Majority
p. 441THE STATE vs. JAMES PHALEN & DANIEL PAINE. P. SHORT, G. W. MAULL & E. WELLS vs. The same defendants.
Headnote
The act of 1842 “concerning lotteries” is unconstitutional.The grant of lottery privileges to certain 'managers, with power to draw until a cer¿ . tain sum is raised beyond all expenses, and the right to sell the grant, is not a contract between the State and the managers.
But after sale of this privilege for a valuable consideration, the State cannot, by subsequent legislation, annul or vary the grant.
Such legislation impairs the obligation of a contract made by authority of the State, and is unconstitutional.
The imposition of a tax on lotteries is constitutional. The taxing power is transcendental, and cannot be restrained by lottery grants, or the contracts under them.
An act cannot be supported by reference to the taxing power, where revenue is a mere incident to other objects. It must be a clear and exclusive exercise of the power of taxation.
Revenue bills must, by the constitution, be exclusively such.
Questions reserved by the Superior Court for hearing before all the judges, on a case stated.
The first of these suits was an action of debt brought under SeG. 1, of the “Act concerning lotteries,” (9 Del. Laws, 425,) to recover for the benefit of the school fund, the sum of ten dollars for each drawing of a lottery by the defendants; and the second suit was by the managers of the Georgetown lottery to recover fifty dollars for each drawing, under the second section of said law.
The case agreed referred to the Georgetown lottery act, (7 Del. LLaws, 131,) authorizing.the plaintiffs in the second suit to raise $ 10,-pOO, clear of all charges and expenses by lottery, and stated a sale py them of the lottery privileges granted by that act to defendants in consideration of $1, and of the further sum of $10,000, to be paid in ten equal semi-annual instalments; that defendants had paid [¡>6,000; that they gave bond as required by the law; that defendants lave drawn said lottery in sundry classes, before and since the act If 1841, and have neglected and refused to pay the sum of $10., re-luired to be paid by the first section of said act on the said classes Irawn since the passing of said act; or the sum of $50, required to fte paid by the second section of said act.
I The question reserved in both cases was, whether the act of 1841' ft contrary and repugnant to the constitution of the United States, ■s impairing the obligation of a contract: and, in the first case, Idiether the said act is contrary and repugnant to the constitution of |ie State of Delaware.
p. 442
The contract between the managers and defendants was dated 14th January, 1839. It recited the act of 1827, and in consideration of one dollar paid, and for the further consideration of $10,000 to be paid in ten equal semi-annual payments at specified times, granted, sold, assigned, &c., to defendants the said lottery, for the term of five years from the 1st of March, 1839, “and all the power, right and authority, given and granted by the said recited act of assembly to us as managers;” and it provided that “if James Phalen and Daniel Paine or their assigns, should be prevented by judicial or legislative interference from drawing said lottery in the State of Delaware, during the said term of five years, then this contract, if they so elect, to be void and of no effect, otherwise to remain in full force and virtue.”
(Extract from the act of 1827, 7 Del. Laws 131 .)
“Sec. 1. It shall be lawful to institute, carry on and draw a lottery, in one or more classes, for the purpose of raising, clear of all charges and expenses, ten thousand dollars, to be paid to the managers hereafter named, or to the majority of them or the survivors of them, or a majority of the survivors, or any other person whom they shall appoint to receive the same, to be applied by such managers to thei building an academy and masonic hall in the town aforesaid, andl the balance, if any, to the finishing St. Paul’s Episcopal church in| said town.
Sec. 2. That Jehu Stockley, Thomas Robinson, sen’r., and Philipl Short, Esquires, be and are hereby appointed managers of said lot-1 tery; and they, or a majority of them, or the survivors of them, or majority of the survivors, shall have power and authority to conduct and draw said lottery, and the different classes thereof, to devise ant determine the scheme thereof, to appoint any agent or agents for the sale of tickets or otherwise, and to do all acts requisite for effectim the premises.
Sec. 3. That the managers aforesaid, or a majority of them, oi the survivors of them, or a majority of the survivors, shall havtl power and authority to sell or dispose of said lottery, or any clas[ or classes thereof; apd the person or persons to whom any such sail or disposal shall be made, may exercise in relation to the said lot tery, or the class or classes thereof so sold or disposed of, the powe| and authority hérein-before conferred.”
(Extract fróm the act of Í 841, 9 Del. Laws 425 -6.)
“Whereas, the drawing of lotteries now under contract, and ai
p. 443
(.homed by acts of the legislature of this State, cannot at present be prohibited, but may be, and it is expedient should be, regulated:
Sec. 1. Be it enacted, &c., That from and after the fifteenth day of March next, the contractor or contractors for any lottery authorized by any law of this State, or drawn within this State, whether acting as manager or managers, or as agent or agents for any manager or managers, shall immediately upon the drawing of each and every scheme or class of such lottery, or within ten days thereafter, pay the sum of ten dollars, for each and every scheme or class so drawn, to the trustee of the school fund, to be applied to and for the benefit of ‘The fund for establishing schools in the State of Delaware.’ ” “And in case of the neglect or refusal of such contractor or contractors, to make such payment or payments as aforesaid, it shall be the duty of the trustee of the school fund, and he is hereby authorized and required, to recover the same, by an action of debt to be instituted in the name of the State, either before some justice of the peace of the county where such drawing shall have been made, or before the -Superior Court; and in such action, full costs of suit shall be recovered; any law to the contrary notwithstanding. And such contractor or contractors so neglecting or refusing, are hereby prohibited from setting up or drawing thereafter any further or other scheme or class of such lottery as aforesaid, under a fine of five hundred dollars, for each scheme or class drawn contrary to this prohibition; to be recovered, &c.”
“Sec. 2. And be it enacted, That from and after the fifteenth day of March next, the contractor or contractors for any lottery authorized by any law of this State, whether acting as manager or managers, or as agent or agents for any manager or managers, shall, immediately upon the drawing of each and every scheme or class of [such lottery, or within ten days thereafter pay, clear of all commis-Imissions, costs, charges and expenses whatsoever, the sum of fifty [dollars, on each and every scheme or class so drawn, to the person [or persons authorized to receive the fund to be raised by such lot-Itery; and shall be applied by such person or persons towards pay-iment of the sum to be raised by such lottery, and to the sum or sums [stipulated to be paid by such contractor or contractors.”
Rogers and Ridgely, for the State,
contended that the law of 1841 Ivas constitutional. The State has an unlimited powrnr of taxation' |>ver the persons and property within its jurisdiction, except where
p. 444
•it is restrained by the constitution of the United States, or its own constitution. The power in reference to this matter is not interfered with by the constitution of the United States, nor by the constitution of Delaware, unless by Sec. 14, Art. 1, Const. Del. (8 Del. Laics, p. 8,) which directs that no matter or clause whatever, not immediately relating to and necessary for raising revenue, shall be in any manner blended with or annexed to a bill for raising revenue. This has reference more to the mode of exercising the taxing power than to the power itself. The objection is, that this is a bill for raising revenue, and that matters are blended with it not relating to that subject. If this be a revenue bill because money is raised by it, then it is exclusively a revenue bill, and there is no other matter mixed with it. In this respect, all lottery grants are bills for raising money either for the State or for objects of the State’s bounty. If such acts are to be regarded as revenue bills, the principle must apply to many other laws; such as the act imposing duties on retailers of foreign goods, wares and merchandise; and the law requiring pedlars to take out licenses. The criminal code itself raises money for the State in the shape of fines and forfeitures. The act imposing a tax on commissions of civil officers; all charters of banking companies, railroads, &c., raise revenue incidentally, without being revenue bills in the constitutional meaning of that term. ( 4 Peters’ Rep. 514 ; 3 Peters’ Dig. 6-¿0.) In all these cases if the fact that money is raised 'for the State, or a tax laid by the State, makes them revenue bills, they are unconstitutional and void, for mingling other matters not immediately relating to or necessary for raising revenue.
• Does the act of 1841 violate the constitution of the United States •(10 Sec. 1 Art.,) by impairing the obligation of a contract?
A contract implies mutual obligation. It transfers some right andl raises some duty. This It and managers. act raises no contract between the State! is a grant, without any consideration, of thel 'bounty of the Stale to a particular object; and these persons are se-l lected as the agents of the State to perform a certain service. Theyl 'acquire no individual interest from the law, and there can be no con-j^ tract between the State and them. There is perhaps an executory contract without consideration between the State and the beneficia-l ries (the Masonic hall and the church;) but the question now is be-l tween the State and its agents, or those who stand in the same con-1 dition, and not between the State and the object of its bounty. The .act authorizes these agents to sell the lottery privileges, and this, il
p. 445
it stood alone, might be claimed to be an authority to make a contract for the State with the purchasers of the lottery. But the act goes on to define the rights and powers of the purchasers within the same limits as those of the lottery managers themselves. A lottery ;rant is not a contract between the State and the grantees or managers, but a mere delegation of a part of the political power of the State, to be used by the managers as the agents of the State, and who ire responsible to the State. Such grant is always subject to the ¡ontrol of the legislature, to modify, change, restrain, or annul at ts pleasure. ( 4 Miss. Rep. 123 .)
If this be a contract it is without obligation; it is an executory con-ract without a consideration; a grant by the State of a bounty which ay be intercepted at any time. ( 13 Conn. Rep. 87 ; 1 Harr. Rep. 70 ; 12 Wheat. 40 , 52; 4 Miss. Rep. 123 -5, Raiule on Const.) . An ct disturbing vested rights is not unconstitutional, unless it also im-air the obligation of a contract. ( 12 Wheat. Rep. 40 ; 11 Pet. Rep. 39 .)
But taking this to be a contract between the managers and de-ndants, in its terms it implies the power of the legislature to inter-re with or annul the lottery grant, and provides that the contract rail cease, if the legislature shall so interfere. This is under seal Ind the defendants are estopped from denying what their own con-act admits.
This case has wider influences and bearings in relation to the pow-rs of the legislature. If the grant of lottery privileges without limita-lon of time, liable as it is to great abuse, be not subject to any fur-ier interference by the legislature, it leaves the State and the peo-.e liable to the greatest evils, without the possibility of redress, here such is the consequence, the court will require the strongest ssible case before it will regard the legislature as having absolutely :d its own hands, and prevented itself from restraining its own be-ficiaries and agents from doing mischief indefinitely. Such grants •e from necessity, and on the highest policy, subject to further legis-llion and control. The object of this act of 1841, was to restrain e too frequent drawing of these lotteries, which had become so iquent as six times or more in a week. ,
Frame, for defendants.
The immorality or evil tendency of lot-ies can have no influence in the decision of this case. That was the legislature to consider; and the question for this court is not aether these acts granting lottery privileges are inexpedient, but
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whether they are binding, and whether subsequent acts violating contracts under them, are constitutional. Much less will the court decide this case on any grounds of State necessity, for the preservation of public morals. This is a doctrine that has no application in free governments, acting under a written constitution; a doctrine which is the favorite resort of tyranny, and the admission of which as a ground of legal judgment, wouid be more dangerous than any evil it could possibly correct. The case presents the high principle of the inviolability of contracts, a principle more important tc civil government and freedom than any question of the immoralitj of lotteries.
The law of 1827 has been treated as a mere delegation of política power to agents of the ¡átate, for raising money by lottery, and wit! power in these agents to substitute others. If this be so, what be comes of a law that imposes a tax or fine on these agents, agent without compensation and without interest, for every act done ii the very business which they W'ere appointed to do. The act 1841 imposes a tax for every drawing of the lottery, which thes] agents were authorized and directed by the act of 1827, to draw i one or more schemes. I grant the power of the State to imposl taxes in the widest extent; but it necessarily has some limits. A ta implies objects of taxation, property, persons, occupations; but to sa that the State shall create an agency to do a certain act for it an in its stead, and then tax that agency, is not only revolting to justic but absurd in itself. It is the legislature taxing its own will — th| power of the State taxing the power of the State.
But there is a contract under the act of 1827 — 1st. Between th| State and the managers. It was a grant by the State, executed far as the State is concerned, accepted by the grantees, acted upo| and transferred to others under the provisions of the grant; and th is an executed contract to the extent of the lottery grant which tl State could not repeal. 2d. There is a contract between the man gers under that lottery grant and Phalen & Co.; a contract found upon a bona fide and valuable consideration to a large amount, part paid down; a contract conferring rights and imposing obligation! made strictly in conformity with the act of 1827; and not in viol tion of any other law. The State by that act authorized this co tract to be made, and to that extent is a party to it. It fully sells the defendants for five years the whole interest in this lottery, wi power to conduct and draw, in as many classes ns they please, at
p. 447
for the consideration of $10,000, and no more. This interest is a vested interest, a valuable interest; the vendees have a property in the thing; a right to realize the profits resulting from the privileges which they have bought under the authority of the law. The contract not only confers rights on the vendees, but it creates duties. E’hey are bound by the law and the contract, and their bond, to pay 11 the prizes drawn to the holders of tickets, as well as the $ 10,-00 to the managers. A grant is a contract. (3 Story’s Com. 241, 66-7.) Legislative grants equally such, though no beneficial in-erest accrues to the grantee. (Ib. 259-60.) Any deviation from íe terms of a contract, accelerating payment or dispensing with its onditions, impairs the obligation of a contract. (3 Story’s Com. &50; 1 Kent’s Corn. 319.) And it does not matter how much or how ittle the contract is varied.
The act of 1841 “concerning lotteries” impairs the-obligation of lis contract, .and is, therefore, unconstitutional and void under the 0th Sec. of Art. 1st of the constitution of the United States, which irohibits any State from passing any ex post facto law, or law im-'airing the, obligation of contracts. It requires these defendants to ay to the trustee of the school fund § 10, and #60 to the managers, zithin ten days after each drawing; the $50 being deducted from e sum to be paid to the managers, according to the contract, and e $10 being in addition to any payment, duty or obligation imposed n them by the contract. Both of these vary the contract and vio-te its obligation. The payment to the managers is at a different me and manner from that contracted for; and the payment to the hool fund is an added obligation which might within the five years ¡mount to a larger sum than the #10,000, which the contract secured; r the defendants have the right to draw six times in each week or ore.
Gilpin. — The authority is to raise $10,000, clear of all charges d expenses. The $10 on each drawing is a part of the charges nd may be raised in addition to the $10,000.
Frame. — Still this violates the contract. The defendant bought 1 the lottery privileges under the law of 1827 for five years, for a ecific sum of $10,000, and no more. They pay this absolutely, hether they make any thing or not, and they have no right to draw hy longer to make up any deficiency of gain or to cover any addi-nal charge. The charges implied by the law of 1827, are those ntained in that law; the charges incident to the drawing; and not
p. 448
charges imposed by subsequent laws. But the contract itself raises for the managers the full lottery privileges; the $10,000 granted by the law, and this exhausts the grant. How then can the contract open and allow the defendants to draw any longer to remunerate them for this superadded charge?
If this be the effect of the act of 1841 it is void, unless it can be shown that the legislature have the constitutional power of so inter fering with a contract. What are the grounds upon which the pow' er is claimed for the legislature? 1st. They say the act of 1841 is an act to regulate the drawing of lotteries. W here do the legista ture get the power to regulate lotteries already under contract so a to violate the obligation of such contracts? That is the very poin in issue. I need not deny the power to regulate the whole subjec of lotteries prospectively, nor the power to regulate, for some pur poses, lotteries already under contract; to require them to be con ducted fairly; to punish frauds, &c.; but I deny the power to regulat such lotteries in such way as to violate existing contracts. 2d. Tha the taw is a constitutional exercise of the taxing power. They dar not place it on this power alone, or they would make this a revenu bill, and expose it to another constitutional objection. As a I’evenui bill it violates the fourteenth section of the second article of th constitution of Delaware, by blending with its object other matter; not immediately relating to or necessary for raising revenue. It )1 in truth a revenue bill, whatever it professes in the preamble; it object was to place money in the treasury, and that is its direct anj not its incidental effect. That which is produced by taxation f< public use is revenue. (Rende on Const. 71; 1 Blue. Com. 170 3d. The third ground of support for this taw resorted to on the otb side, is the proviso at the end of this contract, that if the defendan should be prevented by judicial or legislative interference from dra ing the lottery, the contract should at their election be void. Th is not the kind of interference which the legislature has attempte The stipulation in the contract is for the case of prevention by judl cial or legislative interference from drawing the lottery; the act 1841 does not attempt any such thing, but on its face declares thij the legislature have not the power to prevent it. The case then pr vided for by the contract has not arisen.
Gilpin, Attorney general, in reply.
The act professes to regula lotteries. That was its object and that will be its effect if sustained That is the great purpose manifest on the whole act, and the rev
p. 449
-nue is a mere incident. Mr. Frame admits the power in the legislature to regulate lotteries. Does this act do so, and is that its object? The payment of $10, for each drawing was to prevent too frequent drawings and not to raise revenue. The object was the regulation of the lotteries; and the means used was the imposition of a penalty • or tax on each drawing. This penalty is not properly a tax, nor can it be called revenue. It goes not into the treasury of the State, for paying the expenses of government, but goes into a separate fund for supporting schools. This view is supported by the authority cited. (Rawle on Const 71.) The act has no feature of a revenue bill. The revenue laws are the various laws for assessing, levying, collection and return of State or county rates and levies; the laws whose object is the raising of revenue for the support of government; and not where such revenue is a mere incident.
But take this to be a revenue bill,- what is the matter mixed up with it, that is to vitiate it? The counsel referred to the third section repealing all lottery grants, as the only incongruous matter. Admit it, and what is the consequence; not that the whole act is void, but that this improper matter is void. An act may be constitutional in part, and unconstitutional in part. That which is good remains; that which is bad is void.
The general power of taxation is not denied.' The State may tax to any extent all the persons and property in the State: and the imposition of a tax does not impair a contract. The contract remains with all its obligation; the parties may enforce it as much as ever; ¡though liable as all are to the State’s power of taxation. The State has the power to tax the business of drawing lotteries. The argument against it has been that if conceded, the citizens engaged in this usiness might be ruined; thus arguing from the possible abuse ofpow-r its non-existence. The State has power to tax a bank, though the harter of that bank is a contract between the State and the corpo-ators. ' The power to tax exists without reference to the amount of ;he tax which may possibly be laid. (Proo. Bank vs. Billings, 4 Pet. ep. 514.) The tax imposed by the act of 1841, is not imposed on ndividuals or classes, but upon a business; that of drawing lotteries; nd to be paid out of the very fund to be raised by the lottery. It |s regulated in amount as it ought to be by the extent of the business one. It is to be paid as a part of the charges and expenses of the lottery, which was to be drawn until the whole grant of $10,000 is aised, clear of all charges and expenses. These defendants, there
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fore, pay none of this tax without compensation. They made their contract in reference to the law which authorized the raising the whole sum, clear of charges, &c.
But the act of 1827 created no contract, nor has any contract within the meaning of the constitution of the United States been made under it. Who a^e the contracting parties? The State appointed certain persons its agents to draw a lottery for a particular purpose. They were not bound to accept the appointment; they derived no interest under it. There was no contract with them, and no consideration for any contract. If a part of the political power of the Slate be devolved on agents, though through the medium of an act of incorporation, which is a contract, the State has the power to repeal such grant and reclaim the delegated power. (9 Gill & Johns. 390.) But it is said that a contract has intervened under the authority of the law, by the sale of this lottery grant to Phalen & Paine. Now what was the effect of this sale? to convey to Phalen & Paine all the authority of these managers and nothing more. Was it not competent for the legislature to have repealed the act of 1827, at any time before this sale to defendants? This cannot be doubted. What then prevents the repeal afterwards? The sale could give Phalen & Co. no rights or powers which the managers had not, nor bind the State to any thing to which it was not bound to the managers. These had nothing more than a mere privilege to raise $10,000 by lottery, and when this was done the law expired of itself; they had no right or power to sell to Phalen & Co. any thing more. And even this would be subject, necessarily so, to the power of repeal in the legis lature. The authority ceased on the expiration of the grant, or onl the repeal of the law. The sale, therefore, for five years was not authorized by the act of 1837. If the managers had the right to sel lottery powers for five years, they could sell for any number oil years; and if they could tie up the hands of the legislature from re peal for the shorter period, they eould for the longer. If this is t be the consequence of the recognition of this agreement as a con tract, then the State is at the mercy of the managers in any lottery grant however small; and this moral incubus may be fastened on th State in all time to come, by the act of a mere agent of the legislature, appointed for a specific and temporary purpose, and who him self it can hardly be doubted, would be always subject to the con trol of the legislature, whose creature he is.
As to the proviso in the end of the contract with Phalen & Co., i!
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plain meaning is that in just such case as has occurred, Phalen & Co. should have the option to throw up the contract and consider it void, or continue it subject to any interference on the part either of the legislature or the judiciary. It is true that they speak of a prevention of the drawing, but they obviously did not mean to confine it to the case of an entire prevention, or they would not have reserved to Phalen & Co. the election whether to avoid the contract or not. If they had meant a total prevention from drawing, the consequence would have been stated atonce to be an avoiding the contract. There could be no election to continue that which could not be continued. This clause concludes this 'cause, contract or not; binding on the legislature or not; the parties have agreed that the action of the legislature should put an end to it, or leave it in the election of the defendants to avoid it.
The chancellor delivered the opinion of a majority of the court; judge Layton dissenting, and chief justice Booth not sitting.
The first question submitted for our consideration and decision relates to the constitutionality of the act of 1841, regarding the contract of 1839 under the protection of the tenth section of the first article of the constitution of the United States, which in the latter clause declares that no State shall pass ‘‘any law impairing the obligation of contracts.” Without intending to impugn the legislative power of the State in all matters of revenue, police and other subjects within their appropriate and legitimate action, it becomes our duty to consider the case before us as disconnected and clearly distinguishable therefrom. The defendants insist upon their rights as derived from and exercised under a written contract, executed as they contend under the express sanction of a legislative act. It is against the right or power of the legislature to vary or impair vested rights thus acquired and for a valuable consideration purchased, that they rely upon the clause in the tenth section of the constitution of the United States as their shield and defence. It has been insisted on the part of the plaintiffs, that there exists no lontrac.t, or that if there is, it recognizes by a proviso the right of legislative interference. From the course of argument adopted it rnay be necessary to inquire whether the transaction acquired the jharacter of a legal contract by the written instrument executed in Il839; and if so, what was the legal effect and design of the proviso, jf we advert to the recital of the act of the 20th of February, 3841, It is apparent that the legislature by which that act was enacted, ex-wesslv recognize the existence of contracts under which lotteries
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were then drawing, and in consequence of the existence of such contracts, declare that the drawing cannot be prohibited but may be regulated. This legislative construction of their own powers and the admitted inability to prohibit in consequence of the existence of a contract, would seem fully to establish beyond all question, that the written instrument executed in 183!) is a contract. Hence we discover, in strict accordance with this opinion of their own powers, by I the third and last section of the act of 1841, the legislature repeal all acts granting or authorizing lotteries in this State, which have not been drawn, or all not being drawn, and respecting which no con-1 tract has been made and executed for the drawing thereof.
Having thus deduced from the legislative act of 1841, what ap-j pears to have been the opinion of those who made that law, con-[ cerning their own powers, we shall now proceed to consider the subject independent thereof, and give to you an opinion upon the casei judicially. We all agree that the act of 1827 authorizing the lottery! to be drawn, is neither a grant nor a contract. It is a bare del< tion of authority by which the drawing of the lottery is sanctioned,! until a certain amount or sum shall be raised for a certain purpose/ If the act had confined the authority to the simple agency of the! managers on behalf of the State, the question now presented mightf not have occurred. But in the act we find the managers are emj powered to raise the sum of $10,000, either by drawing the lotten themselves or through their agents, or by a sale of the powers grantee in the lottery act. Hence, although we regard the act as making no grant or contract with the managers, we cannot disregard thd authority granted to them to make a contract with others for a va-l luable consideration, which would be binding on the State. Whilq the authority or power delegated remained in the hands of the manal gers or agents of the legislature, it was subject to the control of th<[ legislature, either to repeal, modify or change. As a mere letter o| attorney, it could be revoked. But from the time1 when a contrae! was made under the authority conferred by the act to make a sale a new state of things took place: an authorized contract between thJ managers and .third persons, for a valuable consideration, conferred new rights and imposed new obligations. The contract having beei| made in pursuance of the powers contained in the letter of attorney and in strict conformity therewith, as also to give effect to the purl pose therein intended, must be obligatory upon the principal; nor ur der such circumstances can it be competent for the principal, evej
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should he revoke the letter of attorney, to annul or even impair the contract: its obligation rests upon him as strongly as if he had himself primarily made it and received the consideration paid. Regarding, therefore, the legislature as the principal, under whose authority the contract of 1839 was made, we do consider they had no right to violate this contract, or so revoke or modify the contract as to impair its obligation. But the act of 1841 does not assume to revoke its authority, but to modify by regulating the exercise of the powers delegated, after the same had become the property of third persons as purchasers by sale: that act recognizing the existence of certain lottery grants as under contract, and affirming that with respect to such they had no right to prohibit.
The question then recurs, was the modification of the lottery grant bj act of 1841, being under contract at the time, an unconstitutional interference with the contract of 1839? The managers had by that contract for the consideration of $10,000, payable in senii-annual in-stalments of $1,000' for five years, sold and transferred to Phalen & Co., the defendants, all the power, rights and privileges to draw the lottery as authorized by the act of 1827, during the period of five years, the act having authorized the managers to make $10,000, either by drawing or sale, clear of charges and expenses. It may be proper here to remark, that while the authority existed in the [hands of the managers, it was unaffected by the lapse of time; it did [not terminate until they realised the sum of $10,000, clear of all [charges and expenses. But the purchasers by the contract of 1839 [received all the rights subject to a different limitation; they bought [the exercise of them expressly for a limited period, and agreed to ■pay the sum of $10,000 for the same or the right to enjoy the same las then existing for five years. The contract when considered in ■reference to the interests of the contracting parties and the mutuality Sf obligation, evidently secures to the vendors the payment of $10,-■000, clear of all charges and expenses in five years, and to the pur-Shasers all existing rights and privileges under the act of 1827, for land during a period of five years; and each party contracting becomes bound or subject to the obligation of the contract as the consequence of their own agreement, containing and expressing their lawn stipulations, and ascertaining clearly their respective equivalents. ■Upon such a contract and the rights vested and exercised under it lifter the lapse of two years from its execution, the legislature by the Set of 1841, declare that all persons drawing lotteries should pay to
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the school fund $10 for each drawing, and $50 to the parties entitled to the purchase money to be credited on account thereof. The simple question we have to settle in the present case is, does this addition of $10 on each drawing and variation of the time of payment of the instalments of the purchase money by requiring $50 thereof to be paid at each drawing, interfere with the contract'made with Pha-len & Co., in the year 1839, so as to impair the obligation thereof? It has been said that this was no additional charge impairing the contract, because it would come in as a charge, and the defendants would have the right to draw on to reajize the additional sum. We entertain a very different opinion: the parties by their contract agreed to no such thing. The defendants agreed to pay $10,000 for the privileges of the lottery act of 1827, with the then existing charges, If the legislature could add $10 on each drawing, they might add $1,000; it is a question of power and not of amount. So as to the imposition of $50; if they can vary the lime of payment of a part of the purchase money, why not the whole; but we consider it our duty to say the legislature had no right thus to add to or vary th contract of 1839; and that such addition and variation thereof, as it increases the amount which the defendants agreed in five years to pay for the exercise of a privilege during five years, and also varies the mode and time of payment of the sum agreed to be paid, it necea sarily has the effect of impairing the obligation of the contract. In, dependent of the constitution of the United States the act, although clearly contrary to right and incapable of being sustained, yet as the act of a sovereign power, might be valid; for it is not always tha power regards right; experience teaches that power unlimited, ofter tramples upon and disregards private right. But when we turn t the clause in the constitution of the United States, which appear there inserted as a shield and defence against all legislative actioil by a State impairing the obligation of contracts, we feel authorized to say, not only that the legislature had no right, but they had n power to regulate in the manner attempted by the act of 1841, th existing contract of 1839.
In the argument of this case our attention has been drawn to th case of the Charleston Bridge Co. vs. The Warren Bridge. It doe| not appear to us analogous, or that the conclusion we have arrive^ at in reference to the questions submitted conflict with the decisio in that case. It only establishes that where the legislature had mad a grant out of one of the great powers of government for the puil
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pose of authorizing a bridge to be made with the franchise of toll, it had not exhausted the power so as to prohibit it from granting a similar power to another company for the erection of another bridge (and a free bridge.) over the same stream, although such grant might in effect prejudice or destroy the first bridge. The case before us s not the question whether the power of making other lottery acts till remains in the legislature after this was sold to defendants; nor hether such additional act, though to the injury of the defendants, would be unconstitutional; but it is whether the power still exists in be legislature by direct action, to burthen and impair the contract ade and transferred under a subsisting act. The question in the base cited was whether a contract and sale of a certain legislative ower or privilege to build a bridge was a monopoly, and restrained .he legislature from granting a similar power to others. The ques-ion here is, whether the legislature could directly add to or vary a ontract made under its authority.
W. H. Rogers, Ridgely and Gilpin, for plaintiffs.
Frame, (with whom was J^ M. Clayton,) for defendants.
With respect to the question arising out of the suggestion that the axing power authorized the legislature thus to regulate lotteries, it sufficient for us to remark, that we do not consider the taxing pow-r as having in this case been called into action; the act of 1841 is .0 revenue bill, but a bill to regulate lotteries under contract.
It only remains for me now to remark, that the proviso in the con-act does not vary the case. It was no doubt inserted to protect e purchaser in case he should be interfered with by the legitimate ction of the legislature; and the right of election excludes the pre-mption that the parties were to abandon on any interference of the gislature, especially when they reserved moreover the right to have judicial sanction to this interference.
Hence we are of opinion that the act of the legislature of the State |f Delaware, passed February 20,1841, entitled “An act to regulate tteries,” so far as the same affects the contract of the defendants ade in 1839, purchasing the lights and privileges of drawing a ttery under the act of 1827, is a violation of the latter clause of e tenth section of the first article of the constitution of the United Itates, and therefore we adjudge and declare the same in relation said contract void and of no effect.
Cases cited
- Clark v. Mayor of Washington 12 Wheat. 40 at 52 p. 445