U.S. Supreme Court
Phalen v. Virginia, 49 U.S. 8 How. 163 163 (1850)
Phalen v. Virginia
49 U.S. (8 How.) 163
In 1829, the Legislature of Virginia passed an act appointing five commissioners to raise by way of lottery or lotteries the sum of $30,000 for the benefit of the Fauquier & Alexandria Turnpike Road Company. Two of the commissioners declined to act, and the remaining three took no steps to execute the power for a long time.
On 25 February, 1834, the legislature passed an act for the suppression of lotteries, which prohibited all lotteries and sale of lottery tickets after 1 January, 1837, saving, however, contracts already made which were by their terms to extend beyond 1 January, 1837, or contracts hereafter to be made under any existing law which were to extend beyond that day. These were permitted to go on until 1 January, 1840.
On 11 March, 1834, the legislature passed an act appointing two commissioners in the place of the two who had declined to act.
On 19 December, 1839, these commissioners entered into a contract with certain persons authorizing these persons to draw as many lotteries as they might think proper, without limitation as to time, upon the payment of a certain sum per annum to the commissioners.
The right to draw lotteries under the act of 1829 is not a contract the obligations of which were impaired by the act of 1834.
It may be doubted whether it constitutes a contract at all. But if it was a contract, it was not unlimited as to time, and the act of 1834, allowing the grant to continue chanroblesvirtualawlibrary
for a certain time, stands upon the same ground as acts of limitation and recording acts, which this Court has said a state has a right to pass.
The privilege granted by the act of 1829 had become obsolete from nonuser, and the act of 1834, appointing two commissioners, did not fully revive it, because the two acts of 1834 must be taken together, and the limitation contained in one must apply to the other.
The courts of Virginia have so construed these statutes, and this Court adopts their construction.
The plaintiff in error had been convicted in the Superior Court for the County of Henrico and City of Richmond on an indictment for selling lottery tickets contrary to the Act of Assembly of Virginia passed on 25 February, 1834. The case was removed by writ of error to the General Court of Virginia, where the judgment was affirmed. That being the highest court of criminal jurisdiction in Virginia, the plaintiff in error brought his case into this Court by a writ of error under the twenty-fifth section of the Judiciary Act; and now alleged that the act of 25 February, 1834, under which he was convicted, is void, being contrary to the tenth section of the first article of the Constitution, which forbids a state to pass any "law impairing the obligation of contracts."
On the trial of the case below, the jury found a special verdict, setting forth at length the several acts of assembly of Virginia, and the contract under which the defendant in the enactment claimed a right to sell lottery tickets and to be exempted from the penalties of the Act of February, 1834, under which he was indicted.
It appears that in December, 1828, the President and Directors of the Fauquier & Alexandria Turnpike Road presented a petition to the Legislature of Virginia, setting forth the importance and value of their road to the public; that by the exertions of the directors and a few of the stockholders, and on their responsibility, money had been raised, and the road put in excellent condition, except three miles, which required much repair; and asked a law authorizing a lottery to raise $30,000.
On 30 January, 1829, the legislature passed an act appointing five commissioners, "whose duty it shall be to raise, by way of lottery or lotteries, the sum of $30,000, for the purpose of improving the Fauquier & Alexandria Turnpike Road." After directing the commissioners to contract with fit persons for managing the lotteries, and to take bonds for the faithful performance of their duties, they are ordered to "pay over to the President and Directors of the said Fauquier chanroblesvirtualawlibrary
& Alexandria Turnpike Road Company," the money raised by said lotteries, "to be by them appropriated in the improvement and repair of said road."
Two of the commissioners appointed by this act declined acting under it, and nothing was done under the license or authority granted therein during the five years which intervened between that time and the passage of the act of 25 February, 1834, for the suppression of lotteries.
This act prohibits, under severe penalties, all lotteries and sale of lottery tickets after the first day of January, 1837, with these provisos: 1st,
"That nothing herein contained shall be construed to extend to or interfere with contracts already made for the drawing of any lotteries, the drawing whereof, by the provisions of such contracts, shall extend to a period beyond said first day of January, 1837,"
"That nothing herein contained shall be construed to extend to or interfere with any contract which may hereafter be made under or by virtue of any existing law authorizing the same, for the drawing of any lottery, the drawing whereof shall not extend beyond 1 January, 1840."
A few days after the passage of this act, on 11 March, 1834, an act was passed appointing two commissioners in place of those who had declined, "to carry into effect the Act of 30 January, 1829."
Nothing was done under these acts till 19 December, 1839, when the commissioners entered into a contract with the plaintiff in error and another, authorizing them to draw as many lotteries as they think proper, paying to the commissioners the sum of $1,500 a year, with covenants to increase the consideration, provided the Legislature of Virginia should pass an act exempting these lotteries from the penalties of the Act of February, 1834, or if this Court should pronounce the act of 1834 unconstitutional.
It is by virtue of this contract with the commissioners, that the plaintiff in error claims immunity, contending
"that the act of 1829 confers a valuable right or franchise on an existing corporation, without limitation of time; that it is a contract; and that the act of 1834 has attempted to limit and curtail the previous grant, and injuriously to abridge it, and is therefore void, as impairing the obligation of a contract. "