Section XIX.
Assuming it now to be proved that the “obligation of contracts,” which the States are forbidden to “impair,” is the natural “obligation”; and that, constitutionally speaking, this provision secures, to all the people of the United States, the right to enter into, and have the benefit of, all contracts whatsoever, that have that one natural “obligation,” let us look at some of the more important of those State laws that have either impaired that obligation, or prohibited the exercise of that right.
1. That law, in all the States, by which any, or all, the contracts of persons, under twenty-one years of age, are either invalidated, or forbidden to be entered into.
The mental capacity of a person to make reasonable contracts, is the only criterion, by which to determine his legal capacity to make obligatory contracts. And his mental capacity to make reasonable contracts is certainly not to be determined by the fact that he is, or is not, twenty-one years of age. There would be just as much sense in saying that it was to be determined by his height, or his weight, as there is in saying that it should be determined by his age.
Nearly all persons, male and female, are mentally competent to make reasonable contracts, long before they are twenty-one years of age. And as soon as they are mentally competent to make reasonable contracts, they have the same natural right to make them, that they ever can have. And their contracts have the same natural “obligation” that they ever can have.
If a person’s mental capacity to make reasonable contracts be drawn in question, that is a question of fact, to be ascertained by the same tribunal that is to ascertain all the other facts involved in the case. It certainly is not to be determined by any arbitrary legislation, that shall deprive any one of his natural right to make contracts.
2. All the State laws, that do now forbid, or that have heretofore forbidden, married women to make any or all contracts, that they are, or were, mentally competent to make reasonably, are violations of their natural right to make their own contracts.
A married woman has the same natural right to acquire and hold property, and to make all contracts that she is mentally competent to make reasonably, as has a married man, or any other man. And any law invalidating her contracts, or forbidding her to enter into contracts, on the ground of her being married, are not only absurd and outrageous in themselves, but are also as plainly violations of that provision of the constitution, which forbids any State to pass any law impairing the natural obligation of contracts, as would be laws invalidating or prohibiting similar contracts by married men.
3. All those State laws, commonly called acts of incorporation, by which a certain number of persons are licensed to contract debts, without having their individual properties held liable to pay them, are laws impairing the natural obligation of their contracts.
On natural principles of law and reason, these persons are simply partners; and their private properties, like those of any other partners, should be held liable for their partnership debts. Like any other partners, they take the profits of their business, if there be any profits. And they are naturally bound to take all the risks of their business, as in the case of any other business. For a law to say that, if they make any profits, they may put them all into their own pockets, but that, if they make a loss, they may throw it upon their creditors, is an absurdity and an outrage. Such a law is plainly a law impairing the natural obligation of their contracts.
4. All State insolvent laws, so-called, that distribute a debtor’s property equally among his creditors, are laws impairing the natural obligation of his contracts.
If the natural obligation of contracts were known, and recognized as law, we should have no need of insolvent or bankrupt laws.
The only force, function, or effect of a legal contract is to convey and bind rights of property. A contract that conveys and binds no right of property, has no legal force, effect, or obligation whatever.*
Consequently, the natural obligation of a contract of debt binds the debtor’s property, and nothing more. That is, it gives the creditor a mortgage upon the debtor’s property, and nothing more.
A first debt is a first mortgage; a second debt is a second mortgage; a third debt is a third mortgage; and so on indefinitely.
The first mortgage must be paid in full, before anything is paid on the second. The second must be paid in full, before anything is paid on the third; and so on indefinitely.
When the mortgaged property is exhausted, the debt is cancelled; there is no other property that the contract binds.
If, therefore, a debtor, at the time his debt becomes due, pays to the extent of his ability, and has been guilty of no fraud, fault, or neglect, during the time his debt had to run, he is thenceforth discharged from all legal obligation.
If this principle were acknowledged, we should have no occasion, and no use, for insolvent or bankrupt laws.
Of course, persons who have never asked themselves what the natural “obligation of contracts” is, will raise numerous objections to the principle, that a legal contract binds nothing else than rights of property. But their objections are all shallow and fallacious.
I have not space here to go into all the arguments that may be necessary to prove that contracts can have no legal effect, except to bind rights of property; or to show the truth of that principle in its application to all contracts whatsoever. To do this would require a somewhat elaborate treatise. Such a treatise I hope sometime to publish. For the present, I only assert the principle; and assert that the ignorance of this truth is at least one of the reasons why courts and lawyers have never been able to agree as to what “the obligation of contracts” was.
In all the cases that have now been mentioned,—that is, of minors (so-called), married women, corporations, insolvents, and in all other like cases—the tricks, or pretences, by which the courts attempt to uphold the validity of all laws that forbid persons to exercise their natural right to make their own contracts, or that annul, or impair, the natural “obligation” of their contracts, are these:
1. They say that, if a law forbids any particular contract to be made, such contract, being then an illegal one, can have no “obligation.” Consequently, say they, the law cannot be said to impair it; because the law cannot impair an “obligation,” that has never had an existence.
They say this of all contracts, that are arbitrarily forbidden; although, naturally and intrinsically, they have as valid an obligation as any others that men ever enter into, or as any that courts enforce.
By such a naked trick as this, these courts not only strike down men’s natural right to make their own contracts, but even seek to evade that provision of the constitution, which they are all sworn to support, and which commands them to hold valid the natural “obligation” of all men’s contracts; “anything in the constitutions or laws of the States to the contrary notwithstanding.”
They might as well have said that, if the constitution had declared that “no State shall pass any law impairing any man’s natural right to life, liberty, or property”—(that is, his natural right to live, and do what he will with himself and his property, so long as he infringes the right of no other person)—this prohibition could be evaded by a State law declaring that, from and after such a date, no person should have any natural right to life, liberty, or property; and that, therefore, a law arbitrarily taking from a man his life, liberty, and property, could not be said to impair his right to them, because no law could impair a right that did not exist.
The answer to such an argument as this, would be, that it is a natural truth that every man, who ever has been, or ever will be, born into the world, necessarily has been, and necessarily will be, born with an inherent right to life, liberty, and property; and that, in forbidding this right to be impaired, the constitution presupposes, implies, assumes, and asserts that every man has, and will have, such a right; and that this natural right is the very right, which the constitution forbids any State law to impair.
Or the courts might as well have said that, if the constitution had declared that “no State shall pass any law impairing the obligation of contracts made for the purchase of food,” that provision could have been evaded by a State law forbidding any contract to be made for the purchase of food; and then saying that such contract, being illegal, could have no “obligation,” that could be impaired.
The answer to this argument would be that, by forbidding any State law impairing the obligation of contracts made for the purchase of food, the constitution presupposes, implies, assumes, and asserts that such contracts have, and always will have, a natural “obligation”; and that this natural “obligation” is the very “obligation,” which the constitution forbids any State law to impair.
So in regard to all other contracts. The constitution presupposes, implies, assumes, and asserts the natural truth, that certain contracts have, *and always necessarily will have, a natural “obligation.” And this natural “obligation”—which is the only real obligation that any contract can have—is the very one that the constitution forbids any State law to impair, in the case of any contract whatever that has such obligation.
And yet all the courts hold the direct opposite of this. They hold that, if a State law forbids any contract to be made, such a contract can then have no obligation; and that, consequently, no State law can impair an obligation that never existed.
But if, by forbidding a contract to be made, a State law can prevent the contract’s having any obligation, State laws, by forbidding any contracts at all to be made, can prevent all contracts, thereafter made, from having any obligation; and thus utterly destroy all men’s natural rights to make any obligatory contracts at all.
2. A second pretence, by which the courts attempt to evade that provision of the constitution, which forbids any State to “pass any law impairing the obligation of contracts,” is this: They say that the State law, that requires, or obliges, a man to fulfil his contracts, is itself “the obligation,” which the constitution forbids to be impaired; and that therefore the constitution only prohibits the impairing of any law for enforcing such contracts as shall be made under it.
But this pretence, it will be seen, utterly discards the idea that contracts have any natural obligation. It implies that contracts have no obligation, except the laws that are made for enforcing them. But if contracts have no natural obligation, they have no obligation at all, that ought to be enforced; and the State is a mere usurper, tyrant, and robber, in passing any law to enforce them.
Plainly a State cannot rightfully enforce any contracts at all, unless they have a natural obligation.
3. A third pretence, by which the courts attempt to evade this provision of the constitution, is this: They say that “the law is a part of the contract” itself; and therefore cannot impair its obligation.
By this they mean that, if a law is standing upon the statute book, prescribing what obligation certain contracts shall, or shall not, have, it must then be presumed that, whenever such a contract is made, the parties intended to make it according to that law; and really to make the law a part of their contract; although they themselves say nothing of the kind.
This pretence, that the law is a part of the contract, is a mere trick to cheat people out of their natural right to make their own contracts; and to compel them to make only such contracts as the lawmakers choose to permit them to make.
To say that it must be presumed that the parties intended to make their contracts according to such laws as may be prescribed to them—or, what is the same thing, to make the laws a part of their contracts—is equivalent to saying that the parties must be presumed to have given up all their natural right to make their own contracts; to have acknowledged themselves imbeciles, incompetent to make reasonable contracts, and to have authorized the lawmakers to make their contracts for them; for if the lawmakers can make any part of a man’s contract, and presume his consent to it, they can make a whole one, and presume his consent to it.
If the lawmakers can make any part of men’s contracts, they can make the whole of them; and can, therefore, buy and sell, borrow and lend, give and receive men’s property of all kinds, according to their (the lawmakers’) own will, pleasure, or discretion; without the consent of the real owners of the property, and even without their knowledge, until it is too late. In short, they may take any man’s property, and give it, or sell it, to whom they please, and on such conditions, and at such prices, as they please; without any regard to the rights of the owner. They may, in fact, at their pleasure, strip any, or every, man of his property, and bestow it upon whom they will; and then justify the act upon the presumption that the owner consented to have his property thus taken from him and given to others.
This absurd, contemptible, and detestable trick has had a long lease of life, and has been used as a cover for some of the greatest of crimes. By means of it, the marriage contract has been perverted into a contract, on the part of the woman, to make herself a legal non-entity, or non compos mentis; to give up, to her husband, all her personal property, and the control of all her real estate; and to part with her natural, inherent, inalienable right, as a human being, to direct her own labor, control her own earnings, make her own contracts, and provide for the subsistence of herself and her children.
There would be just as much reason in saying that the lawmakers have a right to make the entire marriage contract; to marry any man and woman against their will; dispose of all their personal and property rights; declare them imbeciles, incapable of making a reasonable marriage contract; then presume the consent of both the parties; and finally treat them as criminals, and their children as outcasts, if they presume to make any contract of their own.
This same trick, of holding that the law is a part of the contract, has been made to protect the private property of stockholders from liability for the debts of the corporations, of which they were members; and to protect the private property of special partners, so-called, or limited partners, from liability for partnership debts.
This same trick has been employed to justify insolvent and bankrupt laws, so-called, whereby a first creditor’s right to a first mortgage on the property of his debtor, has been taken from him, and he has been compelled to take his chances with as many subsequent creditors as the debtor may succeed in becoming indebted to
All these absurdities and atrocities have been practiced by the lawmakers of the States, and sustained by the courts, under the pretence that they (the courts) did not know what the natural “obligation of contracts” was; or that, if they did know what it was, the constitution of the United States imposed no restraint upon its unlimited violation by the State lawmakers.
*It may have very weighty moral obligation; but it can have no legal obligation.
**
Payout declined, since this is not original content.
Continued in Section XX here.