Summary

Stanley Matthews Chicago and Northwestern Railway Company v…

In our opinion, that view cannot be maintained. The contracts of 1875 were for four years, and were expressly authorized by law. They were, therefore, valid, and binding on the United States as well as upon the railroad company. They contained, within themselves, a mode for lessening, or, if deemed best, for discontinuing entirely, the described service; and provided for a proportionate reduction of the stipulated compensation. In no other mode could the contract be changed, except by the mutual assent of the parties.
Source: Wikisource

Stanley Matthews Chicago and Northwestern Railway Company v…

But it would not have this effect if an equivalent to the reduction of pay were recoverable under the name of damages, with, perhaps, the expenses of litigation added. Therefore I conclude that the construction most consistent with justice and fair dealing is the true one, viz., that, as to existing contracts, the rate remains as stipulated in the agreement during the term therein mentioned, but that in those cases where no contract prevailed the reduction should be made.' 15 Op.
Source: Wikisource

Stanley Matthews Chicago and Northwestern Railway Company v…

The government, whatever power it may reserve over its own agreements, cannot impose new contracts upon those with whom it deals. It might by a repeal of the contract, expressly stipulated, restore the previous state, and claim the bare rights it had before; but it cannot do more than that. It certainly cannot retain the obligation of the contract as against the company, and at the same time vary its own, unless it has reserved the right to do so in the contract itsl f.
Source: Wikisource

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