wisdom of that body may determine. If not fully occupied, the States may legislate within the same sphere, subject, however, to any subsequent legislation that Congress may adopt." Thus, in the absence of a national bankruptcy law, the States may, under the usual restrictions applying to all their legislative acts, pass bankruptcy laws of their own. Wherever the exercise of the powers granted to the Federal Government would be hindered by the exercise of similar powers on the part of the States, the powers of the State are to that extent to be deemed to be withdrawn. One important application of this principle affects the right of the State to tax the agencies, offices, or debts of the Federal Government. In the case of Macculloch v. Maryland, 4 Wheat. 316, the State of Maryland claimed the right of taxing a bank within its territorial limits established by authority of Congress. The principle contended for was pronounced by Chief-Justice Marshall to be fatal to the Constitution. It would be "capable of avoiding all the measures of the Government and prostrating it at the foot of the States. The American people have declared their Constitution, and the laws made in pursuance thereof, to be supreme; but this principle would transfer the supremacy in fact to the States. If the States may tax one instrument employed by the Government in the execution of its powers, they may tax any and every other instrument. This was not intended by the American people. They did not

* Cooley's "Principles of Constitutional Law," p. 35.

design to make their Government dependent to the States." The like limitation is recognised on the powers of Congress with respect to the taxation of State means and instruments, and for the same reasons. In like manner, the power of the States to tax persons and property within their limits must not be so exercised as to interfere with the operation of the laws made by Congress for the regulation of commerce (see Inman Steamship Co. v. Jenker, 94 U.S. 238). So with police regulations made by State or municipal authorities, which may come in conflict with the power of Congress. The line of demarcation in such cases between the State and Federal spheres is often extremely difficult to trace.

Of the express restrictions on the legislative power of the State as set forth above, the most important for our purpose are those which protect contracts and property or vested rights.

It has been frequently observed that the framers of the Constitution appear to have had no conception of the importance which was fated to be attained by the clause forbidding Acts which should impair the obligation of contracts. It is dismissed very briefly in the "Federalist" as a security against legislation which would violate the first principles of the social compact. No principle of the Constitution has been so elaborately expounded by the courts, and none has had an interpretation more favourable to just legislation. "Apparently," says Mr. Cooley, "nothing was in view at the time except to prevent the repudiation

of debts and private obligations, and the disgrace, disorder, and calamities that might be expected to follow. In the construction, however, of this provision, it has become one of the most important, as well as one of the most comprehensive, in the Constitution."

One of the earliest applications of the rule occurred in reference to a case in which the Legislature of Georgia had revoked a grant made by a previous Legislature, on the ground that it had been obtained by fraud. Chief-Justice Marshall, after declaring that all contracts, executed or executory, come within the rule, proceeds to say :-"Since, then, a grant is a contract executed, the obligation of which still continues, and since the Constitution uses the general term 'contract' without distinguishing between those which are executory and those which are executed, it must be construed to comprehend the latter as well as the former. A law annulling conveyances between individuals, and declaring that the grantors should stand seised of their former estates, notwithstanding those grants, would be as repugnant to the Constitution as a law discharging the vendors of property from the obligations of executing their contracts by conveyances. It would be strange if a contract to convey was secured by the Constitution, while an absolute conveyance remained unprotected. If, under a fair construction of the Constitution, grants are comprehended under the term 'contracts,' is a grant from the State excluded from the operation of the provision? Is the clause to be considered as inhibiting

the State from impairing the obligations of contracts between two individuals, but as excluding from that inhibition contracts made with itself? The words themselves contain no such distinction. They are general, and applicable to contracts of every description." The same principle was applied to an Act of the Legislature of Virginia for the disendowment of the Episcopal Churches, which held property under grants from the Crown or the old Colony of Virginia. The Constitution of the State prohibited the possession of exclusive privileges by any religious denomination, and the Legislature ordered glebe-lands on the happening of a vacancy to be sold and applied for the benefit of the poor; but the Act was held unconstitutional by the Supreme Court. Disendowment, as distinguished from Disestablishment, would therefore appear to be beyond the competency of a State Legislature. Another remarkable development of the principle took place in the famous Dartmouth College case, by which charters granted to private corporations were held to be irrevocable, as contracts made between the State and the members of the corporation. "It is under the protection of the decision in the Dartmouth College case," says Mr. Cooley, "that the most enormous and threatening powers in our country have been created: some of the great and wealthy corporations actually having greater influence in the country at large and upon the legislation of the country than the States to which they owe their corporate existence. Every privilege granted or right conferred-no matter

by what means or on what pretence-being made inviolable by the Constitution, the Government is frequently found stripped of its authority in very important particulars by unwise, careless, or corrupt legislation, and a clause in the Federal Constitution, whose purpose was to preclude the repudiation of debts and just contracts, protects and perpetuates the evil." * Even an agreement by the State-made for a real or supposed consideration-to exempt certain property from taxation, is a protected contract within the rule, although the principle has not been carried so far in other matters which appear no more essential than the power of taxation to the sovereign character of the State. A State, Mr. Cooley thinks, "cannot barter away, or in any manner abridge or weaken, any of those essential powers which are inherent in all Governments, and the existence of which in full vigour is important to the well-being of organised society."

The words of the Constitution are that the "obligation of a contract" is not to be impaired. This means the obligation imposed on the parties by the law as existing at the time the contract was made. "If any subsequent law affects to diminish the duty or impair the right, it necessarily bears on the obligation of the contract in favour of one party to the injury of the other; hence any law which in its operation amounts

* "Constitutional Limitations," p. 340. property of corporations may be taken for property, on compensation being made.

Franchises and other public use, like other