This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In this sense the contract comes into existence at the moment that it becomes enforceable between the parties, even though further acts are to be clone in performance thereof.1 Thus when a certificate of stock is issued to a member of a loan association incorporated in a foreign state, and his application for a loan is approved, a contract exists which cannot be impaired by subsequent legislation restricting the right of such corporation to do business in such state, even though the loan was not made until after the statute was passed.2
4 Pinney v. Nelson, 183 U. S. 144.
5 In re Pauley's Estate, 149 Pa. St. 196; 24 Atl. 114.
6 Sitton v. Dubois, 14 Wash. 624; 45 Pac. 303.
7 Louisiana v. New Orleans, 102 U. S. 203; Gunn v. Barry, 82 U. S. 610; Ernst v. Hollis. 89 Ma. 638; S So. 122; Stephens v. R. R. Co., 109 Cal. 86; 50 Am. St. Rep. 17; 29 L. R. A. 751; 41 Pan. 783; State v. Bradshaw, 39 Fla 137; 22 So. 296; McMurray v. Sidwell. 155 Ind. 560; SO Am- St. R»p. 255: 58 N. E. 722; Oary Library v. Bliss. 151 Ma3s. 364; 3 L. R. A. 765; 25 N. E.
92; Hamilton v. State (Miss.). 8 So. 761; s. c, 67 Miss. 217; 7 So. 282; State v. Kearney. 49 Neb. 325; 68 N. W. 533; American, etc., Association v. Rainbolt, 48 Neb. 434; 67 N. W. 493; State v. McPeak, 31 Neb. 139; 47 N. W. 691; Hughes v. Cuming. 165 N. Y. 91; 58 N. E. 794; Flewellen v. Proetzel, 80 Tex. 191 ; 15 S. W. 1043.
8 Smith v. Jennings, 67 S. C. 324; 45 S. E. 821.
1 Bedford v. Loan Association, 181 U. S. 227; Central Trust Co. v. Ry., 70 Fed. 282.
If a debt was contracted before a statute was passed and a note given therefor after the statute was passed, the date of contracting the debt determines the validity of the statute.3 It will not be presumed, however, that a given contract was entered into before the statute in question was passed; but that fact must be affirmatively shown.4
On the other hand, a transaction which has not yet created contract rights may be affected by a statute passed during such transaction.5 Thus a statute withdrawing public land from sale does not impair the rights of prospective purchasers who have not complied with the law so far as to secure their rights.6 If they have complied with the law so far as to acquire rights in the public lands a subsequent change of statute cannot divest such rights.7 The date of the law, in determining the application of this principle, is the date at which the law is passed and not that at which it is to go into effect, if it is to go into effect at a period subsequent to its passage.8 Thus a statute made contracts of a foreign corporasubsequently repealed and then _ re-enacted. Its re-enactment was held not to impair the obligation of the contract, no modification of it having been made while such repeal is in force.13 If a corporation whose charter is not subject to alteration by the state accepts the benefits of subsequent legislation, it becomes subject to all the provisions thereof.14 The contractual charter rights of a lessee of a street railway line date from the charter of the lessee and not from that of the lessor.15
2 Bedford v. Loan Association, 181 U. S. 227.
3 Wilson v. Brochon. 95 Fed. 82.
4 Blair v. Ostrander. 109 la. 204; 77 Am. St. Rep. 532; 47 L. R. A. 469; 80 N. W. 330; Williams v. Donough, 65 0. S. 499; 56 L. R. A. 766; 63 N. E. 84.
5 Campbell v. Wade, 132 U. S. 34.
6 Campbell v. Wade. 132 U. S. 34.
7 American Association v. Innis, 109 Ky. 595; 60 S. W. 388: State v. Bridges. 22 Wash. 04; 79 Am. St. Rep. 914: 60 Pac. 60; (citing Lytle v. Arkansas, 9 How. 314;
Stark v. Starrs, 6 Wall. 402; The Yosemite Valley Case; (sub. nom. Hutchings v. Low). 15 Wall. 77; Barney v. Dolph. 97 U. S. 652; Wirth v. Branson. 98 U. S. 118; distinguishing Allen v. Forrest. 8 Wash. 700; 24 L. R. A. 606; 36 Pac. 971; Frisbie v. Whitney. 9 Wall. 187; The Yosemite Valley Case (sub. nom. Hutchings v. Low). 15 Wall. 77; Campbell v. Wade. 132 U. S. 34).
8 Diamond Clue Co. v. Glue Co., 187 U. S. 611; Wrightman v. Boone County. 88 Fed. 435; same case. 82 Fed. 412; Hedger v. Rennaker, 3 tion which did not file its charter with the secretary of state void on the corporation's behalf but valid against it. This statute was to go into effect at a future time. It was held that a contract entered into by such corporation in the interim was affected by such statute.9 So a deed of trust executed after the passage of a statute providing that certain mechanics' liens created after mortgages may have priority over them, but before it goes into effect, is governed by the provisions of such statute.10 The greater number of the cases cited are on the point that in determining what is a reasonable time for bringing suit in case the statute of limitations is shortened, the time given is to be counted from the date of the passage of the act.11 Thus where a statute of limitations was to take effect six months after its passage, it was not invalid as impairing the obligation of contracts because causes of action were barred thereby as soon as it took effect, if a reasonable time was given after the passage of the act.12 A statute in force when the contract was made was
Met. (Ky.) 255; Smith v. Morrison, 22 Pick. (Mass.) 430; Hill v. Townley, 45 Minn. 167; 47 N. W. 653; Duncan v. Cobb, 32 Minn. 460; 21 N. W. 714; O'Brien v. Gaslin, 20 Neb. 347; 30 N. W. 274; (following Harbacb v. Miller, 4 Neb. 31) ; Osborne v. Lindstrom, 9 N. D. 1; 81 Am. St. Rep. 516; 46 L. R. A. 715; 81 N. W. 72; Merchants' National Bank v. Braithwaite, 7 N. D. 358; 66 Am. St. Rep. 653; 75 N. W. 244; Korn v. Browne, 64 Pa. St. 55; Virginia Development Co. v. Iron Co., 90 Va. 126; 44 Am. St. Rep. 893; 17 S. E. 806; Eaton v. Supervisors, 40 Wis. 668. Contra, that it is the taking effect of the statute and not the date of its passage. Ludwig v. Stewart. 32 Mich. 27; Price v. Hopkins, 13 Mich. 318; Gilbert v. Ackerman, 159 N. Y. 118; 45 L. R. A. 118; 53 N. E. 753.
9 Diamond Glue Co. v. Glue Co., 187 U. S. 611.
10 Virginia Development Co. v.
Iron Co., 90 Va. 126; 44 Am. St. Rep. 893; 17 S. E. 806.
11 Wrightman v. Boone County, 88 Fed. 435; same case, 82 Fed. 412; Hedger v. Rennaker, 3 Met. (Ky.) 255; Smith v. Morrison, 22 Pick. (Mass.) 430; O'Brien v. Gaslin, 20 Neb. 347; (following 30 N. W. 274; Harbach v. Miller, 4 Neb. 31) ; Osborne v. Lindstrom, 9 N. D. 1; 81 Am. St. Rep. 516; 46 L. R. A. 715; 81 N. W. 72. " The plain purpose of this provision was to give the holders of judgments rendered ten years or more before the passage of the act a reasonable time in which to revive their judgments before the act took effect." Wrightman v. Boone County, 88 Fed. 435, 436. Contra, Ludwig v. Stewart, 32 Mich. 27; Gilbert v. Ackerman, 159 N. Y. 118; 45 L. R. A. 118; 53 N. E. 753.
12 Hill v. Townley, 45 Minn. 167; 47 N. W. 653. Contra, Gilbert v. Ackerman, 159 N. Y. 118; 45 L. R. A. 118; 53 N. E. 753.