sum of seventeen dollars and twenty-five cents adjudged by the court hereunto the said John L. Moffat and Joseph Curtis, on their assent for their costs and charges by them about their suit in this behalf laid out and expended. And the said William G. Cook in mercy, etc.

It will be contended that the court cannot, consistently with law and the Constitution of the United States, give an effect to State insol. vent laws greater or more extensive than that given by the decision in that case.

*The Constitution is to be construed [*299 with reference to its general as well as to its particular intents.

Memorandum. Judgment rendered in this cause on this 21st day of April, 1836, for the damages laid in the declaration and costs of The general government emanates from the suit; the said damages to be released on pay-people, and its powers are to be exercised diment of $7,335.57, with interest from 21st day of April, 1836, and cost of suit.

Memorandum. That no execution against the person of the defendant be issued in the above cause on said judgment without the leave of the court.

298*] *To review this judgment the case was brought up to this court.

The cause was argued by Mr. Mayer and Mr. Johnson for the plaintiff in error, and by Mr. Hinkley for the defendants in error.

rectly upon them and for their benefit. McCulloch v. Maryland, 4 Wheat. 316; Cohens v. Virginia, 6 Ibid. 413.

Moreover, the Constitution is an agreement or compact between each individual of the people and all the rest, as well as between each one of the States and all the others.

The States, as to their sovereign and exclusive powers, are foreign to each other, as well as to the federal government. Woodhull et al. v. Wagner, Bald. C. C. Rep. 296.

Mr. Mayer entered into a critical analysis of It is said there is great obscurity in the clause all the opinions which had been given by this of the Constitution (art. 1, sec. 10) which decourt on the subject of State insolvent laws, clares, among other things, that "no State shall from all which he argued, that the philosophy pass any law impairing the obligation of conof the law had never been settled; that, in con- tracts." But if we construe the language as sequence of the want of harmony in those opin-it stands, it is clear, that, forming what logiions, the whole subject ought to be again re- cians call a universal negative proposition, and viewed. There was a difficulty in annexing being absolute and imperative. a meaning to some terms in the Constitution 1. It excludes every kind and degree of what which were in themselves uncertain; such, for it prohibits, whatever that be. This has been example, as the phrase, "impairing the obliga- seen by the court. Sturges v. Crowninshield, tion of contracts." This expression was sup-4 Wheat. 122; Green v. Biddle, 8 Ibid. 84. posed to include a prohibition to pass insol- 2. Consequently it excludes every cause, mode vent laws; and yet in Sturges v. Crowninshield, and manner, by which the thing prohibited may 4 Wheat. 122, it appeared to be conceded that be affected. Hence it is immaterial what may a State might pass such laws, operating only be the title, provisions, or professed object of upon its own citizens. It was also admitted, a State law, if, in its effect, it impair the obon all hands, that the United States could pass ligation of a contract in the sense of the Conbankrupt laws, which dissolved a contract en- stitution. tirely. Now, if these laws were prohibited on account of their supposed dishonesty, it was unaccountable that a power to extend them over the whole nation should have been conferred upon Congress. Certainly laws do not become less mischievous by becoming more extensive. It would seem as if bankrupt laws were not considered as impairing the obligation of contracts. In the debates of 1787, they were spoken of as mere commercial regulations, like damages upon bills of exchange. Luther Martin says that the prohibition meant to exclude tender laws, and retrospective laws. All nations have bankrupt laws, and it is not surprising that the power to make them was given to Congress, as auxiliary to the general one of regulating commerce. These State laws only stay all judicial proceedings, like statutes of limitation. It will not do to say that statutes of limitation rest on a presumption that the debt has been paid, because where they apply to land there can be no such presumption.

In support of these and similar views he cited Secret Proceedings and Debates of the Convention, Yates' Notes, 70, 71, 246, 247; 3 Madison Papers, 1442, 1443, 1448, 1480, 1549, 1552; Federalist, 80th number; Story's Conflict of Laws, secs. 312, 395, 404, 422, 438.

Mr. Hinkley, for defendants in error:

It is understood that the question raised upon the statement of facts in this case was decided in the case of Ogden v. Saunders, 12 Wheat.

213.

3. It may be admitted, that, in the absence of any bankrupt law of Congress, the States may pass insolvent or bankrupt laws, provided their effect be not extended to impair the obligation of contracts. The power granted to Congress by the Constitution, art. 1, sec. 8, "to establish uniform laws on the subject of bankruptcies throughout the United States," is permissive, not imperative. The decisions which are in accordance with this construction need not be disturbed, however difficult it may be to reconcile the exercise of the power by the States with the prohibitory clause in relation to impairing the obligation of contracts. Perhaps it can only be done in the manner in which it has been done by the decision of Justice Johnson in the case of Ogden v. Saunders, by allowing the States to legislate for their own citizens in matters exclusively within the jurisdiction of their own courts, but not for citizens of other States who have a right to the jurisdiction of the courts of the United States. The justice, policy, or humanity of insolvent or bankrupt laws is not so much a question for the courts as for the Legislatures. If the State Legislatures can constitutionally pass such laws, their own courts may be bound to administer them to all suitors within their jurisdiction. See Babcock v. Weston, 1 Gallis, C. C. R. 168.

4. A creditor may waive his constitutional rights. Consensus vincit legem. What [*300 acts may amount to a waiver it is for the court to determine. It has been decided, that re

ceiving a dividend under the insolvent law of a Kinzie, 1 How. 316. The lex loci contractus State is evidence of a waiver. Clay v. Smith, is said in general to govern in determining the 3 Pet. 411. Making himself a party to the nature, validity, and interpretation of contracts. proceedings under a State insolvent law in Story's Conflict of Laws, sec. 241; The Bank other ways may have the same effect. Bald. C. of the United States v. Donally, 8 Pet. 361. C. R. 299; Buckner v. Finley, 2 Pet. 586. But And sometimes the law of the place where the a citizen of one State, by simply becoming a contract is to be performed is said to govern. party to a commercial contract with a citizen of another State, does not waive any right under the Constitution of the United States. This point is involved in the question put for decision by Justice Johnson in the case of Ogden v. Saunders, 12 Wheat. 358. If, indeed, this were construed to be a waiver, it would in effect take away the jurisdiction of the courts of the United States. What now is the meaning of the phrase "impairing the obligation of a contract?"

There is a nice discrimination to be made by courts in regard to the source of the law, as well as to the nature of the law, which ought to govern them.

con

As to the contract now under consideration, we are furnished with no law, either of New York or of Maryland, in regard to its nature, validity, or interpretation. If not prohibited it is not to be adjudged by their laws. The right of the parties to enter into the contract was not granted by either of those States. It is The word "contract" is an artificial term of a right of personal liberty which was very extensive signification. It is collective quered by our fathers, and was inherent in the and generic, embracing a great number of in- people when the State governments were dividuals, but comprehending only the essential formed, as well as when the general governproperties of each. It may be defined an agreement was established. The States of the conment, not prohibited by law, between two par- tract were silent as to the laws of the contract, ties at the least, whereby each, for a sufficient and therefore the law of the former must govconsideration, promises or undertakes to do or ern it. Indeed, what is intended by the lex loci not to do something. What one promises or contractus would seem to be, not the territorial gives is ordinarily the consideration for what law, but the law of the government under whose the other promises or gives. There is a duty jurisdiction the parties are, in reference to the imposed on each party by the laws of God and contract. If the territorial law is silent, and by the laws of man, in civil society, to perform the citizenship of the parties gives them a what is stipulated in the contract on his part to right to resort to an independent forum, the law be performed. This is the obligation of the of this forum will be the law of the contract. contract. Jurisdiction given in consideration of percontrolled or lost by temporary domicil within the territorial surface or sphere of a subordinate jurisdiction. And this appears to have been the law of the Roman empire in the first century. For, when St. Paul was accused before Festus at Cæsarea, being a Roman citizen, he appealed to Cæsar, and his appeal was allowed. And afterwards, when Agrippa had heard his noble defense, he told Festus that he found nothing in the man worthy of death or of bonds, and that he might have been set at liberty, if he had not appealed to Cæsar. After the appeal, neither the governor not the king could decide the cause. The jurisdiction was gone. And Paul was sent a prisoner to Rome.

There may be, and usually are, two obliga-sonal attributes or qualifications is not always tions in a contract, one appertaining to each party. When one party has fulfilled his obligation, there remains only the obligation of the other party. Although the contract include a moral as well as a legal obligation, yet the legal obligation only is intended in the Constitution. The moral obligation acts upon the conscience, understanding, the free will of man, and cannot be enforced by human laws or courts of justice. It may die and revive again. It may remain and be the consideration of a new promise after the legal obligation is released by law. According to Webster, the 'impair' is of French derivation, and signifies to make worse, to lessen the value of.

With reference to the Constitution of the United States the term "contracts" must embrace all subjects to which the judicial powers extend, whether of common law, equity, or admiralty and maritime jurisdiction.

The contract in question is one of common law jurisdiction, and must be adjudicated with reference to the rules of this jurisdiction. There are three sources of law, to one or more of which the court may look for rules to guide. They are distinguished as lex rei sitæ, lex loci contractus, and lex fori. Much depends upon a correct understanding and applicability of these laws, in any given case, as to the results to which the court may be led. 301*] *If the subject of the contract be land, the lex rei sitæ takes precedence, and the place of the contract, or the citizenship or domicil of the parties, is immaterial. All rights and titles in the subject must be governed by the law of the State in which it is situate. And the decisions of the courts of the State will be respected as to what the law is. Bronson v.

Residence of aliens within a State of the Union constitutes no objection to the jurisdiction of the federal court. Breedlove et al. v. Nicolet et al. 7 Pet. 413.

The constitutional right of a citizen to sue in the circuit courts of the United States does not permit an act of insolvency, executed under *the authority of a State, to be a bar [*302 against a recovery upon a contract made in another State. Suydam et al. v. Broadnax, 14 Pet. 67. This case decides to what extent the jurisdiction of the United States will prevail over that of the States, and how far the laws of the States can interfere with the remedies afforded by the courts of the United States.

Neither the statutes of the States nor decisions of the State courts apply to questions arising in a court of the United States upon contracts of a commercial nature. Swift v. Tyson, 16 Peters, 1; Amis v. Smith, 16 Ibid. 303. This court, then, is not to be restrained by any State law in passing judgment upon the contract in question.

To revert to the consideration of the obliga- does not appear to be any obscurity in the tion of the contract, what does it require the phrase, "impairing the obligation of concourt to do? What judgment to pronounce? tracts." And, unless there is obscurity or laI have said it is the duty imposed upon the tent ambiguity, it is a rule that you cannot go party to perform what he has stipulated. It is out of the instrument for explanation. And it argued on the other side, that the creditor ought is a well settled rule of evidence, that what to submit to the insolvent law of the State of may have passed pending negotiations for a which the debtor was a citizen when the con- contract does not form a part of the contract tract was made, as he must have contemplated finally agreed upon and deliberately executed. the possibility that the debtor would avail him- And this rule applies with great force to an self of this law. But before insolvency hap-instrument of so grave and solemn a character pens, the expectation of the creditor, and of as the Constitution of the United States. the debtor, too, if he is honest, is, that the But the debates do not seem to furnish any debt will be paid without default. It is not thing that militates with the construction which probable that the remedy is in the contempla- we have given to the phrase in question. It is tion of the parties. It is not strictly a part of said that they furnish evidence that none but the contract. It is a legal right arising after retrospective laws were intended to be prohibbreach or default, secured by the constitutions ited. At page 1443 of Volume III. of the Madand the laws. It is not necessary to be contem-ison papers, it is found that "Mr. King moved plated at the time when the contract is made, to add, in the words used in the ordinance of in order to be appropriated after the contract is broken. It may be resorted to when there is occasion for its use. And as between the remedy afforded by the State and that by the United States, the latter may be esteemed superior and preferable, and as the creditor has the right of election, it may be presumed, that if he contemplated any remedy at the time of entering into the contract, it was that which he has elected. It is in accordance with the rule of the common law, that of two concurrent jurisdictions a party may elect the superior one. The court are now to render judgment. The obligation of the debtor as a party to the contract is clearly seen and admitted. It is to pay a certain sum in gold or silver coin. But the State, by her act, interposes a release of the debtor, against the will of the creditor, and would thereby bar a judgment corresponding with the debtor's obligation. Does not the Constitution mean, by the obligation of a contract, the obligation entire and full, and in all the integrity and with all the value that was given to it by the terms of the contract? We answer in the affirmative. For if the court gave judgment for the value of the obligation after the It is stated that Mr. Gerry entered into obState law has acted on it, and after the release servations inculcating the importance of public shall have been applied, then it suffers exactly faith, and the propriety of the restraint put on what is prohibited by the Constitution. It suf- the States from impairing the obligation of fers the law to impair the obligation. And so contracts, and alleging that Congress ought to every obligation might be impaired to any ex-be laid under the like prohibitions. He made 303] tent, or wholly destroyed. The judg-a motion to that effect. He was not seconded. ment is a record of the obligation, or more exactly of the duty which the Constitution and the law imposes upon the debtor in order that he discharge his obligation.

It would appear, therefore, that in cases in which a court of common law of the United States has jurisdiction over a commercial contract, valid by the law of the State or States where made, a State insolvent law cannot be applied to impair the obligation of the contract in suit. That the forum has law of its own, and that this is the law to be administered, in order to determine and adjudge what is the obligation of the contract.

Congress establishing new States, a prohibition on the States to interfere in private contracts." Upon which there was debate, which see; Mr. Morris and Colonel Mason being against, and Mr. Sherman, Mr. Wilson, and Mr. Madison in favor of the motion. And at page 1444, Mr. Wilson stated, "The answer to these objections is, that retrospective interferences only are to be prohibited." Whereupon, "Mr. Rutledge moved, instead of Mr. King's motion, to insert, 'nor pass bills of attainder, nor retrospective laws;' upon which seven States voted in the affirmative and three in the negative. At page 1450, Mr. Dickinson mentioned that ex post facto related to criminal cases only; that some further provision was necessary to restrain the States from retrospective laws in civil cases. At page 1552, we find the words "altering" or "impairing" the obligations of contracts introduced into the tenth section of art. 1. At page 1581, we find the first clause of art. 1, sec. 10, altered so as to read as it now stands in the Constitution. And there [*304 does not appear to have been any debate upon this section in this form.

Now, it is a sufficient answer to all that may be inferred from the remark of Mr. Wilson, or any other member of the convention, that the phrase "retrospective laws" was not finally adopted, although it appears to have been suggested. And in the absence of all debate or explanation of the phrase, "or law impairing the obligation of contracts, we are left to construe it according to its plain meaning. It is said that it could not be meant to restrain the States from passing bankrupt or insolvent laws, which the framers of the Constitution must have approved, inasmuch as they gave Congress power to pass a uniform law upon It has been said, that, by reason of the doubts the subject of bankruptcies throughout the in regard to the meaning of the Constitution States. But if the States were qualified to pass upon this question, resort must be had to ex- acceptable laws on this subject, what need was ternal evidence, to the history of the times prior to the formation of the Constitution, and 1. In a note it is said that in the printed jourto the debates of the convention had upon that nal this was "ex post facto." If the debates were instrument. In the view we have taken, thereupon this phrase, there is no inference to be made

as to the meaning of terms in question.

304

SUPREME COURT OF THE UNITED STATES.

there of a law of Congress? The inference is the rather, that, while it admitted the power of States to pass such laws, that either the character or effect of them was objectionable.

It is admitted that retrospective laws were intended to be prohibited, as impairing the obligation of contracts. But insolvent and bankrupt laws are usually retrospective; therefore they could not have been intended to be wholly excluded from the prohibition.

The fair meaning of the clause, as to impairing the obligation of contracts, is, that the prohibition or restraint was laid upon the States, and took effect from the moment the Constitution was adopted, so that it was not afterwards competent for any State to pass any law which might have the effect to impair the obligation of any contract to be thereafter made.

tensive than that of 1774. From 1805 to the time when this court decided the case of Sturges v. Crowninshield, no doubt existed of the constitutionality of these laws, either as respecting debts or debtors. The bankrupt law of the United States passed in 1800 recognized State laws. The decision in Sturges v. Crowninshield took the States and the profession by surprise. It was a matter of astonishment that up to that time the States had all been wrong. But this surprise was lessened when the case came to be discussed afterwards by the bench as well as the bar, in Ogden v. Saunders. [Mr. Johnson here went into a minute examination of the opinions of the judges in that and subsequent cases.]

The doctrine cannot be correct, that Maryland law means one thing when applied to her As to the distinction between the right and own citizens, and another thing when applied the remedy, it is proper when used to distin- to other persons. The Constitution of the Unitguish what is stipulated in the contract, sup-ed States is obligatory within a State itself, as posing it to be performed without breach, and what the law will compel the delinquent party to do in consequence of his failure to do what he has stipulated. But the remedy is the fruit of the contract, and it is the whole value of the obligation of the delinquent party. This obligation continues as an obligation of the contract at the time of the judgment, and afterwards until satisfaction, or until the judgment dies by lapse of time.

It is difficult to decide in every case how far the remedy may be modified without impairing the obligation. The remedy is given by the United States, although it be adopted from the laws and practice of the States respectively. The only general rule seems to be to distinguish between form and substance. The remedy cannot be wholly taken away, nor essen305*] tially impaired. See Green v. Biddle, *8 Wheat. 1-75; Bronson v. Kinzie, 1 How. 316; McCracken v. Hayward, 2 Ibid. 608.

It may be dificult, in strict reasoning, to prove that imprisonment is only a form of remedy. But as gold or silver is the only thing that can constitutionally satisfy the debt, and as an incarcerated body cannot be sold or put into slavery, it seems to be no direct remedy at all, and as a punishment it is unjust against an honest man.

Upon the whole, the judgment ought to be affirmed, and the decisions rest undisturbed.

Mr. R. Johnson, for the plaintiff in error, in reply to Mr. Hinkley, divided the subject into the four following heads:

1. What points have been decided by this court.

2. How far the points decided bear upon the present case.

3. Under all the circumstances of the opin ions given, whether it is not justifiable and proper to look into those opinions.

4. That the law of the case was with the plaintiff in error.

The debtor was a citizen of Maryland at the time of contracting the debt, and at the time of his discharge. Anterior to the Revolution, the State had bankrupt laws which discharged the debt, as well as the person of the debtor. Act of 1774. After the Revolution, special acts were passed from time to time, all of which discharged the debts themselves. In 1805, exa general system was established, more

well as between citizens of different States. The protection which it extends over all extends to persons in the same State, and if such protection prevents the claims of a foreign creditor from being destroyed by an insolvent law, it must equally secure the claims of a domestic creditor. The result will be, that such laws must be entirely swept away, even as regards the internal concerns of a State; in which her own citizens alone have an interest. But this conclusion is not likely to be adopted. [*306 The power of a State to pass such laws is not denied. 4 Wheat. 136; 12 Ibid. 277.

Contemporaneous construction has acquiesced in this power. The Federalist does not deny it. State judiciaries acted on it. No convention where the Constitution was discussed ever Millions have thought it an objection that this power was taken away from the States. been distributed by its exercise. As an attribute of sovereignty, a government cannot get along Such laws are known to all the without it. globe where commerce is known. The hazards of life and business make it certain that some men must be ruined. At first, these laws were passed solely for the benefit of the creditors, and bankrupts were punished as guilty. But a more benign spirit at length taught that men might become poor and bankrupt from misfortune as well as crime. The framers of the Constitution did not hold it to be immoral to discharge debtors, because they gave the power of doing so to the United States. The fortysecond number of the Federalist says, that the expediency of such a power is not likely to be drawn into question. Can the Constitution be made to say that State laws are unjust, and that the same laws by the United States are not unjust? Or does it rather mean, that under the operation of State laws a sufficient amount of good could not be obtained? State laws cease with their limits. A debtor might be free within his own State, but not beyond it. Giving all possible effect to the Maryland insolvent laws within her limits, yet if a bankrupt debtor went beyond, he was unprotected; and the Constitution must have intended to supply this deficiency, by giving to Congress power to pass a law which should protect him everywhere. But there is nothing in this hostile to State insolvent laws. On the contrary, it is recognizing them and extending their beneficial influence. Howard 5.