Morley v. Lake Shore & M. S. Railway Company/Dissent Harlan

Mr. Justice HARLAN, dissenting.

In an action brought in the supreme court of New York by John S. Prouty against the Lake Shore & Michigan Southern Railway Company and others to compel the specific performance of a certain contract, it was adjudged, January 26, 1878, that the company pay the plaintiff out of its net earnings $53,184.88, 'together with interest thereon from the entry of said judgment.' It was also adjudged that if the company, within a time specified, failed to pay to the plaintiff the above principal sum 'and such interest,' the plaintiff might have execution therefor against the defendant. Judgment was also entered in plaintiff's favor for $1,437.73 for his costs and allowance in the action.

By the statutes of New York in force when this judgment was rendered 7 per cent. was the legal rate of interest. It was provided that 'overy judgment shall bear interest from the time of perfecting the same;' that is, 'from the time when it is entered.' Laws 1844, c. 324; 1 Rev. St. N. Y. p. 771, pt. 2, c. 4, tit. 3; Laws 1877, c. 417, pp. 468, 477. It was also provided that, 'whenever a judgment shall be rendered, and execution shall be issued thereon, it shall be lawful to direct, upon such execution, the collection of interest upon the amount recovered, from the time of recovering the same until such amount be paid.'

Execution was issued on the above judgment, and, by written indorsement upon it, the sheriff was directed to collect thereon $54,622.61, (which was the aggregate amount, principal and costs, adjudged in favor of the plaintiff,) with interest at 7 per it competent for the legislature, by the act of 1879, which took effect January 1, 1880, of 1879, which took effect january 1, 1880, to reduce to 6 per cent. the interest collectible, after its passage, on the above judgment? I think it was not, and therefore dissent from the opinion and judgment of the court.

It may be conceded, for the purposes of this case, that a judgment, into which is merged a contract that does not itself provide for interest, will bear interest as may be prescribed by the statute in force when the judgment is entered, whatever may have been the rate of interest upon judgments at the time such contract was made. But it does not follow, when interest is given by a judgment in conformity with the statutes in force when it is rendered, that the right thus acquired can be affected or taken away by subsequent legislation. The difficulty is not met by saying that the allowance of interest upon a judgment is wholly within legislative discretion, and not a matter of agreement between the parties. Rights may be acquired by legislation that cannot be taken away by subsequent enactments. When the judgment in question was rendered, the plaintiff was entitled by statute to require the collection of interest upon the amount recovered from the time of the recovery 'until such amount be paid;' and that right was asserted in the mode prescribed when the plaintiff, by his indorsement on the execution, required the sheriff to collect the amount adjudged, with 7 per cent. interest till paid. Although the contract upon which the judgment was based did not, in terms, provide for interest upon any judgment rendered for its specific performance, it was necessarily implied, in such contract, that the party suing for a breach of it, or suing to compel its specific performance, should receive from the other party the amount judicially ascertained to be due, with such interest, if any, as the law allowed, and as the court legally awarded, at the time judgment might be entered. Indeed, it is an implied condition of every agreement that the party failing to comply with its terms shall be liable to the party injured in such sum as the law will give him at the time the default is adjudged.

Mr. Justice Story says: 'Express contracts are where the terms of the agreement are openly avowed and uttered at the time of the making of it. Implied contracts are such as reason and justice dictate from the nature of the transaction, and which, therefore, the law presumes that every man undertakes to perform. The constitution makes no distinction between the one class of contracts and the other. It, then, equally embraces and applies to both. Indeed, as by far the largest class of contracts in civil society, in the ordinary transactions of life, are implied, there would be very little object in securing the inviolability of express contracts if those which are implied might be impaired by state legislation. The constitution is not chargeable with such folly or inconsistency.' 2 Const. § 1377. The principle was applied in Fisk v. Police Jury, 116 U.S. 131, 134, 6 Sup. Ct. Rep. 329, where court, speaking by Justice Miller, said: 'The vice of the argument of the supreme court of Louisiana is in limiting the protecting power of the constitutional provision against impairing the obligation of contracts to express contracts, to specific agreements, and in rejecting that much larger class in which, one party having delivered property, paid money, rendered service, or suffered loss at the request of or for the use of another, the law completes the contract by implying an obligation on the part of the latter to make compensation. This obligation can no more be impaired by a law of the state than that arising on a promissory note.'

This principle was illustrated in another case in this court. I allude to McCracken v. Hayward, 2 How. 608, 613. The question there was as to the validity of a statute of Illinois, prohibiting property from being sold on execution for less than two thirds of the valuation made by appraisers, pursuant to the directions contained in the law. That statute was held to impair the obligation of contracts made before its passage, and to be inoperative upon executions issuing on judgments founded on such contracts. This court said: 'The obligation of the contract between the parties in this case was to perform the promises and understandings contained therein. The right of the plaintiff was to damages for the breach thereof, to bring suit and obtain a judgment, to take out and prosecute an execution against the defendant till the judgment was satisfied, pursuant to the existing laws of Illinois. These laws giving these rights were as perfectly binding on the defendant, and as much part of the contract, as if they had been set forth in its stipulations in the very words of the law relating to judgments and executions. If the defendant had made such an agreement as to authorize a sale of his property, which should be levied on by the sheriff, for such price as should be bid for it at a fair, public sale, on reasonable notice, it would have conferred a right on the plaintiff which the constitution made inviolable; and it can make no difference whether such right is conferred by the terms or law of the contract.'

A case in point is Cox v. Marlatt, 36 N. J. Law, 389. The principal question there, as stated by the court, was 'whether, after a judgment has been obtained, which carries a certain rate of interest under the then existing law, a change of that law by a subsequent statute, increasing or diminishing the former rate of interest, will affect the amount that can be collected under execution upon such judgment.' The court said: 'The effect of a judgment is to fix the rights of the parties thereto by the solemn adjudication of a court having jurisdiction. How those rights can be affected by any subsequent legislation is not apparent. This contract of the highest authority cannot be disturbed so long as it remains unexercised and unsatisfied. Changing the rate of interest does not affect existing contracts or debts due prior to such enactment, whether they be evidenced by statute, by judgment, or by agreement of the parties.' After referring to several cases, the court proceeds: 'It will be seen that these cases are decided on the principles above stated; that the parties' rights are fixed by the judgment of the court, and the judgment carries with it its incidents, equally determined, and all relating to the date of its entry.' It is of no consequence, in the present case, that the judgment, although calling for interest on the amount adjudged, did not specify the rate of interest. The statute then in force fixed the rate, and, as said in Amis v. Smith, 16 Pet. 303, 311, interest upon a judgment, secured by positive law, is 'as much a part of the judgment as if expressed in it.'

It seems to me that the law made it a part of the contract upon which Prouty's judgment was founded that for any breach of it, or for any failure to perform it by the other party, he should be entitled to sue, and to have judgment for such sum, whether principal or interest, as the law, at the time of judgment, entitled him to demand. The statute in question took away his right to receive a part of the amount which a court, having full jurisdiction of the subject-matter and of the parties, adjudged to be due him, and therefore impaired the obligation of the contract.

If the statute in question is constitutional, then it was competent for the legislature, not simply to reduce the interest upon unsatisfied judgments previously rendered, but to take away the right to all interest after its passage. Indeed, I do not see why, under the reasoning of the court, the legislature might not, after the judgment was rendered, have forbidden the collection of any interest whatever upon it. If it be said that the right to interest at 7 per cent. had become established up to the passage of the last act, and could not be affected by its provisions, with equal force it could be said that the right to interest from the entry of the judgment until the payment of the principal was established by the judgment. Nor do I see why, under the principles of the opinion, it was not competent for the legislature to have increased the rate of interest, and thus compelled the defendant to pay more than it was bound to pay when the judgment was rendered.

Look at the question in another aspect. Suppose, by the law in force when a judgment is rendered, the plaintiff is entitled to execution upon it. If the legislature subsequently, for the purpose of favoring debtors, requires the return of all outstanding executions, and forbids any execution upon judgments or decrees for money to be issued for 12 months, when the law, at the date of the judgment, authorized an execution to be issued in 10 days after judgment, could not such legislation, under the principles of the decision in this case, be sustained as not impairing the obligations of contracts? Those who would seek to sustain legislation of that character need only say that, as the right to execution upon a judgment for money was not given by the agreement of the parties, but by the statute regulating executions, it was within legislative discretion to modify the law in force when the judgment was rendered, in respect to the mode of enforcing the judgment. I do not think that such an argument would be heeded. Yet I take leave to say, with all respect for the opinions of others, that it ought to prevail in the case supposed, if it be true, as is now held, that it is competent for the legislature, consistently with the contract clause of the constitution, to declare that a party, adjudged by a court of competent jurisdiction, in a case ex contractu, to pay a given sum, with interest, until paid, at the rate then established, shall not be required to perform that judgment in all of its parts, but may go acquitted by paying less interest than that so fixed both by the existing law and by the judgment.

There is still another view of the case which, in my opinion, is conclusive against that taken by the court. If the rights of the parties as established by the judgment were not protected by the clause of the constitution forbidding the passage of state laws impairing the obligations of contracts, was not the right of Prouty to collect the sum, principal and interest, awarded him by the judgment, a right of property, of which he could not be deprived by legislative enactment? Could the legislature have taken from him the right to collect the principal sum found to be due from the railroad company? Clearly not, if any effect whatever is to be given to that clause of the fourteenth amendment declaring that no state shall deprive any person of property without due process of law. But if the judgment, as respects the principal sum, was property of which Prouty could not be arbitrarily deprived, why is not the interest which the judgment, in conformity with law, awarded to him, equally property, and entitled to like protection? In Louisiana v. Mayor, etc., 109 U.S. 285, 289, 291, 3 Sup. Ct. Rep. 211, it was held that a judgment against a municipal corporation for damages caused by a mob was not within the protection of the contract clause of the constitution. But the court conceded that such judgments, 'though founded upon claims to indemnity for unlawful acts of mobs or riotous assemblages, are property, in the sense that they are capable of ownership, and may have a pecuniary value.' It, however, held that the fourteenth amendment did not apply to that case, for the reason that, as the judgments continued an existing liability against the city, the relators could not be said to have been deprived of them. In that case, Mr. Justice Bradley concurred in the judgment on a special ground, namely, 'that remedies against municipal bodies for damages caused by mobs or other violators of law unconnected with the municipal government are purely matters of legislative policy, depending on positive law, which may at any time be repealed or modified, either before or after the damage has occurred, and the repeal of which causes the remedy to cease.' But he also said: 'An ordinary judgment of damages for a tort, rendered against the person committing it, in favor of the person injured, stands upon a very different footing. Such a judgment is founded upon an absolute right, and is as much an article of property as anything else that a party owns; and the legislature can no more violate it without due process of law than it can any other property. To abrogate the remedy for enforcing it, and to give no other adequate remedy in its stead, is to deprive the owner of his property, within the meaning of the fourteenth amendment. The remedy for enforcing a judgment is the life of a judgment, just as much as the remedy for enforcing a contract is the life of the contract. While the original constitution protected only contracts from being impaired by state law, the fourteenth amendment protects every species of property alike, except such as in its nature and origin is subject to legislative control.

In my opinion, the right which a party has by a judgment for money-at least where the cause of action is ex contractu-to collect the sum awarded thereby, with interest, until paid, at the rate then established by law, is a right of property, of which he cannot be deprived by mere legislative enactment, even to the extent of reducing the interest collectible under such judgment.

I am authorized by Mr. Justice FIELD and Mr. Justice BREWER to say that they concur in this opinion.