U.S. Supreme Court Stone v. Mississippi, 101 U.S. 814 (1879) Stone v. Mississippi 101 U.S. 814 DIGEST rom https://www.oyez.org/cases/1850-1900/101us814
Facts of the case In 1867, the provisional state legislature of Mississippi chartered the Mississippi Agricultural, Educational, and Manufacturing Aid Society. Society. he Society !as chartered to run a lottery for the ne"t #$ years% ho!ever, in 1868, a ne! constitution rati&ed 'y the people outla!ed lotteries in the state. (ohn Stone and others associated !ith the Society !ere arrested in 187) for running a lottery. he Society clai*ed they !ere protected 'y the provisions of their charter !hile the state declared that the su'se+uent enforce*ent legislation had repealed the grant.
uestion -id Mississippi violate the ontract lause 'y repealing the Society/s grant0
onclusion A unani*ous ourt found that the Mississippi classi&cation of lotteries as outla!ed acts !as valid. he State legislature do not have the po!er to 'ind the decisions of the people and future legislatures. legislatures. he ourt stated that no legislation had the authority to 'argain a!ay the pu'lic health and *orals. he ourt vie!ed the lottery as a vice that threatened the pu'lic health and *orals. he contracts protected protected in the onstitution onstitution are property property rights, not not govern*ental govern*ental rights. herefore, herefore, one can only o'tain te*porary suspension of the govern*ental rights in this case, the right to outla! actions2 in a charter !hich can 'e revo3ed 'y the !ill of the people.
ERROR TO THE S!RE"E #ORT O$ THE ST%TE O$ "&SS&SS&!!& Sy''a(us 1. &) 18*+, the egs'ature o "sssspp gra)te a charter to a 'ottery copa)y or twe)ty-23e years ) co)serato) o a stpu'ate su ) cash, a) a))ua' paye)t o a
urther su, a) a perce)tage o recepts ro the sa'e o tcets. % pro3so) o the co)sttuto) aopte ) 18*8 ec'ares that The 'egs'ature sha'' )e3er authorze a)y 'ottery, )or sha'' the sa'e o 'ottery tcets (e a''owe, )or sha'' a)y 'ottery heretoore authorze (e pertte to (e raw), or tcets there) to (e so'. He': 1. That ths pro3so) s )ot ) co)6ct wth sec. 10, art. 1, o the #o)sttuto) o the )te States, whch proh(ts a State ro pass)g a 'aw par)g the o('gato) o co)tracts. 7. That such a charter s ) 'ega' eect )oth)g ore tha) a 'ce)se to e)oy the pr3'ege co)erre or the te, a) o) the ters spec2e, su(ect to uture 'egs'at3e or co)sttuto)a' co)tro' or wthrawa'. 7. Trustees of Dartmouth College v. Woodward, 4 heat. 518, coe)te upo) a) e;p'a)e. <. The 'egs'ature ca))ot, (y charter)g a 'ottery copa)y, eeat the w'' o the peop'e o the state authortat3e'y e;presse, ) re'ato) to the co)t)ua)ce o such (us)ess ) ther st. The egs'ature o "sssspp passe a) %ct, appro3e $e(. 1*, 18*+, e)tt'e %) %ct )corporat)g the "sssspp %grcu'tura' a) "a)uactur)g % Socety. &ts pro3so)s, so ar as they (ear upo) the =uesto)s )3o'3e, are as o''ows: The corporato) sha'' ha3e power to rece3e su(scrpto)s, a) se'' a) spose o cert2cates o su(scrpto)s whch sha'' e)tt'e the ho'ers thereo to a)y artc'es that ay (e aware to the, a) the str(uto) o the awars sha'' (e ar'y ae ) pu('c, ater a3erts)g, (y the cast)g o 'ots, or (y 'ot, cha)ce, or otherwse, ) such a))er as sha'' (e recte (y the (y'aws o sa corporato)> . . . a) the sa corporato) sha'' ha3e power to oer preus or przes ) o)ey, or the (est essays o) agrcu'ture, a)uactures, a) eucato), wrtte) (y a ctze) o "sssspp, or to the ost eser3)g wors o art e;ecute (y ctze)s o "sssspp, or the ost useu' )3e)to)s ) echa)cs, sce)ce, or art, a)e (y ctze)s o "sssspp. Sec. + pro3es that the artc'es to (e str(ute or aware ay co)sst o 'a)s, (oos, pa)t)gs, statues, a)t=ues, sce)t2c Page 101 U. S. 815
)strue)ts or apparatus, or a)y other property or th)g that ay (e or)ae)ta', 3a'ua('e, or useu'. Sect. 8 re=ures the corporato) to pay, (eore the coe)cee)t o (us)ess, to the treasurer o the state or the use o the u)3ersty the su o ?5,000, a) to g3e (o)
a) securty or the a))ua' paye)t o ?1,000, together wth o)e-ha' perce)t o) the aou)t o recepts er3e ro the sa'e o cert2cates. Sect. 9 ec'ares that a)y )eg'ect or reusa' to cop'y wth the pro3so)s o the act sha'' wor a oreture o a'' the pr3'eges gra)te, a) su(ect a)y o@cer or age)t a')g to carry out ts pro3so)s or cott)g a)y rau ) se'')g tcets at raw)g o 'ottery to )cte)t, the pe)a'ty (e)g a 2)e )ot 'ess tha) ?1,000, a) prso)e)t )ot 'ess tha) s; o)ths. Sect. 11 e)acts that as soo) as the su o ?100,000 s su(scr(e a) the su o ?75,000 pa )to the capta' stoc, the copa)y sha'' go )to operato) u)er ther charter a) )ot (eore, a) the act o )corporato) sha'' co)t)ue a) (e ) orce or the space o twe)ty-23e years ro ts passage, a) that a'' 'aws a) parts o 'aws ) co)6ct wth ts pro3so)s (e repea'e, a) that the act sha'' tae eect ro a) ater ts passage. The co)sttuto) o the state, aopte ) co)3e)to) "ay 15, 18*8, a) rat2e (y the peop'e Aec. 1, 18*9, ec'ares that The 'egs'ature sha'' )e3er authorze a)y 'ottery, )or sha'' the sa'e o 'ottery tcets (e a''owe, )or sha'' a)y 'ottery heretoore authorze (e pertte to (e raw), or tcets there) to (e so'. The 'egs'ature passe a) act, appro3e Bu'y 1*, 18+0, e)tt'e %) %ct e)orc)g the pro3so)s o the #o)sttuto) o the State o "sssspp, proh(t)g a'' )s o 'otteres wth) sa State, a) a)g t u)'awu' to co)uct o)e ) ths state. The %ttor)ey-Ce)era' o "sssspp 2'e, "arch 1+, 18+4, ) the #rcut #ourt o arre) #ou)ty ) that state, a) )orato) ) the )ature o a =uo warra)to, aga)st Boh) D. Sto)e a) others, a''eg)g that, wthout authorty or warra)t o 'aw, they were the), a) or the prece)g twe'3e o)ths ha (ee), carry)g o) a 'ottery or gt e)terprse wth) sa cou)ty a) state u)er the )ae o The "sssspp %grcu'tura', Eucato)a', Page 101 U. S. 816
a) "a)uactur)g % Socety. The )orato) a''eges that sa socety o(ta)e ro the 'egs'ature a charter, (ut sets up the aoresa co)sttuto)a' pro3so) a) the act o Bu'y 1*, 18+0, a) a3ers that the charter was there(y 3rtua''y a) ) eect repea'e. Dy ther a)swer the respo)e)ts at that they were carry)g o) a 'ottery e)terprse u)er the )ae e)to)e. They a3er that ) so o)g they were e;ercs)g the rghts, pr3'eges, a) ra)chses co)erre (y ther charter, a) that they ha3e ) a'' th)gs
cop'e wth ts pro3so)s. They urther a3er that ther rghts a) ra)chses were )ot pare (y the co)sttuto)a' pro3so) a) 'egs'at3e e)acte)t aoresa. The state rep'e to the a)swer (y att)g that the respo)e)ts ha ) e3ery partcu'ar co)ore to the pro3so)s o ther charter. The court, ho')g that the act o )corporato) ha (ee) a(rogate a) a))u''e (y the co)sttuto) o 18*8 a) the 'egs'ato) o Bu'y 1*, 18+0, auge that the respo)e)ts (e ouste o a) ro a'' the '(ertes a) pr3'eges, ra)chses a) eo'ue)ts, e;ercse (y the u)er a) (y 3rtue o the sa act. The uge)t was, o) error, a@re (y the supree court, a) Sto)e a) others sue out ths wrt. "R. #H&E$, BST&#E %&TE e'3ere the op)o) o the #ourt. &t s )ow too 'ate to co)te) that a)y co)tract whch a state actua''y e)ters )to whe) gra)t)g a charter to a pr3ate corporato) s )ot wth) the protecto) o the c'ause ) the #o)sttuto) o the )te states that proh(ts states ro pass)g 'aws par)g the o('gato) o co)tracts. %rt. 1, sec. 10. The octr)es o Trustees of Dartmouth College v. Woodward, 4 heat. 518, a))ou)ce (y ths court ore tha) s;ty years ago, ha3e (ecoe so (ee ) the ursprue)ce o the )te states as to ae the to a'' )te)ts a) purposes a part o the #o)sttuto) tse'. &) ths co))ecto), howe3er, Page 101 U. S. 817
t s to (e ept ) ) that t s )ot the charter whch s protecte, (ut o)'y a)y co)tract the charter ay co)ta). & there s )o co)tract, there s )oth)g ) the gra)t o) whch the #o)sttuto) ca) act. #o)se=ue)t'y the 2rst )=ury ) ths c'ass o cases a'ways s, whether a co)tract has ) act (ee) e)tere )to, a) so, what ts o('gato)s are. &) the prese)t case, the =uesto) s whether the State o "sssspp, ) ts so3ereg) capacty, (y the charter )ow u)er co)serato) () tse' rre3oca('y (y a co)tract to pert the "sssspp %grcu'tura', Eucato)a', a) "a)uactur)g % Socety, or twe)ty-23e years, to rece3e su(scrpto)s, a) se'' a) spose o cert2cates o su(scrpto) whch sha'' e)tt'e the ho'ers thereo to a)y 'a)s, (oos, pa)t)gs, a)t=ues, sce)t2c )strue)ts or apparatus, or a)y other pr operty or th)g that ay (e or)ae)ta', 3a'ua('e, or useu', aware to the (y the cast)g o 'ots, or (y 'ot, cha)ce, or otherwse. There ca) (e )o spute (ut that u)er ths or o wors the 'egs'ature o the state chartere a 'ottery copa)y, ha3)g a'' the powers )ce)t to such a corporato), or twe)ty-23e years, a) that ) co)serato) thereo the copa)y pa )to the state treasury ?5,000 or the use o a u)3ersty, a) agree to pay, a) u)t' the coe)cee)t o ths sut pay, a) a))ua' ta; o ?1,000 a) o)e-ha' o o)e perce)t o) the aou)t o recepts er3e
ro the sa'e o cert2cates or tcets. & the 'egs'ature that gra)te ths charter ha the power to () the peop'e o the state a) a'' succee)g 'egs'atures to a''ow the corporato) to co)t)ue ts corporate (us)ess ur)g the who'e ter o ts authorze e;ste)ce, there s )o ou(t a(out the su@ce)cy o the 'a)guage ep'oye to eect that o(ect, a'though there was a) e3e)t purpose to co)cea' the 3ce o the tra)sacto) (y the phrases that were use. hether the a''ege co)tract e;sts, thereore, or )ot epe)s o) the authorty o the 'egs'ature to () the state a) the peop'e o the state ) that way. %'' agree that the 'egs'ature ca))ot (arga) away the po'ce power o a state. &rre3oca('e gra)ts o property a) ra)chses ay (e ae they o )ot par the supree authorty to ae 'aws or the rght go3er)e)t o the state, (ut Page 101 U. S. 818
)o 'egs'ature ca) curta' the power o ts successors to ae such 'aws as they ay ee proper ) atters o po'ce. "etropo'ta) Doar o E;cse 3. Darre, <4 .F. *5+> Doy 3. %'a(aa, ! U. S. 6!5 . "a)y attepts ha3e (ee) ae ) ths court a) e'sewhere to e2)e the po'ce power, (ut )e3er wth e)tre success. &t s a'ways easer to eter)e whether a partcu'ar case coes wth) the ge)era' scope o the power, tha) to g3e a) a(stract e2)to) o the power tse' whch w'' (e ) a'' respects accurate. o o)e e)es, howe3er, that t e;te)s to a'' atters aect)g the pu('c hea'th or the pu('c ora's. Deer #opa)y 3. "assachusetts, 7 U. S. "5 > !atterso) 3. Ge)tucy, 7 U. S. 501. ether ca) t (e e)e that 'otteres are proper su(ects or the e;ercse o ths power. e are aware that orer'y, whe) the sources o pu('c re3e)ue were ewer tha) )ow, they were use ) soe or a'' o the states, a) e3e) ) the Astrct o #o'u(a, to rase o)ey or the erecto) o pu('c (u')gs, a)g pu('c pro3ee)ts, a) )ot u)re=ue)t'y or eucato)a' a) re'gous purposes> (ut ths #ourt sa, ore tha) thrty years ago, spea)g through "r. Bustce Crer, ) Phale# v. $%rg%#%a,8 How. 1*<, ! U. S. 168 , that e;pere)ce has show) that the coo) ors o ga(')g are coparat3e'y ))ocuous whe) p'ace ) co)trast wth the wesprea pest'e)ce o 'otteres. The orer are co)2)e to a ew perso)s a) p'aces, (ut the 'atter )ests the who'e cou)ty> t e)ters e3ery we'')g> t reaches e3ery c'ass> t preys upo) the har ear))gs o the poor> a) t p'u)ers the g)ora)t a) sp'e. Happ'y, u)er the )6ue)ce o restrct3e 'egs'ato), the e3's are )ot so appare)t )ow, (ut we 3ery uch ear that wth the sae opportu)tes o )u'ge)ce the sae resu'ts wou' (e a)este.
& 'otteres are to (e to'erate at a'', t s )o ou(t (etter that they shou' (e regu'ate (y 'aw, so that the peop'e ay (e protecte as ar as poss('e aga)st the )here)t 3ces o the syste> (ut that they are eora'z)g ) ther eects, )o atter how careu''y regu'ate, ca))ot at o a ou(t. he) the go3er)e)t s u)trae'e (y a)y c'a o 3este rghts or chartere pr3'eges, )o o)e has e3er suppose that 'otteres cou' )ot 'awu''y (e suppresse, a) those who a)age the pu)she se3ere'y as 3o'ators o the ru'es o soca' Page 101 U. S. 81
ora'ty. $ro 1877 to 18*+, wthout a)y co)sttuto)a' re=uree)t, they were proh(te (y 'aw ) "sssspp, a) those who co)ucte the pu)she as a ) o ga('ers. Aur)g the pro3so)a' go3er)e)t o that state, ) 18*+, at the c'ose o the 'ate c3' war, the prese)t act o )corporato), wth ore o 'e character, was passe. The )e;t year, 18*8, the peop'e, ) aopt)g a )ew co)sttuto) wth a 3ew to the resupto) o ther po'tca' rghts as o)e o the )te states, pro3e that The 'egs'ature sha'' )e3er authorze a)y 'ottery, )or sha'' the sa'e o 'ottery tcets (e a''owe, )or sha'' a)y 'ottery heretoore authorze (e pertte to (e raw), or tcets there) to (e so'. %rt. 17, sec. 15. There s )ow scarce'y a state ) the )o) where 'otteres are to'erate, a) #o)gress has e)acte a speca' statute, the o(ect o whch s to c'ose the a's aga)st the. Re3.Stat., sec. <894> 19 Stat. 90, sec. 7. The =uesto) s thereore rect'y prese)te, whether, ) 3ew o these acts, the 'egs'ature o a state ca), (y the charter o a 'ottery copa)y, eeat the w'' o the peop'e, authortat3e'y e;presse, ) re'ato) to the urther co)t)ua)ce o such (us)ess ) ther st. e th) t ca))ot. o 'egs'ature ca) (arga) away the pu('c hea'th or the pu('c ora's. The peop'e these'3es ca))ot o t, uch 'ess ther ser3a)ts. The super3so) o (oth these su(ects o go3er)e)ta' power s co)t)u)g ) ts )ature, a) they are to (e ea't wth as the speca' e;ge)ces o the oe)t ay re=ure. Co3er)e)t s orga)ze wth a 3ew to ther preser3ato), a) ca))ot 3est tse' o the power to pro3e or the. $or ths purpose, the 'argest 'egs'at3e screto) s a''owe, a) the screto) ca))ot (e parte wth a)y ore tha) the power tse'. Deer #opa)y 3. "assachusetts, supra. &) Trustees of Dartmouth College v. Woodward, 4 heat. 518, t was argue that the co)tract c'ause o the #o)sttuto), g3e) the eect co)te)e or ) respect to corporate ra)chses, wou' (e a) u)pro2ta('e a) 3e;atous )terere)ce wth the )ter)a' co)cer)s o a state, wou' u))ecessar'y a) u)wse'y e(arrass ts 'egs'ato), a) re)er uta('e those c3' )sttuto)s whch are esta('she or the purpose o )ter)a' go3er)e)t, a) whch, to su(ser3e those purposes, ought
Page 101 U. S. 8"0
to 3ary wth 3ary)g crcusta)ces, p. 17 U. S. 6"8 > (ut "r. #he Bustce "arsha'', whe) he a))ou)ce the op)o) o the #ourt, was careu' to say Ip. 17 U. S. 6" , that the raers o the #o)sttuto) )ot )te) to restra) states ) the regu'ato) o ther c3' )sttuto)s, aopte or )ter)a' go3er)e)t, a) that the )strue)t they ha3e g3e) us s )ot to (e so co)strue. The prese)t case, we th), coes wth) ths 'tato). e ha3e he', )ot, howe3er, wthout stro)g opposto) at tes, that ths c'ause protecte a corporato) ) ts charter e;epto)s ro ta;ato). h'e ta;ato) s ) ge)era' )ecessary or the support o go3er)e)t, t s )ot part o the go3er)e)t tse'. Co3er)e)t was )ot orga)ze or the purposes o ta;ato), (ut ta;ato) ay (e )ecessary or the purposes o go3er)e)t. %s such, ta;ato) (ecoes a) )ce)t to the e;ercse o the 'egtate u)cto)s o go3er)e)t, (ut )oth)g ore. o go3er)e)t epe)e)t o) ta;ato) or support ca) (arga) away ts who'e power o ta;ato), or that wou' (e su(sta)ta''y a(cato). %'' that has (ee) eter)e thus ar s, that or a co)serato) t ay, ) the e;ercse o a reaso)a('e screto), a) or the pu('c goo, surre)er a part o ts powers ) ths partcu'ar. Dut the power o go3er))g s a trust cotte (y the peop'e to the go3er)e)t, )o part o whch ca) (e gra)te away. The peop'e, ) ther so3ereg) capacty, ha3e esta('sh ther age)ces or the preser3ato) o the pu('c hea'th a) the pu('c ora's, a) the protecto) o pu('c a) pr3ate rghts. These se3era' age)ces ca) go3er) accor)g to ther screto), wth) the scope o ther ge)era' authorty, wh'e ) power> (ut they ca))ot g3e away )or se'' the screto) o those that are to coe ater the, ) respect to atters the go3er)e)t o whch, ro the 3ery )ature o th)gs, ust 3ary wth 3ary)g crcusta)ces. They ay create corporato)s, a) g3e the, so to spea, a 'te ctze)shp> (ut as ctze)s, 'te ) ther pr3'eges, or otherwse, these creatures o the go3er)e)t creato) are su(ect to such ru'es a) regu'ato)s as ay ro te to te (e ora)e a) esta('she or the preser3ato) o hea'th a) ora'ty. The co)tracts whch the #o)sttuto) protects are those that re'ate to property rghts, )ot go3er)e)ta'. &t s )ot a'ways Page 101 U. S. 8"1
easy to te'' o) whch se o the ')e whch separates go3er)e)ta' ro property rghts a partcu'ar case s to (e put, (ut ) respect to 'otteres there ca) (e )o @cu'ty. They are )ot, ) the 'ega' acceptato) o the ter, a'a ) se, (ut, as we ha3e ust see), ay proper'y (e ae a'a proh(ta. They are a speces o ga(')g, a)
wro)g ) ther )6ue)ces. They stur( the checs a) (a'a)ces o a we'' orere cou)ty. Socety (u't o) such a ou)ato) wou' a'ost o )ecessty (r)g orth a popu'ato) o specu'ators a) ga('ers, '3)g o) the e;pectato) o what, (y the cast)g o 'ots, or (y 'ot, cha)ce, or otherwse, ght (e aware to the ro the accuu'ato)s o others. #erta)'y the rght to suppress the s go3er)e)ta', to (e e;ercse at a'' tes (y those ) power, at ther screto). %)yo)e, thereore, who accepts a 'ottery charter oes so wth the p'e u)ersta))g that the peop'e, ) ther so3ereg) capacty a) through ther proper'y co)sttute age)ces, ay resue t at a)y te whe) the pu('c goo sha'' re=ure, whether t (e pa or or )ot. %'' that o)e ca) get (y such a charter s a suspe)so) o certa) go3er)e)ta' rghts ) hs a3or, su(ect to wthrawa' at w''. He has ) 'ega' eect )oth)g ore tha) a 'ce)se to e)oy the pr3'ege o) the ters )ae or the spec2e te, u)'ess t (e soo)er a(rogate (y the so3ereg) power o the state. &t s a pert, goo as aga)st e;st)g 'aws, (ut su(ect to uture 'egs'at3e a) co)sttuto)a' co)tro' or wthrawa'. O) the who'e, we 2) )o error ) the recor. Buge)t a@re.
