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March 3, 1902



Fuller, Harlan, Gray, Brewer, Brown, Shiras, Jr., White, Peckham, McKenna

Author: Shiras

[ 184 U.S. Page 408]

 MR. JUSTICE SHIRAS, after making the foregoing statement, delivered the opinion of the court.

The Federal question in this case is founded upon the contention that the act of July 8, 1879, under which the land was purchased by Dolan, having provided in its twelfth section for the forfeiture of the contract of purchase, in event of default in payment of annual interest, by a judicial proceeding, such section became part of the obligation of the contract between the State

[ 184 U.S. Page 409]

     and the purchaser, which was impaired by the subsequent act of August 20, 1897, authorizing a forfeiture without judicial ascertainment or proceedings, and that therefore the proceedings under the last mentioned act were null and void, as a violation of section 10, article 1, of the Constitution of the United States.

As the Supreme Court of Texas overruled that contention, and as the Civil Court of Appeals entered the final judgment in the case in accordance with the opinion of the Supreme Court, the question is properly before us for determination.

The reasoning upon which the Supreme Court of Texas proceeded can be best presented by the following extracts from its opinion, as it appears in this record:

"The act of 1897, under which the commissioner took the action the effect of which is in question, authorized the commissioner, when any portion of the interest due by purchasers of such land has not been paid, to declare a forfeiture of the purchase without judicial aid, and gave to his action the effect of putting an end to the contract. That this statute by its terms applies to cases such as this is not disputed.

"We think it clear that all the terms of the contract between the State and a purchaser under the act of 1879 are contained in sections 6, 7, 8, 9 and 10, above outlined, and their rights, the obligations of their contract, arises from a compliance with those provisions. The contract there provided for is an executory contract of sale and purchase, which arises upon an acceptance of and compliance with the stated terms of the offer made by the State for the sale of the lands. The purchaser presents his application, makes the cash payment, causes the land to be surveyed and executed his obligation to perform the things to be done in the future. The contract then is complete, and its terms are fixed. Jumbo Cattle Co. v. Bacon, 79 Texas, 12. Both the State and the purchaser are bound so long as there is compliance with the obligation -- the purchaser to make the further payments, and the State, upon completion thereof, to grant the land to the purchaser; but no title passes, and a right of rescission in the State may arise just as it might arise in an individual upon default in performance on the part of the other party.

[ 184 U.S. Page 410]

     "This right might be exercised by legislative act or by the act of some officer properly empowered thereto. The statute of 1879 does not give authority to any officer to rescind without judicial action; but the right of rescission existed in the State, and its exercise might be subsequently authorized through the lawmaking power, and an exercise of it, based upon the default of the other party, would not be a denial of any right of his. It could only be held that the right of rescission for default of the purchaser did not exist by holding that the contract provided that it should not exist, or that it should be exercised in a particular manner; but the contract embraces no such provision. There is no undertaking on the part of the State with the purchaser that the remedy prescribed in this statute, and no other, shall be pursued, unless it is to be implied from the mere presence of the provision in the statute, and we think it is well settled that no such implication arises. In the proposition often stated in the decisions that parties contract with reference to existing laws, and that such laws become a part of the contract, the reference is to those laws which determine and fix the obligation of the contract, the correlative rights and duties springing from it and not to laws of mere procedure prescribing remedies. With reference to these, there is ordinarily no obligation arising, but the contract is made in contemplation of the power of the legislature to change them. Of course, all remedy cannot be taken away, nor can the existing remedy be so altered as to take away or impair any of the rights given by the contract as interpreted by existing law. It is also true that a specific remedy, provided by the contract itself, cannot be changed by legislation, because it constitutes a part of the contract. Loan Co. v. Hardy, 85 ...

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