Oglesby v. Adams

Pless, J. “Contracts to which a State is a party are within the constitutional prohibition against the impairment of the obligation of contracts. An act of a legislature may be an obligation of the State within the constitutional prohibition, and whatever rights are created by such act a subsequent legislature cannot impair. It is a well established principle that a contract to which a State, or a subdivision thereof, is a party is as much within the constitutional prohibition of statutes impairing the obligation of contracts as a contract between individuals, particularly with respect to contracts previously entered into by the State in its proprietary capacity.” 16 C.J.S. 1301, Constitutional Law, Sec. 285. Also it is said in 16 Am. Jur. 2d 791, Constitutional Law, Sec. 443: “The general principle is established in American jurisprudence that a legislative grant under which rights have vested amounts to a contract and that a subsequent statute attempting to impair or annul such grant is unconstitutional because it is a law impairing the obligation of contracts. Thus, if a State makes a grant absolute in terms and without any reservation of a right to alter, modify, or repeal it, this constitutes an executed contract, and the State is forbidden to pass laws impairing the obligation arising therefrom.” And “it is a matter of established law that a legislative enactment in the ordinary form of a statute may contain provisions which, *274 when accepted as the basis of action by individuals or corporations, become contracts between them and the State within the protection of the clause of the Federal Constitution forbidding impairment of contract obligations; rights may accrue under a statute or even be conferred by it, of such character as to be regarded as contractual, and such rights cannot be defeated by subsequent legislation. When such a right has arisen, the repeal of the statute does not affect the right or an action for its enforcement.” Ibid 790. • The case of State v. Spencer, 114 N.C. 770, 19 S.E. 93, is quite similar to the one under consideration. In that case Spencer entered an oyster bed in Hyde County and held a grant therefor under the authority of Chap. 119, Laws 1887. Six years later the Legislature made the same lands not subject to entry, and in the contest resulting from the two conflicting statutes, the Court said: “When the State comes into its courts seeking their aid in annulling a contract it is governed in general by the same rules as a citizen. It has provided its own tribunal with full powers and a system by which its decisions may be reviewed. These laws are binding, upon us. Aware as we are, of the importance of preserving these public grounds for' the common benefit, we are not permitted to provide another way when the legislature has marked out the course to be pursued by those who have been injured by the action of commissioners. “In the absence of any allegation of fraud or mistake in the complaint there was no cause of action stated. If grants have been issued under the provisions of and in strict accord with the law, rights of property have been acquired which the State itself cannot take away except after compensation and under the principle of eminent domain.” We are aware of the case of Pinkham v. Mercer, 227 N.C. 72, 40 S.E. 2d 690, in which it is said: “No person has a vested right in a continuance of the common law or statute law. It follows that, generally speaking, a right created solely by the statute may be taken away by its repeal or by new legislation.” The distinction is that here the plaintiff is relying not upon a statute but upon a contract duly and legally executed by the State, and the State is not at liberty to violate the rights conferred upon the plaintiff by a solemn agreement. The order of Judge Parker is Affirmed.