The Supreme Court narrowed the scope of the application of the contracts clause to public contracts.
Early in U.S. history, the Supreme Court determined that both public and private contracts were covered by the Constitution’s ban on the impairment of contracts. This proposition was harder to maintain for public contracts. John B. Stone’s corporation was given a Mississippi charter to operate a lottery, but the next year, Mississippi adopted a constitution banning all lotteries. The state ordered Stone to cease operating his lottery, and the Mississippi high court upheld the order. The Supreme Court unanimously held for Mississippi, distinguishing this abrogation of contract by arguing that a state’s police power controlled lotteries and that no state could contract away its police power, generally following the logic of West River Bridge Co. v. Dix
Contract, freedom of
West River Bridge Co. v. Dix