according to the terms of this act of Parliament, they have not a right to do. At the same time I am far from saying that there may not be many small things, perhaps small excesses of authority, which are so obviously beneficial that the shareholders would all acquiesce in them and never think of complaining of them. It does not, therefore, follow that they cannot do the least thing not expressly mentioned in the act. I believe they have the power to do all such things that are necessary and proper for the purpose of carrying out the intention of the act of Parliament, and they have no power of doing anything beyond it.

I do not now intend to enter into a discussion of how far such a proceeding is affected by the principles of public pol icy; but this may be observed, that if there is any one thing more desirable than another, after providing for the safety of all persons traveling upon railways, it is this, that the property of railway companies should be itself safe, that a railway investment should not be considered a wild speculation, exposing those engaged in it to all sorts of risks, whether they intended it or not. Considering the vast property which is now invested in railways, and how easily it is transferable, perhaps one of the best things that could happen to them would be that the investment should be of such a nature that prudent persons might, without improper hazard, invest their moneys in it. Quite sure am I that nothing of that kind can be approached if railway companies should be at liberty to pledge their funds in support of any plausible speculation not authorized by their legal powers, and which might very possibly, to say the least, lead to extraordinary losses on the part of the railway company.

I repeat, as I said at first, that I consider this to be a question of great importance, not merely 'to the railway companies who claim these powers, but to the public, in a greater variety of ways than it is necessary for me to point upon this occasion. I say, therefore, that subject to the examination which I shall feel it my duty to give to the pleadings, I shall not dissolve this injunction. If I find that the pleadings are improperly framed, then I think the objection ought to be brought forward in another form; namely, by demurrer.

The MASTER OF THE ROLLS stated that he had examined the bill and was of opinion that it had been properly framed and that the injunction must be continued.

A CHANGE OF CORPORATE PURPOSES WILL BE ENJOINED.

ELEVENTH SELECTED CASE.

ZABRISKIE V. THE HACKENSACK AND NEW YORK RAILROAD COMPANY AND OTHERS.

*

1. A legislative charter is a contract between the State and the corporators, which the State cannot impair.

2. Corporators or partners, associated for a special purpose specified in their charter or articles of partnership, cannot change that purpose without the consent of all the corporators or partners.

3. The reservation in a charter that the State may, at any time, alter, amend, or repeal it, is a reservation made by the State for its own benefit, and is not intended to affect or change the rights of corporators as between each other. Nor does it authorize the State to authorize one part of the stockholders, for their own benefit at their mere option, to change their contract with the other part.

4. The power to alter or modify a charter is restrained to the powers and franchises granted by the charter. It does not authorize the legislature to change the object of the incorporation, or to substitute another for it. An alteration or modification is necessarily of the grant or thing to be altered or modified, and cannot be done by substituting a different thing; that would be a change.

5. A grant of an additional franchise to a corporation not affecting or impairing those before granted, does not alter or modify the charter, if it does not compel the corporation to exercise such franchises. Such grant can be made whether the right to alter and modify be reserved or not. But in neither case can the corporation be compelled to accept them, not can part of the corporators accept them without the consent of all.

6. Corporators who stand by and suffer the company to contract a new work authorized by law, without interference, will be held to have acquiesced in it, and, by such acquiescence will lose their remedy in equity.

*Reported in 18 N. J. Eq., 178 (1867).

THIS case was argued upon a rule to show cause why the defendants should not be enjoined from mortgaging the property of the company, or from expending its funds in the construction of a road not authorized by their charter, but being an extension of the original road authorized by a supplement to their charter.

THE CHANCELLOR.-The Hackensack and New York Railroad Company was incorporated in 1856 with power to construct a railroad from Hackensack to the Patterson and Hudson River Railroad, with a capital of two hundred thousand dollars, and with power to mortgage its road and lands, franchises and appurtenances, to the amount of fifty thousand dollars. Under this act it laid out, located and built a road five miles in length, terminating at Essex street in Hackensack, within one mile of the court-house, as required by the charter. It borrowed thirty thousand dollars, for which it gave a mortgage upon the road and equipments, franchises and other property. By a supplement to this charter, passed March 12, 1861, it was authorized to extend the road northwardly to Nanent, on the Erie Railway, in the State of New York, a distance of about twelve miles, to increase the capital stock to any extent required, and to issue bonds to the amount of two hundred and fifty thousand dollars, which, in the words of the act, were "for the construction and equipment of the road to be constructed under this act; and to secure the payment of said bonds, the said company shall have power to mortgage the said road with its franchises and chartered rights."

In 1861, the company extended its road under this supplement to a point in Passaic street, in the village of Hackensack, more than a mile from the court-house, the length of the extension being about a mile. After this it executed a new mortgage upon the whole road, as extended, and its equipments, and its franchises and chartered rights, to secure the payment of ten thousand dollars. No new stock was issued for this extension.

The company has recently, under the supplement of 1861, laid out and located another extension for about a mile and a

half north of the present terminus, reaching from Hackensack to Newbridge, and has made contracts for the construction of it, and has, by resolution, determined to make a new mortgage to cover the whole road, as it will be when finished to Newbridge, with its equipment and appurtenances, and the chartered rights and franchises of the company, to secure one hundred bonds of one thousand dollars each, for the purpose of paying off the two mortgages which are now on the road; for relaying with new rails and ties the road first built, and furnishing it with the necessary equipment, which is now deficient for its business; and for constructing and equipping the extension to Newbridge.

The complainant is a stockholder in the company; and of nine hundred and thirty shares of capital stock issued, for one hundred dollars each, he owns three hundred and twenty-four. He applies for an injunction to restrain the defendants from constructing the extension to Newbridge, and from executing the mortgage proposed.

He opposes the extension on the ground that it is a different enterprise from that for which his stock was taken, and the money paid, and that neither the directors, nor a majority of the stockholders, can compel him to embark his capital in any undertaking but the one for which it was subscribed and paid.

The extension to Nanent, authorized by the act of 1861, has never been submitted formally to the stockholders, nor has it in any way been approved of by them, or a majority of them, except by the assent given in the answer in this suit, to which the directors are made defendants, which is sworn to by the directors, individually, who own together five hundred and seventeen shares of the capital stock. But, of this, two hundred shares, held by one of them, Mr. Robert Rennie, is special stock, issued to him to build the Lodi Branch, which is leased to him during the existence of the company, and which he is to operate at his own expense and for his own profit, under the agreement that he shall pay as rent the dividends that may be declared on these two hundred shares; and under another agreement, indorsed on the certificate of stock issued for these shares, that they are to be entitled to no dividends beyond the rent of the Lodi Branch, or, in other words, that

he is to pay no rent, and this stock is to receive no dividends. Under these circumstances, this stock can receive no benefit from the extension if it is profitable, nor sustain any loss from it if it is ruinous. And it would seem that if the consent of a majority of the shareholders was necessary to the new enterprise of the extension, that the assent of the other three hundred and seventeen shares held by the directors, not being a majority of the whole stock held by the complainant, who dissents, is not the consent of the majority of the shareholders. And, if it is necessary to obtain the majority to make the extension authorized by the supplement of 1861, that consent does not appear in the cause as now presented.

The extension authorized by the act of 1861 is a radical change in the object of the incorporation; it is an enterprise entirely different from that in the charter. That was to construct and operate a railroad from Hackensack to the Patterson Railroad, at Boiling Spring, an easy and almost direct route to New York; it was from a thriving village, the county town of Bergen county, over a level country, and only five miles in length, as shown by the return of its location. The extension would be about twelve miles in length, through an uneven country, mostly, if not wholly, agricultural, with no village, except the small one at Newbridge, on its route, and it runs into the State of New York some distance, and terminates at a point on that part of the Erie Railway which the company have abandoned for regular traffic, and on which few trains are run. It is an entirely different enterprise.

The question here is, can this company, either with or without the consent of a majority in interest of its stockholders, compel the complainant to embark capital subscribed for the first enterprise in this new one, entirely different.

Since the Dartmouth College case in the Supreme Court of the United States, the doctrine has been considered firmly established and been confirmed by repeated decisions, both in that court and in the State courts, that a charter granted by the legislature to a corporation is a contract between the State and the corporators, and that the State can pass no act to take away or impair any of the franchises or privileges granted by it. The company or artificial person thus created, and its