STURGES

v.

CROWNINSHIELD

Mr. Chief Justice Marshall delivered the opinion of the Court. This case is adjourned from the Court of the United States, for the first circuit and the district of Massachusetts, .on several points on which the judges of that Court were divided, which arestatéd in the record for the opinion of this Cóuít. The first is,

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 ?

_ . . I his question depends on the following clause, in 1 the 8th section of the 1st article of the constitution of 'the StateS-

“ The Congress shall have power,” &c. to “establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States. "

The counsel for the plaintiff contend, that the The counsel for the plaintiff contend, grant of this power to Congress, without limitation, takes it entirely from the several States.

In support of this proposition they argue, that every power given to Congress is necessarily supreme; and, if, from its nature, or from the words of grant, it is apparently intended to be exclusive, it is as much so as if the States were expressly forbidden to exercise it.

These propositions have been enforced and illustrated by many arguments, drawn from different parts xif the constitution. That the power is both unlimited and supreme, is not questioned. That it is exclusive, is denied by the counsel for the defendant.

. In considering this question, it must be recollected that, previous to the formation of the new constituí tion, we were divided into independent States, united for some purposes, but, in most respects, sovereign. .These States could exercise almost every legislative power, and,' among others, that of passing bankrupt laws. When the American people created a national legislature^ with certain enumerated powers, it was neither necessary nor proper to define the powers retained by the States. These powers proceed, not from the people of America, but from the people of the several States; and remain, after the adoption of the constitution, what they were before,-except so faifas they may be abridged by that instrument. In some instances, as in making-treaties, we .find an express prohibition; and this shows the sense of the Convention to have been, that the mere grant of a power to Congress, did not imply a prohibition on the States to exercise the same power. But it has never been supposed, that this concurrent power legislation'extended to every possible case in which its exercise by the States has not been expressly prom» . . hibited. The confusion resulting from such a practice would be endless. The principle laid down by the counsel for the plaintiff, in this respect, is undoubtedly correct. Whenever the terms in which a power is granted to Congress, or the nature of - the power, require that it should be exercised exclusively by Congress, the subject is as completely taken from the State Legislatures, as if they had been expressly forbidden to act on it.

Is the power to establish uniform laws on the sub- # ject of bankruptcies, throughout the United States, of this description ?'

The peculiar terms of the grant certainly deserve notice. Congress is not authorized merely to pass laws, the operation of which shall be uniform, but to establish uniform laws on the subject throughout the United States. This establishment of uniformity is, perhaps, incompatible with State legislation, on that part of the subject to which the acts of Congress may extend. But the subject is divisible in its nature into bankrupt and insolvent laws; though the line of partition between them is not so distinctly marked as to enable any person to say, with positive precision, what belongs exclusively to the one, and not to the other class of laws. It is. said, for example, that laws which merely liberate the person are insolvent laws, and those which discharge the contract, are bankrupt laws. But if an act of Congress* should discharge the person of the bankrupt, and leave his future acquisitions liable to his creditors, we should feél much hesitation in saying that this was an insolvent, not a bankrupt act; and, therefore, unconstitutional. Another distinction has been stated, and has been uniformly observed. Insolvent laws operate at the instance of an imprisoned debtor; bankrupt laws at the instance of a creditor. But should an act of Congress authorize a commission of bankruptcy to issue on the application of a debtor, a Court would scarcely be warranted in saying, that the law was unconstitutional, and the commission a nullity.

When laws of. each description may be passed by the same Legislature, it is unnecessary to draw a precise line between them. The difficulty can arise only in our complex system, where the Legislature of the Union possesses the power of enacting bankrupt laws and those of the States, the power of enacting insolvent laws. If it be determined that they are not laws of the same character, but are as distinct as bankrupt laws and laws which regulate the course of descents, a distinct line of separation must be drawn, and the power óf each government marked with precision. But all perceive that this line must be in a great der , . .lili gree arbitrary. Although the two systems have existed apart from each other, there is such a connection between them as to render it difficult to say how far they may be blended together. The bankrupt law is said to grow out of the exigencies of commerce, and to be applicable solely to traders; but it is not easy to say who must be excluded from, or may be included within, this description. Iris, like every other part of the subject, one on which the Legislature may exercise an extensive discretion.

This difficulty of discriminating with, any accuracy between insolvent and bankrupt laws, would lead to the opinion, that a bankrupt law may contain those regulations which are generally found in insolvent laws; and that an insolvent law may contain those which are common to a bankrupt law. If this be correct, it is obvious that much inconvenience would result from that construction of the constitution, which should deny to the State Legislatures the power of acting on this subject, in consequence of the grant to Congress. It may be thought more' convenient, that much of it should be regulated by State legislation, and Congress may purposely omit to provide for many cases to which their -power extends. It does not appear to be a violent construction of the constitution, and is certainly a convenient one, to consider the power of the States as existing over such cases as the laws of the Union may not reach. But be this as it may, the power granted to Congress, may be erSér cised or declined, as the wisdom of that body shall decide. If, in the opinion of Congress, uniform laws concerning bankruptcies ought,not to be established, it does not follow that partial laws may not exist, or that State legislation on the subject must cease. It is not the mere existence of the power, but its exercise, which is incompatible with the exereise of the .same power by the States. It is not the right to es-' tablish these uniform laws, but their actual establishment, which is inconsistent with the partial acts of the States.

It has been said, that Congress has exercised this power; and, by doing so, has extinguished the power of the States, which cannot be revived by repealing the law of Congress.

We do not think so.' If the right of the States to pass a bankrupt law is not taken away by the mere grant of that power to Congress, it cannot be extinguished ; it can only be suspended, by the enactment of a general bankrupt law. The repeal of that law cannot, it is true, confer the power on the States; but it removes a disability to its exercise, which was created by the act of Congress.

Without entering farther into the delicate inquiry respecting the precise limitations which the several grants of power to Congress, contained in the constitution, may impose on the State Legislatures, than is necessary for the decision of the question before the Court, it is sufficient to say, that until the. power to, pass uniform laws on the subject of bankruptcies be exercised by Congress, the States are not forbidden general distress following the war m which our mde- ° ° , Pendence was established. To relieve this distress, paper money ivas issued, worthless lands, and other property of no use to the creditor, were made a tender in payment of debts; and the time of payment, . _ _ . . - stipulated in the contract, was extended by law. A ' J These were the peculiar evils of the day.' So much A J ™schief was done, and so much more was approhended, that general distrust prevailed, and all confidence between man and man was destroyed. To laws of this description therefore, it is said, the prohibition to pass lavys impairing the obligation of contracts ought to be confined.

Let this argument be tried by the words of the section under consideration.

Was this general prohibition intended to preyent paper money ? We are. not allowed to say so, because it is expressly provided, that no State shall “ emit bills of credit;”.neither could these words be intended to restrain the States from enabling debtors, to discharge their debts by the tender of property of no real value to the' creditor, because for that subject also particular provision is made. Nothing hut gold and silver coin can be made a tender in payment of-debts.

It remains to inquire, whether the prohibition under consideration could be intended for the single case of. a law directing that judgements should be carried into execution by instalments ?

This question will scarcely admit of discussion. If this was the only remaining mischiéf against which the constitution intended to provide, it would undoubtedly have been, like paper money and tender laws, expressly forbidden. At any rate, terms more directly applicable to the subject, more appropriately expressing the intention of the Convention, would have been used. It seems scarcely possible to suppose that the framers.of the constitution, if intending to prohibit only laws authorizing the payment of debts by instalment, would have expressed that intention by. saying u no State shall pass any law impairing the obligation of contracts.’’ No men would so express such an intention. No men would use terms embracing a whole class of laws, for the purpose of designating a single individual of that class. No court can be justified in restricting.such comprehensive words to a particular mischief to which no allusion is made.

The fair, and, we think, the necessary construction of the sentence,' requires, that we should give these words their full and obvious meaning. A general dissatisfaction with that lax system of legislation which followed the war of our revolution undoubtedly directed the mind of the Convention to this subject. It is probable that laws such as those which have been stated in argument, produced the loudest complaints, were most immediately , felt. The attention of the Convention, therefore, was particularly directed to paper money, and to acts which enabled the debtor to discharge his debt, otherwise than was stipulated in the contract. Had nothing more been intended, nothing more would have been expressed. But, in the opinion of the Convention, much more remained to be done. The same miscief might be effected by other means. To restore public confidence completely, it was necessary not only to prohibit the use of particular means by which it might be effected^ but to prohibit the use of any means by which the same mischief might be produced, The Convention appears to have intended to establish a great principle, that contracts should be inviolable. The constitution, therefore, declares,. that no State shall pass “ any law impairing the obligation of con-, tracts.”

If, as we think, it must be admitted that this intention might actuate the Conventionthat it is not only consistent with, but is apparently manifested by, all that part of the section which respects this subject; that the words used are well adapted to the expression of it; that violence would be done to their plain meaning by understanding them in a more limited sense; those rules of construction, which.. have been consecrated by the'wisdom of ages, compel us to say, that these words prohibit the passage .of any law discharging a contract without performance.

By way of analogy, the statutes of limitations, and against usury, have been, referred to in argument; and it has been supposed that the construction of the constitution, which this opinion maintains, would apply to them also, and must therefore be too extensive to be correct.

We do not think so. Statutes of limitations relate to the remedies which are furnished in the courts. They rather establish, that certain circumstances shall amount to evidence that a contract has been performed, than dispense with its performance. If, in a State where six year,s may be pleaded in bar to an action' of assumpsit, a law should pass declaring that contracts already iñ existence, not barred by the statute, should be construed to be within it, there could be little doubt of its unconstitutionality.

So with respect to the laws against usury. If the law he, that no person shall take more than six per centum per annum for the use of money, and that, if more be reserved, the contract shall be void, a contract made thereafter, reserving seven per cent., would have no obligation in its commencement; but jf a law should declare that contracts already entered into, and reserving the legal interest, should be usurious and void, either in the whole or in part, it would impair the obligation of the contract, and would be clearly unconstitutional.

This opinion is confined to the case actually under n i • i • i consideration. It is confined to a case m which a creditor sues in a Court, the proceedings oí which the legislature, whose act is pleaded, had not a right to control, and to a case where the creditor had not proceeded to execution against the body of his debtor, within the State whose law attempts to absolve a confined insolvent debtor from his obligation. When such a cáse arises, it will be considered.

It is the opinion of the Court, that the act of the State of New-York, which is pleaded by the defendant in this cause,iso far as it attempts to discharge this defendant from the debt in the declaration mentioned, is contrary to the constitution of the United States, and that the plea is no bar to the action.

Certificate. This cause came on to be heard on the transcript of the record of the Circuit Court of the United States, for the first Circuit, and the district of Massachusetts, and on the questions on which the judges of that Court were divided in opinion, and was argued by counsel: On consideration \yhereof, this Court is of opinion, that, since the adoption of the constitution of the United States, a State has authority to pass a bankrupt law, provided such law does, not impair the obligation of contracts, within the meaning of the constitution, and provided there be no act of Congress in force to establish a uniform system of bankiuptcy, conflicting with such law.

This Court is farther of opinion, that the act of New-York, which is pleaded in this case, so far as it attempts to discharge the contract on which this suit was instituted, is a law impairing the obligation of . contracts within the meaning of the constitution of the United States, and that the plea of the defendant is hot a good and sufficient bar of the plaintiff’s action.

All which is directed to be certified to the said Circuit Court.