by a State statute, has issued bonds in aid of a
railway company; (2) the validity of this statute has been sustained by
the highest State court; (3) later the State legislature passes an act
to repeal certain taxes to meet the bonds; (4) it is sustained in doing
so by a decision of the highest State court holding that the statute
authorizing the bonds was unconstitutional _ab initio_. In such a case
the Supreme Court would take an appeal from the State court and would
reverse the latter's decision of unconstitutionally because of its
effect in rendering operative the act to repeal the tax.[1591]
Suppose further, however, that the State court has reversed itself on
the question of the constitutionality of the bonds in a suit by a
creditor for payment without there having been an act of repeal. In this
situation, as the cases stand today, the Supreme Court will still afford
relief if the case is one between citizens of different States, which
reaches it via a lower federal court.[1592] This is because in cases of
this nature the Court formerly felt free to determine questions of
fundamental justice for itself. Indeed, in such a case, the Court has
apparently in the past regarded itself as free to pass upon the
constitutionality of the State law authorizing the bonds even though
there has been no prior decision by the highest State court sustaining
them, the idea being that contracts entered into simply on the faith of
the _presumed_ constitutionality of a State statute are entitled to
this protection.[1593]
In other words, in cases of which it has jurisdiction because of
diversity of citizenship, the Court has held that the obligation of
contracts is capable of impairment by subsequent judicial decisions no
less than by subsequent statutes and that it is able to prevent such
impairment. In cases, on the other hand, of which it obtains
jurisdiction only on the constitutional ground, and by appeal from a
State court, it has always adhered in terms to the doctrine that the
word "laws" as used in article I, section 10, does not comprehend
judicial decisions. Yet even in these cases, it will intervene to
protect contracts entered into on the faith of existing decisions from
an impairment which is the direct result of a reversal of such
decisions, but there must be in the offing, as it were, a statute of
some kind--one possibly many years older than the contract rights
involved--on which to pin its decision.[1594]
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