650 



OBLIGATION OF CONTRACTS. 



money, is ample for all the purposes of the 

 contract. That, we think, is given by the act 

 of 1882 in both forms of proceeding." 

 The Court concluded as follows : 



In conclusion, we repeat that the question presented 

 by this record is not whether the tax-collector is bound 

 in law to receive the coupon, notwithstanding the leg- 

 islation which, on its lace, prohibits him from doing 

 so, nor whether, if he refuses to take the coupon and 

 proceeds with the collection of the tax by force, he can 

 be made personally responsible in damages for what 

 he does, but whether the obligation of the contract has 

 been impaired by the changes which have been made 

 in the remedies for its enforcement in case he refuses 

 to accept the coupon. We decide only the question 

 which is actually before us. It is no doubt true that 

 the commercial value of the bonds and coupons has 

 been impaired by the hostile legislation of the State, 

 but this impairment, in our opinion, comes not from 

 the change of the remedies, put from the refusal to 

 accept the coupons without suit. What we are called 

 upon to consider in this case is not the refusal to take 

 the coupons, but the remedy after refusal. 



Inasmuch as we are satisfied that a remedy is given 

 by the act of 1882, substantially equivalent to that in 

 force when the coupons were issued, we have not 

 deemed it necessary to consider Avhat would be the 

 effect of a statute taking away all remedies. 



Justice Field began his dissenting opinion by 

 saying that the legislation of Virginia of 1882, 

 which was sustained by the Court, appeared to 

 him to be " in flagrant violation of the con- 

 tract with her creditors under the act of March 

 30, 1871, commonly known as the funding act; 

 and that the doctrines advanced by the Court, 

 though not so intended, do, in fact, license any 

 disregard of her obligations which the ill-ad- 

 vised policy of her legislators may suggest." 



The clause of the Constitution, he continued, 

 which declares that no State shall pass any 

 law impairing the obligation of contracts, pro- 

 hibits legislation thus affecting contracts be- 

 tween the State and individuals equally as it 

 does contracts between individuals. What, 

 then, was the obligation of the contract en- 

 tered into between Virginia and her creditors 

 under the funding act of 1871, so far as the in- 

 terest coupons are concerned ? The contract 

 is, that she will pay the amount of the coupon, 

 and that it shall, at and after maturity, be re- 

 ceivable for taxes, dues, and demands of the 

 State. And by its receivability is meant that 

 it is to be taken by officers whom the State 

 may authorize to receive money for its dues 

 whenever tendered them. By the obligation 

 of a contract is meant the means which the 

 law affords for its execution, the means by 

 which it could at the time it was made be en- 

 forced. Justice Field then said : 



The receivability of the coupon, under the funding 

 act of 1871, for taxes, dues, and demands, gave to it, as 

 already said, its principal value. At that time there 

 was provided in the system of procedure of the State 

 a remedy for the specific execution of the contract, by 

 which this receivability could be enforced. The legis- 

 lation of January 14 and April 7, 1882, deprives the 

 holder of the coupon of this remedy, and in lieu of it 

 gives him the barren privilege, after paying the taxes, 

 of suing in a local court to test before a jury the genu- 

 ineness of the coupon and its legal receivability for 

 them, and, in case he establishes these facts, of having 



a judgment to that effect certified to the Treasurer of 

 the Commonwealth, and the amount paid refunded out 

 of money in the Treasury, if there be any. To recover 

 this judgment, he must pay the costs of the proceed- 

 ing, including the fees of witnesses and jurors, and 

 of the clerk, sheriff, and other officers of the court. 

 This is a most palpable and flagrant impairment of the 

 obligation of the contract. No legislation more de- 

 structive of all value to the contract is conceivable, 

 unless it should absolutely and in terms repudiate the 

 coupon as a contract at all. It is practical repudiation. 



In Bronson vs. Kinzie this court, speaking by Chief- 

 Justice Taney, said : u It is difficult, perhaps, to draw 

 a line that would be applicable in all cases between 

 legitimate alterations of the remedy and provisions 

 which, in the form of remedy, impair the right. But 

 it is manifest that the obligation of a contract, and the 

 rights of a party under it, may, in effect, be destroyed 

 by denying a remedy altogether, or may be seriously 

 impaired by burdening the proceedings with new con- 

 ditions and restrictions, so as to make the remedy 

 hardly worth pursuing. And no one, we presume, 

 would say that there is any substantial difference be- 

 tween a retrospective law, declaring a particular con- 

 tract or class of contracts to be abrogated and void, 

 and one which took away all remedy to enforce them, 

 or encumbered it with conditions that rendered it use- 

 less or impracticable to pursue it." (1 How.. 317.) 



In Planters' Bank t-s. Sharp this court said : " One 

 of the tests that a contract has been impaired is, that 

 its value has by legislation been diminished. It is 

 not, by the Constitution, to be impaired at all. This 

 is not a question of degree or manner or cause, but of 

 encroaching in any respect on its obligation, dispens- 

 ing with any part of its force." (6 How., 327.) 



In Murray m. Charleston the court cited with ap- 

 proval the language of a previous decision to the effect 

 that a law which alters the terms of a contract by im- 

 posing new conditions, or dispensing with those ex- 

 pressed, impairs its obligation ; and added, speaking 

 by Mr. Justice Strong, who recently occupied a seat 

 on this bench, that " it is one of ^the highest duties of 

 this court to take care the prohibition [against the im- 

 pairment of contracts] shall neither be evaded nor frit- 

 tered away. Complete effect must be given to it in all 

 its spirit." (96 U. S., 448.) 



In Edwards vs. Kearzey this court said, speaking by 

 Mr. Justice Swayne. so lately one of our number : 

 " The remedy subsisting in a State when and where 

 a contract is made and is to be performed is a part of 

 its obligation, and any subsequent law of the State 

 which so affects that remedy as substantially to im- 

 pair and lessen the value of the contract is forbidden 

 by the Constitution, and is therefore void." (96 U. S., 

 607.) 



And only two terms ago, in the case of Louisiana vs. 

 New Orleans, this court said, without a dissenting 

 voice, that u the obligation of a contract, in the con- 

 stitutional sense, is the means provided by law by 

 which it can be enforced, by which the parties can be 

 obliged to perform it. Whatever legislation lessens 

 the efficacy of these means impairs the obligation. If 

 it tend to postpone or retard the enforcement of the 

 contract, the obligation of the latter is to that extent 

 weakened." (102 U. S. t 206.) 



How can it be maintained, in the face of these de- 

 cisions, that the legislation of January 14 and April 

 7, 1882, does not impair the obligation of the contract 

 under the funding act? It annuls the present re- 

 ceivability of the coupon ; it substitutes for the spe- 

 cific execution of the contract a protracted litigation, 

 and, when the genuineness of the coupon and its le- 

 gal receivability for taxes are judicially established, 

 its payment is made dependent upon the existence of 

 money in the Treasury of the State. If the language 

 of the act, declaring that, when the genuineness of the 

 coupon and its receivability for taxes are established, 

 the taxes paid by its holder shall be refunded out of 

 the first money in the Treasury in preference to other , 

 claims, be deemed a sufficient appropriation to au- 



