Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/450

 § 450.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VIII. lations between them ; that is to say, a contract has been made to which the state is a party. § 450. The state cannot alter any of its laws so as to affect Contract legal relations in which the law has already mani- thHtate fested itself, for such alteration would be unconsti- andthecor- tutional, in that it would impair the obligation of a poration. ' l j • • contract, 1 or at least deprive some one of his " vested rights." Therefore, the state cannot alter the constitution of a corporation regarded simply as law, so as to affect any legal relations in which it has manifested itself. 2 But as to the corporators, the state cannot alter this constitution so as to affect legal relations not yet arisen, because on the accepting of the charter by the corporators the state is held impliedly to agree that it will not alter the charter as a law, and this implied agreement is the contract between the state and the corporation. Thus, the corporation acquires a right under the protection of the Federal constitution, that the rules of law in its own constitution shall remain unaltered ; i. e., it acquires the right that acts in respect of the corporate enterprise, which 1 E. g., a state law passed after the execution of a mortgage, which declares that the equitable estate of the mortgagee shall not be extin- guished for twelve months after a sale under a decree of chancery, and which prevents any sale unless two- thirds of the amount at which the property has been valued by apprais- ers shall be bid therefor, impairs the obligation of a contract and is void. Bronson v. Kinzie, 1 How. 311; ace. McCracken v. Hay ward, 2 How. 608; compare Curtis v. Whitney, 13 Wall. 68; Connecticut Mut. Life Ins. Co. v. Cushman, 108 U. S. 51. A con- tract between a state and a party whereby he is to perform certain duties for a specific period for a stipulated compensation, is within the protection of the Federal con- stitution. Hall v. Wisconsin, 103 U.S. 5; see Davis v. Gray, 16 Wall. 203; Chicago, etc., R'y Co. v. United States, 104 U. S. 680. A constitu- 430 tional amendment providing that no tax shall be levied for certain state railway aid bonds, already negoti- ated, until the law levying the tax be submitted to a vote of the people, and be adopted by a majority of those voting, is void, as impairing the obligation of a contract. State v. Young, 29 Minn. 474. But a retroactive act validating contracts does not impair the obligation of them. Canal Co. v. Vallette, 21 How. 414; Gross v. United States Mortgage Co., 108 U. S. 477; see § 325. Thus, a statute which, by repealing a usury law, validates a voidable contract, is constitutional. Ewell v. Daggs, 108 U. S. 143. 2 E. g., the state could not abolish the personal liability of shareholders for corporate indebtedness so as to affect legal regulations already sub- sisting between them and creditors of the corporation. Hawthorne v. Calef, 2 Wall. 10. See § 501.