go Bridge Company to restrain the erection of the new structure. It will be noticed that two points were involved: did the restrictive clause in favor of the Delaware bridge in the original charter apply also to the Chenango bridge; and if so, was this clause a contract binding upon the state? The court answered both these questions in the affirmative, and held that the clause was a contract between the state and the Chenango Bridge Company; that it restrained the state from authorizing another bridge to be erected within the specified limits; and that the new charter was void as it impaired the obligation of the contract. From this decision, Chase, C. J., and Grier and Field, JJ., dissented, not denying, however, the general doctrines of the court, but insisting that, from a proper construction of the language of the charter, the Chenango Bridge Company did not acquire any rights under this restrictive clause passed in favor of the Delaware Bridge Company.

§ 585. (3.) It having been settled that if the charter contains any express collateral stipulations, they are contracts, and binding upon the state, we now inquire whether such collateral agreements will be implied in favor of the corporation, from its general nature, design, and objects. The answer is, they will not. The rule has been firmly established, both in the national and in the state courts, that the charter must be construed more strongly against the grantees; that no rights as against the state will arise under it by mere implication; that only such stipulations as are plainly and expressly favorable to the corporation, upon a reasonable construction of the charter, are to be regarded as contracts binding upon the state. These propositions are sustained by many cases. I shall only refer to two, decided by the Supreme Court of the United States, which have been regarded as leading, and which have been followed without a dissent both oy the national and the state judiciary.

§ 586. In the Providence Banx v. Billings,' the bank had been incorporated by a charter entirely silent on the subject of taxation. At the time of incorporation, a certain rate of tax prevailed; the rate was subsequently increased; the bank

1 1 Pet. 514.

resisted payment of the additional tax. The court held the subsequent statute valid, deciding that, as the charter contained no stipulations on the subject, none should be implied.

Again, in the great case of The Charles River Bridge v. The Warren Bridge,1 the subject was examined in an exhaustive manner, and the rule was established beyond a doubt. The Charles River Bridge Company had been incorporated by the legislature of Massachusetts, with power to erect and maintain a toll-bridge. Their charter contained no restrictive clauses, and no express limitations upon the legislative action. Another company was subsequently chartered and authorized to place a free bridge at a very short distance from the former structure. The effect of this free bridge would plainly be to lessen, if not to entirely destroy, the value of the franchises held by the Charles River Bridge Company. The action was brought to restrain all proceedings under the second charter. The Supreme Court, in a most elaborate opinion by Chief Justice Taney, held that there was no contract between the state and the Charles River Bridge Company to the effect that another viaduct should not be constructed; that there being no express contract, none should be implied; and that the later charter was valid, as it did not impair the obligation of a contract. The principle of these cases has never been departed from, either by the national or the state judiciary; indeed, the tendency among many state judges has been to extend it to an unwarrantable length. The Supreme Court of the United States has very recently reaffirmed this principle of construction in Turnpike Company v. The State.2

§ 586 a. The Supreme Court still maintains the doctrine that not only the charters of private corporations, but the collateral stipulations therein, exempting the corporation from taxation, or restricting the state in the exercise of its right of eminent domain, are contracts binding upon the state, and cannot be changed unless the power to do so has

1 11 Pet. 420.

23 Wall. 210.

8 This section was originally in the Appendix, but is now inserted here. The subsequent sections as far as § 586 m were added by the editor. ED.

been reserved in the charter itself or in some prior general law. A very strong dissent from these positions has, however, sprung up in the court. I shall briefly mention the most important instances in which this familiar principle has been applied. A general statute of Missouri provided that the legislature shall have power to alter or repeal the charters of all private corporations. While this law was in existence the legislature incorporated a charitable institution, and also a college, and in the charter of each declared that the property thereof should be exempt from taxation, and also that the statute first mentioned above should not apply to this corporation. A tax which was subsequently imposed upon both of these institutions was pronounced null and void. From this decision Chase, C. J., and Miller and Field, JJ., dissented. They denied that a state can bargain away in this manner its highest governmental attributes, and insisted that the court should abandon its position and overrule the long series of decisions which sustained the views of the majority. A provision in the charter of a bank that its notes shall be receivable by the state in payment of taxes is a contract running with the notes in favor of the holders thereof, and cannot be abrogated by subsequent legislation.2 A state bank had been established in South Carolina, the whole stock of which belonged to the state. A statute appropriating all the assets of this corporation for the payment of the general indebtedness of the state, to the prejudice of the bill-holders and other creditors of the bank, impaired the obligation of the contract contained in the charter and was void. Contracts made for the sale of slaves at a time when slavery was legal-e. g. notes given for their purchase price cannot be invalidated by any subsequent state laws or constitutions, nor is their validity affected by the fourteenth amendment of the United States Constitution abolishing slavery. The obligation of

1 Home of the Friendless v. Rouse, 8 Wall. 430; Washington University v. Rouse, Ibid. 439.

2 Farman v. Nichol, 8 Wall. 44. 3 Barings v. Dabney, 19 Wall. 1. ♦ White v. Hart, 13 Wall. 647; Osborne v. Nicholson, 13 Wall. 655 ; Boice v. Tabb, 18 Wall. 546.

contracts cannot be impaired by a change in the judicial decisions of the state courts by which they would be rendered invalid; the term "laws" used in the constitutional provision includes decisions of courts as well as statutes of legislatures.1

§ 586 b. Charters of Corporations. This subject has given rise to much discussion in the last few years, and many interesting cases have arisen upon it, some of which are here stated. In Munn v. Illinois,2 it was held that a statute of Illinois, April 25, 1871, fixing by law the maximum charges for the storage of grain in warehouses at Chicago, and other places in the state having not less than one hundred thousand inhabitants, was not unconstitutional. And the same principle was applied to a railroad corporation; namely, that a state might lawfully establish maximum rates of charges for the transportation of freight and passengers within its limits; 3 at least when power was reserved to alter the charter. And this was followed in Chicago, &c. Railroad v. Ackley, and Winona, &c. Railroad v. Blake.5 But in them all Justices Field and Strong dissented. This point again arose in Spring Valley Water Works v. Schottler, 110 U. S. 347 (1883). In that case the constitution of California provided that corporations might be formed under general laws, and should not be created by special act, except for municipal purposes, and that all laws, general and special, passed pursuant to that provision might be from time to time altered and repealed. A general law was enacted by the legislature for the formation of corporations for supplying cities, counties, and towns with water, which provided that the rates to be charged for water should be fixed by a board of commissioners, to be appointed in part by the corporations and in 1 Butts v. Muscatine, 8 Wall. '575; Chicago v. Selden, '9 Wall. '50; City v. Lampson, 9 Wall. 477.

2 94 U. S. 113 (1876). ED.

Chicago, &c. Railroad r. Iowa, 94 U. S. 155; Peik v. Chicago, &c. Railway Co. 94 U. S. 164. ED.

4 94 U. S. 179. And see 19 Fed. Rep. 690; Ex parte Koehler, 23 Fed. Rep. 529 (1885). ED.

5 94 U. S. 880. ED.

part by municipal authorities. The constitution and laws of the state were subsequently changed so as to take away from corporations, which had been organized and put into opera tion under the old constitution and laws, the power to name members of the boards of water commissioners, and so as to place in municipal authorities the sole power of fixing rates for water; and it was decided that these changes violated no provision of the Constitution of the United States. Mr. Justice Field dissented in a very elaborate opinion, on the ground that the decision sanctioned the impairing of the obligations between the state and a corporation.

$586 c. Same Subject. — In Shields v. Ohio, 95 U. S. 319, a question similar to that of Munn v. Illinois arose, and it was decided that the consolidation, pursuant to the statute of Ohio of April 10, 1856 (4 Curwen, 2791), of two or more railway companies works their dissolution. All the powers and franchises of the new company which is thereby formed are derived from that statute, and are subject to "be altered, revoked, or repealed by the general assembly" under sect. 2, art. 1 of the constitution of that state, which took effect September 1, 1851. And it was held that the general assembly does not, therefore, impair the obligation of a contract by prescribing the rates for the transportation of passengers by the new company, although one of the original companies was, prior to the adoption of that constitution, organized under a charter which imposed no limitation as to such rates.

§ 586 d. In a subsequent case, two railroad companies in Georgia, chartered prior to January 1, 1863, were partially exempted from taxation. By the Code of Georgia of that date its right to change, modify, and repeal charters was retained. The two companies were consolidated by Act of April 18, 1863. It was held that thereby a new corporation was created, and that a subsequent act taxing its property did not impair the obligation of any contract contained in the charter.

The power of limitation possessed by a state over its future 1 Railroad Company v. Georgia, 98 U. S. 359. ED.