The meaning to be given to a state law is primarily to be determined by the state courts, and, so long as only a question of state constitutional law is concerned, the meaning thus given is conclusive upon the federal courts. Thus, when a state statute is alleged to impair the obligation of a contract it is not the duty of the federal Supreme Court itself to construe the act and then to determine whether, as thus construed, it impairs the obligation of a contract; rather, its duty is to take the act as construed and applied by the courts of the State, and, upon that basis, to determine whether or not the obligation of contracts is impaired. The logic of this doctrine is apparent. Whatever may be the literal terms of a state law, if, in fact, it is not so construed by the state authorities as to work an impairment of contracts the inhibition of the obligation clause cannot be said to be violated.

§ 509. Existence of a Contract a Federal Question.

The rule is well established that the federal Supreme Court will determine for itself, that is, by its own independent judgment, whether or not that which is alleged to be a contract and to have been impaired by a state law is in truth a contract. That is to say, the federal tribunal does not hold itself bound by the decision of a state court which escapes from the application of the obligation clause by holding that the contract, the impairment of which is alleged, is not, in fact, a contract.

In Jefferson Branch Bank v. Skelly the court say: "It has never been denied, nor is it now, that the Supreme Court of the United States has an appellate power to revise the judgment of the supreme court of a State, whenever such a court shall adjudge that not to be a contract which has been alleged, in the forms of legal proceedings, by a litigant, to be one, within the meaning of that clause of the Constitution of the United States which inhibits the States from passing any law impairing the obligation of contracts. Of what use would the appellate power be to the litigant who feels himself aggrieved by some particular state legislation, if this court could not decide, independently of all adjudication of

54 121 U. S. 388; 7 Sup. Ct. Rep. 916; 30 L. ed. 1059.

551 Black, 436; 17 L. ed. 173.

the supreme court of a State, whether or not the phraseology of the instrument in controversy was expressive of a contract within the protection of the Constitution of the United States, and that the obligation should be enforced, notwithstanding a contrary conclusion by the supreme court of a State."

"56

This doctrine is, of course, applicable not only to the construction of instruments which, it is claimed, constitute contracts between individuals, but also to state laws which, it is alleged, amount to contracts on the part of the States. There has been no serious denial of this from the time of the early case of Fletcher v. Peck, in which it was held that the inhibition of the obligation clause applies as well to contracts on the part of the States as to those between private individuals.

§ 510. Constitutionality of State Laws Alleged to Impair Contracts a Federal Question.

Generally speaking, as is well known, the federal Supreme Court holds itself bound by the decisions of the state courts as to the constitutionality of state laws as determined by their respective state constitutions. This rule is, however, departed from in those cases in which it is conceived that it is necessary to do so in order to prevent the impairment of the obligation of contracts.

This refusal of the federal Supreme Court to follow the judg ment of state courts takes the form: First, where the federal court refuses to hold itself bound by the opinion of the state tribunal as to the constitutionality of state laws which support or constitute essential elements of the contracts which, it is alleged, have been impaired by later legislation; and, Second, where the federal tribunal refuses to follow the decisions of state courts as to the constitutionality of state laws which in themselves constitute contracts upon the part of the States enacting them, and which contracts, it is alleged, have been impaired by subsequent enactments.

56 In McCullough v. Virginia (172 U. S. 102; 19 Sup. Ct. Rep. 134; 43 L. ed. 382), it is declared that "the doctrine thus announced has been uniformly followed." City Bridge Proprietors v. Hoboken Land and Improvement Co., 1 Wall. 116; 17 L. ed. 571; Wright v. Nagle, 101 U. S. 791; 25 L. ed. 921; McGahey v. Virginia, 135 U. S. 662; 10 Sup. Ct. Rep. 972; 34 L. ed. 304.

§ 511. Decisions of State Courts: How Far Controlling in Federal Courts.

In State Bank of Ohio v. Knoop," a case brought up by writ of error to the state court, the federal Supreme Court reversed a decision of the state court which held that a state law of 1845, providing for the payment to the State of a certain percentage of their profits by banking institutions in lieu of profits, had not created a contract upon the part of a State to exempt companies organized under that law from future taxation, and that, therefore, a law of 1851 imposing such taxes was not an impairment of any contract rights of the companies. The state court held that the Ohio Constitution, as it existed in 1845, did not permit the legislature to pass the law, and also that, even were that law held valid, it did not operate to create a contract with the companies organized under it. The Supreme Court of the United States, reversing this decision, asserted that the act of 1845 did in fact create a contract, and that the law of 1851 impaired its obligation, and, therefore, need not be obeyed by the corporations sought to be affected by it. It is evident that in arriving at this decision the Supreme Court necessarily held that the original act of 1845 was constitutional as tested by the state Constitution, although the state court held it to be invalid.

So also, in Ohio Life Insurance Co. v. Debolt,58 though the court did not find it necessary to reverse the state court, a similar doctrine is declared.

In these cases there had been earlier decisions of the state courts recognizing the validity of the contracts in question. Taney, in his opinion in the Debolt case, which he uses as his opinion in the Knoop case, says: "When the Constitution of a State, for nearly half a century, has received one uniform and unquestioned construction by all the departments of the government, legislative, executive, and judicial, I think it must be regarded as the true one. It is true that this court always follows the decision of the state courts in the construction of their own constitution and laws.

57 16 How. 369; 14 L. ed. 977. 58 16 How. 416; 14 L. ed. 997.

But where these decisions are in conflict, this court must determine between them. And certainly a Constitution acted on as undisputed for nearly fifty years by every department of the government, and supported by judicial decision, ought to be regarded as sufficient to give to the instrument a fixed and definite meaning. Contracts with the state authorities were made under it. And upon a question as to the validity of such a contract, the court, upon the soundest principles of justice, is bound to accept the construction it received from the state authorities at the time the contract was made." And, later, referring to the case of Rowan v. Runnels,59 he says: "The court then said, that it would always feel itself bound to respect the decisions of the state courts, and from time to time as they were made, would regard them as conclusive in all cases upon the construction of their own Constitution and laws; but that it ought not to give them a retroactive effect, and allow them to render invalid contracts entered into with citizens of other States which, in the judgment of this court, were lawful at the time they were made. It is true, the language of the court is confined to contracts with citizens of other States, because it was a case of that description which was then before it. But the principle applies with equal force to all contracts which were within its jurisdiction. . . . The sound and true rule is, that if the contract, when made, was valid by the laws of the State, as then expounded by all the departments of its governments, and administered in the courts of justice, its validity and obligation cannot be impaired by any subsequent act of the legislature of the State, or decision of its courts, altering the construction of the law." 60

In later cases, coming to the Supreme Court by writ of error from the state courts, the same doctrine is declared and applied.61

59 5 How. 134; 12 L. ed. 85.

60 The last clause states a broader doctrine than has since been upheld with reference to cases coming to the federal Supreme Court by writ of error to the state courts. See infra.

61 Jefferson Branch Bank v. Skelly. 1 Black, 436; 17 L. ed. 173; Louisiana v. Pillsbury, 105 U. S. 278; 26 L. ed. 1090; McGahey v. Virginia, 135 U. S. 662; 10 Sup. Ct. Rep. 972; 34 L. ed. 304; Mobile & Ohio R. R. Co. v. Ten

§ 512. Doctrine in Cases Reaching the Supreme Court by Writs of Error to State Courts.

It is to be observed that all of these cases had reached the Supreme Court by writ of error to the state courts, and that the federal tribunal had been appealed to upon the ground that the contracts had been impaired by state laws enacted subsequent to the time they were entered into. Had there been no such legislation there would have been no constitutional basis for the exercise of the appellate jurisdiction of the federal court.

In New Orleans Waterworks Co. v. Louisiana Sugar Co.62 the court say: "In order to come within the provision of the Constitution of the United States which declares that no State shall pass a law impairing the obligation of contracts, not only must the obligation of a contract have been impaired, but it must have been impaired by a law of a State. The prohibition is aimed at the legislative power of the State and not at the decisions of its courts."

63

This doctrine is reaffirmed in Huntington v. Attrill and again in Bacon v. Texas. In this last case the court, summing up the doctrine, say: "Where the federal question upon which the jurisdiction of this court is based grows out of an alleged impairment of a contract, it is now definitely settled that the contract can only be impaired within the meaning of this clause of the Constitution, and so as to give this court jurisdiction on error to a state court, by some subsequent statute of the State which had been upheld or effect given it by the state court. . If the judgment of the state court gives no effect to the subsequent law of the State, and the state court decides the case upon grounds independent of that law, a case is not made for review by this court upon any ground of the impairment of a contract. above cited cases announce this principle."

The

nessee, 153 U. S. 486; 14 Sup. Ct. Rep. 968; 38 L. ed. 793; Bacon v. Texas, 163 U. S. 207; 16 Sup. Ct. Rep. 1023; 41 L. ed. 132: McCullough v. Virginia, 172 U. S. 102; 19 Sup. Ct. Rep. 134; 43 L. ed. 382; Boyd v. Alabama, 94 U. S. 645; 24 L. ed. 302, it would seem to be contra.

62 125 U. S. 18; 8 Sup. Ct. Rep. 741; 31 L. ed. 607.

63 146 U. S. 657; 13 Sup. Ct. Rep. 224; 36 L. ed. 1123. 64 163 U. S. 207; 16 Sup. Ct. Rep. 1023; 41 L. ed. 132.