chief with that against which the Constitution it was erroneous, because it recognized the expressly provided. And it was well remarked validity of the Act of 1824 as applicable to the by Mr. Chief Justice Marshall, in the case of charter of the corporation, and thus impaired Providence Bank v. Billings (4 Peters, 563), that the obligation of the contract made by that the Constitution was not intended to furnish instrument. At the hearing of the case the the corrective of every abuse of power which court were equally divided in opinion on the may be committed by the State governments." cases assigned, and therefore, according to its This court will not feel inclined to enlarge practice in such cases, the judgment of the the construction of the Constitution, in order inferior court was *affirmed. No opin- [*334 to abridge the power of legislation belonging ion was delivered by the Supreme Court in to the States, their highest attribute of sover bank, nor either of the judges. No authoritaeignty, by any implication extending this con- tive construction of that court has been given stitutional inhibition to all pre-existing laws to the Act of Assembly on the point in question. 333*] *relating to the subject matter of contracts. Of such latitudinarian construction, so startling to State power, the end cannot be seen from the beginning.

While this court, in the exercise of that high function which sits in judgment upon the validity of the legislative acts of a sovereign State, has always shown itself firm to maintain all just rights under the Constitution of the United States, it has also shown itself not less careful to guard against trenching, by its decisions, upon the remnant of rights which that Constitution has left to the States. So cautious does it move, in the execution of this most delicate trust, that it will not set aside an act of the Legislature of a State, as a void thing, unless it appear clearly to be repugnant to the Constitution. If its constitutionality be doubtful only, the doubt resolves itself in favor of the exercise of State power, and the act takes effect.

But I submit to the court, with great confidence, that, as to this bank, it is clear that the State of Ohio has not, by the passing of any law, impaired the obligation of its charter contract; and that therefore, upon this record, no case arises to which the constitutional inhibition relied upon by the plaintiffs in error can extend.

Mr. Gilpin, for plaintiffs in error, in conclu

sion:

The Act of the General Assembly of Ohio of 11th February, 1829 (3 Chase's Ohio Stat., 2059), created this corporation for banking purposes, declared its powers, duties, and liabilities, and especially provided for the contingency of its suspending the payment in gold and sil ver of its bank notes and deposits, by imposing a penalty of twelve per cent. per annum, from the time of demand and refusal. An Act of the 28th January, 1824 (2 Chase's Ohio Stat., 1417), had been previously passed by the same Legislature, making several general regulations in regard to banks and bankers in that State; and, among them, providing for the same contingency, by imposing a payment of six per cent. per annum from the time of suspension. This corporation suspended payment, and the defendant in error, holding a large amount of its notes, brought suit in the Supreme Court of Hamilton County, to recover the penalty. Judgment was given in her favor in that court, for the principal of the notes, and also eighteen per cent. interest, subjecting the corporation to the penalty provided by its charter, and then, in addition, to that provided by the Act of 1824. This judgment was carried by appeal to the Supreme Court in bank of the State of Ohio, being the highest court of law in that State, and the plaintiffs in error contended that HOWARD 5. U. S., Book 12.

The plaintiffs in error contend that this judgment should be reversed by this court, because it is expressly founded on the alleged validity of the Act of 1824, as applicable to their charter; and as that charter was a contract between the State and the corporation, its stipulations are thereby changed, and its obligation impaired.

The charter of 1829 as a contract, to which the parties on one side are the State of Ohio and those claiming privileges reserved to them by the State, and, on the other, this corporation. It is a contract with mutual benefits, not merely of a general kind, but specific, for the State reserves to itself a certain portion of the profits of the institution. It is such a contract as the Constitution of the United States meant to preserve inviolate in its stipulations. It is not a legislative act, operating on the transactions of third parties, or entering into or forming part of their contracts, by the mere force of paramount legislation, but it is an agreement made by the State itself, as a party, for equivalents exacted and received by it from the corporation. It is, even more strongly than in the case of a charitable institution from which the State creating it receives no direct benefit, a contract to which the stockholders, the corporation, and the State are the original parties. It is," in the words of Chief Justice Marshall (Dartmouth College v. Woodward, 4 Wheat., 518), "a contract made on a valuable consideration. It is a contract for the security and disposition of property. It is a contract on the faith of which real and personal property has been conveyed to the corporation. It is, then, a contract within the letter of the Constitution, and within its spirit also." It is a contract "to be held as sacred as the deed of an individual." (Waddell v. Martin, cited 1 Peters's Dig., 481.) The government which is a party to it " can rightfully do nothing inconsistent with the fair meaning of the contract it has made. (Crease v. Babcock, 23 Pick., 340.)

If it is a contract, how are its terms to be ascertained? The charter is the formal and deliberate act of both parties, reducing to literal stipulations what they mutually agree to; laws not introduced form no part of it, except so far as they are general municipal laws regulating all property; the laws that govern contracts between man and man govern this; in such a case, would not the written instrument made by and between the parties be taken as the declaration of their liability? Nothing is better settled than that it would be. (Vattel, 2, 17, 263; Co. Litt., 147; Parkhurst v. Smith, Willes, 332; Schooner Reeside, 2 Sumner, 567; Truman v. Lode, 11 Adolph. & Ell., 597; Kain v. Old, 2 Barn. & Cress., 634; Thomas v. Mahan, 4 Green

The contract, then, between the State of Ohio and the Commercial Bank of Cincinnati is that contained in the charter passed by the former in 1829, and agreed to and accepted by the latter. What is the obligation of it? The State obliged the corporation to pay a certain penalty in a certain contingency; for that it was to be liable, and for no more; if any law of the State imposed a larger payment in that contingency, the obligation was changed-impaired. (Sturges v. Crowninshield, 4 Wheaton, 122; Green v. Biddle, 8 Wheaton, 84; Ogden v. Saunders, 12 Wheaton, 257.)

Is there any State law imposing a larger liability than the contract contained in the charter imposes? It imposes a penalty of twelve per cent. for suspension; that is the entire liability. The Act of 1824, as construed by the highest court of law in the State, im poses an additional penalty of six per cent. more. This certainly changes and impairs the obligation of the contract between the State and the bank, unless the two laws are so blended together as to be but one regulation; or the mere priority of existence of the Act of 1824 makes it necessarily a part of that of 1829; or the constitutional prohibition does not apply to laws passed previously to the contract; or the effect of the law upon the contract must result directly from its own language, and not from its judicial construction or application. None of these exceptions can be successfully main tained in the present case.

leaf, 516.) It is true that written contracts of 1829, because it was then in existence, and 335*]*do not contain all the municipal regu- was not expressly repealed. The facts of the lations necessary to their execution. These are case are at variance with such an implication; tacitly embraced in them. Not so, however, so is every legitimate legal inference. Were where the State is a party to the contract, and this a contract between individuals—and so, in those regulations would essentially vary its the cases before cited, this court has construed terms. In such a case the subsequent law is such charters-unquestionably the legal presubstituted for the previous one, just as a sub- sumption would be that the new superseded sequent contract between the same individuals, the existing contract. Such, too, is the prerelative to the same subject matter, would con- sumption in legislation; a subsequent provistrol, modify, or extinguish a former one. ion by law for the same subject matter is a substitute for a previous one. General laws are so construed; where penalties are imposed, they are not treated as cumulative; where different remedies are given for the same money, both cannot be resorted to, but one or the other must be chosen. (Titcomb v. Union F. & M. Insurance Company, 8 Mass., 333; Bartlet v. King, 12 Mass., 545; Adams v. Ashby, 2 Bibb, 98: Morrison v. Barksdale, 1 Harper, 103; Smith v. The State, 1 Stewart, 506; Stafford v. Ingersoll, 3 Hill, 41; Sharp v. Warren, 6 Price, 137; United States v. Freeman, 3 Howard, 564; Daviess v. Fairbairn, 3 Ibid., 644; Beals v. Hale, 4 Ibid., 53.) Besides, there can be no inference founded on a general legal principle which is to prevail against an inference derived from the law in the particular case. The Act of 1829 provides for the entire case of suspension of payment of notes and deposits in gold and silver. Even the same court recognized it as so doing, when it was before them on another occasion. (State v. Commercial Bank, 10 Ohio, 538.) The only expression contained in it, which can be cited as at variance with this view, is the imposition of the increased interest as "additional damages," which, it is contended, should be construed to be in addition to that imposed by the Act of 1824. But the language does not justify this construction: the imposition of the increased interest not merely on notes, but on deposits, which are not provided for in the Act of 1824, is inconsistent with it; why double the rate, if not to substitute one for the other? It was to be an increase of interest, not a penalty imposed, as is shown by the express language to that effect in the charter of the Franklin Bank, of which the provisions on this point are the same. (3 Chase's Ohio Stat., 2078.) Nor do judicial interpretations of corresponding provisions warrant such a construction. (Hubbard v. Chenango Bank, 8 Cowen, 99; Brown v. Penobscot Bank, 8 Mass., 448; Suffolk Bank v. Worcester Bank, 5 Pickering, 106; Suffolk Bank v. Lincoln Bank, 3 Mason, 1.) It is not denied that there are many cases in which laws, existing at the time of making a contract, will be regarded by courts as necessarily forming a part of it. But it is not so where the State is a party to the contract; where the law to be construed is itself the *contract; where it [*337 is not apparent that the parties must have contemplated such an incorporation of previous laws. (3 Story's Com. on the Constitution, 247; 1 Kent's Com., 395.) There is no decision of this court on the effect of an existing State law on a contract made by the State itself; every one relates to cases of contracts between third persons; yet even in these it has always been held that it must appear that the existing law was intended to be embraced, either from a reasonable interpretation of the terms

The Act of 1824 is not blended with that of 1829. The latter is a written instrument, deliberately drawn so as to embrace the whole subject matter; if the provisions of the Act of 1824 were part of it, this would have been so declared. The Act of 1829 is not a mere legislative act, prescribing a municipal regulation affecting citizens or corporations, but it is the agreement of the State itself, for its own benefit, securing what it claims for itself, and imposing the conditions on the other contracting party. If there were clauses in the Act of 1824 less favorable to the State, could they be construed so as to affect privileges it might reserve in that of 1829? If the State had agreed, by a general law, in 1824, to advance its bonds to the amount of a million to every bank, and in 1829 agreed by the charter to advance to this bank bonds to the amount of half a million, would it be contended that the former agreement was not superseded by, but added to, the latter? It would be easy to suggest similar contingencies. No. The charter is complete, so far as regards all matters of mutual stipulation between the 336*] parties; *there is nothing in it which requires the Act of 1824 to be blended with it. Nor is any inference to be drawn, by legal construction, that the parties intended to include the provisions of the Act of 1824 in that

of the contract itself, or from the place where it was made, which justifies the inference of intention that the lex loci was to govern. (Sturges v. Crowninshield, 4 Wheaton, 122; Clay v. Smith, 3 Peters, 411; Baker v. Wheaton, 5 Mass., 509, 511.) The whole series of decisions in regard to the effect of State insolvent laws on contracts, and as being considered to form, by implication, a part of them, rests on this view of the subject, as does the application of the ler loci to the construction of them.

tions to possess such privileges; the latter law is in itself constitutional, but if the judiciary so applies it as to infringe the privileges of the particular corporation, is it not a violation of the constitutional prohibition? On what other principle do the decisions of this court, in regard to State insolvent laws, rest? They have been held to be constitutional or the reverse, not in themselves, but according to the manner and circumstances to which they are applied by the judgment of a court; if applied to contracts The prohibition of the Constitution had for made within the State enacting it, an insolvent its object to prevent the obligation of a contract law is held to be valid; if applied to those made being impaired by any law whatever, no matter without the State, the identical law is held to whether its passage was before or subsequent be unconstitutional, or, to speak more corto the contract. The inquiry is, Does a con- rectly, the judgment of the court founded upon tract exist? What is its obligation? Does a it is reversed, as making the law violate the law impair it? If there is in existence a contract, constitutional prohibition. When this whole valid in itself, such as the parties had a right question was so elaborately discussed by this to make, not embracing by its terms or by just court (Ogden v. Saunders, 12 Wheaton, 255), no legal implication the provisions of other laws, point received more unequivocally than this then any State law that changes or controls it, the concurring assent of the judges; they afor can be so applied by the judicial tribunals of firmed the validity of the State insolvent law, the State as to change or control it, is contrary to as not contrary to the constitutional prohibithe language and intention of the constitutional tion in its operation on the contract, because it prohibition, no matter when such law bears was made and to be executed within the State date no matter whether its operation be pro- that passed the law, and on that ground Judge spective or retrospective-on contracts existing Johnson placed the ultimate judgment of the when it was passed, or entered into subse- court. (12 Wheaton, 368.) In one case (Clay quently. In the first plan of the Constitution v. Smith, 3 Peters, 411), the contract was made there was no such clause; it was introduced to in Kentucky, the suit was instituted in Loui prevent any interference by laws of the States siana, a discharge under an insolvent law of the with private contracts. It was proposed to re- latter was pleaded and admitted, because it apstrict this to such State laws as were "retro-peared that the plaintiff, though a citizen of spective," but that was not adopted, and the Kentucky, had received a dividend from the existing limitation was made with a view to syndics in Louisiana; had not that circumstance reach the declared object-“a restraint upon occurred, the application of the law of Louithe States from impairing the obligation of siana to the Kentucky contract would have contracts' in any way. (2 Madison Papers, been held to impair its obligation. Was this 1239, 1443, 1445, 1552, 1581.) The reference the law itself, or its application, which conto a future action-that no State "shall pass stituted the violation of the constitutional prosuch laws-relates to the date of the Constitu- vision? There is scarcely a prohibition of the tion; it is a prohibition future as to that instru- Constitution that might not be evaded by State ment, not to the contract to be affected. No laws, if the evasion must arise necessarily from State law, after the Constitution should be the law itself, and not from its application by adopted, was to impair the obligation of a con- the State courts. Cannot a State pass a genertract; this was the object of the prohibition. al law placing certain restrictions on the travCalder v. Bull, 3 Dallas, 388; Sturges v. eling of coaches and stages, but not referring Croninshield, 4 Wheaton, 206; McMillan v. in terms, or by necessary implication, to the Me Neill, 4 Ibid., 212; Ogden v. Saunders, 12 mail coach, and if the highest court of the [bid., 255.) State recognizes the law to be valid [*339 as applied to such a coach, is not that à violation of the constitutional reservation to the United States exclusively of matters connected with the postoffice? Would the decision of the State court be affirmed by this court, or, what is equivalent thereto, jurisdiction over it be declined, on the ground that it was a mere judicial misconstruction of the State law? A State may pass a law requiring, in general terms, the captain of a vessel to adopt certain sanitary regulations on board, to carry certain lights, to steer in a certain way so as to avoid collisions, and impose a penalty for neglect; but if the highest court of the State sustained a suit to recover the penalty, when it appeared that the violation of the law was in the course of a foreign voyage, and not within the local jurisdiction of the State where its authority to enforce police regulations prevails, would not that judgment be subject to the revision of this court? A State has a right to borrow money; it may pass a law authorizing its executive to

It is evident, that if such be the object of this prohibition of the Constitution, then to make it effectual it must operate, not only where its violation is the result of the direct 338*] language of the law, but wherever the law is so applied by that branch of the State government-its judiciary-which enforces the law, as to produce this result, to violate this prohibition. A legislative act seldom, perhaps never, violates a contract proprio vigore; it is the judgment of a court, applying the act to the contract, which does so; the law impairs the contract only by force of the judgment; it is, indeed, the law that does so, but only be cause the judicial application of it has given that construction and application to its provisions. If this were not so, then the law would in every case be constitutional, or the reverse, in itself, and not by reason of its application. Yet this will hardly be contended. Suppose a law confers special privileges on a corporation, and a subsequent general law forbids corpora

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do so on the faith of the State; if in so doing Even the language of the Constitution itself he should issue "bills of credit,” and the high- is more comprehensive than if it meant to proest court of the State should sustain their le-hibit an infringement of its provision by a mere gality as founded on that law, would this court legislative "act"; it seems to use the term refuse to revise that judgment, on the ground law "in a broader sense, as if it was the comthat the law itself was constitutional, and that its plete and sovereign action of a State, comapplication to the particular case was a mere menced by its Legislature but consummated act of the court, not contemplated by the State by its judiciary. In another section, where it Legislature, and therefore not violating the draws the distinction between the actions of constitutional prohibition? these branches of the State government (art. Again, it is not alone on the language itself 4, sec. 1), it refers to public acts" and "juof the State law, it is on its construction also dicial proceedings." Did it not mean by a by the State court, that the supervising judg." law the union of the two? In the clause ment of this tribunal will be founded. The of the ordinance for the government of the decision of a question arising under a local Northwest Territory, intended to embrace the law of a State by its highest judicial tribunal is same object as that of the Constitution, and regarded by this court as final, not because the adopted by the Continental Congress almost at State tribunal has power to bind it, but because the same time, it was declared that no such it has been deliberately held and decided that law ought ever to be made or have force ""a fixed and received construction by a State as, if any enforcement of it, whether legislain its own courts makes a part of the statute tive, executive, or judicial, was as much to be law." (Elmendorf v. Taylor, 10 Wheat., 152; guarded against as its formal enactment. Shelby v. Guy, 11 Ibid., 361; Green v. Neal, Statutes at Large, 51.) 6 Peters, 298.) We have here a local law of the State of Ohio; referring to the law itself, we find it to contain nothing which impairs the obligation of the contract between the State and Commercial Bank of Cincinnati, nothing which violates the constitutional prohibition; it has received a construction by the highest State tribunal which makes it a law impairing that contract, violating that prohibition; that construction has therefore become "a part of the statute law," as fully as if it were in terms con--whether that effect was to impair its obligatained in it; the judgment of the Supreme Court of Ohio is founded upon the laws as so construed; this court, in revising that judgment, would not, under its own well consid ered decisions, give a different construction to a local law; much less would it do so when the effect would be to sanction, under the form of a judicial proceeding, an infringement of a constitutional prohibition.

The legislation of Congress also seems to have contemplated the enforcement of this constitutional prohibition, where its infringement 340*] *arises from the judicial construction of a State law. The Constitution prohibits the passage of a State law impairing the obligation of a contract. It leaves to Congress the legislation necessary to enforce this prohibition. How has Congress enforced it? Not by reserving to itself a direct supervision of the State laws; not by subjecting them to a direct supervision of the Supreme Court of the United States; but by requiring that they should first be passed upon and construed by the highest court of the State itself, and that, if the judgment of that court so construes them, or gives them such validity, as to make them repugnant to the constitutional provision, then this court may reverse such judgment, and by so doing make void such an application of the law. What could be the object of this act of Congress, if it was not to sanction a revision of a judgment of the highest court of a State, founded upon its construction of a State law-upon its holding a State law so con strued to be valid-whether that construction was in itself right or wrong, whenever the direct effect of such judgment was to impair, under color of that law, the obligation of a contract?

Is not the case now before the court exactly that which was adverted to by Judge Trimble, as within the intent and operation of the constitutional prohibition (12 Wheat., 316), where a law might in itself produce no effect prohibited by the Constitution, yet would do so when applied to a case differently circumstanced? He held that the "only necessary inquiry" was, What was its effect and oper ation" in the suit upon the particular contract?

tion. What has been the effect and operation of applying the Act of 1824 to the suit which has been brought upon this contract of 1829; has it not been to impair its obligation? Such, too, is the whole scope of Chief Justice Marshall's remarks in the same case (12 Wheat., 337), where he denies that the constitutional prohibition is confined to "such laws only as *operate of themselves.' He says that [*341 the law itself, at its passage, may have no ef fect whatever on the contract, and asks,

When, then, does its operation (in violation of the constitutional prohibition) commence? We answer, when it is applied to the contract; then, and not till then, it acts on the contract, and becomes a law impairing its obligation." Can language lay down a legal principle more directly applicable to the case before the court than this? Can there be any doubt that the principle itself is in entire harmony at once with the language and the object of the constitutional prohibition?

It is submitted, therefore, that there is no circumstance to withdraw this application of the Act of 1824 to the charter of the Commercial Bank of Cincinnati from being included within the constitutional prohibition as impairing its obligation. If this has been established, then it is clear that the judgment of the Supreme Court of Ohio, recognizing that act as valid when so applied, may and ought to be reversed by this court; for it appears by the record that the validity of the State law was drawn in question on that ground in the State court, and its validity there affirmed. (Miller v. Nichols, 4 Wheat., 311; Wilson v. The Black Bird Creek Marsh Co., 2 Peters. 250; Satterlee v. Matthewson, 2 Peters, 409; Harris v. Dennie, 3 Peters, 292; Crowell v. Randell, 10 Peters, 391.)

Did the decision of this point draw in question the validity of either of these statutes, on JOHN the ground of repugnancy to the Constitution

of the United States? Or was the court mere

y called upon to decide on their construction?

We are of opinion that there can be but one JOHN JONES, Lessee of THE DETROIT