As was observed in the argument, contracts are either expressed or implied, or part expressed and part implied. A provision created by law for the gov ernment or construction of all contracts made under it, need not be recited or expressly referred to in a contract; it will be considered as implied, and have the same force and effect as if it were set out. Should a contract contain a clause, declaring it null and void on the happening of a particular event, as the insolvency of either party, would such a clause be void, or would it be considered as impairing the obligation of the contract? If not, would the same provision in a law, made applicable to all subsequent contracts, so as to form a part of them, be considered as impairing their obligation? It is believed not.— Many cases might be cited in which the law forms a material part of the contract, although neither recited nor referred to; as when one person engages to labor for another, without a promise or stipulation of payment. If payment be refused and suit be brought, courts do not hesitate to say that by the law in force when the engagement was made, the laborer was entitled to the value of his labor—that the contract must be construed by the law-that the law must be taken as forming a part of the contract—and therefore that the plaintiff shall recover. In such a case, the obligation to pay is entirely created by the law, and the recovery is had on the ground that the law forms a part of the contract; for on no other principle would the defendant be held liable.

Although a state legislature cannot pass laws impairing contracts, yet they may regulate them, prescribe their form, their effect, and the mode of their discharge, and every contract is supposed to be made with reference to those laws. Thus if a contract be made for the payment of money, without designating the time of payment; the law says it shall be payable on demand. If it fixes the day of payment, but is silent on the subject of interest, interest shall attach from the day the money becomes due. In these, and in many other cases, the obligation is created by law. In other instances it is discharged by law; as, if a contract be, in whole or in part, contrary to a statute, it is void in toto. If the condition of a bond becomes impossible, by the act of God, by the act of the party, or by operation of law, the bond is void. If a contract be founded in usury, or given for a gambling consideration, or for a consideration malum in se, or if it be contrary to good policy, it is void. In all these cases, the intention of the parties is controlled and restrained by the law; yet it is not considered that the contracts are unconstitutionally impaired. On the same principles, may not the bankrupt law of Maryland be considered as controlling the obligation of the contract on which the present suit is founded?

It is admitted that the states have not given up the entire power of legislating on the subject of contracts. They may, for instance, pass laws preventing usury, and fixing the interest of money. Should such a law enact that a lender may receive from a borrower six per cent. interest and no more, and should an after contract contain an express promise to pay ten per cent., such a contract although voluntarily made for the payment of a specific sum, would be void in part, and, in many of the states, the obligation of the contract would be entirely destroyed, and the obligor released from the payment of both prin. cipal and interest. Independent of statute law, every person has the same right to contract for ten per cent. interest, that he has for the payment of the principal sum; and if the law limiting interest at six per cent., can absolve him

contract.

from the payment of the excess, and even of the principal itself, is not the obligation of the contract as clearly affected, as it is in the case before us? It is admitted that such a law, applied to contracts made prior to its enactment, would be unconstitutional; but not so when applied to subsequent contracts.Why, it may be asked, does this distinction exist? and why is not this class of laws considered void on constitutional grounds? They evidently affect contracts voluntarily made on subjects about which the parties had a right to One reason only can be assigned. The legislature has a right, by law, to regulate contracts, to determine their effect, and point out the mode of their discharge. These laws are applied to all subsequent engagements, and fix the rights of the parties at the very instant the contract is closed, so that the contract in its inception, receives an impress from the law, and the effect of the law being co-existent with the contract, can never be said to alter or impair it. It continues what it was at its commencement; and it is more correct to say that the law has in part made the contract, than that it has changed it. If an obligor be entirely discharged from a contract, by the operation of a statute against usury, and the constitution be not violated, it would be difficult to assign a reason why that instrument should be violated by a bankrupt law acting prospectively and pointing out a state of things, on the happening of which a contract shall cease to have effect, or shall be considered as discharged. If, however, an attempt should be made to give these laws a retrospective effect, the constitutional objection would arise in all its force; for although the legislature may regulate contracts to be made in future, it cannot disturb those previously made, or unsettle rights previously vested; and this is the distinction that ought to determine the character of the law of Maryland. On any other view of the question, the power of the states to legislate on the subject of contracts, will be materially impaired; for if it be admitted that a bankrupt law, operating on an after made contract in the manner prescribed and as was understood by the parties, be unconstitutional, or if contracts be not made with reference to existing laws, so as to imply an assent to their provisions, it must follow that statutes of limitation, statutes against usury, gambling, sale of offices, frauds and perjuries, and the like, must be void, because they impair the obligation of contracts not prohibited by the constitution, and which would have been legally binding had not those statutes been made.

It cannot be said that bankrupt laws go further than the statute just mentioned. They require all contracts to contain, by implication at least, a condition that they shall be discharged on the happening of a particular contin. gency, which would not have affected the contract had there been no statute on the subject. The Supreme Court of the United States decided, that the states may legislate on the subject of contracts. They originally possessed that power, and have conferred it on the general government only in part. They, therefore, possess a concurrent power, and may exercise it as freely as the general government. They may pass a bankrupt law, with this qualification, that so far as it conflicts with an act of Congress to establish a uniform system of bankruptcy, it must yield. But the general government having no law on the subject, there appears to be no restraint on the states. By a power derived .rom the people, Congress may establish an uniform system of bankruptcy throughout the United States. The states, by a power also derived from the

people, may pass bankrupt laws, (qualified as above,) operating within their respective territories. These powers being received from the same source, and differing only in the extent and limits of their operation, would be considered, at first view, as conferring on each, equal rights; and it is the opinion of some intelligent jurists, that when Congress have no law on the subject, the states may legislate to the same extent that Congress have a right to do. But as we only claim for the states the power of discharging, by the operation of their bankrupt laws, contracts entered into subsequently to their passage, and within the state in which the law has effect, and admit that if those laws were applied to pre-existing contracts, or to contracts made in a different state, they would impair their obligation. It is not within our province to examine that opinion.

It is asked if a law releasing a contracting party from the performance of his stipulation, be not a law impairing the obligation of contracts, what is the definition of such a law? It may be answered, when a law by which the parties to a contract are not bound, or which cannot be considered as forming a part of the contract, or as creating a rule for its construction is applied in its discharge, it may be said to impair its obligation in the sense of the constitution.

It was contended by counsel, that, although the contract between these parties was made with a knowledge of the law of Maryland, it was also made with a knowledge that the law was unconstitutional, and that the contract could not be affected by it. This is drawing a conclusion from premises that take for granted, the point in controversy. It is arguing from the contract to the law, and determining the validity of the latter by the apparent intention of the former. When the law in question was enacted, it interfered with no contract, every contract then in existence being placed beyond its operation. As to them, therefore, it was unobjectionable. It had no operation on them prohibited by the constitution. Consequently, persons then about to contract could not know the law as one impairing the obligation of contracts in the sense of the constitution, but as an act regulating future contracts, and pointing out a mode by which they might be discharged. If the law, at its inception, had no improper bearing on contracts, and was free from constitutional objections, the parties to an after contract could not change its nature, and convert it into an unconstitutional act. This would be enabling them to give a new character to an existing statute, and virtually to contract away the power of the legislature. Contracts cannot change the character of laws; they are subordinate to them. Instead of determining the validity of this statute by reference to the alledged intention of the parties to the notes in question, we must fix the legal intent of the parties, as well as the nature and extent of the obligation of the notes, by a reference to the statute. The statute must be tested by the constitution applied to it at the moment it took effect, and with reference to the operation it then might have on rights vested by existing contracts, and if it be found then free from constitutional objection, parties about to contract cannot know it to be unconstitutional.

In the case of Melon v. Fitzjames, (1 Bos. Bul. 142) in which it was determined that a contract made in France should be construed by the laws of that country, and that the defendant was not bound by the mere words of the contract, but might shew how it would be considered in France. Judstice

Rooke says, "if the law of France has said that a person shall not be liable on such a contract, it is the same as if the law of France had been inserted in the contract." The plain import of this language is, that contracts must be expounded according to the laws in force at the time they were made; and that the parties are as much bound by a provision contained in a law, as if that provision had been inserted in, and formed a part of the contract.

On the whole, from the view now taken of the subject, we are led to conclude, that the case before us differs materially from the cases of Sturges v. Crowninshield, and McMillen v. McNeil, and that it cannot be considered as settled by their authority-that this court, therefore, must decide according to their own construction of the constitution. That the statute of Maryland, being confined in its operation to after contracts made within that state, does not interfere with the constitution, and that the defendant was, by the operation of that statute, discharged from the payment of the notes on which the present suit is founded.

LESSEE OF LINDSLEY v. COATS.

IN BANK, 1823.

A conveyance of real estate by exchange is invalid.

The ancient common law conveyances, as such, have never been adopted in this state.
Before the statute of frauds, title to real estate could not be acquired by parol.

This was an action of ejectment, tried before the Supreme Court, in Athens county, 1823, upon an appeal by the defendant from a verdict and judgmeat rendered against him in the Common Pleas.

The facts of the case were these. The defendant, and one Timothy Wilkins, under whom the lessor of the plaintiff derived title, were owners of leases for ninety-nine years renewable forever, of part of the college lands, in Athens county. In the year 1807, the defendant, Coats, and Timothy Wilkins, agreed by parol to exchange the lands they owned, and each gave up to the other possession according to the agreement. Coats had remained in possession of the premises thus obtained by exchange, which are the same for which the suit is brought, ever since. It was part of the contract, that deeds should be exe. cuted between them, but it was never done.-Upon the trial, in the Supreme Court sitting in Athens county, the plaintiff relied upon the legal title. The defendant gave evidence of the contract of exchange, and the possession acquired under it. The court, judges Pease and Sherman, charged the jury that the agreement by parol, and the possession acquired under it, could not be set up at law to defeat the legal title of the plaintiff. A verdict was found for the plaintiff. The defendant moved for a new trial, upon the ground of Jurisdiction, and this motion was reserved for decision by all the judges.

Ewing in support of the motion.

By the COURT.

The lessor of the plaintiff produced a regular title to the lands in controversy, from the University at Athens, under whom the same was held.

The defendant gave evidence, that in the year 1807, (anterior to the enactment of the statute of frauds,) an agreement by parol, was entered into by him

and one Timothy Wilkins, the then owner of the lands in dispute; and through whom the plaintiff deduces title to exchange the same for lands of the defendant, also held under the University, situate in the same county; and that each party to the contract went into possession of the lands so obtained by exchange. The court instructed the jury, that the parol exchange accompanied with possession did not vest in the defendant the legal estate in the land. A new trial is sought for, on the ground that this direction was incorrect. It is contended by the defendant, that at common law, a parol exchange of lands situate in the same county, accompanied with possession, transfers the legal estate without livery of seizin; and that at the time when this exchange was made, there was no statute law of the state requiring contract of or concerning lands to be in wri ting.

By the common law, a parol exchange of lands situate in the same county, was good, provided each party went into possession of the lands acquired by such exchange; but if the lands were situate in different counties, or either party died before going into possession, such parol exchange was void. (Shep. Touch. 294. Lit. Sec. 51, 52, and 62.) Nor was livery of seizin necessary to perfect such exchange; for each had already corporal possession of his land.

This was one of the ancient common law modes of transferring real estate, adopted at a time when writing was practised or understood, but by few individuals.

It has been repeatedly determined by the courts of this state that they will adopt the principles of the common law as the rules of decision, so far only as those principles are adapted to our circumstances, state of society, and form of government. In no instance have the ancient common law modes of conveyance, as such, been adopted in this state; and long anterior to the settlement of this country, they had given way to the comparatively modern mode of assurance by deeds of lease and release, bargain and sale, &c.-There is nothing in our circumstances or state of society, that would seem to require the adoption of a principle so pregnant with mischief as that the title to real estate might rest in and be evidenced by parol only.

The policy of all our laws respecting lands, is opposed to such a principle. Without attempting to enumerate the different acts of the legislature applicable to this subject, it may be said, that from the first organization of the government to the present time, it has been the policy of our laws that the title to real estate should be matter of record, subject to the inspection of every individual interested. The uniform custom of giving and receiving deeds upon all sales and transfers of real estate, has been in accordance with this policy; and this is believed to be the first instance in which an attempt has been made to sustain a legal title to lands resting only in a parol contract.

The policy of law, the custom of our country, the danger of perjury, and the many inconveniences that must necessarily result from the establishment of the principle contended for by the defendant, would, in the absence of all legislative provision upon the subject, require us to declare, that the exchange claimed by the defendant, did not transfer to him the legal title to the land in controversy; and that no contract evidenced only by parol, though accompanied with possession or livery of seizin, would vest in the purchaser, a legal estate in, or legal title to lands.