ment of the original principal of the claim," etc. (p. 648). And such a pledge or transfer, was held there to be valid. It is said, in opposition to this, Why should a bank be considered as able to incur debts! Or why to do any business on credit, requiring sales of its notes or other property to discharge its liabilities? Such inquiries overlook the fact that the chief business and design of most banks, their very vitality, is to incur debts as well as have credits. All their deposit certificates, or bank book credits to individuals, are debts of the bank and which it is a legitimate and appropriate part of its business as a bank to incur and to pay. The same may be said also of all its bank notes, or bills, they being merely promises or debts of the bank, payable to their holders, and imperative on them to discharge. See Bank of Columbia v. Patterson's Adm'r, 7 Cranch, 307; 13 Peters, 593. It may, to be sure, independent of justifications like these, not be customary for banks to dispose of their notes often. But in exigencies of indebtedness and other wants under pressures like those referred to, it may not only be permissible, but much wiser and safer to do it than to issue more of its own paper, too much of it being already out, or part with more of its specie on hand, too little being now possessed for meeting all its obligations. Indeed, its right to sell any of its property, when not restricted in the charter or any previous law, is perhaps as unlimited as that of an individual, if not carried into the transaction of another separate and unauthorized branch of business. Angell & Ames on Corp. p. 104, sec. 9; 4 Johns. Ch. 307; 2 Kent's Com. 283; 11 Serg. & Rawle, 411. Both may sell notes to liquidate their 324*] debts, both sell their lands acquired under mortgages foreclosed or acquired under the extent of executions not redeemed. Both, too, must be able to sell all kinds of their property, when proceeding to close up their business, or find it impracticable. Nor is there any pretense here that any clause in the charter of this bank restricted it from selling its notes or other property under any circumstances, and much less under those, connected with indebtedness and with banking, which have just been referred to. It will be seen, in this way, that all analogies seem to sustain the right which exists by the express grant in this charter to "alien and dispose of" all its "goods, chattels, and effects, of what kind soever, nature, and quality, for the good of said bank." But to avoid differences of opinion, we place the right here solely on the express grant. It ought, perhaps, to be added, that the courts of Mississippi once put a more limited construction on this charter. Baldwin et al. v. Payne et al. 3 Smedes & Marshall, 661. But as that very case is now before us for revision, on the ground that it was erroneous, we feel obliged, for that and other reasons, which need not be here enumerated, to put such construction on the charter, and on the law supposed to violate it, as seems right according to our own views of their true intent. Having thus ascertained the extent of the contract made by the State with the bank in the charter, we proceed next to examine the character and scope of the contract between the maker of the note and the bank. We have already seen that the bank was not only authorized, but expressly required, to discount notes, which were negotiable, or, in other words, which contained a contract or stipulation to pay them to any assignee. Nor is it pretended there was any law of Mississippi, when this charter was given or when this note was taken, which prohibited selling it, and passing to an assignee all the rights, either of property or of bringing a suit in his own name, which then existed with individuals and other banking institutions. What law existed on this point when the note was actually transferred is not the inquiry, but what existed when it was made, and its obligations as a contract were fixed. The law which existed at the transfer, so far from being the test of the force of a contract made long before and under different legal provisions, is the violation of it, and the very ground of complaint in the present proceeding. This contract, then, by the bank with the maker, when executed, enabled the former to sell or assign it, and the indorsee to collect it, not only by its express terms, but by the general law of the State, then allowing transfers of negotiable paper and suits in the [*325 name of indorsees. Howard & Hutchinson's Laws, 373. Indeed independent of the last circumstance, it is highly probable, that by the principles of the law of contracts and commercial paper, such choses in action may be legally assigned or transferred everywhere, when not expressly prohibited by statute. This was done before the Statute of Anne, in England. And it is done since, as to paper both negotiable and not negotiable, independent of that statute. If such notes cannot be sued in the name of the indorsec, when running to order, without the help of a statute, they certainly can be sued in the name of the payee, for the benefit of the indorsee, when the transfer is legal in its consideration and form. The State itself, by passing this law prohibiting the transfer of notes by banks, recognizes the previous right, as well as custom, to transfer them; otherwise the law would not be necessary to prevent it. Nor is this law supposed to have been founded on any prior abuse of power in negotiating or selling its notes, which, if existing, might obviate the above inference. But it is understood, from the record and opinions of the State court, that the design of the law was to secure another provision of statute not previously existing, but made by the Legislature at the same time, requiring banks to receive their own notes in payment of their debtors, though below par. That design, too, would still recognize the prior authority to sell or transfer. We are not prepared to say that a State, under its general legislative powers, by which all rights of property are held and modified as the public interest may seem to demand, might not, where unrestricted by constitutions or its own contracts, pass statutes, prohibiting all sales of certain kinds of property, or all sales by certain classes of persons or corporations. 14 Peters, 74. Such has often been the legislation as to property held in mortmain or by aliens or certain prescribed sects in religion. This is, however, very invidious legislation, *The rights of a party under a con- [*327 tract might improperly be narrowed or denied by a State court, without any redress, if their decision on the extent of them cannot be reviewed and overruled here in cases of this kind; while their decision, if restricting or enlarging the prohibitory act, might more safely stand, as doing no injury in the end, if we hold the act null wherever it is construed by them or us so as to conflict with prior rights obtained under contracts. See Commercial Bank v. Buckingham's Ex'rs. 5 Howard, 317. when applied to classes or to particular kinds | erning us, is to control here in the very cases of property before allowed to be held generally. which, on account of that decision, are brought Legislation for particular cases or contracts, here by appeal or writ of error. without the consent of all concerned, is of very doubtful validity. Merrill v. Sherburne et al. 1 New Hamp. 199. Under our system of government, and the abuses to which in various ways and to various extents that kind of legis lation might lead, several of the State constitutions possess clauses prohibitory of such a course where it affects contracts or vested rights, and more especially does the Constitution of the United States expressly forbid any such 326*] legislation, whenever it goes to impair the obligation of a contract. Hence, the general powers which still exist under other governments, or might once have prevailed here in the States, to change the tenure and rights over property, and especially the jus disponendi of it cannot now, under the federal Constitution, be exercised by our States to an extent affecting the obligation of contracts. The next and final question, then, is, Did the act in question impair the obligation, either of the contract by the State with the bank, or of the contract by the maker of the note with the bank? We have already ascertained the true extent of both of these contracts before this act passed; that by the State with the bank clearly allowing it to take negotiable notes, and to sell or transfer them, and that with the maker clearly enabling the bank to assign his note, and a recovery to be had on it after a transfer, by the assignee. In this condition of things, with this note taken and held, accompanied by such rights and obligations, the Legislature of Mississippi passed the law already quoted, and now under consideration. It expressly took away the right of the bank to make any transfer whatever of its notes, and virtually deprived an assignee of them of the right to sustain any suit, either in his own name or that of the bank, to recover them of the maker. The new law, also, conferred in substance on the maker a new right to defeat any action so brought, which he would otherwise have been liable to. These results vitally changed the obligation of the contract between him and the bank, to pay to any assignee of it, as well as changed the obligation of the other contract between the State and the bank in the charter, to allow such notes to be taken and transferred. It is true that this new law might bear a construction, that the transfer was only a voidable act, and not void, and that if cancelled or waived, a recovery might afterwards be had on the note by the bank; and this seems to have been the view of some of the court in 3 Smedes & Marshall, 681, as well as in Hyde et al. v. The Planters' Bank, 8 Robinson, 421. Yet the State court in Mississippi appears finally to have thought it meant otherwise, and to have decided that no suit at all can be sustained on such a note by anybody after a transfer. This was the view which they think influenced the Legislature. See Planters' Bank v. Sharp et al., 4 Smedes & Marshall, 28. We are disposed to acquiesce in the correctness of this construction, as it seems to conform nearest to the real designs of the Legislature. But this view is not adopted, because a decision by a State court on a State statute, though generally gov If the State courts of Mississippi should hereafter adopt the dissenting opinion of Judge Sharkey, in 4 Smedes & Marshall, 28, and go back to what they appear to have before held, in 3 Smedes & Marshall, 661-namely, that the right to sue by the bank, after a transfer, was not taken away, if the plaintiff replied that the transfer had been rescinded, and the interest was now solely in the bank-and should that construction be adopted here, the force of this new law, as impairing the obligation of the contract, might not be so extensive and clear as now. But still it would seem to impair the contract in some respects; yet whether in such way and extent as to render the obligation it self changed must be left to be decided defini. tively when such a case is presented for our decision. In the present instance, however, as before explained, the extent and operation of the prohibitory law being regarded as forbidding any transfer whatever, and, if it takes place, as barring every kind of remedy on the note, the decisive question may be repeated, How can this happen without injury to the plaintiff's contracts? When every form of redress on a contract is taken away, it will be difficult to see how the obligation of it is not impaired. Green v. Biddle, 8 Wheat. 76; 1 Howard, 317; 4 Smedes & Marshall, 507; King v. Dedham Bank, 15 Mass. 447. If any right or power be left, under the note, by this act, after a transfer is made, it is of no use, when it cannot be enforced and no benefit be derived from it, but an action abated toties quoties as often as it is instituted. 8 Wheat. 12; 1 Bl. Com. 55. In the mildest view, a new disability is thus attached to an old contract, and its value and usefulness restricted; and these of course impair it. Society for Propagating the Gospel v. Wheeler, 2 Gall. 139. 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, dispensing with any part of its force. The Commercial Bank of Rodney v. The State of Mississippi, 4 Smedes & Marshall, 507. So, if the obligation of a contract is to be *regarded as the [*328 duty imposed by it, here the duty imposed by the State to adhere to its own deliberate grant, and the duty imposed on the signer of the note to make payment to an assignee, as well as to the bank itself, are both interfered with and altered. In answer to this supposed violation of the contract between the maker of the note and the bank, some objections have been urged which deserve further notice here. It is sometimes stated, with plausibility, that States may pass insolvent laws, suspending or taking away actions on contracts, where the debtor goes into insolvency, and hence, by analogy, can do it here. But there another remedy is still given on the contract, before the commissioners of insolvency, and a payment is made pro rata, as far as means exist. Here there is no other remedy given, or any part payment made. Indeed, it seems that a forfeiture of all right to recover on the note, in any way, is inflicted here as a penalty for making that very transfer which the bank before, by the act of incorporation, as well as by the note itself, was authorized to make. Again, State insolvent laws, if made, like this law, to apply to past contracts and stop suits on them, have been held not to be constitutional except so far as they discharge the person from imprisonment, or in some other way affect only the remedy. When so restricted, they do not impair the obligation of the contract itself, because the obligation is left in full force and actionable, and future property, as well as present, subjected to its payment, and the body exonerated only as a matter connected merely with the form of the remedy. Cook v. Moffat, 5 Howard, 316, and cases there cited. The case in 8 Robinson, 421, appears also to have been one on a note executed after the prohibitory law, and not, as here, before. But where future acquisitions are attempted to be exonerated, and the discharge extended to the debt or contract itself, if done by the States, it must not, as here, apply to past contracts, or it is held to impair their obligation. Ogden v. Saunders, 12 Wheaton, 213; Sturges v. Crowninshield, 4 Wheaton, 122; 6 Wheaton, 131; 2 Kent's Com. 392; Bronson v. Kinzie, 1 Howard, 311; McCracken v. Hayward, 2 Howard, 608; 1 Cowen, 321; 16 Johns. 237; 1 Ohio, 236; Cook v. Moffat, 5 Howard, 308, 314. Congress alone can do this as to prior contracts, by means of an express permission in the Constitution to pass uniform laws on the subject of bankruptcy; and which laws, when not restrained by any constitution or clause like this as to States impairing contracts, may in that way be made to reach past obligations. set-off, where an assignment had been made The act as to this last topic was passed the next day after the act prohibiting transfers. Mississippi Laws, 2 February, 1840, p. 21, sec. 2. It was in these words: "All banks above alluded to, and all other banks in this State, shall at all times receive their respective notes at par in liquidation of their bills receiv. able and other claims due them." These two acts, though undoubtedly well meant, and designed to give an honest preference to bill holders (see Sharkey's dissenting opinion) as to a paper currency which ought always to be kept on a par with specie, were unfortunately, in the laudable zeal to avert a great apprehended evil, passed, without sufficient consideration of the limitations of the powers imposed by the Constitution of the Union on the State Legisla tures, not to impair the obligation of existing contracts. Nor was it necessary to go so far to secure any legitimate results. Some other laws are referred to, which are upheld, and which affect the whole community, and seem to violate some of the important incidents of contracts between individuals, or between [*330 them and corporations. But it will usually be found that these are such laws only as relate to future contracts, or if to past ones, relate to modes of proceeding in courts, to the form of remedy merely, to priority to some classes of creditors (5 Cranch, 298), to the kind of process (9 Peters, 319; 10 Wheat. 51), to the length of the statute of limitations (6 Wheat. 131; 2 Mason, 168; 3 Johns. Ch. 190; 4 Wheat. 200; 1 Howard, 315, to exempting the body from im. The misfortune here is, that the Legislature, prisonment (4 Wheat. 200), or tools and house329*] if meaning *merely to insure to bill hold goods from seizure (16 Johns. 244; 1 Howholders of the bank, when debtors, the privilege ard, 15; 11 Martin, 730), or affecting some priv. of paying in the bills of the bank (as is sup-ilege attached to the person or territory (Story posed, 4 Smedes & Marshall, 1, 90), have not said so, and no more, by providing that promissory notes, though assigned by banks, should still be open to set-off's by their debtors of any of their bills which they then held. This would have been equitable, and no more, probably, than they would be entitled to, on common law principles, if an assignee purchased, as here, after the promissory notes fell due, and perhaps with a knowledge of the existence of such a set off. on Confl. of Laws, 339, etc.), and not to the terms or obligations of any part of the contract itself. Cook v. Moffat, 5 Howard, 295; Towne v. Smith, 1 Wood. & M. 132; 7 Greenl. 337; 3 Burge on Col. & For. Law, 234, 1046. And if, in professing to alter the remedy only, the duties and rights of a contract itself are changed or impaired, it comes just as much within the spirit of the constitutional prohibition. Bronson v. Kinzie et al., 1 Howard, 316; 2 Howard, 612; 2 Madison Papers, 1239, 1581. Chief Justice Marshall, in The United States Thus, if a remedy is taken away entirely, as v. Robertson, 5 Peters, 659, says, independent here, or clogged "by condition of any kind, the of any statute, "every debtor may pay his cred- right of the owner may indeed subsist and be itor with the notes of that creditor. They are acknowledged, but it is impaired." Green v. an equitable and legal tender." Equally Biddle, 8 Wheat. 75. And the test, as before just and reasonable would have been a declara-suggested, is not the extent of the violation of tory law as to the allowance of such bills as a the contract, but the fact, that in truth its obli But look a moment at the other class of de cisions. Let a charter or grant be entirely expunged, as in the case of the Yazoo claims in Georgia, and no one can doubt that the obliga tion of the contract is impaired. Fletcher v. Peck, 6 Cranch, 87. So, if the State expressly engage in a grant. that certain lands shall nexer be taxed, and a law afterwards passes to tax them. [*332 State of New Jersey v. Wilson, 7 Cranch, 164 Or that corporate property and franchises shali be exempt, and they are then taxed. Gordon v. Appeal Tax Court, 3 Howard, 133. gation is lessened, in however small a particu- | Rep. 445; 2 Hill, 242; 6 Howard, $42. It is lar, and not merely altering or regulating the supposed to help enforce, and not impair what remedy alone. 2 Howard, 612; 8 Wheat. 1. the charter requires. But on this, being a very Having, it is believed, assigned sufficient different question, we give no opinion. reasons to show that the obligation of both of these contracts was impaired, it is now pro posed briefly to refer to a few precedents bearing on the correctness of this conclusion, chiefly in respect to the most important of the contracts that between the State and the bank. On an examination of the various decisions which have taken place in this court on the violation of the obligation of contracts, it will be found that this case does not come within the principle of any of those where the decision was, that the new laws were no violation; but, on the contrary, is much like several where the decision annulled them as a clear violation. Thus, where a new law has taken the property of a corporation for highways under the right of eminent domain, which reaches all property, private or corporate, on a public necessity, and on making full compensation for it, and under an implied stipulation to be allowed to do it in all public grants and charters, no injury is committed not atoned for, nothing is 331]done not allowed by pre-existing laws or rights, and consequently no part of the obligation of the contract is impaired. See case of The West River Bridge, and authorities there cited, in 6 Howard, 507. So, when the Legislature afterwards tax the property of such corporations in common with other property of like kind in the State, it is under an implied stipulation to that effect, and violates no part of the contract contained in the charter. Armstrong v. Treasurer of Athens County, 16 Peters, 281; see Providence Bank v. Billings, 4 Peters, 514; 11 Peters, 567; 4 Wheat. 699; 12 Mass. Rep. 252; 4 Gill & Johns. 132; 4 Durn & East. 2; 5 Barn. & Ald. 157; 2 Railway Cases, 23. So, when no clause existed in a charter for a bridge against authorizing other bridges near at suitable places, it is no violation of the terms or obligation of the contract to authorize another. Charles River Bridge v. The Warren Bridge et al. 11 Peters, 420. Nor is it, if a law makes deeds by femes covert good when bona fide, though not acknowledged in a particular form; because it confirms rather than impairs deeds, and carries out the original intent of the parties. Watson v. Mercer, 8 Peters, 88. Or if a State grant lands, but makes no stipulation not to legislate further upon the subject, and poceeds to prescribe a mode or form of settling titles, this does not impair the force of the grant, or take away any right under it. Jackson v. Lumpkin, 3 Peters, 280. Nor does it, if a State merely changes the remedies in form, but does not abolish them entirely, or merely changes the mode of record ing deeds, or shortens the statute of limitations. 3 Peters, 280; Hawkins v. Barney's LesBee, 5 Ib. 457. So, if lands have been granted for one purpose, and an attempt is made by law to appro priate them to another, or to revoke the grant. Terrett v. Taylor, 9 Cranch, 43; Town of Paw let v. Clark, 9 Cranch, 292. Or if a charter, deemed private rather than public, has been altered as to its governmen and control. Dartmouth College v. Woodward 4 Wheat. 518. Or if owners of lands, granted without con ditions or restrictions, have been by the Legis lature deprived of their usual remedy for mesne profits, or compelled to pay for certain kinds of improvements, for which they were not otherwise liable. Green v. Biddle, 8 Wheat. 1. Or if, after a mortgage, new laws are passed, prohibiting a sale to foreclose it, unless two thirds of its appraised value is offered, and enacting further that the equitable title shall not be extinguished till twelve months after the sale. Bronson v. Kinzie, 1 Howard, 311; McCracken v. Hayward, 2 Ib. 608. These last cases in Wheaton and Howard are very near in point to the present one, though in my view, a less strong and decisivie encroachment on a previous contract than this is. So are the cases very near where all remedy whatever is taken away, and it is held that the obligation of the contract is thus impaired. See some before cited, and Mass. Rep. 430; 2 Gall. 141; 2 Greenl. 294; 1 Howard, 311; 3 Peters, 290; 2 Howard, 608. The whole usefulness and value of a note or contract is in this way destroyed, and that without any reference to the contract itself. For these reasons the judgment below must be reversed. Baldwin et al. v. Payne et al This case involves several of the questions just discussed in that of The Planters' Bank v. Sharp et al. Some of the points of difference are merely nominal; as, for instance, that the charter of the Mississippi Railroad Company, which transferred the notes in this case, is different. But, it being subsequent in date to the charter to the Planters' Bank, and with "all the usual It has been held, also, not only that a Legis- rights, powers, and privileges of banking which lature may regulate anew what is merely the are permitted to banking institutions within remedy, but some State courts have decided | the State,” the court seemed, by mutual conthat it may make banking corporations subject | sent of parties, to regard those conferred on to certain penalties for not performing their the Planters' Bank as extensive as any, and duties such as paying their notes on demand therefore a correct guide here. in specie, and that this does not violate any contract. Brown v. Penobscot Bank, 8 Mass. *Other differences may be more ma. [*333 terial in appearance, as that the transfer in this case was found by the special verdict to have been in payment of a debt of the bank; and another, that the suit here is in the name of the indorsee, and not, as in the former case, in the name of the promisee. Its being assigned in payment of a debt is, however, no more than was presumed might have been the truth in the other case. And its being sued in the name either of the indorsee or payee can make little difference on the final construction given by the State court to the prohibitory law in the action of The Planters' Bank v. Sharp et al. That construction, we have seen, was, that it is the transfer itself which is prohibited and made in some degree penal, rather than the action in the name of the indorsee being all which is prohibited. It will be remembered, also, that if the State might be able, by a general repealing law, to prevent a suit in the name of an indorsee, without impairing any contract in the charter itself, as is argued for the defense, it could hardly do this without impairing the other contract, between the bank and the maker, by which the latter promises to pay any indorsee. Certainly the new prohibitory law ought not to have attempted more than a repeal of the statute allowing suits by indorsees of negotiable paper in their own name. Then the indorsees of notes negotiable, as of notes not negotiable, would still possess a right to sue their notes in the names of the payees. In such a case, there would be some plausibility in the idea, that, though the action would not lie in the name of the indorsee, yet if it could in the name of the payee, for and on his account, the prohibitory law would chiefly affect the remedy, and not the right of action in some form or other. But even then, if the obligation or force or duty of the contracts, whether with the bank by the State, or with the maker, was impaired in any degree, though under cover of affecting the remedy only, it would come within the constitutional restriction. Mr. Chief Justice Taney and Mr. Justice Daniel dissented. Mr. Justice McLean: So far as the seventh section of the act in question has been construed, by the Supreme Court of Mississippi, to invalidate the note between the bank and the payee, it is unconstitutional. The fair import of the provision takes away only the negotiability of the instrument. But the courts of Mississippi have decided, where a note has been assigned in vio lation of the statute, that no suit can be sustained on the note, either in the name of the assignee or of the payee. This impairs the obligation of the contract, which the Constitution inhibits. The argument, that, where the bank, attempts to transfer a note by a void indorsement, it must be re-indorsed to enable the bank to sue in its own name as payee, is unsustainable. A void indorsement is no indorsement, and it can have no effect on the validity of the note. The section declares, that "it shall not be lawful for any bank in this State to transfer, by indorsement or otherwise, any note, bill receivable, or other evidence of debt; and if it shall appear in evidence, upon the trial of any action upon such note, bill receivable, or other evidence of debt, that the same was transferred, the same shall abate upon the plea of the defendant." The object of the statute was to secure the right of the debtors of a bank to pay their debts in its own paper. This they could not do, if the notes, before they were payable, had been assigned by the bank. No fair construction of the seventh section can authorize a forfeiture of the note, by reason of the illegal indorsement. It is, therefore, unnecessary to consider whether such a provision would be constitutional. The bank had the power, under its charter, to assign promissory notes. If this were not so, the law to prohibit the assignment [*335 But how much more must it so come in this would have been unnecessary. There being no case, as well as the other, where, instead of express power in the charter of the bank to inmerely changing the obligation so as to render dorse notes, it must be considered as exercising a recovery on the contract not permissible in the power under the general law making notes the name of an assignee, but more inconven-negotiable; and in this respect it must stand on ient, expensive, dilatory, and often difficult in the same ground as an individual. And this the name of another, the payee, the State court presents the question, whether the repeal of the of Mississippi hold, that the Legislature, by the law making notes negotiable by banks can afprohibitory law of 1840, not only meant to fect notes executed before the repeal. A maabate a suit in the name of an indorsee, but in jority of the judges hold that a provision so the name of the payee, if a transfer had once construed is void, as it impairs the obligation heen made. Substantially, they consider any of the contract. I dissent from this conclusion. suit on the note, by anybody, after it has once 334] been transferred, as illegal, and the right to enforce the contract to be lost or forfeited forever. This view of the statute of 1840 being regarded as established in Mississippi, renders it clear that in this case, as well as the case of The Planters' Bank v. Sharp et al., the law under which this action has been abated must be considered as having impaired the obligation of contracts; and therefore to be in this respect unconstitutional, and the judgment of the State court erroneous. The judgment below must therefore be reversed, and as a special verdict was found in this case, judgment must be entered on it in favor of the original plaintiffs. An individual holds a note, which, under the statute, is negotiable; but the statute is repealed. Does this take away the negotiability of the note? I think it does. There can be no doubt of this, unless such a construction shall impair the obligation of the contract. Now, what obligation is violated by this construction? It is said, that the maker of the note promised to pay to the assignee of the payee. This is admitted. But until the note be assigned, there can be no assignee. The indorsement is a new contract between the indorser and the indorsee; and when this contract is made, it can no more be impaired than the contract between the maker and the payee of the note. A promise to pay to A B or his assignee is |