Baltzer v. North Carolina
In Baltzer v. North Carolina, 161 U.S. 240 (1896), the plaintiff sued the state of North Carolina after it amended its constitution to forbid the payment of any debt or bond incurred during 1868, which was the year when the state ratified its new constitution and regained admission to the Union.
After the amendment's ratification, the plaintiff sued for interest the states owed him on his bonds.
Finding that North Carolina consented to the suit, the Court nevertheless recognized that this consent did not extend to the enforcement of a judgment against the state, and that this did not run afoul of the Contracts Clause or any other section of the U.S. Constitution. Id. at 245-46.
Thus, there is not a U.S. Constitutional rule requiring a state to honor judgments against it, and this includes situations where the state has breached one of its contracts.
In Baltzer, the Court recognized the principle that:
"When a judgment has been rendered, the liability of the State has been judicially ascertained, but there the power of the court ends. The State is at liberty to determine for itself whether to pay the judgment or not. The obligations of the contract have been finally determined, but the claimant has still only the faith and credit of the State to rely on its fulfillment." Id. at 243 (citing R.R. Co. v. Tenn., 101 U.S. 337, 340, 25 L. Ed. 960 (1880)).
The Court further stated that a state "may refuse to pay, that is, may refuse to make the necessary appropriation, and the courts are powerless to compel them to do so." Id.