Hyde v. Planters Bank of Mississippi

Bullard, J. The enactment of the Legislature of the State of Mississippi, which the District Court considers as unconstitutional, because it impairs the obligationof a contract, to wit, the charter of the Planters Bank, is contained in “ an act, approved on the 21st of February, 1840, entitled an act requiring the several banks in this State to pay specie, and for other purposes.” It is the seventh section, and provides : “ That it shall not be lawful for any Bank in this State to transfer, by endorsement or otherwise, any note, bill receivable, or other evidence of debt; and if it shall appear in evidence, upon the trial of any action upon any such note, bill receivable, or other evidence of debt, that the same was so transferred, the same shall abate upon the plea of the defendant.” Acts of 1840, page 16. It ought to be premised, that the Planters Bank was a State bank, the State owning one-third of the stock; and the charter pledges the faith of the State to make good all losses which may accrue from a deficiency of the funds of said bank, or by [421] other means, in proportion to the amount of stock which it holds. That, in common with other persons, natural and artificial, the bank had the authority to transfer chases in action as incident to their capacity to contract, is clear; but it failed to redeem its notes in specie ; its notes became depreciated, and it incurred the risk, to say the least of it, of forfeiting its charter. It was under these circumstances that the Legislature passed the act containing the above recited provision. But it is contended, that by the charter of the bank it was authorized to hold and possess real and personal property of every kind, and to sell, alienate, or dispose of the same for the good of the bank, and to do and perform all and singular such matters or things as to them may appear necessary, or which to them may appertain to do as incident to bodies corporate ; and that the Legislature could not deprive the institution of any of these powers without a violation of the charter, and thus impairing the obligation of contracts. It appears to us very clear, that the statute in question has not impaired the obligation of the contract, as between Hyde & Goodrich and the bank. The former are still bound to pay, the latter have still a right to recover. But the law has modified the capacity of the bank to cede to another its right to enforce the contract; nor can the bank be said to jhave any vested right to make such a transfer, resulting from any contract with the State. The capacity for contracting is generally within the power of the Legislature in reference to future contracts, and remedies may be modified at the will of the Legislature. “ Any deviation,” says Judge Story, “ from the terms of a contract by postponing or accelerating the period of its performance which it prescribes; imposing conditions not expressed in the contract; or dispensing with the performance of those which are a part of the contract, however minute or apparently immaterial their effect upon it, impair its obligation” — He proceeds to say, that the abolition of all remedies operating in prcesenti, is also an impairing of the obligation of a contract; “ but,” he adds, that “ every change and modification of the remedy does not involve such a consequence no one will doubt.” 3 Story on the Constitution, § 1379. But it is said, that the contract violated is the privilege granted [422] to the bank to dispose of its assets as it may think proper, and that such a modification of the charter, without the consent of the corporation is unconstitutional; and that it is not shown that the bank has accepted this modification of its charter. No adjudged case has been referred to in support of this position, and a very strong case must be made out to induce us to declare the law of a neighboring State unconstitutional, especially when it appears that the purpose of the law was, in a great measure, remedial. We see in that statute one of the means adopted by the legislative power of the State, to maintain inviolate its plighted faith, that the public shall suffer no loss by the operations of the bank, by preventing them from disposing of their assets or portfolio, and suffering their circulation to perish on the hands of the people, and from providing for some favored depositors by a transfer of bills receivable while its notes in circulation are at a heavy discount; by, in effect, compelling the banks always to receive in discharge of obligations due to them the currency with which they have flooded the country, and refusing to the transferree any action upon such evidence of debt. It leaves the remedy by direct action still open to the bank, and only refuses an action to their assignees. A law which should deny to the bill-holder a right to pay a debt due to the bank even in the hands of a transferree, in its own circulation, always payable to bearer, and passing from hand to hand as cash, and so difficult to be traced and identified in the ordinary course of business, would, in our opinion, be as justly liable to be treated as violating the obligation of a contract. But this court will not in any case of serious doubt as to the constitutionality of laws, pronounce them void, especially when their operation is to protect our own citizens from injuries arising from the abuse of the banking power. The disability created by the statute affects not merely the Planters Bank, but -all of a particular class of artificial persons, not in reference to any peculiar corporate right or franchise, but as to a species of contract, of which they were previously capable, in common with all other persons capable of contracting at all. No one can be said to have any vested right in any existing legal capacity in reference to any future contract, or advantage to result from this capacity. He who to-day is by law a forced-heir in expectancy, may to-morrow by a new law, be [423] declared liable to be disinherited by will, or incapable even of succeeding ab intestato. It may be assumed, indeed, as a general rule, that the mere capacity or incapacity of particular classes of persons to contract, or to inherit, depends upon the legislative will. We, therefore, conclude, that the law of the Legislature of Mississippi must have its effect, and that the appellee acquired no legal title to the debt due by the appellants to the Planters Bank. It is, therefore, adjudged and decreed, that the judgment of the District Court be reversed, that the rule taken by the appellee be discharged, and that he pay the costs of both courts.