Opinion ID: 1690853
Heading Depth: 1
Heading Rank: 4

Heading: The State's Contractual Obligations.

Text: The trial court was correct in resolving the foregoing statutory and constitutional issues in favor of the unions. Whatever strengths could be perceived in the State's position simply cannot be used to frustrate its contractual obligations. In the first place the foregoing provisions do not exist in vacuums. The unions point out that contractual rights also enjoy strong validation in both the federal and our own Constitution. Freedom of contract is a basic right, protected under the liberty concept of both the Fifth and Fourteenth Amendment due process clauses. 1 Antieau, Modern Constitutional Law § 3:22, at 244 (1969) (citing Prudential Ins. Co. v. Cheek, 259 U.S. 530, 536, 42 S.Ct. 516, 519-20, 66 L.Ed. 1044, 1051 (1922)). Indeed the enforceability of contracts, even with respect to the obligations of government, has been established from the earliest days of our republic. In Perry v. United States, 294 U.S. 330, 353 n. 3, 55 S.Ct. 432, 436 n. 3, 79 L.Ed. 912, 918 n. 3 (1935), the United States Supreme Court quoted with approval the following eighteenth century authority: [W]hen a government enters into a contract with an individual, it deposes, as to the matter of the contract, its constitutional authority, and exchanges the character of legislator for that of a moral agent, with the same rights and obligations as an individual. Its promises may be justly considered as excepted out of its power to legislate unless in aid of them. It is in theory impossible to reconcile the idea of a promise which obliges, with a power to make a law which can vary the effect of it. Id. (quoting Hamilton: Communication to the Senate, January 20, 1795). If we possessed the power to fashion a different rule for Iowa law, a power we very much doubt we have, we would not do so. It would be no favor to the State to exonerate it from contractual liability. To do so would seriously impair its ability to function. A government must finance its affairs, must contract for buildings, highways, and a myriad of other public improvements and services. It would lead to untenable results if a government, after having contracted for needed things, did not have to pay for them. The rules of economics seem to exact a terrible price from those of uncertain responsibility. The few persons or institutions willing to deal with an exempt state would necessarily factor in the cost of such a tentative chance to collect. This cost to the State would ultimately be borne by the public. Authorities from other jurisdictions indicate that these principles apply to enforce wage agreements for public employees. See generally Association of Surrogates v. State of New York, 940 F.2d 766, 771 (2d Cir.1991); Association of Surrogates v. State of New York, 79 N.Y.2d 39, 44-45, 588 N.E.2d 51, 53, 580 N.Y.S.2d 153, 155 (1992); Carlstrom v. State, 103 Wash.2d 391, 394-96, 694 P.2d 1, 4 (1985).