 
 clear to require the support of argument, that all contracts and 
 rights, respecting property, remain unchanged by the revolution. 
 The obligations, then, which were created by the charter of Dart- 
 mouth College, were the same in the new that they had been in the 
 old government. The power of the government was also the same. 
 A repeal of this charter at any time prior to the adoption of the 
 present constitution of the United States would have been an extra- 
 ordinary and unprecedented act of power, but one which could have 
 been contested only by the restrictions upon the legislature to be 
 found in the constitution of the State. But the constitution of the 
 United States has imposed this additional limitation-, that the legis- 
 lature of a State shall pass no act impairing the obligation of 
 contracts. 
 
 The opinion ends with a demonstration that the acts of 
 New Hampshire impaired the obligation of the contract. 
 
 The foregoing is, of course, but a bare outline of the 
 arguments, and can give only an inadequate idea of Story's 
 painstaking and exhaustive citation of authorities and of 
 the exquisitely polished and effective argument of Marshall. 
 
 Marshall argued upon principle, not upon authority, and, 
 as such, the argument is a very powerful one. The prop- 
 erty donated to this college should not belong, he feels, 
 either in justice or upon the ground of public policy, to the 
 state; it is private property. But to allow the legislature 
 to dissolve the corporation at its pleasure would work a for- 
 feiture of this property. 
 
 In spite of the force of this reasoning, it seems that the 
 question, how did the common law and the constitutional 
 practice of England regard corporations, has such a direct 
 bearing upon the issue raised in this case, even though the 
 existence and obligation of the contract was to be deter- 
 mined upon principles of natural law, that more attention 
 should have been paid to this point and a fuller citation of 
 authorities should have been given by the Chief Justice. 
 Granted, however, that the common law regarded corporate 
 franchises as private property, similar in kind to other prop- 
 erty, his attitude towards the omnipotent power of Parlia- 
 ment seems, for the reasons already explained, properly 
 taken. 
 
6lS] THE DARTMOUTH COLLEGE CASE Jl 
 
 We are brought back therefore to the question, how were 
 corporations regarded at common law? And we would 
 again call to mind the rules that the Crown could not alter 
 or repeal a grant of corporate powers, and" that such grants 
 were called franchises, which were incorporeal heredita- 
 ments, which were a species of private property. 
 
 It is said, however, that these doctrines only demonstrate 
 the existence of a contract between the grantees and the 
 Crown, and not the exisence of one between the grantees and 
 Parliament. It is true, of course, that a contract obligatory 
 upon the Crown only is proved ; yet the fact that it was 
 obligatory upon the Crown would suggest that it was not 
 considered to be at the mercy of Parliament, and this is 
 strengthened, as was said before, by the fact that franchises 
 were spoken of as property. However, it is pointed out by 
 Mr. Hill 18 that the common law writers especially recognized 
 the power of Parliament to dissolve corporations. Cor- 
 porations, he says, were political institutions as their very 
 name (body politic and corporate) shows. 
 
 Kyd and Blackstone did seem to consider it necessary to 
 assert that corporations could be dissolved by an act of Par- 
 liament. If by this they meant merely that Parliament 
 could dissolve a corporation by virtue of its omnipotence 
 solely, it does not affect our argument. If, on the other 
 hand, they meant that Parliament had a special supervisory 
 power over corporations, it strongly negatives the contract 
 theory. Blackstone's statement rather infers the one view, 
 Kyd's the other. Blackstone says : " A corporation may be 
 dissolved by act of Parliament, which is boundless in its 
 operations." 14 Kyd says, " That a corporation may be dis- 
 solved by act of Parliament is a consequence of the omnipo- 
 tence of that body in all matters of political institution." 15 
 Kyd, it may be said, is a writer who displays a good deal of 
 originality, and many of whose theories, therefore, are at 
 
 13 8 American Law Rev. 189. 
 
 11 1 Blackstone, 485. 
 
 15 2 Kyd, Corporations, p. 447. 
 
72 OBLIGATION OF CONTRACTS [6 1 6 
 
 variance with the accepted doctrines of that time. Thus he 
 maintains that a corporation is not a mere invisible and in- 
 tangible body existing only in contemplation of law, thus 
 foreshadowing the newer theories on the subject, and also 
 that it is not proper to speak of a charter as a franchise. 
 The latter position was only adopted, however, upon the 
 ground that a corporation was a person in itself, whereas a 
 franchise was a transferable privilege existing only in the 
 hands of some person — a corporation "is to a franchise 
 as a substance to its attribute " — but, he says of the right of 
 the members of the corporation to act in that capacity : " It 
 is a right of such nature that every member, separately con- 
 sidered, has a free-hold in it, and all, jointly considered, 
 have an inheritance which may go in succession. Natural 
 persons, as such, are capable of taking and holding this 
 right, which is not taken or held in their politic, but in their 
 natural capacity." 16 
 
 Besides the arguments which we have thus far consid- 
 ered, much stress was laid, in all three opinions, upon the 
 fact that the college was a private corporation. This im- 
 plied an admission that public corporations were subject to 
 governmental regulation and control, and a claim that pri- 
 vate corporations were not. If such a broad distinction 
 was recognized at common law, the case is certainly proved 
 in favor of the sanctity of the corporate rights of all private 
 corporations. 
 
 This argument, it may be noted, was not treated in ex- 
 actly the same way in all of the opinions. Marshall, for 
 instance, did not claim that this distinction was recognized 
 at common law. He simply said that the Constitution never 
 intended to prohibit the States from regulating their civil 
 institutions. He further argued that the fact of incorpora- 
 tion was immaterial in determining whether an institution 
 was or was not a public or civil one: "The character of 
 civil institutions does not grow out of their incorporation, 
 but out of the manner in which they are formed, and the 
 
 16 I Kyd, Corporations, p. 15. 
 
6 1 7] THE DARTMOUTH COLLEGE CASE 73 
 
 objects for which they are created." In fact he did not use 
 the words "public corporation," as distinguished from "pri- 
 vate corporations," at all. 
 
 Story laid the greatest stress upon the distinction, and re- 
 garded it, apparently, as a well settled rule of the common 
 law. We think, however, that he draws the distinction far 
 more sharply than the authorities justified. The only real 
 authority is the case of Phillips v. Bury," which we shall 
 shortly consider. 
 
 Justice Washington seems to state the matter with emi- 
 nent fairness. He quotes the language of Lord Holt in 
 Phillips v. Bury practically verbatim. In the original case 
 it is as follows : 
 
 And that we may the better apprehend the nature of a visitor, we 
 are to consider that there are in law two sorts of corporations aggre- 
 gate; such as are for public government, and] such as are for pri- 
 vate charity. Those that are for the public government of a town, 
 city, nursery, or the like, being for public advantage, are to be 
 governed according to the laws of the land; if they make any par- 
 ticular private laws and constitutions, the validity and justice of 
 them is examinable in the king's courts ; of these there are no par- 
 ticular private founders, and consequently no particular visitor. . . . 
 But private and particular corporations for charity, founded and 
 endowed by private persons, are subject to the private government 
 of those who erect them ; and, therefore, if there be no visitor ap- 
 pointed by the founder, the law appoints the founder and his _ heirs 
 to be visitors, who are to proceed and act according to the particular 
 laws and constitutions assigned them by the founder. 
 
 "This right of government and visitation," continues 
 Justice Washington, "arises from the property which the 
 founder had in the lands assigned to support the charity; 
 and as he is the author of the charity, the law invests him 
 with the necessary power of inspecting and regulating it. 
 The authorities are full to prove that a college is a private 
 charity, as well as a hospital, and that there is, in reality, no 
 difference between them except in degree; but they are 
 within the same reason, and both eleemosynary. These 
 corporations, civil and eleemosynary, which differ from each 
 other so especially in their nature and constitution, may 
 very well differ in matters which concern their rights and 
 
 "2 T. R. 352- 
 
74 
 
 OBLIGATION OF CONTRACTS [6 1 8 
 
 privileges, and their existence and subjection to govern- 
 mental control." He then endeavors to justify the distinc- 
 tion, but upon reason rather than upon authority. 
 
 It is noticeable that Washington is careful and conserva- 
 tive in his statement as to the doctrine of public and private 
 corporations, and there was good reason for his being so. 
 In the first place, the authority of Phillips v. Bury is condi- 
 tioned by the question which was at issue in that case. 
 There the court was dealing with the doctrine of the visi- 
 tatorial power over corporations, and the question was 
 whether the king's courts had jurisdiction to review the ac- 
 tion of the visitor of a college who had deprived the rector 
 of his office. Lord Holt held that they had no such power, 
 and distinguished the case from that of public corporations, 
 as to which the king's courts exercised a visitatorial power. 
 He was far from saying, indeed could not have said, that 
 the king could interfere in the government of these public 
 corporations, nor did he say that Parliament was the proper 
 body to supervise them. As Blackstone put it, the king was 
 the founder of civil corporations, but his visitatorial power 
 over them was only exercised through the king's courts. 
 We agree, therefore, with Mr. Hill that Phillips v. Bury 
 does not warrant the conclusion which Story drew from it, 
 and that it does not of itself furnish authority for the gen- 
 eral distinction taken by the court between public and pri- 
 vate corporations. In the next place, as Mr. Hill points 
 out, neither Hale, 18 Kyd, Blackstone, Wooddeson, Chitty 19 
 nor Stephen 20 draws any distinction between public and pri- 
 vate corporations. The classification is always into aggre- 
 gate and sole, ecclesiastical and law, civil and eleemosynary. 
 Finally, it may be pointed out that the very case most relied 
 upon to demonstrate the contractual relation between the 
 Crown and its grantees, growing out of a grant of corporate 
 powers, — the case of The King v. Passmore — involved the 
 
 18 Hale, Analysis of the Law. 
 
 19 Chitty on the Prerogative. 
 
 20 Stephen's Commentaries on the Laws of England. 
 
619] THE DARTMOUTH COLLEGE CASE 75 
 
 charter of a borough, and the language of Buller, J., here- 
 tofore quoted, was spoken of this charter. In fact, the 
 doctrines that the Crown could not interfere with a charter 
 once granted, and that charters were franchises, applied to 
 borough charters as well as to the charters of other kinds 
 of corporations. 
 
 This seems to put the reasoning of the court, at least of 
 Story and Washington, in a rather difficult position. It 
 was declared that, public corporations had no contract rights 
 in their franchises, but that private corporations did have. 
 Yet the very precedents cited to prove that the charters of 
 private corporations were regarded as private property ap- 
 ply equally to public corporations. To declare that all char- 
 ters were irrepealable and unamendable by the legislature 
 was an impossibility, in view of the established practise in 
 this country giving the legislature full control over public 
 or municipal corporations. To declare that all corporations 
 were subject to legislative control would have necessitated 
 an affirmance of the decision of the New Hampshire court. 
 
 It seems correct to say that the common law did not draw 
 the clear distinction between private and public corporations 
 which Story attributed to it; all corporations were treated 
 as of the same genus and species. But as between the two 
 conceptions of public institution and private property, it 
 may fairly be said that corporations were placed in the latter 
 class, as we have already shown in part and shall show more 
 fully hereafter. The criticism of this distinction is, there- 
 fore, not of any particular importance. 
 
 There is one more authoritative source, to which we have 
 not yet turned, and which, as we have already noted, is of 
 especial importance, in a state whose legislature is legally 
 omnipotent, in estimating the nature and sanctity of private 
 rights, namely, the legislative usage in regard to these rights. 
 
 The actual precedents which we are about to review are 
 not entirely clear. They lend themselves to conflicting in- 
 terpretations. But although this is the case, it nevertheless 
 suggests another consideration which should not be over- 
 
j6 OBLIGATION OF CONTRACTS [620 
 
 looked. The question to which we are seeking an answer 
 is: Were corporate franchises private property? In its 
 last analysis this depends, in a state where the legislature 
 is omnipotent, upon the way in which such franchises were 
 generally regarded at the time they were granted, and Jus- 
 tice McKenna's observation, in his dissenting opinion in 
 Blair v. Chicago, 21 in which he was endeavoring to deter- 
 mine the true construction of a contract made by one of the 
 States, that "whatever we may profess, it is not easy to 
 realize the conditions, thoughts and purposes of another 
 time," is peculiarly applicable to the case at hand. Mar- 
 shall, Story and Washington were much closer to the 
 thought and feeling of the common law of the eighteenth 
 century than we are to-day, and there is a reasonably strong 
 presumption that they interpreted its spirit correctly in this 
 instance. 
 
 Judge Bartlett, in his very able argument before the Court 
 of Appeals of New Hampshire, maintained that corpora- 
 tions had always been regarded as subject to regulation by 
 Parliament, as was shown, he said, by actual precedents. 22 
 Bartlett argues : 
 
 When the nation was dissatisfied with the operations of the land 
 bank and south-sea scheme, no difficulty existed for want of power 
 in parliament to take away their charters and even make the mem- 
 bers individually liable for bills. 23 In the time of Henry Sixth a 
 statute was passed by which all corporations and licenses granted 
 by that prince were declared to be void. 24 Monopolies granted by 
 charter are always abolished by parliament when thought proper. 25 
 So the fee for admission into trading companies is altered almost 
 yearly by parliament, although much against the inclination of the 
 corporators; as also the qualifications and number of members. — In 
 the 23rd of Geo. II. a corporation was established for trade to 
 Africa, with great detail in its rights, privileges, etc. and by statute 
 the fort of Senegal with all its dependencies had been vested in it ; 
 
 21 201 U. S. 401 at 501. 
 
 22 This point, so far as appears from the printed report, was barely 
 touched upon in the Supreme Court. The argument for the new 
 trustees, which was made in that court by different counsel, was, it 
 must be admitted, far inferior to the arguments presented for the 
 same side in the court below. 
 
 23 5 Rus. Mod, Eu. 14. 
 2 * Bac. Abr. Stat. F. 18. 
 2 5 1 Tm. W. M. 181. 
 
62 1 ] THE DARTMOUTH COLLEGE CASE "JJ 
 
 still in the 5th of Geo. III. parliament thought proper, on much de- 
 liberation and after much opposition, to take from their jurisdiction 
 that fort and a large extent of coast, vest it in the crown and declare 
 the trade thither free to all his majesty's subjects.— Indeed for proof 
 that parliament have controuled, altered, and even abolished corpora- 
 tions at their pleasure, it cannot be necessary to refer to particular 
 cases, while no book upon the subject can be found that does not 
 recognize the principle. 26 But if examples of a college are neces- 
 sary, among many others, that of Manchester college may be no- 
 ticed, where parliament took from a special visitor the power of 
 visitation and vested it in the crown by the 2d of Geo. II. 27 Also 
 the case of Rex & Reg. vs. St. John's College, where by statute of 
 1 W. & M. for abrogating the oaths of allegiance and supremacy, it 
 was provided that the office of head or fellow of a college in either 
 university should be vacated if the incumbent refused the new oath. 28 
 
 In this country too our provincial assemblies exercised the same 
 power and often changed the whole organization of such institu- 
 tions. — An- act was passed in Connecticut in 1723 without petition 
 or consent of the corporation "For the more full and complete estab- 
 lishment of Yale College, and for enlarging its powers and privi- 
 leges." By this act, the number of trustees was enlarged, new offices 
 created, and new regulations made with regard to the number which 
 should constitute a quorum. 29 
 
 By an order of the general court of the province of Massachusetts, 
 J673, an addition was made to the members of the corporation of 
 Harvard College, against the will of the corporation. 30 In 1784, the 
 charter of Trinity church in New York, with regard to induction 
 was repealed by the legislature. 31 To these might be added many 
 other instances, (as 3 John. Rep. 127-151, &c.) But I will here 
 leave the question as to the subjection of corporations to the gen- 
 eral legislative power with an offer to abandon the defence when 
 one unequivocal authority shall be produced by the plaintiffs to show 
 that the exercise of such power by the legislature of Great Britain 
 was ever adjudged illegal. 32 
 
 With the exception of the South Sea Company, the other 
 "bubble" companies were not corporations at all. The 
 Bubble Act passed by Parliament was for the suppression 
 of all those pretending to act as a corporation; and the 
 South Sea Company was especially excepted from its pro- 
 visions. 33 The statute of Henry VI referred to is indeed 
 mentioned in several reported cases, but an examination of 
 
 26 2 Term. Rep. 533—8 Term. Rep. 430— Doug. Rep. 637. 
 
 27 4 Term Rep. 236-237, 244; 2 Term Rep. 318. 
 
 28 4 Mod. Rep. 233. 
 
 29 2 Doug. Summary, 183. 
 
 30 1 Hutch. Hist. 159. 
 31 9 Johns. Rep. 127. 
 
 32 65 New Hampshire Rep. 573-574. 
 
 33 Carr, the Law of Corporations, p. 108 ; Select Charters of Trad- 
 ing Companies, vol. xxviii, Selden 'Society Publications, p. cxxxi. 
 
78 OBLIGATION OF CONTRACTS [622 
 
 the statutes has failed to disclose it. 3 * The act of 2 Henry 
 VI, chap, i, confirmed all existing franchises. The argu- 
 ment as to monopolies is not in point, the charter in ques- 
 tion not being a monopoly. The case of the African Com- 
 pany seems to be a misleading citation. This company 
 seemed to have no private right in the forts. 35 
 
 The case of Manchester College is not in point because 
 the act of Parliament was in this case passed to avoid the 
 difficulty of a vacancy in the office of rector caused by the 
 disqualification of the incumbent. The oath referred to 
 which was required of heads and fellows of colleges was 
 merely a general oath of allegiance such as might have been 
 required of every person. As to the precedent with regard 
 
 34 The Statute is referred to in these cases as a private statute, and 
 possibly for that reason it is not' found in the Statutes of the Realm. 
 
 35 The corporation which was divested of the forts was the suc- 
 cessor of the Royal African' Company of England, but it was a cor- 
 poration of a very peculiar nature. The act of 25 George II, chap, 
 xl, which repealed the charter of the Royal African Company, which 
 had gotten into financial difficulties, recited that that company was 
 willing to surrender its lands, forts, cannon, etc. and 1 its charter, and 
 appropriated about ninety thousand pounds towards paying the credi- 
 tors of the company and about twenty-three thousand pounds as a 
 payment to the owners of the stock. The new company was named 
 The Company of Merchants Trading in Africa. It was a non-stock 
 company. Any merchant trading in Africa could become a member 
 by paying forty shillings. It could not trade in its corporate capac- 
 ity. The managing committee of the company was subject to the 
 supervision of the government commissioners for trade who could 
 remove the committee members, and the committee had to submit 
 annual accounts to the Exchequer and to Parliament. Finally the 
 forts and settlements were given to the Company not for its own 
 proper use and behoof, but "to the interest and purpose that said 
 forts, settlements, and premises shall be employed at all times here- 
 after, only for the protection, encouragement and defense of said 
 trade." The repealing act of 5 George III, chap. xKv, recites this 
 purpose and declares that it will be better fulfilled by vesting the 
 forts in the Crown. The Royal African Company had been given 
 an exclusive grant for a certain period. "When this period ex- 
 pired," says Mr. Carr, " the House resolved that the trade ought' to 
 be free, that forts and settlements ought to be enlarged and main- 
 tained by a charge borne out of the trade, that the plantations must 
 be sufficiently supplied with negroes at reasonable rates, and that a 
 large stock was necessary. The company protested its legal right in 
 the forts under a grant from the Crown, and the threatened Bill did 
 not pass." (Selden Society, Publications, vol. xviii, Select Charters 
 of Trading Companies, Introduction, p. 48.) This shows the differ- 
 ence in nature between the two companies. 
 
623] THE DARTMOUTH COLLEGE CASE 79 
 
 to Yale College, we have not examined the reference and 
 are not able to comment, except to say that the college is 
 not alleged to have opposed the amendment. A reference 
 to Hutchinson's History of Massachusetts does not disclose 
 that the amendment to the charter of Harvard College was 
 made against the will of the corporation, nor does this ele- 
 ment appear in regard to the amendment of the charter of 
 Trinity Church. 
 
 Mr. Sullivan, arguing for the same side, gave the follow- 
 ing instances of legislative interferences with chartered 
 rights : 
 
 The legislatures of many of the states, perhaps of all of them, 
 have taken from private corporations some of their rights and privi- 
 leges, when the welfare of the community has required it. In this 
 state it has often been done. — The New Hampshire Bank made some 
 of its bills payable in Philadelphia. The General Court passed an 
 act declaring that after a certain day " it should be unlawful for any 
 Banking company in this state, by themselves, their directors or 
 agents to issue any bank bill or bank note payable at any other place, 
 than at the Bank from which it is issued." 36 Every Banking com- 
 pany that acted in violation of this law, was subjected to a penalty 
 of one hundred dollars for each offence. The New Hampshire Bank 
 had a right, by its charter, to make its bills payable in Philadelphia, 
 or New York, or at any place whatever. The act prohibiting this, 
 was an alteration of its charter, as much as if it had been entitled, 
 an act to alter and amend the charter of the New Hampshire Bank. 
 Yet it has never been suggested, that the legislature had not power, 
 by the constitution, to pass the law. In many other instances, the 
 General' Court has deprived banks of rights conferred on them, and 
 in effect, altered their charters. By an act passed in June, i8o7, 3r 
 Banks were forbidden to issue bills, which were not payable on de- 
 mand and to bearer ; or which were subj ect to any condition. Every 
 Bank, existing in the state at the time when this law was passed, had 
 a right by its charter to make its bills payable at a future day — to 
 order — and subject to conditions. The law, depriving Banks of 
 these rights, has never been considered as repugnant to the consti- 
 tution. It has not unfrequently happened that the legislatures of 
 those states, in which Banks have been established, have prohibited 
 their passing bills under certain denominations. Thus, the General 
 Court of Massachusetts in June, 1799, made a law, that no Bank, 
 incorporated by the legislature of that Commonwealth, except the 
 Nantucket Bank, should issue any notes for a less sum than five 
 dollars. 38 By their charters they had a right to issue bills of any 
 denomination. This law deprived them of that right. 
 
 The General Court have not only imposed new duties on Banks, 
 
 38 State Laws, 283. 
 
 37 Ibid. 
 
 38 Mass. Laws, 884. 
 
80 OBLIGATION OF CONTRACTS [624 
 
 but have added heavy penalties, to enforce the performance of them. 
 By an act, passed in June, 1814, the directors of the several Banks 
 in this state are obliged to make returns of the situation of their 
 respective Banks, annually, to the Governor and Council ; and in 
 case of neglect or refusal, the Banks are subjected to a penalty of 
 one thousand dollars. 
 
 The General Court of Massachusetts passed a law, by which all 
 the Banks within the Commonwealth were subjected to a penalty of 
 ' two per cent, a month, on the amount of those of their bills, which 
 should not be paid, when presented for payment. An action was 
 commenced against the Penobscot Bank to recover the amount of 
 certain bills, presented for payment, but which were not paid; and 
 also to recover two per cent, a month on that amount. It was con- 
 tended on the part of the Bank, that the law was unconstitutional. 
 But the Court recognized- the authority of the legislature to make it. 
 It was, say the Court, " A duty incumbent on the legislature to pass 
 the law, and this the rather, as these corporations derive all their 
 powers from legislative grants." 39 In this case the Court recognizes 
 the authority of the legislature, to superintend corporations of a pri- 
 vate nature, and to impose penalties upon them for not performing 
 those duties, the neglect of which produces mischief to society.— 
 They hold, that as these corporations derive all their powers from 
 legislative grants, it is not only the right, but the duty of the legis- 
 lature to see that the Commonwealth receives no detriment. 40 
 
 Practically all of these acts were general acts regulating 
 particular phases of the banking business, and none of them 
 necessarily impaired any charter provision, nor is it at all 
 likely that they did so. Again, if any of them did impair 
 charter grants, it is not apparent that they were ever brought 
 before and sustained by the courts. 
 
 Angell and Ames, in their treatise on private corporations, 
 cite the case of the dissolution of the Knights Templars in 
 the reign of Edward II. It appears from Kyd, however, 
 that this body was incorporated by the Pope and had been 
 dissolved by one of his successors some years before the act 
 of 17 Edward II was passed judging that the Templars 
 were well dissolved and conferring the property of the order 
 upon the Knights of St. John. 41 
 
 A precedent which cannot be evaded, however, is the 
 case of the dissolution of the monasteries in the time of 
 Henry VIII, and the subsequent confiscation of their prop- 
 erty. The case was apparently considered a very excep- 
 
 39 8 Mass. Rep. 445. ~ 
 
 40 56 New Hampshire Reports, pp. 506, 507, 508. 
 41 2 Kyd, Corporations, p. 446. 
 
625] THE DARTMOUTH COLLEGE CASE 8 I 
 
 I 
 
 tional one, and could hardly have been regarded as furnish- 
 ing a precedent for ordinary times. 42 
 
 A second case of interference was the passage of the 
 " Corporation Act " in the reign of Charles II. This act 
 "enjoined all magistrates and persons bearing offices of trust 
 in corporations to swear that they believed it unlawful, on 
 any pretense whatever to take arms against the king, and 
 that they abhorred the traitorous position of bearing arms 
 by his authority against his person or against those that are 
 commissioned by him. They were also to renounce all 
 obligation arising out of the oath called the solemn league 
 and covenant; in case of refusal to be immediately removed 
 from office. Those elected in the future were, in addition 
 to the same oaths, to have received the sacrament within 
 one year before their election according to the rites of the 
 English church." 43 Yet it is by no means apparent that these 
 two cases of Parliamentary interference sufficed to estab- 
 
 42 Thus Hallarn writes of the confiscation of the property of the 
 monasteries : " A few more were afterwards extinguished through 
 his (Woolsey's) instigation; and thus the prejudice against inter- 
 ference with this species of property was somewhat worn off, and 
 men's minds gradually prepared for the sweeping confiscations of 
 Cromwell. The king indeed was abundantly willing to replenish his 
 exchequer by violent means, and to avenge himself on those who 
 gainsayed his supremacy; but it was this able statesman who, 
 prompted both by the natural appetite of ministers for the subject's 
 money, and, as has been generally surmised, by a secret partiality 
 towards the Reformation, devised and carried on with complete 
 success, if not with the utmost produce, a measure of no inconsid- 
 erable hasard and difficulty. For such it surely was, under a system 
 of government which rested so much on antiquity, and in spite of 
 the peculiar sacredness which the English attach to all freehold 
 property, to annihilate so many prescriptive baronial tenures, the 
 possessors whereof composed more than a third part of the house 
 of lords, and to subject so many estates which the law had rendered 
 inalienable,, to maxims of escheat and forfeiture that had never been 
 help applicable to their tenure. But for this purpose it was neces- 
 sary, by exposing the gross corruptions of monasteries, both to 
 intimidate the regular clergy, and to excite popular indignation 
 against them." Hallam, Constitutional History of England, vol. i, 
 
 pp. 70-71. 
 
 43 Hallam, Constitutional History of England, vol. ii, pp. 27-^28. 
 The object of the act was to oust the dissenters from the corpora- 
 tion and to place the royalists in control. 
 
 6 
 
82 OBLIGATION OF CONTRACTS [626 
 
 lish the doctrine that corporations had no private rights in 
 their franchises. 
 
 There is a rather interesting passage to be found in 
 Browne's Civil and Admiralty Law, published in 1802. 
 Browne says: "Corporations were dissolved at Rome by 
 the prince, by death, by surrender, by forfeiture. So with 
 us, corporations may be dissolved by act of Parliament, 
 whose power is said to know no limits, but is on them very 
 sparingly and cautiously exercised." 44 
 
 Turning to a recent writer upon the origin and develop- 
 ment of corporations, we find the author remarking that 
 " the body of principles apparently necessary for the regu- 
 lation of their relations have been attached to the main body 
 of English Law by means of fictions." For this reason, he 
 explains, the historian and jurist have always had difficulty 
 in knowing how to treat them : " It has always been a ques- 
 tion whether they were public or private in nature, or 
 whether they were divisions of the state or associations of 
 citizens — a matter of importance in technical analysis." 45 
 Further he says : 
 
 The maturity of the conception of corporations in the English Law 
 was undoubtedly facilitated by the development of the corporations 
 themselves. It was not entirely fortuitous that the conception of 
 corporations as artificial persons was nearly coincidental with the 
 completion of the process of " shrinkage " of corporations from 
 entire communities to smaller select bodies within them. The close 
 bodies in guilds and municipalities were crystallizing during the 
 fourteenth and fifteenth centuries. It was when they ceased to 
 derive their life from the communities themselves and appeared to 
 enjoy an existence independent of them, not in harmony with them 
 but rather in opposition and contrast to them, that their distinct per- 
 sonality emerged. Moreover, the development facilitated the sub- 
 stitution of the private for the public view that might be expected 
 to be taken of the communities. The close bodies as well as the 
 rest of the community regarded the powers reposed in them largely 
 as sources of private advantage; the state was accordingly much 
 more readily inclined to assign them to the department of private 
 law than to that of public law. The nearer they approached the 
 plane of private persons in their activity, the easier it was for the 
 jurist's imagination to impute personality to them. 48 
 
 44 Browne, Civil and Admiralty Law, p. 148. 
 
 45 Davis, Origin and Development of Corporations, vol. ii, p. 239. 
 49 Ibid., p. 294. 
 
627] THE DARTMOUTH COLLEGE CASE 83 
 
 This, it may be observed, was spoken concerning the bor- 
 oughs. The later history of the boroughs and the state of 
 corruption into which they fell is well known. The borough 
 franchise must indeed have appeared to be private property 
 when it was possessed by a close, self -perpetuating body of 
 men within the larger community which constituted the 
 borough itself. The struggles of the boroughs against the 
 attacks on their charters made by Charles II and James II 
 must also have tended to intensify feeling of proprietorship 
 among the possessors of the borough franchises. 
 
 There is perhaps another aspect of the borough fran- 
 chises which affords better evidence of their proprietary 
 nature. Even before the corporate idea was clearly formu- 
 lated the boroughs possessed many franchises obtained 
 chiefly by charters from the king. These franchises were 
 the chief earmarks of the borough and they were largely 
 political in their nature — the right to their own court, to the 
 firma burgi, to be free from tolls, etc. But at the time of 
 which we are speaking, society was based upon the feudal 
 system. The land was full of franchises. Political and 
 proprietary rights were everywhere commingled, but com- 
 mingled in such a way that the proprietary side was by far 
 the more conspicuous. These feudal privileges of the bor- 
 oughs gave the king a good deal of control over them, yet 
 even the king did not claim the right arbitrarily to despoil 
 them of their privileges. And the king in those times was 
 clothed to a much greater degree with the sovereign power 
 of the state than he later became, when the power of Par- 
 liament expanded to his detriment. 47 After describing the 
 various franchises of the boroughs, Pollock and Maitland 
 continue : " Such in brief were the main franchises that the 
 borough enjoyed, and these franchises, some or all of them, 
 made the borough to be a borough. This gave the king a 
 tight hold upon the townsfolk. The group of burgesses 
 Was a franchise-holder in a land full of franchise-holders, 
 and had to submit to the rules which governed the other 
 
 47 1 Pollock v. Maitland's History of English Law, 2d ed., p. 668. 
 
84 OBLIGATION OF CONTRACTS £628 
 
 possessors of royal rights. It might lose its privileges by- 
 abuse or non-use ; it might lose them by not claiming them 
 before the justices in eyre, though in this case a moderate 
 fine would procure their restoration." 
 
 Tracing the development of the corporate idea, Pollock 
 1 and Maitland note the change of the boroughs into some- 
 thing bearing the resemblance of a gild — the phase of devel- 
 opment upon which Mr. Davis laid stress in the passage we 
 have quoted above. It is interesting to note one of the 
 causes which these writers give for this change. " In the 
 great boroughs," they say, " large sums of money were sub- 
 scribed in order that privileges might be bought from the 
 king, and the subscribing townsfolk naturally conceived that 
 they purchased those privileges for themselves. Some defi- 
 nition of the privileged, the f ranchised, body was necessary, 
 and yet in the great boroughs that body could not assume 
 any of the old accustomed forms. 48 
 
 It would seem that it was this feeling of the proprietary 
 nature of the borough franchises which preserved the bor- 
 oughs untouched until long after their usefulness had ceased 
 and, indeed, until long after their corruption was a matter 
 of general recognition, for it was not until 1835, sixteen 
 years after the decision in the Dartmouth College case, that 
 their reform was actually accomplished. 
 
 There are some who have commented upon the College 
 case who have used the argument that the court decided the 
 controversy upon musty old English precedents rather than 
 upon the liberal principles which inspired the common law 
 upon its transplantation to this country. They claim that 
 the existence of special privileges of any kind was contrary 
 to the genius of our laws. In so arguing they admit, of 
 course, the correctness of the decision, judged by English 
 precedents. Judge Corwain, of the Supreme Court of 
 Ohio, in an opinion delivered in the well known case of 
 Knoup v. Piqua Bank, 49 takes this position, and in so doing 
 
 48 Ibid,, p. 670. 
 
 49 Decided in 1850; 1 Ohio St. 603, 616. 
 
629] THE DARTMOUTH COLLEGE CASE 85 
 
 calls attention to the proprietary nature in which offices 
 were long regarded in England. He says : 
 
 It is plain that many things are the subject of a franchise, in Eng- 
 land, which are not such' in this country. The best illustration of 
 this perhaps, will appear by comparing the nature of an office in 
 England, and an office in America. An office, like a franchise, is a 
 royal gift. It is considered property, in England. Some offices are 
 estates in fee simple, or fee tail; some estates for life, and some 
 only estates at will. Cruise's Digest, Volume iii, Title 25. There 
 are some offices, also, which are said to be estates for a term of 
 years, or for one year. And ministerial offices may be in reversion, 
 or to commence at a future period. Some offices are even assignable 
 by deed. But, in America, an officer is only a public agent or trus- 
 tee, and has no proprietorship, or right of property, in his office. 
 
 Another important authority which has been a good deal 
 cited — it is one upon which Mr. Hill, in the article hereto- 
 fore referred to, lays much stress — is the argument which 
 Edmund Burke made in the year 1783 upon Mr. Fox's bill 
 to repeal the charter of the East India Company. The bill 
 was not passed and the charter therefore was not repealed, 
 and so was in full force at the time the College case was 
 decided. Mr. Hill contends, however, that the failure of 
 this bill to pass was not in the least due to the respect enter- 
 tained for the chartered rights of the company, and he 
 maintains that the argument of Burke correctly represents 
 the position of corporations at that time. Mr. Hill's quota- 
 tion is a long one, but it necessitates our making a still 
 longer one, for the reason that it seems that there is a quali- 
 fying and underlying conservatism in this argument of 
 Burke's which Mr. Hill does not see, and which the portions 
 which we have added serve to emphasize. 
 
 Webster, in his argument before the Supreme Court, had 
 differentiated the case of the East India Company upon the 
 grounds that it had been granted the widest sort of political 
 dominion and that it had grossly abused its privileges, and 
 these distinctions were evidently suggested by Burke's 
 speech. 
 
 Burke argued as follows : " As to the first of these objec- 
 tions ; I must observe that the phrase of the chartered rights 
 of men is full of affectation; and very unusual in the dis- 
 
86 OBLIGATION OF CONTRACTS [63O 
 
 cussion of privileges conferred by charters of the present 
 description. But it is not difficult to discover what end that 
 ambiguous mode of expression so often reiterated is meant 
 to answer." He proceeds then to speak of the natural 
 rights of man. These are indeed sacred things. If they 
 are further affirmed and declared by express covenants, they 
 are in a still better condition ; " they partake not only of the 
 sanctity of the object so secured, but of that public faith 
 itself which secures an object of such importance." And 
 here he refers to Magna Charta and similar documents. 
 " These charters," he continues, " have made the very name 
 of the charter dear to every Englishman. But, sir, there 
 may be, and there are charters, not only different in their 
 nature, but formed on principles the very reverse of those 
 of the great charter. Of this kind is the charter of the East 
 India Company. Magna charta is a charter to restrain 
 power, and to destroy monopoly : the East India charter is 
 a charter to establish monopoly and to create power. Po- 
 litical power and commercial monopoly are not the rights 
 of man ; and the rights to them derived from charters, it is 
 fallacious and sophistical to call the chartered rights of 
 men. These chartered rights (to speak of such charters 
 and their effects in terms of the greatest possible modera- 
 tion) do at least suspend the natural rights of mankind at 
 large; and in their very frame and constitution are liable 
 to fall into a direct violation of them." 
 
 It is a charter of the latter description (that is to say a charter 
 of power and monopoly) which is affected by the bill before you. 
 The bill, Sir, does, without question, affect it ; it does affect it essen- 
 tially and substantially. But having stated to you of what descrip- 
 tion the chartered rights are which this bill touches, I feel no diffi- 
 culty at all in acknowledging the existence of those chartered rights 
 in their fullest extent. They belong to the company in the surest 
 manner, and they are secured to that body by every sort of public 
 sanction. They are stamped by the faith of the king; they are 
 stamped by the faith of parliament ; they have been bought for money ; 
 for money honestly and fairly paid; they have been bought for 
 valuable consideration, over and over again. 
 
 I therefore freely admit to the East India Company their claim 
 to exclude their fellow subjects from the commerce of half the 
 globe. I admit their claim to administer an annual territorial reve- 
 
63 1 ] THE DARTMOUTH COLLEGE CASE 8? 
 
 nue of seven millions sterling; to command an army of sixty thou- 
 sand men; and to dispose (under the control of a sovereign, imperial 
 discretion, and with the due observance of the natural and local law) 
 of the hves and fortunes of thirty millions of their fellow creatures. 
 All this they possess by charter, and by acts of parliament (in my 
 opinion) without a shadow of controversy. 
 
 Those who carry the rights and claims of the company the furthest, 
 do not contend for more than this ; and all this I freely grant. But 
 granting all this, they must grant to me, in my turn, that all polit- 
 ical power which is set over men, and that all privilege claimed or 
 exercised in exclusion of them, being wholly artificial, and for so 
 much a derogation from the national equality of mankind at large, 
 ought to be some way or other exercised ultimately for their benefit. 
 
 If this be true with regard to every species of political dominion, 
 and every species of commercial privilege, none of which can be 
 original, self-derived rights, or grants for the mere private benefits 
 of the holders, then such rights, or privileges, or whatever else you 
 choose to call them, are all in the strictest sense a trust; and it is 
 of the very essence of every trust to be rendered accountable, and 
 even totally to cease, when it substantially varies from the purposes 
 for which alone it could have a lawful existence. 
 
 This, I conceive, sir, to be true of trusts of power vested in the 
 highest hands, and of such as seem to hold of no human creature. 
 But about the application of this principle to subordinate, derivative 
 trusts, I do not see how a controversy can be maintained. To whom 
 then would I make the East India Company accountable? Why to 
 parliament, to be sure, to parliament from which their trust was 
 derived, to parliament, which alone is capable of comprehending the 
 magnitude of its object, and its abuse, and alone capable of an 
 effective remedy. The very charter which is held out to exclude 
 parliament from correcting malversation with regard to the high 
 trust vested in the company is the very thing which at once gives a 
 title and imposes a duty on us to interfere with effect wherever 
 power and authority originating from ourselves are perverted from 
 their purposes, and become instrument's of wrong and\ violence. 
 That the power notoriously, grossly abused has been bought from 
 us is very certain. But this circumstance, which is urged against 
 the bill, becomes an additional motive for our interference; lest we 
 should be thought to have sold the blood of millions of men for the 
 base consideration of money; we sold, I admit, all that we had to 
 sell, that i9, our authority, not our control. We had not a right 
 to make a market of our duties. 
 
 I ground myself therefore on this principle — that if the abuse is 
 proved, the contract is broken ; and we reenter into all our rights ; 
 that is, into the exercise of all our duties. 
 
 Again he says : 
 
 The strong admission I have made of the company's rights (I am 
 conscious of it) binds me to do a great deal. I do not presume to 
 condemn those who argue a priori, against the propriety of leaving 
 such extensive political powers in the hands of a company of mer- 
 chants. I know much is, and much more may be, said against such 
 a system. But with my particular ideas and sentiments, I cannot 
 go that way to work. I feel an insuperable reluctance in giving my 
 
88 OBLIGATION OF CONTRACTS [632 
 
 hand to destroy any established institution of government, upon a 
 theory, however plausible it may be. ... To justify us in taking the 
 administration of their affairs out of the hands of the East India 
 Company, on my principles, I must see several conditions. 1st, The 
 object affected iby the abuse should be great and important. 2nd, 
 The abuse affecting thia great object ought to be a great abuse. 3rd, 
 It ought to be habitual and not accidental. 4th, It ought to be 
 utterly incurable in the body as it now stands constituted. All this 
 ought to be made as visible to me as the light of the sun before I 
 should strike off an atom of their charter. 60 
 
 It thus seems that Burke was far from asserting that the 
 chartered rights of the company were held at the good 
 pleasure of Parliament. When he says : " I ground myself 
 on this principle — that if the abuse is proved, the contract 
 is broken," he admits very plainly the existence of a con- 
 tract between Parliament and the company. If it is con- 
 tended that this contract cannot, under his theory, be a 
 contract upon the principles of municipal law, it neverthe- 
 less completely meets the requirements for a contract upon 
 the principles of natural \law. Upon his theory, it is true, 
 Parliament, contrary to the rule laid down for the Crown, 
 would have the right to repeal its grants when they were 
 abused without having to appeal to the courts to enforce a 
 forfeiture. Such a doctrine was not, however, incompati- 
 ble with the existence of a contract upon principles of nat- 
 ural law. Moreover it could not, of course, have been 
 argued that Parliament would have to obtain the sanction 
 of the courts before exercising its rights. At all events, 
 Burke seems to recognize enough of a contract to warrant 
 applying the prohibition of the " contracts clause " to it. 51 
 
 50 Burke's Works (Boston, 1826), vol. ii, p. 266 ff. 
 
 51 We might note that, although the generally accepted doctrine 
 in this country seems to be that a State must apply to the courts to 
 have a forfeiture of chartered franchises enforced, it is difficult' to 
 see why a legislative act repealing misused or non-used franchises 
 should be denied effect by the courts, if the fact of misuser or non- 
 user be shown ; that is, it is difficult to see why the state should be 
 Compelled to go through the proceeding of judicially declaring a 
 forfeiture, if a cause for forefeiture actually exists. In the case of 
 Given v. Wright, 117 U. S. 648, the court said that they could see 
 no reason why the government could not take the benefit of the pre- 
 sumption of the surrender of a franchise by its non-user for a period 
 of say thirty years without taking judicial proceedings for forefeit- 
 ing the same. The preponderance of the evidence seems to us to be 
 
^33] THE DARTMOUTH COLLEGE CASE 89 
 
 But we have not entirely exhausted the authorities which 
 the court had, or might have had, to rely upon, and we wish 
 to complete the list in order to show just what was the 
 strength of the court's position. 
 
 In 1785 James Wilson published an argument, which he 
 had made as counsel, in opposition to the repeal by the legis- 
 lature of Pennsylvania of the charter which a prior legisla- 
 ture had granted to the Bank of North America. Although 
 we have already quoted the argument at length, it sets out 
 so clearly and at such an early day the doctrine that a 
 charter was a contract that it seems worth while to quote 
 again some of the pertinent language. After remarking 
 that generally speaking a state must have the power to re- 
 peal its own laws, he says : 
 
 Very different is the case with regard to a law by which the state 
 grants privileges to a congregation or other society. Here two 
 parties are established, and two distinct interests subsist. Rules of 
 justice, of faith, and of honor must, therefore, be established be- 
 tween them : for if interest alone is to be viewed, the congregation 
 or society must always be at the mercy of the community. . . . For 
 these reasons, whenever the objects and makers of a instrument, 
 passed under the form of a law, are not the same, it is to be con- 
 sidered as a compact and interpreted according to the rules and 
 maxims by which compacts are governed. 52 
 
 And James Wilson, the reputed author of the "contracts 
 clause," was considered one of the most learned members 
 of the Constitutional Convention, and was later a member of 
 the Supreme Court of the United States. 
 
 Again, in an early Massachusetts case, the following 
 statement was made by Chief Justice Parsons : " We are 
 also satisfied that the rights legally vested in this, or in any 
 
 very strongly in favor of the view that the common law regarded 
 corporate franchises as private property rights. And therefore we 
 think it may fairly be said that a charter involved a contract not to 
 repeal it, 'both upon common law principles and upon natural law 
 principles. And if the common law, or the constitutional practice 
 of the period under discussion, did distinguish between public and 
 private corporations, and between the security with which they held 
 their privileges, we think it safe to say that the age which Dicey 
 calls that of " Blackstonian optimism" and "Eldonian toryism" 
 would not have repudiated the doctrines as to private corporations 
 which Marshall, Story and Washington attributed to it. 
 62 Wilson's Works, ed. Adrews, p. 565- 
 
90 
 
 OBLIGATION OF CONTRACTS [634 
 
 corporation, cannot be controlled or destroyed by any sub- 
 sequent statute, unless a power for that purpose be reserved 
 to the legislature in the act of incorporation." 53 
 
 In the case of Terrett v. Taylor, 54 decided in 1815, Justice 
 Story delivered an opinion in which he said that the state 
 legislatures had no authority to repeal the charters of pri- 
 vate corporations, although the same could not be said of 
 public corporations. The facts of the case are peculiarly 
 complicated, and we shall therefore not examine them here. 
 It will suffice to say that it is a very close question whether 
 the remarks of Story concerning the power of the legisla- 
 ture over corporate charters were or were not obiter, but 
 the probabilities are that they were not. The case came up 
 from the District of Columbia and involved the question of 
 the effects of certain acts of the legislature of Virginia. 
 Story, therefore, was not confined to the " contracts clause " 
 as the sole basis for the decision. Story said : 
 
 How far the statute of 1786, ch. 12, repealing the statute of 1784, 
 ch. 88, incorporating the episcopal churches, and the subsequent stat- 
 utes in furtherance thereof of 1788, ch. 47, and ch. 53, were consistent 
 with' the principles of civil right or the constitution of Virginia, is a 
 subject of much delicacy, and perhaps not without difficulty^ It is 
 observable, however, that they reserve to the churches all their cor- 
 porate property, and authorize the appointment of trustees to man- 
 age the same. A private corporation created by the legislature may 
 lose its franchise by a misuser or a nonuser of them; and they may 
 be assumed by the government under a judicial judgment upon a 
 quo warranto to ascertain and enforce the forfeiture. — This is the 
 common law of the land andl is a tacit condition annexed to the 
 creation of every such corporation. Upon a change of government, 
 too, it may be admitted that such exclusive privileges attached to a 
 private corporation as are inconsistent with the new government 
 may be abolished. In respect, also, to public corporations, which 
 exist only for public purposes, such as counties, towns, cities, etc., 
 the legislature may, under proper limitations, have a right to change, 
 modify, enlarge or restrain them, securing, however, the property 
 for the uses of those for whom and at whose expense it was origi- 
 nally purchased. But that the legislature can repeal statutes creating 
 private corporations, or confirming to them property already ac- 
 quired under the faith of previous laws, and by such repeal can vest 
 the property of such corporations exclusively in the state, or dispose 
 of the same to such purposes as they may please, without the con- 
 sent or default of the corporators, we are not prepared to admit; 
 and we think ourselves standing upon the principles of natural jus- 
 
 53 Wales v. Stetson, 2 Mass. 134 at 156. 1806. 
 64 9 Cranch, 43. 
 
635] THE DARTMOUTH COLLEGE CASE 9 1 
 
 face, upon the fundamental laws of every free government, upon the 
 spirit and the letter of the constitution of the United States, and 
 upon the decisions of most respectable judicial tribunals in resisting 
 such a doctrine. 55 
 
 Finally, it may be noticed that the Court of Appeals of 
 New Hampshire, in deciding in favor of the new trustees, 
 rested their holding solely upon the ground that colleges 
 were public corporations, and admitted that the charter of 
 a private corporation was inviolable. Again, the counsel 
 for the new trustees, in their arguments before the New 
 Hampshire court, laid far more stress upon the point that 
 the corporation was a public one than upon the point that 
 all corporations were subject to governmental control, and 
 in the Supreme Court, counsel for the new trustees relied 
 exclusively upon the former argument. 56 
 
 There remains, therefore, to be considered the grounds 
 upon which it has been contended that Dartmouth College 
 should have been classed as a public corporation. The 
 argument of the Supreme Court of New Hampshire upon 
 this point is based almost entirely upon the proposition that 
 the trustees of the college had no private interest which they 
 could assert — surely a most narrow and technical method 
 of reasoning. But the underlying idea of the opinion rather 
 clearly appears to be that when property has been given to 
 found institutions such as colleges and hospitals, the donors 
 loose all private interest in the property, which becomes 
 subject to the legal control of the state. Although disclaim- 
 ing that they base their decision in the slightest degree upon 
 expediency, the court devote the last two pages of the opin- 
 ion to a justification of their position from the standpoint 
 of public policy. And, indeed, the argument is very forci- 
 
 55 9 Cranch, 51-52. 
 
 66 The New Hampshire court said: " It becomes, then, unneces- 
 sary to decide in this case, how far the legislature possesses a con- 
 stitutional right to interfere in the concerns of private corporations. 
 It may not, however, be improper to remark, that it would be diffi- 
 cult to find a satisfactory reason why the property and immunities 
 of such corporations should not stand, in this respect, on the same 
 ground with the property and immunities of individuals." See 65 
 N. H. Reps. 631. 
 
92 
 
 OBLIGATION OF CONTRACTS [636 
 
 bly put, and in a style which Marshall himself could hardly 
 have improved upon. 
 
 But the court had no precedents to cite upon the point 
 that the trustees had no rights which they could assert in a 
 court of law. After all, that really depended upon the 
 question whether any one had a beneficial interest in the 
 property which they could have asserted, for, if there was 
 any such beneficiary, surely the trustees could have asserted 
 his rights for him. 
 
 On this larger question, also, we think it rather clear that 
 the spirit of the common law was more truly interpreted by 
 trie Supreme Court of the United States than by that of the 
 State. The state court's abstract reasoning to the effect 
 that property given for these public purposes becomes essen- 
 tially public property strikes one with some force in these 
 times, but the court failed to cite any authorities to sustain 
 its contention. Although the common law did distinguish 
 between public and private charities, basing the distinction 
 upon the inclusiveness or exclusiveness of the designation 
 of the cestuis qui trust, it continually spoke, as we have seen 
 from Phillips v. Bury, and as appears from other cases, of 
 colleges and hospitals as private eleemosynary corporations, 
 and the whole law as to founders and their visitatorial power 
 is strong evidence that these corporations, whatever others 
 may have been, were regarded as private in their nature. 
 Then again, as Chief Justice Doe of New Hampshire has 
 pointed out, this doctrine would have to be applied to all 
 charitable trusts, whether they are incorporated or not ; and 
 yet it has never been supposed that the legislature could 
 appoint trustees of its own to administer charitable trusts 
 or associate them with existing trustees, nor have our legis- 
 latures ever undertaken the administration of charitable 
 trusts. This has always been left to the judiciary. 57 
 
 It is arguable that public educational institutions do essen- 
 tially belong to the public and should be subject to public 
 control, and the opinion of the New Hampshire court is an 
 
 67 Harv. Law Rev. 169-170. 
 
637] THE DARTMOUTH COLLEGE CASE 
 
 93 
 
 excellent example of such an argument; but nothing is 
 plainer than that this conception has not yet been accepted 
 by the law of this country. 
 
 The contention has been made that Dartmouth College 
 was essentially a university, and that universities, as dis- 
 tinct from colleges, were public corporations. Oxford and 
 Cambridge, it is true, were regarded as somewhat different 
 in their nature from the colleges of which they were com- 
 posed. They were civil corporations, whereas the colleges 
 were eleemosynary. They enjoyed certain political powers, 
 including the right to representation in Parliament, but as 
 has been seen, even they can not be regarded as public cor- 
 porations at common law. Also, it would hardly have been 
 proper to class Dartmouth College as a university merely 
 because it had been given the power of awarding degrees. 
 It had none of the other powers of universities. The 
 clauses in its charter giving its officers the same powers as 
 similar officers in the universities of England can hardly 
 afford the foundation for any inferences as to its character 
 as a university when it was distinctly designated in the char- 
 ter as a college. This argument is not considered by any 
 of the justices of the Supreme Court in their opinions. 
 
 We have endeavored to show, in the first part of this 
 chapter, that, by the weight of authority then existing, the 
 ruling of Fletcher v. Peck that a grant was a contract in- 
 volving an obligation was a proper ruling. We have en- 
 deavored to show, in the second part of the chapter, that 
 the ruling of Fletcher v. Peck that a state was bound by its 
 grants, was also consonant with the generally accepted doc- 
 trines of that day. We believe that these conclusions are 
 fairly supported by the evidence, but, in any event, these 
 rulings, whose validity we have been discussing, had been 
 fixed in our law by Fletcher v. Peck and were hence estab- 
 lished principles by the time that Dartmouth College v. 
 Woodward came up for decision. If grants by a state were 
 contracts, all that needed to be done in the College case, as 
 Story pointed out, was to find out whether a charter was 
 
94 
 
 OBLIGATION OF CONTRACTS [638 
 
 considered as granting a private, property right. We have 
 just seen that there was a preponderating weight of author- 
 ity to support the affirmative of this proposition. 
 
 There was also the matter of the omnipotent power of 
 Parliament to be considered. It would not seem that the 
 mere existence of an omnipotent power should have or did 
 bother the counsel for the college. It was given almost no 
 discussion in either court. Parliamentary omnipotence could 
 repeal a land grant or confiscate a man's property, yet these 
 proceedings would have been condemned as unlawful and 
 unconstitutional. But the question as to what extent this 
 Parliamentary omnipotence actually was used in the case 
 of corporations did have a very important bearing upon the 
 nature of corporate franchises, that is, whether they were 
 private property. The second question therefore tends to 
 merge itself into the first. All of which we have set out 
 more fully above. 
 
 We do not in the least consider that the case should have 
 been regarded by the counsel for the College as one which 
 they were sure to win. While we say that the preponder- 
 ance of authority was in their favor, we think that this fact 
 would not militate against a feeling on the part of counsel 
 for the College of doubt as to the outcome, and a desire on 
 their part to bring as many questions as possible before the 
 Supreme Court. There are few new questions of law, com- 
 ing up to be decided for the first time, in which, if there is a 
 possibility of two views being taken, counsel are not justified 
 in being doubtful as to the outcome, and especially if the 
 case, like the present one, wears somewhat of a political 
 aspect. 
 
 Mr. Shirley, in his book entitled the Dartmouth College 
 Causes, has come to conclusions somewhat at variance with 
 those which we have reached. We wish, therefore, to con- 
 sider a few of his principal conclusions and the arguments 
 by which they are supported. 58 Mr. Shirley's argument is 
 
 58 Mr. Shirley's book is very diffuse. It is argumentative almost 
 from cover to cover. A number of facts, statements and cases are 
 
639] 
 
 THE DARTMOUTH COLLEGE CASE 95 
 
 well summarized in Lodge's Life of Daniel Webster, from 
 which we shall quote. Lodge's conclusions and criticisms 
 on the case may be found in the following passages : 
 
 It now becomes necessary to state briefly the points at issue in this 
 case, which were all fully argued by the counsel on both sides. Mr. 
 Mason s brief, which really covered the whole case, was that the 
 
 ■♦I- J?* Le S lsIature were not obligatory, 1, because they were not 
 within the general scope of legislative power; 2, because they vio- 
 lated certain provisions of the Constitution of New Hampshire re- 
 straining legislative power; 3, because they violated the Constitution 
 ot the United States. In Farrar's report of Mason's speech, twenty- 
 three Pages are devoted to the first point, eight to the second, and 
 six to the third. In other words, the third point, involving the great 
 constitutional doctrine on which the case was finally decided at 
 Washington the doctrine that the Legislature, by its acts, had im- 
 paired the obligation of a contract, was passed over lightly. In so 
 ?? ,n ^',7 v Mason was n °t alone. Neither he nor Judge Smith nor 
 Mr. Webster nor the court nor the counsel on the other side, at- 
 tached much importance to this point. Curiously enough, the theory 
 had been originated many years before, by Wheelock himself, at a 
 tune when he expected that the minority of the trustees would in- 
 voke the aid of the Legislature against him, and his idea had been 
 remembered. It was revived at the time of the newspaper contro- 
 versy, and was pressed upon the attention of the trustees and upon 
 that of their counsel. But the lawyers attached little weight to the 
 suggestion, although they introduced it and argued it briefly. Ma- 
 son, Smith, and Webster a u re lied ! for success on the ground covered 
 by the first point in Mason's brief. This is called by Mr. Shirley 
 the " Parsons view," from the fact that it was largely drawn from 
 an argument made by Chief Justice Parsons in regard to visita- 
 torial powers at Harvard College. Briefly stated, the argument was 
 thatthe college was an institution founded by private persons for 
 particular uses ; that the charter was given to perpetuate such uses ; 
 that misconduct of the trustees was a question for the courts and 
 that the Legislature, by its interference, transcended its powers. 
 To these general principles, strengthened by particular clauses in the 
 Constitution of New Hampshire, the counsel for the college trusted 
 for victory. The theory of impairing the obligation of contracts they 
 introduced, but they did not insist on it, or hope for much from it. 
 On this point, however, and, of course, on this alone, the case went 
 up to the Supreme Court. In December, 1817, Mr. Webster wrote 
 to Mr. Mason, regretting that the case went up on " one point only." 
 He occupied himself at this time in devising cases which should 
 raise what he considered the really vital points, and which, coming 
 within the jurisdiction of the United States, could be taken to the 
 Circuit Court, and thence to the Supreme Court at Washington. 
 These cases, in accordance with his suggestion, were begun, but 
 before they came on in the Circuit Court, Mr. Webster made his 
 
 seized upon to support the argument and a number of inferences are 
 drawn which have seemed to the writer, from a general— not a 
 minute — reading of the book to be erroneously drawn, but a careful 
 criticism of the whole work will not be attempted. 
 
96 OBLIGATION OF CONTRACTS [64O 
 
 great effort at Washington. Three quarters of his legal arguments 
 were there devoted to the point's in the Circuit Court cases, which 
 were not in any way before the Supreme Court in the College vs. 
 Woodward. So little, indeed, did Mr. Webster think of the great 
 constitutional question which has made the case famous, that he 
 forced the other points in where he admitted that they had no proper 
 standing, and argued them at length. They were touched upon by 
 Marshall, who, however, decided wholly upon the constitutional 
 question, and they were all thrown aside by Judge Washington, who 
 declared them irrelevant, and rested his decision solely and properly 
 on the constitutional point. Two months after his Washington argu- 
 ment, Mr. Webster, still urging forward the Circuit Court cases, 
 wrote to Mr. Mason that all the questions must be brought properly 
 before the Supreme Court, and that, on the " general principle " that 
 the State Legislature could not divest rights, strengthened by the 
 constitutional provisions of New Hampshire, he was sure they could 
 defeat their adversaries. Thus this doctrine of " impairing the obli- 
 gation of contracts," which produced a decision in its effects more 
 far-reaching and of more general interest than perhaps any other 
 ever made in this country, was imported into the case at the sugges- 
 tion of laymen, was little esteemed by counsel, and was compara- 
 tively neglected in every argument. 59 
 
 The popular opinion of this case seems to be that Mr. Webster, 
 with the aid of Mr. Mason and Judge Smith, developed a great con- 
 stitutional argument, which he forced upon the acceptance of the 
 court by the power of his close and logical reasoning, and thus 
 established an interpretation of the Constitution of vast moment. 
 The truth is, that the suggestion of the constitutional point, not a 
 very remarkable idea in itself, originated, as has been said, with a 
 layman, was regarded by Mr. Webster as a forlorn hope, and was 
 very briefly discussed by him before the Supreme Court. He knew 
 of course, that if the case were to be decided against Woodward, it 
 could only be on the constitutional point, but he evidently thought 
 that the court would not take the view of it which was favorable 
 to the college. 60 
 
 Mr, Lodge speaks of the legal argument made by Webster 
 as strong, effective and lucid, but dry, cold and lawyerlike. 
 He continues : 
 
 It gives no conception of the glowing vehemence of the delivery, 
 or of those omitted portions of the speech which dealt with matters 
 outside the domain of law, and which were introduced by Mr. Web- 
 ster with such telling and important results. He spoke for five 
 hours, but in the printed report his speech occupies only three pages 
 more than that of Mr. Mason in the court below. Both were slow 
 speakers, and thus there is a great difference in time to be accounted 
 for, even after making every allowance for the peroration which we 
 have from another source, and for the wealth of legal and historical 
 illustration with w.hich Mr. Webster amplified his presentation of 
 the question. " Something was left out," Mr. Webster says, and that 
 something which must have occupied in its delivery nearly an hour 
 
 59 Lodge, Life of Webster, pp. 80-82. 
 
 60 Ibid., pp. 97-98. 
 
641] THE DARTMOUTH COLLEGE CASE 
 
 97 
 
 was the most conspicuous example of the generalship by which Mr. 
 Webster achieved victory, and which was wholly apart from his law. 
 1 his art of management had already been displayed in the treatment 
 of the cases made up for the Circuit Courts, and in the elaborate 
 and irrelevant legal discussion which Mr. Webster introduced be- 
 fore *"? Supreme Court. But this management now entered on a 
 much higher stage, where it was destined to win victory, and exhib- 
 ited in a high degree tact and knowledge of men. Mr. Webster was 
 fully aware that he could rely, in any aspect of the case, upon the 
 sympathy of Marshall and Washington. He was equally certain of 
 the unyielding opposition of DuvalJ and Todd; the other three 
 judges, Johnson, Livingston, and Story, were known to be adverse 
 to the college, but were possible converts. The first' point was to 
 increase the sympathy of the Chief Justice to an eager and even 
 passionate support. Mr. Webster knew the chord to strike, and he 
 touched it with a master hand. This was the " something left out," 
 of Which we know the general drift, and we can easily imagine the 
 effect. In the midst of all the legal and constitutional arguments, 
 relevant and irrelevant, even in the pathetic appeal which he used so 
 well in behalf of his Alma Mater, Mr. Webster bodly and yet skil- 
 fully introduced the political view of the case. So delicately did he 
 do it that an attentive listener did not realize that he was straying 
 from the field of " mere reason " into that of political passion. Here 
 no man could equal him or help him, for here his eloquence had full 
 scope, and on this he relied to arouse Marshall, whom he thoroughly 
 understood. In occasional sentences he pictured his beloved college 
 under the wise rule of Federalist's and of the Church. He depicted 
 the party assault that was made upon her. He showed the citadel 
 of learning threatened with unholy invasion and falling helplessly 
 into the hands of Jacobins and free-thinkers. As the tide of his 
 resistless and solemn eloquence, mingled with his masterly argu- 
 ment, flowed on, we can imagine how the great Chief Justice roused 
 like an old war-horse at the sound of the trumpet. The words of 
 the speaker carried him back to the early years of the century when, 
 in the full flush of manhood, at the head of his court, the last strong- 
 hold of Federalism, the last bulwark of sound government, he had 
 faced the power of the triumphant Democrats. Once more it was 
 Marshall against Jefferson, — the judge against the President. Then 
 he had preserved the ark of the Constitution. Then he had seen the 
 angry waves of popular feeling breaking vainly at his feet. Now, 
 in his old age, the conflict was revived. Jacobinism was raising its 
 sacreligious hand against the temples of learning, against the friends 
 of order and good government. The joy of battle must have glowed 
 once more in the old man's breast as he grasped anew his weapons 
 and prepared with all the force of his indomitable will to raise yet 
 another constitutional barrier across the path of his ancient enemies. 
 We cannot but feel that Mr. Webster's lost passages, embodying 
 this political appeal, did the work, and that the result was settled 
 when the political passions of the Chief Justice were fairly aroused. 
 Marshall would probably have brought about' the decision by the 
 sole force of his imperious will. But Mr. Webster did a good deal 
 of effective work after the arguments were all finished, and no ac- 
 count of the case would be complete, without a glance at the famous 
 peroration with which he concluded his speech and in which he 
 
98 OBLIGATION OF CONTRACTS [642 
 
 boldly flung aside all vestige of legal reasoning, and spoke directly 
 to the passions' and emotions of his hearers. 61 
 
 Mr. Lodge describes in the following manner the efforts 
 which were made after the case was argued to create public 
 sentiment in favor of the College: 
 
 This work was pushed with increased eagerness after the argument 
 at Washington, and the object now was to create about the three 
 doubtful judges an atmosphere of public opinion which should im- 
 perceptibly bring them over to the college. Johnson, Livingston, 
 and Story were all men who would have started at the barest sus- 
 picion of outside influence even in the most legitimate form of argu- 
 ment, which was all that was ever thought of or attempted. This 
 made the task of the trustees very delicate and difficult in developing 
 a public sentiment which should siway the judges without their being 
 aware of it. The printed arguments of Mason, Smith, and Webster 
 were carefully sent to certain of the judges, but not to all. All docu- 
 ments of a similar character found their way to the same quarters. 
 The leading Federalists were aroused everywhere, so that the judges 
 might be made to feel their opinion. With Story, as a New England 
 man, a Democrat by circumstances, a Federalist by nature, there 
 was but little difficulty. A thorough review of the case, joined with 
 Mr. Webster's argument, caused him 'soon to change his first im- 
 pression. To reach Livingston and Johnson was not so easy, for 
 they were out of New England, and it was necessary to go a long 
 way round to get at them. The great legal upholder of Federalism 
 in New York was Chancellor Kent. His first impression, like that 
 of Story, was decidedly against the college, but after much effort 
 on the part of the trustees and their able allies, Kent was converted 
 partly through his reason, partly through his Federalism, and then 
 his powers of persuasion and his great influence on opinion came to 
 bear very directly on Livingston, more remotely on Johnson. The 
 whole business was managed like a quiet, decorous political cam- 
 paign. 62 
 
 The statement thus made as to the weakness of the case 
 of the College in the opinion of its counsel seems greatly 
 exaggerated. In the first place, the argument made by 
 computing the number of pages devoted by counsel in their 
 arguments to the consideration of the "contracts clause," 
 and then concluding that the rest of the arguments of 
 counsel were irrelevant is utterly worthless. As we have 
 shown, a charter could only be established as a contract 
 under the " contracts clause " by showing that k was re- 
 garded at common law as a grant of a private property 
 right. The three headings of Mason's argument, which 
 
 81 Ibid., pp. 86-88. 
 62 Ibid., pp. 92-93. 
 
643] THE DARTMOUTH COLLEGE CASE 9$ 
 
 Webster also used, were mere frames on which to set the 
 discussion of the nature of the corporate franchise as a 
 piece of property. Had Webster omitted the first two head- 
 ings and retained only the heading that the acts in question 
 impaired the obligation of a contract, only about six pages, 
 in which he considers in detail specific clauses of the New 
 Hampshire constitution, of his whole forty-nine page argu- 
 ment would have become irrelevant. The rest would not only 
 have been relevant, it would have been absolutely essential. 
 The inference based upon the page calculation is, therefore, 
 unfounded. 
 
 Answering another of the points made, we would say that 
 we have not discovered that Webster ever stated that he 
 regarded the case as a " forlorn hope." That seems to be 
 . an inference of Mr. Shirley. The expressions found in 
 Webster's correspondence simply amount to saying that he 
 is sorry the case went up on a single point and would like to 
 bring a case in the federal courts so as to bring the whole 
 case before the Supreme Court. 68 
 
 63 The following are the quotations which Mr. Shirley gives from 
 Webster's correspondence. 
 
 " You are aware that in the college cause the only question that 
 can be argued at Washington is whether the recent acts of the Leg- 
 islature of New Hampshire do not violate the Constitution of the 
 United States. This point, though we trust a strong one, is not per- 
 haps stronger than that derived from the character of these acts 
 compared with the Constitution of New Hampshire. It has occurred 
 to me whether it would not be well to bring an action which should 
 present both and all our points to the Supreme Court . . ." 
 
 "It is our misfortune that our cause goes to Washington on a 
 single point. I wish we had it in such shape as to raise all the other 
 objections as well as the repugnancy of these acts to the Constitu- 
 tion of the United States." 
 
 " I am sorry our college cause goes to Washington on one point 
 only. What do you think of an action in some court of the United 
 States that shall raise all the objections to the act in question." 
 
 " I am glad a suit is to be brought [in the federal courts]." 
 
 "The question which we must raise in one of these actions, is 
 whether by the general principles of our governments the State Leg- 
 islatures be not restrained! from divesting vested right's. This, of 
 course, independently of the constitutional provision respecting con- 
 tracts On this question I have great confidence in a decision on the 
 right side. This is the proposition with which you began your argu- 
 ment at Exeter and which I endeavored to state from your minutes 
 at Washington." Shirley, pp. 5, 6- 
 
100 OBLIGATION OF CONTRACTS [644 
 
 The fact that the Justices of the Supreme Court were 
 unable to reach a conclusion the day after the case was 
 argued is sometimes referred to as warranting the inference 
 that a number of the Justices were at that time unfavorable 
 to the College, and had to be brought around to another 
 way of thinking, either by outside influence or by the force 
 of the Chief Justice's will, but the inference seems rather 
 extreme. The principal source of information as to the 
 position of the Justices upon the case at that time is found 
 in Webster's letter to Smith, of March 18, 1818. It will be 
 noticed that the statement is not by any means as positive 
 as Mr. Lodge's statement upon the same subject. Webster 
 wrote : 
 
 I have no accurate knowledge of the manner in which the judges 
 are divided. The chief and Washington, I have no doubt, are with 
 us. Duval and Todd are perhaps against us ; the other three holding 
 up. I cannot much doubt but that Story will be with us in the end, 
 and I think we have much more than an even chance with one of the 
 others. 64 
 
 Again, much is made of the conversions of Story and 
 Kent, who had originally held opinions in favor of the new 
 trustees. We do not marvel at Story's conversion, but we 
 are surprised at the fact of his ever having held another 
 view, considering the position which he had taken four 
 years before, in the case of Terrett v. Taylor, in regard to 
 the sanctity of corporate franchises. 
 
 Kent offers a very reasonable explanation of his change 
 of opinion. In a letter to Mr. Marsh, he writes that he 
 took a trip through New Hampshire to recruit his spirits, 
 stopped off at Hanover where he met a friend who intro- 
 duced him to the president and professors of the univer- 
 sity, but did not meet the officers of the college : 
 
 Being on the spot and witnessing the college sessions I was 
 anxious to know something of the controversy, though nothing was 
 
 64 Mr. Shirley gives the following account from The National In- 
 telligencer: "On Friday morning [March 13, 1818] the chief justice 
 observed that the judges conferred on the cause between the Trus- 
 tees of Dartmouth College and William H. Woodward. Some of 
 the judges have not come to an opinion on the case. Those of the 
 judges who have formed opinions do not agree. The cause must 
 therefore be continued until next term." Shirley, p. 238. 
 
*H5] THE DARTMOUTH COLLEGE CASE IOI 
 
 said on the subject by the gentlemen to whom I was introduced. I 
 had often casually heard the subject mentioned but knew nothing of 
 its merits. After some search I was enabled to purchase lie opinion 
 of the Supreme Court of New Hampshire as delivered by the Chief 
 Justice and read it the next day on my return to Windsor. That 
 opinion furnished me with the few scanty facts I possessed in regard 
 to the great constitutional question and it appeared to me on a hasty 
 perusal of it that the legislature was competent to pass the laws in 
 question, for I was led by the opinion to assume the fact that Dart- 
 mouth College was a public establishment for purposes of a general 
 nature. I knew nothing nor do I now know anything material in 
 respect to the policy or motives of the laws or what were the real 
 inducements to pass them. 
 
 But I will declare to you with equal frankness that the fuller 
 statement of facts in Mr. Webster's argument in respect to the 
 original reasons and substance of the charter of 1769 and the sources 
 of the gifts gives a new complexion to the case and it is very prob- 
 able that if I was now to sit down and seriously study the case with 
 the facts at large before me that I should be led to a different con- 
 clusion from the one which I had at first formed. But my hasty 
 impressions one way or the other are not worth mentioning for I 
 deem them of no value. I have merely stated those incidents to 
 show how very acceptable is the argument you sent me. 
 
 Mr. Shirley comments : 
 
 As has already been suggested, the opinion of Judge Richardson 
 contained a statement of facts ; and the pamphlet produced by Kent 
 gave precisely the same information as the State report. Probably 
 no person was ever misled by the State report — except ( ?) Chan- 
 cellor Kent. Strange as it may seem, Daniel Webster and Jeremiah 
 Mason never discovered it. 65 
 
 We cannot but regard such a comment as disingenuous. 
 The opinion of Richardson did give the facts very scantily 
 and made no mention of the history of the Indian school, 
 or the fact that Dr. Wheelock was named as the founder ; 
 and it is easily understandable how an able presentation of 
 one side of a case will draw assent from one not already 
 versed in the particular question under discussion, when a 
 presentation of the opposite side might have produced an 
 entirely different result. 
 
 Mr. Shirley does not give any authorities for his state- 
 ment that Webster introduced the political aspect of the 
 case into his argument, but the probabilities would certainly 
 be that he did so. Mr. Lodge's very interesting picture of 
 the nature of that part of the speech and its effect on Mar- 
 
 •* Shirley, The Dartmouth College Causes, pp. 263^264. 
 
102 OBLIGATION OF CONTRACTS [646 
 
 shall is probably not far wrong. It seems, nevertheless, that 
 this feature of the case has been over-emphasized because 
 the soundness of the decision from the legal standpoint has 
 been overlooked. 
 
 Given the doctrine of Fletcher v. Peck, the questions in 
 the College case were : Was a charter grant a grant of prop- 
 erty? Were charitable or educational institutions, public 
 institutions ? These questions were to be answered by ex- 
 amining the common law and then by subjecting it to such 
 modifications as it had received in its adaptation to the needs 
 of this country. The English precedents rather clearly 
 supported the court upon both of these questions. The 
 court might have said that the English doctrines were un- 
 suited to this country, and particularly might they have said 
 that these educational institutions were public institutions. 
 Here, if anywhere, their political opinions may have had 
 some play, but not, perhaps, as much as has often been 
 thought. 68 
 
 Our view of Fletcher v. Peck is that here, also, the weight 
 of authority upon the technical questions involved supported 
 the opinion of the majority. But any judgment upon this 
 case must be subject to a review of the evidence which was 
 available to the court as to whether or not it was the inten- 
 tion of those who framed and adopted the Constitution that 
 the "contracts clause" should extend to protect the con- 
 tracts of the States, which is a matter we shall shortly con- 
 sider. Of the two cases, Fletcher v. Peck, took far the 
 larger step toward the position at which the court finally 
 arrived. It established the principle of which Dartmouth 
 College v. Woodward was merely the application, and it was 
 with this conception in mind, undoubtedly, that Marshall 
 admitted that it was quite possible that those .who adopted 
 the Constitution might never have had in contemplation the 
 precise case of grants of corporate franchises. 
 
 The College case has, however, been used as the authority 
 
 86 It should be noted that Justice Duval dissented, but as he wrote 
 no opinion his reason for so doing cannot be known. 
 
647] THE DARTMOUTH COLLEGE CASE 103 
 
 for sustaining all other franchise grants as well as grants 
 of corporate franchises, because these secondary franchises 
 were almost always found in the charters themselves, and 
 were hence considered contracts without question. The 
 effect of the ruling in the College case is now and has for 
 some time been very largely nullified by the reservation, in 
 the grants of corporate franchises, of the right to alter, 
 amend or repeal them, to which the vast majority of exist- 
 ing charters are, without doubt, subject. Its effect is still 
 noticeable in the decisions relating to secondary franchises, 
 such as the franchises in city streets of public service cor- 
 porations, which are often not subject to this reserved right 
 of repeal. 
 
 In connection with the College case, must be always borne 
 in mind the modifying doctrines of the Charles River Bridge 
 case, 67 that state grants are to be construed strictly in favor 
 of the state ; of the so-called Granger cases, 68 that businesses 
 affected with a public interest are subject to legislative regu- 
 lation and control ; of The West River Bridge Co. v. Dix 69 
 that franchises are always taken subject to the exercise of 
 the power of eminent domain on the part of the state ; and 
 of Stone v. Mississippi, 70 and other cases, that the police 
 power cannot be alienated. All these doctrines were un- 
 doubtedly felt to be necessary limitations upon the operation 
 of the principles of the College case. How far they were 
 actually necessitated would depend upon how general the 
 practice had become, at the time these decisions were ren- 
 dered, of reserving the right to repeal charters — a question 
 which we are not prepared to answer. 
 
 The effect of the College case upon the body politic gen- 
 erally is, however, a question upon which we have made no 
 special investigation and which is indeed most difficult of 
 estimation. It may be said that, with the limitations which 
 have been affixed to the doctrine, and with the reservation 
 
 » T 11 Pet. 420 (1837). 
 
 ss Munn v. Illinois', 94 U. S. 113 (1876), and the cases following. 
 
 69 6 How. 507 (1848). 
 
 ™ioi U. S. 814 (1879)- 
 
104 OBLIGATION OF CONTRACTS [648 
 
 of the right of repeal, now so common, there is not much 
 ground for complaining of its being burdensome, although, 
 as said before, it is still effective in the case of many second- 
 ary franchises. There is undoubtedly much truth in Mr. 
 Cotten's remark : " That is the great effect, the great point 
 of the case, — that it fixed the popular as well as the legal 
 mind in favor of the stability of corporate enterprise and 
 securities." 71 
 
 When we speak of the limitations which have been affixed 
 to the College case we do not mean to infer that these limi- 
 tations are necessarily to be considered as deviations from 
 its doctrine. That is quite a different question, and one 
 which we shall not attempt to answer. Logically speaking, 
 there is no incompatibility between the doctrines of The 
 Charles River Bridge case, the Granger cases, The West 
 River Bridge Co. v. Dix and Stone v. Mississippi, and the 
 
 71 Marshall's Decisions, ed. Cotten, p. 349. Sir Henry Maine has 
 said : " I have seen the rule which denies to the several states the 
 power to make any laws impairing the obligation of contracts criti- 
 cised as if it were a mere politico-economical flourish; but in point 
 of fact there is no more important provision of the Constitution. 
 Its principle was much extended by a decision of the Supreme Court, 
 whjch ought now to interest a large number of Englishmen, since 
 it is the basis of the credit of many of the great American railway 
 incorporations. But it is this prohibition which has in reality secured 
 full play to the economical forces by which the achievement of culti- 
 vating the soil of the North American continent has been performed, 
 it is the bulwark of American individualism against democratic 
 impatience and socialistic fantasy." Maine, Popular Government 
 (Essay IV.), p. 247. Mr. John F. Dillon has said: "The doctrine 
 of the Dartmouth College case as applied by the Supreme Court in 
 its various decisions, is not only sound, but has been one of the 
 chief causes of our individual and national prosperity." John Mar- 
 shall, ed. Dillon, vol. i, p. 370. Governor Baldwin says in his Ameri- 
 can Political Institutions at p. 121 : " So did the little phrase impair 
 the obligation of contracts, — like the genius of some Arabian tale 
 at the touch of the magic wand of Chief Justice Marshall, rise and 
 spread into the form' of that invincible champion of chartered fran- 
 chises by which the whole theory of American corporations was to 
 be revolutionized once and again. And so, by means perhaps less 
 direct, but no less controlling, has a new meaning been read into 
 many a provision of statute or constitutions, by public opinion and 
 the lapse of time, — a meaning by which the law, it may be, at last 
 ceases to protect and begins to oppress society. Has not this been 
 the history of the constitutional guaranty now under consideration? " 
 It is, however, very difficult to gauge this moral effect of the case. 
 
6 49] THE DARTMOUTH COLLEGE CASE 105 
 
 doctrine of the case under consideration. The question is, 
 Was there a deviation in spirit between these cases? 
 
 It may be noted that the rule, that the power to legislate 
 as to the forms of administering justice and as to the duties 
 and powers of the courts was inalienable, was laid down in 
 Bank of Columbia v. Okely, 72 decided at the same term of 
 court as Dartmouth College v. Woodward, so that it is not 
 apparent that the later rulings as to the inalienability of the 
 power of eminent domain and of the police power were 
 opposed to the spirit of the College case. 
 
 As both the Charles River Bridge case and the Granger 
 cases claim to be merely restatements of common law doc- 
 trine, it would require a careful examination of these de- 
 cisions to see how far they were supported by the common 
 law. If they really were supported by common law prece- 
 dents it would not seem correct to say that they were devia- 
 tions from the spirit of the College case. Story's own view 
 of the Bridge case and his voucher for Marshall's 73 affords 
 strong presumption, however, that this case was really con- 
 trary to the spirit which animated the justices in the Col- 
 lege case, and that the result reached was largely due to a 
 changed public opinion reflected in the new bench. 
 
 The case of Illinois Central v. Illinois R. R. Co. 74 is an 
 interesting one. It may probably be said to be a departure 
 from the spirit of the College case. Here it was held that 
 a grant to a railroad company of an area of more than a 
 thousand acres of the submerged land in the harbor of 
 Chicago was merely a revocable license. The extent to 
 which the decision of the majority was based upon expedi- 
 ency is seen from their admission that small parcels of sub- 
 merged land such as are necessary for the construction of 
 docks and "which when occupied do not substantially im- 
 pair the public interest in the lands and waters remaining " 
 might be granted. So submerged shoals and flats may be 
 ceded. The minority come rather close to the truth when 
 
 72 4 Wheat. 235, 245. 
 
 73 1 Watson on the Constitution, p. 810. 
 ** 146 U. S. 487. 
 
106 OBLIGATION OF CONTRACTS [650 
 
 they say that the ruling of the majority essentially was that 
 too big a grant had been made. 
 
 It remains to present a few other suggestions that have 
 been made concerning the case, and particularly those made 
 by Chief Justice Doe in the article already referred to. 
 
 Chief Justice Doe points out that Marshall's opinion in 
 the College case is very largely based upon the fact that 
 property had been given to the corporation upon the faith 
 of its charter which, if the charter was subject to amend- 
 ment or repeal, would be liable to forfeiture to the state or 
 to be placed under the immediate control of the state. But 
 as it has since been held that the property of corporations 
 does not escheat to the state upon the repeal of the charter, 
 but is regarded as a trust fund for the benefit of the mem- 
 bers of the corporation, the raison d'etre of the decision in 
 that case, he maintains, has ceased to exist. 
 
 This argument does not, of course, attack the validity of 
 the decision as applicable to the time at which it was ren- 
 dered, inasmuch as the doctrine that the corporate property 
 upon dissolution belongs to the shareholders was at that 
 time unheard of. Nor, it may be noticed, could the argu- 
 ment yet be used in the case of religious and eleemosynary 
 corporations for, as to these, the law seems still to be that 
 their personal property is forfeited to the state upon the 
 repeal of the charter. 75 
 
 Again, this argument does not affect the position taken by 
 Justices Story and Washington, as they held that corporate 
 franchises were property, per se, and that the consideration 
 for the grant was the benefit to the public resulting from 
 the exercise of these powers. Nor is it clear that Marshall 
 did not have that conception also. He seems to express it 
 when he says: "The objects for which a corporation is 
 created are universally such as the government wishes to 
 promote. They are deemed beneficial to the country and 
 this benefit constitutes the consideration, and in most cases 
 the sole consideration of the grant." 76 
 
 75 Church of Latter Day Saints v. United States* 136 U. S. 1. 
 
 76 12 Wheat. 518, 637. 
 
65 l] THE DARTMOUTH COLLEGE CASE IO/ 
 
 Upon the abstract question, should the charters of busi- 
 ness-corporations be regarded as contracts, the argument is 
 of some value. It amounts about to this: that incorpora- 
 tors do not give the state any real consideration for these 
 grants of corporate franchises and therefore they should 
 not be considered to be irrepealable. Were the question to 
 be decided to-day, the argument might well prevail. 77 
 
 77 Morawetz, in his work on private corporations, states that it is 
 hard to find any contract between the state and its corporations, 
 although he apparently thinks that one exists in the case of a special 
 grant of corporate privileges. In the case of corporations formed 
 under the provisions of a general law, he finds that, although there 
 is no contract between the state and the incorporators, there is a 
 contract between the corporators themselves which, under the " con- 
 tract clause," the state is forbidden to impair. Thus he says that 
 although the charter creates no contract between the state and the 
 incorporators, nevertheless the state cannot amend the charter so 
 as to alter the purposes of the corporation, as that would impair the 
 obligation of the contract entered into among the incorporators. It 
 is rather doubtful if this is a logically correct position. Mr. Mora- 
 wetz goes so far as to hold that the state cannot repeal a charter, 
 because to do so would impair the obligation, not of the contract 
 between the corporators themselves, a position which, it seems to us, 
 is unsound. See Morawetz, Private Corporations, Sees. 1047, 1048, 
 1054. In Taylor on Corporations is found 1 this criticism of the case: 
 
 " Sec. 450 : One may well raise the question whether this implied 
 contract not to alter lie constitution of a corporation would be held 
 to exist, did 1 the matter arise as res nova in regard to a general 
 enabling statute. If the right to repeal were not reserved, pre- 
 sumably, under the authority of past decisions, courts would hold 
 that the statute could not be repealed or changed so as to affect the 
 right of existing corporations to carry on their business as under 
 the statute. But would courts so hold in regard to a statute sanc- 
 tioning limited' partnerships? Is there any implied contract between 
 the state and a limited partnership any more than between the state 
 and an ordinary firm? No citizen by acting under a statute, any 
 more than by acting under a rule of common law, acquires a right 
 that the statute shall remain unrepealed so that he may always act 
 under and be protected by its' terms. And why should there be held 
 to exist an implied contract between the state and an ordinary busi- 
 ness corporation any more than between the state and a limited 
 partnership? Still who is today rash enough to hint that the de- 
 cision in the Dartmouth College Case was based on the false analogy 
 between a grant of a franchise (i. e. the passage of a special law), 
 and the grant of property? As Justice Davis said in the Binghamp- 
 ton Bridge : Courts are today estopped from questioning the doc- 
 trine of the Dartmouth College Case. ... 
 
 " Sec 451 : That the constitution of a corporation is law is more 
 apparent in respect of corporations formed under general enabling 
 statutes, while the characteristics of a contract appear more promi- 
 nently where a special charater is granted by the state to the cor- 
 
108 OBLIGATION OF CONTRACTS [65 2 
 
 Chief Justice Doe makes the further criticism upon the 
 College case that even had the charter been granted by the 
 legislature of New Hampshire instead of by the King of 
 England, it could not have constituted an irrepealable con- 
 tract for, inasmuch as the legislature's power of law-making 
 had been merely delegated by the State, that body could 
 not contract away this power. But if it be conceded that 
 the States can contract, it would seem to be very narrow 
 and technical reasoning to contend that the power to con- 
 tract is not granted to the legislature under the ordinary 
 grant of legislative power found in the State constitutions. 
 
 Again, Chief Justice Doe suggests that, under the doc- 
 trine of the strict construction of state contracts, which has 
 been elaborated since the College case, upon the authority 
 of the Charles River Bridge case, it can not be said that a 
 grant of corporate franchises contains a contract not to re- 
 peal them, when the only way in which such a contract can 
 be found is by implying one. 
 
 It may be that such a conclusion is entirely compatible 
 with a logical application of the rule of strict construction. 
 But the rule of strict construction is not always applied with 
 logical precision. The court is inclined to protect those 
 who have expended large sums of money on the faith of 
 legislative grants, and has adhered to the principle that 
 when the legislature grants franchises upon the faith of 
 which large sums of money are spent, although such fran- 
 chises are not expressly stated to be irrevocable, and though 
 no time is fixed for the duration of such franchises, never- 
 
 porators. The differences between an enabling statute and a charter 
 are, however, mainlv differences in form. A charter as well as an 
 enabling statute prescribes rules for conduct; the difference being 
 that these rules in the case of a charter have a more limited appli- 
 cation. And as an enabling statute, as well as a charter, proffers 
 terms and facilities of action which are accepted by the corporators 
 by filing their articles of association, only in the case of an enabling 
 statute the terms are offered to the citizens of the state at large, any 
 sufficient number of whom' may accept them and incorporate them- 
 selves by complying with them." Taylor, Corporations, pp. 432-433. 
 It is difficult to perceive whether Mr. Taylor's idea is that no cor- 
 porate charters are contracts or only that corporations incorporated 
 under the general law have no contract right's as against the state." 
 
65 3] THE DARTMOUTH COLLEGE CASE IO9 
 
 thless there is a condition implied in them that the legisla- 
 ture will not revoke its grant. If Justice Doe's position 
 were correct, no public utility franchises would be contracts 
 unless a specific period of existence was named in them, and 
 possibly not then, if they are not expressly made irrevocable. 
 But the Supreme Court has recently held that grants of 
 franchises in the streets of cities to public utility companies, 
 under which large sums of money are to be spent, are, 
 although not expressly made irrevocable, and although their 
 duration is not specified, of perpetual duration. 78 
 
 It has already been remarked, in the part of this chapter 
 in which the general question of the power of the States to 
 contract was considered, that there are no very clear logical 
 lines to be drawn between contracts which the States may 
 make and those which they may not make. The question 
 may almost be said to be one of policy. Thus much room 
 is left for difference of opinion upon this matter. It would 
 seem that a line may properly be drawn somewhere between 
 contracts concerning property, on the one side, and con- 
 tracts concerning essential governmental powers, on the 
 other. Practically every one will agree that it now seems 
 rather incongruous to consider the taxing power as a sub- 
 ject of contract. It would seem much more reasonable to 
 place it along with the power of eminent domain, the police 
 power, and the power of administering justice, as not capa- 
 ble of being made the subject of contract. Public service 
 franchises have uniformly been regarded as in the nature 
 of property, and hence as the subject of contract. Con- 
 tracts exempting public service corporations from rate regu- 
 lation are close to the line. Another close case is that of 
 Illinois Central R. Co. v. Illinois, 79 where it was held that 
 the State could not make irrevocable grant of land covered 
 by navigable waters, if it will substantially impair the public 
 interest in the lands and waters remaining. 
 
 "Owenstooro v. Cumberland Telephone Co., 230 U. S. 58; Old 
 Colony Trust Co. v. Omaha, 230 U. S. 100; Boise Water Co. v. Boise 
 City, 230 U. S. 84. 
 
 ™ U. S. 387. 
 
110 OBLIGATION OF CONTRACTS [654 
 
 It remains to review the proceedings of the Constitutional 
 Convention of 1787, of the State conventions, and the other 
 historical data concerning the adoption of the " contracts 
 clause." Justice Miller, in his lectures on the Constitution 
 has said: 
 
 _ It has seemed probable to many judges and lawyers who have con- 
 sidered this clause of the Constitution that it was not' designed by 
 the framers of that instrument to do anything more than protect 
 private contracts, those between individuals and those between indi- 
 viduals and private corporations, that is, not municipal corporations, 
 but those organized for purposes of profit; and if it were now an 
 original question, it is by no means certain but that this would be 
 held to be the sound view of it. But those eminent men who at an 
 early day had the duty of defining the meaning of this provision 
 thought otherwise. 80 
 
 80 Miller on the Constitution, p. 555. 
 
CHAPTER V 
 
 The " Obligation of Contracts Clause " as Viewed by 
 the framers of the constitution 
 
 Heretofore we have been engaged in a more or less tech- 
 nical examination of the "contracts clause" and the de- 
 cisions construing it. We have been able to proceed thus 
 far without considering the historical surroundings of the 
 clause, because the decisions themselves were based on tech- 
 nical, rather than historical considerations. It remains for 
 us, however, to review the proceedings in the Constitutional 
 Convention and the other available data, to check up, as it 
 were, the results already reached. The purpose will be 
 twofold: to ascertain whether the information at the dis- 
 posal of the court when the important decisions were made 
 was such as should have assured a different result from that 
 actually reached; secondly, to ascertain, as a matter of in- 
 terest, what further opinions, undisclosed at the time of the 
 rendering of the decisions before mentioned, were held by 
 the " Fathers " as to this clause. 
 
 In truth the court had little in the way of historical infor- 
 mation to assist it in laying out the field to be covered by 
 the "contracts clause." The intentions of the Convention 
 itself could not be ascertained, for the journal and debates 
 were not published until after the important cases on this 
 subject had been decided. The members of the Conven- 
 tion, moreover, had been pledged to secrecy. 1 Was there 
 then a clear conception of the meaning of the clause pre- 
 vailing generally throughout the land, at the time the Con- 
 stitution was adopted? 
 
 1 1 Farrand, The records of the Federal Convention, pp. xi, xiv. 
 The journal was published in 1819. Various minutes were later 
 published from time to time, and finally Madison's Minutes of the 
 debates were published in 1840. 
 
 in 
 
112 OBLIGATION OF CONTRACTS [656 
 
 Turning, first, to the Federalist, the primary source of 
 information on questions such as these and which, doubt- 
 less, acted as the most potent agency for moulding public 
 opinion on matters of this kind, we find that the only treat- 
 ment of the clause is in Number 44, at the hands of Madi- 
 son. He there says : 
 
 Bills of attainder, ex post facto laws, and laws impairing the obli- 
 gation of contracts, are contrary to the first principles of the social 
 compact and to every principle of sound legislation. The two former 
 are expressly prohibited by the declarations prefixed to some of the 
 State constitutions, and all of them are prohibited by the spirit and 
 scope of these fundamental charters. Our own experience has taught 
 us, nevertheless, that additional fences against these dangers ought 
 not to be omitted. Very properly, therefore, have the convention 
 added this constitutional bulwark in favor of personal security and 
 private rights, and I am much deceived if they have not, in so doing, 
 as faithfully consulted the genuine sentiments as the undoubted 
 interests of their constituents. The sober people of America are 
 weary of the fluctuating policy which has directed the public coun- 
 cils. They have seen with regret and indignation that sudden changes 
 and legislative interferences, in cases affecting personal rights, be- 
 come jobs in the hands of enterprising and influential speculators, 
 and snares to the more industrious and less informed part of the 
 community. They have seen too, that one legislative interference is 
 but the first link of a long chain of repetitions, every subsequent 
 interference being naturally produced by the effects of the preceding. 
 They very rightly infer, therefore, that some thorough reform is 
 wanting, which will banish speculations on public measures, inspire 
 a general prudence and industry, and give a regular course to the 
 business of society." 2 
 
 In the discussion of the first clause of section 10 in the 
 Virginia convention Patrick Henry feared that it might re- 
 quire the States to pay the continental paper money in full. 
 Speaking of ex post facto laws and laws impairing the obli- 
 gation of contracts, he said : " The expression includes pub- 
 lic contracts, as well as private contracts between indivi- 
 duals. Notwithstanding the sagacity of the gentleman, he 
 cannot prove its exclusive relation to private contracts." 3 
 The answer given to this contention was that Congress and 
 not the States had contracted to pay this debt. Governor 
 Randolph called Henry's attention to the fact that Congress 
 was only forbidden to pass ex post facto laws which re- 
 
 2 Federalist, ed. Ford, p. 297. 
 
 3 2 Elliott's Debates, 474- 
 
657] AS VIEWED BY FRAMERS OF THE CONSTITUTION II3 
 
 f erred only to criminal matters. He also said: 
 
 I am still a warm friend of the prohibition, because it' must be 
 promotive of virtue and justice, and preventive of injustice and 
 fraud. If we take a review of the calamities which have befallen 
 our reputation as a people, we shall find they have been produced by 
 frequent interferences of the state legislatures with private con- 
 tracts. If you will inspect the great cornerstone of republicanism, 
 you will find it to be justice and honor.* 
 
 It will be noticed that Randolph nowhere denies Henry's 
 contention that the "contracts clause" refers to the con- 
 tracts of the States as well as to those between individuals. 
 In the debate in the North Carolina convention the ques- 
 tion was raised, whether the clause had reference to the 
 contracts of the States as well as to contracts made between 
 individuals. W. R. Davie, a member of the Constitutional 
 Convention, answered it in the negative, saying : 
 
 Mr. Chairman, I believe neither the 10th section, cited by the gen- 
 tleman, nor any other part of the Constitution, has vested the gen- 
 eral government with power to interfere with the public securities of 
 any state. I will venture to say that the last thing which the general 
 government will attempt to do will be this. They have nothing to 
 do with it. The clause refers merely to contracts between indi- 
 viduals. 5 
 
 There does not appear to have been any debate over the 
 clause in a single other State convention, and the only other 
 mention of it is to be found in Sherman's and Ellsworth's 
 letter to the governor of Connecticut, and in Luther Mar- 
 tin's " Genuine Information " to the Maryland Legislature. 
 Sherman and Ellsworth say: 
 
 The restraint on the legislatures of the several states respecting 
 emitting bills of credit, making anything but money a tender in pay- 
 ment of debts, or impairing the obligation of contracts by ex post 
 facto laws, was thought necessary as a security to commerce, in 
 which the interests of foreigners, as well as of the citizens of dif- 
 ferent states may be affected. 8 
 
 Martin said : 
 
 The same section also puts it out of the power of the States to 
 make any thing but gold or silver coin a tender in payment of debts, 
 
 * Ibid., 478. 
 
 5 3 Farrand, Records of the Federal Convention, p. 349. 
 
 6 Ibid., vol. iii, p. 100. 
 
 8 
 
114 OBLIGATION OF CONTRACTS [658 
 
 or to pass any law impairing the obligations of contracts. I con- 
 sidered, Sir, that there might be times of such great public calamities 
 and distress, and of such extreme scarcity of species, as should 
 render it the duty of a government, for the preservation of even 
 the most valuable part of its citizens, in some measure to interfere 
 in their favor by passing laws totally or partially stopping the courts 
 of justice, or authorizing the debtor to pay by instalments or by 
 delivering up his property to his creditors at a reasonable and honest 
 valuation. The times have been such as to render regulations of 
 this kind necessary in most or all of the States, to prevent the 
 wealthy creditor and the moneyed man from totally destroying the 
 poor though even industrious debtor. Such times may again arrive. 
 I therefore voted against depriving the States of this power, a power 
 which I am decided they ought to possess, but which, I admit, ought 
 only to be exercised on very important and urgent occasions. I 
 apprehend, Sir, the principal cause of complaint among the people 
 at large is the public and private debt with which they are oppressed, 
 and which in the present scarcity of cash, threatens them with de- 
 struction, unless they can obtain so much indulgence in point of 
 time, that by industry and frugality they may extricate themselves. 7 
 
 A provision in the Northwest Ordinance, passed by Con- 
 gress in 1787 before the work of the convention was fin- 
 ished, may also be noticed on account of the similarity of 
 the language used and, as well, on account of the differ- 
 ences. The clause reads as follows : 
 
 And in the just preservation of rights and property, it is under- 
 stood and declared, that no law ought ever to be made or have force 
 in the said territory that shall in any manner whatever interfere 
 with or affect private contracts or engagements bona fide and with- 
 out fraud previously formed. 
 
 This was all the documentary evidence that the court 
 could have had in making its important decisions as to the 
 meaning to be attributed to the "contracts clause." Of 
 course it is true that the State laws passed during the exist- 
 ence of the Confederation which had impaired the obliga- 
 tion of private contracts by issuing depreciated paper cur- 
 rency and making it legal tender, allowing debts to be 
 satisfied in property or paid in installments, and hindering 
 creditors in their efforts to obtain redress, 8 were necessarily 
 matters of common knowledge. Considering then the par- 
 ticular evils which seem to have inspired the adoption of the 
 
 7 Ibid., vol. iii, p. 214. 
 
 8 See Madison's introduction to the debates, 3 Farrand, Records of 
 the Federal Convention, p. 548. 
 
659] AS VIEWED BY FRAMERS OF THE CONSTITUTION 1 1 5 
 
 clause, the statement of Davie in the North Carolina con- 
 vention and the general trend of Martin's argument as it 
 was found in his Genuine Information (although there is 
 no means of knowing whether the latter two sources of 
 information were actually presented to the court), an infer- 
 ence might have been drawn that only private contracts 
 were intended to be protected. 
 
 Against this may be placed several important considera- 
 tions. The first and most important of all — one that we 
 have already had occasion to call attention to and which, we 
 think, has been too often overlooked in considering the 
 course of the early decisions upon this clause of the Consti- 
 tution — is that the most eminent jurists of the day, both at 
 the time of the convention and for some years afterwards, 
 were firm adherents to the doctrine of natural law. They 
 were familiar with the theory of the natural obligation of 
 contracts ; they were familiar with the theory of the social 
 compact ; and the idea of a state's being bound by its con- 
 tract must have been a perfectly natural one to them. 
 
 Jurists imbued with the theories of Austin, to whom the 
 idea of the state's being obligated by a contract made with 
 one of its citizens has always been an incongruous one, are 
 apt to feel that the court was legislating in a most active 
 way when it declared that the contracts of the States were 
 included within the operation of the "contracts clause." 
 They say that, what with the jealousy exhibited by the 
 States on all occasions and with the very narrow margin by 
 which the Constitution was actually carried through, it is 
 inconceivable that it would have been adopted had the 
 meaning of the "contracts clause," as it "later developed, 
 been fully explained. 
 
 We have already suggested, as a partial answer, that the 
 theory of natural law, which recognized the contracts of 
 states equally with those of individuals, was generally ac- 
 cepted at that time. Several proof s of this maybe adduced. 
 James Wilson— member of the Constitutional Convention, 
 
Il6 OBLIGATION OF CONTRACTS [660 
 
 the reputed author of the "contracts clause," 9 one of the 
 most influential men of his day, " reputed among the fore- 
 most in legal and political knowledge," 10 and later a justice 
 of the Supreme Court of the United States — published in 
 1792 a number of lectures which he had delivered to a body 
 of students. The following extracts from the lectures will 
 illustrate the views which he held. "Sir William Black- 
 stone," says Wilson, "tells us that the original of the obli- 
 gation which a compact carries with it, is different from 
 that of a law. The original of the obligation of a compact 
 we know to be consent : the original of the obligation of an 
 act of parliament we have traced minutely to the very same 
 source." Again, he says, page 190: "Consent is the sole 
 principle on which any claim, in consequence of human 
 authority, can be made upon one man by another. Exclu- 
 sively of the duties required by the law of nature, I can 
 conceive of no claim that one man can make upon another 
 but in consequence of his own consent." Naturally, to such 
 a one, the spectacle of a state's being bound by a contract 
 was perfectly congenial ; and so we find : " It [the state] is 
 an artificial person — it has its obligations and it has its 
 rights. It may acquire property distinct from that of its 
 members, it may incur debts, to be discharged out of the 
 public stock, not out of the private fortunes of individuals: 
 it may be bound by contracts and for damages arising quasi 
 ex contractu." 11 It may also be mentioned that, in 1785, he 
 had published an argument in opposition to a bill which had 
 been introduced in the Pennsylvania Legislature for the 
 purpose of repealing the charter granted by the State of 
 Pennsylvania to the Bank of North America, in which he 
 argued that the charter was a contract and that the legisla- 
 ture, therefore, had no power to repeal it. 12 
 
 9 See argument in Sturges v. Crowninshield, 4 Wheat. 122. 
 
 10 3 Farrand, Records of the Federal Convention, p. 91 
 
 « 1 Wilson's Works, ed. Andrews, p. 183. It should be stated that 
 he had made the argument as counsel for the bank before the lee- 
 
 islature. 
 12 2 Wilson's Works, ed. Andrews, p. 565. 
 
66 1 ] AS VIEWED BY FRAMERS OF THE CONSTITUTION 11/ 
 
 The doctrine which he then put forward is summed up in 
 this form: "For these reasons, whenever the objects and 
 makers of an instrument, passed under the form of a law, 
 are not the same, it is to be considered as a compact and 
 interpreted according to the rules and maxims by which 
 compacts are governed." 13 
 
 A brief statement from Merriam's American Political 
 Theories will show the current political theory of revolu- 
 tionary and post-revolutionary times. That writer says: 14 
 
 B y wa i y of sutnm ary, it may be said that the leading doctrines of 
 the . re volutionary period were those of what is known as the Natur- 
 recht school of political theory. They included the idea of an origi- 
 nal state of nature, in which all men are born politically free and 
 equal, the contractual origin of government, the sovereignty of the 
 people and the right of revolution against a government regarded 
 as oppressive. ... It will be observed that the spirit of this rea- 
 soning was decidedly individualistic. The starting point was the 
 independent and sovereign individual endowed with a full set of 
 natural rights. He consents to* give up a part of these natural rights 
 to form a government by means of a compact. 
 
 Not only was this natural law and social compact theory 
 an accepted philosophical doctrine ; it is often found stated 
 in the opinions of the courts as well. Thus, in Calder v. 
 Bull, 15 decided in 1796, we find a polished and elaborate 
 statement of it by Justice Chase. Then, in the early case 
 of Vanhorne's Lessee v. Dorrance, 16 decided in 1795, we find 
 Justice Patterson of the Supreme Court contemplating with 
 equanimity the possibility, not only of an act of the legisla- 
 ture's constituting a contract, but of its constituting a con- 
 tract within the meaning of the " contracts clause." In an- 
 swer to an argument of counsel to the effect that the act in 
 question impaired the obligation of a contract, he merely 
 says : " But if the confirming act be a contract between the 
 Legislature of Pennsylvania and the Connecticut settlers, it 
 must be governed by the rules and regulations which per- 
 vade all cases of contracts and if so, it is clearly void." 
 
 13 1 Wilson's Works, ed. Andrews, p. 565. 
 
 14 American Political Theories, pp. 94-95. 
 «3Dall. 386. 
 
 16 2 Dall. 304. 
 
tl8 OBLIGATION OF CONTRACTS [662 
 
 The proceedings in the Virginia convention were favor- 
 able. 
 
 The language of the Federalist, which we have already 
 quoted, was very broad and general. It is not specific, of 
 course, but the very fact was one to which the court did, 
 and we think rightly, attach considerable weight. Justice 
 Johnson, who dissented in Fletcher v. Peck, was ready to 
 admit that the clause applied to the contracts of the States. 
 Speaking of this clause, he said: "There is reason to be- 
 lieve, from the letters of Publius, which are well entitled 
 to the highest respect, that the object of the convention was 
 to afford a general protection to individual rights against 
 the acts of the state legislature. Whether the words ' acts 
 impairing the obligation of contracts' can be construed to 
 have the same force as must have been given to the words 
 'obligation and effect of contracts' is the difficulty in my 
 mind." In other words, he contended only that a convey- 
 ance was not a contract. 
 
 Taking the broad general language of the clause, taking 
 the equally general language of the Federalist, applying the 
 principles of natural law, to which he adhered and by which, 
 rather than by the common law, the wording of the clause 
 was made intelligible, Chief Justice Marshall made his de- 
 cision that the contracts of the States were protected from 
 impairment. This decision was generally acquiesced in at 
 the time and for sometime afterwards. Even the Justices 
 who, in Ogden v. Saunders, disagreed with the Chief Jus- 
 tice, and refused to go the full length of the natural law 
 theory, admitted that it was natural law which chiefly 
 created the obligation of the contracts of the States them- 
 selves. It is by no means certain, therefore, that the Chief 
 Justice was not justified in his belief that the framers of 
 the Constitution intended the meaning which he gave. And 
 it is difficult to say that he should have argued that the 
 clause, so construed, would have caused the rejection of the 
 Constitution and hence should not be construed according 
 to what was, to him, the plain meaning of its terms. It 
 remains to examine the proceedings of the convention itself. 
 
663] AS VIEWED BY FRAMERS OF THE CONSTITUTION II9 
 
 It was not until slightly over two weeks before the close 
 of the Convention that we find any reference to a provision 
 relating to contracts. On Tuesday, August 28, Rufus King 
 moved to add to the prohibitions upon the States, in the 
 words of the Ordinance of Congress establishing new States 
 — the Northwest Ordinance — a prohibition on the States to 
 interfere in private contracts. Gouverneur Morris thought 
 this would be going too far, as there are a thousand laws, 
 he said, relating to the bringing and the limitation of actions 
 which affect contracts. James Wilson was in favor of 
 King's motion. Madison admitted that inconveniences might 
 arise from such a prohibition, but thought these overbal- 
 anced by the utility of it. He conceived, however, that a 
 negative on the State laws could alone secure the desired 
 effect. Mason thought this carrying restraint too far, and 
 thought that cases might happen where interference would 
 be necessary, mentioning the case of statute of limitations. 
 Wilson replied: "The answer to these objections is that 
 retrospective interference only will be prohibited." Madi- 
 son asked if that was not already done by the prohibition 
 of ex post facto laws. This ended the debate, for the pro- 
 hibition was voted simply against ex post facto laws. 17 The 
 next day Dickinson reported that, on consulting Blackstone, 
 he found that the term " ex post facto " related to criminal 
 cases only and would not, therefore, prevent the States from 
 passing retrospective laws in civil cases. The draft was 
 sent to the Committee of Style, however, on September 10, 
 without any change being made. It was upon its return 
 from this committee on September 12 that the "contracts 
 clause" first made its appearance, the prohibition being 
 directed to the passage of any laws " altering or impairing 
 the obligation of contracts." An amendment, striking out 
 the word "altering" was passed on the 14th of September, 
 but a motion by Gerry, who " entered into observation incul- 
 cating the importance of public faith and the propriety of 
 the restraint put on the states from impairing the obligation 
 
 17 Madison has it in his notes, " retrospective " law. 
 
120 OBLIGATION OF CONTRACTS [664 
 
 of contracts," to put Congress under the same restraint was 
 not seconded. There is, also, a note found upon Mason's 
 copy of the draft of February 12, to the effect that a mo- 
 tion to strike out " ex post facto laws," and, after the words 
 "obligation of," to insert "previous" was refused. This 
 motion is not found in the journal or in any other of the 
 records of the debates. 18 
 
 It is very plain that the convention had in mind only 
 retrospective laws as impairing the obligation of contracts, 
 and it is almost equally plain that they had in mind only the 
 contracts of private individuals. 
 
 18 The history of this clause in the Convention is accurately de- 
 scribed by Meigs in his Growth of the Constitution, pp. 182-186. Its 
 history may easily be traced in Farrand's authoritative Records of 
 the Federal Convention, Iby referring to the index which gives the 
 places of reference of each clause. A reference to vol. ii, pp. 448, 
 449, should be added. 
 
INDEX 
 
 Ames, 31. 
 
 Austin, theories of, 30. 
 
 Bank of Columbia v. Okely, <&, 
 105. 
 
 Blackstone, definition of con- 
 tract, 24, 33, 36, 66, 71. 
 
 Blair v. Chicago, 76. 
 
 Boise Water Co. v. Boise City, 
 109 (note). 
 
 Borough franchises, 83 ff. 
 
 Brown's Austinian Theory of 
 
 . Law, quoted, 55. 
 
 Browne's Civil and Admiralty 
 Law, cited, 82. 
 
 Burgess v. Seligman, 49 (note). 
 
 Burke, Edmund, argument in 
 the East India Company case, 
 85 ff . 
 
 Charles River Bridge case, 103. 
 
 Charters, corporate, contractual 
 character of, 58 ff. 
 
 Church of Latter Day Saints v. 
 United States, 106 (note). 
 
 Cincinnati v. Louisville & N. R. 
 Co., 52 (note). 
 
 Constitutional Fathers, doctrines 
 of, in ff. 
 
 Contract, definitions of, 20 ff. 
 
 Contracts, defined, 17; Black- 
 stone, 24; Marshall, 25. 
 
 Contracts between individuals, 
 17. 
 
 Contract between States, 17. 
 
 Conveyance, contractual, char- 
 acter of, 21 ff. 
 
 Corporate charter, as a contract, 
 58 ff. 
 
 Corporation Act of Charles II, 
 
 8l. ! 
 
 Corporations, status of, as com- 
 mon law, 65. 
 
 Dartmouth College Case, 58 ff. 
 Dartmouth College v. Wood- 
 ward, 16, 47. 
 
 Davis, Origin and Development 
 of Corporations, quoted, 82 
 (note). 
 
 Dillon, J. F., quoted as to value 
 of Dartmouth College, de- 
 cision, 104 (note). 
 
 Doe, C. J., views of, 108. 
 
 Douglas v. Kentucky, 49. 
 
 East India Company, 85. 
 Eminent Domain, cannot be 
 alienated by contract, 52. 
 
 Farmers' & Mechanics' Bank y. 
 
 Smith, 17. 
 Federalist, quoted, 112; cited, 
 
 118. 
 Fletcher v. Peck, 16, 24, 67, 93, 
 
 102. 
 
 Gelpcke v. Dubuque, 50. 
 
 Gifts, contractual character of, 
 
 29. 
 Green v. Biddle, 17. 
 
 Henry, Patrick, 112. 
 
 Hobbes, contract theories of, 28. 
 
 Illinois Central Ry. Co. v. Illi- 
 nois, 52 (note), 105, 109. 
 
 Jefferson Branch Bank v. Skelly, 
 
 49 (note). 
 Johnson, Justice, opinion in 
 
 Ogden v. Saunders, 45. 
 
 Kent, as to contractual character 
 
 of gifts, 29. 
 King v. Amery, 36. 
 King v. Passmore, 65. 
 Knoup v. Piqua Bank, 84. 
 Kyd, on corporations, 71 (note), 
 
 80 (note). 
 
 Life Insurance & T. Co. v. De- 
 bolt, 50 (note). 
 
 121 
 
122 
 
 INDEX 
 
 [666 
 
 Lodge, Henry Cabot, Life of 
 Webster, quoted, 95, 
 
 McMillan v. McNeill, 16. 
 
 Maine, Sir Henry, quoted, 104 
 (note). 
 
 Maitland, 32 (note). 
 
 Marshall) Chief Justice, his defi- 
 nition of contract, 25 ; his use 
 of natural law, 26 (rlote) ; his 
 dissent in Ogden v. Saunders, 
 42 ; opinion in Dartmouth Col- 
 lege Case, 68 ff. 
 
 Martin, Luther, 113. 
 
 Merriarn, American Political 
 Theories, quoted, 117. 
 
 Mot awetz, Private Corporations, 
 cited, 107 (note). 
 
 Natural Law, regards convey- 
 ance as a contract, 26; in 
 opinions in Ogden v. Saun- 
 ders, 42. 
 
 New Jersey v. Wilson, 16. 
 
 Newton v. Commissioners, 52. 
 
 Northwest Ordinance, 114. 
 
 Obligation of Contract, 13. 
 
 Obligation, defined, 17, 20. 
 
 Ogden v. Saunders, 17, 40. 
 
 Ohio Life Insurance Co. v. De- 
 bolt, 51 (note). 
 
 Old Colony Trust Co. v. Omaha, 
 109 (note). 
 
 Owensboro v. Cumberland Tele- 
 phone Co., 109 (note). 
 
 Owings v. Speed, 17. 
 
 Parliament, British, and obliga- 
 tion of contracts, 48; regula- 
 tory power over corporations, 
 76. 
 
 Piqua Branch Bank v. Knoup, 
 Si. 
 
 Police Power, cannot be alien- 
 ated by contract, 52. 
 
 Powell, on contracts, 34 (note). 
 
 Public corporation, Dartmouth 
 College a, 91 ff. 
 
 Public Service Franchises, 109. 
 Pufendorf, 52; his doctrine of 
 natural law, 27 ff., 47. 
 
 Salmond's Jurisprudence, quoted, 
 54- 
 
 Savigny, his definition of con- 
 tract, 20. 
 
 Shirley, J. M., The Dartmouth 
 College Causes, cited, 18 
 (note) ; cited (note) and ex- 
 amined, 59 ; quoted, 99 (note) . 
 
 State, obligation of, 40 ff.; as a 
 subject of legal obligation, 53 
 ff. ; suability of, 54 ff. 
 
 State contracts, 51. 
 
 Stone v. Mississippi, 52 (note), 
 103. 
 
 Story, Justice, use by, of natural 
 law, 46; opinion in Dartmouth 
 College Case, 67, 73; opinion 
 in Terrett v. Taylor, 90; his' 
 attitude in the Dartmouth 
 College Case, 100. 
 
 Sturges v. Crowninshield, 16,36 
 (note). 
 
 Taylor, on Corporations, quoted, 
 107 (note). 
 
 Terrett v. Taylor, 90. 
 
 Universities, status of, as public 
 corporations, 93. 
 
 Vanhorne's Lessee v. Dorrance, 
 117. 
 
 Wales v. Stetson, 90 (note). 
 
 Washington, Justice, opinion in 
 Ogden v. Saunders, 44; opin- 
 ion in Dartmouth College 
 Case, 66, 73. 
 
 Webster, Daniel, argument in 
 Dartmouth College Case, 18, 
 95- 
 
 West River Bridge Co. v. Dix, 
 103. 
 
 Wilson, James, 36, 37 (note), 
 47; views of, 89, 115 ff. 
 
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 King James laid down, for the benefit of his son Prince Henry, 
 his most careful thought in regard to a king's duty towards God, in 
 his office, and in private life. This is followed by " The Trew Law 
 of Free Monarchies," "An Apologie for the Oath of Allegiance," 
 "A Premonition to all Christian Monarches, Free Princes and 
 States," "A Defence of the Right of Kings, against Cardinall du 
 Perron," " Speech of 1603-1604," " Speech of 1605," " Speech of 
 1607," "Speech of 1609-1610," "Speech in the Star Chamber, 
 1616." For the general purpose intended, it was deemed inadvis- 
 able and unnecessary to cumber this text with variant readings or 
 even with explanatory notes. 
 
 To orient the student, however, in his study of the period, the 
 editor has provided an introduction of about one hundred pages, in 
 which he first discusses the rise and growth of the "Anglican 
 Schism" and the development of political ideas accompanying it. 
 This study clears the ground for a consideration in chapter two of 
 the political philosophy of James I, which was summed up in the 
 doctrine of the Divine Right of Kings. Four Appendices discuss 
 the Tudor literature on Church and State, Cowell's " Interpreter," 
 James and the Puritans, and the writings of Robert Parsons. A' 
 complete bibliography directs the student to important contemporary 
 and modern works connected with the general field. A compre^ 
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The West Florida Controversy 
 of 1798-1813 
 
 A Study in American Diplomacy 
 
 By ISAAC JOSLIN COX 
 
 AxocUt* Pnhmr of History. UaiTanitr «f Cincinnati 
 
 710 Page*. 12mo. $3.00. 
 
 This volume has recently been published in the series of the Albert 
 Shaw Lectures on Diplomatic History. It is based on lectures de- 
 livered in the Johns Hopkins University in 1912, and later revised 
 for publication. The subject involves one of the most intricate prob- 
 lems in American history, and Professor Cox has spared no pains 
 in searching for new sources of information. He has not only 
 availed himself of the collections' in Washington and of the 
 material in the Department of Archives and History at Jackson, 
 Mississippi, but he has personally searched the Archives at Seville 
 and Madrid. 
 
 The volume deals with the secret intriguea of statesmen and 
 diplomats in the capitals of America and Europe on the one hand, 
 and with the aggressive, irresponsible movements of impatient 
 frontiersmen on the other. Professor Cox thinks that the sturdy 
 pioneers of the Southwest outstripped the diplomats, and that 
 their deeds were the decisive factors in the settlement of the long 
 and bitter controversy that was waged over West Florida. 
 
 THE JOHNS HOPKINS PRESS 
 
 BALTIMORE, MARYLAND