T UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY V^. A- TREATISE; Private Corporations The effect of the clause of the Constitution of the UNITED STATES that forbids a state to pass a " Law impair- ing the obligation of Contracts," upon the police control of a state over PRI- VATE CORPORATIONS. By WM. WHARTON SMITH. PHILADELPHIA BAR. PHILADELPHIA : R.EES, WELSH & CO. Law Publishers, 19 South Ninth Street, 1889. Entered according to Act of Congress, in the year 1889, by Reese, Wemh & Co. in the oflRce of the Librarian of Conarress, at Washington, D. C. T CONTENTS. Chapter. Page. I. General nature of Police Power 1 to 7 II. Article I, Section 10, of the Constitution of the United States, the decision in the Dartmouth College case, and the questions following that decision 7 to 10 III. Principle of Providence Bank v. Billings .... 11 to 12 IV. The remedy exercised by, or against a corporation is no part of its franchise, and is within legisla- tive control 13 to 18 V. Police control over railroad companies 18 to 39 VI. Control of charges of corporations other than railroads 39 to 40 VII. Kegulations over corporations not demanded by public safety 40 to 43 VIII. A State cannot violate an express provision contained in the charter of a corporation, pro- vided same be constitutional 43 to 47 IX. Cases illustrating the extreme exercise of Police Power 47 to 56 X. Limitation on Police Power, even in these cases . 56 to 57 XC. The effect of a reservation to a State of the power to alter, amend or repeal a charter . . . 57 to 63 XII. Conclusion 63 to 66 756388 TABLK CASKS. B Bailey v. P. W. & B. R. R. (Jo., Bank Commissioners v. Farmers and Mechanics Bank, Bank of Columbia v. Okely, Bank of Ohio v. Knopp, Barnett w. R. R. Co., Bartmyer v. Iowa, • . Beer Co. v. Massachusetts Binghanipton Bridge Co., ...... Boston & Lowell R. R. Co. v. Salem & Lowell R. R. Co., Boston, Concord & Montreal R. R. Co. v. The State, Boyd V. Alabama, . . • Bridge Proprietors v. Hoboken, ..... Broadbeut v. T. S. «fc A. Association, . . . . BrowQ ■». Bank, Bryant «. Bank, , . Butchers Union Slaughter House, etc., v. Crescent City, etc.. Page. 87 26 25 58 32 52 52. 61 47, G3 50 84 55 49 55 27 37 55, 68 Central Bridge Co. v. Lowell, .... Charles River Bridge Co. v. Warren Bridge, . Chicago «& Alton R. R. Co, «. The People, . Chicago & N. W. R. R. Co. v. Dey, Chicago &J«r. W. R. R. Co. v. Baine, Chicago, Burlington & Quincy R. R. Co. v. Iowa, Coates ®. Mayor, etc., of .Nfew York, . Commissioners v. Holyoke Co., , Commonwealth v. Alger, ..... Commonwealth v. Cochituate Bank, Commonwealth v. Essex, ..... Commonwealth ■». New Bedford Bridge Co., . Commonwealth v. Pennsylvania Canal Co., . Corwin v. N. Y. & E. R. R. Co Crawford etalw. Bank of Mobile, . D Dartmouth College v. Woodward, Delaware, Lackawana & Western R. R. ». East Orange, Detroit z'. Detroit & Howell Plank Road Co., Duncan v. Pennsylvania R. R. Co., .... 13 49 24 28 41 32 . 38, 42 20, 50, 61 46 18 28 46, 59, 60 46 46 31 28 21 35 43, 60 37 14 Page. Erie, City of, 1?. Erie Canal Co., 45 F Fertilizing Co. v. Hyde Park, 21, 53 Frankford & Philadelphia P. R. W. Co. v. Philadelphia, . 47 G Gibbons v. Ogden, 19 Gorman v. Pacific R. R. Co., 31, 34 Go wen ?). Penobscot R. R. Co., 28 Gi anger Cases, 40 H Hall V. Lawrence, 20 Hockett V. State, ......... 45 Holyoke Co. v. Lyman, ....... 46, 60 Home for the Friendless v. Rouse, 58 I Illinois Central R. R. Co. v. Arnold, 31 I., P. & C. R. R. Co. V. Marshall, 32 Iron R. R. Co. v. Lawrence Furnace Co., .... 42 K Kansas Pacific R. R. Co. v. Mower, 31 Kincaid's Appeal, 52 I. Lakeview t). Rose Hill Cemetery, 52 Laurel Fork & Sand Hill R. R. Co. v. W. Va. Transportation Co., 41 Lemon v. Railroad Co., 32 Licenses Cases, ......... 19 L. & N. R. R. Co. V. Burke, 32 IMcElrath v. Pittsburg & Steubenville R. R. Co., . . 28 Miller v. R. R. Co., 35, 60 Missouri Pacific R. R. Co. v. Humes, 32, 33 MonoDgaljela Navigation Co. v. Coon, . . , . 37, 61 Moore v. State, 55 Mugler V. Kansas, 19, 53 Munn V. Illinois, 39 New Albany & Salem R. R. Co. v. Maiden, ... 31, 32 New Alb my & Salem R. R. Co. v. Tilton, .... 34 New Orleans v. Houston, 57 15 Page New Orleans Gas Co. v. Louisiana Light Co., . . 20, 50, 50, 63 New Orleans Water Works Co. v. Rivers, .... 50 New York, City of, v. Milu, 20 North Eastern and South Western R, R. Co., ex parte, . 25 Ohio & Mississippi R. R. Co. v. Lackey, 35 Parker v. Metropolitan R. R. Co., . Peik V. Chicago & Northwestern R. R, Co. Pennsylvania R. R. Co., v. Duncan, Pennsylvania R. R. Co., v. Riblet, People, The, v. Jackson & Michij^an P. R. Co., People V. Boston & Albany R. R. Co., Pingry v. Washburn, Powell V. Sammons, ..... Prigg V. Pennsylvania, Providence Bank v. Billings & Pitman, . , . . R Railroad Commission Cases, ...... Railroad Commissioners v. Yazoo & Mississippi R. R. Co., Railroad Co. -o. Baty, Raihoad Co. v. Hecht, Railroad Co. v. Maine, ....... Railroad Co. v. Maryland, Railroad Co. v. Payne, Railroad Co. «. Peoples, .... ... Railroad Co. v. Whiteneck, ..... Ruggles V. Illinois, S Shepard v. Buffalo, New Yoik & Erie R. R. Co., . Shields v. Ohio, Sinking Fund Cases, . Slaughter House Cases, ,.-.... Sloan V. Pacific R. R. Co., Southwestern R. R. Co. v. Paiilk, Spring Valley Water Works v. Schottler, Stanley v. Stanley State V. Bosworth, State V. Columbus Gas Light & Coke Co., State V, Noyes, State V. Richmond & Danville R. R. Co., Stone V. Fai mers' Loan & Trust Co., Ti 45 40 fil 33 28 31 43 27 19 24, 47, 58 43 42 32 28 60 38 32 32 32 40, 42, 59 31, 32 59 58, 59 19,20,55 42 34 28 27 45 35 35 36, 40, 41, 43 16 Page. Stone 7). Illinois Central R. R. Co., 40 Stone V. Mississippi, ........ 54, 61 Stone V. N. O. & N. R. R. Co., 40 Stone ». Wisconsin^ 40 Thorpe v. Rutland & Burlington R. R. Co., . . .29, 33 Toledo, Wabash & Western R. R. Co. ©.Jacksonville, . 35 Toniilson v. Jessups, 58 Tredway v. R. R. Co., ^W 32 Ward V. Farwell, 26 Washington Bridge Co. ®. Connecticut, .... 46 West River Bridge Co. v. Dix, 49 White's Creek Turnpike Co. •». Davidson County, . . 44 CHAPTER I. There is necessarily inherent in every government the power to regulate to a greater or less degree the actions of its subjects, and the uses made by them of their property. This power is the very essence of government, and in its exercise the State can, not only forbid its subjects to do those things that are intrinsically wrong, mala in se, such as perjury or theft, but it can go much further and forbid its subjects to do many things, which, in themselves harmless, yet become wrongful, in consequence of the mutual rights and obligations of its subjects. Thus, any man in the United States can build and operate a slaughter- house out in the countr}'', where it disturbs no one,^ but if he attempts to build and operate a slaughter-house in the heart of a populace city, where his neighbors are dis- tressed and their lives rendered uncomfortable by the ofiFensive odors, etc., arising from the slaughter-house, the State government can forbid him to longer carry on the business. The extent of this general power of the State to regulate individuals and property within its limits, varies greatly according to the form of government. In an absolute monarchy, the only limit to it is the will of the monarch ; while in the United States, numerous restrictions are placed on this power of the individual States, both by the Constitution of the United States and the Constitutions of the dififerent States. The particular branch of this general power which for- bids a man to do that which, harmless in itself, yet becomes a wrong in consequence of the mutual rights and obligations existing between himself and his fellow citi- A There may perhaps be exceptions to this statement, but the rule as stated above is the I. P. & C. R. R. Co. v. Marshall, 27 Ind. 300 ; L. & N. R. R. Co. V). Burke, 6 Cold (Tenn.) 45 ; Redfield, Law of Railways, Chap. XVIII, Sec. 5. 33 coiirU An act of that State required railroad companies in the county of Erie to erect and maintain fences along their tracks, except in certain places, and provided cer- tain penalties for allowing the fences thus required to be built to remain broken down for three days. A supple- ment to the act enacted that where the fences were de- stroyed by fire, caused by the engine of a railroad com- pany, or by its employees, the railroad company should be liable to the penalties in the above act. Under this supplement Riblet brought an action against the company for its refusal to rebuild a fence de- stroyed by fire communicated by its engine, and the Court held the company liable. Bat the opinion was based upon the fact that though the company could be forced to rebuild the fence at once as a matter of police, yet it might recover the cost of reparation from the land- lord. As to the part of the statute requiring railroad com- panies to fence their tracks in the first place, Sharswood J., says, p. 106 : " It may be conceded that it would not be within the constitutional power of the Legislature to impose such an obligation on an}^ existing company; at all events, not on an}' company whose charter * * * * contains no reservation to the Legislature of the right to alter or amend it." Were the case ever to come fairly be- fore the Court, it is very probable that this dictum would not be followed, for in few instances can the police power <' be more wisely or beneficially exercised than in com- pelling railroad corporations to inclose their tracks with fences having gates at crossings, and cattle guards."- Statutes which thus impose regulations on railroad companies for the purpose of making the running of trains more safe, apply to companies in whose charters there is no provision for such regulation' ; to those over 1 Penna. R. R. Co. v. Riblet, 66 Pa. 164. ^ Opinion of Court by Field. J., iu Missouri Pacific Railway Co. v. Humes, 115 U. S. 513, 522. ^ Thorpe v. R. R. Co., supra. 34 whose charters the Legislature has retained no power of alteration, amendment or repeaP; and even to those in whose charter there is a provision that no alteration should be made in it.' Another class ot" statutes imposing an additional burden upon railroad companies already in existence, that has been held constitutional, is the one enabling the personal representatives of a man killed through the neg- ligence of the company to get damages from the com- pany, for the killing, where the man himself could have recovered damages for the injury, had he not been killed^ At common law the representatives of the deceased had no such right of action against the com- pany. The company is held responsible in damages in this way not only to compensate the family of the deceased, but also to make it more careful in running its trains, etc. " Neither a corporation nor a citizen can have a vested right to do wrong; to take human life intentionally or negligently. To prevent so serious an evil, the General Assembly may compel the wrong-doer whether private or corporate, to make pecuniary compen- sation* " Viewing these statutes as a means of making the rail- road companies exercise the greatest possible care in run- ning their trains, to insure the safety of the public, it is easy to see how they should rightly apply to corporations already in existence. It is not easy to say just how far this power to regulate railroad companies extends. In certain cases the States have been held to have exceeded their powers in the 1 Gorman v. Pacific R. R. Co., 26 Mo. 441, 2 New Albany & Salem R. R. Co. «. Tilton, 12 Ind. 3. 3 Boston, Concord & Montreal R. R. v. The State, 32 N. H. 215 ; South-western R. R. ®. Paulk, 24 Ga. 356. * Opinion of Ct, in R. R. Co. v. Paulk supra. See also Patterson on Railway Accident Law, p. p. 40G-S for the other States that have enacted statutes of this sort. 35 statutes which they have enacted ; but in many cases these statutes have not been held unconstitutional, neces- sarily and under all circumstances; but they have been held unconstitutional, because the proper occasion for their enactment had not arisen. " It is not within the power of the general assembly, under the pretence of exercising the police power of the State, to enact laws not necessary to the preservation of the health and safety of the cammunity that will be oppressive and burdensome to the people. If it should prohibit that which is harm- less in itself, or command that to be done which does not tend to promote the health, safety or welfare of society, it would be an unauthorized exercise of power, and it would be the duty of the courts to declare such legisla- tion void." ^ This rule was applied in the above case, and a city ordinance requiring the railway company to keep a flagman by day and a red lantern by night at a certain crossing was held to be an unreasonable require- ment and therefore void. And yet from what the other cases decide^ and from what the judge says in this very case, there is no doubt that there is such an ordinance would be valid if the crossing were a particularly dang- erous one\ When the public safety calls for a regulation, be its character what it may, it must be considered one which the State could impose and constitutional. At one time it seems to have been doubted whether care for the public convenience merely, would justify a State in imposing fresh burdens or regulations on a cor- poration, and a case* decided by the Maine Court and 1 Opinion of Ct. in Toledo, Wabash & Western Railway Co. v. The City of Jacksonville 67 111. 37. * E. g. Delaware, Lackawana & Western R. R. Co. v. East Orange, 12 V room 127. « See also Miller v. 11. R. Co., 21 Barbour 513 ; Ohio & Miss. R. R. Co. V. Lackey, 78 111. 55 ; State v. Richmond & Danville R. R. Co., 73 N. C. 537. * State V. Noyes 47 Me. 189. 36 often cited as an authority says distinctly that regard for convenience alone does not justify new regulations or burdens. A statute of Maine enacted that, where the tracks of two railroad companies crossed each other and a train was due at the junction at the same time on each road, the train arriving first should wait a certain length of time (the time fixed was not necessarily unreasonably long, being but 20 minutes) for the other train, so as to accomodate passengers who should want to change cars. This statute was held unconstitutional. But when the question as to whether mere public convenience justified a State in imposing new burdens or regulations on a cor- poration came before the Supreme Court of the United tStates, that Court held that it did. In Stone v. Farmers Loan & Trust Co.' a statute of Mississippi providing for the appointment of certain commissioners one of whose duties it was to see that railroad companies provided suitable reception rooms for the use and accommodation of their passengers and kept bulletin boards in these rooms containing certain information in regard to trains, was held constitutional. These regulations were held to be among those " affecting the comfort, the convenience, or the safety"- of the traveling public, and within the leg- islative power of the State. The public convenience, therefore, justifies a State in imposing fresh regulations orburdenSjif they are not unreasonable, upon a corporation. Statutes of a different kind are those making a railroad company or corporation of a similar character liable for consequential injuries done to property by it in the ex- ercise of the right of eminent domain granted to the cor- poration by a State, for which the corporation was not liable when it was created. 1 116 U. S. 307. * Opinion of Ct. in above case per Waite, C. J., p. 334. 31 Such statutes are unconstitutional.^ But where the State reserved the power to alter, amend or repeal the charter of the corporation, the act is constitutional." It is not easy to see just why the State should not be able to compel the corporation to be responsible for these consequential damages, when the act applies to injuries done after its passage, as was the case in Penn. R. R. Co., vs. Duncan (when the act is retrospective as it was in Bailey vs. P. W. & B. R. R. Co., the case is different) un- less it reserved to itself the power to alter or repeal the charter of the corporation. There is a clear distinction between these damages and those which the representa- tives of a man killed by a railroad company can get, for the latter are a means of providing for the public safety as well as for making compensation to the relatives of the injured person ; but I do not see why the reasoning ap- plied to the statutes regulating charges (discussed later) should not be held to apply equally well here. The stat- utes making the company responsible for consequential injuries need not interfere with the company in the exer^ cise of its franchises any more than do those regulating charges ; and certainly, he whose property has been greatly lessened in value by an act of a corporation ; through no fault of his own, is just as much in need of a legislative protection as he who is compelled to pay an unreasonable charge for transportation. An act making an individual responsible in this way for consequential damages would be constitutionaP ; the state when cre- ating the corporation could undoubtedly say for what in- juries to property damaged by it the corporation should 1 Sailey v. P. W. & B. R. R. Co.; 4 Har. (Del.) 389, opinion of Ct. delivered by Gibson, C. J. in Monongabela Navig. Co. vs. Coon, 6. Ban-. 379, 383. 2 Monongabela Navigation Co. v. Coon, 6 Barr 379 ; Penna. R. R. Co. V. Duncan, 111 Penna. 353. ' Opinion of coui-t delivered by Hare, P. J., in Dune in «. Penna. R. R. Co., 7 W. N. C. 551, 556. 38 be responsible ; the charter of the corporation contained no exemption from such regulations ; and it is very diffi- cult to see why the principle laid down in Providence Bank vs. Billings (supra) should not be applied in such cases, and the corporation be bound by these Acts, even if the legislature did not reserve to itself the power to alter, amend, or repeal the charter of the corporation. Another ver}^ important class of legislation and of adju- dications following it arose in connection with railroad companies. As the railroad companies developed and became firml}'^ established it was found that they charged more for carrying freight and passengers than the differ- ent State legislatures thought proper. Even competition did not keep the charges down to a reasonable figure, and the result was a very widespread movement on the part of the different States to regulate by statute the charges that the railroad companies could exact. The companies naturally refused to be controlled in this way, and the question as to the constitutionality of these statutes came before the Supreme Court of the United States in a num- ber of cases. The first of these cases was Chicago, Burlington & Quincy R. R. Co. vs. Iowa' decided in 1876. In 1874 the legislature of Iowa passed "An act to establish rea- sonable maximum rates of charges for the transportation of freight and passengers on the different railroads of this state." The charter of the C. B. & Q. R. R. Co. antedated this act, but was granted expressly subject to such rules and regulations as the legislature might from time to time enact and provide. It had already been decided that a state has the unlim- ited right to charge or authorize others to charge, toll, freight or fare for transportation on its roads, canals, and railroads, because these roads, canals, and railroads, are its own works, or constructed under its own authority. 1 94 U. S. 155. 2 R. R. Co. V. Maryland 2i Wallace 456. 39 The Court had also decided that when an employment or business becomes a matter of such public interest or importance as to create a common charge or burden upon the citizen ; in other words when it becomes a practical monopoly, to which the citizen is compelled to resort, and by means of which a tribute can be exacted from the community, it is subject to regulation by the legislative power'. The question then arose: Does the charter of a railroad company protect the company from such legislative regulation of its charges as the state could have imposed when the company was created ; or from such control as to charges as a state can exercise over a private individual at any time when his business is such as to come within the doctrine of Munn vs. Illi- nois? The company claimed exemption from such con- trol, but the principle laid down in Providence Bank vs. Billings (supra) that " Any privileges which may exempt it (a corporation) from the burdens common to individ- uals do not flow necessarily from the charter, but must be expressed in it, or they no not exist," was applied ; and it was held that the company was subject to such control. As the price an individual can charge for his labor, &c., is subject to legislative control under certain circum- stances; so a corporation is subject to the same control, unless specially exempted from it by its charter. "Rail- road companies" says Waite, C. J. in the opinion of the court, p 161, are carriers for hire. They are incorporated as such, and given extraordinary powers, in order that they may better serve the public in that capacity. They are, therefore, engaged in a public employment, affecting the public interest, and under the decision in Munn vs. Illinois subject to legislative control as to their rates of fare and freight, unless protected by their charters." This case having settled the fact that a State Legisla- ture could regulate the charges of railroad companies, unless the charter of the company exempted it from such 1 Munn V. Illinois, 94 U. S. 113. 40 regulation, the question then arose as to what constituted such an exemption. One clause after another contained in the charters of the different companies was held not to be an exemption,' until finally, in Stone vs. Farmers' Loan & Trust Co." the court held that a provision in the charter of the Mobile & Onio Railroad Company " that it shall be lawful for the company hereby incorporated from time to time to fix, regulate, and receive the toll and charges by them to be received for transportation of per- sons or property on their railroad or way aforesaid, &c.," did not exempt the company from legislative control in the matter of charges. " Power is granted to fix reasonable charges, but what shall be deemed reasonable in law is nowhere indicated. There is no rate specified, nor any limit set. Nothing whatever is said of the way in which the question of reasonableness is to be settled. All that is left as it was. Consequently, all the power which the State had in the matter before the charter it retained after- wards."^ Nor is it necessary, in order that the State should have this power to regulate the charges of corporations, that it should reserve to itself the power to alter, amend, or repeal their charters at its pleasure.* There is a limit, however, to the regulations that the State can impose in the matter of charges. " This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and freights, the State can not require a railroad corporation to carry persons or property without reward ; neither can it do that which in law amounts to a taking of private 1 Peik V, Chicago & Northwestern Railway Co., 94 U. S. 164 ; Rug- gles V. Illinois, 108 U. S. 526. 2 116 U. S. 307. 3 Fi om opinion of Waite, C. J. p. 330. See also Stone v. 111. Cen- tral R. R. Co. and Stone v. N. O. & R. R. Co. 116 U. S. 347 and 352. * Opinion of court delivered by Waite, C. J. in Stone v. Farmers' Loan & Trust Co. 116 U. S. 307, p. 325 ; dissentinp; opinion of Field, .T. in the Granger Cases, Stone v. Wisconsin, 94 U. S. 180, p. 185. 41 property for public use without just compensation, or without due process of law."^ " A regulation of the fare a railroad company should charge, which brought its gross receipts so low that after paying all expenses there was not legal interest on the outlay left, would be confiscation and illegal.""- ^ Nor must this control amount to a regulation of inter- state commerce/ the power to regulate which is vested solely in Congress. The question, so far as I know, has not yet come before the Supreme Court of the United States, whether the State could still regulate the charges, after granting the com- pany express exemption from such control. In Laurel Fork & Sand Hill R. R. Co. vs. West Virginia Transpor- tation Co.,* the court says : " From what has been said, it is apparent that even if the Legislature in the charter of L. F. & S. H. R. R. Co. had expressly stipulated, that it would never reduce the tolls which the company was, T Opinion of court by Waite, C. J. in Stone v. Farmers' Loan & Trust Co., 116 U. S. 307, p. 331. 2 Judge Hare's lectures on Constitutional Law, delivered in 1886- 87, at the Law School of the University of Pinnsylvauia, p. 44 of slate notes. A The rule given above was Liid down, I believe, before the ques- tion as to just how far the State could regulate the fares charged by a railroad company had ever come before the courts. The question has very recently come before a Federal Court and the rule as laid down by this court difiers from the rule given above. In Cliicago, N. W, Ry. Co. V. Dey, Fed. Rep. Oct, 16, 1888, p. 8G6, decided in the Circuit Court iu the southern district of Iowa ; Brewer, J. says : " The rule, therefore, to be laid down is this, that where 1he proposed rates will give some compensation, however small, to the owners of the railroad property, the courts have no power to interfere. Bat where the rates prescribed will not pay some compensation to the owners, then it is the duty of the courts to interfere and protect the companies from such rates. Compensation implies three things : Payment of cost of service, interest on bonds, and then some dividend." * Opinion of Waite, C. .J. iu Scone v. Farmers' &c. Co., 116 U. S. 307. * 25 W. Va. 3-24. 42 by its charter, authorized to take, it could nevertheless have done so whenever it pleased, &c." But the weight of authority is decidedly the other way,' and Harlan, J. in his assenting opinion in Ruggles vs. Illinois,Mn speaking of some of the earlier of these railroad cases says that these cases establish among other principles " that such corporation may be protected by its charter against abso- lute legislative control in the matter of rates for the car- riage of passengers and freight." To adopt the other view is to carry the police power of the State to what seems to me to be an unwarrantable extent; for although, as we shall see later, in certain cases the State can control a corporation entirely independently of its charter, this is only where the public health, morals, or safety demand such action, and it is hard to see how the public health, morals, or safety could call for the leg- islative control of charges. Should they, however, at any time call for such control, the power of the State to exer- cise it would be unquestioned, any provision in the charter of the corporation to the contrary notwithstand- ing. But until the public health, morals, or safety call for such control, the argument of Mr. Chief Justice Waite in Chicago, Burlington & Quincy R. R. Co. vs. Iowa (supra), where he says p. 162, " It was within the power of the company to call upon the Legislature to fix perma- nently this limit, and make it a part of the charter, and if it was refused, to refrain from building the road," should be applied to the other side. If the Legislature had not wanted to part with its power to control charges it need not have done so ; but having once done so it should be bound by its contract. If the Legislature reserves to itself the power to alter, amend, or repeal the charter, the case is different, and the 1 See lion R, R. Co. v. Lawrence Furnace Co., 29 Ohio State 208 : and also R. R. Commissioners v. Yazoo & Miss. R. R. Co., 67 Miss €07 ; Sloan v. Pacific R. R. Co., 61 Mo. 24. 2 108 U. S. 526. 43 probable effect of such a reserved power will be di3cussed later. Whatever we may think of these statutes controlling the charges railroad companies can exact ; whether we think they come clearly within the legislative power of the state; or whether with Mr. Justice Field, ^ we are forced to " admit that the power of the legislature over the corporation, is, in spite of the constitutional limita- tions, as absolute as that of the Parliament of Great Britain," there can be no doubt of one thing. The action of so many states in this direction followed finally by the Inter-State Commerce Act passed by Congress in 1887, shows conclusively that there was a very wide-spread and urgent need felt for some means to control the charges railroad companies could exact. Plank road and turnpike companies are very similar to railroad companies in many of tlieir relations to the public and some of the principles that have been laid down in regard to them apply equally well to railroads. Perhaps the most important case in which a turnpike company was discussed is Pingry vs. Washburn,'* where it was held that a statute of Vermont, allowing the in- habitants of a certain village to pass over the bridge of a turnpike company without paying toll, was unconstitu- tional. Doubtless a similar statute forcing a railroad company to carry any particular class of people without compensation, would also be held unconstitutional. An- other case is Detroit vs. Detroit & Howell Plank Road €o.' A statute of Michigan passed in 1879 required plank load companies to remove their toll-gates beyond ^ Dissenting opiniou of Field, J, in Railroad Commission Cases, Stone et al vs. Farmer's &c., Co., 116 U. S. 307, 346. The Justice is speaking of the action of several states in appointing commissioners with the general duty of regulating the charges of railroad companies, and of ■exercising police control over them in certain other particulars. 2 I Aiken 264. » 43 Mich. 140. 44 municipal limits. The Detroit & Howell Plank Road Co. was in- existence when this act was passed and claimed that it was exempted from the act, although its charter was subject to alteration, amendment, or repeal at the time the act was passed. The court held the stat- ute unconstitutional.^ A statute of this sort also, not regulating the charges of the corporation, but depriving it of a certain definite source of income, would very probably be held to apply to railroad companies as well as to plank-road companies."*^ CHAPTER VI. Passing now, from the legislation which was passed in connection with railroad companies and the views the courts have taken of this legislation; we come upon a large number of cases in which various legislative reg- ulations and burdens, imposed upon corporations, have been discussed in different State Courts and in the Su- preme Court of the United States. The same principles govern these cases that govern the railroad cases and, as in the case of the legislation in regard to railroad com- panies, many of the statutes have been held unconstitu- tional and void. It would make an essay of this sort too long if all these cases were to be discussed and I shall only speak of some of the more striking ones. Statutes limiting the charges a corporation can exact, when its business is such as to come within the doctrine of Munn V. Illinois, (supra,) have been held valid wiien ap- ^ See also White's Creek Turupike Company vs. Davidson County etal. 3 Ten. Chanc. 396. A In the plank-road case the statute was held void as taking property without due process of law, and not as impairins the obli- gation of the charter-contract. It sems to me that the statute might have been held void on the latter ground as well ; at any rate the case is an interesting one to consider in relation to the railroad cases pre- viously discussed. 45 plied to other corporations than railroads. In the State V. Columbus Gas Light and Coke Co.^ it was held that a statute of Ohio, limiting the price to be charged by the company for gas was constitutional and in Hockett v. State" a statute of Indiana limiting the rental a tele- phone company could charge for the use of a telephone, was held valid. The same question came up again in a California case, though the circumstances under which it arose were different.' Here a statute providing a method for appointing certain commissioners, different from the method provided by the charter of the corporation, amounted, potentially at least, to a regulation of the charges the corporation could exact, and the statute was held to be constitutional.' CHAPTER VII. Again, as in the railroad cases, statutes imposing addi- tional burdens on corporations, when the public safety does not call for such statutes and the State has not re- served to itself the power to alter or amend the charter of the corporation, have been held unconstitutional for the most part. Thus an act of Pennsylvania requiring the Erie Canal Co. " to build, repair and keep in repair all bridges over their canal on public roads and streets cross- ing the same, was held anconstitutional, and that though the State, which formerly owned the canal, built and re- paired the bridges as the Act required the company to do/ Another act of Pennsylvania required the owners of dams across the Susquehanna river to make sluices in i 32 Amer. Rep. 390. 2 23 Cent. L. J. 34. 3 Spring Valley Water Works v. Schottler, 110 U. S, 347 * See also Parker et al v. Metropolitan R. R. Co., 109 Mass. 506, where a statute limiting the fares a ferry company could exact was held to be constitutional, 5 City of Erie v. Erie Canal Co., 59 Penn. 174. 46 them for the passage of fish, and this act was also held to be unconstitutional as applied to corporations/ In neither of these cases the State reserved to itself the power to re- peal or alter the charter of the company. In Massachu- setts, however, where the State reserved this power, it was held that a corporation could be compelled to put fishways in its dam." But even in that State where the company by the terms of its amended charter was ex- empted from any obligation to construct fishways, it could not be forced to construct them/ Whether the Supreme Court of the United States would hold it necessary for the State to reserve to itself the power to alter or repeal the charter of a corporation in order for it to be able to com- pel the corporation to put fishways in its dam, is very hard to say. In The Commonwealth vs. Proprietors of the New Bed- ford Bridge Co.,^ a statute of Massachusetts ordering a certain corporation to widen the draws of its bridge was held unconstitutional. But in the charter of this com- pany it was provided that the bridge should contain two suitable draws at least 30 feet wide, under which provi- sion, the court held, the company could be forced to widen its draws. But whether the present draws were of a suit- able width was a judicial, not a legislative question. A similar act of Connecticut was held void.* But in this case the Judge particularly says that the writ of quo war- ranto w^as not prosecuted on the ground that the bridge was a public nuisance, obstructing the common and free use of the Housatonic river, nor does the court pass upon the question as to whether the Bridge Company could justify under their charter the continuance of the bridge 1 Commonwealth v. Penn. Canal Co., 66 Penn. 41. 2 Commissioners v. Holyoke Co., 104 Mass. 446, affirmed in Hol- yoke Co. v. Lyman, 15 Wallace 500. » Commonwealth v, Essex, 13 Gray 248. 4 2 Gray 350. * Washington Bridge Co. v. Conn., 18 Conn. 53. 47 in its present condition, if, in fact, it essentially obstructs the passage of vessels to and from a port of delivery above. This certainly looks as if the act would have been held constitutional under certain circumstances ; and had there been no provision in the charter of the Massachusetts cor- poration under which it could have been compelled to ■ widen its draws, I can not help thinking that the Massa- chusetts statute might have been held constitutional. On the other hand, an ordinance of Philadelphia requiring passenger cars to be numbered and to be licensed on paying a stipulated sum for each car, was held a valid police regulation.^ It is true that the burden imposed by this ordinance on the company was a very small one ; at the same time it was a burden which the company objected to bearing, and it was not demanded by the public safety. We have already seen that statutes regulating corporation charges are valid in certain cases, and these regulations are not demanded by the public safety. It is not easy for me to reconcile all the cases in which the acts discussed were not demanded by the public safety,. and the charter of the corporation was not subject to alter- ation or repeal, and it seems to me that in some of them the State courts have not followed the principle of Provi- dence Bank vs. Billings (supra). CHAPTER VIII. But where a corporation is expressly given by its charter special rights, as certain exclusive privileges, statutes at variance with the charter are void. An interesting case of this sort, one in which the statute discussed seems to be close to the border line between constitutional and unconstitutional legislation, is that of the Binghampton Bridge Company.- An Act of New York incorporated a company with power to construct a bridge, build a toll- 1 Frankford «&; Pliila. Passenger K. W. Co. v. Phila., 58 Penn. 119, » 3 Wallace 51. 48 gate, and take the tolls fixed by the Act. The charter also contained an express provision that no person or persons should erect any bridge within two miles either above or below the first one. Subsequently to the building of the bridge, some of the inhabitants of the town of Binghamp- ton petitioned the New York Legislature to authorize the building of another bridge within the limits reserved for- the first one. The petition set forth that the town had a population of 10,000 inhabitants, and had increased largely in size, and that it was inconvenient to have but one bridge. "That by reason of the great amount of travel over the present bridge and other causes it is fre- quentl}^ out of repair, so that only one side of it can be used, and at such times it is passed only with great delay and difficulty." The New York Lsgislature, acting on this petition, incorporated the Binghampton Bridge Com- pany, which built a bridge a few rods above the old one. The new structure greatly diminished the tolls of the old one and seemed likely to destroy them altogether. The question whether the act under which the new company was incorporated was constitutional, was a very delicate one. On one side was the express contract contained in the charter of the original company, and the great dimi- nution of profit suffered by the company in consequence of the contract not being enforced ; on the other side, was the great inconvenience suffered by a large number of people and the fact that the circumstances had changed very much since the bridge was built, so that it was no longer able to carry out effectually the purpose (from the standpoint of the legislature) for which it had been built. The court decided that the charter of the first company came within the Dartmouth College Case, and that the act allowing the second company to build a bridge within two miles of the first one was unconstitutional. The judges were not unanimous, however, the Chief Justice and Field and Grier, J. J. dissenting. We may perhaps be inclined to agree with the dissent- ing opinion in this case, and to think that the prevention 49 of a great inconvenience to many of the inhabitants of a large town, offers a suitable opportunity for the exercise by a State of its police power, even though by so doing the value of a corporate franchise would be greatly reduced on account of the State failing to fulfil its part of the con- tract. But it should be remembered that in this case no positive, active nuisance (as was the case in Fertilizing Co. V. Hyde Park, infra) called for such an extreme exer- cise of the police power, as the State would liave made, had it not been bound by the express agreement in the charter of the first company. Moreover, the State, in the exercise of its right of eminent domain, could have taken the bridge and the road leading to it from the company, making the company due compensation therefor,' in which case the stockholders of the corporation would have had nothing to complain of, and a new bridge could then have been built as close to the old one as was desirable. The statute of New York incorporating the second company was enacted by the State in exercise of its police- power ; but the need for the second bridge was not so ur- gent as to justify the State in disregarding an express provision in the charter of the first company." The pro- ject of building the first bridge was too great a one to be undertaken by an individual. A large sum of money was necessary, and returns on it were far distant ; to in- duce public spirited citizens to build the bridge, the State gave them certain exclusive rights, which under the cir- cumstances it had the power to do and having once done so it was bound by its contract. 1 See Central Bridge Co. v. Lowell, 4 Gray 474, where the bridge of a company was appropriated for a town way, compensation being made to the company therefor. See also West River Bridge Co. v. Dix, 6 How. 507, where the same thing was done. a In this case the dissenting Judges thought that there was no pro- vision in the charter of the first corporation excluding other bridges within two miles on both sides of the first bridge. Whether the mi- nority of the Court would have held as they did, had the charter of the first company expressly forbidden other bridges, it is difBcult to say. See also Bridge Proprietors v. Hoboken Co. 1 Wallace 116. 50 This principle has been very clearly recognized in other and more recent cases. The new Orleans Gas Light Company, had under its charter, the exclusive right of supplying New Orleans with gas for 50 years dating from 1875. The Constitution of Louisiana of 1879 abolished all monopoly features in the charters of corporations ex- cept such as were contained in the charters of railroad companies. Acting under the Constitution, the State in- corporated the Louisiana Light Co. in 1881 with certain rights at variance with the exclusive rights contained in charter of the New Orleans Gas Light Co. The question then arose whether the State could in this way repeal the exclusive rights granted to the older company. The Court held the exclusive right to supply gas to a mu- nicipality is a franchise vested in the State, which it can grant to a corporation, and such a grant is a contract protected by the Constitution of the United States.^ CHAPTER IX. Some of the cases already examined have illustrated what seems to me to be the extreme length to which a State should go in the exercise of its police power in the matter of regulating the charges which a corporation can exact, unless indeed the State should be called upon to regulate the charges under circumstances very differ- ent from any that have yet arisen. But there are other cases in which the States have gone further in altering or repealing charters in the exercise of their police power than in any of the cases heretofore spoken of. An early case and a striking one, too, is Coates v. Mayor etc., of N. Y.' decided in 1827. In the year 1697 letters patent were granted under William III of England 1 New Orleans Gas Light Co. v. Louisiana Light Co., 115 U. S. 650. See also New Orleans Water Works Co. v. Rivers 115 U. S. 674, and Boston & Lowell R. R. Co. v. Salem & Lowell R. R. Co. 2 Gray 1. 2 7 Cowen 585. 51 whereby certain persons were constituted a body corpor- ate under the name of "The Rector and Inhabitants of the City of New York, in communion of the Protestant Episcopal Cliurch of England." The corporation under the letters took certain land in what is now the first ward of New York City to be used by it as a burying-ground. Sometime before the year 1827 New York city, under a statute of the State of New York giving it power so to do, passed a by-law prohibiting the interment of the dead in certain parts of the city. The parts of the city in which interment was forbidden included the land which th corporation took under the letters patent of William III and which trustees now held for the benefit of the cor- poration for a burying ground. The question was, did the by-law of New York city apply to this particular cor- poration so as to prevent it from using as a burying ground land which it held for that express purpose and which it was authorized by its charter to use as such. The Court held that the corporation was not exempted from the operation of the by-law, and said in its opinion: " Every right, from absolute ownership in property, down to a mere easement, is purchased and holden subject to the restriction, that it shall be so exercised as not to injure others. Tliough, at the time it be remote and inoffensive, the purchaser is bound to know, at his peril, that it may become otherwise by the residence of many people in its vicinity and that it must yield to by- laws, or other regular remedies for the suppression of nuisances. We are of the opinion that this by-law is not void, either as being unconstitutional, or as conflicting with what we acknowledge as a fundamental principle of civilized society, that private property shall not be taken even for public use, without ju3t compensation. No property has, in this instance, been entered upon or taken. None are benefited by the destruction, or rather the suspension of the rights in question, in any other way than citizens always are, when one of their number is forbidden to continue a nuisance. For the same 52 reason, there is nothing imparing the obligation of con- tracts, within the sense of the Constitution of the United States\" The Supreme Court of Illinois decided a similar case^ the other way, but should the question ever come before the Supreme Court of the United States, it would follow the New York and Pennsylvania courts I believe. A still more striking case is Beer Company vs. Com- monwealth of Massachusetts^ decided in 1879. In 1812 the Boston Beer Co. was incorporated for the pur- pose of manufacturing malt liquors in all their varieties. Its charter was subject to repeal or alteration. Under the Massachusetts prohibitory law of 1869 certain malt liquors of the company were seized and declared forfeited. Bartemyer vs. lowa^ had already decided that pro- hibitory laws are constitutional as applied to individuals. In that case it was presumed that the liquor in question was not in existence when the prohibitory law was passed and the same presumption was applied in Beer Co., vs. Massachusetts, so that the chief question was: Is the com- pany exempted by its charter from the general prohibi- tory law, which, when applied to individuals, is constitu- tional ? The court held that the law applied to the cor- poration no less than to individuals. "If," says Mr. Justice Bradley, in the opinion of the court, p 32, "the public safety or the public morals require the discontinu- ance of any manufacture or traffic, the hand of the legis- lature cannot be staid from providing for its discontinu- ance, by any incidental inconvenience which individuals or corporations may suffer, all rights are held subject to the police power of the state." Since Beer Co., vs. Mass- achusetts was decided another case has settled the ques- tion that prohibitory laws, so far as individuals are con- cerned, apply to liquor that was in existence before the 1 See also Kincaids appeal, 16 P. F. Smith 433. 2 Lakeview v. Roso Hill Cemetery, 70 111. 192. 3 97 U. S. 25. * 18 Wallace, 129. 58 laws were passed, no less than to that made after the passage of such laws,^ and should the same question ever come up in regard to corporations, the law would be held to apply to them in the same manner as it does to individuals. The statute held constitutional in Beer Co., vs. Massa- chusetts is a very good example of the extreme exercise of police power in one direction. A company was incor- porated for a special purpose, lawful at the time the com- pany was created ; under its charter the company erected its works and carried on its business for many years; and yet the charter of the company was practically repealed by a law forbidding the manufacture in which the com- pany was engaged. Fertilizing Co. vs. Hyde Park'' is another interesting case, the necessity which called for an extreme exercise of the police power, being different from the necessity in the previous case. In 1867 an act of Illinois was passed for in3orporating the Northwestern Fertilizing Co., giving it continued succession for 50 years and authorizing it to establish and maintain in a certain part of Cook county factories for making an agricultural fertilizer from dead animals, &c. The company was organized as provided by its charter, and located its works within the territory allowed by the act. When the factories were built the country around them was swampy and nearly uninhab- ited, giving little promise of further improvement. After awhile, however, the town of Hyde Park grew up around the works, which then become an unendurable nuisance to the people living within many miles of them. The charter of Hyde Park, as revised by the legislature in 1869, gave to its trustees the authority to "define or abate nuisances which are, or may be, injurious to the public health." In pursuance of this power, the municipality passed an ordinance which declared that no person should transport any ofFal or other offensive or unwhole- 1 Mualer V. Kansas, S. C. of U. S., Oct. Term, 1887, No. 19. 2 97 U. S. 659. 54 some matter through the village, or maintain or carry on any offensive or unwholesome business or establishment within the limits of the village, or within one mile of its limits. The constitutionality of this ordinance, as applied to the Northwestern Fertilizing Co., was before the Court in this case. The Court upheld the ordinance, saying that although the charter, ujitil revoked, was a sufficient li- cense for the manufacturing of the company, yet it was not a contract guaranteeing that the company, notwith- standing its business might become a nuisance by reason of the growth of population around the place originally selected for its works, should for 50 years be exempt from the exercise of the police power of the state, and that its charter affords the company no protection from the en- forcement of the ordinance. " That a nuisance," says the Court, "oi a flagrant character existed, as found by the Court below, is not controverted. We can not doubt that the police power of the State was applicable and adequate to give an effectual remedy. It extends to the entire property within their (the separate States) jurisdiction. To regulate and abate nuisances is one of its ordinary functions." In Stone vs. Mississippi^ it was decided that to preserve the public morals the State can carry the exercise of its police power to an extreme length, by practically repeal- ing the charter of a corporation, as we have already seen it can do when the public health demands such action.^ In this case the validity of that part of the constitution of Missisippi, which declares: "nor shall any lottery hereto- fore authorized, be permitted to be drawn, or tickets therein to be sold," as appliedto corporations already in existence, was considered by the Court. The plaintiff was a corporation organized as a lottery company before 1 101 U. S. 814. A I suppose that prohibitory laws are for the preservation of morals as well as health and safety, so this question was settled before this case arose. 55 the constitution was made, and had complied with all the conditions imposed upon it. Here, as in the case of pro- hibitory laws, the constitutionality of similar legislation, as applied to individuals, had been previously decided,^ so that the chief question was whether the corporation's charter exempted it from the law. The previous cases set- tled unquestionably what the answer to this question would be and the court in holding the constitution valid said: p. 819, " The question is therefore directly presented, whether, in view of these facts, the legislature of a State can, by the charter of a lottery company, defeat the will of the people, authoritatively expressed, in relation to the further continuance of such business in their midst. We think it cannot. The people, in their sovereign capacity, have established their agencies for the preservation of the public health and the public morals, and the protec- tion of public and private rights. These several agencies can govern according to their discretion, if within the scope of their general authority, while in power ; but they can- not give away or sell the discretion of those that are to come after them, in respect to matters, the government of which, from the very nature of things, must vary with varying circumstances."^ Finally came the case of Butchers Union Slaughter- House and Live Stock Landing Co. vs. Crescent City Live Stock Landing and Slaughier-House Co.^ decided in 1884. The legislature of Louisiana, in the exercise of its police power, granted a monopoly in the butchering trade to the appellee, extending over a large extent of territory, including New Orleans. In 1881 themunicij)al authori- ties of that city, under authority granted by tlie Consti- tution of Louisiana, gave certain privileges to the appe- lants for stock-landing and slaughter-houses, at variance iBoyd V. Alabama, 91 U. S., 645. 2 See also Moore v. State, 48 Miss. 148 ; Contra. Broadbent v. T. S. & A. Asso'u, 45 Ala. 172. 3 111 U. S. 74G. * See Slaughter- House Cases, 16 Wallace 36. 56 with the exclusive privileges previously granted to the appellee. The case was in most respects exactly similar to New Orleans Gas Co. vs. La. Light Co., previously discussed. The only difference between them was in the character of the business of the two corporations to which exclusive privileges had been granted. The business of the Slaughter-House Co. was necessarily detrimental to public health in whatever manner conducted.^ In the case of the Gas Light Co. this was not so, and the exclusive grant to it was sustained, as so doing did not obstruct the State in the exercise of her power to provide for the public health.' But the exclusive grant to the Slaughter-House Co. was not sustained ; the Supreme Court holding that, as the State could grant exclusive privileges to a company in the exercise of its police power, so it could also withdraw them in the exercise of the same power whenever the public health demanded such action. CHAPTER X. These cases show that a State has practically unlimited control uver corporations, in the exercise of its police power, when the public health or morals call for such control. There is, however, one limitation placed upon a State in the exercise of this power ; not, indeed, as to when or for what purposes the State shall exercise it, but as to the capacity in which it shall exercise it. The Constitution of Louisiana granted a charter to a lottery company — or rather, revived a previous charter which had expired — and the question arose whether a company, incorporated in this way, whose charter was contained in the Consti- tution of a State, was subject to the police control of the State, acting through its Legislature, even where the pub- lic morals were concerned. The Court held that it was * N. O. Gas Co. V. La. Light Co., 115 U. S. 650, 669. 5 115 U. S. 672. 51 not, saying: " It is undoubtedly true that no rights of contract are, or can be, vested under this constitutional provision which a subsequent Constitution might not destroy without impairing the obligation of a contract, •within the sense of the Constitution of the United States for the reason assigned in Stone vs. Mississippi. But an ordinary act of Legislature cannot have that effect, be- cause the constitutional provision has withdrawn from the scope of the police power of the State, to be exercised by the General Assembly, the subject matter of the grant- ing of lottery charters, so far as the Louisiana State Lot- tery Company is concerned.^ " Therefore when a State, in its Constitution, grants a charter to a corporation, it looses all control over the corporation except when acting under the same or another Constitution.^ CHAPTER XL In many of the cases examined the charters of the cor- porations have been subject to amendment, alteration, or repeal at the pleasure of the State legislature. The de- •cision in the Dartmouth College case made it necessary for the State to reserve this power to itself if it desired to control the corporation in the future ; under many cir- cumstances, at any rate. The effect that this provision has upon the police control of the corporation by the ■State is an important question. It is extremely difficult to say just what the effect is, and the numerous cases cannot all be placed on the one side or the other of any •clearly drawn line. Apparently such a provision does not give the Legislature power to alter, amend, or repeal 1 New Orleans v. Houston, 119, U. S. 265. ^ The limitation upon the police power of a State, spoken of in this ■case, is not imposed by Article 1, Section 10 of the Constitution of the United States, but is the result of the relation between the Con- stitution of a State and laws passed by its Legislature. The case is, however, a very interesting one to consider in connection with the ■cases just discussed. 58 charters at its pleasure, as on its face it purports to do. Just as we have seen that a State can control a corpora- tion under certain circumstances, in spite of the fact that the charter of the corporation is a contract, and as such protected by the Constitution of the United States; so, on the other hand, the corporation, after the State has once given it being, has certain rights which it is beyond the power of the Legislature to retract, although it has ex- pressly reserved to itself the power to alter, amend, or repeal the charter of the corporation. " The reservation is to be interpreted as placing the State Legislature back on the same platform of power and control over the char- ter containing it as it would have occupied had the consti- tutional restrictions about contracts never existed ; and I think the reservation effects nothing more.'" Perhaps as good an illustration of the power this pro- vision gives the Legislature as can be found, is furnished by some statutes imposing taxes on corporations. We saw that where the charter of the corporation said noth- ing in regard to taxes, the State could tax the corpora- tion as it could the individual.^ But where the charter contains a definite provision as to taxation, or exempts the corporation from taxes, the State cannot then tax the corporation, except as provided by its charter.^ Where, however, the charter of a railroad company exempted it from taxation, but was subject to repeal or alteration, the legislature by virtue of the latter provision, could tax the corporation, in spite of the exemption.'' Whether such a power of alteration or repeal reserved to the legislature, would be held to enable it to act at variance with an express provision in the charter of a corporation in the matter of regulating charges, as it was 1 Dissenting opinion of Bradley, J, in Sinking Fund Cases 99 U. S. 7C0, 748. ^ Providence Bank v. Billings, 4 Peters, 514. ' Bank of Ohio ». Knopp, 3 Wall. 51 ; Home for the Friendless v. Rouse, 8 Willi. 430. * Tomilson z'. .Jessup, 15 Wall. 459. 59 held to do in the matter of taxation, has not, I believe, been actually settled. It seems, however, that the rule which was applied to the power of a State in regard to to taxation, would also be applied in regard to regulating the charges of corporations, and that by virtue of this reserved power, a State could regulate the charges of a corporation in spite of any provision contained in the charter of the latter/ Whether the court would have decided the Binghamp- ton Bridge Case (supra) differently, had the charter of the first company been subject to repeal or alteration, is a difficult question. In Tomilson vs. Jessup (supra) the change in the charter of the corporation, did not render its franchise valueless, though it lessened its value ; but to have decided the Binghampton Bridge Case differently would have practically destroyed the value of the fran- chise of the first company, and would not have been in keeping with the decision in Commonwealth vs. Essex, it seems to me. As to the alterations which a State can make in the charter of a company under this reserved power, Mr. Justice Swayne says :^ " * * * they must be made in good faith, and be consistent with the object and scope of the act of incorporation. Sheer oppression and wrong cannot be inflicted under the the guise of amend- ment or alteration." " Vested rights, it is conceded, cannot be destroyed or impaired under such a reserved power, but it is clear that the power may be exercised, and to almost any extent, to carry into effect the original purposes of the grant, and to protect the rights of the public, and of the corporators, or to promote the due administration of the affairs of the ^ Tiedman Liniitatious to Police Power, p. 588, dissenting opinion of Bradley, J. in Siukinjj Fund Cases, 99 U. S. 700, 749; assenting opinion of Harlan, J. in Ruggles v. 111. 108 U. S. 526, 537. 2 13 Gray, 249. 3 Shields v. Ohio, 95 U. S. 324. 60 corporation."^ In Railroad Co. vs. Mains'* it was held that " the existence of the Corporation, and its franchises and immunities, derived directly from the State, were thus kept under its control," but that " rights and inter- ests acquired by the company, not constituting a part of the contract of incorporation, stand upon a different foot- ing." The State cannot under this reserved power pass a law imposing a serious burden upon a corporation,^ nor one taking away from it one of its sources of income.^ *' There is no well considered case," says Cooley, J.,'* " in which it has been held that a legislature, under its power to amend a charter, might take from the corporation any of its substantial property or property rights."' But this power of alteration and repeal reserved to the legislature is not so important in connection with the po- lice power of the State, as at first it might seem to be. The statute held unconstitutional in Miller vs. R. R. Co (supra) imposed no more weighty burden upon the cor- poration than did many of the statutes held valid in Thorpe vs. R. R. Co. (supra) and similar cases, and we have seen that in those cases the statutes were held valid whether or not the Legislature reserved to'itself the power to alter or repeal the charters of the corporations. It seems, then, that although this reserved power will not enable the Legislature to impose fresh burdens upon a corporation, its police power, when exercised for the pub- lic safety'*^ will enable it to do so, or even enable it to alter 1 Opinion of Ct. in Holyoke Co. v. Lyman, 15 Wall. 500. 2 96 U.S. 499. 3 Miller v. N. Y. & Erie R. R. Co. 21, Barb. 513. * Detroit v. Detroit & Howell Plank Road Co. 43 Micb. 140. * See also Commonwealth v. Essex, 13 Gray, 248, *■ In Miller v. R. R. Co. tbe Court said in regard to tbe attempted regulations: "If such arrangements were necessary for tbe safety of tbe passengers . . . they migbt be doubtless required of tbe Companies, ..." 61 or repeal the charter.^ Therefore, in considering statutes passed for the protection of the public health or safety which impose fresh burdens on a corporation, or perhaps repeal its charter, the fact that the Legislature did or did not reserve to itself the power to alter or repeal the char- ter of a corporation, need not be taken into considera- tion. The same is true in considering statutes passed to protect public morals.'' Whsn, however, the State, acting to protect neither the public safety, health, or morals, imposes fresh burdens on a Corporation, or limits its powers in any way, this re- served power may become an important factor in con- sidering the statute, as the Pennsylvania Court held.' It may also be decided hereafter that this reserved power enables the State to regulate the charges of a cor- poration, and control it in other respects, in spite of ex- press provisions in the charter of the corporation, ex- empting it from such regulation. (See the cases on tax- ation cited above.) CHAPTER XII. From an examination of the cases discussed it is evi- dent that the police power of a State has a very wide range ; that in the exercise of it a State can legislate in regard to a large number of subjects, and for a large number of purposes. It is primarily exercised to guard the public health, safety, and morals ; but it is also ex- ercised to guard the public purse from undue charges levied by persons whose business has become a practical monopoly, and for other purposes. A general division of the statutes passed in the exercise of this power would ^ Coates V. Mayor &c., of N. Y. supra ; See also Opinion of Ct. in Beer Co. v. Mass. 97 U. S. 25. * Stoue V. Mississippi's, supra. ^Monongahela Na,v. Co, v. Coon, Penna R. R. Co. v. Duncan supra. 62 be into those passed to protect the public health, safety, and morals ; and those passed for any other purpose. In deciding what the effect of the clause in the Consti- tution, which forbids a State to pass a law impairing the obligation of a contract, is upon the police control of a State over a corporation, it must first be remembered that a remedy a corporation may have against those who deal with it, or that those who deal with a corporation may have against it, is no part of its corporate franchise, and is within legislative control, provided the legislation is reasonable. The division just made of the statutes, passed in the exercise of the police power, into two classes, must also be borne in mind, and the need which called for any given act of legislature must be considered no less than the character of the act itself. An act which would be held unconstitutional when passed for a certain pur- pose, might still be held constitutional when passed to accomplish some different purpose, as the Louisiana Monopoly Cases show so beautifull3^ When a State, in the exercise of its police power, passes a law in regard to a corporation, for other purposes than the protection of the public health, safety, or morals, the provisions contained in the charter of the corporation, and the fact that the legislature did or did not reserve to it- self the power to alter or repeal the charter, must be taken into consideration, as explained above. For the most part, with certain exceptions in the State courts, the doctrine laid dowd in Providence Bank vs. Billings (supra) has been followed, and regulations that would be constitutional when applied to individuals, have been held to apply to corporations, unless the charter of the corporation exempts it from such regulations. A State cannot, however, except when legislating to protect the public health, safety, or morals, violate an express pro- vision in the charter of a corporation, unless it has re- served to itself the power to alter, amend, or repeal the charter. The fact that the State may have acted indis- creetly in making the contract does not influence the case 63 at all. If the contract is made in express terms, the State is bound by it/ But, when the public safety, health, or morals, demand protection, the State has absolute control over a corpora- tion, subject to the single limitation explained above, that under certain circumstances the State can act only through its Constitution, whether or not it reserved to it- self the power to alter or repeal the charter of the corpo- ration, and even thougli such control is at variance with an express provision of the corporotion's charter, or prac- tically repeals it. "While we are not prepared to say that the Legislature can make valid contracts on no sub- ject embraced in the largest definition of police power, we think that, in regard to two subjects so embraced, it cannot, by any contract, limit the exercise of those powers to the prejudice of the general welfare. These are the public health and the public morals. The preservation of these is so necessary to the best interests of social or- ganization that a wise policy forbids the legislative body to divest itself of the power to enact laws for the preser- vation of health and the repression of crime."" Every contract, therefore, between a State and a cor- poration, created by the grant of its charter to the latter by the former, is made upon the implied condition that the State reserves to itself the power to legislate for the public health and morals ; and for the purpose of guard- ing the public health or protecting the public morals, the State can enact any laws in regard to the corporation, which would be constitutional if applied to an individ- ual, in spite of the fact that the charter of the corpora- tion is a contract, and that the Constitution of the United States forbids any State to pass a law impairing the obli- gation of contracts. iBingliatnpton Bridge Co., 3 Wall. 51; New Orleans Gas Co. v. La. Light Co. 115 U. S. 650. 2 Opinion of Ct. delivered by Miller, J. in Butchers, etc. Co. v. Crescent City, etc. Co. Ill U. S. 746. INDEX. Alter. ''•'«*• See Amend. Amend. The eflfect of reserving to a State the power to alter, amend, or repeal a charter, 57,61 Bridg^e. A canal company cannot be compelled to build bridges over its canal at public roads, 45 Burden. A State cannot impose fresh burdens on a corporation, 45 New burdens can be imposed on corporations to force them to perform their duties, 27 See Safety. Also Corporation and Convenience. Burying- Ground. Police control over, 50-52 Can be moved from cities, 51-52 Cattle Guard. See Railroad. Change. See Remedy. Charges. Rights of a State to regulate. As to individuals, 39 As to corporations. — Railroad companies, . . . 39-43 Gas companies, ......... 45 Telephone companies, ....... 45 Water vporks companies, 45 Ferry companies, ........ 45 Where a State reserves power to alter, amend, or repeal a charter, 58-59 Charter. Inviolability of, 21 See Corporation. Commerce. See Inter-State Commerce. Commissioners. May be appointed to oversee banks, .... 26 To oversee railroads, 40 65 06 Page. Condition. A corporation may bo compelled to fulfill the conditions, expressed or implied, on which it holds its charter, . 26 Convenience. Care for public convenience justifies a State in imposing fresh burdeus^on a corp -ration, 35 Consequential Injuries. Liability of a corporation for, o6 Constitution of the United States. Article I, Section 10 of, Its application to corporations, 21 Contract. See Corporation, and also Impair. Corporation. Charter of is a contract, ....... 21 Views as to power of a State to control, . . . 24-26 Not exempt from burdens common to in