The right of the States, in the absence of conflicting congressional legislation, to enact bankruptcy laws is limited by the provision of the Constitution that no State shall pass any law impairing the obligation of contracts. Indeed, if we are to accept the statement of the court in Hanover v. Moyses6 this prohibition was made for this express purpose.7
In Sturges v. Crowninshield the court held invalid a state law which discharged the debtor from a contract entered into previous to its passage.
In Ogden v. Saunders the court held valid a state bankruptcy law which discharged the debtor and his future acquisitions of property so far as it related to debts contracted subsequent to the passage of the law. The law was thus, in effect, read into each contract as a clause thereof.8
The authority of the States to deal by bankruptcy or other laws with contracts entered into subsequent to their enactment is plenary. "The inhibition of the Constitution [as to the impairment of contracts] is wholly prospective. The States may legislate as to contracts thereafter made, as they may see fit. It is only those in existence when the hostile law is passed that are protected from its effect." 9 Thus the States have been permitted to exempt at will from execution, or from attachment and distribution under bankruptcy proceedings, such classes and amounts of the debtor's property as they may see fit.10