208 U.S.

Argument for Plaintiffs in Error.

This was the case with the railroad bonds in question. By these bonds the county court expressly agreed to pay certain sums of money at certain times and in a certain way, and it certainly has a deep interest in seeing that it is not deprived of the power to carry out its agreement.

The people of the county, the taxpayers, are certainly parties to the contracts of the county. It is they who pay the county's debts and discharge its obligations. If after they have contracted a debt in their aggregate capacity as a county, a law is passed that impairs its obligations, they have as much right as the creditor to object to it and to test its validity in the courts. This must be done, if at all, in the name and by means of the county court, their representative. Clark v. County Court, 55 W. Va. 278, 285. While one or a few could bring such a suit, the burden should not be placed on one or a few which ought to be borne by all. And see Board of Liquidation

v. Louisiana, 179 U. S. 622.

The obligation of a contract consists in its binding force on the party who made it. This depends on the laws in force when it is made. These laws are necessarily referred to in all contracts as forming part of them as the measure of the obligation to perform them and as creating the right acquired by the other parties to compel performance. The obligation does not inhere and subsist in the contract proprio vigore, but in the law applicable to the contract. Ogden v. Saunders, 12 Wheat. 213, 302; McCracken v. Hayward, 2 How. 608; Goodale v. Fennell, 27 Ohio St. 426; S. C., 22 Am. Rep. 221; United States v. Judges, 32 Fed. Rep. 715; State v. New Orleans, 37 La. Ann. 17; Von Huffman v. City of Quincy, 4 Wall. 535, 549; United States v. Mayor and Administrators of the City of New Orleans, 103 U. S. 358; Butz v. City of Muscatine, 8 Wall. 575; White v. Hart, 13 Wall. 647; Walker v. Whitehead, 16 Wall. 318; City of Galena v. Amy, 5 Wall. 709; Riggs v. Johnson Co., 6 Wall. 194; Mobile v. Watson, 116 U. S. 305; Curran v. State of Arkansas, 15 How. 304; Planters' Bank v. Shark, 6 How. 301; Green v. Biddle, 8 Wheat. 1.

Argument for Defendants in Error.

208 U.S.

The constitutional provisions and the laws which were in force in West Virginia when the railroad bonds of Braxton County were issued, not only authorized, but required the county court to provide for the collection of a direct annual tax sufficient to pay annually the interest on said bonds, and the principal thereof within and not exceeding thirty-four years. Const. of West Virginia, Article 10, § 8. The law governing the county court in such a case is § 59, c. 54 of the Code.

Mr. W. Mollohan for defendants in error:

The county court of Braxton County under the constitution and statute law of the State of West Virginia, as construed by the highest court of that State, is a mere fiscal or administrative board for the management of county affairs and has no personal or direct interest in claims against the county owned or held by third persons, such as will authorize it to prosecute a writ of error in this case, nor under such constitution, statutes and decisions has it the right to stand in judgment for such third parties and present for decision the question whether or not any given statute violates their contract rights against the county.

Even if this court should be of opinion that it is not bound to accept the decision of the Supreme Court of Appeals of West Virginia as to the powers of the county court to stand in judgment for its creditors and present for decision the question of alleged impairment of creditors' contracts, yet under the decisions of this court the county court of Braxton County had no such interest as would enable it to prosecute a writ of error to this court. Henderson v. Tennessee, 10 How. 311; Lampasas v. Bell, 180 U. S. 276; Giles v. Little, 134 U. S. 635; Smith, Auditor, v. Indiana, 191 U. S. 138; Tyler v. Registration Court Judges, 179 U. S. 405; Clark v. Kansas City, 176 U. S. 114; Turpin v. Lemon, 187 U. S. 51; Ludeling v. Chaffee, 143 U. S. 301; Caffrey v. Oklahoma, 177 U. S.

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

Speaking generally, the regulation of municipal corporations is a matter peculiarly within the domain of state control. The taxing body, the taxing district and the limits of taxation are determinable by the legislature of the State. Kelly v. Pittsburgh, 104 U. S. 78; Forsyth v. Hammond, 166 U. S. 506, and cases cited in the opinion; Williams v. Eggleston, 170 U. S. 304, 310; 1 Dillon on Municipal Corporations (4th ed., p. 52), and following. True, the legislature may sometimes, by restrictive legislation in respect to taxes, seek to prevent the payment by a municipality of its contract obligations, and in such a case the courts will enforce the protective clauses of the Federal Constitution against any state legislation impairing the obligation of a contract. In other words, no State can in respect to any matter set at naught the paramount provisions of the National Constitution.

Again, that the act of the State is charged to be in violation of the National Constitution, and that the charge is not frivolous, does not always give this court jurisdiction to review the judgment of a state court. The party raising the question of constitutionality and invoking our jurisdiction must be interested in and affected adversely by the decision of the state court sustaining the act, and the interest must be of a personal and not of an official nature. Clark v. Kansas City, 176 U. S. 114, 118; Lampasas v. Bell, 180 U. S. 276, 283; Smith v. Indiana, 191 U. S. 138, 148. In the latter case suit was brought in the state court against a county auditor to test the constitutionality of the exemption law of Indiana, which was claimed to be in conflict with the Federal Constitution. The decision of the state court having been in favor of the act, the auditor brought the case here. Mr. Justice Brown, delivering the opinion of the court, cited the following cases: Tyler v. Registration Court Judges, 179 U. S. 405; Clark v. Kansas City, 176 U. S. 114; Turpin v. Lemon, 187 Ù. S. 51;

Lampasas v. Bell, 180 U. S. 276; Ludeling v. Chaffee, 143 U. S. 301; Giles v. Little, 134 U. S. 645; and said (191 U. S. 148):

"These authorities control the present case. It is evident that the auditor had no personal interest in the litigation. He had certain duties as a public officer to perform. The performance of those duties was of no personal benefit to him. Their non-performance was equally so. He neither gained nor lost anything by invoking the advice of the Supreme Court as to the proper action he should take. He was testing the constitutionality of the law purely in the interest of third persons, viz., the taxpayers, and in this particular case the case is analogous to that of Caffrey v. Oklahoma, 177 U. S. 346. We think the interest of an appellant in this court should be a personal and not an official interest, and that the defendant, having sought the advice of the courts of his own. State in his official capacity, should be content to abide by their decisions." These decisions control this case and compel a dismissal of the writ of error, and

It is so ordered.

UNITED STATES v. A. GRAF DISTILLING COMPANY.

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT.

No. 24. Argued December 16, 1907.-Decided January 27, 1908.

A revenue statute containing provisions of a highly penal nature should be construed in a fair and reasonable manner, and, notwithstanding plain and unambiguous language, provisions for the prevention of evasion of taxation, which naturally are applicable to taxable articles only, will not be held applicable to articles not taxable, wholly harmless, and not used for an illegal purpose, in an improper manner, or in any way affording opportunities to defraud the revenue.

The sale of a barrel of whiskey, stamped, branded and marked so as to show that the contents have been duly inspected, and the tax thereon paid, into which a non-taxable substance has been introduced after such stamping, branding and marking by an officer of the revenue, does not

authorize a seizure and forfeiture thereof to the United States under the provisions of § 3455, Rev. Stat.

The phrase "anything else," as employed in § 3455, Rev. Stat., does not include substances that are not in themselves taxable under the law of the United States.

THIS case comes here on a certificate from the United States Circuit Court of Appeals for the Eighth Circuit. The proceeding was commenced in the District Court of the United States for the Eastern District of Missouri, January 4, 1905, by the United States District Attorney for that district, who filed therein an amended information, praying for a decree of forfeiture, condemnation and sale of three barrels of whiskey, which had theretofore been seized by the collector of internal revenue and were still in his possession and custody.

The sole ground for the seizure and forfeiture averred in the information is contained in the following paragraph thereof, as certified by the Circuit Court of Appeals:

"That prior to the time of said seizure of said barrels and packages, they, and each of them, had been purchased and received by A. Graf & Co., they then being stamped, branded, and marked so as to show that the contents thereof were distilled spirits of a certain proof, which had before then been duly inspected by an officer of the revenue, to wit, a United States gauger. That afterwards and before said seizure said barrels and packages, and each of them, and the contents therein then contained, were sold to divers persons, each of the barrels and packages at the time of the sales last aforesaid containing things else than the contents which were therein when said barrels and packages were so lawfully stamped, branded and marked by said officer of the revenue as aforesaid, to wit, burnt sugar, commonly called caramel, which had been added to and placed in said spirits before said lastmentioned sales thereof, in violation of section 3455 of the Revised Statutes of the United States, whereby and by force of said statute said barrels and packages and all the contents thereof became and are forfeited to the United States."