As to the power of congress to impair the obligation of a contract, see Hepburn v. Gris wold, 8 Wall. (U. 603, 622, 19 L. Ed. 513 ; Knox v. Lee, 12 Wall. (U.' S.) 457, 20 L. Ed. 287 (and specially Clarkson N. Potter, argu endo at p. 501, and Strong, J., at p. 547) ;, Juilliard v. Greenman, 110 U. S. 421, 4 Sup. Ct. 122, 28 L. Ed. 204.
The provision of the constitution Is, how ever, not applicable to laws enacted by the states before the first Wednesday in March, 1789 ; Owings v. Speed, 5 Wheat. (U. S.) 420, 5 L. Ed. 124.
Contracts are made subject to the exercise of the rightful authority of the government and no obligation of a contract can defeat lawful government authority ; Louisville & N. R. Co. v. Mottley, 219 U. S. 467, 31 Sup. Ct; 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671, where a contract to Issue passes to a person for life could not be enforced after the pas sage of an act of congress forbidding the is sue of passes by any common carrier engaged in interstate commerce. An act of congress rendering contracts in retard to commerce invalid does not infringe the con stitutional liberty of the citizen to make con tracts ; and an act otherwise constitutional is not unconstitutional under the Vth Amend ment, as taking private property without compensation because it invalidates contracts between individuals which conflict with the public policy declared in the act ; id.
In the application of this constitutional prohibition there is an exception to the gen eral rule that the United States supreme court will accept the construction placed by a state court upon its own constitution, when the question of contract or no contract is pre sented in the construction of a state statute ; in such case there is imposed upon the Unit ed States supreme court the duty of exercis ing an independent judgment upon the ques tion whether there is a contract, though it will lean towards the interpretation of the state court ; Stearns v. Minnesota, 179 U. S. 223, 232, 21 Sup. Ct. 73, 45 L. Ed. 162 ; Great Southern Fire Proof Hotel Co. v. Jones, 193 U. S. 532, 24 Sup. Ct. 576, 48 L. Ed. 778.
Where there is no contract protected by the impairment clause, whether a statutory exemption has been repealed by a subsequent statute is a question of state law in which the decisions of the highest court of the state are binding; and it is only where an 4rre pealable contract exists that it is the duty of the federal court to decide for itself whether a subsequent act impairs the obliga tion of such contract ; Wicomico County v. Bancroft, 203 U. S. 112, 27 Sup. Ct. 21, 51 L.
Ed. 112, where it was held that a proviso in a state statute, taxing all property of rail roads, that no irrepealable contract of ex emption shall be affected, must be construed as expressing the legislative intent to repeal all exemptions not protected by binding con tracts beyond legislative control.
Where the highest court of a state decided that bonds were invalid and the decision is in conformity with prior decisions, the bonds are not protected, having been illegally is sued ; Zane v. Hamilton County, 189 U. S. 370, 23 Sup. Ct. 538, 47 L. Ed. 858.
Contracts made after a law is passed are made subject to it ; Abilene Nat. Bank v. Dolley, 228 U. S. 1, 33 Sup. Ct. 409, 57 L. Ed. 707 ; Chicago, B. & Q. R. Co. v. Cram, 228 II. S. 70, 33 Sup. Ct. 437, 57 L. Ed. 734.
All contracts, whether executed or execu tory, express or implied, are within the pro hibition ; New Jersey v. Wilson, 7 Cra. (U. S.) 164, 3 L. Ed. 303 ; Green v. Biddle, 8 Wheat. (U. S.) 1, 5 L. Ed. 547 ; Louisiana v. New Orleans, 109 U. S. 285, 3 Sup. Ct. 211, 27 L. Ed. 936 ; State Tax on Foreign-Held Bonds, 15 Wall. (U. S.) 300, 21 L. Ed. 179; and also judgments founded upon contracts; Wolff v. New Orleans, 103 U. S. 358, 26 L. Ed. 395 ; Warren v. Stoddart, 105 U. S. 228, 26 L. Ed. 1117 ; Rails County v. U. S., 105 U. S. 733, 26 L. Ed. 957. • A violation of the prohibition may be by city ordinance ; Cumberland Telephone & Telegraph Co. v. City of Memphis, 198 Fed. 956, citing New Orleans Waterworks Co. v_ RefiningCo., 125 U. S. 18, 31, 8 Sup. Ct. 741,. 31 L. Ed. 607 ;' St. Paul Gaslight Co. v. St. Paul, 181 U. S. 142, 21 Sup. Ct. 575, 45 L. Ed. 788 ; or any action of a municipality exer cising delegated legislative power ; Grand Trunk W. R. Co. v. City of Sbuth Bend, 227 U. S. 544, 33 Sup. Ct. 303, 57 L. Ed. 633 ; or to the action of any state instrumentality exercising such delegated authority as a rail road commission ; Grand Trunk Western R. Co. v. R. R. Commission, 221 U. S. 400, 31 Sup. Ct. 537, 55 L. Ed. 786 ; Prentis v. At lantic Coast Line Co., 211 U. S. 210, 29 Sup. Ct. 67, 53 L. Ed. 150 ; to land grants of a state ; McGehee v. Ma this, 4 Wall. (U. S.) 143, 18 L. Ed. 314 ; or by state legislature; Terret v. Taylor, 9 Cra. (U. S.) 43, 3 L. Ed. 650 ; Pawlet v. Clark, 9 Cra. (U. S.) 292, 3 L. Ed. 735 ; Franklin County Grammar School v. Bailey, 62 Vt. 467, 20 Atl. 820, 10. L. R. A. 405 ; to a law which is in Its nature a contract under which absolute rights have vested ; Fletcher v. Peck, 6 Cra. (U. S.) 87, 3 L. Ed. 162.