STURGES v. CROWNINSHIELD.

FEBRUARY TERM, 1819.

[4 Wheaton's Reports, 122-208.]

CROWNINSHIELD, on the 22d of March, 1811, made two promissory notes to Sturges, due in the following August. On the 3d of April, 1811, the legislature of New York, in which state the notes were given, passed “An act for the benefit of insolvent debtors and their creditors." Crowninshield did not pay his notes, but complied with the act referred to, and obtained a discharge. Sturges sued him before the United States circuit court for the district of Massachusetts, and the judges being opposed in opinion upon the great questions in the case, it was brought before the supreme court, the opinion of which was delivered by Chief Justice Marshall on the 17th of February, 1819.

THIS case is adjourned from the court of the United States for the first circuit and the district of Massachusetts, on several points, on which the judges of that court were divided, which are stated in the record for the opinion of this court. The first is,

Whether, since the adoption of the constitution of the United States, any state has authority to pass a bankrupt law, or whether the power is exclusively vested in the congress of the United States?

This question depends on the following clause, in the eighth section of the first article of the constitution of the United States:

"The congress shall have power," &c., to "establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States."

The counsel for the plaintiff contend that the grant of this power to congress, without limitation, takes it entirely from the several states.

In support of this proposition, they argue that every power given to congress is necessarily supreme; and if, from its nature, or from the words of grant, it is apparently intended to be exclusive, it is as much so as if the states were expressly forbidden to exercise it.

These propositions have been enforced and illustrated by many arguments drawn from different parts of the constitution. That the power is both unlimited and supreme is not questioned. That it is exclusive is denied by the counsel for the defendant.

In considering this question, it must be recollected, that, previous to the formation of the new constitution, we were divided into independent states, united for some purposes, but in most respects sovereign. These states could exercise almost every power, and among others that of passing bankrupt laws. When the American people created a national legislature, with certain enumerated powers, it was neither necessary nor proper to define the powers retained by the states. These powers proceed not from the people of America, but from the people of the several states; and remain, after the adoption of the constitution, what they were before, except so far as they may be abridged by that instrument. In some instances, as in making treaties, we find an express prohibition; and this shows the sense of the convention to have been that the mere grant of a power to congress did not imply a prohibition on the states to exercise the same power. But it has never been supposed that this concurrent power of legislation extended to every possible case in which its exercise by the states has not been expressly prohibited. The confusion resulting from such a practice would be endless. The principle laid down by the counsel for the plaintiff, in this respect, is undoubtedly correct. Whenever the terms in which a power is granted to congress, or the nature of the power, require that it should be exercised exclusively by congress, the subject is as completely taken from the state legislatures as if they had been expressly forbidden to act on it.

Is the power to establish uniform laws on the subject of bankruptcies throughout the United States of this description?

The peculiar terms of the grant certainly deserve notice. Congress is not authorized merely to pass laws the operation of which shall be uniform, but to establish uniform laws on the subject throughout the United States. This establishment of uniformity is, perhaps, incompatible with state legislation on that part of the subject to which the acts of congress may extend. But the subject is divisible in its nature into bankrupt and insolvent laws; though the line of partition between them is not so distinctly marked as to enable any person to say, with positive precision, what belongs exclusively to the one, and not to the other class of laws. It is said, for example, that laws which merely liberate the person are insolvent laws, and those which discharge the contract are bankrupt laws. But if an act of congress should discharge the person of the bankrupt, and leave his future acquisitions liable to his creditors, we should feel much hesitation in saying that this was an insolvent, not a bankrupt act; and therefore unconstitutional. Another distinction has been stated, and has been uniformly observed. Insolvent laws operate at the instance of an imprisoned debtor, bankrupt laws at the instance of a creditor. But should an act of congress authorize a commission of bankruptcy to issue on the application of a debtor, a court would scarcely be warranted in saying that the law was unconstitutional, and the commission a nullity.

When laws of each description may be passed by the same legislature, it is unnecessary to draw a precise line between them. The difficulty can arise only in our complex system, where the legislature of the union possesses the power of enacting bankrupt laws; and those of the states, the power of enacting insolvent laws. If it be determined that they are not laws of the same character, but are as distinct as bankrupt laws, and laws which regulate the course of descents, a distinct line of separation must be drawn, and the power of each government marked with precision. But all perceive that this line must

be in a great degree arbitrary. Although the two systems have existed apart from each other, there is such a connexion between them as to render it difficult to say how far they may be blended together. The bankrupt law is said to grow out of the exigencies of commerce, and to be applicable solely to traders; but it is not easy to say who must be excluded from, or may be included within, this description. It is, like every other part of the subject, one on which the legislature may exercise an extensive discretion.

This difficulty of discriminating with any accuracy between insolvent and bankrupt laws would lead to the opinion that a bankrupt law may contain those regulations which are generally found in insolvent laws; and that an insolvent law may contain those which are common to a bankrupt law. If this be correct, it is obvious that much inconvenience would result from that construction of the constitution which should deny to the state legislatures the power of acting on this subject, in consequence of the grant to congress. It may be thought more convenient that much of it should be regulated by state legislation, and congress may purposely omit to provide for many cases to which their power extends. It does not appear to be a violent construction of the constitution, and is certainly a convenient one, to consider the power of the states as existing over such cases as the laws of the union may not reach. be this as it may, the power granted to congress may be exercised or declined, as the wisdom of that body shall decide. If, in the opinion of congress, uniform laws concerning bankruptcies ought not to be established, it does not follow that partial laws may not exist, or that state legislation on the subject must It is not the mere existence of the power, but its exercise, which is incompatible with the exercise of the same power by the states. It is not the right to establish these uniform laws, but their actual establishment, which is inconsistent with the partial acts of the states.

cease.

But

It has been said that congress has exercised this power; and by doing so has extinguished the power of the states, which cannot be revived by repealing the law of congress.

4 Wh. 195,

We do not think so. If the right of the states to pass a bankrupt law is not taken away by the mere grant of that power to congress, it cannot be extinguished; it can only be suspended by the enactment of a general bankrupt law. The repeal of that law cannot, it is true, confer the power on the states; but it removes a disability to its exercise which was created by the act of congress.

Without entering farther into the delicate inquiry respecting the precise limitations which the several grants of power to congress contained in the constitution may impose on the state legislatures, than is necessary for the decision of the question before the court, it is sufficient to say, that, until the power to pass uniform laws on the subject of bankruptcies be exercised by congress, the states are not forbidden to pass a bankrupt law, provided it contain no principle which violates the tenth section of the first article of the constitution of the United States.

This opinion renders it totally unnecessary to consider the question, whether the law of New York is, or is not, a bankrupt law.

We proceed to the great question on which the cause must depend. Does the law of New York, which is pleaded in this case, impair the obligation of contracts within the meaning of the constitution of the United States?

This act liberates the person of the debtor, and discharges him from all liability for any debt previously contracted, on his surrendering his property in the manner it prescribes.,

In discussing the question, whether a state is prohibited from passing such a law as this, our first inquiry is into the meaning of words in common use. What is the obligation of a contract? and what will impair it?

It would seem difficult to substitute words which are more intelligible, or less liable to misconstruction, than those which are to be explained. A contract is an agreement in which a party undertakes to do, or not to do, a particular thing. The law binds him to perform his undertaking, and this is, of course,