17 U.S. 122, 1819 WL 2136 (U.S.Mass.),4 L.Ed. 529, 4 Wheat. 122

THIS was an action of assumpsit, brought in the Circuit Court of Massachusetts, against the defendant, as the maker of two promissory notes, both dated at New York, on the 22d of March 1811, for the sum of $771.86 each, and payable to the plaintiff, one on the 1st of August, and the other on the 15th of August 1811. The defendant pleaded his discharge under ‘an act for the benefit of insolvent debtors and their creditors,’ passed by the legislature of New York, the 3d day of April 1811. After stating the provisions of the said act, the defendant's plea averred his compliance with them, and that he was discharged, and a certificate given to him, the 15th day of February 1812. To this plea, there was a general demurrer and joinder. At the October term of the circuit court, 1817, the cause came on to be argued and heard on the said demurrer, and the following questions arose, to wit:
1. Whether, since the adoption of the constitution of the United States, any state has authority to pass a bankrupt law, or whether the power is exclusively vested in the congress of the United States?
2. Whether the act of New York, passed the 3d day of April 1811, and stated in the plea in this case, is a bankrupt act, within the meaning of the constitution of the United States?
3. Whether the act aforesaid is an act or law impairing the obligation of contracts, within the meaning of the constitution of the United States?
4. Whether plea is a good and sufficient bar of the plaintiff's action?
And after hearing counsel upon the questions, the judges of the circuit court were opposed in opinion thereupon; and upon motion of the plaintiff's counsel, the questions were certified to the supreme court, for their final decision.
February 8th.
Daggett, for the plaintiff, argued: 1. That since the adoption of the constitution, no state has authority to pass a bankrupt law, but that the power is exclusively vested in congress. The 8th section of the 1st article of the constitution is wholly employed in giving powers to congress. Those powers had hitherto been in the state legislatures or in the people; the people now thought fit to vest them in congress. The effect of thus giving them to congress, may be fairly inferred from the language of the 10th article of the amendments to the constitution, which declares, that ‘the powers, not delegated to the United States by the constitution, nor prohibted by it to the states, are reserved to the states respectively, or to the people.’ The expression is in the disjunctive; not delegated nor prohibited. The inference is, therefore, fair, that if a power is delegated, or prohibited, it is not reserved. Every power given by the constitution, unless limited, is entire, exclusive and supreme. The national authority over subjects placed under its control, is absolutely sovereign; and a sovereign power over the same subject cannot co-exist in two independent legislatures. Uniform laws on the subject of bankruptcies are contemplated in the constitution; the laws of the different states must be, of course, multiform; and therefore, not warranted by the constitution. The same clause which provides for the establishment of uniform laws on the subject of bankruptcies, provides also for ‘a uniform rule of naturalization.’ In the first clause of the same section, it is declared, that ‘duties, imposts and excises shall be uniform throughout the United States;’ and in the 9th section, it is further declared, that ‘no preference shall be given, by any regulation of commerce or revenue, to the ports of one state over those of another.’ In the last three cases, it is admitted, that congress alone can legislate; and by the same reasoning, congress only can make laws on the subject of bankruptcies. It is a national subject; and therefore, the power over it is in the national government. Before the adoption of the constitution, partial laws were enacted by the states, on the subject of foreign commerce, of the commerce between the states, of the circulating medium, and respecting the collection of debts. These laws had created great embarrassments, and seriously affected public and private credit; one strong reason for a national constitution was, that these alarming evils might be corrected. The constitution provides this remedy; it takes from the states the power of regulating commerce, the power of coining money, and of regulating its value, or the value of foreign coin. It prohibits, in terms, the issuing of paper money, the making anything but gold and silver a tender in the payment of debts. It provides for the establishment of national courts, extends the judicial power to controversies between citizens of different states, and between the citizens of the respective states and foreign subjects or citizens: and yet it is urged, that it leaves in the states the power of making laws on the subject of bankruptcies, whereby contracts may be destroyed. If the convention had intended that congress and the state legislatures might legislate on this subject, we should expect to see the powers of these respective sovereignties expressed, and a definition of them, at least, attempted. We might expect this, because, in several cases in the constitution, it appears that this course had been pursued.: § 4, art. 1; § 8, art. 1; compared with § 2, art. 2; § 9, art. 1; § 10, art. 1; § 1, art. 2; § 3, art. 4, and art. 5, furnish instances of powers of this character. It is said, that the power in question is not declared to be exclusive in congress. We answer, nor is any power so declared, except that of legislating for the ten miles square, the seat of government. It is said, again, that the exercise of this power is not prohibited to the states. Nor is the power to provide for the punishment of piracy and other crimes committed on the high seas; nor of making a rule of naturalization; nor of the regulating the value of coin; nor of securing to authors and inventors the exclusive right to their writings and discoveries, prohibited. Yet, who doubts that legislation by the states on those subjects is opposed to the spirit of the constitution? It is also objected, that congress are vested with the power of laying and collecting taxes; and yet, this power is rightfully exercised by the states. This is admitted, and we contend, that comparing the 8th and 10th sections of art. 1, there is a strong implication of a reservation of power, in this case, to the states. In the 8th section, granting powers to congress, taxes, duties, imposts and excises are specified; in the 10th section, prohibiting the exercise of powers by the states, the word taxes is omitted, undoubtedly, by design. Besides, there is no incompatibility in the exercise of this power by the two sovereignties; and we concede, that upon the true principles of the constitution, the powers not prohibited to the states, nor in their nature exclusive, still remain in the states. It will be argued, that, if congress declines to exercise the power of making laws on the subject of bankruptcies, the states may exercise it. But we contend, that the whole subject is intrusted to the national legislature; and if it declines to establish a law, it is to be considered as a declaration, that it is unfit that such a law should exist: and much stronger is the inference, if, as in 1805, congress repeal such a law. It will, perhaps, be asked, if this construction of the constitution be correct, how it is, that so many states, since the adoption of the constitution, have passed laws on the subject of bankruptcies. On examination, it will appear, that no acts, properly called bankrupt laws, have been passed in more than four or five of the states. There are, indeed, insolvent laws, by which the bodies of debtors, in one form or another, are exempted from imprisonment, in nearly all the states. Rhode Island had an act in existence, when the constitution was adopted, by which the debtor might, on application to the legislature, be discharged from his debts. In New York, a law of the same character has been in operation, since the year 1755, and also in Maryland, for a long period. In Pennsylvania, a bankrupt law operating only in the city and county of Philadelphia, existed for two or three years; and in Connecticut, the legislature has often granted a special act of bankruptcy, on applications of individuals. But in all the other states, their laws on this subject have been framed with reference to the exemption of the body from imprisonment, and not to the discharge of the contract. In Massachusetts, the idea has prevailed so extensively, that the power of congress is exclusive, that no bankrupt law was ever passed by the legislature of that state. It cannot be denied, that if congress exercise this power, the states are divested of it. But what species of power is this? Laws made by independent legislatures, expire by their own limitation, or are repealed by the authority which enacted them. Here, however, is a novel method of destroying laws. They are not repealed; do not cease by their own limitation; but are suspended by the interference of another independent legislature. It is difficult, upon this construction, to define this power of the states.
2. The act of the state of New York, pleaded in this cause, is a bankrupt law, within the meaning of the constitution of the United States. By this law, on the application of any person imprisoned or prosecuted for a debt; or, on the application of any creditor of a debtor imprisoned, or against whom an execution against his goods and chattels hath been returned unsatisfied, he having given sixty days' notice thereof, proceedings may be had before certain tribunals by the act established, whereby all his property may be taken and divided among his creditors, and he liberated from imprisonment, and discharged from all debts. It will be insisted, in support of the plea, that this law is an insolvent law. What is an insolvent law? Insolvent laws are derived from the cessio bonorum of the Roman law, and discharge the person, and not the future acquisitions of the debtor. A judgment, assignment or cession, under that law, does not extinguish the right of action; it has no other effect than to release from imprisonment. A bankrupt law establishes a system for a complete discharge of insolvent debtors. An insolvent law is an act occasionally passed for the relief of the body of the debtor. A bankrupt law, as distinguished from an insolvent law, is a general law, by which all the property of the debtor is taken and divided among his creditors, and he discharged from his debts, and made, as it is sometimes said, a new man. But if this be not a bankrupt law, then it may remain in force, if congress should exercise its power. Would then the laws on the subject of bankruptcy be uniform? It is impossible to believe, that the convention meditated such an absurdity. On this point the cases are numerous and strong. In Golden v. Princethe law of Pennsylvania, which was similar to that of New York, was treated, both by the bench and bar, as a bankrupt law. In Blanchard v. Russell, the statute now pleaded, was declared by the supreme court of Massachusetts, to be a bankrupt law. In Smith v. Buchanan, he law of Maryland was so considered by the English court of K. B. In Proctor v. Moore, a special act of the legislature of Connecticut, is considered as a bankrupt law, by the supreme court of Massachusetts. In the case of Blanchard v. Russell, Mr. Chief Justice PARKER says, speaking of the statute now in question, ‘The law under which the debtor claims to be discharged, is a general law, intended to affect all the citizens of the state of New York, at least, and it provides a system by which an insolvent debtor may, upon his own application, or upon petition of any of his creditors, be holden to surrender all his property, and be discharged from all his debts. It is, therefore, a bankrupt law, and to be distinguished from insolvent laws, technically so called.’ But this is said not to be a bankrupt law, because such laws apply only to traders and this embraces every debtor. The first English bankrupt statute, that of Hen. VIII., c. 1, makes a general provision; and this is declared to be the foundation of the whole system. It is true, by various subsequent statutes, it was limited; but the construction now given to those statutes embraces various descriptions of persons, who are not merchants or traders. It is not, therefore, an essential feature of a law, on the subject of bankruptcies, that it should extend to traders only. It is further urged, that by the English bankrupt laws, an act of bankruptcy divests the debtor of his property, and the proceedings always originate with the creditor. By the 16th section of the law under consideration, the creditor may originate proceedings, under certain circumstances; and all grants and dispositions of property, made after a certain time, are declared void. What constitutes this, and other similar laws, bankrupt laws, is, that thereby an absolute discharge of the body of the debtor and his future acquisitions of property is obtained. In this, it differs from insolvent laws.
3. This act is a law impairing the obligation of contracts, and therefore, unconstitutional and void. A contract is an agreement to do, or not to do, a particular thing. Its obligation binds the parties to do, or not to do, the thing agreed to be done, or not done, and in the manner stipulated. Whatever relieves either party from the performance of the contract, in whole or in part, impairs its obligation. It is, however, said, that if the contract is made in the state where such law exists, the parties have reference to it, and it is a part of their contract. This is a petitio principii. If the act be unconstitutional and void, the parties regarded it as such, and of course, did not look to it as binding. A law, declaring that debtors might be discharged on paying half the sum due, or that the creditor might recover double the sum due, are alike void; or else, all contracts are at the mercy of the legislature. Legislatures act within the limits of their powers, only when they establish laws to enable parties to enforce contracts; laws to afford redress to the injured against negligence and fraud in not performing engagements: and courts act within their proper sphere, when they confine themselves to the exposition of those contracts, and giving efficacy to the laws.
4. But even admitting this act to be constitutional, as to all contracts made after it was passed, it was clearly unconstitutional and void as to all contracts then existing, as it was an act or law impairing their obligation. The first impression of any man, learned or unlearned, is, that a law which discharges a contract, without an entire performance of it, impairs its obligation. A law which declares, that a bond given for the payment of $1000 may be cancelled, and the obligor freed from all liability to suit thereon, upon the payment of $500, certainly materially affects the obligation of the contract, and impairs it. It will be urged, however, that though the words in the constitution are broad enough to include the case, yet they are to be construed according to the intent of the framers, and that the prohibition of such laws as that in question, was not intended by the constitution. Surely, language, here, as everywhere else, is to be understood according to its import. If, by a law impairing the obligation of contracts, we are not necessarily to understand a law relieving either of the contracting parties from the performance of any part, or the whole, of the stipulations, into which he has entered, we ask for a definition of such law. In the case before the court, it appears, that the defendant, in March 1811, in New York, gave to the plaintiff his promissory note, payable in August 1811, for $771.86. In April 1811, the law under consideration was passed, and thereby the legislature of New York declare, virtually, that if the defendant shall deliver up all his property for the benefit of all his creditors, and that property shall be sufficient to pay ever so small a proportion of his debts, the plaintiff shall never thereafter prosecute the defendant for the remaining sum, but that the contract shall be discharged. The language of the constitution expressly forbade the legislature from making such law. The prohibition is plain and unequivocal-needs no comment, and is susceptible of no misinterpretation. And why should we seek to affix any other than their natural meaning to the terms used? It is certainly a sound rule, not to attempt an interpretation of that which is plain, and requires no interpretation. This is the rule in relation to treaties and public conventions; and surely is applicable to a constitution, where every word and sentence was the subject of critical examination and great deliberation. Nor is it admitted, that the convention, in their prohibition, did not look directly to a law of this nature. It was notorious, that the states had emitted paper money, and made it a tender; had compelled creditors to receive payment of debts due to them in various articles of property of inadequate value; had allowed debts to be paid by installments, and prohibited a recovery of the interest. All these evils, so destructive of public and private faith, and so embarrassing to commerce, the convention intended, doubtless, to prevent in future. The language employed speaks only of paper money and tender laws, by a particular description. Was nothing else intended? Why then add the comprehensive words ‘or law impairing the obligation of contracts?’ Its language, taken in connection with the subject, is equivalent to this declaration: ‘The state governments have abused their power; they shall no more interfere between debtor and creditor; they shall make no law whatsoever impairing the obligation of contracts.’ In Golden v. Prince, and Blanchard v. Russell, already cited, the circuit court in Pennsylvania, and the supreme court of Massachusetts, expressly adopt this construction of the constitution. In the last case, Mr. Chief Justice PARKER says, ‘a law made after the existence of a contract, which alters the terms of it, by rendering it less beneficial to the creditor, or by defeating any of the terms which the parties had agreed upon, essentially impairs its obligation, and, for aught we see, is a direct violation of the constitution of the United States.’ The same doctrine is also recognised by the supreme court of Massachusetts.
5. This act is retrospective, and therefore, void. The act was passed after the note was made. Ex post facto laws, which regard crimes, are not only declared void by the constitution, but they are opposed to common right. The same is true of retrospective laws in civil matters.
They are not made to enforce, but to violate contracts; and are, therefore, considered repugnant to natural justice. In the case of the Society for Propagating the Gospel, &c. v. Wheeler, 2 Gallis. 139, Mr. Justice STORY says, ‘upon principle, every statute which takes away or impairs a vested right, acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability in respect to transactions or considerations already past, must be deemed retrospective.’ In Dash v. Van Kleeck, 7 Johns. 477, the supreme court of New York says, ‘an act of the legislature is not to be construed to operate retrospectively, so as to take away a vested right. It is a principle of universal jurisprudence, that laws, civil or criminal, must be prospective, and cannot have a retrospective effect.’
Hunter, contrà, stated, that before he proceeded to the discussion of the question before the court, he would relieve himself, if not the court, from the pressure of an authority of the utmost respectability, which, if it stood single and unopposed, would be irresistible. He referred to the case of Golden v. Prince, decided by Mr. Justice WASHINGTON; but the truth is, that opinion was more conspicuous, because it stood alone; no other judge of this court, or of any state court, had so decided: but, on the contrary, that opinion had been decided against in several instances since its publication. Hannay v. Jacobs, ruled by Mr. Justice JOHNSTON, in the circuit court of South Carolina; Adams v. Storey, determined by Mr. Justice LIVINGSTON, in the circuit court of New York, 1 Paine 79; Blanchard v. Russell, 13 Mass. 1; Farmers' and Mechanics' Bank v. Smith, 3 S. & R. 63. The counsel also referred to the earlier opinions on the question; to the discussion and decisions, which took place in the legislature of Maryland, soon after the adoption of the constitution, as mentioned by Mr. Chief Justice TILGHMAN, in his opinion in 3 S. & R. 63. To a decision in Connecticut, in 1794, a MS. statement of which had been furnished him by an eminent lawyer of that state, and the accuracy of which would be readily acknowledged. ‘One Huntington petitioned the general assembly for a special act of insolvency. While the petition was pending, he prayed for a writ of protection. His creditors directed the sheriff to attach his body, and commit him to prison, on the ground, that the assembly had no power of granting his petition, and of course, the writ of protection was void; the sheriff accordingly committed him. Huntington then prayed for a habeas corpus from the assembly, which was granted, commanding the sheriff to release him, which was done. The creditors brought an action against the sheriff, before the circuit court, in which it was determined by Mr. Justice CHASE, that a state had the right of passing special insolvent acts, without infringing the constitution.’ In the circuit court of Rhode Island, several cases had occurred about the same period. In Murray v. Thurber, a discharge under the insolvent law of Rhode Island was pleaded in bar; and upon demurrer, and after argument, principally upon the constitutionality of the law, judgment was given by Mr. Justice WILSON, in favor of the plea. In 1798, the case of Cock and Townsend v. Clarke and Burges, occurred. This was an action brought by the plaintiffs, citizens of New York, against the defendants, citizens of Rhode Island, on two promissory notes. After several continuances, the defendants pleaded in bar to the action, since the last continuance, their discharge under the insolvent law of Rhode Island; and upon a general demurrer, the constitutionality of the law was elaborately argued. Every leading principle laid down in the decision of Golden v. Prince, was suggested by the plaintiff's counsel; but they were overruled in an elaborate opinion of Mr. Chief Justice ELLSWORTH. Other cases had occurred in the same state, but the most important was one, the name of which could not be recollected, determined by Mr. Chief Justice JAY, in his first circuit in Rhode Island, very soon after that state had adopted the constitution. The defendant pleaded a license or indulgence, granted him by a law of the legislature of Rhode Island, exempting him, for a certain number of years, from the payment of his debts and suits, & c. The argument principally turned upon the proper construction of that clause in the constitution, which prohibits the state legislatures from passing any law impairing the obligation of contracts. The Chief Justice went fully into the principle; admitted the power of the state to pass insolvent laws, from the power inherent in every community to give relief to distress, and to protect its citizens from perpetual imprisonment; from the impossibility of compelling payment where there was no property; from the right of the states to pass insolvent laws as they had always previously done, as they had only granted to the United States the power of passing bankrupt laws, which were very different in his conception from insolvent laws. He stated it as his opinion, that, by an insolvent law, the contract was not, in the sense of the constitution, impaired. But the practice of suspending the collection of debts, of granting licenses and indulgences, against the consent of the creditor, of impairing the obligation of a contract as to the important point of time when a debt by its terms was payable, and denying all remedy by action, merely for the convenience of the debtor, when his ability was confessed, he strongly and severly reprehended, as an infraction of the constitutional injunction. The accuracy of this statement of the case is verified by the effects. The docket of the legistature of Rhode Island was immediately cleared of every petition praying for time, licenses, indulgences, &c.; and no one has ever since been sustained. But they have continued to act, as heretofore, upon their insolvent system.
1. It is, however, admitted, that this question has not been determined by the supreme court; sitting as such; and we are bound to inquire, whether these decisions of its former illustrious members were founded in error, and whether they cannot be supported by reasoning. On the other side, it is said, in the first place, that congress have power to pass uniform laws on the *139 subject of bankruptcy throughout the United States. That if an unqualified power be granted to a government to do a particular act, the whole of the power is disposed of, and not a part of it; consequently, that no power over the same subject remains with those who made the grant, either to exercise it themselves, or to part with it to any other authority. If the principle were applicable to the subject, and correct in its hypothesis, it would be a truism, which nobody would be disposed to dispute. But if it be not applicable to the subject, and if the hypothesis is not previously proved, it is a petitio principii; a gratuitous assumption of that which is to be proved. The test of this principle consists, in the first place, in the inquiry, what was the particular act, to do which, a power, an unqualified power, was granted? It was a power to pass uniform laws on the subject of bankruptcies throughout the Union; not on the subject of insolvencies in the particular states. It is to pass bankrupt, not insolvent laws. No two things are more clearly distinguishable; they mean, and always have meant, in English and American jurisprudence, different things. Undoubtedly, they are analogous subjects; but nullum simile est idem. In speaking of the state of suspension or denial of payment, we say, bankrupt; that is, a merchant who, committing certain acts, gives evidence, that he is criminally disinclined to pay, and who may nevertheless not be insolvent: or, we say, an insolvent; any man who is at once poor and in prison; who surrenders all he has; pays as far as he can; and who, from the absolute want of means, is physically incompetent to pay more. Hassels v. Simpson, 1 Doug. 92, note.
We refer to terms in the English language, that have been contradistinguished in their use, so far as we can trace them, for nearly three centuries. Both the terms, bankrupt and insolvent, are familiar in the law of England; and it will be conceded, that whenever a term or phrase is introduced, without comment or explanation, into our constitution or our statutes, every question respecting the meaning of that term or phrase, must be decided by a reference to that code from whence it was drawn. In the earliest times, neither bankruptcy nor insolvency were subjects of English jurisprudence. Of the general code of the primordial common law, they formed no part, for the plain reason, that anciently, imprisonment for debt, which is now the main proof of bankruptcy, and consummation of insolvency, was unknown to the common law. It was even against Magna Charta. Burgess on Insolvency 5; Co. Litt. 290 b. The nature of the population of England in feudal times, developes the cause. The different counties of England were held by great lords; the greater part of the population were their villeins; commerce hardly existed; contracts were unfrequent. The principal contracts that existed were with the lords and their bailiffs, the leviers of their fines and amercements, receivers of their rents and money, and disbursers of their revenues. In the year 1267, imprisonment for debt was first given against the bailiffs, by the statute of Marlbridge, 52 Hen. III., c. 23; Burgess 18, 19; F. N. B. Accompt, 117. The statute of Acton Burnel, 11 Edw. I., gave the first remedy to foreign merchants, by imprisonment, in 1283. The statute 13 Edw. I., c. 2, gave the same remedy against servants, bailiffs, chamberlains, and all manner of receivers. Burgess 24, 27. These instances show how imprisonment for debt first commenced, how few were at first included, and accounts for the non-existence of legal insolvency. The statute of 19 Hen. VII., c. 9, which gave like process in actions of the case and debt, as in trespass, is the true basis of the right, or wrong, of general imprisonment. This statute, and the usurpations of the various courts, produced their natural effects. They filled the jails of England with prisoners for debt. This state of things produced, sixty years afterwards, the statute 8 Eliz., c. 2, restricting the right of imprisonment, and guarding against its abuses; but this was not sufficient. She issued the proclamation of the 20th of April 1585, authorizing certain commissioners, therein mentioned, to order and compound controversies and causes. Rymer's Foed. tom. 17, fol. 117; Burgess 84. This commission continued in force until her death, and, according to the political system of the times, had the force of law. James I., aided by the counsels and the pen of Lord BACON on the 11th of November 1618, issued a similar, but enlarged, commission, in which the term insolvency is expressly mentioned, and its nature described. Rymer's Foed. tom. 17, fol. 116; Rot. Parl., 16 Jac. I.; Burgess 88. Charles I., in 1630, issued a similar commission. Burgess 95. The first insolvent law, similar in language and design to these ordinances, and meant to supply their place, was passed, after the execution of Charles I., by the republican parliament, in 1660. Scobell's Ordinances 56; Burgess 98. In the 23d Charles II., the first great regular insolvent act was made, the model of all that follow; its provisions and language having been copied by the subsequent parliaments in England, and by our colonial legislatures, with almost unvarying exactness. About forty acts of insolvency have passed from that time to the present, in Great Britain; until at length a regular system of insolvency is established; and courts possessing a peculiar jurisdiction, clearly and practically contradistinguished from bankruptcy, decide cases of insolvency, in one room of Guildhall, while commissioners of bankruptcy are deciding cases of bankruptcy in another. Burgess, 176. It appears, then, that insolvency is the creature of statute, and has been described, settled and ascertained, in a course of centuries, by plain, positive, parliamentary enactments: and this is likewise true of bankruptcies. In strict chronology, the bankrupt laws existed first. The first statute of bankruptcy was passed in 1542, the 34 Hen. VIII.; but the 13 Eliz. and the 21 James I., are the principal and all-important statutes. These and others, amounting to fourteen or fifteen different acts, continued down to Anne and George III., form the present system of bankruptcy in England. Thus, while the ordinances of Elizabeth and James, and the various statutes, down to the present times, were passed, expressly on the subject of insolvency, for the benefit of all poor prisoners confined for debt, including all classes in society, the parliament was, at the same time, passing statutes of bankruptcy, maturing and accumulating that peculiar code, confined as it was to merchants and traders only. Burgess 212; 2 Bl. Com. 476, Christian's note; 2 Wils. 172; Cooke's Bank. Law 42; Rees's Encyclop., title Insolvency; 2 Montefiore's Com. and Law Dict. 390.
The distinction between bankrupt and insolvent laws was perfectly well known to our ancestors, who, in their legislation and usages, have always considered insolvent as different from bankrupt laws. All the colonies, in some shape or other, had insolvent laws; few had bankrupt laws. In 1698, Massachusetts passed an insolvent law: that is, a law for the relief of poor prisoners confined for debt. Mass. Laws 130 (Lond. ed. 1724). In 1713, that colony passed an act concerning bankrupts, and for the relief of the creditors of such persons as shall become bankrupts; this was a temporary law, which failed in experiment, and expired in 1716. By this historical deduction, it is intended to prove, that the particular act which the states granted to congress a power to pass, was one having reference to bankruptcies; which meant something contradistinguished from insolvencies. It is not denied, that insolvency, in its most comprehensive sense, is a universal, of which bankruptcy is a particular; but taking it in this sense, it is insisted, that the grant to congress narrows the universality of the previous power of the states, only by excluding from it the ancient, and well-understood, distinct matter of bankrupt laws. But it is in more exact conformity to the facts, and therefore, more precise language and safer reasoning, to say, that modified as this matter is, and has been, for centuries, in practice, they are different things, expressed by essentially different terms. How has this subject been considered between the two constitutional parties, the congress of the United States, and the individual states? Surely, they knew what the one granted, what the other received. The last have always asserted their power of passing insolvent laws: the former have always assented to the exercise of this power, without the smallest complaint of injury or usurpation. Very soon after the adoption of the constitution, a bankrupt law was introduced into congress; it was postponed, on the ground that the state insolvent laws were sufficient. The whole debate turns on the acknowledged and well understood differences between the two laws. Debates of Congress, vol. 2, p. 204. Congress, when, at last, in the year 1800, it acted on this subject, took care solemnly to enact, that the bankrupt law should not repeal or annul, or be construed to appeal or annul, the laws of any state now in force, or which may be hereafter enacted. Act 4th April 1800, ch. 173, § 51. In all the abortive attempts to pass a new bankrupt law, every committee of the house of representatives and senate introduced the same clause. Thus, it appears, that the two parties, whom it is sought to make litigant, essentially and cordially agree, and that upon a point of power. Who have a right to say they disagree? To interfere to make them disagree? Congress, in asserting the claim of the United States to priority of payment over other creditors, exerts this right solely in cases of legal insolvency: and this court has frequently, and after great deliberation in sanctioning this claim, considered and defined legal insolvency. United States v. Fisher, 2 Cranch 358; United States v. Hooe, 3 Ibid. 73; Prince v. Bartlett, 8 Ibid. 431; Thelusson v. Smith, 2 Wheat. 396. How preposterous this, if no legal insolvency can exist! Congress itself has passed an insolvent law for the district of Columbia. This it has done, because there it had the power of exclusive legislation. It has done for its district of Columbia, what the states can do for themselves: what congress cannot do for them. Again, by the declaration of rights of many of the states, it is asserted, ‘that the person of the debtor, when there is not strong presumption of fraud, ought not to be continued in prison, after delivering up his estate in such manner as shall be prescribed by law.’ This supposes a rightful, permanent system of insolvency by state authority.
2. But admitting, for the sake of the argument, that this grant of power to congress includes all that can be comprehended both under insolvencies and bankruptcies, we contend, that from the peculiar nature of the subject, to convert the grant of power into an actual prohibition of its exercise by its former possessors, it must actually be exercised by its present possessors. This arises from the very nature of the subject; from the nature and condition of human affairs; from an overruling necessity: for, the duties of humanity are imperative and indispensable, and must be exercised by some one or other of the guardian powers of the community.
The existence of the power of granting relief, in the extremities produced by debt and indigence, is morally necessary, not only to the well-being, but to the existence of civilized and commercial society; and if one authority in a nation divests itself of this, by a grant to another authority, it imposes its exercise as a duty on that other; and if the one does not exercise it, the other, by necessity, must. The power, in this sense, remains concurrent. This principle may be illustrated by an analogous question of international law. Denmark, by its position as to the Baltic and its entrances, owes a duty to the navigating interest of the world, of guarding their ships from peril and from shipwreck. She has, so far as is practicable, by her buoys, her light-houses, her pilots, performed this duty. Suppose, she were to cede, by treaty, the benefit she derives from this source; grant the right, and impose the duty upon her neighbor and rival, Sweden. Suppose, Sweden was to forbear or neglect to exercise it; could not Denmark exercise it? Would she not be bound to exercise it, by all the obligations of humanity? Are the buoys to be torn up, the pilots to be suppressed, the lights to be extinguished? Are the coasts of both countries to be lined with shipwrecks, her own subjects to suffer, and her great duties to the civilized world to be neglected and violated? Is this analogy too remote? All the duties of humanity are associated: quoddam commune vinculum habent. Why was this power over bankruptcies granted at all? Undoubtedly, that it might be exercised, being necessary for the good of the community; and if its exercise is suspended, may it not, justly and properly, be re-assumed, until again exercised by that which is conceded to be the paramount authority. This concurrent power of the states, from a similar, though less imperative necessity, exists in various other cases. Congress has the whole power of regulating commerce with foreign nations. The most important medium of foreign commerce, is foreign bills of exchange, which are, therefore, important subjects of commercial regulation. There can hardly be imagined a duty more incumbent on congress, than this exercise of its admitted power of legislation. Yet it has neglected that duty; and as it is a power that, from the necessity of the thing, must be exercised, the states may and do exercise it, and their rightful use of this power has been sanctioned by this court in innumerable instances. Congress has power to regulate the value of foreign coins; it was long before it exercised this power, as to any foreign coins, and still omits to do it, as to the greater number. Have these foreign coins then no value? So also, congress has power to fix an uniform standard of weights and measures. This has never been done. Is there then no standard, and are all contracts relative to quantity, to weight and measure, destitute of a legal medium of ascertainment? If congress had neglected to establish post-roads, would not the states have had power to provide for so great a public convenience; a benefit which they always enjoyed, even in colonial times? As to the power of congress to establish an uniform rule of naturalization, it may be necessarily exclusive, because if each state had power to prescribe a distinct rule, there could be no uniform rule on the subject: and naturalization, or the power of making aliens citizens, must have uniformity; since the citizens of each state are entitled to all the privileges and immunities of the citizens of the several states: it is a power that must pervade the Union. But insolvent laws have no extra-territorial force, unless by consent; they are made by the state, for the state; at any rate, a single state has no inherent power of foreing them upon the other state. This depends upon the old question of the lex loci. The reasoning adopted by that learned lawyer and accomplished scholar, Mr. Chancellor KENT, in the case of Livingston v. Van Ingen, 9 Johns. 572, may, with the strictest propriety, be applied to this case. Congress has the power of securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries. To the mere importers of foreign inventions, or foreign improvements, congress can grant no patent; are not the states at liberty, in this omitted case, in this different matter, to promote the progress of science and useful arts, by pursuing their own measures, and dispensing their own rewards? Even supposing they cannot legislate upon the peculiar and admitted objects of congressional legislation, yet they may on others. If not, this great subject of imported improvements, would be entirely unprovided for and unprotected. Applications to congress on this very subject have been frequently made, and always rejected for want of power. The analogy between our argument and that presented in the case of Livingston v. Van Ingen, is this: that if congress had exercised all its power, it would not have exhausted the subject. Congress has not the power to pass a general insolvent law; the states have a power to pass state insolvent laws; the objects and spheres of legislation are different; congress has power to pass a bankrupt law, and if it does, that will be paramount. Having safely possessed ourselves of this ground, we may ascend a little higher. We are justified in saying, that the states are not prohibited from passing even bankrupt laws. They once had the power, and they gave away, in conjunction with the other states, only that of passing uniform laws of bankruptcy throughout the United States. In this sense, the power they have granted, and that they retain, are different. The grant to congress is not incompatible. We have shown, that the mere grant of a power to congress, does not vest it exclusively in that body. There are subjects upon which the united, and the individual, states, must of necessity have concurrent jurisdiction. The fear that the rights and property of the citizens will be worn away in the collision of conflicting jurisdictions, is practically refuted; and is even theoretically unfounded, because the constitution itself has guarded against this, by providing that the laws of the United States, which shall be made, shall be the supreme law of the land, anything in the constitution or the laws of any of the states to the contrary notwithstanding.
3. But the other great point remains: is not this law unconstitutional and void, inasmuch as it impairs the obligation of a contract? As preliminary to this inquiry, it may be suggested, that if it has been proved, that a bankrupt law is not an insolvent law, and that the convention, with a perfect knowledge of the subject, left the states in the full enjoyment of the right they had always possessed, of passing insolvent laws, and subjected them to the domination of uniform bankrupt laws only, whenever congress might pass them, the position is disproved, which alleges that such laws are still void, as impairing the obligation of contracts. From the nature of the subject, it is not supposable, that the convention left a power in the states, which, if exercised, must necessarily violate another part of the constitution. It is not conceivable, that a power was given, directly repugnant and contradictory to a prohibition imposed: as almost all the states have passed insolvent laws, and congress has sanctioned them, and the people assented to, and approved them; let us find out some other interpretation that will reconcile these opposite powers, and obviate this flagrant inconsistency. The judges of the state courts, and of this court, have confessed that there is in these words, ‘impairing the obligation of contracts,’ an inherent obscurity. Surely, then, here, if anywhere, the maxim must apply, semper in obscuris quod minimum est sequimur. They are not taken from the English common law, or used as a classical or technical term of our jurisprudence, in any book of authority. No one will pretend, that these words are drawn from any English statute, or from the states' statutes, before the adoption of the constitution. Were they, then, furnished from that great treasury and reservoir of rational jurisprudence, the Roman law? We are inclined to believe this. The tradition is, that Mr. Justice WILSON, who was a member of the convention, and a Scottish lawyer, and learned in the civil law, was the author of this phrase. If, then, these terms were borrowed from the civil code, that code presents us with a system of insolvency in its cessio bonorum; and yet, as it is said by Gibbon, ‘the goddess of faith was worshipped, not only in the temples, but in the lives of the Romans.’ The rights of creditors, we know, were protected by them, with the utmost vigilance and severity. They did not, however, it seems, conceive that a cessio bonorum was inconsistent with the rights of creditors, or impaired the obligation of contracts. England also anxiously guards the rights of creditors. On commerce, on the integrity of her merchants and manufacturers, her best reputation and interest depends. And yet, England, more than any other country, has her system of insolvency and bankruptcy. Good sense, in all ages, in all countries, is the same; as in Rome, in England, and in all other commercial countries, so in this, bankrupt and insolvent laws have never been considered as impairing the obligation of a contract. If included in the literal *152 acceptation of the words of this clause of the constitution, from the nature of things, they form an implied exception. Insolvent laws are based upon the confessed and physical inability of a party to perform a pecuniary contract, otherwise than by a surrender of all he has. How idle, then, to make a provision in respect to such laws, guarding against the impairing a contract; that is, providing for its strict, adequate and undiminished performance, when the impossibility of any performance is pre-supposed. The total, physical inability of the individual, is his exemption, and this is tacitly and necessarily reserved and implied in every contract. This is the doctrine of Vattel, of a nation, as to a public treaty (Vattel, lib. 3, ch. 6, § 91); and is it not the law of nations, that the obligations of a treaty shall not be impaired? To impair an obligation has reference to the faculty of its being performed. The obligation of a contract, and a remedy for its performance, are different things. Whether a contract shall be fit matter for judicial coercion, is a different question, from its being preserved perfect and undiminished where it is. When the courts do take cognisance, they shall not adjudge less, nor differently, either as to the amount, or other terms and conditions of the contract. The performance of the contract shall be exact; imprisonment is the remedy for enforcing it: but where there is a confessed and adjudicated inability, the society withholds the power to protract indefinitely and miserably, what can never be an effectual remedy, but only a vindictive punishment. The moral obligation of a contract may, perhaps, remain for ever, but misfortune and extreme indigence put an end to the legal obligation, as war does to a treaty; as revolution does to a pre-existing government; as death does to personal duties. The impossibility of payment discharges from contracts, as insanity does from crimes: ‘ Impossibilium,’ says even the severe Bynkershoek, ‘ nulla est obligatio.’ To impair means, as to individuals, you shall not pay less; you shall not have an extension of time in which to pay; you shall not pay in goods, when your contract is cash; you shall not pay in depreciated coin, or even current bank-notes, when your contract binds you to the payment of pure coin; interest shall not be diminished: in fine, there shall be no alleviation of its terms, or mitigation of its conditions. The facts as to which you engage shall remain the same. The insolvent law is something independent of the obligation of the contract, and extraneous to it. It is a matter of peremptory nonsuit to the action; or rather a bar, having reference to nothing inherent in the contract, but to something exterior and posterior to it. The insolvent law, so far from impairing the contract, sets it up, admits its obligation, and endeavors to enforce it, so far as it is possible, consistently with the misfortunes of the debtor, to enforce it. If it was meant, by these words of the constitution, to prohibit the passage of insolvent laws, why not, in plain terms, have said so? It would have been as clearly understood, as the plain prohibition, that no state shall grant any title of nobility. It could not have been meant to bury such a meaning under such obscurity. To suppose, that the framers of the constitution were designedly obscure on this delicate and dangerous subject, is an impeachment of their integrity; to suppose, that they had so little command of appropriate and perspicuous language as to employ such terms to express such a thought, is an unjust imputation upon their acknowledged talents.