U.S. Supreme Court STATE OF INDIANA EX REL. ANDERSON v. BRAND, 303 U.S. 95 (1938)

[Page 303 U.S. 95, 98]

Supreme Court which affirmed the judgment. [Footnote 2] The Court did not discuss the first ground of demurrer relating to the action taken in the school year 1932-1933, but rested its decision upon the second, that, by an act of 1933, Acts Ind.1933, c. 116, the Teachers' Tenure Law had been repealed as respects teachers in township schools; and held that the repeal did not deprive the petitioner of a vested property right and did not impair her contract within the meaning of the Constitution. In its original opinion the court said: 'The relatrix contends ... that, having become a permanent teacher under the Teachers' Tenure Law before the amendment, she had a vested property right in her indefinite contract, which may not be impaired under the Constitution. The question is whether there is a vested right in a permanent teacher's contract; whether, under the tenure law, there is a grant which cannot lawfully be impaired by a repeal of the statute.' Where the state court does not decide against a petitioner or appellant upon an independent state ground, but deeming the federal question to be before it, actually entertains and decides that question adversely to the federal right asserted, this Court has jurisdiction to review the judgment if, as here, it is a final judgment. 3 We cannot refuse jurisdiction because the state court might have based its decision, consistently with the record, upon an independent and adequate nonfederal ground. And since the amendment of the judiciary act of 17894 by the act of February 5, 18675 it has always been held this Court may examine the opinion of the state court to ascertain whether a fed-

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eral question was raised and decided, and whether the court rested its judgment on an adequate nonfederal ground. [Footnote 6] Any ambiguity arising from the generality of the court's reference to the Constitution is resolved by a certificate signed by all the Justices of the court, made a part of the record, to the effect that the reference to the Constitution in the opinion was to article 1, section 10, of the Constitution of the United States. [Footnote 7] It thus appearing that the constitutional validity of the repealing act was drawn in question and the statute sustained, we issued the writ of certiorari. 302 U.S. 678, 58 S.Ct. 262, 82 L.Ed. --.

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ployment from year to year is unenforceable for want of mutuality.

As in most cases brought to this court under the contract clause of the Constitution, the question is as to the existence and nature of the contract and not as to the construction of the law which is supposed to impair it. The principal function of a legislative body is not to make contracts but to make laws which declare the policy of the state and are subject to repeal when a subsequent Legislature shall determine to alter that policy. Nevertheless, it is established that a legislative enactment may contain provisions which, when accepted as the basis of action by individuals, become contracts between them and the State or its subdivisions within the protection of article 1, 10. 8 If the people's representatives deem it in the public interest they may adopt a policy of contracting in respect of public business for a term longer than the life of the current session of the Legislature. This the petitioner claims has been done with respect to permanent teachers. The Supreme Court has decided, however, that it is the state's policy not to bind school corporations by contract for more than 1 year.

On such a question, one primarily of state law, we accord respectful consideration and great weight to the views of the state's highest court but, in order that the constitutional mandate may not become a dead letter, we are bound to decide for ourselves whether a contract was made, what are its terms and conditions, and whether the State has, by later legislation, impaired its obligation. [Footnote 9] This involves an appraisal of the statutes of the State and the decisions of its courts.

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afforded relief in actions upon teachers' contracts. [Footnote 10] An act adopted in 189911 required all contracts between teachers and school corporations to be in writing, signed by the parties to be charged, and to be made a matter of public record. A statute of 192112 enacted that every such contract should be in writing and should state the date of the beginning of the school term, the number of months therein, the amount of the salary for the term, and the number of payments to be made during the school year.

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By an amendatory act of 193315 township school corporations were omitted from the provisions of the act of 1927. The court below construed this act as repealing the act of 1927 so far as township schools and teachers are concerned and as leaving the respondent free to terminate the petitioner's employment. But we are of opinion that the petitioner had a valid contract with the respondent, the obligation of which would be impaired by the termination of her employment.

Where the claim is that the state's policy embodied in a statute is to bind its instrumentalities by contract, the cardinal inquiry is as to the terms of the statute supposed to create such a contract. The State long prior to the adoption of the act of 1927 required the execution of written contracts between teachers and school corporations, specified certain subjects with which such contracts must deal, and required that they be made a matter of public record. These were annual contracts, covering a single school term. The act of 1927 announced a new policy that a teacher who had served for 5 years under successive contracts, upon the execution of another was to become a permanent teacher and the last contract was to be indefinite as to duration and terminable by either party only upon compliance with the conditions set out in the statute. The policy which induced the legislation evidently was that the teacher should have protection against the exercise of the right, which would otherwise inhere in the employer, of terminating the employment at the end of any school term without assigned reasons and solely at the employer's pleasure. The state courts in earlier cases so declared. [Footnote 16]

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be frustrated by a proper exercise of the police power but we have repeatedly said that, in order to have this effect, the exercise of the power must be for an end which is in fact public and the means adopted must be reasonably adapted to that end,17 and the Supreme Court of Indiana has taken the same view in respect of legislation impairing the obligation of the contract of a state instrumentality. [Footnote 18] The causes of cancellation provided in the act of 1927 and the retention of the system of indefinite contracts in all municipalities except townships by the act of 1933 are persuasive that the repeal of the earlier act by the later was not an exercise of the police power for the attainment of ends to which its exercise may properly be directed.

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(1) It does not appear in the record that a federal question was necessarily involved in the decision of the state court;1 (2) the record does not disclose beyond a reasonable doubt2 that Indiana, by the Teachers Act of 1927, c. 97, surrendered its sovereign, governmental right to change and alter at will legislative policy related to the public welfare, or that its Legislature had the power to do so.

First. It does not appear from the record that a federal question 'was necessarily involved in the decision; and that the State court could not have given the judgment or decree, which they passed, without deciding it.' [Footnote 3] Therefore, 'it is a matter of no consequence to us that the court may have gone further and decided a Federal question.' [Footnote 4] 'Where a case in this court can be decided without reference to questions arising under the Federal Constitution, that course is usually pursued and is not departed from without important reasons.' [Footnote 5]

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and permanent contract. The word 'indefinite' is used in the statute itself. ... The tenure statute was only intended as a limitation upon the plenary power of local school officials to cancel contracts. ... It was not intended as, and cannot be, a limitation upon the power of future Legislatures to change the law respecting teachers and their tenures. These are matters of public policy, of purely governmental concern, in which the legislative power cannot be exhausted or consumed, or contracted away, so as to limit the discretion of future General Assemblies.' [Footnote 11]

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ana's Constitution invests Indiana's Legislature with continuing power to change Indiana's educational policies. It has here held that the Legislature did not attempt or intend to surrender its constitutional power by authorizing definite contracts which would prevent the future exercise of this continuing, constitutional power. If the Constitution and statutes of Indiana, as construed by its Supreme Court, prohibit the Legislature from making a contract which is inconsistent with a continuing power to legislate, there could have been no definite contracts to be impaired. 'The contracts designed to be protected by the (Federal Constitution) are contracts by which perfect rights, certain definite, fixed private rights of property, are vested. ... It follows, then, upon principle that, in every perfect or competent government, there must exist a general power to enact and to repeal laws; and to create, and change or discontinue, the agents designated for the execution of those laws.' [Footnote 13]

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but not to the courts.' [Footnote 14] I believe the people of Indiana, if they prefer, have the right under the Federal Constitution to entrust this important public policy to the elective representatives rather than to the courts. Democracy permits the people to rule. I cannot agree that the constitutional prohibition against impairment of contracts was intended to- or does-transfer in part the determination of the educational policy of Indiana from the Legislature of that State to this Court.

Indiana, in harmony with our national tradition, seeks to work out a school system, offering education to all, as 'essential to the preservation of free government.' That great function of an advancing society has heretofore been exercised by the States. I find no constitutional authority for this Court to appropriate that power. Indiana's highest court has said that the State did not, and has strongly indicated that the Legislature could not, make contracts with a few citizens, that would take away from all the citizens, the continuing power to alter the educational policy for the best interests of Indiana school children. The majority decision now places in this Court a power which has been exercised by the states since the adoption of our Constitution. The people have not surrendered that power to this Court by constitutional amendment.

For these reasons I cannot agree to the majority decision and I believe the judgment of the Supreme Court of Indiana should be affirmed. Footnotes

[Footnote *] Rehearing denied 303 U.S. 667, 58 S.Ct. 641, 82 L.Ed. --.

Footnote 1 The proceeding was instituted against the respondent's predecessor who then held the office of school trustee; the respondent was subsequently substituted as defendant. Nothing turns on this substitution and both trustees will be referred to as the respondent.

Footnote 2 Ind.Sup., 5 N.E.2d 531, 110 A.L.R. 778; on rehearing Ind.Sup., 7 N. E.2d 777, 110 A.L.R. 789; dissenting opinion of Treanor, J., Ind.Sup., 5 N. E.2d 913.

Footnote 3 Murdock v. City of Memphis, 20 Wall. 590, 635, 636; Henderson Bridge Co. v. Henderson, 173 U.S. 592, 608, 19 S.Ct. 553; Rogers v. Hennepin County, 240 U.S. 184, 188, 189 S., 36 S.Ct. 265; Grayson v. Harris, 267 U.S. 352, 358, 45 S.Ct. 317, 319; Virginia v. Imperial Coal Sales Co., 293 U.S. 15, 16, 55 S.Ct. 12; International Steel Co. v. National Surety Co., 297 U.S. 657, 666, 56 S.Ct. 619, 623.

Footnote 4 Section 25, 1 Stat. 85.

Footnote 5 Section 2, 14 Stat. 386, now 28 U.S.C.A. 344.

Footnote 6 Murdock v. City of Memphis, 20 Wall. 590, 633, 634; Kreiger v. Shelby R.R. Co., 125 U.S. 39, 44, 8 S.Ct. 752; Bank of Commerce v. Tennessee, 163 U.S. 416, 421, 16 S.Ct. 1113; Thompson v. Maxwell Land Grant Co., 168 U.S. 451, 456, 18 S.Ct. 121; Columbia Water Power Co. v. Columbia Elect. St. Ry., etc., Co., 172 U.S. 475, 488, 489 S., 19 S.Ct. 247; Abie State Bank v. Bryan, 282 U.S. 765, 771, 51 S.Ct. 252, 255; Utley v. St. Petersburg, 292 U.S. 106, 111, 54 S.Ct. 593, 595; Fox Film Corporation v. Muller, 296 U.S. 207, 209, 56 S.Ct. 183.

Footnote 7 International Steel Co. v. National Surety Co., 297 U.S. 657, 662, 56 S.Ct. 619, 621.

Footnote 8 New Jersey v. Yard, 95 U.S. 104, 113, 114 S..

Footnote 9 Phelps v. Board of Education, 300 U.S. 319, 322, 57 S.Ct. 483, 484, and cases cited.

Footnote 10 City of Crawfordsville v. Hays, 42 Ind. 200; Charlestown School Tp. v. Hay, 74 Ind. 127; Harrison School Tp. v. McGregor, 96 Ind. 185; Kiefer v. Troy School Tp., 102 Ind. 279, 1 N.E. 560; Sparta School Tp. v. Mendell, 138 Ind. 188, 37 N.E. 604; School City of Lafayette v. Bloom, 17 Ind.App. 461, 46 N.E. 1016; Henry School Tp. v. Meredith, 32 Ind.App. 607, 70 N.E. 393; Gregg School Tp. v. Hinshaw, 76 Ind.App. 503, 132 N.E. 586, 17 A.L.R. 1222.

Footnote 11 Act of Feb. 28, 1899, G.L. Inc. 1899, p. 173, c. 111, Burns' Ind. Stat.Ann. 1933, 28-4302 and 28-4303.

Footnote 12 Act of March 7, 1921, Acts of 1921, p. 195, c. 91, 1, Burns' Ind. Stat.Ann. 1933, 28-4304.

Footnote 13 Act of March 8, 1927, Acts of 1927, p. 259, c. 97, Burns' Ind.Stat. Ann.Supp. 1929, 6967.1 et seq.

Footnote 14 'Section 1. Be it enacted by the general assembly of the State of Indiana, That any person who has served or who shall serve under contract as a teacher in any school corporation in the State of Indiana for five or more successive years, and who shall hereafter enter into a teacher's contract for further service with such corporation, shall thereupon become a permanent teacher of such school corporation. ... Upon the expiration of any contract between such school corporation and a permanent teacher, such contract shall be deemed to continue in effect for an indefinite period and shall be known as an indefinite contract. Such an indefinite contract shall remain in force unless succeeded by a new contract signed by both parties or unless it shall be cancelled as provided in section 2 of this act: Provided, That teachers' contracts shall provide for the annual determination of the date of beginning and length of school terms by the school corporation: and, Provided, further, That teachers' contracts may contain provisions for the fixing of the amount of annual compensation from year to year by a salary schedule adopted by the school corporation and such schedule shall be deemed to be a part of such contract: and, Provided, further, That such schedule may be changed by such school corporation on or before May 1st of any year, such changes to become effective at the beginning of the following school year: Provided, That all teachers affected by such changes shall be furnished with printed copies of such changed schedule within thirty days after its adoption.

Footnote 15 Act of March 1, 1933, Acts 1933, p. 716, c. 116, 1, Burns' Ind. Stat.Ann. 1933, 28-4307.

Footnote 16 Ratcliff v. Dick Johnson School Tp., 204 Ind. 525, 185 N.E. 143; Kostanzer v. State, 205 Ind. 536, 187 N.E. 337; State v. Stout, 206 Ind. 58, 187 N.E. 267; Arburn v. Hunt, 207 Ind. 61, 191 N.E. 148.

Footnote 17 Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 438, 54 S.Ct. 231, 240, 88 A.L.R. 1481; Worthen Co. v. Thomas, 292 U.S. 426, 431, 432 S., 54 S.Ct. 816, 817, 818, 93 A.L.R. 173; Worthen Co. v. Kavanaugh, 295 U.S. 56, 60, 55 S.Ct. 555, 556, 97 A.L.R. 965; Treigle v. Acme Homestead Ass'n, 297 U.S. 189, 197, 56 S.Ct. 408, 411, 101 A.L.R. 1284.

Footnote 18 Central Union Tel. Co. v. Indianapolis Tel. Co., 189 Ind. 210, 126 N.E. 628; Downing v. Indiana State Board of Agriculture, 129 Ind. 443, 28 N.E. 123, 614, 12 L.R.A. 664.

[Footnote 1] Moore v. Mississippi, 21 Wall. 636, 639.

[Footnote 2] Cf. Ogden v. Saunders, 12 Wheat. 213, 270.

[Footnote 3] Armstrong et al. v. Treasurer of Athens County, 16 Pet. 281, 285.

[Footnote 4] Moore v. Mississippi, supra.

[Footnote 5] Siler v. Louisville & N.R.R. Co., 213 U.S. 175, 193, 29 S.Ct. 451, 455.

[Footnote 6] Burton v. United States, 196 U.S. 283, 295, 25 S.Ct. 243, 245; 'If the experience of one hundred and fifty years of constitutional interpretation has taught any lesson, it is the unwisdom of making solemn declarations as to the meaning of that instrument which are unnecessary to decision. They can serve no useful purpose, and their only effect may be to embarrass the Court when decision becomes necessary. O'Donoghue v. United States, 289 U.S. 516, 550, 53 S.Ct. 740; Humphrey's Executor v. United States, 295 U.S. 602, 626, 627 S., 55 S. Ct. 869,' Stone, J., dissenting, David A. Wright, Petitioner, v. United States, , 58 S.Ct. 395.

[Footnote 7] Barbier v. Connolly, 113 U.S. 27, 31, 5 S.Ct. 357, 359.

[Footnote 8] The New Jersey Act (as quoted in Phelps v. Board of Education of Town of West New York, , 57 S.Ct. 483).

Section 1 (4 N.J.Comp.St.1910, p. 4763, 106a). 'The service of all teachers, principals, supervising principals of the public schools in any school district of this state shall be during good behavior and efficiency, after the expiration of a period of employment of three consecutive years in that district, unless a shorter period is fixed by the employing board . ... No principal or teacher shall be dismissed or subjected to reduction of salary in said school district except for inefficiency, incapacity, conduct unbecoming a teacher or other just cause, and after a written charge of the cause or causes shall have been preferred against him or her ... and after the charge shall have been examined into and found true in fact by said board of education, upon reasonable notice to the person charged, who may be represented by counsel at the hearing.'

[Footnote 9] Dodge v. Board of Education of Chicago et al., 302 U.S. 74, 79, 58 S.Ct. 98.

[Footnote 10] Charles River Bridge v. Warren Bridge, 11 Pet. 420, 547.

[Footnote 11] 5 N.E.2d 531, 532.

[Footnote 12] State ex rel. Clark v. Haworth, 122 Ind. 462, 23 N.E. 946, 7 L.R.A. 240.

[Footnote 13] Butler et al. v. Pennsylvania, 10 How. 402, 416.

[Footnote 14] State ex rel. Clark v. Haworth, supra.