22 Congress, through an amendment to the Judicial Code, endeavored
to extend the reviewing power of the Supreme Court to suits involving
"'* * * the validity of a contract wherein it is claimed that a change
in the rule of law or construction of statutes by the highest court of a
State applicable to such contract would be repugnant to the Constitution
of the United States * * *'" This appeared to be an invitation to the
Court to say frankly that the obligation of a contract can be impaired
as well by a subsequent decision as by a subsequent statute. The Court,
however, declined the invitation in an opinion by Chief Justice Taft
which reviewed many of the cases covered in the preceding paragraphs.
Dealing with the Gelpcke and adherent decisions, Chief Justice Taft
said: "These cases were not writs of error to the Supreme Court of a
State. They were appeals or writs of error to federal courts where
recovery was sought upon municipal or county bonds or some other form of
contracts, the validity of which had been sustained by decisions of the
Supreme Court of a State prior to their execution, and had been denied
by the same court after their issue or making. In such cases the federal
courts exercising jurisdiction between citizens of different States held
themselves free to decide what the State law was, and to enforce it as
laid down by the State Supreme Court before the contracts were made
rather than in later decisions. They did not base this conclusion on
Article I, Sec. 10, of the Federal Constitution, but on the State law as
they determined it, which, in diverse citizenship cases, under the third
Article of the Federal Constitution they were empowered to do. Burgess
_v._ Seligman, 107 U.S. 20 (1883)."[1595] While doubtless this was an
available explanation in 1924, the decision in 1938 in Erie Railroad Co.
_v._ Tompkins, 304 U.S. 64, so cuts down the power of the federal courts
to decide diversity of citizenship cases according to their own notions
of "general principles of common law" as to raise the question whether
the Court will not be required eventually to put Gelpcke and its
companions and descendants squarely on the obligation of contracts
clause, or else abandon them.
"Obligation."--A contract is analyzable into two elements: the
_agreement_, which comes from the parties, and the _obligation_ which
comes from the law and makes the agreement binding on the parties. The
concept of obligation is an importation f
|