the purchasers acquire is the ownership of the railroad and the rolling-stock and other property requisite for its use, and the franchise of maintaining it and operating it as such, -privileges which may be as well exercised by natural persons as by a corporation. As was said in the Central R. R. & Banking Co. v. Georgia,1 it is an unbending rule that a grant of corporate existence is never implied. In the construction of statutes every presumption is against it; and the principle applies to the transfer or assignment of a previously existing charter and of the right to act as a body corporate under it.

When, however, an exemption from taxation is conferred with a view of enhancing the value of the property in question and inducing third persons to become buyers, it may be binding not only in favor of the original grantee, but of every one who gives value in the belief that it will not be repealed,2 and will in effect run with the property or land. Charters obey the general rule that contracts do not operate in favor of third persons; but there are under these circumstances two contracts, one with the first takers, the other with the persons who deal with them in reliance on the assurance held forth by the State.

In the case first cited, the State of New Jersey purchased the Indian title to lands in that State, and as a consideration for the purchase bought another tract of land as a residence for the Indians, having previously passed an act declaring that such lands should not be subject thereafter to any tax by the State, any law or usage or law then existing to the contrary notwithstanding. The Indians lived upon the tract until the year 1801, when they were authorized to sell it by an act which contained no provision in respect to future taxation. The sale took place, and the legislature soon afterwards repealed the exemption and laid a tax, which the Supreme Court of the United States declared invalid. Although the privilege

1 92 U. S. 665, 670.

2 M'Geer. Mathis, 4 Wallace, 143; Hartman v. Greenhow, 102 U. S. 679. See Woodruff v. Trapnell, 10 Howard, 190; Furman v. Nichol, 8 Wallace, 44: Exchange Bank v. Knoup, 19 Grattan, 739; Antoni v. Wright, 22 Pa. 833; 847 for the same principle. See ante, p. 587.

670

EXEMPTION MAY RUN WITH

was given for the benefit of the Indians, it was annexed to the land which had been given in lieu of the property which they surrendered, and they were entitled to profit by it not only while they resided on the land, but through the increased value in the event of a sale. A like interpretation was put, in McGee v. Mathis, on a legislative issue of transferable scrip for work done in the drainage of certain swamplands, with a proviso that it should be received in payment for so much of the lands as the holder should select, which should be exempt from taxation for the term of ten years. The plaintiff subsequently, and before the passage of a law by which the exemption was repealed, became the purchaser for a valuable consideration of a large amount of the scrip, and with it, after the repeal, took up and paid for many sections. of the land. The court held that the privilege inured not only to the persons to whom the scrip was issued, but to every one to whom it was afterwards assigned, and that the land could not be taxed during the stipulated period consistently with the Constitution of the United States.1

The current of decision sometimes varies like the tides, as every lawyer finds who relies on precedents, and in Morgan v. Louisiana 2 the court reached a different conclusion under circumstances which might have been thought analogous. The legislature there exempted the capital stock, works, fixtures, vehicles of transportation, and other appurtenances of a railway company from taxation, and also empowered the company to borrow such sums of money as might be requisite, and secure the same by a mortgage of their property and franchises. A mortgage having been executed in pursuance of the power, the mortgagee proceeded to judgment and execution, and the property and franchises of the company were sold by the sheriff and purchased by the defendant in error Morgan; and it was held that the exemption from taxation was personal to the company, and did not pass by

1 New Jersey v. Wilson, 7 Cranch, 164; Given v. Wright, 117 U. S. 648, 655; Jefferson Branch Bank v. Skelly, 1 Black, 436; M'Gee v. Mathis, 4 Wallace, 146.

2 93 U. S. 217.

THE LAND WHEN SO DESIGNED.

671

the sale. Such an immunity might loosely be called a franchise, but did not come under that head when appertaining to a railway company. The franchises of such a corporation are the rights and privileges essential to the operation of the road, and without which it would be of little value; such as the franchise to run cars, to take tolls, to appropriate earth and gravel for the bed of its road, or water for its engines, and the like. They are the positive rights or privileges, without which the road cannot be successfully worked. Immunity from taxation is not one of them. The former may be conveyed to a purchaser of the road as part of the property of the company; the latter is personal, and incapable of transfer without an express statutory direction. Where "such rights and privileges" are expressly stated to be conferred" for the purpose of making and using the road," an accompanying exemption from taxation is presumably confined to the grantee, unless the circumstances or words employed indicate that it was meant to be susceptible of sale or transfer. No one contends that a statute exempting the property of a charitable or literary institution will run with the land to a purchaser, although the privilege may attach to the property bought with the proceeds of the land so conveyed.

The acts of a legislative assembly are presumably laws susceptible of modification or repeal by the same or any subsequent legislature, and to render them irrevocable the intention must appear with a clearness which cannot be misunderstood. Such would seem to be the true import of the case of Lord v. Litchfield,2 and the principle was applied in The People v. Roper.3 The legislature there enacted that the property of all persons who should serve in the militia for seven years should be exempt from taxation, and the statute was held to be merely declaratory of an existing legislative intent, and not a contract.1

1 Morgan v. Louisiana, 93 U. S. 217.

2 36 Conn. 116. See ante, p. 590.

8 35 N. Y. 630.

"Had specific contracts been entered into with each of the relators

672

STATUTES ARE NOT CONTRACTS.

that if he would volunteer to equip himself and perform militia duty at stated periods during the next seven years, he should thenceforth be released from all future obligations due from him as a citizen to the government,' it would be material to consider whether the people had clothed their agents with authority to enter into such an engagement. The mere fact that there was the form of a contract, and that those who made it intended that it should not only be operative but indissoluble, would not necessarily bring it within the protection of the Federal Constitution. The clause in that instrument which prohibits the passage of State laws 'impairing the obligation of contracts,' applies only to contracts which impose obligations under the general principles of law. It does not extend to those which are void in their origin under the State Constitution, nor to those entered into without authority from the party sought to be bound. We find nothing in the decisions of the State or the federal courts which leads us to suppose that such a contract could be enforced after legislative revocation. In the present case the claim is limited to a partial release of the citizen from his future obligations to the government as a promised reward for voluntary and meritorious services. It is substantially conceded that they were services which the State had a right to command, and that the only evidence of its purpose to acknowledge them by a future gratuity is to be found in a provision of the general law which it had an undoubted right to repeal. It is claimed, however, that the law thus repealed contained within itself an irrepealable contract, imposing obligations on the State which the federal courts are bound to enforce.

"It is true that the State may, if it will, within the limits prescribed in its organic law, enter into private contracts with its citizens by which the people and the government are forever bound; but we are never to construe a general statute as embracing such a purpose when it is obvious that it was designed only as an expression of the legislative will for the time being in a matter of mere municipal regulation. When this is the object of the law, those who act upon the faith of its provisions do so with a reasonable assurance, indeed, that it will not be modified or repealed until such action shall be required, in the judgment of the legislature, by the general interest of the community, but with notice that it is subject to revocation by the State whenever the public exigencies may demand. Such a repeal involves no breach of obligation in the sense of the Federal Constitution; for the faith reposed is on the stability of a general law, and not on the efficacy of a legal contract." The People v. Roper, 35 N. Y. 630.

LECTURE XXX.

The Obligation of a Contract arises from the Command of the Law that it shall be fulfilled. — The Obligation will be impaired by revoking the Command or rendering the Means of enforcing it ineffectual. — The Remedy may be abrogated or changed if a Sufficient Remedy is substituted or remains, but any Alteration in the Time or Mode of Performance or Measure of Damages for the Breach is unconstitutional. The Prohibition is designed to guard against Retroactive Legislation, and will not be violated by a Law which affects only Subsequent Contracts. A State may enact a Bankrupt or Insolvent. Law as to Future Contracts, but not as to those already made. -The Legislature cannot authorize a Debtor to pay the Creditor's Taxes and deduct them from the Debt. A Law providing that the Bonds or Scrip issued by the State shall be received in Payment of Taxes, cannot be repealed as to subsequent Holders. - Chartered Privileges cannot be abrogated except under the Police Power or Right of Eminent Domain.

If we now inquire what is the obligation which may not be impaired, the answer will be such as would naturally spring from the reflection that the prohibition is contained in the organic law and intended to control legislation. The moral obligation of a contract, or that arising from the natural law, is beyond the reach of law-makers, and would exist though they were to declare all contracts null, or provide that compensation should not be recovered in the event of a breach. What the framers of the Constitution therefore presumably had in view was the obligation resulting from the remedies through which the contract may be enforced. These are creatures of the law, and if they are repealed or rendered ineffectual, the obligation of past contracts is necessarily impaired; but no such alteration will occur in contracts made subsequently in subordination to the statute which works the change, and have no legal efficacy save that which it confers. In the former case the change disappoints the reasonable