charter be renewed without such provision, there is no longer such restriction as to taxation as to the bank or its stocks.1

Laws affirming invalid and doubtful contracts. But State laws making valid irregular and doubtful, or even void, contracts, not thereby affecting injuriously contract rights of third persons, are not laws impairing the obligations of contract within the meaning of the United States Constitution.2

Legal dissolution of private corporations. Nor does the dissolution of a private corporation by authority of an existing State law or laws providing therefor, and for closing up its concerns, operate as against the corporation creditors as an impairment of their contract of indebtedness. The obligation of those contracts continues, and are enforcible against the assets of the defunct corporation, and they could reach nothing else if the corporation had not dissolved. Every creditor is supposed to know the nature of such corporations, and their liability to dissolution, voluntary or forced, and to contract with it in reference thereto. Creditors, in such case, must look to the corporate assets, which will be liable so far as not transferred into the hands of bona fide purchasers. The case is no harder than that of creditors of a natural person who dies. They, too, must look to the assets for satisfaction of their demands. If there are no assets in either case, yet the contract obligation still remains, and is in no wise impaired.4

State ex

Existing Laws Enter into Contracts. The laws of isting at the time of making a contract enter into it as a part thereof, so far as regards its force and obligation; and its judicial enforcement by judgment or decree, and process of the courts; hence, subsequent laws requiring property levied on and offered for sale, or offered for sale under decree of the courts, to be appraised, and requiring bids of two-thirds the appraised value as a condition prerequisite to a sale, superadds a condition unknown to the contract, and obstructs and impairs the obligation of the same, and is therefore void. The Supreme Court of the United States have held that the obligation of a contract is to perform the promises and undertakings contained therein; the right of

'Gordon v. The Appeal Tax Court, 3 How. 133; Ches v. The Appeal Tax Court, 3 How. 133; Dodge v. Woolsey, 18 How. 331.

2 Watson v. Mercer, 8 Pet. 88; Satterlee v. Matthewson, 2 Pet. 380.

8 Mumma v. Potomac Co., 8 Pet. 281. • Ibid.

the obligee to bring suit, obtain judgment, and take out final process thereon, and enforce it until satisfied, pursuant to the substantial features of the existing law, and that if such law allows a sale of property for what it will bring, that a subsequent law prohibiting a sale unless for a named proportion of its value, is, as stated, void, for impairing the obligation of the contract.1 So, where the charter of a bank declared it "capable and able, in law, to have, possess, receive, retain, and enjoy, to themselves and their successors, lands, rents, tenements, hereditaments, goods, chattels, and effects, of what kind soever, nature, and quality, *** and the same to grant, demise, alien, or dispose of for the good of" such bank; and "to receive money on deposit, and pay away the same free of expense, discount bills of exchange and notes," a subsequent law prohibiting the bank from transferring, by endorsement or otherwise, any note, bill receivable, or other evidence of debt, was held, inasmuch as the charter privileges so granted amounted to a contract between the State and the bank, an enactment which violated the obligation of the contract, and was therefore unconstitutional and void. 2

Abolition of Imprisonment for Debt. A State may pass a law discharging persons imprisoned for debt, and such a law does not impair the obligation of the contract. It merely modifies the remedy, but does not take the remedy away. Imprisonment is no part of a contract of indebtedness, and therefore releasing a prisoner who is held for a debt does not, in any manner, impair the contract creating the debt. The power of a State to impose imprisonment as part of the remedy, also enables it to abolish that part of the remedy generally; and, if it be allowable by a general law, it is also allowable in special cases.3 In Sturges v. Crowninshield, here cited, the Supreme Court of the United States say: "Imprisonment of the debtor may be a punishment for not performing his contract, or may be allowed as a measure for inducing him to perform it. But a State may refuse to inflict this punishment, or may withhold it altogether, and leave the contract in full force. Imprisonment is no part of the contract,

'Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 6 How. 608; Howard v. Bugbee, 24 How. 461.

2 Planters' Bank of Miss. v. Sharp,

6 How. 301; State Bank of Ohio v. Knoop, 16 How. 369.

3 Mason v. Haile, 12 Wheat. 370; Sturges v. Crowninshield, 4 Wheat. 200; Beers v. Haughton, 9 Pet. 329.

and simply to release the prisoner does not impair its obligation." Such being the power of a State legislature, it results therefrom that the enactment of a law discharging a prisoner held for debt, on bonds, in the prison bounds, and the going at large of such prisoner beyond said bounds, as the result of such discharge, neither violates the obligation of any contract nor amounts to a breach of condition of the bonds, conditioned that the prisoner shall "continue to be a true prisoner, in the custody, guard and safe-keeping, ** until he shall be lawfully discharged;" for such a release, by operation of law, is a lawful discharge.1

*

State Insolvent Laws. And so it is held that State insolvent laws do not impair the obligations thereafter entered into between the citizens of the States by which they are enacted.2

Taxing a City's Own Indebtedness. An ordinance of a city taxing its own indebtedness, as the property of its non-resident creditor, is illegal, and so is a provision thereof requiring the amount of the tax to be deducted and withheld from the creditor out of the accruing interest on such debt. Such ordinances are void as violating and impairing the obligation of the contract.3 In the language of STRONG, J.: "States and cities, when they borrow money, and contract to pay it with interest, are not acting as sovereignties. They come down to the level of ordinary individuals."4

XVI. USURY.

This subject has been incidentally treated of in Sec. IX. of this chapter, under the head of "Commercial Paper." As connected with our general subject, it can present itself in either one of three phases: 1st. Where the contract is made in one State, and is performable in another, and the interest contracted for is usurious according to the lex loci contractus, but is allowable and valid by the lex solutionis, or the law of the place where the contract is to be performed. 2d. Where the interest contracted for is valid by the lex loci contractus, but is invalid and usurious by

1 Mason v. Haile, 12 Wheat. 370; Beers v. Haughton, 9 Pet. 329.

Ogden v. Saunders, 12 Wheat. 213; Cooley's Const. Limitations, 4th ed. 360 et seq.

Murray v. City of Charleston, 6 Otto, 432.

4 Ibid. 445.

the lex solutionis. 3d. Where the rate of interest contracted for is allowable by the lex loci contractus, and the contract does not specify any place for the performance of the contract, but the interest so contracted for happens to be usurious by the lex fori, or the law of the place where the contract happens to be sued upon. And let us now consider the first division. It may be asserted, as a general and now well established doctrine that if the interest is valid by the lex solutionis, or the law of the place of performance, notwithstanding it be usurious by the lex loci contractus, such contract and interest will be upheld in both States, in the absence of fraud or any intent to evade the law.1 When parties contract with reference to the laws of a particular State, it is proper that those laws should govern their contract in whatever forum the contract is construed or litigated upon. Those laws form an integral part of their contract, and, as a general rule, to hold otherwise, would be a breach of State comity, and the precursor of much confusion. 2d. It should follow, as a necessary sequence of our first classification, that if the lex solutionis governs, a contract which provides for interest allowed by the lex loci contractus, but which interest is usurious according to the lex solutionis, or the place where the contract is to be performed, will be governed by the law of the latter place and the interest will accordingly be construed as usurious. This doctrine has not, however, received the unanimous concurrence of courts and authors. It having been asserted by some that even though the interest is usurious by the lex solutionis, or the law of the place where the contract is to be performed, yet, if the interest is allowed by the lex loci contractus, the same would be allowed, because, as is said, "the parties may stipulate the rate of interest of either country, and thus, by their own express contract, determine, with reference to the law of which country that

'Andrews v. Pond, 13 Pet. 65, 77, 78; Boyer v. Edwards, 4 Pet. 111; Balme v. Wombaugh, 38 Barb. 352; Pratt v. Adams, 7 Paige, 615; Arnold v. Potter, 22 Iowa, 194; Junction Railroad v. Ashland Bank, 12 Wall. 226; Parham v. Pulliam, 5 Cold. 497; Duncan v. Helm, 22 La. Ann. 418; Tyler on Uusury, 81 et seq.; Story's Conf. of Laws, § 291 et seq.; Wharton's Conf.

of Laws, § 503; Burges' Com., vol. 3, p. 774; Foote's Private International Law, 370; Westlake's Private International Law, § 206.

See cases cited in the preceding, and also Wharton's Conf. of Laws, § 504; Andrews v. Pond, 13 Pet. 65; Story's Conf. of Laws, §§ 290, 304 b; Tyler on Usury; Burges' Com. on Colonial Laws, vol. 3, p. 774.

incident of the contract shall be decided."1 We do not, however, regard it as consistent with the doctrine which has been above stated under our first division. Neither do we think that it is consistent with reason that the courts of a State should enforce a contract made to be performed within that State, and which con- ' tract, in terms, overrides an express law of that very State. If, however, the contract was brought before the courts of the State where made, it might be reasonable to suppose that the local court would enforce the interest, inasmuch as the same would be valid by their laws. We think that the doctrine which we have stated is the most consistent and conformable to the general rule. It is true that there are cases which hold that the interest being allowable where the contract is made, will be enforced in the State where payable, even though usurious there, on the ground that the validity of purely personal contracts depends upon the law of their place were made. But we are at a loss to see how this reasoning will apply, when the parties contemplate, as they are presumed to do, by making the contract performable in another State, to contract with reference to those laws. It does not seem for them proper to say that, as to the interest, the lex loci shall govern, but as to everything else, time for demand, days of grace, etc., the law of the place of performance shall govern. 3d. Where the contract is made performable in any place it will be presumed to be made performable in the place where made. The usury laws, therefore of the loci contractus will govern the contract, and wherever the same is construed or litigated upon, the law of the place where the contract was made will govern the

1 Story's Conf. of Laws, § 304 b. This part of the text, however, it seems, is the work of some one of its numerous editors. Peck v. Mayo, 14 Vt. 33; Depau v. Humphreys, 8 Martin, (N. 8.) 1; Chapman v. Robertson, 6 Paige, 629.

2 Wharton's Conf. of Laws, $§§ 504510; Story's Conf of Laws, §§ 291, 298; 2 Parsons on Contract, *584 and note. Thus, it is said, as to an ordinary contract which is to be performed in a State other than where made, that to be enforced, it must be valid, as tested by the laws of the place of perform

ance. Kanaga v. Taylor, 7 Ohio St. 134; Lewis v. Headley, 36 Ill. 433; Adams v. Robertson, 37 Ill. 45; Davenport v. Karnes, 70 Ill. 465; Evans . Anderson, 78 Ill. 558; Maguire v. Pingree, 30 Maine, 508.

3 For cases which hold different from the text, the reader is referred to Bowen v. Bradley, 9 Abbott, (N. S.) 395; Clayes v. Hooker, 4 Hun. 231; Depau v. Humphreys, 8 Martin, (N. s.) 1; Peck v. Mayo, 14 Vt. 33; Pope v. Nickerson, 3 Story, 466; Kilgore v. Dempsey, 25 Ohio St. 413; Bowman v. Miller, 25 Gratt. 331.