This is indeed a moral law, and has been recognized as such by all civilized nations.
Justice Curtis, in his Life of Webster (vol. i., chap. 7, p. 165) thus notices the decision in the Supreme Court which first gave the scope and meaning of this clause in regard to charters of private corporations:
"The framers of the Constitution of the United States, moved chiefly by the mischiefs created by the preceding legislation of the states, which had made serious encroachments on the rights of property, inserted a clause in that instrument which declared that 'no state shall pass any ex post facto law, or law impairing the obligation of contracts.' The first branch of this clause had always been understood to relate to criminal legislation, the second to legislation affecting civil rights. But before the case of Dartmouth College v. Woodward occurred, there had been no judicial decisions respecting the meaning and scope of the restraint in regard to contracts, excepting that it had more than once been determined by the Supreme Court of the United States that a grant of lands made by a state is a contract within the protection of this provision, and is, therefore, irrevocable. The decisions, however, could go but little way toward the solution of the questions involved in the case of the college. They did, indeed, establish the principle that contracts of the state itself are beyond the reach of subsequent legislation equally with contracts between individuals, and that there are grants of a state that are contracts. But this college stood upon a charter granted by the crown of England before the American Revolution. Was the state of New Hampshire—a sovereign in all respects after the Revolution, and remaining one after the federal constitution, excepting in those respects in which it had subjected its sovereignty to the restraints of that instrument—bound by the contracts of the English crown? Is the grant of a charter of incorporation a contract between the sovereign power and those on whom the charter is bestowed? If an act of incorporation is a contract, is it so in any case but that of a private corporation? Was this college, which was an institution of learning, established for the promotion of education, a private corporation, or was it one of those instruments of government which are at all times under the control and subject to the direction of the legislative power? All these questions were involved in the inquiry, whether the legislative power of the state had been so restrained by the constitution of the United States that it could not alter the charter of this institution, against the will of the trustees, without impairing the obligation of a contract. If this inquiry were to receive an affirmative answer, the constitutional jurisprudence of the United States would embrace a principle of the utmost importance to every similar institution of learning, and to every incorporation then existing, or thereafter to exist, not belonging to the machinery of government as a political instrument....
"On the conclusion of the argument the Chief-Justice (Marshall) intimated that a decision was not to be expected until the next term. It was made in February, 1819, fully confirming the grounds on which Mr. Webster had placed the cause. From this decision, the principle in our constitutional jurisprudence which regards a charter of a private corporation as a contract, and places it under the protection of the Constitution of the United States, takes its date."
We add a passage from Mr. Webster's speech in this case, as quoted by the same author from a letter of Prof. Goodrich, of Yale College, to Rufus Choate:
"This, sir, is my case. It is the case not merely of that humble institution; it is the case of every college in our land. It is more. It is the case of every eleemosynary institution throughout our country—of all those great charities founded by the piety of our ancestors to alleviate human misery and scatter blessings along the pathway of life. It is more! It is, in some sense, the case of every man among us who has property of which he may be stripped, for the question is simply this: Shall our state legislatures be allowed to take that which is not their own, to turn it from its original use, and apply it to such ends or purposes as they in their discretion shall see fit?"
The charitable and religious institutions of Italy and the States of the Church were founded under guarantees as strong at least as those which assured the perpetuity of Dartmouth College, and were entitled to as much immunity from confiscation and intrusion for all coming time.
When a law is in its nature a contract, and absolute rights have vested under that contract, a repeal of the law cannot divest those rights, nor annihilate or impair a title acquired under the law. A grant is a contract according to the meaning given to the word by jurists. A grant is a contract executed, and a party is always estopped by his own grant. A party cannot pronounce his own act or deed invalid, whatever cause may be assigned for its invalidity, and though that party be the legislature of a state. A grant amounts to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A grant from a state should be as much protected as a grant from one individual to another; therefore, a state is as much inhibited from impairing its own contracts, or a contract to which it is a party, as it is from impairing the obligation of contracts between two individuals. A grant once made by the ruling or competent power, creates an indefeasible and irrevocable title. There is no authority or principle which could support the doctrine that such a grant was revocable in its own nature, and held only durante bene placito. For no ruling power, be it kingly, legislative, or otherwise, can repeal a law or grant creating a corporate body, or confirming to them property already acquired under the faith of previous laws or edicts, and by such repeal vest the property in others without the consent or default of the corporators. Such a procedure would be repugnant to the principles of natural justice. A society or order of religious people holding property in common or in solido, may be considered in the character of a private eleemosynary institution endowed with a capacity to take property for objects unconnected with government: it receives gifts or devises, and other private donations bestowed by individuals on the faith of its perpetuity and usefulness—such a corporation not being invested with any political power whatever, or partaking in any degree in the administration of civil government. It is merely an institution or private corporation for general charity. It is established under a charter, which was a contract, to which the donors, the trustees of the corporation, and the governing power were the original parties, and it was granted for a valuable consideration—for the security and disposition of the property necessary for the existence of the community, order, or society.
The legal interest, in every such literary and charitable institution, is in trustees, and to be asserted by them, which they claim or defend on behalf of the society or community for the object of religion, charity, or education, for which they were originally created, and the private donations made. Contracts of this kind, creating such charitable or educational institutions, should be at all times protected by the state, and their rights maintained by the courts administered by a pure and just judiciary. Conquests or revolutions cannot change the rights acquired under such contracts, and no state should by any act transfer the rights of property theretofore acquired, nor transfer from the trustees appointed according to the will of the founders or donors. The will of the state should not be substituted for the will of the donors, or convert an institution, moulded according to the will of its founders, and placed under the control of people of their own selection, into government property. Such action is of course subversive of the original compact on the faith of which the donors invested their gifts, donations, or devises, and is, therefore, repugnant to every idea of honesty and good morals, for enforcing which governments are instituted.
A grant to a private trustee, for the benefit of a particular cestui que trust, or for any special, private, or public charity, cannot be the less a contract because the trustee takes nothing for his own benefit. Nor does a private donation vested in a trustee for objects of a general nature thereby become a public trust, which a government may at its pleasure take from the trustee. A government cannot even revoke a grant of its own funds, when given to a corporation or private person for special uses. It has no other remaining authority but what is judicial to enforce the proper administration of the trust. Nor is such a grant less a contract though no beneficial interest accrues to the possessor. All incorporeal hereditaments, as immunities, dignities, offices, and franchises, are rights deemed valuable in law, and whenever they are the subject of contract or grant they should be held as legal estates. They are held as powers coupled with interests, and consequently are vested rights, and of which the possessors should not be divested by any legislative body without their consent.